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Objectives and Marketing |
Objectives |
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In this section we explore two important decisions that companies have to make regarding their approach to marketing: (1) whether they should adopt an asset led or a market led approach; (2) whether they should aim at low-cost, product undifferentiated marketing; or for differentiated marketing.
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We also look at a general philosophy in marketing advocated by Hugh Davidson, called “offensive marketing”.
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Approaches to marketing |
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We distinguish between two main approaches to marketing:
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| (1) | | Production orientation: the firm concentrates on efficient low cost production and endeavours to produce quality goods and expects the customer to buy them. This is also called asset led marketing. The firm identifies its assets — its skills and expertise — and then produces a product in line with those assets.
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| (2) | | Market orientation: the firm tries to get the company to produce what the customer wants. This is called a market led orientation.
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Thus we are looking at two kinds of firm — the production orientated firm with a “push” strategy in which pushes the product at the market and the customer-orientated firm with a “pull” strategy in which demand dictates product development.
Modern business philosophy much favours the customer orientated approach — “give the customer what he wants” is a widely heard slogan.
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Theodore Levitt |
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Theodore Levitt argued that an industry is a customer-satisfying process, not a goods-producing process. He states that every industry was once a growth industry and maintains that only a thoroughly customer-orientated management can keep a growth industry growing even after the obvious opportunities have been exhausted. He distinguished selling from marketing. All companies must clarify their purposes, strategies and plans, and clearly communicate them to the workforce. All enterprises must have a system of rewards, audits and controls to ensure the proper pursuit of those goals.
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Competing on price, or completing on value |
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Companies have to choose between alternative marketing strategies:
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| 1 | | Low-cost, product undifferentiated market.
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| 2 | | Differentiated marketing. A variant of concentrated marketing in which a basic product and features is targeted simultaneously at different segments.
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Effectively, a company that aims to produce a low cost undifferentiated product is competing exclusively on price. What this strategy means is that the customer will perceive the good as satisfying all his basic needs from the good, but not having any distinctive feature that might make him want it as opposed to some other substitute. The principle reason for buying a undifferentiated product is that it is cheaper than any other similar product.
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This strategy, therefore, has implications for the structure and nature of the firm. Only the lowest cost producer, who probably enjoys the largest market share, is likely to benefit from this strategy. Only one company can be the lowest cost producer in any one industry.
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Since companies that compete on price are only successful if they can occupy the lowest cost position; in practice much more attention is given to other elements of competitive strategy and the marketing mix.
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Creating a differentiated product means creating a product that expresses unique values that customers would want to have and to some extent regardless of the price of the product. This leads to further discussion of price elasticity (or inelasticity) and to the subject of value analysis, both dealt with in separate units.
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Offensive marketing |
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Hugh Davidson attacks “conventional marketing”, which he says can be closely identified with a structure that places the marketing department at the centre of the company, but which results in bureaucracy rather than innovation and enterprise.
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“Offensive marketing”, advance by Hugh Davidson, follows the acronym POISE:
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P = profitable
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“The object of marketing is not just to increase market share or to provide good value for customers, but to increase profit. Offensive marketers will encounter conflicts between giving the consumer what he or she wants, and running the firm efficiently.”
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O = offensive
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An attitude of mind permeating the company which has the effect of making the company take the lead rather than waiting for the competition to make the first move.
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I = integrated
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“All employees to relate their work to the needs of the market-place and to balance it against the firm’s profit needs.”
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S = strategic:
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There is “intense analysis and careful consideration of alternatives”
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E = effectively executed.
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