Explain the marketing concept and its importance to an organisation making particular reference to developing relationships with customers.

It does not matter how good the product is, an organisation must be in tune with consumer requirements as market trends and fashions are constantly changing. 

“A good example of this statement is the introduction of a new technology, WAP - Wireless Application Protocol, that allows people to access the Internet from their mobile phones.  70% of those who had trial uses of WAP said they would not buy the technology.  

There are several key problems with WAP.  It is slow, it is expensive and there is not enough room on the mobile phone screen to show information and the content does not show up clearly.  Thus, though WAP is one of the latest technologies, it can create more problems than it solves.

Businesses that focus on what their production people can produce (production orientation) rather than on what the customer wants (marketing orientation) will fail.  To be successful, businesses need to determine what it is that customers want and what they are willing to pay for it.  The problem they point out is that the products are engineered by engineers for the sake of engineering rather than for the consumer who will actually use it.’ 

The marketing concept may seem an obvious and sensible approach to running a business.  However, business people have not always believed that the best way to make sales and profits is to satisfy customers.  A famous example is the marketing philosophy for cars widely attributed to Henry Ford in the early 1900s: “The customers can have any colour car they want as long as it is black”.  Today, a customer buying a certain product has a wide variety to choose from.  When buying a car for example, you can now choose a car in almost any colour you like.  

The evolution of the marketing concept can be said to have embraced four stages.  They are:

The Production era, pre – 1920s.  Businesses concerned themselves primarily with production.  This viewpoint was encapsulated in ‘Says Law’, which states ‘Supply creates its own demand.  If a product is made, somebody will want to buy it’.

The Sales era ran from the 1920s to the 1950s.  Businesses realised that products would have to be “sold” to customers.  Businesses viewed sales as the major means of increasing profits.

The Marketing era developed in the early 1950s.  Businesses found that they had to first determine what customers wanted and then produce it.

We are currently in the Relationship marketing era.  Here the focus is on developing bonds with customers.  The focus lies on maintaining a customer’s loyalty and making a multi-purchase agreement.  Businesses believe brand loyalty is the future and that customers naturally favour a certain brand.

To try and gain the custom of consumers, marketing managers have to implement the marketing mix.  The marketing mix consists of five factors; price, place, product, promotion and gradually, people.  Each one of these components is crucial as a slight alteration of one of these factors may cause the balance of the product to be altered.

According to Kotler et al. (1999), the mix is a set of “controllable tactical marketing tools that the firm blends to produce the response it wants in the target market”.

“Product: Anything that can be offered to a market for attention, use or consumption that might satisfy a need.  It includes physical objects, services and ideas.

Price: The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.

Promotion: Activities that communicate the product or service and its merits to target customers and persuade them to buy.

Place: All of the company’s activities that make the product or service available to target customers.” 

“Increasingly, people are becoming the fifth component.  A primary goal of a marketing manager is to create and maintain a marketing mix that satisfies consumers’ needs for a general product.”

Notice in the exhibit above that the marketing mix is built around the buyer, as implied by the marketing concept.  The people variable reflects the level of customer service, advice and sales support.  

Most organisations today recognise the importance of their customers.  They try to understand what customers need and want so that they can try to provide the goods and services to match these requirements.  They can do this by targeting customers.  Firstly they must find their customer base, e.g. the group of people they want to target.  Knowing whom to target affects the way in which the products are to be applied.  They must be able to distinguish different types of customers, e.g. it would be pointless for the Aston Martin V8 Vantage to be targeted at the average working family as the car has a price tag of £70,000.

Businesses have increasingly been targeting younger customers.  This is because they feel if they can target young people, they may be able to keep their custom.  This may seem obvious as people may see that a brand can be trusted and so they will keep buying their products.  However, when targeting younger customers a business must take into consideration that most children are living on ‘pocket money’ and so trying to sell an 8-12 year old child a product costing around £150 may not be the best idea.

Many businesses have taken up loyalty card schemes.  With loyalty cards, the customer shows loyalty to a business by regularly buying their products.  In return the business gives the customer loyalty points.  When a certain number of points are collected, the customer is entitled to a free gift etc.  

This is a brilliant tactic because although the customer may be able to get an improved deal elsewhere they keep purchasing from the same place due to their desire for the ‘rewards’.  

‘Achieving customer loyalty can be very gratifying for many organisations and businesses.  It is well known that it is generally more profitable to preserve an established client than continually be searching for new ones’.  ‘The loyalty of existing customers also represents an entry barrier to competitors because the cost of enticing customers to change loyalties is often prohibitively expensive’.

“With a recognition that existing customers are the source of most companies' profits, there has been an explosion of interest in understanding customers from a long-term, relationship view. 

Frequently though this “relationship” view just means trying to sell more things to more customers.  If companies are really going to embrace the concept of relationships they have to understand more about what their customers need to build a “shared future” with them.

A shared future is a challenging concept since it means that both parties have to understand how the other will help them get to where they want to go and what has happened in the past.”

The survival, growth and profitability of an organisation in a competitive environment are dependent on good customer relations.  Businesses understand the need to form bonds with their customers, as this relationship will ultimately decide their potential in the future. 

Bibliography:

• Dibb, Simkin, Pride and Ferrel, (2001). Marketing Concepts and Strategies, 4th edition. Boston: Houghton Mifflin
• Kotler, Philip, Armstrong, Gary, Saunders, John, Wong, Veronica (1999). Principles of Marketing, 2nd edition. London: Prentice Hall Europe
• Kotler, Philip, (1988). Marketing Management: Analysis, Planning, Implementation, and Control, 6th edition. NJ: Englewood Cliffs
• Peterson, R. A. (1995), "Relationship marketing and the consumer," Journal of the Academy of Marketing Science, 23 (4), 278-81.

• www.google.com

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