50-200 word discussion on marketing discussion

Transcript: Marketing Concepts

Definition of Marketing

The American Marketing Association defines marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

This new definition positions marketing as an activity instead of a function. It identifies marketing as a broader activity in a company or organization, and not just a department. The new definition also recognizes that marketing provides long-term value as well as the short-term benefit of exchange of money for the shareholder and the organization.

Concept of Exchange

The essence of marketing is an exchange between two parties, meaning one party is willing to give up something (often money) in exchange for something he or she would rather have. Exchange occurs when one social unit (person or organization) exchanges something of value with another social unit.

Conditions for Exchange

Six conditions must exist for an exchange to be able to occur:

· First, two or more social units must be involved.

· Second, the parties must be involved voluntarily—that is, each party must be free to accept or reject the other's offer.

· Third, each must have needs that must be satisfied.

· Fourth, each party must have something of value to exchange.

· Fifth, the parties must believe that they will benefit from the exchange.

· And finally, the parties must be able to communicate with each other, and deliver the goods or services to be exchanged.

The Marketing Concept

The Marketing Concept is a philosophy that guides the firm in how it conducts its business. The Marketing Concept suggests that an organization should aim all its efforts at identifying and satisfying consumer needs.

The Marketing Concept is based on three fundamental beliefs:

· First, all planning and operations should be customer-oriented.

· Second, all marketing activities in an organization should be coordinated.

· And third, customer orientation and coordination of activities are essential to achieve the organization's performance objectives.

Strategic Marketing Concept

However, some observers have said that the focus of the Marketing Concept was too narrow, because it failed to account for the larger business and social environment. Consequently, there have been efforts to extend the Marketing Concept to create a philosophy more attuned to the realities of today's business environment.

One such extension is the Strategic Marketing Concept.

Noting that the Marketing Concept does not adequately consider a firm's competition, the Strategic Marketing Concept suggests that a firm must satisfy customer needs while sustaining a competitive advantage to ensure long-term profitability. That is, a firm must have dual goals: satisfying customers and outperforming the competition on one or more key factors.

For example, Tune Hotels is a rapidly growing lodging chain designed to provide real value to the large population at the base of the population pyramid. Tune Hotels' business model embraces many of the efficient operating characteristics pioneered by low-cost carrier airlines such as Southwest Airlines, RyanAir, and Air Asia.

For Tune Hotels, this includes:

1. Internet distribution direct to customers,

2. Aggressive use of price to stimulate demand and maintain high occupancies,

3. "Opt-in/opt-out" amenities,

4. High operating efficiencies, and

5. A simple and consistent operating model that gives the customer a significant value proposition.

Using ten tiers of room rates, Tune can offer incredible value for guests willing to book months in advance; this represents a creative marketing opportunity for developing markets that have rapidly growing, large populations with limited disposable incomes. Guests can access a quality, compact, clean guest room for less than US$5.00 per night, including all fees, and pay only for the amenities they require. Prices are kept low because incremental revenue is generated in every way possible, including the selling of advertising space throughout the hotel's physical structure.

Societal Marketing Concept

Another extension of the Marketing Concept is the Societal Marketing Concept, which addresses the criticism that although the Marketing Concept may lead to business success, it may encourage actions that conflict with a firm's responsibility to society. Thus, the Societal Marketing Concept evolved to resolve what is known as "the micro-macro dilemma." That is, what is good for some producers and consumers may not be good for society as a whole.

The Societal Marketing Concept recognizes that the market includes not only buyers of the firm's products, but also other people affected by the firm's operations. It also means the firm takes a long-term view of customer satisfaction.

For example, in one region of Cambodia, every tour bus company stops at a particular wat (a Cambodian temple) starting at 4:00 in the evening for the express purpose of letting tourists view the sunset from the top of the hill where the wat is located. Although including this scenic view increases the satisfaction of the tour bus companies' customers, the vast number of tourists clambering around the hill are destroying the ancient wat, so future generations will be unable to enjoy it. If the tour companies were practicing the Societal Marketing Concept, they would identify another venue that would provide equal customer satisfaction and would also protect the wat from destruction, especially since the customers are there to view the sunset, not the wat.

Firms that practice corporate social responsibility are utilizing the philosophy of the Societal Marketing Concept.

Applying Marketing Concepts

So which of these marketing concepts is the most appropriate for your organization?

In their 2008 article on the relative merits of the different marketing concepts, Ward and Lewandowska indicate that in volatile, uncertain business environments, following the simpler Marketing Concept strategy of customer orientation seems to be most effective. In stable business environments, it is better to use the Societal Marketing Concept and competitive-based Strategic Marketing Concept. All strategies come with caveats and marketing is no different. In very rare conditions, utilizing any form of marketing may waste resources. These limited conditions include:

· When the customers are satiated to the point they will not make any further purchases

· When a product that customers want will not be made available

· When the cost of gathering the information about customer needs exceeds the revenue it will generate

· When the firm is restricted in what it can exchange

Marketing Myopia

The Marketing Concept suggests that an organization should aim all its efforts at identifying and satisfying consumer needs.

Businesses that define themselves in terms of goods and services rather than consumer needs often find themselves engaging in narrow, short-term thinking, which is sometimes called "marketing myopia." The term "marketing myopia" was coined by Ted Levitt in a 1975 essay published in the Harvard Business Review. When an organization suffers from marketing myopia, it defines its business strategy too narrowly, to the point where it cannot adapt to evolving consumer needs.

Service-Profit Chain

Another critical concept in the hospitality industry is the service-profit chain.

The concept of the service-profit chain was originally introduced by Heskett and others in an essay published in theHarvard Business Review in March-April 1994. It has been widely embraced by the hospitality industry because the model contends that if the organization treats employees well, employees will be more satisfied and have greater loyalty and productivity. In turn, increased employee productivity will increase focus on providing an excellent customer experience, and increase customer value and satisfaction. Because satisfied customers are more loyal to the brand and more willing to shop with the firm, the internal service focus leads to improved firm financial performance.

Extended Service-Profit Chain Model

Most recently, in the March 2009 issue of Journal of Marketing, Christian Homburg, Jan Wieseke, and Wayne D. Hoyer published research that demonstrated that customer satisfaction resulted more from employee-company identification than from employee satisfaction. In this complementary model, employee-company identification leads through improved customer focus to customer-company identification. This directly influences customer loyalty and customer willingness to pay. As in the traditional service-profit chain, these factors lead to improved financial performance.

These two complementary models make up the extended service-profit chain.

Transcript: Marketing Mix: The Four Ps of Marketing

Product

Product means identifying and developing the goods and services that consumers want or need. Often this involves in-depth market research.

Place

Place is offering products in a location so that they are convenient to the guest. For example, the number one hotel attribute for which a customer selects a particular hotel over that of a competitor is the convenience of the hotel's location.

Price

Setting the price is an essential step of the process. A price must serve many functions. It must yield a profit, it must provide value to the guest, and it has to take into account the price of competing goods and services.

Promotion

Promotion involves letting guests know about the product through advertising, personal selling, and other forms of marketing communications.