Company Orientation Towards Market Place (Philip Kotler Summary)

0
2189

Companies activities to address the market affects-  organization, customers, society. Interest of each group may be different and in conflict to each other.

Q: What weightage should an organization give to each group?

A: Company should choose its orientation towards market place.

Orientation/ Philosophy could be :

  1. Production concept
  2. Product concept
  3. Selling/ Sale concept
  4. Marketing concept
  5. Societal concept

i) Production Concept:  Consumers will favour those products that are widely available and low in cost. Hence, focus is on efficiency and wide distribution.

It’s applicable when :

  • Product demand is more than product supply.
  • Product cost is to be lowered to expand market through scale economies.

Eg,   Total cost = (Fixed cost) + (Variable Cost).

  • 100   unit/ day:  total cost = 10000 + 2000    = 12000/=       unit cost= 120/=.
  • 1000 unit/ day:  total cost = 10000 + 20000  = 30000/=       unit cost=  30/=.

Hence, in scale economies, fixed cost comes down.

Scale economies are economics of production achieved through higher level of productin due to fixed cost(overheads) getting distributed over a larger market share.

Eg, – Maruti Udyog Ltd. At the time of launch of M800.

ii) Product Concept:   Consumer will favour those products that offer superior quality, innovation, performance features. Eg.- Gillete, Nokia, Intel, Sony, Toyota. This concept may lead to marketing myopia. PIP television is innovative product, but didn’t sell due to complications. This is marketing myopia.

 iii) Selling concept:  Consumers, if left alone, will ordinarily not buy enough of the organization product. Hence, focus is on aggressive selling & promotion effort.

Assumptions:

  • Customer shows buying inertia.
  • Company has effective selling & promotion tools to stimulate buying.

Used when:

  • Goods that buyers normally do not think of buying. Eg.- insurance, credit cards.
  • Companies have over capacity.

In some situation, companies have to sell what they make rather than make what they sell.

In current world, many markets are buyer markets. Hence, producers need to sell aggressively. This gives rise to a feeling that selling is all or most important part of marketing. In reality, selling is just one part of marketing.

iv) Marketing Concept:  Integrate marketing activities towards determining & satisfying needs/ wants of target market more effectively than competition.

This is the key to achieving organization goals.

Marketing Activities – Activities to create/ deliver/ consume the product to satisfy/ identify need/ want.

Four Pillars of Marketing concept –

(a) Target market.

(b) Customer needs.

(c) Integrated market.

(d) Profitability.

(a) TARGET MARKET:    Normally, any company may not be able to operate in every market to satisfy every need.

  • Needs/ Wants are/ can be quite special/ different for different conditions
  • Hence, a company needs to identify specific target market which it can address or whose specific needs it can fulfill.

Need – Thirst- thirst satisfier.

Want –  Bottled drink/ Packaged drink.

Product – Pepsi- carbonated artificial flavoured.

Fruity- non carbonated/ fruit based.

Energy- non carbonated/ milk based.

(b) CUSTOMER NEEDS:  Customers needs need to be fully understood. This may involve,

  • going deeper into needs
  • understanding possible trade- off.

Needs could be   ( Inexpensive Car).

1. Stated Need- Inexpensive car

2. Real Need- Good fuel economy

3. Unstated Need- Good service from dealer

4. Delight Need- Free accessories

5. Secret Need- Seen in good light by friends

Customer needs could be a range of attributes of product features at low price. This may not be possible. Hence, trade off need to be understood. Company need to understand customer need/ tradeoff and meet them better than competition.

Responsive Marketing:  Find stated Need & fulfill it.

Creative Marketing:       Discover/ produce solution that customer did not ask for but Customer response is enthusiastic.  Eg.- cell phones, ATM’s.

(c) INTEGRATED MARKETING:   All departments within an organistion work together to serve customer’s interest.

It occurs at two levels:

-Within marketing department/ functions. Like, Services/ advertising / sales / product management/ market research

-Marketing department with other company department.

Like, Purchase/ production/   finance/ HR/ R & D.

Internal Marketing – Directed at people within organization.

External Marketing – Directed at people outside organization.

Every staff member must be conscious of how his/ her work impacts other customers.

(d) PROFITABILITY:

Ultimate Purpose: – Achieve organizational goals(profit).

Key : –                     Do job well and achieve profits as a by-product.

Doing job well: –     Satisfying customer needs better than competition.

In Reality:  Many/ Most organizations embrace marketing concept due to situation.

Situation could be

  • Declining sales.
  • Slow growth.
  • Changing buying pattern.
  • Increase in competition.
  • Increase in marketing expenditure.
  • While converting to a marketing oriented organization, a company faces/ may face internal hurdles.

These could be,

– Organised Resistance – Perception of erosion of power of outer departments such as production/ finance/ R & D.

– Slow Learning – Resistance to change/ old habits die hard.

– Fast Forgetting – Small success leading to forgetting key success factors.

(v) Societal marketing concept:

Organization’s task is

  • To determine Needs/ Wants/ Demands/ interests of target market.
  • To deliver desired satisfaction more efficiently & effectively than competition.
  • To preserve/ enhance consumers/ societies well being while doing so.

i.e., build social/ ethical considerations int marketing practice.

Emerged in the background of :

  • Environmental deterioration.
  • Resource shortage.
  • Consciousness of social services or social awareness.

Eg.- Chemical companies – Effluent management systems.

  • Use of Bio- degradable paper bags in lieu of plastics.
  • Two way (reusable) soft drinks bottle in lieu of disposable bottles.

Leave a Reply