Essentials of Marketing Management

Geoffrey Lancaster, Lester Massingham

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9781138038882
• eBook ISBN: 9781351709071
• Topic: Business
• Subtopic: Business General
• Index: Business

The overall success of an organization is dependent on how marketing is able to inform strategy and maintain an operational focus on market needs. With an array of examples and case studies from around the world, Lancaster and Massingham's vital study offers an alternative to the traditional American focused teaching materials currently available.

This second edition has been fully revised and updated, including a new chapter on digital marketing written by Dr Wilson Ouzem.

Topics covered include:

• consumer and organizational buyer behaviour
• product and innovation strategies
• direct marketing
• Social media marketing

Designed and written for undergraduate, MBA and masters students in marketing management classes, Essentials of Marketing Management builds on the successful earlier edition to provide a solid foundation to understanding this core topic.

1 The development of a strategic approach to marketing

Its culture; internal macro- and external micro-environmental issues

Learning objectives

After reading this chapter you will:

• understand the meaning, importance and evolution of the marketing concept;

• appreciate the factors which have given rise to the need for a more strategic approach to marketing management;

• be familiar with the steps in strategic marketing planning;

• appreciate contemporary developments in understanding and applying marketing ideas and their implications for strategic marketing.

Introduction

Over the past 50 years we have witnessed at first a gradual and then an increasingly rapid recognition that effective marketing is the keystone of organizational success. Having said this, for some companies this recognition came too late. For others its meaning and implications have not been adequately understood or accepted. More important is the fact that at the same time as some companies struggle to come to terms with the basic concepts and meaning of marketing (i.e. the marketing concept), markets (and marketing itself) are evolving and changing. With respect to the practice of marketing, the most significant of these changes is that, increasingly, marketing has become more strategic in nature. The significance and implication of this shift, along with the concepts, tools and frameworks needed to achieve such an approach, are the focus of this text.

We start by tracing the origins, development and meaning of marketing as this is essential to understanding the second part of the chapter: namely, factors that have given rise to the growth of strategic marketing.

The origin and development of marketing

As might be expected from a function that has attracted so much research, critical comment and time and effort from those charged with the responsibility of managing it, we now have a substantial body of knowledge relating to the theory and practice of marketing.

Attempting to pinpoint the exact origins of marketing as a business function is challenging, as there is no single, universally agreed definition. The confusion over its exact meaning is demonstrated in a passage written by American marketing scholars:

It has been described as a business activity; as a group of related business activities; as a trade phenomenon; as a frame of mind; as a co-ordinating integrative function in policy making; as a sense of business purpose; as an economic process; as a structure of institutions; as the process of exchanging or transferring ownership of products; as a process of concentration equalization and dispersion; as the creation of time, place and possession utilities; as a process of demand–supply adjustment; and many other things.¹

Marketing tends to mean whatever the user wants it to mean and has, over the years, been the subject of numerous attempts at definition, including the very succinct:

The function of marketing is the establishment of contact.²

Marketing is the delivery of a standard of living to society.³

… selling goods that don’t come back to the people who do (sell them).⁴

A widely accepted definition is the one used by the UK Chartered Institute of Marketing (CIM) since 1976: ‘Marketing is the management process, responsible for identifying, anticipating and satisfying customer requirements profitably.’ The American Marketing Association’s (AMA) latest approved definition of marketing was produced in July 2013: ‘Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society.’ It is our opinion that the AMA definition is more accurate than that of the CIM, as the CIM definition infers satisfying customer requirements profitably: in fact, public services such as the police and fire service are not-for-profit and in a modern context they undoubtedly apply marketing principles, as we discuss in Chapter 18. A more detailed definition was proposed from the CIM in 2007:

The strategic business function that creates value by stimulating, facilitating and fulfilling customer demand. It does this by building brands, nurturing innovation, developing relationships, creating good customer service and communicating benefits. By operating customer-centrically, marketing brings positive return on investment, satisfies shareholders and stake-holders from business and the community, and contributes to positive behavioural change and a sustainable business future.

However, this definition does not seem to be very popular due to its verbosity, so another definition is proposed: ‘Marketing is 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 plethora of meanings makes it difficult to say where and when marketing first began. In its most basic form – that is, people exchanging goods or services in a reciprocal manner – it has existed for centuries. The rudiments of contemporary marketing were discussed as far back as the eighteenth and nineteenth centuries by theorists such as Adam Smith,⁵ the father of modern economics, who wrote: ‘Consumption is the sole end and purpose of all production and the interests of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.’ This statement is close to the basis of the modern marketing concept, which postulates that needs and wants of consumers should be a manufacturer’s main concern and they should produce only what can be sold. Marketing can be said to have developed in an evolutionary rather than revolutionary manner, alongside, and keeping pace with, our economy.

When economies were agrarian, people were mostly self-sufficient. As time passed, it became evident that some people excelled at certain activities and the concept of the division of labour began to emerge. Individuals concentrated on products they were best at producing, which inevitably resulted in them making more than they needed for themselves and their families. This laid the foundation for trade. Exchange then began to develop on a simple basis: usually a one-to-one trading of products. Trade is at the very heart of marketing. Adam Smith postulated that from the division of labour stems the benefits of specialization and the need for more effective means of exchange.

The next step sees small producers making relatively large amounts of goods in anticipation of future demand. This development produces another type of business person, the ‘middleman’, or agent, who acts as an intermediary between producer and consumer. This go-between is of utmost importance in a commercial society, as without this the right goods cannot be sold to the right people in the right place at the right time. Torrens⁶ was an influential economist of his day whose writing and opinions have only recently been rediscovered: he anticipated this philosophy by more than a century when he wrote:

Activities designed to make commodities available at either times or places where they are more in demand than at times and places at which they are available at the outset creates wealth or utility just as much as activities designed to change their physical composition.

This was economic justification for the existence of marketing intermediaries. McCullough,⁷ developing this argument, explained:

Merchants, or dealers collect goods in different places in the least expensive manner, and by carrying them in large quantities at a time, they can afford to supply their respective customers at a cheaper rate than they can supply themselves.… They also promote the convenience of everyone, and reduce the cost of merchandising to the lowest limit.

The parties involved – that is, manufacturers, intermediaries and buyers – gathered together geographically, and trading centres of the world evolved; indeed, such evolution is a continuous process.

As an economy becomes more advanced and sophisticated, so too does marketing. It can be said that marketing is adopted by a country’s business and non-business organizations, depending upon the stage of development of its economy. It is generally accepted that modern marketing began with the Industrial Revolution (in Europe and the USA), with consequent migration to urban centres. As the number of factory workers grew, so too did the service industries to meet their growing needs and those of their families. Marketing was a very basic business activity in the USA (and Europe) until the late 1920s, when emphasis was on the growth of manufacturing firms because demand typically far exceeded supply. Modern marketing in the USA began after the First World War, when ‘over-production’ and ‘surplus’ became commonplace words. Since the late 1920s (with the exception of the Second World War and the immediate post-war period) a strong buyer’s market has existed in America. There was no difficulty in producing goods; the problem lay in marketing them.

In tracing the development of marketing within the framework of business practice there are four distinct stages that can be identified:

• production orientation;

• product orientation;

• sales orientation;

• marketing orientation.

Production orientation

This is a philosophy that:

1 concentrates on increasing production;

2 controls and reduces costs;

3 makes profit through sales volume.

The era of production orientation occurred in the USA from the mid-nineteenth century up to the 1940s and was characterized by focusing efforts on producing goods or services. Management efforts were devoted to achieving high production efficiency (mostly by mass production of standard items), thus denying the customer much choice.

The production department was the central core of the business, with other functions (such as finance, personnel and sales) being secondary. The main philosophy by which production-oriented firms operated was that customers would buy whatever goods were available if the price was reasonable. This era is best epitomized by Henry Ford’s classic statement that his customers could have any colour (‘Model T’ Ford) they wanted as long as it was black. This mass production mentality meant produc...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• 1 The development of a strategic approach to marketing: its culture; internal macro- and external micro-environmental issues
• 2 Markets and customers: consumer and organizational buyer behaviour and marketing strategy
• 3 Markets and customers: market boundaries; target marketing
• 4 Product and innovation strategies
• 5 Pricing strategies
• 6 Channels of distribution and logistics
• 7 Communications strategy
• 8 Sales management
• 9 Customer care and relationship marketing
• 10 Direct marketing
• 11 Digital marketing
• 12 Sales forecasting
• 13 Marketing information systems and research
• 14 Analysing the environment and appraising resources
• 15 Evaluating and controlling strategic marketing
• 16 Strategic marketing planning tools
• 17 Global marketing
• 18 Services marketing and not-for-profit marketing
• Index