After reading this lecture, you will be able to know about the
functions of management and how firm
formulate strategies in order to perform these functions.
Marketing can be
described as the process of defining, anticipating, creating, and fulfilling
needs and wants for products and services.
There are seven basic
functions of marketing:
(1) Customer analysis,
(2) Selling products/services,
(3) Product and service planning,
(6) Marketing research, and
(7) Opportunity analysis.
Understanding these functions helps strategists identify and
evaluate marketing strengths and weaknesses.
examination and evaluation of consumer needs, desires, and wants—involves
administering customer surveys, analyzing consumer information,
evaluating market positioning strategies,
developing customer profiles, and determining optimal market
segmentation strategies. The information
generated by customer analysis can be essential in developing an
effective mission statement. Customer
profiles can reveal the demographic characteristics of an
organization's customers. Buyers, sellers,
distributors, salespeople, managers, wholesalers, retailers,
suppliers, and creditors can all participate in
gathering information to identify customers' needs and wants
successfully. Successful organizations
continually monitor present and potential customers' buying
Successful strategy implementation generally rests upon the
ability of an organization to sell some product
Selling includes many marketing
activities such as advertising, sales promotion, publicity, personal
selling, sales force management, customer relations, and dealer
relations. These activities are especially
critical when a firm pursues a market penetration strategy.
effectiveness of various selling tools for
consumer and industrial products varies. Personal selling is
most important for industrial goods companies,
and advertising is most important for consumer goods companies.
Determining organizational strengths
and weaknesses in the selling function of marketing is an
important part of performing an internal strategicmanagement
With regard to advertising products and services on the
Internet, a new trend is to base advertising rates
exclusively on sale rates. This new accountability contrasts
sharply with traditional broadcast and print
advertising that bases rates on the number of persons expected
to see a given advertisement. The new costper-
sale online advertising rates are possible because any Web site
can monitor which user clicks on which
advertisement and then can record whether that consumer actually
buys the product. If there are no sales,
then the advertisement is free.
The most popular type of Internet advertisement is the banner.
However, many people just ignore online
Product and Service Planning
Product and service planning
includes activities such as test marketing;
product and brand positioning; devising
warranties; packaging; determining product options, product
features, product style, and product quality;
deleting old products; and providing for customer service.
Product and service planning is particularly
important when a company is pursuing product development or
One of the most effective product and service planning
techniques is test marketing.
Test markets allow an
organization to test alternative marketing plans and to forecast
future sales of new products. In conducting
a test market project, an organization must decide how many
cities to include, which cities to include, how
long to run the test, what information to collect during the
test, and what action to take after the test has
been completed. Test marketing is used more frequently by
consumer goods companies than by industrial
goods companies. Test marketing can allow an organization to
avoid substantial losses by revealing weak
products and ineffective marketing approaches before large-scale
Five major stakeholders affect
Sometimes an organization will pursue a forward integration
strategy primarily to gain better control over
prices charged to consumers. Governments can impose constraints
on price fixing, price discrimination,
minimum prices, unit pricing, price advertising, and price
Competing organizations must be careful not to coordinate
discounts, credit terms, or condition of sale; not
to discuss prices, markups, and costs at trade association
meetings; and not to arrange to issue new price
lists on the same date,
to rotate low bids on contracts, or to
uniformly restrict production to maintain high
prices. Strategists should view price from both a short-run and
a long-run perspective, because competitors
can copy price changes with relative ease. Often a dominant firm
will aggressively match all price cuts by
With regard to pricing, as the value of the dollar increases,
which it has been doing steadily, U.S.
multinational companies have a choice. They can raise prices in
the local currency of a foreign country or
risk losing sales and market share. Alternatively, multinational
firms can keep prices steady and face reduced
profit when their export revenue is reported in the United
States in dollars.
warehousing, distribution channels, distribution coverage, retail site
territories, inventory levels and location, transportation
carriers, wholesaling, and retailing. Most producers
today do not sell their goods directly to consumers. Various
marketing entities act as intermediaries; they
bear a variety of names such as wholesalers, retailers, brokers,
facilitators, agents, middlemen, vendors, or
Distribution becomes especially important when a firm is
striving to implement a market development or
forward integration strategy. Some of the most complex and
challenging decisions facing a firm concern
product distribution. Intermediaries flourish in our economy
because many producers lack the financial
resources and expertise to carry out direct marketing.
Manufacturers who could afford to sell directly to the
public often can gain greater returns by expanding and improving
their manufacturing operations. Even
General Motors would find it very difficult to buy out its more
than eighteen thousand independent dealers.
Successful organizations identify and evaluate alternative ways
to reach their ultimate market. Possible
approaches vary from direct selling to using just one or many
wholesalers and retailers. Strengths and
weaknesses of each channel alternative should be determined
according to economic, control, and adaptive
criteria. Organizations should consider the costs and benefits
of various wholesaling and retailing options.
They must consider the need to motivate and control channel
members and the need to adapt to changes in
the future. Once a marketing channel is chosen, an organization
usually must adhere to it for an extended
period of time.
Marketing research is
the systematic gathering, recording, and analyzing of data about problems
relating to the
marketing of goods and services. Marketing research can uncover
critical strengths and weaknesses, and
marketing researchers employ numerous scales, instruments,
procedures, concepts, and techniques to gather
information. Marketing research activities support all of the
major business functions of an organization.
Organizations that possess excellent marketing research skills
have a definite strength in pursuing generic
The eighth function of marketing is
which involves assessing the costs, benefits, and
associated with marketing decisions. Three steps are required to
perform a cost/benefit analysis:
Compute the total costs
associated with a decision,
Estimate the total
benefits from the decision, and
Compare the total costs
with the total benefits.
As expected benefits exceed total costs, an opportunity becomes
more attractive. Sometimes the variables
included in a cost/benefit analysis cannot be quantified or even
measured, but usually reasonable estimates
can be made to allow the
analysis to be performed. One key
factor to be considered is risk. Cost/benefit
analyses should also be performed when a company is evaluating
alternative ways to be socially responsible.
Marketing Audit Checklist of Questions
Similarly as provided earlier for management, the following
questions about marketing are pertinent:
1. Are markets segmented effectively?
2. Is the organization positioned well among competitors?
3. Has the firm's market share been increasing?
4. Are present channels of distribution reliable and
5. Does the firm have an effective sales organization?
6. Does the firm conduct market research?
7. Are product quality and customer service good?
8. Are the firm's products and services priced appropriately?
9. Does the firm have an effective promotion, advertising, and
10. Are marketing planning and budgeting effective?
11. Do the firm's marketing managers have adequate experience