In last Lesson the focus of discussion was core concepts of the
marketing and the increasingly important role of the marketing process
in the ever-changing domestic and global business environment Today we
will be covering following topics:
A. MARKETING CHALLENGES IN THE 21st CENTURY.
The marketing concept has changed dramatically over the last several
decades, and recently the focus has increasingly moved to customers
(versus products and selling) marketing globally and the various
technology issues that impact the market. In addition, there is renewed
emphasis in marketing on creating and innovating with new and better
products and services rather than just competing against other firms and
following the marketing patterns established by competitors.
A. Porter’s 5 Forces Model of Competition: Marketing
is facing different challenges in the 21st century to meet these Before
entering the business Porter model can be used to analyze the
environment both for new and existing business and can be used to
overcome and meet the challenges.
• Threat of New Entrants Ratio of new entrants in
the industry greater the ratio greater will be intensity of competition
• Bargaining Power of Buyers: When
competition is intense and number of manufacturer is greater the buyer
have more options for product switching over this will increase the
buying power of buyer
• Threat of Substitute: As obvious from the term
greater the threat of new entrants will result in greater higher
completion that in tern will result in increase in the number of
• Bargaining Power of Suppliers: Greater number of
the supplier will provide the stronger buying power to the
manufacturer/customer and vice versa
• Rivalry Among Competing Firms in Industry: Larger
number of the manufacturers and greater number of product variety
increases the rivalry among the competitors, which demands for more
quality and customer satisfy9ng products in order to meet the
A. The information technology revolution
The information age, particularly the advent of the Internet is
having a major impact on the direction of marketing science and
practice. Digitalization and Connectivity: The flow of digital
information requires connectivity Intranets, Extranets, and the Internet
are key drivers of the “new economy Technologies for Connecting
b. The major force behind the new connectedness is technology.
c. The boom in computer, telecommunications, and information
technology, as well as the merging of these technologies, has had a
major impact on the way businesses bring value to their customers.
1). Using today’s powerful computers, marketers create detailed
databases and use them to target individual customers with offers
designed to meet their specific needs and buying patterns.
2). Cell phones; fax machines, and CD-ROM to interactive TV are just a
few of the tools being used to make connections.
a). Electronic commerce allows consumers to shop and buy without ever
b). Virtual reality displays, virtual shopping, and virtual salespeople
are just a few of the changes that consumers seem to be embracing. The
Information Superhighway (and its backbone-- the Internet) will link
customers to companies in ways that were unimagined only a few years
ago. The Internet is a vast and burgeoning global web of
computer networks, with no central management or ownership. The
user-friendly World Wide Web has changed us all.
1). The Internet has been hailed as the technology behind a new model
for doing business.
2). New applications include:
a). Internet--connecting with customers.
b). Intranets--connecting with others in the company.
c). Extranets--connecting with strategic partners, suppliers, and
3). Marketplaces have now become market spaces.
2). However, new opportunities abound.
• Connections with Customers Today, most marketers are realizing that
they don’t want to connect with just any customers. Instead, most are
targeting fewer, potentially more profitable customers.
1). Greater diversity and new consumer connections have meant greater
a). Marketers have responded by moving to more segmented marketing where
they target carefully chosen sub markets or even individual buyers.
2). At the same time, companies are analyzing the value of the
customer to the firm. What value does the customer bring to the
organization? Are they worth pursuing?
a). Connect with those that will be bring in profits. h. Connect for a
1). Rather than always looking for new customers, the focus has now
shifted to keeping current customers and building lasting relationships
based on superior satisfaction and value.
2). Long-term profits have superseded short-term gain.
3). Companies are spending more time considering “share of customer”
and less time worrying about “share of market.”
a). Employees are being trained in cross-selling.
b). Up-selling is now a common practice. Today, beyond connecting more
deeply, many companies are also taking advantage of new technologies
that let them connect more directly with their customers.
1). Products are now available via telephone, mail-order catalogs,
kiosks, and electronic commerce.
2). Business-to-business purchasing over the Internet has increased even
faster than online consumer buying.
3). Some firms sell only via direct channels (Example: Dell Computer,
4). Other firms use a combination of traditional selling and direct
selling methods. Direct marketing is redefining the buyer’s role in
connecting with sellers.
1). Buyers are now active participants in shaping the marketing offer
2). Some companies allow buyers to design their own products online.
3). Some marketers have hailed direct marketing as the “marketing model
of the next millennium.”
• Connections with Marketing’s Partners Connecting inside the
company--traditionally, marketers have played the role of intermediary,
charged with understanding customer needs and representing the customer
to different company departments, which then acted upon these needs.
1). Marketing no longer has sole ownership of customer interactions.
a). Now, every employee must be customer-focused.
b). Companies are reorganizing their operations to align them better
with customer needs.
c). Teams coordinate efforts toward the customer. Connecting with
outside partners--most companies today are networked companies, relying
heavily on partnerships with other firms.
1). Supply chain management--the supply chain describes a longer
channel, stretching from raw materials to components to final products
that are carried to final buyers. Each member of the supply chain
creates and captures only a portion of the total value generated by the
2). Supply chain management allows all partners to strengthen
relationships for mode of payment and delivery.
3). Strategic alliances--companies need strategic partners.
a). Many strategic alliances take the form of marketing alliances--can
be product or service oriented in which one company licenses another to
produce its product, or two companies jointly market their complementary
b). Alliances could be promotional, logistical, or even pricing in
c). Companies must be careful when choosing partners so as to complement
strengths and offset weaknesses.
• Connections with the World Around Us Marketers are taking a fresh
look at how they connect with the broader world around them.
1). Global connections--geographical and cultural differences and
distances have shrunk dramatically in the last decade.
2). Today, almost every company, large or small, is touched in some
way by global competition.
a). Firms are challenged by international competitors in their once safe
b). Companies are not only exporting, but buying more components and
supplies from abroad.
c). Domestically purchased goods and services are hybrids (with
components coming from many international sources).
d). The secret for business success in the next century will be to build
good global networks. The New Connected World of Marketing Smart
marketers of all kinds are taking advantage of new opportunities for
connecting with their customers, marketing partners, and the world
1). The old marketing thinking saw marketing as little more than selling
or advertising. It emphasized: a). Customer acquisition.
b). Short-term profit. c). Goal--sell products.
2). The new marketing thinking believes that improving customer
knowledge and customer connections is a corporate goal.
a). Target profitable customers.
b). Find innovative ways to capture and keep these customers.
c). Form direct connections and build lasting customer relationships.
• Use targeted media.
• Integrate communications.
• Use technologies to provide connections.
• View suppliers and distributors as partners, not adversaries.
• Deliver superior value.
B. Rapid Globalisation
Technological and economic developments continue to shrink the
distances between countries. World is becoming global village due to
advancement in the connecting technologies. The world is shrinking
rapidly with the advent of faster communication, and transportation, and
financial flows. In the Twenty-First century, firms can no longer afford
to pay attention only to their domestic market, no matter how large it
is. Many industries are global industries, and those firms that operate
globally achieve lower costs and higher brand awareness. At the same
time, global marketing is risky because of variable exchange rates,
unstable governments, protectionist tariffs and trade barriers, and
other prohibitive factors Global Marketing into the Twenty-First
a. The world is shrinking rapidly with advent of faster
communication, transportation, and financial flows.
c. Domestic companies never thought about foreign competitors until they
suddenly found them in their backyard. The firm that stays at home to
play it safe might not only lose its chance to enter other markets but
also risks losing its home market.
d. Although some companies would like to stem the tide of foreign
imports through protectionism, this response would be only a temporary
solution and, in the long run, would raise the cost of living and
protect inefficient firms.
e. The longer that companies delay taking steps toward
internationalizing; the more they risk being shut out of growing global
h. A global firm, is a firm that, by operating in more than one
country, gains marketing, production, R&D, and financial advantages in
its costs and reputation that are not available to purely domestic
C. The Changing World Economy
Even as new markets open to rising affluence in such countries as the
"new industrialised" pacific rim, poverty in many areas and slowed
economies in previously industrial nations has already changed the world
economy. The New Economy presents many new challenges and opportunities
for the marketer. The most important point is that the New Economy
assuredly places the customer more firmly in the driver’s seat for
decisions on her/his product and service choices (customization and
customerization). In addition, there have been and will be many changes
in business and marketing practices as both consumers and businesses
have virtual and real-time access to literally millions of products,
offers, options, prices, people, competitors, and sources of information
that did not exist until recent years. As a result, the marketing mix
will change as marketers and firms identify new uses for intangible
assets and effective customer relationship management that is more than
a marketing term. We can assume that this increasingly rapid
growth and rate of change will continue, and despite the
dot-com bust, recession, and other major social, political, and economic
adjustments, the Internet and the New Economy have changed marketers and
marketing for the long-term future.
D. The Call for More Ethics and Social Responsibility
The greed of the 1980's and the problems caused by pollution in
Eastern Europe and elsewhere has spurred a new interest in ethical
conduct in business. Social and ethical issues in marketing: Connections
with our values and social responsibilities--as the worldwide
consumerism and environmentalism movements mature, today’s marketers are
being called upon to take greater responsibility for the social and
environmental impact of their actions. The social responsibility and
environmental movements will place even stricter demands on companies in
the future. Those that resist will be forced into compliance by
legislation or consumer outcries.
1. High Prices High Costs of Distribution can
be misleading. Among other reasons, consumers want to know about
products, it is expensive to advertise and promote, brands provide
psychological benefits and quality standards, and distribution costs
include delivering the product not just promoting it. High
Advertising and Promotion Costs are determined in a competitive
marketplace where consumers often have real choices. Excessive
Markups are the exception rather than the rule and are more likely
in uncompetitive industries. Ethics can influence strategic decisions on
such pricing decisions as market penetration versus market skimming
2. High costs of distribution. It is often argued
that middlemen are greedy and mark up prices beyond the value of their
services. A comprehensive implementation of marketing ethics should
include policies and guidelines for defining the company's relationship
3. High advertising and promotion costs. Modern
marketing is also accused of pushing prices up to cover the costs of
heavy advertising and sales promotion. When considered in light of
increasing activism among consumer groups to regulate advertising,
marketers have a unique opportunity to proactively address the needs for
strong advertising ethical standards. While protecting free speech,
marketers could adopt a statement on ethics in advertising that promotes
accurate information exchange, encourages creative and innovative
4. Excessive middlemen gross profit margins. Critics
say that middlemens gross margins are excessive.
5. Deceptive Practices Deceptive pricing
includes practices such as falsely advertising "factory" or "wholesale"
prices or a large price reduction from a phoney high list price.
Deceptive promotion includes practices such as overstating the
product's features or performance, luring the customer to the store for
a bargain that is out of stock, or running rigged contests.
Deceptive packaging includes exaggerating package contents through
subtle design, not filling the package to the top, using misleading
labeling, or describing size in misleading terms.
6. High-Pressure Selling People are free to not
respond to selling tactics. Moreover, most states have "cooling off"
periods that allow buyers to return products or back out of a purchase
for large ticket items.
7. Unsafe Products Dangerous products are most often
illegal. Corporate marketing policies can provide broad guidelines that
everyone in the organization must follow
8. Product Development. Product development may be
influenced by ethical codes seeking more desirable
products or changes is salutary product concepts to make them more
E. The New Marketing Landscape
The new marketing landscape is a dynamic, fast-paced and evolving
function of all these changes and opportunities. More than ever there is
no static formula for success. Customer is known as the king in the
marketing and all efforts of the organization rate directed towards the
customer satisfaction this provides new landscape to the marketing and
development of the connecting technologies are playing primary role in