The American Marketing Association has defined marketing as "the process of planning, executing, pricing, promoting, and distributing ideas, goods, and services to create exchanges that meet individual and organizational goals."
Marketing is considered the set of techniques used for the marketing and distribution of a product among different consumers. At first it was limited to trying to sell a product that was already manufactured, that is, the marketing activity was after the production of the good and was only intended to promote sales of a final product, now it has many more functions that must be fulfilled before start the production process.
The concept of marketing is based on two fundamental beliefs, first: all planning, policy and operation of a company must be customer-oriented; And second, the goal of a company should be lucrative sales volume.
In its fullest sense, the concept of marketing is a business philosophy that determines that the satisfaction of customers' wishes is the economic and social justification for the existence of a company.
marketing-concepts-1Consequently, all production, engineering, and finance activities must be devoted first to determining what the customer wants, and then to satisfying that wish while obtaining a reasonable profit. The second fundamental point that supports the philosophy of marketing is that it is based on the concept of profit, not on the concept of volume.
The simplest and clearest definition of Marketing is given by Jay C. Levinson in a book he published in 1985, titled Guerrilla Marketing:
The meaning of this is: Marketing involves from naming a company or product, selecting the product, determining the place where the product or service will be sold, the color, shape, size, packaging, location of the business, advertising, public relations, the type of sale to be made, sales training, sales presentation, problem solving, strategic growth plan, and follow-up.
HISTORICAL DEVELOPMENT OF MARKETING
In a historical study of marketing, one can first observe the factors that caused the marketing changes; second, the current legacy of ancient marketing practices and institutions, and third, the relative stability over time.
In a feudal, agrarian, or forest economy, the population is largely self-sufficient. He produces his own food, makes his own cloth, and builds his own houses and utensils. There is very little specialization in the job and very little need for any kind of trade. In the course of time, however, the concept of division of labor begins to emerge and the artisans concentrate their efforts on the production of that item in which they excel. This results in each man producing from some items more than he needs, but lacking the other products. As soon as a person appears who produces more than he wants, or wants more than he produces, the basis for commerce exists and commerce is the heart of marketing.
When exchange begins to develop in agrarian economies, it does so on very simple bases. Most businesses are small-scale businesses with no specialization in their management. They are developed from family artisan organizations and production is mainly catered for, paying little or no attention to marketing. In fact the normal practice is to produce manually on demand.
In the next step in the historical evolution of marketing, small producers begin to manufacture their products in greater quantity, anticipating future orders. A new division in labor appears when a type of businessman begins to help sell that increased production. This man - who acts as a link between producers and consumers - is the intermediary.
To make communication, buying and selling easier, different stakeholders tend to group together geographically; in this way shopping centers are created. Today there are some nations that are going through this stage of economic development. It can be seen that the refinements and advances in marketing generally go with the advances in civilization.
Modern marketing in the United States was born with the Industrial Revolution. Associated or as a by-product of the Industrial Revolution came the growth of urban centers and the decline of the rural population. Family crafts were transformed into factories and people moved from the countryside to the city looking for work. Service companies grew to meet the daily needs of industrial workers who were no longer self-sufficient. Marketing barely developed during the last half of the 19th century and the first two decades of the 20th century. All interest was focused on increasing production because market demand exceeded supply of the product. In fact, mass marketing was a prerequisite for series production.Only with a massive marketing system could factories function at an optimal level of production, with the advantage of being able to enjoy production economies.
The rise of marketing specialists was the obligatory step in this evolutionary development.
Evolution of the Marketing concept
The concept of marketing starts from a simple concern to sell and make a profit. The marketing concept has been modified a guidance mass, what has been called marketing one to one (one-to-one). Marketing, like any process, is dynamic and changes, constantly changing. This process, despite what is created, has not happened at the same time in all countries, or regions of the world.
It is in the United States of America where the process has gone through all the phases indicated below. Each person who reads this text should identify in what stage of development of the concept of marketing and its application, are their colleagues, superiors, company, neighborhood, city, region, province or country. Are they in 1800, 1920, or 1950?
Production Orientation
From 1800 to 1920, companies in Europe and the US displayed a clear production orientation. Since everything produced was consumed immediately, manufacturing determined the characteristics of the products. It was not necessary to market to sell. Everything was consumed immediately, whatever was produced. The consumer did not have time to select neither shape nor color, he took anything. Demand exceeded supply.
Orientation to the Sale
From the crisis of the year 1920, where the purchasing capacity was reduced to a minimum, products were created and developed, which later tried to enter the Market. Many of those products were unsuccessful, others were momentary successful. Sales are beginning to be given great importance as an income generator. Techniques designed to sell are developed. (This is where the current confusion of the concepts of sale and marketing originates).
Market Orientation
The commercialization processes were analyzed by the American Universities, especially Harvard, and little by little a whole series of theories has been developed, to ensure the success of any commercial activity.
The concept that gave rise to Marketing or Marketing (1950, Harvard, Teodore Levitt), was to guide the products to the Group of Buyers (Meta Market) that was going to consume or use them. Along with this, efforts are made to promote the masses (mass marketing), through the mass media that are beginning to appear (cinema, radio, television).
One-to-one marketing.
Starting in 1990, the concept of customer-oriented marketing was refined, and the creation of products and services aimed at individuals in particular began, with the use of complex computer systems capable of identifying specific customers and their specific needs.
The segments are reduced until reaching highly determined target groups, almost specific people, with names and surnames. These are giving each one his own. This new step drives it and allows the creation of new ones, their price reduction and the globalization of the economy.
CURRENT IMPORTANCE OF MARKETING
Modern marketing came of age after the First World War, when the words "surplus" and "overproduction" became more and more prevalent in the vocabulary of our economies. Mass production methods, both in industry and agriculture, had been developed in the 19th century; after 1920 the growth of marketing was clearly seen. The importance of marketing in the United States as a whole has become more and more apparent as the rise in the economic level above the mere subsistence that was characteristic of the pre-WWII era has continued. Since approximately 1920, except for the war years and the immediate post-war periods, there has been a market dominated by buyers in this country, that is,the potential supply of goods and services has far exceeded real demand. There has been relatively little difficulty in producing most of these products; the real problem has been selling it.
Generally, there cannot be a high level of economic activity without a corresponding high level of marketing activity. During the time of recession or depression, one soon realizes that there is a slowdown in marketing activity that forces production to decrease.
It becomes clear that in our economy "nothing happens until someone sells something" and there is an urgent need for ever-increasing marketing rather than increased production.
As we have seen all commercial, industrial or service activities, large or small, they require to "market" their products or services. There is no exception. It is not possible to be successful in a commercial activity without Marketing. Naturally, Procter & Gamble, General Motors, or Pepsi Cola is not the same as a company that produces and sells leather articles, for local consumption, in a small and remote locality. What we must all agree on is that every company must keep ten basic truths in mind.
Ten truths that no merchant or professional should forget are:
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- The market is constantly changing. People forget very quickly. Competition is not asleep. Marketing establishes a position for the company. Marketing is essential to survive and grow. Marketing helps you keep your customers. Marketing increases internal motivation. Marketing gives an advantage over dormant competition. Marketing allows businesses to continue operating. Every businessman invests money that he does not want to lose.
IMPORTANT MARKETING CONCEPTS
Market:
In general, we can say that MARKET is any person or group with which an individual or organization has or may have an exchange relationship. In particular, we have several definitions for the market:
1.- Place or geographical area where buyers and sellers are located and operate, here merchandise or services are offered for sale and their ownership is transferred.
2.- Set of demand by potential customers for a product or service.
3.- In economic theory, a market implies a set of conditions and forces that determine prices.
MARKET CLASSIFICATION
The types of markets are:
Current market: It is made up of all current consumers, it is the total result of supply and demand for a certain item or group of items at a given time.
Autonomous market: A market is said to be autonomous when the subjects that intervene in it carry out the transactions in the conditions that they freely agree among themselves.
Capital market: Place where long-term credit operations are negotiated and means of financing fixed capital are sought.
Competition market: It is the part of the market that is in the hands of the competition.
Demand market: In this type of market the action is focused on the manufacturer.
Money market: It is in which short and long-term credit operations are negotiated and the means of financing working capital are sought.
Company market: It is the part of the market that the company dominates.
Foreign market: Area where the commercial activity is carried out and which corresponds to a country different from that where the company is located.
Government Market: It is the one constituted by state institutions.
Imperfect market: This is the name in which the properties of the merchandise are not objectively and completely defined.
Target market: It is the group of people or organizations to which a company directs its marketing program.
Market segmentation
It means dividing the Market into more or less homogeneous groups of consumers, in their degree of intensity of need. More specific, we can say that it is the division of the market into diverse groups of consumers with different needs, characteristics or behaviors, which may require different products or marketing mixes.
Segmentation Requirements
The variables to be used in a segmentation process must meet certain technical conditions, these are:
- Measurability means that the segment in question can be measurable or quantifiable. Accessibility, the selected market segments can be effectively served and reached. Sustainability is associated with a concept of materiality, that is, how large (quantity) or interesting is the segment to be used. Drive, has to do with the possibility of creating or designing adequate / effective plans for the segment in question.
Segmentation process
Step 0: Need to find a market.
Step 1: Observation, search for market opportunity. It can be done through several sources:
- Primary: Investigations by internal company departments, or external investigations (consultants, institutions, public sources, among others).
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- Secondary: Based on previous studies Empirical intuition Experts
Step 2: Determination of the potential market and generic needs. That is, the maximum sales possibility in the industry must be identified, and the real needs of potential future buyers.
Step 3: Determine the relevant variables for the segmentation. Those variables or important characteristics that allow us to reach a division or grouping of these must be identified, given our objectives.
Step 4: Determination and potential projection of each segment. Once each group has been defined. We will obtain a segment matrix. Each segment or "market niche" will have a peculiar characteristic, and therefore a probable potential of its own.
Step 5: Determine and project the action of the competition in each segment. Before selecting a niche to target, we must keep in mind the activities or roles that the competition plays in each of them.
Step 6: SWOT of each segment. Compare F TRENGTHS and O pportunities against D ebilidades and A menazas offering each segment is a strategic task before choosing a position. This vision will allow us to know the place we will find ourselves to compete in the market, given the chosen segment.
Step 7: Choice of each segment. The segmentation process ends here, since one or more segments were selected to compete.
Market Segmentation Variables for Massive Products
As we mentioned in the previous point, step 3, there are a number of variables that help the administrator to structure (segment) a market, in this case of a mass consumption product or service. The selection criteria to use one or another variable will depend on the objectives pursued. It should be noted that the use of variables can be used in isolation or in combination.
Some of the most used variables are:
- Geographic segmentation requires dividing the market into different geographic units. As countries, states, regions, provinces, commons, populations, etc. Demographic segmentation, consists of dividing the market into groups, based on variables such as age, sex, family size, family life cycle, income, occupation, educational level, religion, race, and nationality. Socioeconomic segmentation consists of grouping the population of a market according to social strata. Psychographic segmentation, divides buyers into different groups. based on the characteristics of their social class, lifestyle and personality. Behavioral segmentation: groups buyers according to their knowledge of the product, attitude towards it, use how they respond to a product.Among the groups, the following stand out: expected benefits, purchase occasion, use rate, degree of loyalty, degree of knowledge, and attitude towards the product.
Needs, wants and demands
Definition. Need: it is the feeling of lack of some of the basic satisfiers.
It is classified in:
False, true, absolute, relative, generic, derived, positive and negative.
Desires: it consists in yearning for a specific satisfier for a need.
Demand: is when a desire is backed by purchasing power and the will to acquire.
Marketing from this point of view does not create a need since these issues are not controllable, but marketing influences wishes.
Product - Service.
The idea of marketing is that consumers do not buy goods for the good itself, but for the service that the good brings.
Therefore ideologues define the following:
1) consumer choices are focused on the service that reports a certain good
2) different products can meet the same need: eg. bicycle, car, etc., to cover the need for transportation.
3) Every product is a set of characters and attributes
4) The same product can meet different needs. Eg Computer, can be used as a calculation tool, game, word processing, etc.
Product service classification:
Products - services are classified into:
Generic products: these are the basic advantages of the product
Expected product: it is everything that accompanies the generic product
Increased product: it is what is offered to differentiate it from the competition
Potential product: it consists of everything that can be done to attract and keep buyers.
Other important concepts are ……..
Consumers: they are the people who potentially acquire certain products and services that are offered for sale or for free (ideas, models, philosophies, information, etc.)
Clients: are those buyers who acquire some good periodically from the perspective of the company or store where the product is purchased.
Company: is any person who carries out an activity in relation to products and services in order to obtain profits and benefits.
Services:
We will understand by services as "all those identifiable, intangible activities that are the main object of an operation that is conceived to provide the satisfaction of consumer needs."
From the above it follows that service organizations are those that do not have as their main goal the manufacture of tangible products that buyers are going to permanently own, therefore, the service is the object of marketing, that is, the company is selling service as the central nucleus of its offer to the market. Another similar definition is the one that states that: “a service is any act or function that one part can offer to another, which is essentially intangible and does not result in any property. Its production may or may not be linked to a physical product. " However, a universally acceptable definition of services has so far not been achieved. From a marketing point of view, both goods and services offer benefits or satisfactions; both goods and services are products.The narrow vision of a product tells us that it is a set of attributes, tangible and intangible, physical and chemical, brought together in a special way. The broad vision, the marketing vision, says that it is a set of attributes, tangible and intangible, that the buyer can accept to satisfy his needs and desires. Thus, in the broadest sense, every product has intangible elements for it since everyone sells intangibles in the market, regardless of what is produced in the factory.In the broadest sense, every product has intangible elements for it since everyone sells intangibles in the market, regardless of what is produced in the factory.In the broadest sense, every product has intangible elements for it since everyone sells intangibles in the market, regardless of what is produced in the factory.
THE ROLE OF MARKETING IN THE ECONOMY
The function of marketing in the economy is to organize voluntary and competitive exchange in a way that ensures an efficient meeting between supply and demand for products and services.
This meeting is not spontaneous but requires the organization of union activities of two types:
The material organization of the exchange, that is, the physical flows of goods from the place of production to the place of consumption.
The organization of communication, that is, of the information flows that must precede, accompany and follow the exchange, in order to ensure an efficient meeting between supply and demand.
The function of marketing in the economy is, therefore, to organize the exchange and communication between producers and buyers. This definition applies to both commercial and non-profit activities, generally to any situation where there is voluntary exchange between the organization and a public user of the services offered by the organization.
THE EXCHANGE ORGANIZATION
The organization of exchange is the responsibility of distribution, whose function is to transfer goods from the distributive situation of production to the distributive situation of consumption. The move to the distributive situation of consumption implies production by distribution of three types of profits, which constitute added value of the distribution.
- The utilities of state, is the set of material transformations destined to put the goods in conditions of consumption, these are the operations of fractionation, conditioning, assortment, etc. The utilities of place, or spatial transformations, such as transportation, distribution geographic, etc., which contribute to making the goods available to users in the places of use, transformation or consumption. Time utilities, or temporary transformations, such as storage, which allows the availability of the goods at the time desired by the buyer.
EXCHANGE MATERIAL ORGANIZATION: “DISTRIBUTION LOGISTICS” AND COMMUNICATION ”
Meeting the terms of trade is not enough to ensure an effective match between supply and demand. For it to be possible, the exchange of goods implies that potential buyers are aware and alert to the existence of the goods, that is, to the alternative combinations of attributes that can satisfy their needs.
Communication activities aim to “Produce” knowledge for producers, distributors and buyers. Different communication flows in a market can be distinguished, as reflected in the following demonstration table.
1-Before production, a collection of information at the initiative of the producer, in order to identify the needs and functions of the buyers, which constitute an attractive opportunity for him. It is the function of "market research and strategic marketing"
2-At the initiative of the potential buyer, the study of the possibilities offered by suppliers and the organization of "offers stimulus announcements."
3- After production, the manufacturer's communication actions “oriented towards distribution” and whose objective is to obtain product information and the cooperation of distributors in terms of sales space, promotion and price.
4- At the initiative of the manufacturer, the promotional activities are through "advertising or the sales force aimed at making the buyers aware of the existence of the goods and their distinctive qualities claimed by the producer"
5- At the initiative of the distributors, "promotional and communication activities" aimed at the buyer and aimed at making the assortment offered and the conditions of sale known and creating customer loyalty.
6- After the use or consumption of the goods, the measures of "satisfaction or dissatisfaction" collected by the producer to allow them to adjust their offer or the reactions of the buyers.
7- After the use or consumption of the goods, the "evaluations and / or claims" are objectivity, the specific nature
The evolution of the marketing function in the company.
Marketing, although it has become relevant in recent times, is an activity that has always been carried out. Since technology, economics and competitiveness has developed, marketing has taken a leading role in the company. There are three phases in the evolution of marketing:
Passive marketing: this type of marketing does not carry out much activity and is given in markets where demand exceeds supply. In this case, the company only deals with producing and delivering the products to customers. Advertisements and promotions are in vain, as they will not report significant benefits.
Organizational Marketing: This type of marketing is responsible for making the organization efficient from a sales point of view. Try to find and organize the outputs of manufactured products to consumers.
Active Marketing: It is characterized by an important activity and relevance of strategic marketing. This development is due to the advance that technology and innovative products have had and have. This type of marketing appears when there are a large number of competitors for the same product making similar offers. It is characterized by the acceleration of technological progress, by the maturity of markets and by the internationalization of markets (globalization).
Operational Marketing: the function is to choose the market segment to which the product will be offered. It takes into account, at what prices and how the product will reach consumers. Advertising and promotion occupy an important place.
Strategic Marketing: it is in charge of knowing and analyzing the evolution of the needs of individuals and organizations, and identifying products - markets and current and potential segments. Strategic marketing aims to clarify the vision of the company and develop a medium and long-term strategy.
Strategic planning: mission, vision, goals and objectives depending on the consumer.
It is written at the beginning of the company, in an economic period or reinvestment or evaluation. Is composed of:
The mission that is the raison d'être of the company
Segmentation in relation to the market product
SWOT analysis, threats, opportunities, weaknesses, strengths, etc.)
Objectives, such as sales, economic benefits, sales increases, market share, customer loyalty, company image, etc.)
Budgeting is what is needed to meet the objectives.
Programming, covers products, places, promotion and price.
The marketing program.
When carrying out a marketing program, the needs of the market, its way of distribution, the final price of the product, advertising and promotion, and the cost of development to achieve the desired benefit must be taken into account.
Controllable and uncontrollable variables
| Product | Square | Promotion | Price |
| - Quality
- Aspects - Options - Style - Brand - Packaging - Sizes - Services - Guarantee - Utilities |
- Channels
- Coverages - Location - Inventory - Transportation |
- Advertising
- Personal sale - Sale promotion |
- List price
-Discounts -Concession -Payment period - Credit conditions |
About the non-controllable variables we can mention the following:
Micro-environment:
- Competition Market Public Distributors Suppliers
Macro-environment:
- Technology Cultural factors Economic factors Legal-legal factors
Marketing management in the company.
It has two ways of management:
- A systematic and permanent analysis of market needs and the development of profitable products. Organization of a sales and communication strategy, whose objective is to publicize the qualities of the products offered to potential buyers.
PROFITABILITY AND PRODUCTIVITY IN MARKETING
Profitability is nothing but "the result of the production process." If this result is positive, the company earns money and has met its objective. If this result is negative, the product in question is giving loss so it is necessary to review the strategies and in case no corrective can be implemented, the product should be discontinued.
A General Motors executive said, "We are in the business of making money, not cars," he was wrong; a company makes money and therefore is profitable when it satisfies the needs of the consumer better than the competition, it follows that a company that produces under the principle of integrity in business obtains profits, market share and growth in addition.
Analysis of profitability in Marketing
How is the profitability of a product calculated or estimated?
Generally, those who buy expensive products compare the performance characteristics of different brands and pay more for better performance, as long as the price increase does not exceed the highest perceived value, in short, the customer will always be looking for the best price-value ratio. At first, almost all products are at one of four performance levels: Low, Average High, and Superior. The question is: does higher performance make it more profitable?
The Strategic Planning Institute studies the impact of higher relative product quality, which equates to performance and other factors that increase value, and found a significant and positive relationship between relative product quality and return on investment. For example, in a sample of 525 medium-sized businesses, those with low-quality products earned 17%; those of medium quality 20%, and those of high quality 27%. Thus, high-quality businesses earned 60% more than lower-quality businesses, since the best quality allowed them to charge a higher price or to achieve greater renewal of purchases, as well as the perseverance and recommendation of the clients themselves, so the cost of this quality improvement was not much higher than that of companies that produced lower quality.This does not mean that the company should aim to achieve the highest possible quality, but it should choose the best value for money. Likewise, companies must continuously improve the product, which usually generates a higher recovery and market share. Many companies do not change the initial quality unless they find highly visible defects or exceptional opportunities arise, and others deliberately reduce it to increase their profits, although in the long run this usually affects profitability. The company must use at least one (or all) of the following strategies to determine its quality policy that will determine its profitability:Likewise, companies must continuously improve the product, which usually generates a higher recovery and market share. Many companies do not change the initial quality unless they find highly visible defects or exceptional opportunities arise, and others deliberately reduce it to increase their profits, although in the long run this usually affects profitability. The company must use at least one (or all) of the following strategies to determine its quality policy that will determine its profitability:Likewise, companies must continuously improve the product, which usually generates a higher recovery and market share. Many companies do not change the initial quality unless they find highly visible defects or exceptional opportunities arise, and others deliberately reduce it to increase their profits, although in the long run this usually affects profitability. The company must use at least one (or all) of the following strategies to determine its quality policy that will determine its profitability:Others deliberately reduce it to increase their profits, although this usually affects profitability in the long run. The company must use at least one (or all) of the following strategies to determine its quality policy that will determine its profitability:Others deliberately reduce it to increase their profits, although this usually affects profitability in the long run. The company must use at least one (or all) of the following strategies to determine its quality policy that will determine its profitability:
Compliance with specifications. The degree to which the design and characteristics of the operation are close to the desired standard. (conform to standards such as Norven seal of quality, for example)
Durability. It is the measure of the operational life of the product. (For example, the Volvo company guarantees that the vehicles they manufacture have the highest average lifespan and therefore their high price.)
Safety of Use. The manufacturer's guarantee that the product will work without fail for a specified time. (Chrysler in Venezuela gives the widest guarantee to its vehicles: 2 years or 50,000 kilometers, demonstrating its confidence in the quality of manufacturing.)
There are 9 main factors that influence profitability and which we will analyze throughout the work:
- Investment intensity Productivity Market Share Market growth rate Product / service quality New product development or differentiation from competitors Vertical integration Operating costs
How is the profitability of a market calculated?
The first question for a company to ask is whether a potential market segment has the right size and growth characteristics. Large companies prefer high-volume segments and often underestimate or avoid small segments. Small companies, in turn, avoid large segments, as these require too many resources. Segment growth is generally a desirable feature as companies want their sales and profits to increase; But at the same time, competition will quickly enter the growing segments and, as a consequence, their profitability will decrease. A segment could be of desirable size and growth and not be attractive from the point of view of its potential profitability.There are five forces that are identified to determine the long-term intrinsic attractiveness of an entire market or segment. Companies have to assess the long-term impact on profitability of five groups or risks, which are as follows:
- Industrial Competition: a segment is not attractive if it already contains numerous, strong or aggressive competitors. It is even worse if the segment is stable or declining, if capacity increases are made in large increments, if fixed costs are high, if exit barriers are high, or if competitors are strong in the segment. These conditions will lead to frequent price wars, advertising battles and new product introductions, and it will cost the company more to compete.
- Potential Participants: A segment is not attractive if it can attract new competitors who will come with new capacity, resources and momentum to increase participation.
The most attractive segment is one whose barriers against entry are high and barriers against exit are low.
Substitutes: A segment is not attractive if there are actual or potential substitutes for the product. Substitutes limit the prices and potential profits that can be obtained in a segment. The company has to closely monitor price trends in substitutes. If technology advances or competition increases in these substitute industries, prices and profits are likely to decrease in the market.
Buyers and Suppliers: A segment is not attractive if buyers have strong or growing bargaining power. Buyers will try to drive prices down, demand better quality or services, and will put competitors against each other; all this at the expense of the seller's profitability. Even if the market shows positive size and growth and is structurally attractive, the company must take into account its own objectives and resources in relation to said market or selected segment. Some are attractive and could be scrapped because they do not match the company's objectives. The company must consider whether it has the skills and resources required to succeed in that market.
How is profitability calculated based on sales areas and distribution channels?
Profitability measures in the sales territory take several forms. Managers can compare territories to identify any variations in margins and cost of sales. It is possible to calculate the profitability of the territory based on the return produced. If you seek to improve the allocation procedures in terms of assets and direct expenses, or if you want to modify the budgets of the territories, you can compare the coefficients of return on the assets managed in the different territories. Accounts receivable, inventories and deposit assets are generally used to estimate these managed assets. To the extent that the sales territory determines the credit policy and has its own warehouse to maintain inventory,assets under management may be sufficient to guarantee the use of this measure.
How is it determined if the marketing activities are profitable or not?
The purpose of the marketing concept is to help organizations achieve their goals. In the case of private companies, the main goal is profits; in the case of public and non-profit organizations, it is surviving and raising enough funds to perform their functions well. Now, the key is not to make profits as a first goal, but to make them as a consequence of having done a good job.
As we said earlier: "A company makes money by meeting the needs of its customers better than the competition." But how many companies have actually practiced the marketing concept? The answer is that very few: in reality, only a handful of companies stand firm as practicing leaders in the marketing concept, such as Procter & Gamble, Apple, McDonalds, etc. Clearly, these companies are customer focused and organized to respond effectively to changes in customer needs.
Marketing is the art of attracting and keeping profitable customers. Even so, companies usually discover that between 20 and 40% of their consumers will be unprofitable and that in 20% of their best customers is 80% of their profit. In addition, many companies report that their most profitable consumers are not the largest, but rather those of medium size, since they receive a good service, pay almost the total price, and are the most profitable.
When are the costs valid and when not?
The costs of a company are presented in two forms: fixed and variable. Costs become fixed or variable according to production, for example, the areas of administration, accounting, human resources, etc. do not vary with production or sales profits; for their part, the variables depend on the production since the prices of the raw material, the state of the machinery, etc. vary. To intelligently set prices, organizations need to know how their costs vary at different levels of production. Despite the price setting, it presents important risks, when it is aggressive it could give a cheap image of the product.
But, all costs, including marketing costs, are subject to learning improvements. For example, if three companies invest a large amount of money testing telemarketing, the company that has used it the longest would put telemarketing costs lower, then this company may charge slightly less for their product and still get the same return., with the rest of the costs at the same level. Organizations also need to mark their costs against those of their competitors to see if they are operating at a cost with advantages or disadvantages and at the same time should ask buyers how they perceive the price and quality of each competitor's offer. In a simple way this is done to place the price of the product inch by inch with that of the competitors.
What activities can be established to reduce costs?
There are many strategies and activities that can be implemented to reduce costs, but we will only analyze some of them.
Outsourcing: consists of delegating to external companies those activities that are not related to the main business of the company in order to reduce operating costs.
Benchmarking: consists of copying and adapting those processes that other companies (including the competition) perform best, in order to make our performance and utility more efficient and productive.
Marketing 1 to 1: it consists of developing a direct relationship with each of our most important clients to adapt our products and services to their needs, offering added value and therefore, retaining clients and increasing their potential value throughout their lives. useful as a consumer.
How and when should a company evaluate the possibility of modifying its business strategies?
Strategies must be evaluated at all times. The success of a company today does not guarantee the success of tomorrow. The markets change and the circumstances too, which turned out to be extremely positive once according to certain market characteristics can change in a short time and therefore the requirements of the consumers, this is part of the process of constant evaluation and feedback of each company. According to Tracy Emerick, a marketing expert, while the use or implementation of a marketing strategy produces positive results for the company, it should not be changed or modified, but should be aware of the new, of future innovations or trends that are likely Bring changes to quickly adapt to them.Another important aspect is to analyze the costs and performances in each of the activities that generate value and find ways to improve them. And estimate the costs and performance of your competitors as milestones. To the extent that any company is able to perform some activities better than its competitors, it can obtain a competitive advantage.
How can the value of the business be increased?
There are many ways how to increase business value, among which we can mention: the search for competitive advantages beyond its own value chain; Three strategies must be implemented to obtain competitive advantages:
In the first place, Cost Leadership, which implies that a company intends to be the lowest cost producer in its industrial sector, this allows economies of scale, use of its own technology, preferential access to raw materials and other factors. Secondly, Differentiation with such a strategy seeks to be unique in the industrial sector, along with some dimensions that are highly valued by buyers (exclusivity is rewarded with higher price levels) and thirdly, the approach strategy or positioningThis involves choosing a narrow competition landscape within an industrial sector that relates to a group or segment of the industrial sector and adjusts the strategy to be seen with the exclusion of others. Marketing can no longer be viewed as a simple sales department, but rather as the responsibility for designing and managing a superior value delivery system to reach the target consumer. Thought should also be given to how to stimulate the development of improved company products, actively collaborating with other departments to manage the company's central processes and build stronger external partnerships. Apart from the previous ones,There are additional strategies to increase the value of the business, such as the development of new markets or the breadth of existing markets through the development of new products, economies of scale, globalization and Benchmarking strategies, etc. In addition, today companies are looking to give added value to differentiate their products or services and to retain customers.
Marketing and Communication
Marketing is not just the development of a good product, its price and putting it up for sale. Customers need to know the product before buying it and this is done through communication. In addition, the company communicates even if we have not planned it, so nothing should be left to chance.
Communication system
Communication program, also called Promotion Mix
It uses several instruments to fulfill the goals and objectives of marketing communication:
- AdvertisingPersonal SalesSales PromotionPublic Relations
Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Includes: –Printed forms, diffusion, exteriors, others.
Personal Sale: It is the personal presentation that the sales force of the company makes with the purpose of making sales and developing relationships with customers through: –Sales presentations, trade fairs, employee incentive programs
Sales Promotion: They are the short-term incentives to promote the purchase or sale of a product or service by:
Displays at the point of sale, prizes, discounts, coupons and demos
Public Relations: It is the creation of positive relationships with the various publics of the company, by obtaining favorable publicity, creating a positive corporate image and managing or eliminating rumors, stories and unfavorable events.
The company and effective communication: the main steps that a company must follow in order to clearly reach its clients are:
1.- Identify the target audience: it can be made up of potential buyers or current users, those who make purchases or influence them; individuals, groups, special audiences or the general public.
2.- Determine the communication objectives: In most cases the communication objective is a sales response. In this step the company should also make an analysis of its image, being this the set of beliefs, ideas and impressions that a person has on an object; the important thing about this is to recognize
the vision that our consumers have of the company, products and competitors and thus be able to make the right decisions about what strategies to take to affect a defined audience.
3.- Design the message: They are the series of signs and compositions that will reach the public which refer to our products. It must capture attention, maintain interest, spark desire, and provoke action. Important points when designing the message:
a.- Message content: how to reach the audience. It must be motivating, it must offer a benefit, identification and why the audience should buy this product. Its content displays a unique appeal, theme, idea or sales purpose for the audience to respond in a desired way. The qualification of the topic or message depends on what type of attraction our consumer responds, let's see: there are rational attractions that attract consumers because of the value they represent in the product and are closely linked to the needs of customers. If this qualifies with our product, a message should be addressed highlighting the benefits of the product such as economy, quality, performance value, etc.
There are also the emotional attractions that come to the client through feelings such as humor, love, joy, pride, fear, grief and shame to achieve a desired result.
And finally we have the moral attractions that direct the sense of the audience towards what is correct and appropriate to promote the desire to buy or collaborate, this is used mostly by foundations, social aid institutions and government.
b.- Message Structure: the effectiveness of a message depends on its structure as well as its content. Three themes can be defined about this: reaching conclusions, unilateral or bilateral arguments, the order of representation.
c.- Message Format: it is the way how the message is developed so that it reaches the client. Example: in a market test, the same coffee was tasted in different colored jugs: brown, red, blue and yellow. The results were: 75% felt that the coffee served in the brown container was heavily loaded. 85% judged that the coffee served in the red container was tastier, almost all felt that the coffee served in the blue container was soft, and the coffee served in the yellow container was tasteless.
d.- Message Source: the message that is transmitted by an announcer or a famous source related to the topic is more successful. For example, millions of dollars are spent hiring celebrities to do commercial spots on various products. In general, the public judges the experience, confidence and taste of the commercial.
4.- Select communication channels: The communicator must select efficient communication channels. There are two channels in this regard: 1) Personal communication channels: They involve two or more people who communicate with each other, among them we have several channels for the distribution of information: support channels, expert channels, social channels. two)
Non-personal communication channels: They transmit messages without contact or interaction with the audience, consisting of newspapers, radio, television, posters, posters and mainly information in the media that do not imply interaction with the public and the audience.
5.- Distribute the total promotion budget: there are 4 methods for this:
Allowable method
Sales Percentage Method
Competitive Parity Method
Goal and Task Method
Allowable Method: -The promotion budget is determined at the level they believe the company can afford; You start with total revenue, deduct operating expenses and capital outlays, and then spend a portion of the remaining funds on advertising.
Percentage of sales method: the promotional budget is determined in a certain percentage of the current or predicted sales. Or, they budget a percentage of the sales price per unit.
Advantages: -It is easy to use. -Help in the administration to understand the relationships between promotion expenses, the sale price and the profit per unit. Disadvantages: -Considers that sales are the cause of the promotion and not the result, the budget is based on the availability of funds, rather than on opportunities, it can prevent greater spending than is sometimes necessary to improve a decrease in sales. sales. -It is difficult to make long-term plans, since the budget varies according to sales each year. It provides no basis for selecting a specific percentage.
Competitive parity method: they monitor the advertising of the competitors, or they obtain calculations of the expenses of promotion of the industry in the publications or associations of the sector and determine their budgets based on the average of the industry.
Pros: Competitors' budgets represent the collective wisdom of the industry, spending the same as competitors prevents promotion wars. On the contrary: it is not certain that the competition has a clear idea of how much should be spent on promotion, each company has its different needs regarding the promotion they carry out.
Objective and task method: -It is the most logical method to determine the promotion budget, through which the company determines the promotion budget based on what you want to achieve with the promotion.
This budgeting method involves:
- Define the specific objectives of the promotion. Determine the tasks necessary to achieve those objectives. Calculate the costs of performing those tasks.
DETERMINATION OF THE MARKET MIXTURE
Once the budget is determined, the company must allocate the total promotion budget among the main promotional instruments, i.e. advertising, personal selling, sales promotion, and public relations. The instruments of the promotion are: Advertising, Sales Promotion, Personal Sales, Public Relations, Direct Marketing.
Advertising:
Advantages: Public Presentation, Penetration Capacity, Greater expression capacity, Impersonality. Disadvantages: -It is impersonal and cannot be persuasive like the salesmen of a company.
- It can convey one-way communication with the audience and the audience does not feel that they need to pay attention or respond. It can be very costly, if advertising through television networks is required. Promotion: The instruments of sales promotion are very diverse among them we can find: coupons, contests, prizes, etc.
Features: Communication: capture attention and provide information about the product. –Incentive: they incorporate some incentive or contribution to the consumer. - Invitation: include an invitation to make the transaction immediately.
Personal Sale: It is the most effective instrument in certain stages of the buying process, particularly in the creation of preferences, convictions and actions of the buyer. characteristics
It involves a personal interaction between two or more people, so that each person can observe the needs and characteristics of the other and can make quick adjustments. -They allow all kinds of relationships to emerge, ranging from practical sales relationships to deep personal friendship. -The effective seller thinks about the interests of the clients, in order to create a long-term relationship.
Public Relations: They offer several unique qualities:
They are highly credible, as news stories, features, and events seem more realistic and more credible to readers than ads. -
In addition, they can reach many potential customers who avoid ads and sellers, because the message reaches buyers as a “news”, rather than as a sales-oriented communication.
They highlight a product or a company.
Direct Marketing: It is done through Direct Mail, Telemarketing, Electronic Marketing. Distinctive Features: –Non-public: the message is addressed to a specific person. –Design according to specifications: the message is designed according to specifications. Updated: a message can be generated very quickly to deliver to the individual.
QUANTIFICATION OF THE RESULTS OF THE PROMOTION
It is necessary to measure the impact on the target audience, and this implies asking the target audience:
- If you recognize or remember the message How many times did you see it What points do you remember How do you feel about the message The previous attitude and the current attitude towards the product or the company.
Also collect behavioral measures of audience response.
Bibliography
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