In the global market that the company lives -micro, small, medium or large-, whatever its volume, it has to be competitive. To achieve this goal, marketers use tools such as auditing and costs. This is how a new discipline appears: strategic marketing, based on the principle enunciated by Peter Drucker "Manufacture what you can sell, rather than trying to sell what you can manufacture".
This article aims to demonstrate the importance of integrating the disciplines of Auditing and Costs, which as communicating vessels, amalgamate at the service of the company, to achieve its objectives. And making a warning call to administrators, accountants and economists to take an interest in these current issues.
What is strategic marketing
A fundamental concept that has changed the original idea of marketing by 360 degrees, which “consists of carrying out the commercial activities that direct the flow of goods and services from the manufacturer or producer to the market” () with the understanding that markets do not exist to meet the needs of the company, but it exists to meet the needs of the market. Thus we see that in the economic system prior to the Second World War, marketing focused, in a market of shortages and with clients with minimal consumption capacity, on providing basic needs.
And as soon as its per capita income improved, it produced a series of changes in the nature of demand: more new products and services.
But the impact of the economic crisis immersed in the capitalist system, with its consequent reduction and stagnation of private consumption, forced companies to adjust their production capacities to demand and seek new markets or new products. To overcome this situation, operational marketing appears that relies on tactical means based on product, distribution, price and communication policy, the horizon of action for which is in the short and medium term. It was a time of closed markets, the countries practiced the policy of import substitution where the export concept was beyond the possibilities of the common company. More was imported from the foreign market than what was sold to it.
Globalization changed this situation, international obstacles disappeared, and now it is a current fashion to export abroad.
For this purpose, strategic marketing aims to discover what the market needs and act accordingly, guiding companies towards satisfying needs that constitute attractive economic opportunities for them, directing their horizon in the medium and long term, based on the generally accepted principle of the going concern, that is, to position supply according to demand: sell what is produced or produce what is sold. And how to achieve it?
With the help of costs, the application of pricing strategies, qualitative and differentiation strategies supervised by the goal compliance audit to take corrective measures when the provisions of a given period are not met.
Pricing strategies
One of the most effective marketing tools to promote a product or service is price. This aspect affects image and demand, and helps us penetrate a specific segment of the market. Pricing strategies must be consistent with all business goals and objectives. To select a price strategy you must analyze:
- The target market.Customers.Direct and indirect competitors.Risks.Impact that the price will have on the demand for the product or service.How much would the buyer be willing to pay for the product or service?
In a successful business, the price must take into account the total cost and leave a profit margin.
Price for Market Penetration
It is commonly known as the introductory price. A low price is set to attract consumers and gain a large market share. Department stores and discount stores use this strategy to penetrate a specific segment.
Many conditions favor setting a low price:
- It will bring you further growth in the market. Distribution and production costs will decrease as sales volume increases. It helps keep competition out.
Discounts
The pricing strategy may include discounts to customers who shop regularly.
- Discount can be offered to customers who pay promptly. This reward helps the company stay stable, as well as allowing cash flow and reducing accounts receivable costs. Purchase volume discounts can be offered. The cost per unit decreases as the quantity of the product increases. Seasonal discounts, as an incentive for consumers to buy during times when a decrease in sales is traditionally reflected.
Equalize the Competition Price
It is a common tactic to use the price of the competition as a guide to set your own prices.
Breakeven analysis
Before deciding on the sale price of a product or service, we need to know first how much it costs us to produce. Once you identify the cost, you can determine the break-even point. Where there will be no profit or loss of money in the sale or production of a product and in the offering of a service.
For example, if the cost of a product or service is $ 100 and the sale price is the same, this will be your break-even point: INCOME = COSTS. To determine the tie point, it is necessary to know the total fixed costs and calculate what the variable costs are at the different production levels.
- Fixed costs are those that do not vary, such as: rent {office, premises, warehouse}, office equipment {computers, fax, desks}, insurance, interest, depreciation of equipment, water, electricity, telephone, employee wages, etc. Variable costs are those that vary with the volume of production of a product or the services offered. These costs include: the hours paid to a person who was hired for a special project, raw material, etc. There are some variable costs that do not specifically depend on the amount of production, such as advertising and promotion.
Before determining the break-even point, it is necessary to know the fixed costs as well as the variable costs.
How to Calculate Profit at Break-even Point?
The following formulas can be used:
PEQ = CF / MCU
Where: PEQ = Equilibrium Point in Quantities.
CF = Fixed Cost
MCU = Unit Contribution
Margin Contribution Margin = Net Sales less Variable Cost.
PEM = CF /% MC
Where: PEM = Monetary Equilibrium Point
CF = Fixed Cost
% MC = Percentage of Contribution Margin.
How to Calculate the Monetary Balance Point
For example, we will try to determine the appropriate hourly rate for a Business Consultant. The total fixed cost is S /.30,000. The variable cost per unit is S /.15.00 {the Consultant's time} and the sale price per unit is S /.30.00 (consultation time).
PEM = CF /% MC
CF = S /. 30,000% MC = 30 - 15 = 15 (15/30) * 100 = 50% = 0.5
30,000 / 0.5 = S /. 60,000
$ 30,000 / 1- ($ 15 / $ 30) = $ 60,000
This business needs to sell S /. 60,000, just to cover costs. If you do not generate this amount then you will have lost. If it exceeds S /.60,000, then you will have an income.
Determine the Price to Make Profit: Price based on Cost
After determining the tie point, there are strategies to set prices in order to achieve other financial objectives, such as:
- Set a high price to get high profits initially. This strategy is used to recoup high research and development costs or maximize profits before competitors enter the market. (Pharmaceutical companies use this strategy when introducing new medications.) Establish a low price on one or more products to make sales quickly, so that they can support another product that is in development. (Some companies adopt this strategy when they need to increase cash flow.) Set various prices until you know the goal you want to obtain in profit. For example, if you want a 20% profit per unit and the cost per unit is $ 10, you can set a price of $ 12.
Determine the Price to Make Profit: Price based on Value
How high can the price be after the product or service has been released?
To understand consumer perception of the value of your product or service, use subjective criteria such as consumer preferences, product benefits, convenience, product quality, company image, and the alternatives offered by the competition..
- What do you think consumers receive in return for their money? Do they save money or time with the purchase of your product or service? Do they gain any competitive advantage from using their service? Is it more convenient to use their service than trying to do it? by themselves? What are the consumer's options? What is the price of the competition?
With this information, you can begin to understand the maximum price that the consumer will be willing to pay for the benefits received.
Qualitative strategies
Benefits and Distinctive Features of the Product
Products can be described in terms of their distinctive features and benefits.
- The distinctive features are the characteristics of the product that highlight its benefits, such as: the size, color, design, function and materials used to manufacture the product.Benefits are the advantages of the product for the consumer.
While the distinctive features of the product are easy to detect and describe, in the benefits of the product it is necessary to have an ability to show them, since they are often intangible. The most attractive benefits are those that offer an emotional or financial reward to the consumer.
Emotional rewards flow the gamut of human emotions that allows the consumer to improve in some way. For example, sending flowers to a family member or friend allows people to express love. Acquiring products that are made with recycled material offers the buyer the opportunity to take responsibility for the environment.
Products that offer a financial reward allow the buyer to:
- Save money (discount plan) Make money (computer programs for running a business from home) Gain convenience and time (microwave meals)
Discovering the Product Benefits
To identify the benefits of the product, you need to consider the consumer's point of view. In addition to mentally putting yourself in the shoes of the consumer, it is necessary to do a study to know about the benefits of the product. The results may give you information you never considered about the product.
You can develop different systems to monitor and track the benefits of the product:
- Ask customers for suggestions for product improvement Pay attention to consumer complaints Be on the lookout for what the consumer is saying Watch the competition.
Why is it important to understand what are the benefits or distinctive features of our product?
Understanding the benefits and distinctive features of the product allows us to:
- Describe the product in a more convincing way for the consumer. Explain how the product is better than the competition. Set a price. Create effective strategies.
Differentiation strategy
Products can be unique (special products) or visually different from competing products (consumer items). Specialty products are not necessarily better than consumer goods, but require different market strategies. One strategy for specialty products is differentiation. Comparing our products with those of the competition will allow us to position ourselves effectively.
A job that, given the dynamics of the market, in which people's needs and desires continually change, has to be constant over time. Only in this way can satisfactory responses be made to market demands at all times, as Philip Kotler says "Successful companies will be the few that make their Marketing change as fast as their market". That is why today, the victory is given not by the struggle of products but of perceptions.
So to know our situation in the market and the positioning in the customer's mind, we will have to regularly carry out a Marketing Audit.
Marketing audit
If for a moment they stopped to know what a Marketing Audit is, what it consists of and what its real benefits are, they would realize that, above all, it is a business ally. And what do the allies do? The answer seems evident, to collaborate with us in the buoyant moments, so that the situation becomes even more profitable; and cooperate with us in times of skinny cows like the current one, to help us overcome the greatest enemy that any company can have: the crisis.
The Marketing Audit is neither more nor less than a working tool that allows the company to analyze and evaluate the programs and actions of the Commercial and Marketing area, as well as their adaptation to the environment and the current situation. Said in a more practical way, it examines all the areas of the company and finds out the opportunities and threats, or more importantly, indicates the areas of improvement on which to act to increase the profitability of the company.
For it to be truly effective, it has to meet a series of mandatory conditions. It must be, in general lines:
- Systematic. You must follow an ordered sequence in each of the phases necessary to carry out the diagnosis. Complete. You must analyze each of the factors that influence each and every marketing variable and its effectiveness.
But in addition, an effective Marketing Audit must be independent, so that it guarantees an objective analysis. And the best way to achieve this objectivity is by commissioning the audit to specialized professionals outside the company. External, but which in turn must be fully integrated with it. Furthermore, only good communication between company and auditor can bear the desired fruits. But the true usefulness of auditing begins when, knowing where we are starting from, we can begin to create, plan and set objectives.
In short, to position ourselves successfully in an increasingly competitive market, we must go one step further, enter the frontiers of strategic marketing and use the wide range of information and solutions that Marketing Audits offer us.
Final comment
It calls us to reflection how the impact of globalization is forcing professionals from different specialties to join multidisciplinary teams, previously unthinkable, to overcome the increasingly complex problems posed by the world market. Is it not a wake-up call to the Faculties of Administration, Accounting and Economy to merge into one within the Universities? Furthermore, the integration of their respective Professional Colleges into a large Federation? Only time will tell if we are wrong.
Bibliography
Kotler, Philip. Marketing direction. Editorial Prentice Hall.
Kotler, Philip. Frequently Asked Questions about Marketing. Granica Publishing House.
Westwood, John. How to Create a Marketing Plan. Editorial Gedisa.
(1) Doctor in Accounting and Business Sciences from UNMSM. Master in Administration from the University of San Martín de Porres. Public Accountant from the UNMSM School of Accounting Sciences. Current Ordinary Professor of the Postgraduate Unit. LIME. PERU. Email [email protected]
