Wednesday, September 19, 2007

Understanding Marketing

In previous posts, you learned that businesses are established in order to satisfy a need or a want. It does that by producing a good or a service for a group of people whom we call a target market.

For profit oriented organizations, it is essential that you produce or have access to sufficient quantities of the product so as to meet the product or good cost of production and earn a reasonable profit.

If this can not be done, the business will suffer and, ultimately, will not survive.

What Is Marketing?

The process of raising people's awareness for your product, service or information through proper strategies to enable them to buy it, in exchange of, usually, cash or credit that will provide a profit for you, is the essence of Marketing. For non-profit organizations, the objective of the exchange is not to gain profit, but to obtain customer satisfaction.

Marketing comes from the word "Market."

A ‘Market’ is "a group of potential customers with similar needs who are willing to exchange something of value for the various goods and/or services you are offering." For a more detailed discussion of Markets and Marketing go back to the Information Warehouse and review your Effective Sales, Sponsoring & Recruiting Market. Click here to review.

This means that "Marketing" is a process by which two groups of people (the customers and the sellers) who have needs to be satisfied, are willing to try to satisfy those needs by exchanging products (goods or services), ideas and/or information for monetary or non-monetary returns that include monetary or non-monetary profit. This can be done face-to-face at some physical location (or through someone in the middle) that links buyers and sellers living apart.

The Five Concepts Of Marketing

In order to carry out your marketing activities, which are needed to achieve the desired exchanges with the target market, you have several alternative concepts that can help guide your activities: The production concept, the product concept, the selling concept, the marketing concept, and the societal marketing concept.

These concepts have developed throughout the years in parallel with the continuous development in the concept of business itself. They still hold as optional strategies that you can use at any time depending on the marketing situation you are encountering.

The Production Concept

This concept holds that consumers will favor those products that are widely available and low in cost.

The Product Concept

This concept holds that consumers will favor those products that offer the most quality, performance, or innovative features. Both of the above concepts are old ones. They were developed at a time when companies focused on the production of a few specific products, if not only one. Management would think in the following way, "If we can make it, it will sell." Or, they might say "How could they (customers) know what they want before they see the product?"

The Selling Concept

This concept holds that consumers, if left alone, will ordinarily not buy enough of the organization’s products. By 1930, mass production was under way and companies had more production capabilities. Competition started to appear stronger than before. Companies now had the ability to produce similar but cheaper products.

To answer the problem of how to beat the competition and win more and more customers, was resolved in the adoption of the selling concept where more emphasis was placed on selling the product (no matter how) by undergoing aggressive selling and promotion efforts.

The Marketing Concept

This concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.

This concept started a new era of understanding marketing and business. It involved, for the first time, customers. Entrepreneurs (including marketing ones) have started to realize the importance of knowing what consumers think and what their wishes are (in tems of their products).

Rather than making whatever product/s that are easy to produce, or getting stuck on one product without taking into consideration customers' needs, entrepreneurs have now started to incorporate the needs of their customers in their daily business decision making.

Marketing activities have now started to revolve around its newest focus: the customer. This new marketing concept is now based on four main ideas: The target market, customer needs, integrated marketing, and profitability.

The Societal Marketing Concept

This concept holds that the organization’s task is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances consumer's and the society's well-being.

This is the fifth and the newest concept of marketing. It focuses on the well-being of the individual and the society by taking them into consideration when marketing activities and efforts are being made. It calls for a balance between the company's profits, customer satisfaction, and society's interest.

What Is A Product?

From previous posts, you learned that products are offered by organizations to satisfy certain needs or wants of customers. Products can be physical and tangible (seen and touched) items called "goods," or, they can be virtual (generated by computerized or electronic means) or intangible (can not be seen and touched) items such as "services, or it can be a combination of both.

Products that are considered "goods" can be stored and produced away from the customer; while those that are considered "services" can not be stored and they are often produced in the presence of a customer. The United Arab Emirates is an open market. It contains local and international products. Each product must have a specific target market that it is aimed at.

ATarget Market is a group of customers who are segmented from the total population due to the similar characteristics, buying habits and behavior and whom the company wishes to contact regarding the product.

The Marketing Mix

Your marketing mix will always involve making decisions concerning the 4 Ps - Product, Promotion, Price and Place of introducting products, services and/or information to the general public.

First: You have to make decisions on the Product: The decisions you have to make here should reflect the needs of the targeted group. What are you offering your customers and in what shape or form are you offering it?

Second: You have to make decisions on Promotion: The decisions you have to make here are concerned with how and with which methods you are going to tell your potential customers and your target market about your product. Promotion includes:

A. Personal Selling
B. Word of Mouth
C. Mass Selling (Publicity and Advertising)
D. Sales Promotion

You will have to make promotional decisions on whether you want to use one kind of promotion or a blend of more than one.

Following is a brief description of each tool:

A: Personal Selling: Personal selling is a very costly tool to promote your product but in some types of businesses it is the most important one. It involves direct communication between sellers and potential customers in the form of a telephone interview or face-to-face meeting.

B: Word of Mouth: Word of Mouth is based on the reputation of your product and how people perceive it to be. Word of mouth is what people tell each other and talk amongst themselves about your product. It is free of charge but you can not rely on it on its own. A bad quality product or a company with a bad reputation can be destroyed by the word of mouth of its potential buyers, even before it is officially introduced into the market.

C: Mass Selling: Mass Selling is the means to communicate with a large number of potential customers at the same time and it consists of: Advertising & Publicity; Advertising is a "paid form of nonpersonal presentation of ideas, goods or services by an identified sponsor," while Publicity is unpaid.

D: Sales Promotion: Sales Promotion involves the use of leaflets, brochures, coupons, signs, special offers, discounts, and samples, etc., It is important to realize that the best way to promote your product is to choose a Promotional Mix (a combination of more than one promotional tool) that best suits your potential customers, your own promotional budget and the availability of enough resources.

Third: You have to make decisions on Price: The decision you have to make here is: what is the right price for this product?

Finally: You have to make decisions on the Place: The decisions you have to make here should reflect how you are going to provide the product to the target market. You have to deliver the product at the appropriate time and location keeping its quality intact.

Every IMG.Ws Associate, in your effort to develop a marketing strategy, has to design a specific Marketing Mix for the targeted customers you are seeking. To do this, you have to develop a product or have access to a product, service or information that is appealing to a certain target group.

Then you must find a way to deliver your product, service or information and reach your group’s place. You can let your targeted customers know about your product, service or information by using one or more of the promotional tools discussed in this blog and, last but not least, a price will have to be set to reflect the buying ability of the target market.

As an IMG.Ws Associate, the marketing strategy of your business; either online or off line, should reflect the decisions you have made concerning the Marketing Mix that best represents you, your company and product or service to the market you have identified that needs, wants or you can use what you have to offer.