Literature Review on Marketing Essay
Literature Review on Marketing
This part of the thesis deals with the research and critical comments on various literatures related with the marketing activities that can be implemented by a firm to improve their business performance.
According to Ferrell and Hartline (2010) Marketing Strategy is both art and science where the firm finds or plans ways to deliver their value by fulfilling the needs & wants of their potential customers. This helps in determining the marketing mix and analyzing the competitive advantage of the firm by implementing and presenting new ideas so as to satisfy their customers. Employing strategies helps in increasing the level of sales by branding, advertising & promotion. So as per the authors (Ferrell& Hartline, 2010) the points that are to be taken under consideration by a firm to properly establish a marketing strategy are discussed below: Firstly, a proper marketing plan is to be established as it helps in providing the necessary detailed outline to carry out the marketing program for a firm. As per the authors ,the marketing plan is not at all similar to a business plan; but a business plan contains a marketing plan along with financial, capital and human resource.
Therefore, the core means to accomplish the desired goals & objectives of an organisation’s marketing strategy is through its well defined marketing plan. Secondly, a firm must aim in seeking marketing opportunities available by collecting and analyzing the information. The technique used for data collection& analysis is through situation analysis; which is a process of data collection that describes the current& future issues & trends that can have an effect on the internal, customer, external environments respectively (Ferrell& Hartline, 2010). This helps in making the strategy by identifying the environment of the business is dealing in and analyze whether the plan will be beneficiary or not before implementation. Then, a Marketing expansion is to be made by identifying in the best interest of the their customers using marketing tools like segmentation & targeting and this can be calculated by identifying the customers buying process because it will help the managers in realizing who are their customers & what exactly do the customers want (Ferrell& Hartline, 2010).
Finally, the firm has to implement the plan but must execute certain activities to increase employee motivation and commitment in achieving the desired goals and objectives effectively by controlling & evaluating the marketing strategy as per the plan proposed. Therefore, implementation of marketing strategy is incomplete without a control mechanism (Ferrell& Hartline, 2010). The key in effective strategic controlling is by maintain an appropriate communication system and the managers must make business decisions as per the interest of the organisation and its customers.
Thus, marketing strategy is a never ending process making it important for the managers to monitor and evaluate the outcomes of the plan that has being implemented for future benefits as it can allow the firm to concentrate on its limited available resources & seek their opportunities to increase sales and achieve a competitive edge. By this we can say that strategy plays a key role for a company to be successful in a way that can obtain benefit against its competitors.
Analysis of the environment:
According to Richard Lynch (2006), analysis of the business environment for an organisation is certainly an important part for this report, as in a much broader sense it helps to describe everything and everyone outside the firm. This includes customers, competitors, suppliers, distributors, government and social Institutions. The following will briefly explain about few marketing analysis that are to be considered for gaining a competitive advantage. The Strategic Analysis is a part of the environmental analysis that contributes in strategically analyzing of the environment by firstly, measuring the Market Size which will enable a firm in assisting and developing a strategy task, then the Market Growth for comprehending how much the market has grown over the years as the growth mainly relates to the organisation’s objectives & lastly, the Market Share to realize how much portion does the firm consume & take benefit within the market in comparison with its major competitors (Lynch, 2006).
But for this to be applied the market must first be defined properly meaning the company must realise exactly in which particular market or markets it is entering. The PESTEL Analysis basically defines the Political, Economic, Social, Technological, Environmental & Legal factors that can affect the firm as it offers a valuable starting point of the overall environment surrounding an organisation (Lynch, 2006). Though the PESTEL analysis is depend on past events and experience, but the analysis can be used as a forecast of the future by the managers. Although, this analysis is effective but must be updated on a regular basis as over time the lifestyles, regulations, culture and technology keeps on changing.
The Degree of turbulence at the general level of environmental analysis considers the basic conditions surrounding the organisation (Lynch, 2006). Special attention needs to be directed to the nature and strength of the forces driving the change in the dynamics of the environment and the environmental forces that immediate the organisation can be measured according to firstly the Changeability which is the degree of the environment that is likely to change & the Predictability which is the degree of those changes that can be predicted. Lastly, the managers of an organisation must determine the Key Factors of success that helps the organisation in achieving their main goals & objectives as the resources, skills and attributes of an organisation that are vital to bring success in the market place (Lynch, 2006).
Usually calculating & measuring the environmental analysis mentioned by the author Lynch; takes a lot of time & money of the company in determining the industry market by statistical tools which is not accurate making it risky & also based on the external factors that keeps on changing making it difficult for every firm to apply the analysis up to its full potential. But, still using Environmental Analysis helps the managers in making effective business & marketing decisions by determining the market industry in which the organisation deals in & identifying the essentials parts that are worth exploring to recognize the success that the firm has by gaining potential for customer satisfaction & differentiating itself from its competitors.
The Analysis of the Industry’s Competitive Strategy:
Competitiveness of a firm is its capability to achieve its targets. These targets are likely to be conveyed in a range of position depending on the context (Barney 2002). From abusiness perspective, a competitive firm requires to survive in the market and achieve the desired market share and profitability. The success of a competitive firm can be calculated by obtaining their current position in the defined market. According to Michael E. Porter’s (1985), the best model in realizing a firm’s current situation is by Porter’s five forces model. This identifies the competitive strategy that an operating business has & aims at defeating its rival companies. According to Porter (1985), the guidelines of rivalry are characterized into “five competitive forces”. These competitive forces are entry to the new competitors, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and rivalry among the existing competitors. Porter (1985) further explains that the industry arrangement is reasonably stable, but can altered over time as the industry progresses, and the strong points of these competitive forces varies from one industry to another.
Based on this model there’s ahelp in analyzing the bargaining power of buyer’s which willeffect the price that a firm can charge.The power of suppliers defines the costs of raw materials; the intensity of rivalry influences prices of competing. The threat of entry places a boundary on prices, and outlines the investment vital to put offnew competitors; Threats from substitutes usually pose a threat whenever there is a technological or low-cost breakthrough. Chaffey (2002) supports Porter’s model forces as it still provides a useable framework for studyingthe threats arising. The value of Porter’s model enables managers to think about the current industry that is in a structured and easy-to-understand system for further analysis. But, the above model’s framework is fundamentally fixed, while the competitive environment in general is constantly changing and it does not apply to a nonprofit type of organisation (Lynch, 2006).
It also assumes that the buyers have no major significance than the aspect of the micro-environment; But the customer are always considered to be more important than other aspects of competitive strategy development process. Thus in order to solve these issues the SWOT analysis can be implemented (Lynch, 2006). As the SWOT analysis determines the strength, weaknesses, opportunities and threats for a firm with in the environment it operates. Even though the model has been questioned with few critical remarks but for the managers of any major firm this model still demonstrates to be a useful for a competitive strategic analysis within the industry. So, there is no doubt that this is the best model that aims at defeating the major competitors in the market.
Customer Relationship Analysis:
According to Nigel Hill, Greg Roche & Rachel Allen (2007), Customer Satisfaction is all about how a firm succeeds in maintaining their customers as top of their agenda. This further identifies the 3r’s of customer loyalty which are Retention, Related Sales & Referrals. The 3r’s are basically the customer’s behavior that must staying longer, chose to use more of the services/products by a firm. This can be further useful by helping in noticing the customers Attitudes & Behavior towards the firm and prove to be effective for the firm’s achievement of their goals in satisfying their customers.
Thus, to improve customer satisfaction organisation’s should focus on its resources on areas where they are least meeting the essential of their customer requirements. But as per the authors (Hill, Roche& Allen, 2007) ‘The profitability of customers increases the longer you keep them’ meaning is that the value of a customer typically increases over time by identifying a customer lifetime value by the following points. An Acquisition is a process of acquiring customers occurs wholly in the first year with a functioning business organisation i.e. before & just after becoming a customer.
The Base Profit is the difference between sales revenue earned by a particular good or service and the cost to produce or provide that good or service.
The Revenue growth will increase when the customers are satisfied as a satisfied customer have a tendency to buy or use more of the firm’s products or services.
Customer satisfaction also leads to Cost Savings as long term customers will cost lesser in providing services as they became familiar with the organisation’s techniques & are more likely to get what they expect.
In Referrals a highly satisfied customers will recommend and even applaud the product or service to their family & friends which thus brings more customer by eliminating the cost of acquisition of a customer.
The long term customers who are satisfied with what the organisation has to offer will be also ready to pay a Price Premium meaning a higher price since they trust the product or service which results in adding value of the firm.
According to Lynch (2006) The Internal Analysis is very crucial as it adds further value for an organisation which in turn is beneficiary for them if they take time in analyzing their business performance through which they can improve the overall customer satisfactory level. Hencethe firm must make in-depth analysis of their departments to determine which areas are to be immediately improved. Overall, it is very important & a responsibility of an organisation to establish a well refined relationship with their customer in such a way that satisfies them and results in earning more profits & establishing a competitive edge on a long term basis.
The Market Segmentation:
According to Sally Dibb & Lyndon Simki (1996), the market segmentation aims to identify groups of customers with similar needs and then the firm tries to select their segments by targeting thus determining how to position their products/services that helps to appeal in the targeted market of a region. This over all helps the firm in realizing which type of consumers are there and whether they prefer or like the services/products that the firm has to offer and this can be measured by making a research and getting at most possible feedback from the existing customers. The Segmentation process of a market segmentation comprises of three diverse portions namely Segmentation, Targeting & Positioning. It is very important to fully understand how different can the markets be segmented before making a final decision. It is clear that there are three points in the process at which assistance is defiantly necessary. As there is a need to recognize the categories of factors that will contribute to a positive result.
During the analysis, it is important to create the qualities that emerging segments display. After the segmentation output has been confirmed, direction is needed for the criteria to review the desirability of the different segments. (Dibb & Simki, 1996) The most commonly used way is arranged in few steps, that tells that segments should exhibit measurability, so that segment size and prospective can be measured; substantiality, so that the segments are sizeable to be profitable; accessibility, to reach the customers in the segments; actionability, letting segments to assist successfully with marketing programmes and lastly; stability, so that resources can be safely financed (Kotler, 1994). This is clearly aimed at managers during the segmentation process, as it shows features that are in contradiction to emerging segments that can be matched.
The problem concerning with market segmentation compared to the authors comments (Dibb & Simki, 1996) is the fact that marketers sometimes fail to produce a usable segmentation answer as it is very difficult for them to analysis information that is constantly changing making the data material collected not precise. On top of that, this analysis is mainly based on statistical information which is at certain point difficult to calculate accurate information as statistical data are also based on the closest assumption value. The Marketing Mix also plays an important role as it identifies the product/service of an organisation, then determine at what price to sell the goods and services, later defines the place which is suitable for production and announce effective promotion methods to bring more customers (Hill, Roche& Allen, 2007).
In order to obtain market segmentation success the managers should become critical about the quality of information they are receiving as it plays a vital role for implementing a marketing strategy by questioning the source of data and considering when it was collected. The method of data collection should be correct, durable and must be up-to-date as soon as possible.
As per Bodo B. Schlegelmilch (1998), marketing ethics is an ethical dilemma that deals with relating the marketing function. The ethical issues usually arise in marketing situations for a firm. This part thus relates to how a firm should make ethical marketing decisions to obtain the satisfaction of the society & must focus on the ethical issues that connect with analyzing the market opportunities that are available. Marketing has been criticized for hurting the interest of customers, society and the environment in the presentation of the marketing mix by stimulating societal moral decay, endorsing materialism and affecting the environment. “Marketing ethics is thus alarmed with the moral principles and values which guide the marketing decisions and activities in an ethical manner” (Jobber, 2010). The assistance of both the primary stakeholders (Customers, Employees, Suppliers, Shareholder & other investors) & secondary stakeholders (Media, Special-Interest Groups & Government Institutions) is important to support the ethical activities of marketing practices (Schlegelmilch, 1998).
But the most important factor for the reason that ethics are to be considered by the marketing managers are so to satisfy their organisation customers and employees (Schlegelmilch, 1998) as the customers are the people who buys the goods & service which runs the business & employees are those people that works for the company and are determined by their attitudes towards the jobs to keep the business running as well. While all other factors are directly or indirectly related with these two factors making it utmost important to satisfy them so as to achieve the desired goals & objectives. The Marketing activities has an impact on the society and the environment as a whole. Therefore the managers of the organisation should behave responsibly within the best interest of those who will be affected. In conclusion, marketing ethics is an important factor to be considered, despite the challenges and uncertainty a company faces with its applications.
This chapter presents the theoretical background of the major areas for marketing techniques of the research. The aimis to review the critical points of current knowledge including substantive findings on marketing techniques for theoretical and methodological contributions to a particular topicas the reviews are secondary sources and do not require any new or original experimental work.