HOW BUSINESS AND MARKETING ARE CHANGING
HOW BUSINESS AND MARKETING ARE CHANGING
We can say with some confidence that “the marketplace isn’t what it used to be.” It is
Namostar.com
changing radically as a result of major forces such as technological advances, globalization, and deregulation. These forces have created new behaviors and challenges:
Customers increasingly expect higher quality and service and some customization.
They perceive fewer real product differences and show less brand loyalty. T
obtain extensive product information from the Internet and other sources, permitting
them to shop more intelligently. They are showing greater price sensitivity in their
search for value.
Brand manufacturers are facing intense competition from domestic and foreign
brands, which is resulting in rising promotion costs and shrinking profit margins.
They are being further buffeted by powerful retailers who command limited shelf
space and are putting out their own store brands in competition with national brands.
Store-based retailers are suffering from an oversaturation of retailing. Small retailers are succumbing to the growing power of giant retailers and “category killers.”
Store-based retailers are facing growing competition from direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and the Internet.
As a result, they are experiencing shrinking margins. In response, entrepreneurial
retailers are building entertainment into stores with coffee bars, lectures, demonstrations, and performances, marketing an “experience” rather than a product
assortment.
HOW BUSINESS AND MARKETING ARE CHANGING
We can say with some confidence that “the marketplace isn’t what it used to be.” It is
changing radically as a result of major forces such as technological advances, globalization, and deregulation. These forces have created new behaviors and challenges:
Customers increasingly expect higher quality and service and some customization.
They perceive fewer real product differences and show less brand loyalty. They can
obtain extensive product information from the Internet and other sources, permitting
them to shop more intelligently. They are showing greater price sensitivity in their
search for value.
Brand manufacturers are facing intense competition from domestic and foreign
brands, which is resulting in rising promotion costs and shrinking profit margins.
They are being further buffeted by powerful retailers who command limited shelf
space and are putting out their own store brands in competition with national brands.
Store-based retailers are suffering from an oversaturation of retailing. Small retailers are succumbing to the growing power of giant retailers and “category killers.”
Store-based retailers are facing growing competition from direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and the Internet.
As a result, they are experiencing shrinking margins. In response, entrepreneurial
retailers are building entertainment into stores with coffee bars, lectures, demonstrations, and performances, marketing an “experience” rather than a product
assortment.
Company Responses and Adjustments
Given these changes, companies are doing a lot of soul-searching, and many highly
respected firms are adjusting in a number of ways. Here are some current trends:
➤ Reengineering: From focusing on functional departments to reorganizing by key
processes, each managed by multidiscipline teams.
➤ Outsourcing: From making everything inside the company to buying more products
from outside if they can be obtained cheaper and better. Virtual companies outsource
everything, so they own very few assets and, therefore, earn extraordinary rates of
➤ E-commerce: From attracting customers to stores and having salespeople call on
offices to making virtually all products available on the Internet. Business-tobusiness purchasing is growing fast on the Internet, and personal selling can
increasingly be conducted electronically.
➤ Benchmarking: From relying on self-improvement to studying world-class performers
and adopting best practices.
➤ Alliances: From trying to win alone to forming networks of partner firms.24
➤ Partner-suppliers: From using many suppliers to using fewer but more reliable
suppliers who work closely in a “partnership” relationship with the company.
➤ Market-centered: From organizing by products to organizing by market segment.
➤ Global and local: From being local to being both global and local.
➤ Decentralized: From being managed from the top to encouraging more initiative and
“intrepreneurship” at the local level.
Marketer Responses and Adjustments
As the environment changes and companies adjust, marketers also are rethinking
their philosophies, concepts, and tools. Here are the major marketing themes at the
start of the new millennium:
➤ Relationship marketing: From focusing on transactions to building long-term,
profitable customer relationships. Companies focus on their most profitable customers, products, and channels
➤ Customer lifetime value: From making a profit on each sale to making profits by
managing customer lifetime value. Some companies offer to deliver a constantly
needed product on a regular basis at a lower price per unit because they will enjoy
the customer’s business for a longer period.
➤ Customer share: From a focus on gaining market share to a focus on building customer
share. Companies build customer share by offering a larger variety of goods to their
existing customers and by training employees in cross-selling and up-selling.
➤ Target marketing: From selling to everyone to trying to be the best firm serving welldefined target markets. Target marketing is being facilitated by the proliferation of
special-interest magazines, TV channels, and Internet newsgroups.
➤ Individualization: From selling the same offer in the same way to everyone in the
target market to individualizing and customizing messages and offerings.
➤ Customer database: From collecting sales data to building a data warehouse of
information about individual customers’ purchases, preferences, demographics,
and profitability. Companies can “data-mine” their proprietary databases to detect
different customer need clusters and make differentiated offerings to each cluster.
➤ Integrated marketing communications: From reliance on one communication tool such
as advertising to blending several tools to deliver a consistent brand image to
customers at every brand contact.
➤ Channels as partners: From thinking of intermediaries as customers to treating them
as partners in delivering value to final customers.
➤ Every employee a marketer: From thinking that marketing is done only by marketing,
sales, and customer support personnel to recognizing that every employee must be
customer-focused.
➤ Model-based decision making: From making decisions on intuition or slim data to
basing decisions on models and facts on how the marketplace works.
These major themes will be examined throughout this book to help marketers and companies sail safely through the rough, but promising, waters ahead. Successful companies
will change their marketing as fast as their marketplaces and marketspaces change, so
they can build customer satisfaction, value, and retention, the subject of Chapter 2.
EXECUTIVE SUMMARY
All marketers need to be aware of the effect of globalization, technology, and deregulation. Rather than try to satisfy everyone, marketers start with market segmentation and develop a market offering that is positioned in the minds of the target market. To satisfy the target market’s needs, wants, and demands, marketers create a
product, one of the 10 types of entities (goods, services, experiences, events, persons, places, properties, organizations, information, and ideas). Marketers must
search hard for the core need they are trying to satisfy, remembering that their products will be successful only if they deliver value (the ratio of benefits and costs) to
Every marketing exchange requires at least two parties-both with something
valued by the other party, both capable of communication and delivery, both free to
accept or reject the offer, and both finding it appropriate or desirable to deal with the
other. One agreement to exchange constitutes a transaction, part of the larger idea of
relationship marketing. Through relationship marketing, organizations aim to build
enduring, mutually satisfying bonds with customers and other key parties to earn and
retain their long-term business. Reaching out to a target market entails communication channels, distribution channels, and selling channels. The supply chain, which
stretches from raw materials to the final products for final buyers, represents a value
delivery system. Marketers can capture more of the supply chain value by acquiring
competitors or expanding upstream or downstream.
In the marketing environment, marketers face brand, industry, form, and
generic competition. The marketing environment can be divided into the task environment (the immediate actors in producing, distributing, and promoting the product offering) and the broad environment (forces in the demographic, economic, natural, technological, political-legal, and social-cultural environment). To succeed,
marketers must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies. Within these environments, marketers apply the marketing mix-the set of marketing tools used to pursue marketing objectives in the target market. The marketing mix consists of the four
Ps: product, price, place, and promotion.
Companies can adopt one of five orientations toward the marketplace. The production concept assumes that consumers want widely available, affordable products;
the product concept assumes that consumers want products with the most quality, performance, or innovative features; the selling concept assumes that customers will not
buy enough products without an aggressive selling and promotion effort; the marketing concept assumes the firm must be better than competitors in creating, delivering,
and communicating customer value to its chosen target markets; and the societal marketing concept assumes that the firm must satisfy customers more effectively and effi-
ciently than competitors while still preserving the consumer’s and the society’s wellbeing. Keeping this concept in mind, smart companies will add “higher order” image
attributes to supplement both rational and emotional benefits.
The combination of technology, globalization, and deregulation is influencing
customers, brand manufacturers, and store-based retailers in a variety of ways.
Responding to the changes and new demands brought on by these forces has caused
many companies to make adjustments. In turn, savvy marketers must also alter their
marketing activities, tools, and approaches to keep pace with the changes they will face
today and tomorrowCompanyvities, tools, and approaches to keep pace with the changes they will face
today and tomorrowCompany Responses and Adjustments
Given these changes, companies are doing a lot of soul-searching, and many highly
respected firms are adjusting in a number of ways. Here are some current trends:
➤ Reengineering: From focusing on functional departments to reorganizing by key
processes, each managed by multidiscipline teams.
➤ Outsourcing: From making everything inside the company to buying more products
from outside if they can be obtained cheaper and better. Virtual companies outsource
everything, so they own very few assets and, therefore, earn extraordinary rates of return.
➤ E-commerce: From attracting customers to stores and having salespeople call on
offices to making virtually all products available on the Internet. Business-tobusiness purchasing is growing fast on the Internet, and personal selling can
increasingly be conducted electronically.
➤ Benchmarking: From relying on self-improvement to studying world-class performers
and adopting best practices.
➤ Alliances: From trying to win alone to forming networks of partner firms.
➤ Partner-suppliers: From using many suppliers to using fewer but more reliable
suppliers who work closely in a “partnership” relationship with the company.
➤ Market-centered: From organizing by products to organizing by market segment.
➤ Global and local: From being local to being both global and local.
➤ Decentralized: From being managed from the top to encouraging more initiative and
“intrepreneurship” at the local level.
Marketer Responses and Adjustments
As the environment changes and companies adjust, marketers also are rethinking
their philosophies, concepts, and tools. Here are the major marketing themes at the
start of the new millennium:
➤ Relationship marketing: From focusing on transactions to building long-term,
profitable customer relationships. Companies focus on their most profitable customers, products, and channels
➤ Customer lifetime value: From making a profit on each sale to making profits by
managing customer lifetime value. Some companies offer to deliver a constantly
needed product on a regular basis at a lower price per unit because they will enjoy
the customer’s business for a longer period.
➤ Customer share: From a focus on gaining market share to a focus on building customer
share. Companies build customer share by offering a larger variety of goods to their
existing customers and by training employees in cross-selling and up-selling.
➤ Target marketing: From selling to everyone to trying to be the best firm serving welldefined target markets. Target marketing is being facilitated by the proliferation of
special-interest magazines, TV channels, and Internet newsgroups.
➤ Individualization: From selling the same offer in the same way to everyone in the
target market to individualizing and customizing messages and offerings.
➤ Customer database: From collecting sales data to building a data warehouse of
information about individual customers’ purchases, preferences, demographics,
and profitability. Companies can “data-mine” their proprietary databases to detect
different customer need clusters and make differentiated offerings to each cluster.
➤ Integrated marketing communications: From reliance on one communication tool such
as advertising to blending several tools to deliver a consistent brand image to
customers at every brand contact.
➤ Channels as partners: From thinking of intermediaries as customers to treating them
as partners in delivering value to final customers.
➤ Every employee a marketer: From thinking that marketing is done only by marketing,
sales, and customer support personnel to recognizing that every employee must be
customer-focused.
➤ Model-based decision making: From making decisions on intuition or slim data to
basing decisions on models and facts on how the marketplace works.
These major themes will be examined throughout this book to help marketers and companies sail safely through the rough, but promising, waters ahead. Successful companies
will change their marketing as fast as their marketplaces and marketspaces change, so
they can build customer satisfaction, value, and retention,
EXECUTIVE SUMMARY
All marketers need to be aware of the effect of globalization, technology, and deregulation. Rather than try to satisfy everyone, marketers start with market segmentation and develop a market offering that is positioned in the minds of the target market. To satisfy the target market’s needs, wants, and demands, marketers create a
product, one of the 10 types of entities (goods, services, experiences, events, persons, places, properties, organizations, information, and ideas). Marketers must
search hard for the core need they are trying to satisfy, remembering that their products will be successful only if they deliver value (the ratio of benefits and costs) to
customers.
Every marketing exchange requires at least two parties-both with something
valued by the other party, both capable of communication and delivery, both free to
accept or reject the offer, and both finding it appropriate or desirable to deal with the
other. One agreement to exchange constitutes a transaction, part of the larger idea of
relationship marketing. Through relationship marketing, organizations aim to build
enduring, mutually satisfying bonds with customers and other key parties to earn and
retain their long-term business. Reaching out to a target market entails communication channels, distribution channels, and selling channels. The supply chain, which
stretches from raw materials to the final products for final buyers, represents a value
delivery system. Marketers can capture more of the supply chain value by acquiring
competitors or expanding upstream or downstream.
In the marketing environment, marketers face brand, industry, form, and
generic competition. The marketing environment can be divided into the task environment (the immediate actors in producing, distributing, and promoting the product offering) and the broad environment (forces in the demographic, economic, natural, technological, political-legal, and social-cultural environment). To succeed,
marketers must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies. Within these environments, marketers apply the marketing mix-the set of marketing tools used to pursue marketing objectives in the target market. The marketing mix consists of the four
Ps: product, price, place, and promotion.
Companies can adopt one of five orientations toward the marketplace. The production concept assumes that consumers want widely available, affordable products;
the product concept assumes that consumers want products with the most quality, performance, or innovative features; the selling concept assumes that customers will not
buy enough products without an aggressive selling and promotion effort; the marketing concept assumes the firm must be better than competitors in creating, delivering,
and communicating customer value to its chosen target markets; and the societal marketing concept assumes that the firm must satisfy customers more effectively and effi-
ciently than competitors while still preserving the consumer’s and the society’s wellbeing. Keeping this concept in mind, smart companies will add “higher order” image
attributes to supplement both rational and emotional benefits.
The combination of technology, globalization, and deregulation is influencing
customers, brand manufacturers, and store-based retailers in a variety of ways.
Responding to the changes and new demands brought on by these forces has caused
many companies to make adjustments. In turn, savvy marketers must also alter their
marketing activities, tools, and approaches to keep pace with the changes they will face
today and tomorrow
Originally published at https://namostar.com on January 11, 2021.
