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RETAIL MARKETING MANAGEMENT
Concepts, Guidelines, and Practices
By Cludia Buhamra Abreu Romero
AuthorHouseCopyright © 2013 Cludia Buhamra Abreu Romero
All rights reserved.
To Start, Recommendations of Kotler
To start, I want to highlight three recommendations given by Professor Philip Kotler in one of his lectures: managing the present, selectively forgetting the past, and creating the future.
1. Managing the present: To Kotler, managing the present involves deep knowledge of the environment in which the company is in, including the client and other stakeholders, so that managers can make right decisions related to products, processes, and threads, either in the sense of creating them or even abandoning them.
2. Selectively forgetting the past: Exploiting accumulated experience is increasingly important in the maintenance of customers and markets. It should include the flexibility to abandon practices that are proven to not represent value for the client nor for the organization.
3. Creating the future: For the future, Kotler emphasizes Marketing 3.0, which focuses on the moral and ethical values of organizations, as well as their relation to environmental issues.
The tolerance of new ideas is one of the characteristics that Kotler attributes to enduring companies. For these companies, says Kotler, priorities are: valuing people, not assets; direction and controls that become looser over time; and an organization dedicated to learning and community involvement.
Finally, Professor Kotler summarizes: The ancient philosophy of the relationship between business and society made us believe that "what is good for business is good for society!" The new philosophy, on the other hand, is that "what is good for society is good for organizations."
Thus, we propose to readers to anticipate the future of their organizations from the ideas presented here and practice planning marketing that enables the effective management of the present and the selective forgetfulness of what has passed.
After All, What Is Marketing?
Initially we are going to understand the etymology of the word marketing, and then explore it as an administrative activity.
MARKET ING MERCADO LOGY
The word mercado comes from the Latin language and means "market." The English suffix logy comes from the Greek language and means "the study of." So, mercadology means "the study of the market."
However, studying the market is just the beginning of the process, because the marketing activities in a company originate after the market is researched. By possession of knowledge about the characteristics of target customers—their needs, desires, and purchase behaviors—the company can be prepared to serve them.
The American Marketing Association (AMA) defines marketing as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large" (AMA 2008).
It is possible to summarize the definition of marketing and its activity as follows:
Marketing is the organization response to the demands of consumer, through adjustments performed in their operational processes.
In the first part of the definition that was presented—marketing is the organization response to the demands of the consumer—an adaptation of the definition given by Jerome McCarthy and William D. Perreault Jr. (1960), one of the precursors in marketing studies, two words deserve to be highlighted: response and demand, because they point to the actions of marketing directed outside of the organization. Considering that you can only answer correctly when you know the question, it is impossible to promote the satisfaction of the client without knowing his needs and desires. This means researching the market and getting closer to the reality of the customer to have a greater chance of success in offering products and services that satisfy him.
In the second part of the definition—through adjustments performed in their operational processes—we stress the words adjustments and processes, which point into the organization. That is, after knowing the market, we must prepare ourselves to serve it. And that includes the company as a whole, not just the marketing area. From the president to the janitor, everyone should be oriented for the customer.
In short, marketing is the activity that builds brands of value in the market by offering products and services with a focus on the expectations of its effective and potential customers and on organizational objectives.
And What Is Not Marketing?
After defining marketing, it is worth clarifying what marketing is not. We call this conceptual clarification.
First, marketing is not a fad, because no fashion would last so long and would not develop with such strength as occurred with the subject of marketing within the context of science in business administration.
Marketing is not just propaganda, as some still think it is. In fact, advertising is the marketing tool that most appears, that most stands out, because it happens in front of the cameras. Nobody sees what happens when the company is planning or conducting market research. People do not take note of the anguish experienced by executives and businessmen in developing new products. People do not take note of what they live as they decide the price of a product or its distribution to become competitive and accessible to the consumer.
But everyone sees the advertisement. It is on the billboards, in magazines, in newspapers, on packaging, and on television, among other media that surround us daily.
Marketing is not fooling people, under any circumstances. That's lack of ethics and respect, shame, not marketing. Some even make false advertising, but this is a distortion of the concept of marketing. Marketing has, in essence, the honest-exchange relation from company to consumer, based on win-win, not win-lose, as some assume.
Marketing does not finish with the sale. The sale process is just the beginning of a relationship that should last for a long time, if it is in the interest of both sides. The moment of the sale is the confirmation of the promise made by the company in the media. The satisfaction is just confirmed later, and repurchase depends on this satisfaction.
What gives longevity to companies in the market is the continuing relationship they have with their customers. As the relationship progresses, the client represents less cost to the organization, because it is not necessary to invest in order to win him and there is less risk of default when you know the reputation of the one with whom you negotiate.
Marketing is not just for big companies. Moreover, the smaller the company, the greater is the chance it will have to be closer to its customer, to hear him, to exchange ideas and learn about him. Of course, when you give examples of marketing actions, large organizations' brands are known by more people, but that does not mean that only large corporations are able to do marketing.
Marketing is not just for private companies. There are many public companies that do good marketing, all over the world, through logistics efficiency, product development, and targeted custom or environmental actions that contribute to the construction of brands' market value.
Marketing activities have been equally important to the Brazilian government to stimulate the correct and healthy behavior of the Brazilian population, such as the practice of prenatal testing, prevention of prostate cancer and breast cancer, and respect to traffic safety, including the use of helmets, seat belts, and child safety seats in the backseat, as well as campaigns against alcohol for those who will drive.
Finally, it is worth mentioning that marketing is not just for companies that seek profit. NGOs—nongovernmental organizations—as well as some charities demonstrate commitment to the provision of real value to society.
Having made these conceptual clarifications, we can move on to analyze the activities of a marketing professional.
What Are the Activities of the Marketing Area?
Many theories are supported by paradigms that are meant to facilitate their understanding and operationalization. So it is with the mix or composite marketing or simply the 4Ps (product, price, place, and promotion), which represent the pillars of marketing activity. But what is the origin of the marketing mix?
The concept of marketing mix was designed in the fifties (Grönroos 1994) by Professor Neil Borden of Harvard Business School. In 1964, he authored an article entitled "The Concept of the Marketing Mix," which was published as a chapter in the George Schwartz's book entitled Science in Marketing (Borden 1984).
The marketing mix created by Borden (1984) originally contained twelve elements. They are:
Product—quality and design appropriate to the target market;
Channels of distribution—channels between producers and consumers, and efforts to ensure harmony in the channel;
Personal selling—sales staff;
Advertising—how much to spend and the platform to be adopted of product and company image;
Promotion—special plans for sale;
Packaging—decisions about packaging and labels;
Display—methods of exposure of products and communication pieces that help the sales process;
Servicing—decisions on necessary services;
Physical handling—logistics (warehousing, transportation, and inventory);
Fact-finding and analysis—acquisition, analysis, and use of data in marketing operations.
In 1960, Professor Jerome McCarthy and William D. Perreault Jr., in their book Basic Marketing: A Managerial Approach, presented the twelve elements of the marketing mix proposed by Neil Borden synthesized in four variables beginning with the letter "P," making the "mix" known as the 4Ps of marketing: product, price, place, and promotion.
In the concept of the product were included attributes of the product itself, branding, packaging, and servicing, as listed by Borden. The price, which involves, in addition to the amount paid by the customer, payment methods and deadlines, among others, is equal to Borden's term of pricing. The place, whose best translation is distribution, includes the decisions of channels and logistics distribution of products, services, and information to the client that Borden called physical handling (storage, transportation, and inventory). And, in the element promotion, or communication, are the variables of advertising, sales promotion, personal selling, and display, also listed by Borden. Finally, fact-finding and analysis, cited by Borden but not directly included in the four Ps, gives supports to all marketing operations with acquisition, analysis, and use of market information.
These four elements of marketing—product, price, place, and promotion—on the one hand facilitated the understanding of the subject, but on the other, they brought a problem of definition of the functions of the marketing professional. After all, we cannot imagine a person or department responsible for all of these elements, whose management involves different areas and functions within an organization.
What occurs in most organizational structures is that decisions on the product are made in the areas of R&D (Research and Development) and production. Issues relating to price are under the responsibility of finance. Distribution is handled by the area of distribution and logistics. Finally, communication is the responsibility of the marketing area, as shown below.
However, professionals in the media, including advertisers, make advertising, sales promotion, and public relations assignments. Personal selling, in turn, is another form of marketing communication, which most often is handled by an area known as sales management or business management, as shown in the diagram below.
Given this reality, what are the functions of the marketing professional? How is it possible for this professional to work the four fundamental elements of marketing when they are spread throughout the entire organization?
Actually, the 4Ps are the cornerstones of marketing for an organization as a whole. To the marketers is due the activities of marketing research, marketing planning, and customer relationship to guide the construction of these four pillars, as shown in the following diagram.
Through market research, the marketing professional feeds the organization information about its customers and competitors, aiding strategic, tactical, and operational decision making. Often, research institutes are hired to assist in the application of research.
With the planning activity, the marketer directs all actions relating to product, price, distribution, and communication developed by the various organizational areas, integrating them into the concept of customer focus. Mason, Mayer, and Wilkinson (1993) added, though, two Ps they called compound retailer: Presentation, or point of sale (also included in P: Place or distribution), and People (considered in all marketing pillars). At the moment of marketing planning, it can be helpful to have consultants who can contribute to the construction and implementation of the plan without employment that sometimes compromises the mechanisms of execution and plan control.
Finally, with the relationship activity, the marketing professional brings to the company the "voice of the customer" and takes to him the organization's response.
Even when there is not formally a marketing area in the company, its activities must be present, seeking the ultimate goal of building value brands, winning and keeping customers, and ensuring profitability for the organization.
From Borden's and McCarthy's messages, we conclude that the 4 Ps—product, price, place, and promotion—together form the pillars of the marketing of an organization, but the responsibility of its construction involves all who are part of it.
Why Do Marketing?
One of the most frequent questions in the corporate and academic environment concerns the real need for a company to do marketing; after all, marketing actions for achieving and maintaining customers not only require time for planning, but also financial resources for their implementation. It would be easier if organizations devoted their time and resources just to selling and making a profit without much effort being devoted to it. But things do not work this way.
It has become increasingly difficult for successful market relations to happen spontaneously. There is a lot of effort necessary for achieving and maintaining clients, who have become increasingly demanding.
Now let's talk about some of the many reasons why organizations should do marketing. We will discuss, first, changes in consumer behavior, then changes in competition, and finally, the actions of the state.
5.1 Changes in Consumer Behavior
There is no denying that the consumer has changed. Oversupply beyond demand in the market has put numerous options in front of the consumer. Sales are appealing from all sides. The packaging, promotion, advertisements, new products, everything are reasons to seduce and delight consumers.
But the fact is that they are not so easily seduced, and delighting consumers has been one of the most arduous tasks of marketing management.
What is this new consumer like? Below are some of the characteristics of the consumer of today:
More well informed
Enjoys personalized treatment
No time available
Customers are more demanding; there is no denying that. They ask for and charge everything. They want the best offer, with maximum convenience at the lowest price.
Customers are more selective. They select products, brands, stores, salespeople, prices, and payment methods. All that is offered to the consumer goes through a rigorous selective process of options so there is no regret in relation to the purchase made.
Customers are more rational. Rationality is expressed, for example, by opting for the most expensive product because it ensures greater reliability at the time of a repair, a service need, a complaint, or even a repurchase.
Customers are less faithful. Today it has become common to use the term customer loyalty. But, in essence, what does the word loyalty mean?
According to the dictionary, loyalty is to be faithful, to not change, to not use something else. It means that if a consumer is in fact loyal to one brand of a product, he will not use another brand of the same product category. Likewise, if you are loyal to a store, such as a supermarket, you will not buy anywhere else but there. It's the extreme, but this is the real definition of the word loyalty.
Making a client loyal is, therefore, one of the most difficult activities of a company, particularly because the consumer of today loves novelty and, in most cases, cannot resist the many temptations to try the new. There are many offers. And by the time he experiences such offers, he has already left the idea of being faithful. Some might say it was just to prove a point. Nevertheless, the concept of fidelity was damaged.
It's the same thing that happens in marriage. Can a husband or wife call himself or herself faithful, but "try new things"? Even if it is "only once"? The same thought applies to the trade in which the concept of loyalty is involved.
Excerpted from RETAIL MARKETING MANAGEMENT by ClÃudia Buhamra Abreu Romero. Copyright © 2013 by ClÃudia Buhamra Abreu Romero. Excerpted by permission of AuthorHouse.
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