CONCEPT OF MARKETING

The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case.

In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later.

To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing other philosophies that once were predominant. While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.

The Production Concept:

The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:

* Can we produce the product?

* Can we produce enough of it?

At the time, the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.

The Sales Concept

By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:

• Can we sell the product?
• Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:

* What do customers want?

* Can we develop it while they still want it?

* How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which involves:

* Focusing on customer needs before developing the product

* Aligning all functions of the company to focus on those needs

* Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities. While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a "marketing problem" - everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.


The major differences between selling concept and marketing concept

 1. The selling concept starts with the seller and its focus is on existing products, it  being seller-oriented. The company believes in aggressive selling and other promotions. Customer value and satisfaction are no concern for the seller. The firm produces the products first and then figures out ways to sell and make profits. Different company departments operate without coordination.

2. Marketing orientation starts with the customer and the company strives to learn  customer needs and wants, develops appropriate products or services to satisfy the customer. Business is viewed as a customer need satisfying activity. All departments coordinate their activities and the focus is on customer needs. Profits are an outcome of doing the job well by the company. It requires reliable company wide  information system and maintains it. All departments are responsive to informational inputs. Everybody understands the critical role played by marketing, a fact visibly demonstrable when the head of marketing is part of top management.

THE SOCIETAL MARKETING CONCEPT

Marketing concept was accepted widely among companies in developed and some developing countries and continued to evolve and take on new meanings. Not long after this, criticism started about the nature of its social responsibility. The emphasis shifted to how marketing affected society as a whole in an age of depleting and increasingly scarce resources, environmental deterioration, etc. It was good enough to produce what customers needed or wanted, and for achieving organisational objectives, but in certain cases the concept could be in conflict with customers’ and society’s best long-run interests. Societal marketing concept is a management philosophy that takes into account the welfare of society, the organisation, and its customers.

Adoption of this concept requires that marketing decisions be made in an ethical and socially responsible manner. Companies must pay attention not only to the short-term needs of customers but also to their long-term well being. This includes, for instance, excess fat content in ready-to-eat foods, toxic wastes, and environmental issues.

The need is to strike a balance between the interest of customers, the company itself, and the society in which operations are conducted. Some responsible firms have started using recyclable packaging materials and products that do not harm the environment. Among the marketing tasks, demarketing is an approach that reflects the societal marketing philosophy.

Many companies encounter several hurdles in adopting the marketing concept. For some firms, it is simply too difficult to understand the underlying philosophy and they fail to implement it. Other companies face a conflict between short-term and long-term objectives and have no inclination to sacrifice short-term gains for the sake of customer satisfaction, simply because the customer is not the major priority of top management.

HOLISTIC MARKETING APPROACH

There have been major changes in almost every sphere of human activity over the last decade, like implication being that this requires fresh marketing thinking, a fresh approach to business, and this calls for a holistic marketing approach. This new thinking relies upon marketing research to define market segments, their size, and their needs. To more completely satisfy those needs, marketers need to have a more complete and cohesive approach to internal marketing, targeted marketing, relationship marketing, be visibly socially responsible, and make decisions about the controllable elements of the marketing mix.

MANAGEMENT BY EXCEPTION (M.B.E.)

It is a system of identification and  communication that signals the manager when his attention is needed: conversely, it remains silent when his attention is not required.

The primary purpose of such a system is to simplify the management  process itself.

It permits the manager to find the problems that need his action and to avoid  dealing with these the are better handled by his subordinates.

Elements of MBE: The MBE system’s structure is constituted by the following elements

1.	Measurement	by assigning values to performance
2.	Projection	Towards business objective & expectations.
3.	Selection	Follow progress towards its objectives
4.	Observation	to know current state of performance.
5.	Comparison	actual with expected and identify the            exceptions.
6.	Decision making	Prescribes the action that must be fallen in order
		(i) Bring performance back into control
		(ii) Adjust expectations to reflect changing conditions
		(iii) Exploit opportunity

It is also deeply rooted in the principles of the decision of labour, delegation or responsibility and authority and span of control.

Merits: The practice of MBE in management yields benefit in the following way

1. It save personal time
2. Concentrative executive effort
3. Reduces distortions
4. Facilitates broader management coverage
5. Lessens frequency of decision making.
6. Makes fuller use of knowledge of trends history and available business data.
7. Fully utilizes highly paid people on high-return work.
8. Identify crises and critical problems.
9. Provides qualitative and quantitative yardsticks for judging situations and people.
10. Enables inexperienced managers to handle new assignments with a minimum of related experience and training.
11. Alerts management to opportunity as well as difficulties.
12. Encourages more comprehensive knowledge of all phases of business operations.
13. Stimulates communication between different segments of an organization.

Demerits : Peter Druker’s critically viewed MBE as follows.

1. It breeds organization man thinking
2. It is often dependent upon unbelievable data.
3. It rewires a comprehensive observing and reporting system.
4. It tends to proliferate paper work
5. It often assumes an un relational stability in business affairs.
6. It gives false sense of security to management.
7. Standard of comparison tend to become obsolete.
8. Some critical business factors are difficult to measure
9. It can’t be a substitute for thinking.

Principles of MBE: The make the MBE system effective the following principles may be followed.

1. Practice of Self-control
2. Discard pre-conceived notions.
3. Be guided by policy
4. Learn to live with accountants.
5. Delegate for result.
6. Sharpen your observational power
7. Use MBE to describe subordinates in different phases.
8. Invite enough participation
9. Expect some people to call you lazy
10. Differentiate between “Big” and  “Little” jobs
11. Don’t be an “Over-the-Shoulder” supervisor
12. Avoid the “organization – man” attitude
13. Expect to work harder but to enjoy it more.

MANAGEMENT BY OBJECTIVES

It is a process whereby the superior and subordinate managers of an enterprise jointly identify its common goals, define each individual’s major areas of responsibility in terms of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members.

                                                                                    -           GEORGE S. ODIORNE

MBO is comprehensive managerial system that integrates many key managerial activities in a systematic manner and that is consciously directed toward the effective and efficient achievement of organizational and objective.

MBO PROCESS

Step – 1:          Set down informally the goals of the enterprise.

Step – 2:          Objective the goal so set out and define measures of performance.

Step – 3:          The goals and sub-goals at all management levels must them be set out.

Step – 4 :         Adjustment in the organization structure.

Step – 5:          The goals to be set at all levels must be joint and agreed ones.

Step – 6:          Continuous feedback from appraisal of internal

                        Goals and the enterprise goal as it is set.

Step – 7:          Appraisal of results proceed continuously against the goals at all levels.

Step – 8:          Review of sub-results throws light on organization results.

Benefits of MBO

1.                  Improvement of managing

2.                  Clarification of organization.

3.                  Encouragement of personal commitment

4.                  Development of effective controls.

Weakness of MBO

1.                  Failure to teach the philosophy of MBO

2.                  Failure to give guidelines to goal setters.

3.                  Difficulty of setting goals

4.                  Emphasis on short-term goals

5.                  Danger of inflexibility

6.                  Other dangers.

DIRECT CONTROL VERSUS PREVENTIVE CONTROL

DIRECT CONTROL:

1.                  Cause of negative Deviations from standards. Un certain, Lac of knowledge, experience or judgment

2.                  Questionable assumptions underlying direct control

• Assumption that that performance can be measured
• Assumption that personal responsibility exists
• Assumption that time expenditure if warranted
• Assumption that mistake can be discovered in time
• Assumption that the person responsible will take.
•                               Corrective steps.

Preventive control

Assumption :

            Qualified managers make a minimum of errors.

            Management fundamental can e used to measure performance

            Application of management fundamentals can be evaluated.

Advantages :

1.                  Greater accuracy

2.                  Encourage self control

3.                  Lighten the managerial burden

4.                  Impressive

Thus control is a very important process through which managers ensure that actual activities confirm to planned activities. It is mainly used to measure progress, to uncover deviations and to indicate corrective action.

TECHNIQUES OF CONTROL

To control the activities in the organization, managers can use variety f tools and techniques. They are broadly grouped under two heads.

1.                  Traditional techniques.

2.                  Modern techniques.

Traditional techniques are those which have long been used by the managers. Some of the important techniques under this heads are budgetary control, financial statement and ratio analysis, auditing, break-even analysis and report writing etc.

“Budgetary control is a process of comparing the actual results with the  corresponding budgeting data in order to approve accomplishments or to remedy differences by either adjusting the budget estimates or correcting the cause of the difference.”

-          GEORGE R TERRY

The different budgets such as production budget, sales budget, overhead budget, labour budget etc. clearly indicate the limits for expenses and also the results to be achieved in a given period. It ensures effective co-ordination of the work of the entire organization. It promotes co-operation and team spirit among the employees

Standard Costing is one of the techniques of cost control and it is being increasingly used by modern business concerns for the purpose of cost reduction and cost control. It involves a comparison of actual with the standards and the discrepancy is called variance.

Break-even analysis is useful in planning and control because it emphasize the marginal cost and benefit concept. It helps to make profit estimation at the different levels of activity, ascertaining turnover for desire profit and estimating the impact of the variations of fixed and variable costs. It magnifies a set of relationships of fixed costs, variable cost, price, level of output and sales mix to the profitability of the organization.

Financial statement analysis such as Found Flow analysis, Cash Flow analysis and Ratio analysis help to know the financial performance and financial position of the business unit. The liquidity, profitability and solvency position of the business unit can be ascertained and efforts can be taken to maintain these factors in an optimum proportion,

Auditing is the process of investigating financial and other operation of a business establishment. It may be carried out by internal and external members. It helps to scrutinizes the applicability and relevance of policy, procedure and method which have a tendency to become obsolete. This it helps in choosing a suitable working procedures and methods.

Adoption of reporting system helps to analyse a particular problem and to take necessary corrective action over it. Reports may be prepared regarding taxation, legislation and its effect on profit, make or buy decisions, replacement f capital equipment, social pricing analysis etc.

A manager can also exercise effective control over his subordinates by observing them while they are engaging in work. Personal observation helps the managers not only in knowing the workers attitude towards work but also n correcting their work and method, if necessary.

Modern Techniques

These are of recent origin, which provide information not readily available with traditional methods. These techniques help to give sharper focus and promise increasingly to improve the quality of control. Program Evaluation Review Technique (PERT) and Critical Path Method (CPM) are two major techniques coming under this head.

PERT has been, developed by an U.S. Office in  1958 in connection with the Polaris Weapon System and is credited with reduction the completion time of the program by two years. CPM has been jointly developed by DUPoint and Remington Rand USA in order to facilitate the control of large, complex industrial projects. These techniques are used to minimize total time, minimize to cost, minimize idle resources etc. It is helpful in solving problems of scheduling the activities of on-time projects. These tools re widely being used in construction industry, planning and launching a new projects, scheduling ship construction etc. It ensures improved management of resources by facilitating better decision making. It aims to have future oriented control mechanism for the organization.

Management Information System provides needed information to each manager at the right time, in right form which aids his understanding and stimulate his action. MIS is a refined form of traditional information collection and supply to the organization points.

Management Audit is an evaluation of management as a whole. It examine the total managerial process of planning, staffing, directing and controlling. To evaluate the management achievement, the organization plans, policies, procedures, organization structure, system of control personnel relation should be measure with its end results.

1.         Budgetary control                               -           Financial performance

2.         Cost control                                        -           Cost performance

3.         Production control                              -           PERT  CPM

                                                                                    Production, performance, quality

4.         Inventory control                                -           Stores function performance

5.         Profit & Loss

            Control ROL control                          -           Overall organizational objective                                                                                             performance.

6.         External audit control                         -           Statutory performance

7.         Management self audit                       -

ESSENTIALS OF EFFECTIVE CONTROL SYSTEM

Control is necessary in every organization to ensure that everything is going properly. Every manager, therefore, should have an effective and adequate control system to assist him in making sure that events conform to plans.

In this tailoring of control system, there are certain requirements which should be kept in mind.

1.                  Reflecting Organizational Needs ;

All control systems and techniques should reflect the jobs they are to perform.

2.                  Forward Looking :

Control should be forward looking. Though many of the controls are instance, they must focus attention as to how future actions can be conformed with plans.

3.                  Promptness in Reporting Deviations

The success of a thermostat lies in the fact that it points the deviation promptly and takes corrective actions immediately.

4.                  Pointing out Exceptions at Critical points :

Control should point exception at critical points and suggest whether action is to be taken for deviations or not.

5.                  Objectives :

The control should be objective, definite and determinable in a clear and positive way.

6.                  Flexible

Control system should be flexible so that it remains workable in the case of changed plans, unforeseen circumstances or failures.

7.                  Economical

Control should be economical and must be worth its costs. Economy is relative since the benefits vary with the importance of the activity, the size of the operation the expense that might be incurred in the absence of control and the contribution the control system can make.

           

8.                  Simple

Control system must be simple and understandable so that all managers can use it effectively.

9.                  Motivating :

Control system should motivate both controller and controlled

10.              Reflecting Organizational Pattern:

The control should reflect organizational pattern by focusing attention on positions in organization structure through which deviations are corrected.

STEPS IN CONTROLLING

The various steps in control process which are necessary for its relationship to planning. This steps may broadly be classified into four parts.

1.                  Establishment of control standards

2.                  Measurement of performance

3.                  Comparison between performance and standards and the communication and

4.                  Correction of deviations from standards

(1)               Establishment of control standards

Every function in the organizations begins with plans which are goals, objectives or targets to be achieved. In the light of these standards are established which are criteria against which actual results are measured.

(2)               Measurement of performance

The second major step in control process is the measurement of performance. The step involves measuring the performance in respect of a work in terms of control standards.

(3)               Comparing Actual and Standard Performance

The third major step in control process is the comparison of actual and standard performance. It involves two steps

-           finding out the extent of deviations and

-           identifying the causes of such deviations.

(4)               Correction of deviations

This is the last step in the control process which requires that actins should be taken to maintain the desired degree of control in the system or operation.

CONTROLLING

Control is any process that guide activity towards some predetermined goals. Thus control can be applied is n any field such as price control, distribution control pollution control etc. Thus control process tries to find out deviations between planned performance and actual performance and to suggest corrective action wherever these are needed. For example terry has defined control as follows :

“controlling is determining what is being accomplish, that is evaluating the performance and, if necessary, applying corrected measures so that the performance takes place according to plan.

Control is checking event performance against pre-determined standards contained in the plans, with a view to ensuring adequate progress and satisfactory performance.

Controlling consists in verifying whether everything occurs inconformity with the plan adopted, the instructions issued and principles established. Its object is to point but weakness and errors in order to rectify them and prevent recurrence.

1.                  Control is forward looking

2.                  Control is both executive process and from the point of view of the organization of the system, a result

3.                  Control is a continuous process.

4.                  A control system is a coordinated – integrated system.

Importance of control

              Thus control is an integrated action of an organization or manager. It offers help in the following directions.

1.                  Adjustment in operations

A control system acts as an adjustment in organizational operations. Every organization has certain objectives to achieve which become the basis for control.

2.                  Policy verification

Various policies in the organization generate the need for control. For organizational functioning, managers set certain policies and other planning elements which later become the basis and reason for control.

3.                  Managerial responsibility

In every organization, managerial responsibility is created through assignment of  activities to various individuals. This process starts at the top level and goes to the lower levels.

4.                  Psychological pressure

Control process puts a psychological pressure on the individuals for the better performance. The performance of the individuals is evaluated in the light of targets set for them.

5.                  Coordination in action

Control system area designed n such a way that they focus not only on the operating responsibility of a manager but also on his ultimate responsibility. This forces a manager to co-ordinate the activities of his subordinate in such a way that each of them contributes positively towards the objectives of the superior.

6.                  Organizational efficiency and effectiveness

Proper control ensures organizational efficient and effectiveness various factors of control, namely, making managers responsible, motivating them for higher performance, and achieving coordination in their performance, control, ensures that their organization works efficiently.

CO-ORDINATION

It is the integration, synchronization or orderly pattern of group efforts in the enterprise towards the accomplishment of objectives.  It may be defined as balancing and keeping the teams together by ensuring a suitable allocation of working activities to the various members and seeing that they are performed with due harmony among the members themselves.

Need for coordination

·                     Systematic sequence of operation

·                     Fulfillment of activities as per planned schedules

·                     Avoidance of interruptions in the operations

·                     Eliminating inconsistencies in objectives and policies

·                     Removal of conflicts among individuals

·                     Developing the team spirit and cooperation.

Advantages of co-operation

1.                  Increases the efficiency, Increases in the productivity, economizing the activities etc.

2.                  Improve the morale of the employees

3.                  Develop  and retain good personnel

Types of co-ordination

1.                  Internal co-ordination. It is the establishment of relationship with a view to coordinate the employees of all the departments. It may be vertical or horizontal.

2.                  Eternal Co-ordination. It refers to establishment or relationship with a view to coordinate the activity of those who are not part of the organization.

Principles of coordination

1.                  Early beginning

2.                  Direct contact

3.                  Reciprocity

4.                  Continuity

Techniques of coordination

“A manager in managing must coordinate the work for which he is accountable by balancing, timing and integrating.

            Balancing                    -                       Support,

            Timing                         -                       Time schedule

            Integrating                  -                       Unification

Problems of coordination

            -           Complex organizational structure

            -           Improper communication

            -           Higher labour turnover

            -           Lack of motivation and morale

            -           Favoritism

            -           Red-tapism

            -           Improper leadership

            -           Weak public relations