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Demand Management
Most people think of marketing management as finding enough customers for the company's current output, but this is too limited a view. The organization has the desired level of demand for its products. At any point in
time, there may be no demand, adequate demand, irregular demand, or too much
demand, and marketing management must find ways to deal with these different
demand states.
Marketing management is concerned not only with finding and increasing demand but also with changing or even reducing it. For example, Disney World is badly overcrowded in the summertime, and power companies sometimes have trouble meeting demand during peak usage periods. In these and other cases of excess demand, the needed marketing task, called demarketing, is to reduce demand temporarily or permanently. The aim of demarketing is not to destroy order, but only to reduce or shift it. Thus, marketing management seeks to affect the level, timing, and nature of demand in a way that helps the organization achieve its objectives. Simply put, marketing management is demand management
Marketing management
The analysis, planning, and implementation of arid control of programs designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.
Remarketing Marketing
To reduce demand temporarily or permanently - the aim is not to destroy
demand but only to reduce or shift it.
• Building Profitable Customer Relationships and Managing demand
means managing customers. A company's demand comes from two groups: new customers and repeat customers. Traditional marketing theory and practice have focused on attracting new customers and making sales. Today, however, the emphasis is shifting. Beyond designing strategies to attract new customers and create transactions with them, companies are now going all out to retain current customers and build lasting customer relationships. Why the new emphasis on keeping customers? In the past, companies facing an expanding economy and rapidly growing markets could practice the leaky bucket' approach to marketing. Growing markets meant a plentiful supply of new customers. Companies could attract new customers without worrying about losing old customers. However, companies today are facing some new marketing realities.
Changing demographics, a slow-growth economy, more sophisticated competitors, and overcapacity in many industries - all of these factors mean that there are fewer new customers to go around. Many companies are now fighting for shares of flat or fading markets. Thus, the costs of attracting new customers are rising. In fact, it costs five times as much to attract a
new customer as it does to keep a current customer satisfied.7 Companies are also realizing that losing a customer means more than losing a single sale -
it means losing the entire stream of purchases that the customer would make over a lifetime of patronage. For example, the customer lifetime value of Ford customers might well exceed £250,000. Thus, working to retain customers makes good economic sense. A company can lose money on a specific transaction but benefit greatly from a long-term relationship.
Attracting new customers remains an important marketing management task.
However, the focus today is shifting toward retaining current customers and building profitable, long-term relationships with them. The key to customer retention is superior customer value and satisfaction.
Marketing Management Philosophies
We describe marketing management as carrying out tasks to achieve desired exchanges with target markets. What philosophy should guide these marketing efforts? What weight should be given to the interests of the organization,
customers, and society? Very often these interests conflict. Invariably, the organization's marketing management philosophy influences the way it approaches its buyers. There are five alternative concepts under which organizations conduct their marketing activities: production, product,
selling, marketing, and societal marketing concepts.
The Production Concept
The production concept holds that consumers will favor products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency. This concept is one of the oldest philosophies that guides sellers.
The production concept is a useful philosophy in two types of situations. The first occurs when the demand for a product exceeds the supply. Here, management should look for ways to increase production. The second situation occurs when the product's cost is too high and improved productivity is needed to bring it down. For example, Henry Ford's whole philosophy was to perfect the production of the Model T so that its cost could be reduced and more people could afford it. He joked about offering people a year of any color as long as it was black. Today, Texas Instruments (Tl) follows this philosophy of increased production and lower costs in order to bring clown prices. The company won a big share of the hand calculator market with this philosophy. However, companies operating under a production philosophy run a big risk of focusing too narrowly on their own operations. When Tl used the same strategy in the digital watch market, it failed. Although TT watches were priced low, customers did not find them very attractive.
In its drive to bring down prices, Tl lost sight of -something else that its customers wanted - namely, attractive, affordable digital watches.
The Product Concept
Another important concept guiding sellers, the product concept holds that consumers will favor products that offer the most quality, performance, and innovative features and that an organization should thus devote energy to making continuous product improvements. Some manufacturers believe that if
they can build a better mousetrap, the world will beat a path to their
door." But they are often rudely shocked. Buyers may well be looking for a better solution to a mouse problem, but not necessarily for a better mousetrap. The solution might be a chemical spray, an exterminating service, or something that works better than a mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices
it attractively; places it inconvenient distribution channels; brings it to the attention of people who need it, and convinces them that it is a better product.
Product orientation leads to an obsession with technology because managers believe that technical superiority is the key to business success. The product concept also can lead to 'marketing myopia'. For instance, railway management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and cars. Building bigger and better trains would not satisfy consumers' demand for transportation, but creating other forms of transportation and extending choice would.
The Selling Concept
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| Marketing Management |
These are usually poor assumptions to make about buyers. Most studies show that dissatisfied customers do not buy again. Worse yet, while the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others about his or her bad experiences.
Production concept
The philosophy is that consumers will favor products that are available and
highly affordable and that management should therefore focus on importing
production and distribution efficiency
Product concept
The idea that Cal will favor products that offer the most quality,
performance, and features, the organization should, therefore, devote its
energy to making continuous produce improve merits.
The Marketing Concept
The marketing concept holds that achieving organizational goals depends on determining the needs and wants of the target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. Surprisingly, this concept is a relatively recent business philosophy.
The selling concept and the marketing concept are frequently confused. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company's existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses on customer conquest - getting short-term sales with little concern about who buys or why. In contrast, the marketing concept takes an outside-in perspective. It starts with a well-defined market that focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating long-term customer relationships based on customer value and satisfaction. Under the die marketing concept, companies produce what consumers want, thereby satisfying consumers and making profits. Many successful and well-known global companies have adopted the marketing concept. IKEA. Marks & Spencer,
Procter & Gamble, Marriott, Nordstrom, and McDonald's follow it faithfully.
Marketing concept
The marketing management philosophy holds that achieving
organizational goals depends on determining the needs and wants of target
markets and delivering the desired satisfactions more effectively and
efficiently than competitors do.
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