Creating and Exchanging Products
The principles and concepts of Marketing
The principles of marketing
The concepts of marketing
- The marketing concept; the concept of marketing has changed and evolved over time. Whilst in today's business world, the customer is at the forefront, not all businesses in the past followed this concept.
- Marketing orientation, having a marketing orientation implies that the manager or organization has accepted the marketing concept and acts according to it; in today's competitive world putting the customer at the heart of the operation is strategically significant. Whilst some organizations in certain industries may follow anything other than the market orientation concept, those that follow the market orientation concept have a greater chance of being successful.
- Satisfying customers' needs and wants, to ensure long-term survival in today's competitive business environment, all hospitality and travel organizations must realize that the key to their existence is the ongoing satisfaction of customers' needs and wants;
- Market segmentation, all customers are not like, it is better to pick out specific groups of people or target markets and market only to them;
- Value and the exchange process, value represents a mental estimate that customers make of a hospitality or travel service's ability to satisfy their needs and wants. Marketing is an exchange process, suppliers of hospitality and travel services trade items of value with their customers.
- Marketing mix, every organization has a marketing mix. It includes the marketing strategy factors that are used to satisfy the needs of specific customer groups.
The role of marketing in travel, tourism industry
Role of marketing mix
Strategic marking plan
- Single-target-market strategy- Select only one target market from several market segments and market exclusively to it. It is popular with smaller and low-market share organisations. The real advantage of this approach is specialisation and giving close attention to a specific market. For example, Linblad Travel concentrates on offering exclusive, luxury tour packages, often to unusual places. Small, regional air carriers serve specific geographic areas with routes and schedules that major airlines find uneconomical. Cinnabon provides an alternative to fast food with a very narrow line of products. Most small, independent restaurants specialize by only serving a well-defined local market. A growing number of travel agencies concentrate exclusively on corporate accounts.
- Concentrated marketing strategy- Select a few target markets from several market segments and concentrate on these. Many big and established organisations use this strategy because upon facing direct competition from competitors, they open up special, high end services that add the personal touch to attract customers. (Alastair M. Morrison, 1989) For example, most independent hotels and resorts use this approach. Face with direct competition from national chains, they provide uniquely designed properties, added services, or personal touches to attract business and pleasure travellers. They offer a single product that serves the needs of several Iodging market segments. In contrast, several leading hotel chains have several different brands of properties that they hope will appeal to most, if not all, market segments.
- Full-coverage marketing strategy- This is the most expensive strategy. Appeal to all markets segments in the total market with a tailor-made approach for each of them. (Alastair M. Morrison, 1989). An example in the industry include major North America airlines that gobbled up smaller national and regional/commuter carriers in the first half of the 1980s. Their objective was to serve all geographic regions with an increased inventory of equipment, personnel, routes, and schedules. In Canada, Pacific Western Airlines created Canadian Airlines International joining with Canadian pacific Air Lines, Eastern Provincial, and Nordair. In the United States, Texas Air absorbed People Express and Eastern.
- Undifferentiated Marketing Strategy- The organisation produces with a very general appeal. Recognize that there are different markets segments, but ignores these differences when marketing. (Alastair M. Morrison, 1989). For example, we mentioned McDonald's claim that almost every U.S. and Canadian resident has eaten at least once at one of their restaurants. McDonald's and other leading fast-food chains use partially undifferentiated marketing strategies. Their national advertising and promotion are designed to appeal to several target markets. Highly standardized, limited-choice menus are provided to meet common away-from-home eating needs. They use heavy television advertising featuring typical customers from all walks of life. We said partially undifferentiated because McDonald's and some of its competitors allow their franchisees to develop local marketing programs. These local advertising, public relations, and sales promotion efforts have a definite geographic target market.
Certain names have been coined for organizations that follow these strategies. Groups adopting the single-target-market approach have become known as nlchers. Organizations using concentrated and full-coverage strategies are often called segmenters. The name typically associated with users of the fourth strategy is comblners. (Alastair M. Morrison, 1989).
Marketing is so basic that it cannot be considered a separate function. Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Marketing is the process associated with promotion for sale goods or services. It is considered a "social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others." It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Marketing is essential to the success of travel, tourism and hospitality industry. Marketing stimulates research and new ideas, resulting in new goods and services. As well as the marketing concepts is practiced by most successful firms today, that is identify consumer needs and then provide products that satisfy those needs, ensuring the firm's long-term profitability.
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Principles of marketing are normative statements about marketing that specify a condition followed by a suggested action (Armstrong and Schultz 1993). The word "normative" simply means explicating a norm, where norm is an authoritative rule. Thus, principles are action steps or rules that are authoritative in the sense that they work in a given situation.
Market concept is achieving organizational goals depends on determining the needs and wants of target market and delivering desired satisfaction better than competitors, creates long term customer relationships, frequently confused with "Selling Concept".
Kotler & Armstrong has further add on that instead of the product-centered "make and sell" philosophy, marketing concept is customer-centered "sense and respond" philosophy. Therefore, it is not about finding the right customer to like the product but instead, it is delivering the right product which the customer needs and wants. Figure 1 below shows the difference in contrast between the marketing and selling concept. According to Kotler, the sales concepts takes an inside-out perspective, starting from existing products and calls for heavy selling with promotion, achieve profits for the company. On the other hand, the marketing concepts starts with a well-defined market, focus on customers needs, and integrate all the marketing activities that affect customers. It meets the organizational goals by creating long-term customers' loyalty based on value and satisfaction. (Philip Kotler, 1999)
The marketing concept means that an organization aims all its efforts at satisfying its customers at a profit. There are six core principles of marketing:
The role of marketing differs in different organization. But generally, they follow a guideline which is to sell their products in a more efficient way in order to increase their profits. Therefore, role of marketing is a factor affecting the aspects of marketing.
Marketing is the process of interesting potential customers and clients in your products and/or services. The key word in this marketing definition is "process"; marketing involves researching, promoting, selling, and distributing your products or services. It's a huge topic, which is why there are tomes written on marketing, and why you can take a four-year marketing degree. But essentially marketing involves everything you do to get your potential customers and your product or service together.
At times, the roles of the marketing personnel staff may overlap with other departments such as carrying out research, new-product planning, inventory management and etc. Things get complicated in this case and therefore outlining the activities of the staff is important. To efficiently utilize its manpower and resource, the upper management of marketing department must allocate roles and responsibilities even out and set datelines to accomplish objectives. The larger the marketing's role is, the greater the likelihood of the company having an integrated marketing organization. And the smaller the marketing's role is, the greater the possibility of the company undertaking marketing activities on a project, crisis, or fragmented basis.
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In Singapore, Singapore Tourism Board (STB) manages all activities concerning this industry. They have shown the importance of marketing due to the outstanding results over the years before the economic recession in 2008 took place. Statistics provided by STB have shown an increase in visitor arrivals of 35.9% in 2004, 7.4% in 2005, 9% in 2006, and 5.5% in 2007.
STB has empowered their staffs by expanding out to oversea countries such as America, Europe, Greater China, North Asia and other South Asia, Middle East & Africa. It has stated that '[t]he ROs undertake the entire range of tourism functions from tourism marketing to investment promotion. They work together with in-market industry partners to promote Singapore to our overseas consumers, facilitate tourism companies in investment plans and business alliances, monitor competitive activities and support the development of bi-/multi-lateral agreements.' (STB 2008) Staffs are able to experience how to work with people of different cultures and at the same time, training and developing talents.
The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Seven P's, the marketing mix elements are price, place, product, promotion, people, physical evidence, and process.
As stated by Wearne & Baker (2002, p. 41), it is a mixture of strategies that is used by the management to produce a marketing plan. It looks into the different aspects of the components and provides valuable information to the company by carrying out marketing research and analysis. This information consists of market segmentation, market targeting, insights into the competitors' vulnerability and weaknesses, and needs and wants of customers. After which the company will develop strategic marketing plans and implement them to provide superior customer service
Components of marketing mix
Marketing professionals and specialist use many tactics to attract and retain their customers. These activities comprise of different concepts, the most important one being the marketing mix. There are two concepts for marketing mix: 4P and 7P. It is essential to balance the 4Ps or the 7Ps of the marketing mix. The concept of 4Ps has been long used for the product industry while the latter has emerged as a successful proposition for the services industry.
It must provide value to a customer but does not have to be tangible at the same time. Basically, it involves introducing new products or improvising the existing products.
Price is critical marketing mix element; sine affordability constitutes an important pull factor in drawing tourists to particular destinations. Airlines, attractions and hotel commonly reduce their prices until d desirable level of occupancy is achieved, given the profit implications empty seats or rooms for products that have high fixed cost. Given the importance of price in a high fixed cost environment, it is important for tourism managers to be aware of the pricing techniques that can be employed by businesses. Destination managers might possibly influence those prices through tax concession, grants, regulations and other means but cannot by themselves determine the pricing structure. The pricing techniques can be separated into four main and largely self-explanatory categories as follows. (Weaver, D & Lawton, L, 2006)
It refers to the place where the customers can buy the product and how the product reaches out to that place. This is done through different channels, like Internet, wholesalers and retailers.
It includes the various ways of communicating to the customers of what the company has to offer. It is about communicating about the benefits of using a particular product or service rather than just talking about its features. And this also includes advertising, sales promotion, including promotional education, publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.
People refer to the customers, employees, management and everybody else involved in it. It is essential for everyone to realize that the reputation of the brand that you are involved with is in the people's hands. The service personnel issue was considered earlier under the topics of inseparability and variability, which demonstrated the critical role of highly trained employees at the consumer/product interface. The importance of fostering tourist sensitivity and awareness wad also stressed, since inappropriate tourist behaviour can reduce the quality of the product for all participants. For many destinations, the local residents also fall into the category of product, sine tourists may be attracted by the culture and hospitality of the resident population. Again, tourism managers can attempt to control public behaviour towards tourists through education programs, but there is very little that can be done in the way of quality control if some local residents maintain a hostile attitude, unless this is expressed in unlawful activities. (Weaver, D & Lawton, L, 2006)
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It refers to the methods and process of providing a service and is hence essential to have a thorough knowledge on whether the services are helpful to the customers, if they are provided in time, if the customers are informed in hand about the services and many such things.
Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation. Services are quite abstract and it is difficult for customers to judge real quality. Good physical evidence is likely to make your customers feel they are getting a quality service. For example it is hard for the potential customer to imagine a service will be good if it the descriptive leaflet is poorly written designed and printed.
It refers to the experience of using a product or service. When a service goes out to the customer, it is essential that you help him see what he is buying or not. For example- brochures, pamphlets etc serve this purpose.
Strategic planning in marketing is a systematized way of relating to the future. It is an attempt to manage the effects of external, uncontrollable factors on the firm's strengths, weaknesses, objectives and goals to attain a desired end. Further, it is a commitment of resources to a country market to achieve specific goals. In other words, planning is the job of making things happens that may not otherwise occur. (Cateora, 1993)
The strategy market planning process is also based on analysis of the broader marketing environment. Marketing environment forces can place constraints on an organization and possibly influence its overall goals. They also affect the amount and types of resources that a business can acquire. However, these forces can create favorable opportunities as well opportunities that can be translated into overall organizational goals and marketing objectives (Peter & Donelly, 2004).
To develop a strategic marketing plan based on the preparation of all the objectives of the organization, it must remain in the organization's scope of opportunities and resources and to assess their opportunities and the development of the overall strategies. Marketing goals, we must in the design, so that their achievement will help the company's overall strategy, so that they can through the effective use of the company's strategy to complete.
According to Alastair M. Morrison, there are four different types of market focus in hospitality and travel organizations.
Armstrong and Schultz, 1993. Marketing textbooks.
Philip Kotler, 1999, Marketing for hospitality and tourism. 2nd edition, Prentice Hall, New Jersey
Weaver, D & Lawton, L, 2006, Tourism Management 3rd edition, Wiley, J & Sons, Australia
Philip R. Cateora,1993, International Marketing, 8th edition, Richard D. Irwin INC
Peter, J.P & Donelly, J.H, 2004, Marketing Management Knowledge and Skills 7th edn, McGraw-Hill, Americas
Alastair M. Morrison, 1989, Hospitality and Travel Marketing, 1st edition, Delmar, New York
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