Transcript Five approaches to the market

The Role of Marketing in Agribusiness Firm
Dr.Jangkung Handoyo Mulyo,MEc.
Laboratory of Food and Agricultural Policy
Department of Agricultural Economics
Gadjah Mada University
Background…
Nowadays marketing has become more
sophisticated in response to the
changing economic situation.
 Therefore, the more sophisticated
approach to marketing is needed by
agribusiness firms in order to compete
successfully in today’s more demanding
marketplace.
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Five approaches to the market…
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1. The Production Approach
One of the oldest concepts guiding sellers.
Consumers will favor those products that are
widely available and low in cost.
Managers of production-oriented
organization concentrate on achieving high
production efficiency and wide
distribution coverage.
Five approaches to the market:
The Production Approach
 Two types situations:
 a) demand for a product exceeds
supply. Therefore customers are more
interested in obtaining the product
than in its fine points. The suppliers
will concentrate on finding ways to
increase production.
 b) Product’s cost is high and has to be
brought down through increased
productivity to expand the market.
Five approaches to the market:
The Production Approach
 “get-out the production, cut the
price”…>> Henry Ford’s philosophy.
•
to expand the automobile market
• Texas Instrument
• Some Japanese companies
 Marketing means “bringing down the
price to the buyers”.
Five approaches to the market:
The Product Approach
Consumer will favor those products that
offer the most quality, performance, and
features.
Managers focus their energy on making
good products and improving them over
time.
Managers assume that buyer admire wellmade products, can appraise product quality
and performance, and are willing to pay
more for product “extras”.
The product concept leads to “marketing
myopia”, an undue concentration on the
product rather than the need (of costumers).
Five approaches to the market:
The Selling Approach
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Consumers, if left alone, will ordinarily not buy
enough of the organization’s products.
The organization must therefore undertake an
aggressive selling and promotion effort.
Most firms practice selling concept when they
have overcapacity.
Their aim is to sell what they make rather than
make what they can sell.
Selling, to be effective, must be preceded by
several marketing activities such as need
assessment, marketing research, product
development, pricing, and distribution.
Five approaches to the market:
The Selling Approach
 Indeed, marketing based on hard selling
carries hard risks. It assumes that customers
who are coaxed into buying the product will
like it; and if they don’t, they won’t badmouth it to friends or complain to customer
organizations. And they will possibly forget
their disappointment and buy it again. These
are indefensible assumptions to make
about customers.
 One study showed that disappointed
customers bad-mouth the product to eleven
acquaintances, while satisfied customers may
good-mouth the product to only three.
Five approaches to the market:
The Marketing Approach
The key achieving organizational goals consist
in determining the needs and wants of
target markets and delivering the desired
satisfactions more effectively and
efficiently than competitors.
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Need is a state of felt deprivation of some basic
satisfaction.
Wants are desires for specific satisfiers of these
deeper needs.
Demands are wants for specific products that are
back up by purchasing power.
Five approaches to the market:
The Marketing Approach
Several expressions in marketing
approach:
Find wants and fill them
Make what will sell instead of trying
to sell what you can make
Love the customer and not the
product
To do all in our power to pack the
customer’s dollar full of value,
quality, and satisfaction
Starting point
Focus
Means
Ends
Factory
Product
Selling
Profits through
Promotion
A. The selling concept
Market
sales volume
Inside-out perspective
Customer
Coordinate
Profit through
needs
marketing
customer
satisfaction
B. The marketing concept
Outside-in perspective
Five approaches to the market:
The Marketing Approach
Market Focus:
No company can operate in every
market and satisfy every need
Companies do best when they define
the boundaries of their markets
carefully.
 They do best when they prepare a
tailored marketing program for each
target market.
Five approaches to the market:
The Marketing Approach
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Customer Orientation:
Requires the company to carefully define
customer needs from the customer point of
view, not from its own point of view.
To satisfy the customer is important because
a company’s sales each period come from
two groups: new customers and repeat
customers.
It is always most costly to attract new
customers than to retain current
customers.
Five approaches to the market:
The Marketing Approach
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Customer Orientation:
Customer retention is more critical than
customer attraction. The key to customer
retention is customer orientation.
A satisfied customer:
Buys again
Talks favorably to others about the company
Pay less attention to competing brands and advertising
Buys other products that the company later adds to its
line
Five approaches to the market:
The Marketing Approach
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Coordinated marketing:
2 meaning of coordinated marketing:
• The various marketing function (sales force,
advertising, marketing research, etc) must
be coordinated among themselves.
• Marketing must be coordinated with the
other department in the company.
Marketing does not work when it is merely
a department; It only works when all
employees appreciate how they impact on
customer satisfaction.
Five approaches to the market:
The Marketing Approach
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Profitability:
The purpose of the marketing concept is to help
organizations achieve their goals.
In the case of private firms, the major goal is profit. In
the case of non profit and public organizations, it is
surviving and attracting enough funds to perform their
work.
A marketing department does not assure a market
oriented company. The company has marketing
operations, and yet it may fail to see the big picture
and adapt to changing consumer needs and changing
competition.
Five approaches to the market:
The Marketing Approach
Most companies do not really grasp or
embrace the marketing concept until driven to
it by circumstances:
1) Sales decline. When companies experience
falling sales, they panic and start looking for
answer.
2)Slow sales growth.
3)Changing buying pattern.
4)Increasing competition.
5)Increasing market expenditure.
Evolving View of Marketing’s Role in the Company
Pd
Pd
Fin
Pd
Fin
Mkt
Prs
Mkt
Prs
Mkt as equal funct
Initially marketing is
seen as one of
several equally
important business
function in a-check
and balance
relationship
Mkt
Mkt as more
importnt funct
A dearth of demand
then leads
marketers to argue
that their function is
somewhat more
important than the
others
Prs
Fin
Mkt as major funct
A few marketing go
enthusiast, say mrkt
is the major funct. of
enterprise. They put
mkt at the center,
other as support
functions
Evolving View of Marketing’s Role in the Company
Pd
Fin
Pd
Cst
Mkt
Prs
Customer as control
function
This view anger the other
managers. Marketers
clarify by putting customer
rather than marketing at
the center of the company
Mkt
Cst Mkt
Mkt
Fin
Prs
Cust as contrl function, and
mkt as integrating function
Some marketers say that
marketing still needs to
command a central company
position if customers’ needs
are to be correctly interpreted
and efficiently satisfied
Evolving View of Marketing’s Role in the Company
Pd
Pd
Pd
Fin
Fin
Mkt
Prs
Mkt
Prs
Mkt
Prs
Mkt as more
importnt funct
Mkt as equal funct
Mkt as major funct
Pd
Fin
Pd
Cst
Mkt
Prs
Cust as control funct
Fin
Mkt
Cst Mkt
Mkt
Fin
Prs
Cust as contrl function, and
mkt as integrating function
Five approaches to the market:
The Societal Marketing Approach
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In recent years, some people have
questioned whether the marketing
concept was an appropriate organizational
philosophy in an age of environmental
deterioration, resource shortage,
explosive population growth, world
hunger, and poverty and neglected social
services.
The question is whether companies that
do an excellent job of sensing, serving,
and satisfying individual consumer wants
are necessarily acting in the best long-run
interest of consumers and society.
Five approaches to the market:
The Societal Marketing Approach
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The marketing concept sidesteps the potential
conflicts between consumer wants,
consumer interests, and long-run societal
welfare.
Fast-food hamburger (tasty but not nutritious food,
high-fat content).
Soft-drink industry (convenience way but great waste,
not biodegradable)
Detergent (whiter clothes but offering a product that
polluted rivers and stream, killed fish, and injured
recreational opportunities).
Five approaches to the market:
The Societal Marketing Approach
 The
societal marketing concept
calls upon marketers to balance
three considerations in setting
their marketing policies, namely:
 Company profit
 Consumer want satisfaction
 Public interest
Five approaches to the market:
The Societal Marketing Approach
Company profits
Societal
Marketing
Approach
Marketing Mix
 “ the set of marketing tools that the firm uses to
pursue its marketing objectives in the target market”
 McCarthy: Four Ps, product, price, place (distribution)
and promotion.
 Target market:
The relatively homogeneous group of consumers
whose unmet needs the firm hopes to fill efficiently,
effectively, and profitably.
 Product:
The firm must develop the right product to give
maximum satisfaction to the members of the target
market.
Marketing Mix
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Price:
The right product must carry the right price
in light of market condition.
Place:
The right product, at the right price, must
be in the right place to be purchased by the
members of the target market.
Promotion:
Telling the members of the target market in
the right way that the right product, at the
right price is available at the right location.
Marketing Mix
Quality
Features
Channel
Coverage
Options
Style
Brand name
Product
Place
Location
Inventory
Packaging
Transport
Size
Target market
Service
Warranties
Price
Promotion
List price
Advertising
Discount
Personal selling
Payment period
Sale promotion
Credit terms
Public relation
Marketing management…
 Marketing
management is the planning,
organizing, controlling, and directing of all
the firm’s business activities that help satisfy
consumer demands and help the firm
accomplish its goal of maximizing its long-run
profits.
 Besides marketing to current customers,
marketing managers are always looking for
new market opportunities, new consumers,
and better ways to meet customer needs.