What is marketing?
An organization procures resources from the
environment at a cost. It arranges for the utilization of these resources to
produce goods and/or services. These are offered to consumers in the
environment, who avail of these outputs and experience satisfaction there from.
The
procurement and utilization of resources is done through processes and
practices relating to finance, personnel, production, materials, ancillaries,
vendors and so on. All these processes, practices and activities relating to
the production of the output have no justification, if the consumer, who avails
of the output, is not satisfied with it.
The consumer will then not buy what is
offered as output. To win keep a customer is the purpose of all organizations.
The customer is therefore, central to an organization’s purposes. Marketing
links the customer, who is the core, to processes, practices and activities.
Marketing and Decision Making Processes
Marketing looks at the decision making
processes of both the producer and the customers. It tries to bring these two
processes together in an exchange transaction. If there is no exchange, there
is no marketing activity. If the exchange is by compulsion, then again, there
is no marketing.
Marketing is relevant only when there is
freedom of decision on the part of both producers and customers. An organization
has to create, produce and deliver goods and services that customers value and
want at prices which are relatively attractive-particularly when compared with
competition.
For example, an owner of a big hall can make
money by renting it out for marriage purposes. The person hiring it also needs
at the same time, a decorator, a caterer, and so on. If the hall owner can make
arrangements for these also as part of a single package, he is enhancing the
value of his offer and providing greater satisfaction.
Marketing helps to:
• Add value, by finding a better match
between the product and needs.
• Reduce wastage, which would otherwise
occur if the product is not needed or production does not match demand.
• Improve effectiveness of communication
through b etter targeting of messages.
• Cut costs, through more effective distribution
arrangements.
• Improve better understanding between
marketer and customer because of increased contracts.
The concepts of marketing were developed in
relation to consumer goods. These concepts are however relevant to services as
well. Whether goods or services.
Consumer does not buy a product for its
technical features or for what it can do. He buys for the benefits that can be
derived there from. He buys a cluster of values which are intangible. For
example, a shirt is not bought only because of consideration of comfort,
exclusiveness or to appear 'macho'. All these are vague thoughts, difficult to
evaluate and of different importance to different people.
Marketing may not have much of a role in a
controlled economy in cases where the consumer has no options or in conditions
of scarcity.
Relevance of Marketing Concepts
Marketing concepts are relevant even in the
absence of competition.
A monopoly producer also has to generate
revenue through sales. Sales will not increase through increased production if
the:
• Existence of the product is not known
• Need for the product is not felt
• Price is not considered appropriate to
value
• Product is not available at convenient
place or times.
A felt need attracts the customer to the
product, enhances its value and provides satisfaction. This leads to an
increase in sales.
Marketing
Mix
Marketing concepts had been originally
developed in the context of tangible consumer goods.
The main elements of a marketing programme
are conceptualised in terms of four (4) Ps-Product, Price, Promotion and Place.
It is by marketing adjustments and changes in one or more of these four (4) Ps
that the attractiveness to the customer could be strengthened.
These four elements are known as the
marketing mix.
The marketer could mix these in different
ways for maximum effectiveness, like a chef mixes the same ingredients in
different ways to achieve high levels of satisfaction.
In the case of services, three additional Ps
are included in the marketing mix. These are People, Process and Physical
Factors. Services are performed by people and they constitute an integral part
of the service product.
The process of performing the service
corresponds to the process of production of goods. But in the service business,
the process is in operation at the time of consumption by the customer. He is
part of the process of production the way the process is managed affects the
satisfaction experienced by each consumer. Process, like people, is an integral
part of a service product. Services are bought and rendered mostly in the premises
of the service producer and rarely in the customer's premises.
In case of tourism a customer has to go to a
destination. The physical surroundings add to the tourists' satisfaction.
Hence, decor, sounds, colour, artifacts, layout etc. At the premises where the
services are rendered need a careful attention. Each of the elements in the
marketing mix is important and has an influence on the customer. None of them
can be ignored.
However, the marketer has a choice of
concentrating on one or more of the elements to create the necessary impact on
the market. We will deal with promotion later. The other Ps applies differently
to the variety of products that together constitute the tourism product.
Segmentation and Target Market
The term 'market' refers to the collective
of existing and prospective customers for the product. A hotel may be used by
people who need to stay outside their usual residence. A person may have no
such need but if such a need arises later, he is a prospective customer. Part
of the marketing effort is aimed at such prospective customers in the hope that
whenever the need arises in future, they will choose to buy the marketer's
hotel services. There are however limitations. For example, all persons who
need to stay outside are not prospective customer for the 5-star hotel users.
Such parts are called segments of the market.
The customers of a hotel are those who come
to stay as well as users of other facilities. They are different groups and
each group constitutes different segments in the sense that segmentations are
possible on the basis of lunch time users and late night users of the
restaurants because they need different kinds of service. In the swimming pool,
some hotels permit training classes. The segments using the pools for training
are different from regular guests in terms of age, behavior, attention
required, hours spent in the pool or nearby, cleanliness demanded and so on.
A segment is discrete, identifiable, viable
and appropriate.
It is distinguished by characteristics of
purpose, needs, motivation, benefits and behavior. Segmentation is usually done
on the basis of one or more of the following characteristics:
• Geographic-like region, district, density
of population, climate, urban-rural.
• Demographic like family size religion sex
income occupation language education.
• Psychographic like value systems, life
styles, personality types.
• Buying behavior like volumes, frequency,
delivery requirements, negotiated contracts (for long term arrangements).
The tourist market may be segmented on the
basis of:
• Place or origin of tourists
• Destination
• Purposes of tour like holiday, pilgrimage,
sightseeing, shopping, etc.
• Economic status and spending tendencies.
• Demographic characteristics like age, sex
occupation and attitudes.
• Preferences for staying like camping,
luxury hotels, caravans, etc
• Preferences of travel like air, sea, road
or rail. Each segment of the market differs in terms of needs and expectation.
No one .7"' organization can cater for the needs of all the segments. Each
organization has to decide on the particular segment or segments it would cater
to.
The segment so identified is called the
target segment. The identification has to be made on the basis of what the organization
identifies as its objectives and its capabilities.
Having identified the target market all
activities will have to be planned and executed keeping this target market in
mind.
The service being offered, the messages in
communication, the media used for communication, the pricing policies, the
arrangements to access the service, all have to be consistent with preferences
and behavior patterns of the target market. For example, if the hotel is
targeting on the domestic tourists in the circuit of religious places, there
would be little point in advertising in business magazines or providing foreign
cuisine in the restaurant. Simple vegetarian food would perhaps be more
satisfying to its patrons.
The
Service Product
A product is something that a producer makes
and offers to consumers to provide satisfaction of the needs.
Service products are different from goods in
five major characteristics i.e.:
1. Intangibility
2. Inseparability
3. Heterogeneity
4. Perishability
5. Ownership.
1. Intangibility
While goods are tangible in the sense that
they have physical dimensions and attributes and can be seen, felt, or tasted,
services are intangibles. Take for example, and educational institution. One
can see or verify the building in which it is located, the facilities within
etc. But none of these determine the nature and quality of the education
imparted by that institution. The product (or education) provided is to be
evaluated in terms of the development of the knowledge, intellect and character
of the alumni. This development may be perceived, but cannot be measured.
Hence, this critical factor that constitutes education and the output from the
institution is intangible.
One cannot see, feel, smell, touch or
measure a service performed. It can only be experienced from the effects
produced. When a doctor examines a patient and makes a decision about diagnosis
and treatment, what he does is to tap the chest, hear the sounds, and read the
instruments (or reports). That is not what he is paid for. He is paid for his
knowledge, his experience, his training, the meaning that he makes of what he
feels, hears and reads and the remedy he prescribes. This application of
knowledge and making./ of meaning is intangible. If the patient is cured, the
effect of the service is experienced as good. Otherwise, it is experienced as
bad. It does not matter what the doctor's qualifications may be.
The characteristic of intangibility lies on
a continuum with pure goods at one end and pure services at the other, with
most products lying away from the two extremes. Similarly, services can be
distinguished between "pure intangible" (education, information,
consultancy) services which add value to a tangible product (laundry, decor)
and services that make available tangible product (retailing, financing).
2. Inseparability
A physical item is produced in a factory,
bought in a shop and consumed in the customer's premises at his convenience.
But when one buys a service like a courier or a doctor, the production and
consumption of the service takes place at the same time.
The service product being an intangible, as
experienced by the customer, exists only during the experience and that is when
it is produced as well as consumed or used. The service in a restaurant is the
courtesy of the waiter.
Courtesy is, as the customer perceives it,
at the time of behavior, not before or after. It is produced by the waiter and
consumed by the customer simultaneously.
Hence, the production and consumption cannot
be separated. Education takes place in the interaction of the teacher and the
student. Both teaching (production) and learning (consumption) happen together.
If there is no learning, there is no teaching. Hence, the product exists only
when the consumption takes place.
In a class of many students, a teaching
session of one hour may cause different levels of learning among the students.
What the teacher did in that one hour is the same but each student received it
differently. The product of teaching was different to each student, depending
on the nature of his consumption (learning). Hence, the product was received
with varying consumption levels.
3. Heterogeneity
Because of the factor of inseparability it
is not possible to produce a service in advance according to specified
standards. Both production and consumption being by humans, the product of
service as experienced, may not be of consistent quality. What is
"excellent" to one, may not be so to another. In a conducted tour or
in a restaurant, the service quality is also influenced by the behavior of the
companions. Yet, the dissatisfaction experienced is not always attributed to
the companions, but to services providers. An optician sells glass to correct
vision. But what is bought by the customer is not merely better vision, but
also fashion and appearance.
An optician who is technically good at
determining the proper refractive index of corrective glasses has to enhance
his service with a big range of frames and tints of glasses which the consumer
can try out on his face.
The service must also include speed of
delivery, depending on the urgency of the consumer.
The customer may need help in making choices
of frame and glass. A choice cannot be made from a catalogue. The choice
depends on the "fit" of the frame to the face of the customer as seen
by the customer himself.
4. Perishability
The demand for crackers is very high during
the New Year season. A manufacturer of crackers makes them well in advance of
the season, stocks them at various places, and sells the whole stock during the
season. If the goods are not consumed while being produced, they can remain in
stock till the consumers are available. The crackers do not perish during
storage. They retain their full valued vegetables, though perishable over time
can also be stocked for subsequent consumption through processes like
refrigeration and canning.
But the supply of services cannot be stored.
If an advertisement is not seen or read, it dies. It has gone waste. If the
available seats in a cinema are not used during a show, they cannot be added on
to the next show. If the supply is not used, it perishes. So also the seats in
an aircraft or rail car, the rooms in a hotel, the space in a ship, and the
services of a tourist guide, the time of a consultant etc. All perish if not utilized
when available. The loss of revenue cannot be made up. What is not sold cannot
be carried forward as stocks to be sold the next day or at any other time.
The ability to carry stocks gives the
manufacturer of goods some level of stability in his operations despite
fluctuations in demand. If the supply is short at any time, he can arrange
deferred deliveries. The consumer also can buy and store till he is ready to
consume. The stability in operation helps to improve recovery of costs. Such
stability is not possible for the producer or services because of the
characteristic of perishability. For example, if an airline has only 20 per
cent occupancy, the costs of operation do not come down to 20 per cent.
5. Ownership
No ownership passes from seller to buyer in
a service. The buyer only acquires the right to certain benefits of what the
seller offers. One may have the right to use a hotel room or a railway berth
for a period of time, but the ownership of the room or remains with the hotel
or the railways. Similarly, a doctor offers services. 'There is no tangible
good that he produces or offers. He uses knowledge which is intangible and
prescribes treatment which may be satisfying. The treatment may or may not
involve medicines. The ownership of the knowledge of the doctor does not pass
on to the patient, but the patient (customer) is entitled to the benefits of
that knowledge. However, in the case of goods the ownership passes on to the
buyer.
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