Chapter 2 Human Resource Planning & Strategy - Ibrahim … · Ibrahim Sameer (MBA ... to buy...

Ibrahim Sameer (MBA - Specialized in Finance, B.Com – Specialized in Accounting & Marketing)

THE DEVELOPMENT OF MARKETING

It would be a mistake to think that marketing is a

phenomenon of the 20th century. Its origin can be

traced back to early civilisation. When communities

began to specialise they produced surpluses in certain

products which they then sought to exchange with

other communities.


The Industrial Revolution

Prior to the 17th century and the start of the Industrial

Revolution, producers and merchants tended to

operate on a small scale, concentrating their

operations in very localised markets.


The Industrial Revolution (cont…)

However the Industrial Revolution brought with it

advances in technology and production techniques

which meant new processes, greater output and a

transformation of the British economy away from its

dependence on agriculture to one of industrial

production.


The 20th Century

Improvements in technology and production

processes meant that the 20th century witnessed a

transition from a production society to a consumption

society.


The 20th Century (cont…)

Service industries such as banking and hospitality grew

substantially in the latter half of the century. Increasing

competition, not simply local or regional but national and

international, meant that the problem became no longer

one of supply but of anticipating demand.


The 20th Century (cont…)

Towards the end of the 20th century the invention of

the internet had a major impact on businesses and the

way customers purchased products. Customers had

wider access to products and services,


Today

All kinds of industries are now engaged in an intense

struggle to establish customer preference in favour of

their products over those of the competition.


Today (cont…)

Rather than wait for orders tocome to them, the

industry must go out and manage demand for its

products by winning customers and also, importantly,

retaining customers by building customer loyalty.


Today (cont…)

For many, this process was the start of the marketing

era and out of it many modern marketing practices

were born. Advertising appeared as a means of

stimulating sales.


Today (cont…)

Brandingand packaging were developed as a way of

saying something about the quality of the product.


Today (cont…)

Sales forces were introduced rather than relying

solely on the merchants to find and develop new

markets for their products, while products themselves

were developed to better satisfy customer needs.

WHAT IS MARKETING? "Marketing is a human activity directed at satisfying

needs and wants."

WHAT IS MARKETING? "The management process responsible for identifying,

anticipating and satisfying customer requirements

profitably."

THE STRATEGIC ORIENTATION OF BUSINESS

The different approaches to markets are referred to as

Strategic Business Concepts or Strategic Business

Orientation. There are only really four different types as

outlined below:

1. Production concept (or production orientation)

2. Product concept (or product orientation)

3. Sales concept (or sales orientation)

4. Marketing concept (or marketing orientation).

Production Concept A company following the production concept is

operating on the idea that the more you can produce

the more you can sell. Managers assume that

customers are only interested in the availability of

products and low prices and that marketing is not

necessary. This may or may not be true.

Production Concept

In the nineteenth and early twentieth centuries, the

primary purpose of all business and industrial activity

was thought to be production. Manufacturers were

in a “supplier’s market” and were faced with a virtually

insatiable demand for anything that could be

produced.

Production Concept

Henry Ford made a famous statement when he

produced his first production line Model “T” Ford:

“You can have any colour you like, as long as it is

black.”

Production Concept

This was certainly a production orientated statement

and during this period firms concentrated on

improving production efficiency in an attempt to

bring down costs.

Production Concept

In America, in the economic recession of the 1920s and

1930s, to simply produce was no longer good enough

and firms had to begin to focus their attention on the

changing needs of the market place.

Production Concept

This ultimately led to the idea of marketing

orientation and it was America in the 1930s that saw

the origin of this common-sense philosophy.

Production Concept

Advantages of production orientation:

economies of scale

reduced marketing and production costs

greater market share

Production Concept

Disadvantages of Production orientation:

any degree of exclusive appeal

close contact with customer needs

high levels of customer loyalty.

Product Concept

Product orientation is present when managers in the

company believe that customers will recognise a

good product or service and buy it when it is made

available.

Product Concept

Perhaps one of the most quoted examples of this type

of orientation concerns the Sinclair CV5, a small

motorised vehicle which was introduced into the UK

by Clive Sinclair. Sinclair thought he had an excellent

product which would help alleviate pollution and

lower traffic levels on the roads of Britain.

Product Concept

He did carry out product tests –but they were in a

gymnasium. When the product was finally launched

it proved to be dangerous and frightening when users

were faced with large trucks and other vehicles using

the public roads.

Product Concept

Sinclair had underestimated the fact that his target

audience liked their cars and that they were not going

to buy something which, in their opinion, was inferior

to what they already had. Despite his belief in it, the

product failed completely.

Product Concept Companies following a product orientation can only be

successful if:

there is a potential demand for the product

products are given full marketing support

products meet customer requirements.

Product Concept Thus it is obvious that product orientation MUST, if it

is to be successful, be adopted only after research has

been carried out.

Sales Concept

Gradually business people began to appreciate that in

a highly competitive environment it was simply not

enough to produce goods as efficiently as possible. The

sales department was thought to hold the key to

the firm’s prosperity and survival, and sales volume

became the success criterion.

Sales Concept

In a sales-orientated firm, selling is a major

management function, and is often given status

equal with that of production and finance. Here the

emphasis is on “pushing” a company’s products or

services to sometimes unwilling customers.

Sales Concept The sales concept only works when:

there is little need for an after-sales service

companies are not interested in forming relationships

with customers

buyers have low expectations of the product or service

repeat purchasing is unlikely.

Marketing Concept Under the marketing concept it is the customer who

becomes the centre of business attention. Firms no

longer see production or sales as the key to prosperity,

growth and survival, but the identification and

satisfaction of customers’ needs and wants.

Marketing Concept In a marketing-orientated organisation, the whole

firm appreciates the central importance of the

customer and realises that without satisfied

customers there will be no business.

Marketing Concept The Chartered Institute of Marketing sums up what

marketing is in its formal definition of the subject:

“Marketing is the management process

responsible for identifying, anticipating and

satisfying customer requirements profitably.”

Marketing Concept An alternative definition is put forward by the

American Marketing Association:

“Marketing is the process of planning and

executing the conception, pricing, promotion and

distribution of ideas, goods and services to create

exchanges that satisfy individual and

organisational objectives.”

Marketing Concept

The Chartered Institute of Marketing definition,

perhaps more succinctly (briefly) sums up the overall

aim of marketing, but it is felt that the American

Marketing Association’s definition is more precise as it

identifies the tools with which marketing realises its

objectives.

Marketing Concept

These tools are collectively known as the “marketing

mix” - a term coined by Neil Borden and essentially

this means manipulating the “four Ps” (a term coined

by E Jerome McCarthy and which embraces price,

product, place and promotion) in their most effective

way.

Marketing Concept

It is really only since the end of the Second World War

that marketing has developed in the United Kingdom

as a formalised business concept with a codified

philosophy and a set of techniques.

Marketing Concept

It has also been demonstrated that marketing is now

central to planning in businesses that operate in a

competitive environment. The marketing-orientated

firm achieves its business objectives by identifying

and anticipating the changing needs and wants of

specifically defined target markets.

Marketing Concept

Business planning, therefore, starts with

customers, and it is the responsibility of marketing to

marshal these requirements through the marketing

plan into the corporate business plan.

Marketing Concept

As a consequence, it is from customers’ needs and

subsequent marketing planning to meet these needs,

that other functions in a business operation take their

respective leads.

DEVELOPING A MARKETING ORIENTATION

Marketing as an organisational philosophy and activity

is applicable to almost all types of organisation,

whether profit-making or not-for-profit.


When properly understood, it will be appreciated that

marketing is not necessarily narrowly confined to a

particular office or department, and indeed one of the

most frequent problems that companies have is in the

belief of other departments (and sometimes even the

marketing department itself) that somebody ‘does’

marketing in the process sense.


In its widest sense, marketing is really an attitude of

mind or an approach to business problems that should

be adopted by the whole organisation.


It is only when the discipline is understood in this

wider context that the student and practitioner alike

can properly appreciate the role of marketing and

its value to an organisation.


The importance of the consumer:

As far back as 1776, during the Industrial Revolution,

Adam Smith, widely regarded to be the founding

father of modern economics, wrote the following in his

classic work The Wealth of Nations:


“Consumption is the sole end and purpose of all

production and the interests of the producer ought to

be attended to only so far as it may be necessary for

promoting that of the consumer.”


In essence, it does not matter how good a firm may

think its product to be, or how well organised it is in

processing its orders, unless it has customers there

is no business to conduct.


In the statement above, Adam Smith has given the

essence of the central guiding theme of the subject of

marketing. The key word is consumer, as it is the

identification and satisfaction of consumer

requirements that forms the basis of the modern

concept of marketing.


Interestingly, Smith went on to say: “The maxim is so

perfectly self-evident that it would be absurd (silly) to

attempt to prove it. But in the mercantile system, the

interest of the consumer is almost constantly sacrificed

to that of producers who seem to consider production,

and not consumption, as the ultimate end and object

of all industry and commerce.”


Some people view the subject of marketing as a

branch of applied economics. Other writers and

practitioners have worked for a number of years in a

specialised field of marketing such as advertising,

brand management or marketing research.


It is understandable that such people often regard

their particular speciality as the most important facet

(feature) of marketing.


Some people take a rather myopic (narrow minded)

view of the subject and see marketing merely as a

collection of well-developed management

techniques, which, when combined, constitute a

functional area of the organisation’s management

operation.


More enlightened practitioners and theorists view

the subject as an overriding business philosophy

which guides the organisation in everything it

does. Marketing is often viewed as:


A social process: At a macro level, marketing is

viewed as a social process by which individuals and

groups obtain what they need and want by creating

and exchanging things of value.


A distributive system: Marketing is viewed as a

process whereby in a democratic society, operating

within a free market or mixed economy there evolves

a system of distribution that facilitates transactions

resulting in exchange and consumption.


A targeting or allocative system: Marketing is

perceived as the way any organisation or individual

matches its own capabilities to the needs and

wants of its customers.


From an organisational point of view, marketing is

seen as the primary management function that

organises and targets the activities of the entire

organisation in order to convert consumer purchasing

power into effective demand.


Its objective is to move the product or service to the

final consumer or user in order to achieve company

profit (or optimum cost efficiency).


A functional area of management: Marketing is

seen as a functional area of management, usually

based in a particular location within the organisation,

which uses a collection of techniques, e.g. advertising,

public relations, sales promotion and packaging, to

achieve specific objectives.


An overall business philosophy: Many successful

firms see marketing as the keystone of their business.

Marketing in such firms is viewed not as a

separate function, but rather as a profit-

orientated approach to business that permeates not

just the marketing department but the entire business.


The central mission of the entire organisation is

seen as the satisfaction of customer requirements

at a profit (or, in not-for-profit sectors, at a maximum

level of efficiency or minimum level of cost).


This is achieved by focusing the attention of the

entire organisation on the importance of the

customer and the needs of the market place.

COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS

Organization comprise of different department /

sections and units. A typical company may have

following departments:

Finance departments

HR departments

Production department

Marketing departments


Finance departments

The Finance Department is responsible for managing

the corporate finances and budget.

The finance department will monitor the

expenditure and revenue of other departments and

manage the cash flow for the organization.


HR departments

The Human Resource Department is responsible for

managing the staff within an organization.

Activities will involve the recruitment and appraisal

of staff and defining the skills set necessary to achieve

corporate objectives.


Production departments

The Production Department is responsible for

manufacturing the product.


Production departments (cont…)

Production may involve sourcing raw materials,

developing the detailed product specification,

employing staff with the correct skills to make the

product and sometimes the warehousing and

packaging of the product.


Marketing departments

The Marketing Department is responsible for

identifying customer needs, analyzing competitor

products and should liaise with the production

department to ensure its products have the right

features, are of the right quality and will meet

customer expectations.


Finance department vs. Marketing department

Marketing and the Finance Department should work

together in preparing financial plans for the

organization.



The marketing department can assist the Finance

Department in its preparation of forecasts by providing

market information, via research and market

intelligence on predicted market size, market share,

competitor activity and expected customer revenues.



The Finance Department is responsible for ensuring

costs and profits are in line with forecasts/budgets.



An example of a conflict would be when revenues are lower than

budget; the finance department may wish the marketing

department to cut its costs to ensure that profit margins remain

consistent with the forecast, however the marketing department

may wish to actually spend more money (in advance of revenues)

on promotion to try to increase sales revenue.


HR department vs. Marketing department

Marketing and the HR Department should work

together to ensure that the organization recruits and

trains its staff with the skills & competencies

needed to compete effectively in the current and

future market/s.



It is also important that all staff within the organization are

kept up to date with new product development;

therefore marketing should work with the human resource

department to ensure that staff are kept fully informed of

any changes via the use of internal marketing techniques.



Marketing will need to influence the continued development

and skills of its organizations staff to ensure these meet

customer needs, for example customer service levels, therefore

conflict may arise between the two departments who may have

varying objectives and priorities for staff training, for example

the human resource department may feel it is a higher priority to

offer health and safety training.


Product department vs. Marketing department

Marketing and the Production Department must work

together to ensure that the products it produces

meet customer needs.

An example of a conflict between the marketing and

production department would be cost versus quality.



The production department will need to ensure

products are produced to the budget allocated, when

the cost of raw materials rise then they may look to

make cost savings by cutting the quality of materials or

features of the product.



However, the marketing department will be anxious to

ensure that the product quality remains consistent

with customer expectations as well as exceeding

that of competitors.

Recent Marketing Developments “Green Marketing”

We hear the term “green” being applied in a number of

situations these days. There are “green” political

parties both in the UK and elsewhere in the world for

example Germany. Recycling of otherwise waste

materials is another manifestation of what has come to

be referred to as “green” consciousnesses.


Firms too have become more “green” in their business

methods, particularly production and other

operational methods. They have also become more

“green” in terms of the packaging used on their

products, and of course in terms of the products and

services themselves.


A firm that perhaps epitomises (represent) the “green”

marketing firm is the “Body Shop” which offers a

range of environmentally friendly, not tested on

animals, ethically, non exploitatively produced

cosmetic and related products.


A marketing firm that is a good example of a “green”

firm in the service sector is the Co-operative Bank,

which prides itself on only investing and lending to

ethically run enterprises. For example, it will not

lend to any firm that exploits cheap labour overseas or

pollutes the environment or tests products on animals.


Green marketing as a pro-active policy

If you look at the labelling of many everyday packaged

grocery products the next time you are in the

supermarket you will see some form of “green”

message on most of them.


Many firms are now adopting a “proactive” rather than

reactive “green” marketing strategy in an attempt to

gain a competitive business environment.


Marketing is all about the enterprise meeting the

needs and delivering the want of specifically

defined target markets more effectively and

efficiently than the competition.


If the market wants, and is prepared to pay for,

“green” products and services then marketing-

orientated firms are duty bound to find ways of

offering such goods and services to their customers.


They simply would not be doing their job if they did

not, and if they do not satisfy customers it will only be

a matter of time before those customers find another

marketing-orientated firm that does. So-called “green”

issues are no longer simply side issues and only

practised by a few firms, such as “Body Shop”.


Today “green” issues often have a key position in the

long-term corporate policy of many firms. Firms

are seeking advice from a whole raft (range) of

“environmental consultants” who claim to offer such

firms professional advice on all areas of environmental

and “green” issues.


In fact offering advice on “green” issues is today

one of the growth areas of the business

consultancy world. Most marketing courses taught at

colleges and universities today usually have a “green”

marketing component to them.


At the postgraduate level at the major business

schools, “green” issues are given full module status

and they are so important, that they are often woven

into all aspect of marketing and business teaching.


There has been an enormous increase in marketing

firms trying to obtain good ‘green’ credentials over the

last 20 years or so. This trend is likely to increase over

the next ten years as consumers and governments

become more and more concerned with

environmental and ethical issues.


Social commentators question the ethics of marketing

and its place in our social system. In a world of finite

resources, they query whether we might be devoting

too much to the gratification (fulfillment) of

materialistic wants to the detriment of the social good.


It is suggested that marketing creates artificial wants

and the resources channelled into competitive

advertising, branding and packaging are a waste

of money and might be better employed

elsewhere.


It is, however, acknowledged that marketing is not

merely a business practice, but a social influence that

can be used to improve the quality of life in its

widest sense. This influence should not be

patronising; rather it should be exercised in co-

operation with the individuals and groups who are

consumers of marketing’s offerings.


Linked to the idea of marketing as a beneficial social

force, is the extension of functional marketing into

non-commercial activities. The pursuit of customer

satisfaction is a valid aim irrespective of the profit

motive.


Marketing as a discipline is appropriate to the not-for-

profit sector, because its practice obliges managers to

think and act efficiently with end user needs in

mind. Marketing is a style and philosophy of

management that is not restricted to business. It also

has social consequences.


Implicit in true marketing-orientation is recognition

that business responsibility extends beyond a

company’s immediate customers. Truly marketing

orientated firms will realise this fact and will give their

customers what they want.


If society want their commercial organisations to

be more environmentally engaged and socially

responsible then firms must do this. They should

be doing this anyway.


There have been many business ‘scandals’ of late and it

is now even more pressing for firms to demonstrate

their social, environmental and ethical stance.

Past Paper Review December 2007 / Q7

(a) Describe and contrast the following three types of business orientation:

(i) production orientation

(ii) sales orientation

(iii) marketing orientation

Use specific examples to illustrate the points made. (13 marks)

(b) Discuss the importance of recent marketing developments which focus on

environmental, ecological and related issues. (12 marks) (Total 25 marks)

Past Paper Review June 2010 / Q7

(a) Using examples to illustrate your answer, describe and contrast the

following three types of business orientation:

(i) Production orientation

(ii) Sales orientation

(iii) Marketing orientation (13 marks)

(b) Discuss the recent developments which have become known collectively as

‘green marketing’ (i.e. sympathetic to environmental, ecological and related

issues) and the likely effect of such issues on marketing firms over the next 10

years. (12 marks) (Total 25 marks)

Past Paper Review

Answer

(a) Refer Slides 15 – 42

(b) Refer Slides 82 - 102

Past Paper Review

December 2008 / Q7

Discuss the recent developments which collectively

have become known as ‘green marketing’(i.e.

marketing sympathetic to environmental, ecological

and related issues) and explain the likely importance

of such issues to organisations involved in marketing

over the next decade. (25 marks)

Past Paper Review

Answer

Refer slides 82 - 102

Past Paper Review

December 2009 / Q3

(a) Define the term ‘marketing orientation’. (5 marks)

(b) Discuss the view that achieving marketing

orientation within the firm necessitates thinking of

marketing as an overall business philosophy. (20

marks) (Total 25 marks)

Past Paper Review

November 2011 / Q1

(a) Define the term ‘marketing orientation’. (5 marks)

(b) Discuss the view that achieving marketing

orientation within the firm necessitates thinking of

marketing as an overall business philosophy. (20

marks) (Total 25 marks)

Past Paper Review

Answer

(a) Refer Slides 33 – 42

(b) Refer Slides 43 -65

Chapter 2 Human Resource Planning & Strategy - Ibrahim … · Ibrahim Sameer (MBA ... to buy...

Documents

Transcript of Chapter 2 Human Resource Planning & Strategy - Ibrahim … · Ibrahim Sameer (MBA ... to buy...