Organizational structure refers to the way in which an organization’s activities are divided, grouped, and coordinated into relationships between managers and employees, managers and managers and employees and employees. An organization’s departments can be formally structured in three major ways: by function, byproduct/ market or in matrix form.

Functional Organization is perhaps the most logical and basic form of departmentalization. It is used mainly by smaller firms that offer a limited line of products because it makes efficient use of specialized resources. Another major advantage of a functional structure is that it makes supervision easier, since each manager must be expert in only a narrow range of skills. In addition, a functional structure makes it easier to mobilize specialized skills and bring them to bear where they are most needed.

As an organization grows, either by expanding geographically or by broadening its product line, some of the disadvantages of the functional structure begin to surface. Because functional managers have to report to central headquarters it can be difficult to get quick decisions. It is often harder to determine accountability and judge performance in a functional structure. If a new product fails, who is to blame research and development, production or marketing? Finally coordination the functions of members of the entire organizations may become a problem for top managers. Because members of each department may feel isolated from or superior to those in other departments, they may have difficulty working with others in a unified way to achieve the organization’s goals. For example, the manufacturing department may concentrate on meeting cost standards and delivery dates and neglect quality. As a result, the service department may be flooded with complaints. In short, a functional structure can be a difficult setting in which managers must coordinate employees’ activities.

Product / Market organization:

Product or market organization, often referred to as organization by division, brings together in one work unit all those involved in the production and marketing of a product or a related group of products, all those in a certain geographic area, or all those dealing with a certain type of customer. In the 1990 Hewlett-Packard reorganization, John Young replaced one kind of product organization with another kind of product organization.

Most large, multi-product companies such as General Motors have a product or market organization structure. At some point in an organization’s existence, sheer size and diversity of products make functional departments too unwieldy. When a company’s departments becomes too complex or coordinating the functional structure, top management will generally create semi-autonomous divisions. In each division, managers and employees design, produce and market their own products.

Organization by division has several advantages. Because all the activities, skills and expertise are required to produce and market particular products are grouped in one place under a single head, a whole job can more easily be coordinated and high work performance maintained. In addition both the quality and the speed of

decision making are enhanced because decisions made at the divisional level are closer to the scene of action. At the same time, the burden on central management is eased because divisional managers have greater latitude to act. Perhaps most important, accountability is clear. The performance of divisional management can be measured in terms of the division’s profit or loss.

Matrix Organization:

The matrix structure sometimes referred to as ‘multiple command system’ is a hybrid that attempts to combine the benefits of both types of designs while avoiding their drawbacks. An organization with a matrix structure has two types of structure existing simultaneously. Employees have in effect two bosses that is, they work in two chains of command. One chain of command is functional or divisional. The second is a horizontal overlay that combines people from various divisions or functional departments into a project or business team led by a project or group manager who is an expert in the team’s assigned area of specialization.

ORGANIZATION SRUCTUREAn organization overall structure generally falls into one of two designs One is the mechanistic structure. It characterized by a high complexity ( especially a great deal of horizontal differentiation ),high formalization , a limited information network (mostly downward communication) and little participation by low level members in decision making. At the other extreme is the organic structure. It is low in complexity and formalization ,it possesses a comprehensive information network ( utilizing lateral and upward communication as well as downward) and it involves high participation in decision making. Mechanistic structures are rigid , relying on authority and a well defined hierarchy to facilitate coordination .The organic structure on the other hand is flexible and adaptive. Coordination is achieved through constant communication and adjustment.

The Design structure has been described as having the following characteristics

1. Division of labor2. Well-defined authority hierarchy3. High formalization4.Impersonal nature5. Employment decisions based on merit6. Career tracks for employees7. Distinct separation of members organizational and personal lives

The simple Structure

Simple structure are characterized most by what they are not rather than what they are? The simple structure is not elaborated .It is low in complexity has little formalization and has authority centralized in a single person .Overall it is organic than mechanistic.

The functional Structure

The distinguishing feature of the functional structure is that similar and related occupational specialties are grouped together .Activities such as Marketing , accounting , manufacturing, and personnel are grouped under a functional head who reports to a central headquarters.

The Product Structure

The Major advantage to the product form is accountability .The product manager is responsible for all facets surrounding the product. Instead of having the marketing manager oversee fifteen different product lines, each product structure will have its own marketing manager with sole responsibility for marketing his or her division product. In this way ,product control is centralized with the products manager .The drawbacks of course are need to coordinate activities between product structures and the duplication of function within the various structures Whereas in the functional structure a department of five people might be able to handle the entire organization purchasing activities if that organization is structured around ten products divisions each will probably require a purchasing agent, thus doubling the number of personnel engaged in purchasing.

The Matrix Structure

One of more recent organizational design innovations is the Matrix Structure,Essentially the matrix combines the functional and product structures .Ideally it seek to gain the strengths of each , while avoiding their weakness. That is , the strength of the functional structure lies in putting like specialists together. which minimizes the number necessary, and it allows the pooling and sharing of specialized resources across products .Its major disadvantage is the difficulty of coordinating the tasks of diverse functional specialists so that their activities are completed on time and within budget The product structure on the other hand has exactly the opposite benefits and disadvantages .It facilitates the coordination among specialties to achieve on-time completion and meet budget targets. Further , it provides clear responsibility for all activities related to a product, but with duplication of activities and costs.

Strategy

An organization structure is a means to help management achieve its objectives. Since objectives are derived from the organization overall strategy .it is only logical that strategy and structure should be closely linked. More specifically structure should follow strategy. If management makes a significant change in its organization strategy structure will need to be modified to accommodate and support this change.

In summary , the structure follows strategy thesis argues that as strategies move from single product to vertical integration .to product diversification , management will need to develop more elaborate structures to maintain effectiveness .

a n s o f f ' s p r o d u c t / m a r k e t m a t r i x

Introduction

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling

• Secure dominance of growth markets

• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors

• Increase usage by existing customers – for example by introducing loyalty schemesA market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market development

Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

• New geographical markets; for example exporting the product to a new country

• New product dimensions or packaging: for example

• New distribution channels

• Different pricing policies to attract different customers or create new market segments

Product development

Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

Diversification

Diversification is the name given to the growth strategy where a business markets new products in new markets.

This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.

 

\APPRECIATION OF DIFFERENT MARKETING ORIENTATIONSEthnocentricHome country issuperior; sees similarities

in foreign countriesRegiocentricSees similarities and differences in a world region; isethnocentric or polycentric in its view of the rest ofthe worldPolycentricEach host country is unique;sees differences in foreigncountriesGeocentricWorldview;Sees similarities anddifferences in home and hostSource: Journal of Business-Global Marketing Management byWarren J.KeeganThe EPRG framework identifies four types of attitudes ororientations towards internationalization that are associatedwith successive stages in the evolution of international operations.These four orientations are:1. Ethnocentrism (home country orientation)2. Polycentrism (host country orientation)3. Regiocentrism (regional orientation)4. Geocentrism (world orientation)Ethnocentric OrientationIn the ethnocentric company, overseas operations are viewed assecondary to domestic operations and primarily as a means ofdisposing of “surplus” domestic production. The topmanagement views domestic techniques and personnel assuperior to foreign and as the most effective in overseasmarkets. Plans for overseas markets are developed in the homeoffice, utilizing policies and procedures identical to those14 11.361/11.337© Copy Right: Rai UniversityINTERNATIONAL MARKETINGemployed in the domestic market. An export department orinternational division most commonly administers overseasmarketing, and the marketing personnel are composed primarilyof home country nationals.A person who assumes his or her home country is superiorcompared to the rest of the World is said to have an ethnocentricorientation. At some companies, the ethnocentricorientation means that opportunities outside the home countryare ignored. Such companies are sometimes called domestic

companies. Ethnocentric companies that do conduct businessoutside the home country can be described as internationalcompanies; they adhere to the notion that the products thatsucceed in the home country are superior and, therefore, can besold everywhere without adaptation.In the ethnocentric international company, foreign operationsare viewed as being secondary or subordinate to domestic ones.An ethnocentric company operates under the assumption that“tried and true” headquarters’ knowledge and organizationalcapabilities can be applied in other parts of the world. For amanufacturing firm, ethnocentrism means foreign markets areviewed at a means of disposing of surplus domestic production.Polycentric OrientationThe polycentric orientation is the opposite of ethnocentrism.The term polycentric describes management’s often-unconsciousbelief or assumption that each country in which acompany does business is unique. This assumption lays thegroundwork for each subsidiary to develop its own uniquebusiness and marketing strategies in order to succeed; the termmultinational company is often used to describe such astructure.As the company begins to recognize the importance of inherentdifferences in overseas markets, a polycentric attitude emerges.The prevalent philosophy at this stage is that local personneland techniques are best suited to deal with local marketconditions. Subsidiaries are established in overseas markets,and each subsidiary operates independently of the others andestablishes its own marketing objectives and plans.Regiocentric OrientationA Regiocentric company views different regions as differentmarkets. A particular region with certain important commonmarketing characteristics is regarded as a single market, ignoringnational boundaries. “Strategy integration, organizationalapproach and product policy tend to be implemented atregional level. Objectives are set by negotiation betweenheadquarters and regional Headquarters on the one hand andbetween regional HQ and individual subsidiaries on the other.”In a company with a Regiocentric orientation, managementviews regions as unique and seeks to develop an integratedregional strategy. For example, a U.S. company hat focuses onthe countries included in the North American Free TradeAgreement (NAFTA) – the United States, Canada, and Mexico– has a Regiocentric orientation. Similarly, a European companythat focuses its attention on the EU or Europe is Regiocentric.

Market Orientation – Essential foundation for a strong marketing strategy

Apple Computers, Starbucks Coffee, Virgin Group, L’Oreal, Nike, Singapore Airlines, Banyan Tree and Samsung are among some of the most successful brands in the world. Much has been written about the power of their brands that has allowed them to dominate their respective industries not only in the domestic markets but also globally. Most if not all accounts of success of such brands have emphasized on the branding process, the systems of brand management and the role of the brand equity in enhancing the company’s overall profile. The dynamics and the cultural aspect that are the powerful underlying forces behind these brands are rarely talked about.

In today’s hyper competitive global markets, success depends more on the overall vision and philosophy of the companies that drives their activities rather than on their product level or business unit level strategies. The role of brand equity in a company’s market capitalization and shareholder value maximization is well documented. But to achieve such strong brand equity, companies need to develop a culture and an orientation that not only supports market oriented thinking but also nurtures the integration of cross functional integration of thought and activities. This article takes a detailed look into the components of such an orientation and what makes a company’s internal structure conducive to building strong brands.

Market orientation

Market orientation is usually defined as the organization wide generation, dissemination, and responsiveness to market intelligence. This definition at once changes the dominant paradigm that has defined marketing for decades. Marketing has traditionally been defined within the narrow confines of the 4P framework. Such a conceptualization of marketing has relegated marketing to a tactical discipline to be performed by middle level marketing managers who did not possess the overall holistic view of the organization. But the connected knowledge economy, globalizing, converging and consolidating industries, fragmenting and frictionless markets, empowered customers and adaptive organizations among others are forcing organizations to alter their view of marketing.

The concept of market orientation is built on three pillars of customer focus, coordinated marketing and profitability. An organization’s capabilities to develop an orientation towards each of these three pillars depend on the internal structure and culture. The next section further elaborates these three constructs and how they allow companies to create a strong internal culture that can support building brands.

Pillars of market orientation

Customer focus: Organizations have traditionally emphasized either profitability or market share (growth) as their guiding orientations. As the fundamental responsibility of any organization is to maximize shareholder value, such an orientation did not seem wrong. Further, with the advent of branded goods, globalization and increasing competition, companies placed a very high emphasis on products. But all these extant orientations have been challenged with the explosion of the Internet and resulting empowerment of customers. Internet to a great extent reversed the information asymmetry and allowed access to hitherto unavailable information about product features, price and peer recommendation. These factors are forcing companies to shift their fundamental orientation from that of profitability, growth and products to customers.

Customer centricity is at the center of creating any future corporate strategies. Customer centricity primarily proposes that the basic philosophy of companies should be to serve customers rather than sell products and in the course establish long-term relationships by treating customer as strategic assets.

Coordinated Marketing: For a company to have a market orientation, marketing has to break the narrow confines of the tactical 4P framework. Marketing should be transformed into a company-wide discipline practiced by anyone and everyone. Simply, marketing has to become a coordinated, cross-disciplinary function. This is easier said that done.

For any discipline to claim a much broader responsibility and scope beyond its functional domain, the ability to quantitatively measure the outcomes of its activities becomes paramount. This is where marketing has been suffering for a long time. Measuring marketing productivity has indeed become a major challenge for marketers. But further, marketers have refused to acknowledge that customers are not the sole responsibility of the marketing department but of the company as a whole. These factors have together stalled marketing from becoming a coordinated activity that involves other functions such as finance, operations, human resources and strategy within any company.

Profitability: In today’s global capital economy, the future potential of the company and its potential attractiveness is often controlled by the capital markets. Companies and managers are constantly under immense pressure to demonstrate the financial strength every quarter. The effect of quarterly results on the company’s stock price, the signals that such results have come to convey to a wide array of stakeholders and the extent to which financial analysts have managed to unleash havoc and terror for companies have collectively forced companies to adopt a very short-term perspective on profitability.

Further, the focus on short term profitability invariably comes at a very high cost. Most companies tend to ignore the impact of their actions on the long term strategic capabilities. Moreover, under the traditional marketing paradigms, short-term focus was inevitable as the emphasis was on products rather than on customers. But within the framework of market orientation, profitability encompasses both financial measures (such as ROI, EVA, and market share) and non financial measures (such as awareness, attitudes and behavioral patterns). Such a comprehensive measurement would allow companies to balance between short term and long term profitability with a cautious eye on long term financial health of the company.

These three pillars of market orientation have proven to allow companies to create a very strong philosophy and in turn contribute to companies’ long term strategic competence. But having followed the traditional marketing model for decades, it is indeed a tough call for companies to become market oriented. The following section of the article offers guidelines on how companies can establish a structure that allows management and employees to inculcate new way of thinking about marketing and ultimately channeling the aggregate mentality towards a market orientation.

Guidelines to adopt a market orientation

Leverage customer database systems: One of the greatest advantages that companies have today is the power of customer databases. The explosion of internet and the possibility of recording very specific details about customers, their online movement and their purchase behavior have only added power to these databases. The first step for companies in moving towards market orientation is to optimally leverage these databases.

The potential marketing intelligence that these databases offer would allow companies to understand the customers’ current and potential needs clearly. Such an understanding would lead to marketing functions to be in line with customers’ needs rather than compulsions centered around products. As such, pricing will be in line with customer’s willingness to pay rather than to cover costs, advertising and communications

will inform, appeal and endear to customers, customer’s convenience will dictate distribution rather than logistical ease and product features would essentially reflect customers’ unmet needs rather than show off the latest technological supremacy. Such a shift from product centricity to customer centricity will be an important first step.

Create a marketing dashboard: To achieve complete market orientation, companies should create a systematic structure that would enable different functions to collectively discuss about customers and markets.

Traditionally, marketing department handles customers and their needs, finance looks after the money, operations is singly focused on production and strategy generally looks at the market outside to decide on the company’s future. A market orientation mandates that all these functions operate jointly. Marketing dashboards create a platform whereby representatives from each of these departments can come together and discuss the various functional issues so that the collective action will result in activities that enhances the company’s relationships with customers. Further, for marketing to become an organization wide discipline, it must not only understand the different functions within a company but also should be able to relate marketing activities to other functional activities. Marketing dashboards provides marketers a structured platform to ensure marketing become coordinated and company wide.

Constantly update metrics: Metrics used to measure the outcomes of marketing activities cannot be generalized across companies. Rather, they have to be modified and adopted depending on the company, the product class, the industry, the important criteria being measured and the ability of the company to track marketing investments. A first step in recognizing and developing useful metrics would be a collaborative discussion with other functional departments within the company. Further, the corporate mission and underlying philosophy would offer some insights into what metric are regularly tracked such as quarterly market share, relative share within the category, brand awareness, conversion ration through the purchase funnel, shifts in attitudes in response to advertising campaigns, shift in purchase patterns in response to discounts/promotions and so on.

But caution should be taken to ensure that these metrics capture both financial and non-financial measures. Marketing should also strive for developing metrics that go beyond the discipline and are able to capture the outcomes of all activities that bear on the relationship with customers. Such a move would take marketing a step closer to becoming an organization wide discipline.

Conclusion

Brand equity is undoubtedly the most important of corporate assets. To create strong brands, as important as a structured brand management process is a strong guiding philosophy that is customer and market oriented. Such an orientation spawns a self-enriching culture that not only drives the company in the right direction but also facilitates the creation of a strong corporate strategy. As such, companies would benefit tremendously by shifting from a complete product or growth orientation to a market orientation. Such market orientation after all is the basis for building strong brands.

Marketing Mix.What is the marketing mix?

The marketing mix is probably the most famousmarketing term. Its elements are the basic,tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are price, place , product, and promotion. Read on for more details on the marketing mix.The concept is simple. Think about another common mix - a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price. Another way to think about the marketing mix is to use the image of an artist's palette. The marketer mixes the prime colours (mix elements) in different quantities to deliver a

particular final colour. Every hand painted picture is original in some way, as is every marketing mix.

Some commentators will increase the marketing mix to the Five P's, to include people. Others will increase the mix to Seven P's, to include physical evidence(such as uniforms, facilities, or livery) and process (i.e. the whole customer experience e.g. a visit the Disney World). The term was coined by Neil H. Borden in his article The Concept of the Marketing Mix in 1965.

PriceThere are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations. There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations. See also eMarketing Price.

Premium Pricing.Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.

Penetration Pricing.The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.

Economy Pricing.This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming.

Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.

Psychological Pricing.This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.

Product Line Pricing.Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.

Optional Product Pricing.Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product PricingWhere products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.

Product Bundle Pricing.Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Promotional Pricing.Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing.Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.

Value Pricing.This approach is used where external factors such as recession or increased competition force

companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.

PlaceAnother element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumerchannel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption.

Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

There are six basic 'channel' decisions:

Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler).

Single or multiple channels. Cumulative length of the multiple channels. Types of intermediary (see later). Number of intermediaries at each level (e.g. how many retailers in

Southern Spain). Which companies as intermediaries to avoid 'intrachannel conflict'

(i.e. infighting between local distributors).

Selection Consideration - how do we decide upon a distributor?

Market segment - the distributor must be familiar with your target consumer and segment.

Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores.

Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'.

Qualification assessment - establish the experience and track record of your intermediary.

How much training and support will your distributor require?

Types of Channel Intermediaries.There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail.

1. Channel Intermediaries - Wholesalers

They break down 'bulk' into smaller packages for resale by a retailer. They buy from producers and resell to retailers. They take ownership

or 'title' to goods whereas agents do not (see below). They provide storage facilities. For example, cheese manufacturers

seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer.

Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs.

A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.

2. Channel Intermediaries - Agents

Agents are mainly used in international markets. An agent will typically secure an order for a producer and will take a

commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a 'stockist agent' will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs).

Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

3. Channel Intermediaries - Retailers

Retailers will have a much stronger personal relationship with the consumer.

The retailer will hold several other brands and products. A consumer will expect to be exposed to many products.

Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents.

Products and services are promoted and merchandised by the retailer.

The retailer will give the final selling price to the product. Retailers often have a strong 'brand' themselves e.g. Ross and Wall-

Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.

4. Channel Intermediaries - Internet

The Internet has a geographically disperse market. The main benefit of the Internet is that niche products reach a wider

audience e.g. Scottish Salmon direct from an Inverness fishery. There are low barriers low barriers to entry as set up costs are low. Use e-commerce technology (for payment, shopping software, etc) There is a paradigm shift in commerce and consumption which

benefits distribution via the Internet

ProductFor many a product is simply the tangible, phsysical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the product more complex than you first thought? The Three Levels of a Product . . . For many a product is simply the tangible, phsysical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the product more complex than you first thought? In order to actively explore the nature of a product further, lets consider it as three different products - the CORE product, the ACTUAL product, and finally the AUGMENTED product.

These are known as the 'Three Levels of a Product.' So what is the difference between the three products, or more precisely 'levels?'

The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect.The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service.Another marketing tool for evaluating PRODUCT is the Product Life Cycle (PLC).

   

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle.Introduction.

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth.Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.

Maturity.Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

Decline.At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Problems with Product Life Cycle.In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.Another marketing tool for evaluating PRODUCT is the Three Levels of a Product.

The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives. The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives. It is marketing orientated rather than product orientated, and embodies the marketing concept. Essentially, CLC is a summary of the key stages in a customer's relationship with an organisation. The problem here is that every organisation's product offering is different, which makes it impossible to draw out a single Life Cycle that is the same for every organisation.

Let's consider an example from the Banking sector. HSBC has a number of products that it aims at its customers throughout their lifetime relationship with the company. Here we apply a CLC. You can start young when you want to save money. 11-15 year olds are targeted with the Livecash Account, and 16-17 year olds with the Right Track Account. Then when (or if) you begin College or University there are Student Loans, and when you qualify there are Recent Graduate Accounts.When you begin work there are many types of current and savings account, and you may wish to buy property, and so take out a mortgage. You could take out a car loan, to buy a vehicle to get you to work. It would also be advisable to take out a pension. As you progress through your career you begin your own family, and save for your own children's education. You embark upon a number of savings plans and schemes, and ultimately HSBC offer you pension planning (you may want to insure yourself for funeral expenses - although HSBC may not offer this!).This is how an organization such as HSBC, which is marketing orientated, can recruit and retain customers, and then extend additional products and services to them - throughout the individual's life. This is an example of a Customer Life Cycle (CLC).Another important point is that a lifetime CLC is made up many shorter CLC's. So, for example, Volkswagen Cars retains a customer for many years and one can predict the products that meet a customers needs throughout his or her family lifetime. However the purchase of each car, will in itself be a CLC with many Customer Touch Points. The consumer may need a bigger vehicle as his or her family expands - so they visit VW's website and register.

The customer reviews models and books a test-drive with her or his local dealer. He or she decides to buy the car and arranges finance. The car is then delivered from the factory, and returns every year for its annual service. Then after three years, the customer decides to trade in his or her car, and the cycle begins again. The longer-term life cycle is simply the shorter-term life cycles viewed consecutively.CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

Information Technology (IT) perspective The Customer Life Cycle (CLC) perspective Business Strategy perspective

PromotionAnother one of the 4P's is promotion. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. Another one of the 4P's is 'promotion'. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign. The elements of the promotions mix are:

Personal Selling. Sales Promotion. Public Relations. Direct Mail. Trade Fairs and Exhibitions. Advertising. Sponsorship.

The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication. The message from the marketer follows the 'communications process' as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (Message / media).The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represent the thousand of marketing communications that a consumer is exposed to everyday, all competing for attention.

The Promotions Mix.Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are 'integrated' to form a specific communications campaign.

1. Personal Selling.Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

2. Sales Promotion.Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative.

3. Public Relations (PR).Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

4. Direct Mail.Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot.

5. Trade Fairs and Exhibitions.Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

6. Advertising.Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides).

7. Sponsorship.Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the

Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.The elements of the promotional mix are then integrated to form a unique, but coherent campaign. .

Physical EvidencePhysical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following: More . . .

PeoplePeople are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part of the marketing mix - training, personal selling and customer service.

Training.All customer facing personnel need to be trained and developed to maintain a high quality of personal service. Training should begin as soon as the individual starts working for an organization during an induction. The induction will involve the person in the organization's culture for the first time, as well as briefing him or her on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified. A training and development plan is constructed for the individual which sets out personal goals that can be linked into future appraisals. In practice most training is either 'on-the-job' or 'off-the-job.' On-the-job training involves training whilst the job is being performed e.g. training of bar staff. Off-the-job training sees learning taking place at a college, training centre or conference facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development.

Personal SellingThere are different kinds of salesperson. There is the product delivery salesperson. His or her main

task is to deliver the product, and selling is of less importance e.g. fast food, or mail. The second type is the order taker, and these may be either 'internal' or 'external.' The internal sales person would take an order by telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little selling is done. The next sort of sales person is the missionary.Here, as with those missionaries that promote faith, the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually closing the sale is not of great importance at this early stage. The forth type is the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs. Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order. This is tough selling, and tends to o ffer the biggest incentives. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order.

Customer ServiceMany products, services and experiences are supported by customer services teams. Customer services provided expertise (e.g. on the selection of financial services), technical support(e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company. The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company's reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support and expertise and advice.

ProcessProcess is another element of the extended marketing mix, or 7P's.There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example - to achieve a 30% market share a company implements a marketing planning process. Process is another element of the extended marketing mix, or 7P's.There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for example - to achieve a 30% market share a company implements a marketing planning process.

Another view is that marketing has a number of processes that integrate together to create an overall marketing process, for example - telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used to control the marketing mix, i.e. processes that measure the achievement marketing objectives. All views are understandable, but not particularly customer focused.For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an organisation's offering. It's best viewed as something that your customer participates in at different points in time. Here are some examples to help your build a picture of marketing process, from the customer's point of view.Going on a cruise - from the moment that you arrive at the dockside, you are greeted; your baggage is taken to your room. You have two weeks of services from restaurants and evening entertainment, to casinos and shopping. Finally, you arrive at your destination, and your baggage is delivered to you. This is a highly focused marketing process.

Booking a flight on the Internet - the process begins with you visiting an airline's website. You enter details of your flights and book them. Your ticket/booking reference arrive by e-mail or post. You catch your flight on time, and arrive refreshed at your destination. This is all part of the marketing process.

At each stage of the process, markets:

Deliver value through all elements of the marketing mix. Process, physical evidence and people enhance services.

Feedback can be taken and the mix can be altered. Customers are retained, and other serves or products are extended

and marked to them. The process itself can be tailored to the needs of different

individuals, experiencing a similar service at the same time.

Processes essentially have inputs, throughputs and outputs (or outcomes). Marketing adds value to each of the stages. Take a look at the lesson on value chain analysis to consider a series of processes at work.