Marketing concepts are approaches that are used by companies to market their products, satisfy consumer expectations and increase profits. Consumer expectations and preferences are the biggest influences of the choice of a marketing concept. In the process of satisfying customer needs, the company achieves its objective of making profits or increasing its market share. There are many concepts of marketing such as market segmentation, product cycle and customer satisfaction. These concepts are used in various industries because of their flexibility and effectiveness. Market segmentation aims at dividing the market into groups that have homogeneous needs. Product cycle model is designed to guide a company in making marketing decisions throughout the various phases of its product life. The customer satisfaction concept is developed majorly to help companies retain their market share. The concept is built around providing quality services or products to customers. This will then lead to customer loyalty. The concepts can be applied in different ways and scenarios.
Marketing Concept Report
Marketing concepts are approaches of management where companies identify and implement marketing strategies that would help them satisfy customers’ needs or expectations. Companies seek to attain their objectives by meeting customers’ needs, which could be unstated or stated. Marketing concepts exist because of consumer selectiveness. Companies that pursue marketing concepts adhere to the following three steps. They asses the consumer needs and preferences before developing a product. They also streamline all their company’s functions to meet the consumer needs and preferences. Finally, they make profit gains in the long run by meeting the consumer needs and expectations. There are many marketing concepts that a company may choose to implement. Some of the concepts include; customer satisfaction, market segmentation and improvement of customer relations. Furthermore, companies may follow models like the product lifecycle to help it achieve its objectives in marketing.
Market segmentation
This is a marketing concept that has been used to good effect by many big companies in the past such as in the American media industry. Market segmentation is a marketing strategy where a company classifies its prospective customers into segments or groups. All the groups have similar needs and their reactions to marketing activities of the product industry are identical. Companies adopt this concept of marketing to gain maximum benefits from different consumer categories.
Every consumer category is believed to have a perception that some services or products have more value than others. The company makes the categories in a manner that each group has a different perception from the other groups. The segments could be formulated based on age, income, race, gender or religion depending on the type of product and its benefits to consumers. A company can use any of the following three criteria to identify market segments. Homogeneity of products and services and prices are common within each segment. Members classified into similar segments have similar responses to market changes. The segments can also be identified through their uniqueness from other segments in terms of characteristics.
In an article by Asami and Islam about market segmentation in the housing market, the concept of market segmentation is clearly illustrated. Housing can be considered a complex good given its characteristics. Housing is durable, immobile, heterogeneous and spatial. However, it still has the major characteristics of a market product. A housing market consists of sellers and buyers. There is also a geographical region where the interaction between sellers and buyers occurs. The housing industry has many segments based on location and structural characteristics. Segmentation also occurs due to the inelasticity of the prices of the housing units in the short term periods.
The housing industry makes up a big part of many economies in the world. Real estate developers and other traders in the housing industry have identified several ways with which to segment their markets. There are many kinds of people who seek new housing units and their preferences are based on many factors. The owners of the markets are keen to identify those individual preferences of each potential house buyer to use them as modes of segmentation.
The authors portray market segmentation as one way producers can maximize their profit gains while still offering the consumers quality products. Market segmentation is done after comprehensive research of how consumers behave and their preferences. For instance, in the housing industry, the authors opine that producers find information about the consumer preferences, location and income levels. Segmentation does not only involve sellers and marketers. According to Islam and Asum, other stake holders in the industry in question are involved in one way or another. For instance, in the housing sector, urban planners, geographers, researchers, economists and local authorities are all involved.
Market segmentation can be implemented based on various factors. Income is the most flexible factor that is used when considering market segmentation. For instance, in the housing sector, real estate dealers and construction companies classify their products based on income. There are low income houses, middle income and those that are constructed and sold to high income earners. Furthermore, housing can be segmented based on the proximity to urban centers or to industrial zones. Another factor that could be used for segmentation of the housing market is the geographical location of the housing units. Housing units in different cities in a country differ based on the cost of living and the population density. Therefore, market segmentation is a marketing concept used to obtain maximum profits from the potential consumers by segmenting consumers into groups.
Market segmentation is applied in the entertainment and media industry to good effect. Consumers, in this case viewer of music, movies and other television and entertainment programs, are segmented based on age. Age is a good basis of segmentation in the media industry because different age groups differ in preference. The segments include those for adults between age 18-34, middle age from 34-45 and for the old above 50 years. There are also kid programs. These segments have homogeneous preferences. Therefore, the programs are aired based on the target audience. Television stations find a way to balance the programs so that every segment has sufficient programs to watch.
The product life cycle
This is a model that demonstrates all the stages that a product undergoes right from the time it is manufactured to the time it declines over a given period of time. The different stages of the product life cycle are based on the amount of revenues received from its sales. Marketing of any kind of product must be carefully managed because as the product moves through different stages, the marketing conditions change. Companies manage the product life cycle by cutting down on marketing time, extra costs, enhancing product quality and seek potential opportunities to increase their sales.
Upon development, a product goes through four distinct phases. The stages are; the introduction phase, growth phase, maturity phase and then the decline phase. Prior to the introduction phase is the development process. The model of the product life cycle is designed by companies as a marketing strategy to cope with consumer behavior at different stages of the product cycle. When plotted in a life cycle line graph, the product profits and revenue are in the shape of a normal curve skewed to the left.
The introduction stage entails the company seeking to popularize its new product with the aim of creating a significant market base. The marketing efforts include activities such as product branding, distribution, promotions and pricing. Product branding, as well as quality level, is developed. Furthermore, protection against intellectual property is secured through patents or trademarks because it is a new product. The product distribution may be to selected areas until when consumers widely accept the product. The pricing approach may be low to help penetrate the market and establish a significant market share quickly. It could also be high pricing to help make up for the high developmental costs. Product promotion helps communicate to the prospective consumers about the product. It helps develop product awareness among the public.
During the growth stage, companies aim at establishing a significant market share and develop a brand that would gain preference among consumers. The pricing approach is usually upheld since the firm enjoys little or no competition and high demand at that point. The quality of the product is also maintained. However, if deemed fit, additional features or services may be introduced to raise the quality of the product. The firm seeks to widen its distribution channels because of increased demand as the customer base increases. The promotion levels are also designed to meet a larger audience than in the introduction stage of the product.
The product maturity stage is characterized by significant diminishing of total sales. The competition levels are high because of product homogeneity. The main objective during this stage is to retain the company’s market share while ensuring the company gets maximum profits. Due to high competition, the pricing is quite low. The features of the product or service could be improved to differentiate the goods from those of rival companies. Therefore, the promotion is all about communicating how differentiated the product is. The distribution is comprehensive; characterized by incentives, which are given to gain preference over other competing products.
Finally, during the decline phase, the firm experiences rapid decline in sales. The firm can adopt various measures to curb this slide. It can choose to retain the product and extend its product life by introducing new features and developing new uses. The firm could also stop producing the product and liquidate its inventory or choose to sell the rights of production to another company. Finally, the firm can cut down costs by simply producing the good and offering it to some loyal segments. The company chooses any of the three options based on its marketing strategy.
Arthur Eger and J. Drukker wrote about the product cycle and provided a qualitative analysis of the whole process. They argue that product life cycle is an integral part of marketing because of its practicality. The cycle provides a qualitative and descriptive analysis of the product development and sales. However, there are demerits of this model of marketing. The cycle outlines a probable process of a product’s growth from development to the decline stage. However, the cycle does not give a qualitative analysis of how products change during the cycle. This means that it is impossible to make predictions about how products change during the cycle.
The authors provide an analysis of the product life cycle and the economic cycle of the same product and it shows gaping inefficiencies. Based on the economic cycle, the development stage of a product is characterized by spending without any gains. The introduction phase is characterized by less competition and increasing sales. However, economically it is a period of recovery for the company. The company’s proceeds from sales of the product recover the amount incurred during the product development stage. It is during the maturity stage that the company starts making any substantial profits. As long as the maturity stage lasts, the firm’s economic efficiency is stable. When the maturity stage reaches saturation and the sales stall, the economic profits also stall showing inefficiency. At that level, if the firm resorts to other techniques such as segmentation, the economic profits may continue showing efficiency. When the decline stage sets in, there is no efficiency at all from the production of the good. Plotting the product life cycle along with the economic efficiency cycle shows that the product life cycle model is an inefficient model that does not benefit a company’s marketing strategy. Marketing is aimed at developing ways of making profit. The product life cycle only helps make profits during the maturity stage of the product. However, at the maturity stage, there are other factors such as external competition and segmentation that influence sales. Therefore, the product life cycle is inefficient and less beneficial to marketing.
The introduction of a new production in the market requires huge investments by the firm to distribute promote and develop a brand product. At this stage, the firm only aims at popularizing its product hence; it sets low prices. The phase also takes long because promotion of new products is difficult, especially the global environment. Furthermore, there is the risk of poor reception of the product. The growth stage is also characterized by a lot of spending which renders the model inefficient. It is worth noting that during the introduction and growth stage the firm’s profits are used to recover the initial costs. Therefore, if the introduction and growth stages also have huge spending, the firm makes little or no gains.
The maturity stage is experiences diminishing sales because of competition from other firms. Therefore, the firm invests in product segmentation. However, in terms of efficiency, the maturity stage is the most efficient of all other stages. Therefore, the product cycle is an inefficient model which leads the firm into excessive spending. Only one of the four main stages of the product cycle yield significant economic profits. Furthermore, the implementation of the product life cycle takes a long time, which could be used to implement other profitable marketing strategies.
An example of the product life cycle is the communication and electronic company, Apple. Apple introduced a product, the IPhone, into the market which did well in terms of sales. However, competitors such as Samsung and Nokia also started producing similar smart phones. The company made an intelligent move by improving its product to increase device performance and features. Apple has kept on elongating the life of its product, IPhones, by producing better smart phones than the initial ones. The latest is the IPhone 5 which is much efficient and has more features than the IPhone 4 and 3.
Customer satisfaction
This is a marketing concept used by firms to determine if the goods and services it produces are up to its customers’ expectations. Every company would want to know the kind of feedback its clients have about the products. In the process of satisfying customer expectation, the company also achieves its objective of establishing a market base. It is based on the concept that it is easier to keep existing clients than investing a lot of money to attract potential clients. The strategy of customer satisfaction developed due to increased market competition. Companies have resorted to producing highly differentiated products hence; the need to focus on customer satisfaction. If successfully implemented, customer satisfaction is helpful because it helps companies retain their market share by keeping the existing customers satisfied. The concept achieves two major objectives of the firm; to satisfy its clients and to increase company profits.
Customer satisfaction must be tracked, measured and quantified accurately. Failure to measure, track and quantify customer satisfaction may result in ineffectiveness in current global business environments. Using the customer satisfaction concept, a company can adequately plan its operations to suit customer needs and achieve its objectives. However, many companies still use inappropriate techniques to measure customer satisfaction such as sales volume and analyzing sales representative reports. These and other related measures of customer satisfaction are ineffective because they are prone to manipulation.
Firms that have successfully implemented the customer satisfaction concept, take the concept seriously in all aspects. For instance, the program is spearheaded by top marketing and management divisions. The satisfaction program is designed by sales and marketing employees who basically use consumer feedback. Consumer feedback is obtained from questionnaires and other survey programs. The results of these surveys are made known to all employees. This is to make them aware of what customers want and their expectations.
Angelova and Zekiri expound on how customer satisfaction can be measured based on the customer satisfaction model. Keeping satisfied is an important concept for competitive firms because it is the secret to achieving sustainable competitive advantage. The firm’s profitability is also influenced by this concept because it encourages loyalty towards the company’s products. The authors use the Macedonian telecommunications industry to measure customer satisfaction. With three firms in the industry, ONE, T-Mobile and VIP, competition is high. Consumers make choices based on the quality of service they get from the providers. The survey was conducted by randomly issuing questionnaires to subscribers.
The results showed that the general quality of service was low based on customer perceptions. The customers expected much more from the mobile providers. The results of the survey indicated that consumers’ needs and expectations highly influence the product provider they choose. The research into customer satisfaction also indicates that quality service is the secret to brand loyalty. When the services or goods offered are good, the clients will prefer that producer over other producers which earns the company competitive advantage.
A proper example of the application of the consumer satisfaction concept is the one used by communication companies. Companies that offer mobile and wireless telecommunications compete against one another based on the services they offer. Each company seeks to provide its customers with highly customized and friendly services to attract the client to stick with that provider. This leads to firms offering free talk time promotions, internet access and some even allow money transactions using the wireless device of that network. Customers are attracted to services they feel are worth their money.
Conclusion
Therefore, marketing concepts are very important for companies that seek to increase their market share and get profits. Companies choose marketing concepts that suit their marketing strategy. Commonly applied concepts include product life cycle models, customer satisfaction and market segmentation. Market segmentation is used by big companies that operate over a big geographical area and can divide their market share into several segments. Segmentation is used in the housing industry and the television industry to serve different categories of consumers the same good. Customer satisfaction is a concept used mainly to retain a company’s market share. It is effective in communication and generally the service industry. The product cycle model is used by companies to provide an outline to its marketing activities over different stages of the product’s life. Therefore, marketing concepts are guides to efficient marketing.
References
Angelova, B., & Zekiri, J. (2011, October 1). Measuring Customer Satisfaction with Service Quality. Retrieved October 24, 2012, from International Journal of Academic Research in Business and Social Sciences: http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=494126a4-91a6-4871-af64-53a3209a19ce%40sessionmgr104&vid=2&hid=120
Islam, K. S., & Asami, Y. (2009, July 1). HOUSING MARKET SEGMENTATION: A REVIEW. Retrieved October 24, 2012, from Review of Urban & Regional Development Studies: http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=53ed6c2d-7915-40e6-b0d5-fc83394315f7%40sessionmgr111&vid=2&hid=120
Mullins, & Walker. (2010). Marketing management: A strategic decision-making approach (7th Edition ed.). New York: McGraw-Hill.
Oger, A. O., & Drukker, J. W. (2010, March 1). Phases of Product Development:A Qualitative Complement to the Product Life Cycle. Retrieved October 24, 2012, from Design Issues: http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer?sid=072bf892-4188-46a9-8be3-5b561620b119%40sessionmgr114&vid=2&hid=120
