Changing Role of Marketing Viz a Viz "Markets"
Once considered as an activity responsible for ensuring flow of goods and services between organizations and its customers marketing has taken new ‘Avatar’. How does this shapes its role with respect to markets.
- Changing Role of Marketing viz a Viz Markets
- Transactions as a starting point
- Repeated Transactions
- Long Term Relationships
- Strategic Alliance/ Joint Ventures
Changing Role of Marketing viz a Viz Markets
Markets have undergone a change. Originally denoted as physical meeting place for buyer and seller, markets have changed for their processes, systems, institutions, coordination mechanisms, incentives and information systems. Transactions as impersonal, decentralized exchanges segregated in time and space from other transactions are now more planned and administered. Instead of narrow conceptualization of marketing as transaction or series of transactions based, the focus on relationships has broadened the scope of marketing theory and practices and redefined the role of marketing in attaining borderless organizations.
Broadening of both theory and practices of marketing is considered as the agents of change in organization structures and their relationships. In focusing on relationships, marketing as a discipline is found capable enough to address the issues inherent in business relationships and alliances.
Transactions as a starting point
In pure market form of economic organization all activities are conducted as discrete, market based transactions. Pure transaction is a one-time exchange of value between two parties with no prior or subsequent interaction. Price is the guiding mechanism to achieve maximum profits. Marketing job is simply to find the buyer and is focused on sale - the single event of a transaction.
Transactions are repeated for same product or with the same seller to have convenience and to save time and effort. Repetition occurs because of trust and credibility – the foundation of relationship. Marketing ROI is to guide the product differentiation and to create preference and loyalty to earn higher prices and profits in future. Repeation increases the profitability of the markets and also creates a more robust system better suited to dynamics of changing environment in the marketplace.
Long Term Relationships
Such relationships are typical of contractual form of relationships, which hold strategic importance too. Here, the price is based on negotiation process recognizing mutual dependence and not solely determined by market forces and quality, delivery andtechnical support. Marketing revolves around use of various customer relationship management (CRM techniques) which are directed towards customer considered for relatively long term relationships. So customers are defined as either transaction customers or Relationship customers.
As against adversarial long term relationship which are usually at the arm’s length, total interdependencies results into stability in relationships, which contributes to sharing of information among the companies and promotes aggressive, long term growth policies. Marketing has its emphasis more on long term customer relationship and the formation and management of strategic alliances. Such relationships are typical of contractual form of relationships, which hold strategic importance too. Here, the price is based on negotiation process recognizing mutual dependence and not solely determined by market forces and quality, delivery and technical support.
Strategic Alliance/ Joint Ventures
Each partner intends to move towards the achievement of some long term strategic goal. There is sharing of objectives and commitment of resources by both the parties to the alliance. There could be multiple alliances and each is the separate entity managed by bureaucratic and administrative controls. The intellectual core of marketing management shifts from conceptual framework of microeconomics to the set of organizational and strategic issues inherent in relationships and alliances.
These are the complex, multifaceted organization structures that result from multiple strategic alliances, usually combined with other forms of organization including divisions, subsidiaries and value added re-sellers. Since, build around strategic partnership the distinctions between firm and its market environments (both suppliers and customers) become blurred. Unit of analysis for marketing decision making shifts from products and firms to people, organizations, and social processes that bind actors together in ongoing relationships.
Since, evolved forms of organizational structures require more flexibility in decision making to respond to the changing needs of their customers, marketing as an activity and as a philosophy has assumed new and greater role and responsibility within the organization.
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