The Central Role of Marketing in an Organization

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The Central Role of Marketing In an Organization

Dair Dzhumaliev

HULT International Business School

“Marketing… It encompasses the entire business. It is the whole business seen from the point of view of its final result, that is from the customer’s point of view.”

- P.F. Drucker, 1954.

All organizations have their own limited resources – financial, human and production. Nowadays it is crucial for companies to keep apace with ever-changing market needs and make production, product or service enhancements. The goal of each organization is to allocate those resources properly to realize existing market potential in the most profitable way and accumulate certain level of revenues for the business maintenance and future growth. In order to do that, companies need to successfully implement their product in the market.

The essence of marketing is the ability to introduce a product to the market and make customers want to buy it. According to Kotler & Keller (2006), “the buyer chooses between different offerings on the basis of which is perceived to deliver the most value. Value reflects the perceived tangible and intangible benefits and costs to the customer. Value can be seen as primarily a combination of quality, service and price...” (James, 2017). The role of marketing department in an organization is, therefore, to determine existing market demand and its size and to come up with the organization’s strategic directions, products and services which will deliver the highest value to a customer.

4 P’s of Marketing

One of the main marketing concepts is called “4 P’s of Marketing”. It says that to develop an efficient market strategy, organizations have to come up with answers to the following points (James, 2017):

1. Product

• Companies must always understand what exactly they sell. Organizations need to decide how their products are going to visibly differentiate from the ones that are currently on the market and create a high customer perceived value. It includes:

• Product design, size
• Technical capabilities
• Quality
• Product features
• Smell

1. Price

• There are different pricing strategies that companies may implement in order to capture market share. Some organizations may want to price-skim the market and charge higher prices for their products at first and then lower them. Others may want to penetrate the market by lowering their product prices in comparison to competitors’ prices and attract their customers. This factor includes:

• Pricing strategy
• Discounts
• Methods for payments

1. Place

• The next important step in preparing a market strategy is for a firm to decide which distribution channels it is going to use for their customers to have an access to the product. It includes:

• Distribution channels
• Logistics
• Inventory storage

1. Promotion

• The last step of a market strategy development is to introduce a product to the market. It can be done through online and TV advertising, newspapers, PR, etc. It also includes:

• Advertisements
• Public relations
• Sales promotions

Later the concept of 4 P’s has been modified into the concept of 7 P’s by adding such factors as Process, People and Physical Evidence for the organizations that provide services as their end products.

Factors of Market Strategy

        Besides the 4 P’s of marketing, when determining their market strategy companies need to evaluate a bunch of other factors such as PESTLE and SWOT analysis, strategic objectives and directions for growth (James, 2017).

The PESTLE concept focuses on analysis of the following market factors:

• Political
• Economic
• Social
• Technological
• Legal regulatory
• Environmental

The goal of PESTLE analysis is to identify potential opportunities and threats that a product development and implementation may face in the current market in each of the spheres above.

The SWOT analysis deals with the company’s:

• Strengths
• Weaknesses
• Opportunities
• Threats

The first two factors, strengths and weaknesses, focus on the company’s internal assessment of business while the latter two emphasize on the external assessment of the market. Opportunities and threats are also discussed in PESTLE analysis.

Before realizing a product, organizations have to decide on clear marketing objectives. Whether a company introduces a new product to the market or tries to increase sales of an existing product, their marketing objective should be SMART:

• Specific
• Measurable
• Actionable
• Realistic
• Time bound

Finally, to develop a successful marketing strategy, organizations need to work on:

• Market segmentation
• Targeting
• Positioning of a product

First of all, all organizations must know who their customers are in order to adjust their product specifically for their market segment. If a firm fails to recognize their customer segment, they are not going to perform successfully in the long term. By segmenting the markets, organizations are able to see which market segments are the most profitable for them to pursue and target. After that is done, organizations need to position themselves in the market by differentiating their product offer from the rest of the market players and creating high customer perception value.