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International Marketing MKT630

Lesson # 3

INETRNATIONAL MARKETING PROCESS

International Marketing Orientation of Firms

A company's orientation towards the market:

A company can have one of the following five types of orientations towards its markets;

The Production Concept. This concept is the oldest of the concepts in business. It holds that

consumers will prefer products that are widely available and inexpensive. Managers focusing on this

concept concentrate on achieving high production efficiency, low costs, and mass distribution. They

assume that consumers are primarily interested in product availability and low prices. This orientation

makes sense in developing countries, where consumers are more interested in obtaining the product than

in its features.

The Product Concept. This orientation holds that consumers will favor those products that offer the

most quality, performance, or innovative features. Managers focusing on this concept concentrate on

making superior products and improving them over time. They assume that buyers admire well-made

products and can appraise quality and performance. However, these managers are sometimes caught up

in a love affair with their product and do not realize what the market needs. Management might commit

the "better-mousetrap" fallacy, believing that a better mousetrap will lead people to beat a path to its

door.

The Selling Concept. This is another common business orientation. It holds that consumers and

businesses, if left alone, will ordinarily not buy enough of the selling company's products. The

organization must, therefore, undertake an aggressive selling and promotion effort. This concept

assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying.

It also assumes that the company has a whole battery of effective selling and promotional tools to

stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim

is to sell what they make rather than make what the market wants.

The Marketing Concept. This is a business philosophy that challenges the above three business

orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its

organizational goals (goals of the selling company) consists of the company being more effective than

competitors in creating, delivering, and communicating customer value to its selected target customers.

The marketing concept rests on four pillars: target market, customer needs, integrated marketing and

profitability.

Distinctions between the Sales Concept and the Marketing Concept:

The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the

needs of the buyer.

The Sales Concept is preoccupied with the seller's need to convert his/her product into cash.

The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of

the product as a solution to the customer's problem (needs).

The Marketing Concept represents the major change in today's company orientation that

provides the foundation to achieve competitive advantage. This philosophy is the foundation of

consultative selling.

The Marketing Concept has evolved into a fifth and more refined company orientation: The

Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future

forms of marketing and selling approaches.

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International Marketing MKT630

The Societal Marketing Concept. This concept holds that the organization's task is to determine the

needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and

efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all

must be done in a way that preserves or enhances the consumer's and the society's well-being.

This orientation arose as some questioned whether the Marketing Concept is an appropriate

philosophy in an age of environmental deterioration, resource shortages, explosive population growth,

world hunger and poverty, and neglected social services.

Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-

run interests of consumers and society?

The marketing concept possibly sidesteps the potential conflicts among consumer wants,

consumer interests, and long-run societal welfare. Just consider:

The fast-food hamburger industry offers tasty but unhealthy food. The hamburgers have a high fat

content, and the restaurants promote fries and pies, two products high in starch and fat. The products

are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these

restaurants may be hurting consumer health and causing environmental problems.

Some examples of the `marketing concept':

The marketing concept has been expressed in many colorful ways:

"Meeting needs profitably."

"Find wants and fill them."

"Love the customers, not the product."

"Have it your way." (Burger King)

"You are the boss." (United Airlines)

"Putting people first." (British Airways)

"Partners for profit." (Milliken Company)

"Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied

with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of

the customers by means of the product and the whole cluster of things associated with creating,

delivering and finally consuming it"

The international marketing concept rests on four pillars:

target market (The potential customers)

customer needs

integrated marketing (Approaching customers through product offers, marketing communication,

distribution and pricing)

profitability

Types of customer needs:

Although marketing is about meeting needs profitably, understanding customer needs and wants is not

always a simple task. Some customers have needs of which they are not fully conscious. Or they cannot

articulate these needs. Or they use words that require more interpretation

Consider the customer who says he wants an "inexpensive car. The marketer must probe further. Five

types of needs can be identified:

Stated needs (the customer wants an inexpensive car)

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International Marketing MKT630

Real needs (the customer wants a car whose operating cost, not its initial price, is low)

Unstated needs (the customer expects good service from the dealer)

Delight needs (the customer buys the car and receives a complimentary gift)

Secret needs (the customer wants to be seen by friends as a value-oriented savvy consumer)

Importance of customer retention:

Attracting a new customer can cost much more than pleasing an existing customer - it may cost even

much more to bring an existing customer to the same level of profitability as the lost customer -

customer retention is thus more important than customer attraction.

The key to customer retention is customer satisfaction. A highly satisfied customer:

Stays loyal longer

Buys more as the company introduces new products and upgrades existing products

Talks favorably about the company and its products

Pays less attention to competing brands and advertising and is less sensitive to price

Offers product/service idea to the company

Costs less to serve than new customers because transactions are routinized

International marketing value chain:

`Value Chain' is tool for identifying ways to create more customer value. Every firm is a collection of

activities that are performed to design, produce, market, deliver, and support its products. Just like a

metal chain, the strength of a business value chain is the strength of its weakest link. In order to improve

the delivery of final customer value, the business value chain needs to first improve its weakest links

(activities).

The business value chain identifies nine strategically relevant activities that create value and cost in

specific business:

Primary activities (through which a product / services passes during various stages of

manufacturing and delivery)

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Service

Support activities (that are not directly involved in manufacturing and delivery of a product or

service, but support such activities)

Firm infrastructure

Human resource management

Technology development

Procurement

Five different levels of company investment in customer-relationship building:

The customer-relationship building is a process involved in attracting and keeping customers involves.

The objective is to move the customer from just a suspect (in terms of a potential to become a buyer) to

an advocate for other for the company and its brands. The various stages of customer loyalty are in the

following;

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International Marketing MKT630

Suspects -- prospects -- first-time customers -- repeat customers -- advocates

A company can opt to adopt a simple selling orientation towards its customers or may work to develop

an active partnership with them. The five different levels of a company's investment in customer

relationship building are;

Basic marketing

· Simply selling

Reactive marketing

· In addition to selling encourage the customer to contact for any question, comments,

complaints

Accountable marketing

· After-sales calls to check if the customer is satisfied

Proactive marketing

· Contact customer from time to time to seek inputs for future improvements in products

Partnership marketing

· Work continuously with customers to discover ways to effect customer savings or help the

customer perform better

A customer that becomes a partner with a firm buys more of the firm's products, the transaction and

advertising cots are lower, becomes forgiving, gives higher profits margins and also advocates others to

buy the firm's products.