Marketing Management
300
M O D U L E
301 301
Marketing Strategies
305
Quality, Sales, and Marketing
310
New Product Development
315
Product Management
320
Advertising and Promotion
330
Pricing Strategies
340
Consumer Behavior
350
Marketing Research
355
390
360
394
365
395
370
399
375
Module 300 Glossary
Marketing Channels and Distribution
Electronic Commerce and Marketing
Ethics and Marketing
Economics and Marketing
Sales Administration and Management
Quantitative Techniques and Marketing
Ethics and Sales
International Issues
Law and Marketing
380
Module 300 Endnotes
Market Segmentation and Target Markets
385
Services Marketing
587
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Marketing Strategies The Evolution of Markets via Spontaneous Economic Combustion Spontaneous Economic Combustion To understand why marketing is such a fascinating economic and sociological activity, we have to first understand the fundamental reason why markets developed and how marketing adds value. Markets exist because of three primary conditions— raw material scarcity, labor specialization, and consumption satiation. Simply stated, markets exist because valuable raw material resources are geographically concentrated in some locations and not in others (raw material scarcity); we get better at doing things the more we do them (labor specialization); and beyond some level of normal consumption, we tend to become less interested in consuming things the more we consume them (consumption satiation). Put raw material scarcity, labor specialization, and consumption satiation together in any human society and markets, marketing, and trade will be created spontaneously. Let us walk through the logic of this theory of spontaneous economic combustion. RAW MATERIAL SCARCITY Throughout history, tribes of humans have flourished in very different geographical locations. Each location provided very different access to raw material resources, for example, flint, turtles, wheat, water buffalo, potatoes, whale blubber, iron ore, gold, and salt. The most fundamental reason for the spontaneous creation of markets, marketing, and trade was varying access to important raw material resources. Making the best of what they had on hand, different tribes survived and flourished by becoming skilled at hunting, gathering, growing, and processing these raw material resources. This created the second reason for the spontaneous creation of markets, marketing, and trade between clans, tribes, and nations: the development of differential skills in inventing new products out of raw materials, producing them, and then distributing them. How did tribes become skilled at marketing and trading? They did so through labor specialization. LABOR SPECIALIZATION The simple notion that we get better at doing things the more we do them provides the basis for labor specialization. As people specialize in a particular activity, they learn to become better, more efficient, and more skilled at that particular activity. Of course, there are setbacks to learning, and some individuals are more motivated to learn than others. As a general principle, however, the benefits of labor specialization were established and made famous in the 1700s by the pioneering economist Adam Smith. Management scientists and economists have observed that the same learning occurs at the organizational level. This learning process has been studied by economists who analyze it in terms of learning curves.1 In general, as a company’s experience increases, the cost of production and distribution decreases and the potential for its knowledge, learning, and ability to lead to the invention of new goods and services around its expertise increases. CONSUMPTION SATIATION The third necessary ingredient to generate spontaneous economic combustion is consumption satiation. In essence, the basic reason why trading occurs on the demand side is that we like to acquire and use a variety of goods and services rather than live an isolated existence in which we consume only what we produce. When we consume only what we produce, we produce only enough to satisfy our own needs, because to produce more would create a glut or an excess that is not used and is subsequently wasted. This is called consumption satiation. Consumption satiation also leads us to want to swap what we have an excess of for something we are short of. It is based on the idea that beyond some normal level of consumption, the more we consume the same product over time, the less interested we are in consuming another unit of that same product. Hence, the marginal added value of consuming another unit is less than the marginal utility of the unit preceding it. The bottom line is that humans tend to become satiated even when consuming the products they enjoy the most. Consequently, trading will spontaneously occur and thrive because of customer needs, wants, desires, and preferences for a variety of products. Furthermore, trading eliminates the impracticality and inefficiency associated with each individual inventing and making distinct products for his or her own personal use. Thus, raw material scarcity, labor specialization, and consumer satiation are the major forces behind spontaneous economic combustion and the field of marketing itself. These forces have raised the skill of trading and marketing to an economic, social, and political imperative.
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The Evolution of Marketing into a Trading Relationship Exchange Process The Traditional View of Marketing’s Evolution The most frequently noted eras are the production era, the sales era, the marketing era, and the relationship marketing era. (See Exhibit 300.1.) PRODUCTION ERA The production era was based on the philosophical attitude that “good products” would sell themselves. The production era is said to be characterized by companies that focused on developing mass production skills in the belief that if good products were made affordable and widely available, the consuming public would “beat a pathway to the doors” of the manufacturers of these products. Henry Ford’s Model T automobile and the development of the production line assembly plant are often noted as prime examples of the production era. Throughout the production era, marketing is said to have played a secondary role to production. SALES ERA The proposed consequences of the production era were piles of unsold inventory built up because a product did not sell itself. The prevailing philosophy of the sales era was to find customers for inventories that went unsold. Advertising campaigns were developed to convince customers to buy products that they otherwise would not have purchased. In essence, during the sales era, companies were trying to sell what they produced as opposed to producing what they could sell. Marketing continued to play a secondary role during the sales era to other functional areas, such as engineering, production, and finance. Throughout the sales era, the head of the marketing department was frequently given the title sales manager. MARKETING ERA Based on the knowledge gained by the mistakes made during the production and sales eras, business organizations began to appreciate the value of market information prior to making plans for production. As a result, the marketing era was characterized by a great deal of importance placed on identifying customer needs and wants prior to producing the product. The rationale was that the company would produce what the customer actually wanted, and the customer would then purchase the product. During the marketing era, marketing moved to the forefront of business strategy, and satisfying customer needs became the responsibility of everyone in the organization, regardless of whether employees were engineers, production specialists, financial analysts, or sales personnel. RELATIONSHIP MARKETING ERA The driving philosophical approach of the relationship marketing era is to reinforce and broaden the scope of the customer-oriented focus of the marketing era. In the past, businesses focused on conquest marketing activities, which emphasized the sale itself rather than the parties to the sale. In contrast, the relationship marketing era recognizes the value and profit potential of customer retention: creating long-term trading relationships by providing reasons to keep existing customers. The relationship marketing era is also characterized by a broadening of the definition of customers to include suppliers. Hence, the guiding emphasis is to develop long-term, mutually satisfying relationships with the firm’s customers and suppliers.
An Alternative to the Traditional View of Marketing The primary problem with the traditional view of marketing eras as described above is that it does not fit the facts. In reality, the idea of inventing and marketing products that customers need and want, then supplying them, has been fundamental to the development of free-market economies from prehistory on, not something that has been implemented in recent times. The history of global trade and economic development has involved bringing new, attractive products, such as flint arrowheads, bone needles, fertility figurines, chocolate, and spices, to market and creating long-term trading relationships between tribes, countries, companies, and wealthy customers.2 Ancient economies that were very good Exhibit 300.1
The Evolution of Marketing
1. Production Era Business philosophy focusing on manufacturing efficiency.
2. Sales Era Business philosophy focusing on selling existing products.
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3. Marketing Era Business philosophy focusing on customer needs and wants.
4. Relationship Marketing Era Business philosophy focusing on suppliers and keeping existing customers.
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at such relationship marketing flourished and came to dominate other economies. Eventually, these traders became targets for raiders. Military forces were subsequently formed to protect their trade, trade routes, and the fruits of their trade. Thus, there never was a production era or a sales era. In reality, what there have been are companies that become too production-oriented or too sales-oriented, at the expense of listening to the voice of the customer. Eventually, these companies are forced by the competition (with more of a marketing orientation) to become more customer-oriented, or they are driven out of the market. What, then, has been the real history of the development of market economies and marketing? It is the history of the development of well over 10,000 product markets, each with its own unique evolutionary story.3 Marketing scholars have attempted to draw further general conclusions about the evolution of such diverse markets and their marketing traditions and practices by focusing on the exchange process.
Marketing as an Exchange Process According to the most widely accepted definition provided by the American Marketing Association, marketing is ultimately an exchange process: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.4
To illustrate the fundamental concept of added value associated with the exchange process, consider the following scenario. The grower of beef would rather exchange a steak for a watermelon because he is tired of eating steak (consumption satiation) and it costs him a lot less to produce an additional steak (labor specialization) than to grow a watermelon. Similarly, the grower of watermelons also would like to exchange one of her watermelons for a steak because she is sick of eating watermelons and it costs her a lot less to produce a watermelon than a steak. Therefore, if they meet, an exchange is likely to occur between the beef farmer and the watermelon grower.When both benefit,added value has been created by the exchange. Hence, the fundamental benefit of the exchange principle (the law or truth underlying exchange) is added-value creation: By the simple act of exchanging goods and services for other goods and services (or for money), added value is created. Marketing exchanges exist because they are beneficial to both parties. They are beneficial to both parties because of the principles of raw material scarcity, labor specialization, and consumption satiation. Comparative advantage in the cost of producing various goods has long been understood to underlay the benefits of trading. But production-based comparative advantage does not, by itself, lead to production surpluses that create trade and markets. The satiation principle is also necessary. In other words, if the more the farmer ate steak, the more he liked it and wanted more of it to eat, then he would be very happy producing more beef at an ever lower cost and eating more of it than ever. In essence, the farmer would have an ever increasing interest in eating his cattle, rather than exchanging them for other products in the marketplace. Consequently, the fundamental principle of exchange is based on the principles of production-based comparative advantage (which is itself based on resource scarcity and labor specialization) and consumption satiation. Marketing facilitates exchange by performing a variety of activities that benefit consumers, producers, and resellers alike. Marketing exchange activities include the following:
• Buying: Marketers, besides being skilled manufacturers, are often skilled buyers of other products from many different manufacturers that are then resold to customers under one roof. When you shop at Wal-Mart, for example, you are taking advantage of this marketer’s considerable expertise in assessing quality and its volumebuying power that enables it to promise the lowest prices. • Selling: By making a variety of products available under one roof, marketers sell to numerous customers in a single location, thereby alleviating the need for individual customers to deal with individual manufacturers for each and every product they desire to purchase. Selling also includes the skills of understanding, educating, and persuading customers, all much needed in a world of rapidly improving technology and increased competition. • Transporting: Marketers facilitate the transportation of products by providing the products customers want, where and when they want them. Improvements in transportation, from wagon to sailboat to steamboat to jumbo jets and containerization, have made markets global, to the benefit of billions of people. • Storing: Marketers store products, for example, at a grocery store, so that customers do not have to and so that manufacturers do not have to keep everything that they produce in their own inventories until each product is sold. Today, distribution logistics (sometimes called supply-chain management) combines the management of buying, transporting, and storing into a single system. Innovations in these systems have helped to reduce the cost of distribution in the U.S. economy from around 12 percent of gross domestic product (GDP) to 6 percent over the last 20 years.
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• Financing: Marketers offer special paying (e.g., 90 days, same as cash) and leasing agreements that enable more customers access to the products they desire to purchase. Innovations in household financial services in the mid-20th-century U.S. economy led to an enormous increase in the purchase of homes and automobiles and the formation of household debt. These innovations are now taken for granted, but from the early 1930s through the early 1960s, there were many marketing departments in university business schools that taught entire courses on managing consumer credit. • Risk taking: By purchasing products from manufacturers before they are sold to customers, marketers assume the risk that the products may not sell in the marketplace. This diversification of financial risk encourages manufacturer invention, innovation, and entrepreneurship that benefits everyone. • Standardization and grading: Marketers play a role in standardizing and grading the quality and quantity of products made available to customers (e.g., eggs). Such standards are also often mandated by regulation but increasingly are determined by the quality of rivals’ goods and services. Standards increase buyer confidence in the quality and performance of what is purchased. • Obtaining market information: Marketers collect information about buyers and suppliers (1) to increase the efficiency and effectiveness of the exchange process (e.g., by suggesting changes in what is exchanged or how it is exchanged to increase the resulting satisfaction of both parties and thus the total value of the exchange) and (2) to increase the returns from a firm’s deployment of assets and resources. • Fostering trust with trading partners: Marketers are important boundary spanners whose goal is to build and foster trust with trading partners that ensures that the terms of trade are implemented. Trust also leads to cooperative innovations in trading processes and expansion of the relationship into new ventures, product categories, and types of services exchanged, and acts as a goodwill buffer in economic hard times or when new rivals enter the market.
Marketing as an Organizational Process The Marketing Concept Initially, the teaching of marketing covered two main topics: (1) how and why the unique marketing and trading institutions in different markets evolved and (2) the many and diverse ways that marketing activities (particularly undertaken in agriculture and processed foods markets) added value to the exchange process. From 50 years of such case study research and teaching emerged a consensus belief that the keys to business success were to achieve organizational goals by identifying the needs and wants of customers and delivering products that satisfy customers more effectively than competitors could. This prescription for success became known as the marketing concept. The marketing concept consists of three fundamental principles:5 1. The organization exists to identify and to satisfy the needs and wants of its potential and existing customers. 2. Satisfying customer needs is accomplished through an integrative effort throughout the organization. 3. The organizational focus should be on long-term cooperative trading relationships with customers as opposed to short-term exploitation of customers. The marketing concept has its roots in customer orientation founded on the philosophy that production and selling efforts must be based on understanding and serving customers’ needs and wants. The marketing concept puts companies and managers on notice that neither production nor sales nor customers exist in a vacuum: They exist in a competitive marketplace that is becoming increasingly more competitive. It is this competitiveness that ultimately drives the marketing concept. The problem with the marketing concept, however, is that it is too simplistic. There is a great deal more to a firm’s marketing strategy (the planning and directing of a firm’s marketing efforts) than taking the long-term perspective, focusing on the customer, and diffusing such beliefs across the organization.
The Fundamentals of Marketing Strategy How is marketing strategy, the deployment of the resources and skills described in Exhibit 300.2, actually implemented? Markets consist of market segments—homogeneous groups of customers who have similar product usage wants and needs. For example, the soft drink market consists of a regular cola segment, a diet cola segment, and a caffeine-free segment, among others. As a business strategy, market segmentation allows the firm to focus its marketing efforts on
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Exhibit 300.2
Marketing Strategy
Deploying Assets and Capabilities Marketing strategy involves deploying major financial and human capital resources, such as building an Internet presence or a sales force, to develop a superior, distinctive, and difficult to imitate competitive advantage that the company can claim as its own based on the following dimensions: 1. Superior product design and technology as measured by sales growth, performance in use (not on paper), and customer satisfaction. How does the company rate compared to its major and high-growth competition? More importantly, how is this comparison changing? Who has new product development momentum? 2. Superior distribution system alliances, technology, and sales forces as measured by sales growth, service quality effectiveness, efficiency, and distributor satisfaction. How does the company rate compared to its major and highgrowth competition? More importantly, how is this comparison changing? Who has distribution system momentum? 3. Superior cost structure, which leads to lower prices and the potential for significantly lower prices as sales grow. How is the company rated compared to its major and high-growth competition? More importantly, how is this comparison changing? Who has cost reduction momentum? 4. Superior brand reputation based on a history of superior product and distribution strategy (not just a heavy advertising campaign that produces top-of-mind audience name awareness). How does the company rate compared to its major and high-growth competition? More importantly, how is this comparison changing? Who has brand reputation momentum? Using Superior Vision The competitive positioning advantages listed are achieved and cleverly deployed through superior vision (seeing evolutionary market trends into the future) and using the following: 1. Superior market scanning and tracking systems involving the sales force and customer and trade satisfaction tracking services. How is consumer behavior changing? 2. Superior processes that link the highest levels of company decision making (the board and executive committees) to the knowledge and market insights of the company’s boundary spanners (sales force, customer service support, and market researchers). 3. Research and development that tracks trends in new emergent technology used in product and distribution system design. The company learns by imitating as well as by innovating. 4. Information technology systems that measure what is being managed and that allow real-time communication of new knowledge across cross-functional teams and sister operations in other countries. 5. Superior targeting of products and services to market segments. 6. Superior assessment of the growth potential of markets and the company’s competitiveness in each market. 7. Superior marketing planning and improvisation processes that act on the above information.
narrowly defined markets. Many firms lack the resources to efficiently and effectively appeal to every segment in a market; therefore, they often choose to focus on specific segments called target markets. The marketing mix, composed of product, pricing, distribution (place), and promotion decisions, is then tailored to meet the needs and wants of specific target markets and to carve out a position in the marketplace. Product positioning refers to how customers perceive a product’s position in the marketplace relative to the competition. Ultimately, marketing strategy directs the product positioning of the firm and directs and develops a mix of other marketing activities, processes, and practices that are specifically tailored to effectively and profitably serve the needs of a target market. MARKETING MIX The conventional way of thinking about marketing mix is to categorize marketing decisions and activities as being related to product, pricing, distribution (place), and promotion decisions. (See Exhibit 300.3.) PRODUCT DECISIONS AND ACTIVITIES Product decisions and activities encompass a wide array of processes, such as new product development, branding, packaging, labeling, and the strategic management of products throughout their technological life cycle. Products provide form utility—the transformation of raw materials or labor into a finished good or service that the consumer desires. However, we would like you to think of products as more than just tangible goods. Throughout this text, unless otherwise specifically stated, the term product refers to goods (e.g., appliances, automobiles, and clothing), services (e.g., legal, health care, and financial), people (e.g., political candidates, religious leaders, and students looking for their first job), places (e.g., tourism destinations, shopping centers, and countries seeking economic development), and ideas (e.g., HIV protection, Mothers Against Drunk Driving, and antidrug campaigns). Similarly, the term customer includes both business customers and household consumers. No one would dispute that product markets vary greatly in large part be-
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Exhibit 300.3
Elements of Marketing Mix
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Source: From John H. Lindgren, Jr. and Terence A. Shimp, Marketing, 1st edition. (Mason, OH: Thomson Learning, 1996)
cause of differences in the types of customers who make a market. A customer can be a government, a corporation, a family business, a household, or an individual. Clearly, any firm that seeks to satisfy its customers must possess a deep understanding of how customers derive satisfaction from a purchase. In particular, it must strive to have a better understanding than its rivals. Marketing to businesses is so different from marketing to households that it is best to study them separately. PRICING DECISIONS Pricing decisions should satisfy multiple objectives. At the very least, a firm’s pricing strategy should do the following: 1. Support a product’s marketing strategy 2. Achieve the financial goals of the organization 3. Fit the realities of the marketing environment Despite decades of study by economists and market researchers, price setting is still often determined by a bestguess decision that is quickly revised when the guess turns out to be wrong. DISTRIBUTION (PLACE) DECISIONS Distribution decisions reflect the marketer’s ability to create time, place, and possession utilities for customers. Time utility and place utility reflect the marketer’s ability to provide products when and where customers would like to purchase them. Possession utility facilitates the transfer of ownership of the product from the producer to the customer through marketing channels. A typical marketing channel would consist of the following channel members: the manufacturer, who produces the product and sells it to a wholesaler; the wholesaler, who resells the product to a retailer; and the retailer, who sells the product to the final consumer. PROMOTION DECISIONS Promotion decisions communicate the firm’s marketing strategy to customers and channel members who assist in the product’s distribution to the market. Every firm has choices to make as to how to communicate with the market. Communication is accomplished by managing the firm’s promotion mix. Elements of this mix include personal selling, advertising, publicity, and sales promotion. Each element has its advantages and disadvantages.
The Marketing Environment Businesses do not operate in a vacuum. Environmental forces surround a firm and often change the rules of engagement. Consequently, a firm’s marketing strategy must adapt to changes in the marketing environment if the firm is to survive and thrive. In general, a marketing environment comprises six elements. First, the firm’s internal marketing environment (the microenvironment) consists of objectives and resources. The external marketing environment (the macroenvironment) consists of the socio-cultural environment, economic environment, legal/political environment, competitive environment, and technological environment. Exhibit 300.4 provides a framework that incorporates these environmental forces. The model illustrates that these forces impinge on and influence the likely successful fit of all elements of the marketing mix to the internal and
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Marketing Mix Fit
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Target Market Segment
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Source: From John H. Lindgren, Jr. and Terence A. Shimp, Marketing, 1st edition. (Mason, OH: Thomson Learning, 1996)
external marketing environment and to the target market. Successful firms track changes in the marketing environment via environmental scanning. Environmental scanning identifies important trends in the micro- and macroenvironments, then considers the potential impact of these changes on a firm’s existing marketing strategy.
The Internal Marketing Environment OBJECTIVES AND RESOURCES Top-level corporate executives formulate annual and long-term objectives that affect marketing decision making.6 For example, a corporate objective to increase profits by 15 percent over the previous year has implications for current marketing actions. Objectives are critical to any company’s success. Without objectives, a company has no direction. If no objectives are set, a company will waste a great amount of time, money, and effort in pursuing what may prove to be unprofitable or unrealistic strategies. A company must know where it is going if it is to be successful. It needs an overall set of objectives to guide its efforts. Each functional area in the company (e.g., operations, finance, and marketing) also has its own objectives, but its goals must fit into or be guided by the company’s overall objectives. It is imperative that the entire company works together toward the same goals. Thus, marketing strategy is influenced by, and is to some extent constrained by, overall corporate objectives. Marketing strategy is also constrained by available resources. A firm’s resources include finances, technological and production capabilities, and managerial talent. Resource constraints prevent marketing managers from pursuing every available opportunity. For example, financial restrictions can prevent a firm from running a prime-time television campaign for a new product introduction. Instead, it may be able to afford a national radio campaign. Or a firm’s current production line may not be equipped to package a trial size of an existing product. New equipment may be needed, but perhaps finances will not allow it at this time. If a firm is fully aware of its limitations, strategies can be developed and opportunities pursued that are within the company’s limits.
The External Marketing Environment Sociocultural Environment Changes in the sociocultural environment reflect the reshaping of the world’s population in terms of numbers, characteristics, behavior, and growth projections.
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Customer attitudes and behavior also impact the sociocultural environment and the way marketers perceive the market. Marketers must consider the changing roles of women both in marketing their products and in reaching target markets. A traditional medium such as daytime television is no longer effective in reaching working women. Direct mail, magazines, and radio are proving to be more effective in reaching this group. Cultural and age diversity, between and within countries, also affects the sociocultural environment. Marketers are now targeting the specific needs of ethnic markets such as African Americans, Asians, and Latinos. This change in marketing strategy reflects the growing purchasing power of ethnic groups, their increasing rate of population growth relative to the slower growth rate of Caucasian populations, and cultural differences in how different groups purchase and use products. By 2010, minorities will represent one-third of the U.S. population. The Americanization of world culture through science, entertainment, and business has helped to reduce cultural differences, particularly among countries with highly educated populations. This opens up the possibility for global segmentation and positioning, where segmentation spreads across rather than within cultures. In short, cultures no longer follow national, political, or cultural borders as much as they did even 50 years ago. However, many countries still have different consumer wealth, buying power, price elasticity, experience with the product category, and competitive behavior. Consequently, relatively few products can be positioned exactly the same way across the global marketplace. Those products that can be positioned usually have a strong symbolic or intangible image that transcends cultural, technological, and economic differences. ECONOMIC ENVIRONMENT Marketers must also monitor changes in the economic environment.7 The economic environment includes factors such as the purchasing power of markets, per capita expenditures, employment rates, general consumer confidence, and the cost of capital that may be necessary to produce products. The mere size of markets is not enough to make a market profitable. Customers within those markets must have, in addition to the willingness to purchase products, the ability to purchase (purchasing power). LEGAL/POLITICAL ENVIRONMENT The legal and political environment poses another external force for the marketer. It is the job of the government to establish the rules and regulations to which businesses must conform. These rules and regulations affect each element in the marketing mix. Marketers must therefore be aware of and conform to all laws affecting their business. As citizens, our behavior is constrained by the law and by our individual views of right and wrong. It is no different for firms that compete in domestic and international markets. Marketplaces are full of rules. Many are written into law, some are outlined in professional codes of ethics, and others are stated in company rules of good conduct. While the legal/political environment can frustrate initiative, in general it is positive for business. For example, many of the laws that affect marketing practice are in place to encourage competition and to protect consumers. COMPETITIVE ENVIRONMENT Competitiveness reflects how effective and efficient a firm is, relative to its rivals, at serving customers. Effectiveness pertains to the quality of products, market share, and profitability, while efficiency reflects response speed and low costs. Both effectiveness and efficiency ultimately depend on the strength of the firm’s competitive drive and its decision-making skills. Businesses are constantly exhorted by almost everyone—government agencies, associates monitors, and industry insiders, among others—to become more competitive. But becoming more competitive is like losing weight: It is easy to talk about, but it is not easy to do. The task is almost impossible if it is not based on a thorough competitive situation analysis. The analysis should start with a general overview of the competitive structure and dynamics of the market. This includes market share analysis, a review of the history of the market, and a search for emerging competitors that threatens to drive existing firms and their products into extinction. The analysis should then focus on major rivals and their likely behavior. TECHNOLOGICAL ENVIRONMENT Successful firms must also monitor changes in the technological environment. Technology is advancing at an incredible rate. Technological advances primarily influence marketing practice. They enable firms to develop new products and to compete in new markets. Technological advances also help marketers improve the way business trading is conducted on a day-to-day basis. Clearly, monitoring the environment is critical to any firm’s survival. To avoid failures, a company has to pay attention to what is going on in the marketing environment while implementing marketing strategy. It is that simple, yet many companies do not pay attention to what their sales force, sales figures, costs, and market research say is happening with regards to changes in the marketing environment. The reasons for not paying attention and acting on information are many. It may be that the firm does not conduct environmental screening analysis at all, or it collects information that is biased, or information is not passed on to the right decision makers, or the information is not timely enough. Today’s senior management is often faced with numerous distractions, such as take-over attempts,
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lobbying efforts directed toward the government, involvement in major litigation, internal management succession battles, and labor disputes. Reacting to changes in the marketing environment is often a challenging process. Companies often talk about valuing market research and market scanning systems, but the reality is that these activities are undertaken several layers of management away from boards of directors and executives who are making most of the marketing strategy decisions. The lesson is that a major responsibility of the marketing function in any firm is to ensure that tracking measures that monitor the marketing environment get into the hands of the most senior management of the company.
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