Management

A concise introduction

by Richard Pettinger

Chapter 12

Marketing is the competitive process by which goods and services are offered for consumption at a profit. Marketing takes place at strategic and operational levels, and is concerned with developing a brand, image, presence and identity for the company and its products and services. It achieves this through:
  • determining a position in relation to the core strategy as to whether it will be first in the field or a follower
  • using marketing mixes, which are:

    - the 4Ps – price place product promotion
    - the 4Cs – customer convenience choice and cost
This position and mix is then further structured and developed through the use of marketing media – the internet, television and radio, packaging, design, colour, images, PR, posters leaflets and sponsorship and endorsements.

Additional readings

You should be familiar with the content of  P Kotler (2009) Marketing Management – PHI Pearson 
which is the main body of knowledge for all aspects of marketing expertise, and which sets marketing in the complete context of strategy, management and organisational practice.

There is also an excellent textbook on marketing: F Brassington and S Pettit (2012) Principles of Marketing – Pearson 
which is widely used and also very comprehensive.

Otherwise you should look at how companies and organisations present and set off their products, their services and themselves to best advantage. The companies that integrate every aspect of what they do and how they do it, effectively market themselves – present themselves and their products and services and service – so that every aspect of their work and activities, and everything that they do, enhances customer value and market support and confidence, and this in turn leads to the foundations of business confidence that are so vital for product and services viability.

Case studies and examples

Nurofen and ibuprofen: product, brand and market development

In 1989, Boots Plc., the UK pharmacy and department store chain, introduced Nurofen on to the market.  The key ingredient of Nurofen was ibuprofen.  Ibuprofen was created as the result of extensive research and product testing into the relief of both chronic and also acute pain. Ibuprofen proved effective. It was also very easy to produce in both batches and also mass production. The tablets were packaged in distinctive boxes of 12 tablets containing 200 mg each. These boxes were sold for £3.99 per box of 12.

After 18 months Boots developed further variations.  Of especial importance were:
  • Nurofen capsules which were easier to swallow and which were retailed at £4.49 for a box of 12;
  • Nurofen Plus which contained 400 mg of ibuprofen and which were sold at £5.99 per box of 12.
Boots enjoyed market supremacy in this area of medicines until 1996. The Nurofen brand rather than the Boots brand was used in promotions and advertising campaigns, and niche markets were opened up successfully in Western Europe, North America, Africa, Australia and New Zealand. Nurofen was additionally sold off-the-shelf, rather than through prescription; and this helped to make it both accessible and convenient.

The initial response of the other UK pharmacy chains, especially Superdrug and Lloyds, was to do nothing. However, in 1997, independent laboratories successfully replicated the research and product design. At this point the UK market was transformed. Superdrug introduced ibuprofen at £1.99 for 48 tablets, while Lloyds introduced their version at £2.99 for 48.  In 2001, Superdrug introduced their own brand ibuprofen 400 mg at £2.99 for 48 tablets, at the same time reducing the standard version to £1.99. Lloyds followed suit.

Tesco and Sainsbury, the supermarket chains, then introduced their own brand of ibuprofen standard (200 mg) first at 0.99p for 16, and Tesco quickly reduced theirs to 0.69p for 16 and 0.99p for 32. Both subsequently reduced their prices still further, to approximately 34p for 16 tablets.

In maximising the opportunity of the ibuprofen treatment and the Nurofen brand, here was a range of responses available to Boots, including prosecuting the other manufacturing laboratories, and also going after Superdrug and Lloyds. However, Boots chose not to do this; and instead concentrated on maximising and optimising the commercial potential of the Nurofen brand. The key outcome was that Nurofen was made available to owner-managed chemist shops on more advantageous terms than previously. Additionally, Nurofen was still to be sold by Boots. However, the main thrust would now be selling Boots own brand ibuprofen (200 mg) and ibuprofen full strength (400 mg) at rates competitive with those on offer at Superdrug and Lloyds.

This is marketing in practice: once a product is shown to work, its returns have to be maximised and optimised in any and all ways possible. It also shows how different parts of the market can be developed, and how different markets can be served, without disrupting the primary interests of the organisation concerned.

Alongside this, it also shows one response available when lawsuits become an option. Without stating that this should in any way be the response in all cases, here Boots have clearly taken a view that to pursue other laboratories and retail outlets would have been far less valuable to their own interests than going on with developing the best ways to maximise their own position from a commercial point of view.

Some key steps in practical marketing, customer relations and customer management

To charge 99p?

The practice of charging 99p rather than £1.00 for items was introduced by Marks & Spencer.  The reasons were:
  • to reinforce the positive aspects of the transaction by giving change as well the product to the customer;
  • to ensure that each product sold was afforded a receipt;
  • to ensure that the till had to be opened and a transaction recorded for security reasons.
It also means that you are keeping an active check on the speed of turnover of specific items, and on what makes up batches and baskets of goods in terms of specific customers and customer groups.

Loyalty cards 
The first loyalty cards were introduced by the Visa organisation.  The Visa organisation offered points for use of their credit cards.  The initial returns on these were disappointing to the customers however; for several thousand points and high levels of regular usage, the customer in practice received very little in return.  Some improvements were made to this.

This was the same with store cards.  When Tesco introduced its loyalty card in 1990, it quickly became apparent that the returns to customers were inadequate, and unlikely to maintain or preserve loyalty.  Tesco accordingly took the following steps:
  • increased the value of the points as rewards to the customer;
  • produced regular discount vouchers, both in cash terms, and also on a variety of named products, tailored to the individual's buying habits;
  • integrated the loyalty card into a range of other business, product and service developments.

The whole customer loyalty cared conception now means that you can gain as much information as you need about the people with whom you do business. You can instil on to the loyalty card all data that is of value to you, so that each time the customer has their card scanned, you have additional information about their buying and spending habits.

Flat-packing
For many years, the UK and European furniture industries have flat-packed their products for easy storage and delivery. This made all such products much easier to manage at every stage of their journey, until they arrived at the home or premises of the end user. Only then would the product be assembled.  The approach was pioneered in particular by Magnet and Southern, a UK (and later international) manufacturer, deliverer and installer of kitchen equipment. This approach was made universal by Ikea, and now everyone expects their furniture to arrive in flat packs.

Ikea also quickly gained a reputation for incomprehensible instructions and lack of key components in the flat-packs. Ikea dispute this, stating that they have simply picked up the past reputation of the other companies that produced flat-pack furniture. In practice, it was previous providers who gave inadequate instructions and a lack of the full set of components. It is only because Ikea have universalised the whole approach that they have gained this reputation.

This example illustrates two aspects of marketing:
  • you need to always be looking for product and service advantages that are of value to your customers;
  • in terms of managing your reputation, it is what people think of you that is vital, not the actual truth of the matter. In this case, Ikea are quite right in fact to say that they have never had serious problems with their components or assembly instructions. However, as this is what people think of them, they nevertheless have to manage this aspect of marketing effectively.
Public relations (PR)
Customers are much happier if they are told what is happening about a particular product or service; and this message is reinforced further still if they are told promptly and regularly, and in positive terms, what is happening in their particular case.  It is essential to ensure that this is honest as well as positive however.  For example, a woman in London was burgled.  This caused great distress.  Her house was ransacked, and items of value taken away.  However, the burglars were caught, and the woman had her belongings returned to her.  Accordingly, she rang the Metropolitan Police to thank them.  The conversation went along the following lines:

Burglary victim: I am ringing about the burglary at this address.
Metropolitan Police PR Officer: Let me just get the details ….. ah yes, thank you very much indeed for your call; we are working on this case, and we'll let you know progress as soon as we have any.

This destroyed the victim's faith in the integrity of the system.  She had been ringing up merely to thank the Metropolitan Police for the speed at which they solved the crime.  By receiving a standard PR response, she knew, believed and perceived that:
  • the fact that her problem had been resolved had not filtered through to the rest of the organisation;
  • the PR effort was a language rather than customer relations initiative;
  • the overwhelming probability was that everyone else ringing in would get exactly the same response.
Your PR activities have to be fully effective. All you are going to do, if you allow your PR to operate independently of everything that you otherwise do, is to store up trouble for the future. You have to ensure that the whole marketing effort is fully integrated at all stages.

Discussion questions

What are the advantages and drawbacks of digital marketing? How are you going to establish the digital part of a marketing campaign for:
  • political parties;
  • breakfast cereals;
  • high season holidays?
How are you going to go about marketing the next generation of game consoles? What are the key features that you have to present? How are these key features to be presented to best advantage?

How would you market vacuum cleaners to a middle aged generation of males?

What are the strengths and pitfalls of associating your products and services with celebrities?

Web links to other examples, materials and sources

You need to be familiar with the main regulatory drives that influence business and managerial behaviour and the ways in which companies and organisations are supposed to conduct their business. The most high profile regulatory approach is the US Sarbanes-Oxley Act 2002, which was brought in to try and ensure that companies worked to a universal set of standards in the wake of the collapse of Enron. The link is:
www.soxlaw.com

You should also be familiar with the links to the regulatory and statutory bodies with which you have dealings as the result of involvement in particular industries, sectors and locations.

You should also be familiar with universal statutory bodies: