Holistic Marketing

Holistic Marketing An account of evolution of the concepts of Marketing over the years of human existence – from the primitive “Exchange Concept” to the latest “Holistic Marketing Concept”. Introduction Definitions of Marketing : The Shortest Definition : The shortest definition of Marketing Management is “Meeting Needs Profitably”. 1.

Whose Needs ? - The needs of the people, or the customers or consumers,

2.

Who is trying to meet ? - The Producer, Marketer or the Company,

3.

What is the Objective ? - With profit to the company, & satisfaction to the customers.

The American Marketing Association (AMA) Definition : Marketing is an organisational function and a set of processes for creating, communicating & delivering value to customers and for managing customer relationships in ways that benefit the organisation & its stake holders. Philip Kotler’s Definition of Marketing Management : Marketing Management is the art & science of choosing target markets and getting, keeping and growing customers thro’ creating, communicating & delivering superior customer value. What is Marketed Marketing people are involved in marketing the following 10 types of entities as explained below 1.

Goods – Physical products, consumer products, consumer durables, etc.

2. Services – Transport, repair & maintenance, legal, financial, consultancy, hotel, specialised skills, professionals, etc. 3. Events – Trade shows, sports, world cups, vintage car rally, fashion shows, artistic performance, annual functions, event management, etc. 4. Experiences – Theatres, opera, Disney-world, trekking, mountaineering, ocean cruise, cinema, music concerts, etc.

5. Persons – Celebrity marketing, film stars, politicians, artists, performers, advertisers, and now also CEOs of companies. 6. Places – Cities, states, countries for tourism, leisure & place for industrialisation, real estate agents & business, etc. 7. Properties – Ownership of tangible properties like real estate, house, apartment, farm house, precious metals and intangible properties like financial portfolio of various securities, stocks, bonds. 8. Organisations – Building up identity, image, reputation, and brand value in the minds of consumers. 9. Information – It can be produced, packaged & marketed as a product – text books, encyclopaedias, magazines & journals on literature, science, technology, medicine info, available thru internet 10. Ideas – The concept regarding a utility, business opportunity, advertising / marketing ideas, scientific & technical, social, financial, psychological etc. Marketing Concepts The Marketing concepts under which organisations have conducted marketing activities have undergone some sort of evolution during the period of human existence. Chronologically they are : 1. 5.

Exchange Concept : 2. Marketing Concept -

Production Concept 3.

Product Concept - 4.

Selling Concept :

6. Holistic Marketing Concept – In the new marketing environment, companies wonder how to operate & compete. Marketers in the current age are increasingly recognising the need to have a more complete & cohesive approach that goes beyond traditional application of marketing concepts. This concept is based on the development, design and implementation of marketing programs, processes and activities that recognise their breadth and inter-dependencies. Holistic Marketing recognises that “everything matters” with marketing - and that a broad integrated perspective is often necessary. The important components are : a.

Integrated Marketing,

b.

Internal Marketing,

c.

Relationship Marketing,

d.

Social Responsibility Marketing.

The Holistic Marketing Concept is an approach to marketing that seeks to recognise & reconcile the scope & complexities of various marketing processes. We shall discus each one of these in the following. Trends in Marketing Practices The marketplace is not the same as it used to be. It is rapidly changing as a result of major, sometimes interlinking societal forces that have created new behaviours, new opportunities & new challenges, such as : Changing Technologies Customisation Disintegration Heightened Competition Market Fragmentation Retail Transformation Technological Advances

Customer Empowerment Deregulation Globalisation Industry Convergence Privatisation Retail Transformation The Internet Revolution

In response to this rapidly changing environments companies have restructured their business & marketing practices in some of the following ways : 1. Reengineering : Appointing teams to manage customer-value-building processes & break down walls between departments. 2. Outsourcing : Greater willingness to buy more goods & services from outside domestic or foreign vendors. 3.

Benchmarking : Studying “best practice companies” to improve performance.

4.

Supplier Partnering : Increased partnering with fewer but better value-adding suppliers.

5.

Customer Partnering : Working more closely with customers to add value to their operation.

6. Merging : Acquiring or merging with firms in the same or complementary industries to gain economy of scale & scope. 7.

Globalising : Increased effort to “Think Global & Act Local”.

8.

Flattening : Reducing the number of organisational levels to get closer to the customers.

9.

Focusing : Determining the most profitable business & customers & focusing on them.

10. Accelerating :Designing the organisation & setting up processes to respond more quickly to changes in the environment.

11. Empowering : Encouraging & empowering personnel to produce more ideas & take more initiative. Accordingly the role of marketing organisation is also changing. Traditionally, the marketers have played the role of middlemen between the customers & the various functional areas of the organisation. In a networked enterprise, every functional area can interact directly with customers. Thus marketing needs to integrate all the customer-facing processes so that customers a single face (Integrated Marketing) & hear a single voice (Integrated Marketing Communications) when they interact with the company. Integrated Marketing One of the major tasks of marketers is to “integrate” all the marketing activities & programmes like “creating”, “communicating” & “delivering” value to the customers. The marketing programme consists of various decisions on value-enhancing marketing activities that can be used. The Famous Marketing Mix – the Four Ps, as devised by McCarthy constitute the traditional marketing activities in four broad groups as given below in details : 1. Products – Design, Features, Brand Name, Models, Style, Appearance, Quality, Warranty, Package (design, type, material, size, appearance & labelling), Service ( pre-sale, after sale, service standards, service charges), Returns. 2. Price – Pricing Policies, List Price, Margins, Discounts, Rebates, Terms of Delivery, Payment Terms, Credit Terms, Instalment Purchase Facility, Resale Price, Maintenance prices. 3. Place – Channels of Distribution (channel design, types of intermediaries, location of outlets, channel remuneration, dealer-principle relation, etc.), Physical Distribution (transportation, warehousing, inventory levels, order processing, etc.) 4. Promotion – Personal Selling, Selling Expertise, Size of Sales Force, Quality of Sales Force, and Marketing Communications - Advertising (media-mix, media vehicles, and programmes), sales promotions, publicity & public relations, direct & interactive marketing). Now, these traditional concepts of Four Ps represent the sellers’ view of the marketing tools available to influence buyers. In holistic marketing one has to see also the buyers’ point of view, where each of these tools will deliver the customers’ benefit or value. Robert Lauterborn suggested the buyers’ Four Cs as follows : Product = Customer Solution Place = Convenience

Price = Customer Cost Promotion = Communication

Thus the successful companies are those who can meet (1) customer needs (2) economically, (3) conveniently & (4) with effective communication. Two broad concepts of integrated marketing are as follows :

1. Several different marketing activities are used to create, communicate & deliver customer value, 2.

All marketing activities coordinated to maximise their joint efforts.

Or in other words, the design & implementation of one activity is done with all other activities in mind. The business of running a successful organisation is to integrate the system for management of demand, resources & network. Integrated marketing communication is a case in point. Internal Marketing Internal marketing ensures that everyone in the organisation adopts appropriate marketing principles and the top management should see it happen. This is the management task of hiring, training & motivating the employees to serve the customers well. Smart & successful companies understand that there is as much activity outside the company as inside. For it makes no sense to promise excellent services before the company’s service staff is ready to provide. Internal marketing must happen in two levels as follows : 1. At the first level, all the marketing functions like, sales force, market research, customer service, product management, advertising, etc. must go together, i.e., all the personnel should work in tandem or unison for common goal. 2. At the second level, “marketing” must be embraced by other departments for a common goal of the organisation. All the relevant functional departments like Finance, HR, Operations, Logistics, Systems, etc. must coordinate each other to have a marketing orientation. Only trying to meet individual department’s target & norms and not supporting the marketing objectives will take the company nowhere. One has to bear in mind that it’s marketing that earns revenue. Internal marketing requires that everyone in the organisation buy into the concepts & goals of marketing, and engage themselves in selecting, creating, communicating & delivering customer value. Only when all the employees realise that their jobs are to create, serve & satisfy the customers does the company become an effective marketer. Relationship Marketing The development of deep, enduring relationships with all the people or firms involved directly or indirectly in the firm’s marketing activities is appearing as a key goal; of marketing. This is the concept of Relationship marketing – it aims at building mutually satisfying long-term relationships with key parties like customers, financiers, suppliers, distributors & of course the stakeholders, in order to earn & retain their business. It also builds strong economic, technical & social binding amongst the parties. There are four key constituents of marketing are : 1.

Customers

2.

Employees

3.

Marketing Partners : Channels, Suppliers, Distributors, Dealers, Retailers, Agencies, etc.

4.

Financial Community : Shareholders, Stakeholders, Financiers, Investors, Analysts, etc.

5. Another key constituent is the Society : well-wishers, scientists, professors, environmentalists. The ultimate goal of relationship marketing is the building of a unique company asset called a marketing network, which consists of the company & its supporting stakeholders as listed above with whom it has built manual profit relationships. Interestingly, today, the competition is not between companies as such, but between the carefully built marketing networks – whoever has a better network wins. So the principle is simple – build an effective network, & the profits will follow. But the practice is not so. The development & building of a strong relationship requires a deep understanding of the capabilities & resources of different groups as well as their needs, goals & desires. Relationship marketing involves the right kind of relationships with right constituent groups, like Customer Relationship Management (CRM) with customers, Partner Relationship Management (PRM) with other partners. Since these being separate subjects themselves, are beyond the scope of this article. Social Responsibility Marketing Holistic marketing incorporates social responsibility marketing. This involves broader concerns of the society at large, like social, legal, ethical & environmental in the context of marketing activities. Companies operate in a society, and so do their customers and hence they should never forget its contribution to the company. It requires that marketers carefully consider the role they are playing in terms of social welfare. Companies need to evaluate whether they are truly practicing ethical & socially responsible marketing. Several factors are driving the companies to practice higher level of corporate social responsibility, such as : 1.

Rising customer expectations,

2.

Changing employees expectations,

3.

Govt. Legislation & pressure,

4.

Investor interest in social criteria,

5.

Changing business procurement criteria.

Business success and continually satisfying the customers & other stakeholders are closely linked to adoption & implementation of high standard of business & marketing conduct. The most admired companies in the world adhere to a code of serving people’s interests, not only there own. The following are the most important factors of socially responsible marketing : 1. Legal Behaviour : Companies operate within the law of the land, and they must impart the employees with adequate knowledge of law & how to practice them. We have Govt. laws,

Society laws, and the organisations must ensure the employees know & observe relevant law, and restrain themselves from practicing illegal, antisocial, corruptive, anticompetitive practices. 2. Ethical Behaviour : Companies must evolve & adopt a properly written code of conduct based on the social & cultural ethics, decency, tradition & legal practices, and ensure that all concerned are responsible in observing these guidelines. Today customers are well aware of the social, cultural, ecological & environmental affairs in their day-to-day lives. 3. Social Responsibility Behaviour : As said above, the customers also want to know what the firm’s contribution to the society is, or what the company’s social conscience is while dealing with customers & the stakeholders. 4. Cause Related Marketing : Contribution to the society can be enormous, and hence companies choose a particular area of society for a particular cause. The examples are : a.

Health awareness - Heart Diseases, AIDS, Cancer, Diabetic, Obesity, Old age, etc.

b.

Running children’s home, old age home, rehabilitation centre, women’s home, etc.

c. Infrastructure - rural housing, hospitals, preserving archaeological places, maintaining roads & parks, homes for endangered species; d.

Educational scholarship for the poor & needy, higher education facility, Institutes;

e.

Treatment for destitute, food for the starving;

f.

Information legal & technical help during the hour of need;

g.

Volunteerism & Philanthropy.

The list can be endless. Reputed companies even have their own charitable trusts, and also have special cause related marketing plans. Cause-related marketing is the concept where the specific cause is directly or indirectly linked to the particular revenue transaction. The company has at least one non-economic social objective and uses the revenue generated from the designated sales. This concept is also known as Corporate Societal Marketing (CSM). The CSM can include other activities like traditional & strategic philanthropy & volunteerism. 5. Social Marketing : Some marketing is conducted to directly address a social problem or cause. Social marketing is done mainly by NGOs, Non-Profit or Govt. organisations to further a cause, such as “No smoking”, “Say NO to Drugs”, etc.

The Holistic Marketing Matrix HOLISTIC MARKETING INTEGRATED INTERNAL MARKETING MARKETING Products & Services Top Management Communications Marketing Department Channels Other Department

RELATIOSHIP MARKETING Customers Partners Channels

SOCIAL RESPONSIBITITY MARKETING Community Legal, Ethics Environment

The Future of Marketing The top management is slowly recognising that the marketing in the older method is getting wasteful and is demanding more accountability. There are a number of imperatives (must do) to achieve marketing excellence, as presented below : Marketers must 1.

Be “Holistic” and not in bits & parts, i.e., not sectional or departmental.

2. Achieve larger influence in the company if they are to be the main architect of business strategies. 3.

Continuously create new ideas if the company is to prosper in a hyper-competitive economy.

4.

Strive for customer insight & treat customers differently, but appropriately.

5.

Build their brands thru performance, more than thru promotion.

6.

Go electronic & win thru building superior information & communication systems.

In these ways, modern marketing will continue to evolve & confront new challenges & opportunities. As a result, the coming years will see the demise of - - - & the rise of :

No 1 2 3 4

The Demise of The marketing department Free-spending marketing Marketing intuition Manual marketing

The Rise of Holistic marketing ROI (return on investment) marketing Marketing science Automated marketing

To become truly holistic in marketing & achieve these changes, what the marketers need are a new set of skills, competencies in the following areas of expertise. 1.

Customer Relationship management

2.

Partner Relationship management

3.

Database Marketing & Data-mining

4.

Contact Centre Marketing & Telemarketing

5.

Public Relation Marketing including Event & Sponsorship Marketing

6.

Brand-building & Brand-asset Management

7.

Integrated Marketing Communications

8.

Profitability Analysis by Segment, Customer, Channel

9.

Experiential Marketing

The Marketing Excellence Review : The Best practices : POOR Product Driven Mass Market Oriented Product Offer Average Product Quality Average Service Quality End-Product Oriented Function Oriented Reacting to Competitors Supplier Exploitations Dealer Exploitations Price Driven Average Speed Hierarchy Vertically Integrated Stock Holder Driven

GOOD Market Driven Segment Oriented Augmented Product Offer Better Than Average Better Than Average Core Product Oriented Process oriented Benchmarking Competitors Supplier Preference Dealer Support Quality Driven Better Than Average Network Flattened Organisation Stake Holder Driven

EXCELLENT Market Driving Niche Oriented & Customer Oriented Customer Solution Offer Legendary Legendary Core Competency Oriented Outcome Oriented Leapfrogging Competitors Supplier Partnership Dealer Partnership Value Driven Legendary Teamwork Strategic Alliances Societally Driven

CONCLUSION The Nineteenth century American author Ralph Waldo Emerson had said, “This time like all times is a good one, if we but know what to do with it”. Thus, the exciting time for marketing has arrived now. And also, in the relentless pursuit of marketing superiority & dominance, new concepts, new rules, new tools & practices are ever emerging. There are a number of benefits of successful twenty-first-century marketing. All we need are hard work, insight, right application of mind & tools, inspiration, perseverance & of course a willingness to achieve greater heights.

Reference: “Marketing Management”, 12th. Edition (2006), By Philip Kotler and Kevin Lane Keller. Chapters - 1 & 22.