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Posts Tagged ‘consumer’

Exam survival kit: revision posters

In Management, Marketing on May 1, 2013 at 2:24 pm

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Revision is a bore. But knowing where to begin brings you a long way towards exam success. HBR has thrown together 4 examples of how to separate the main themes and topics of a module, while developing your overall view of the marketing and management disciplines.

HBS revision 001

HBS revision 003

HBS revision 002

HBS revision 004

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The value of marketing

In Marketing on April 9, 2013 at 2:45 pm

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Marketing is the activity of creating, communicating, delivering or exchanging offerings with customers.  As one of the functional areas of business, the end-goal of marketing must be aligned with the purpose of companies more generally.

Profit (buying low and selling high) is often cited as the purpose of business. While profit is a necessity, profit maximisation is damaging to businesses’ long-term prospects. Iceland posting record results in June by not chasing short-term profit targets (Retail Week, 2012).

Drucker (1986) proposes different priorities: “Businesses exist to supply goods and services to customers, rather than to supply goods to workers and managers, or even dividends to the business enterprise.”

Exxon connects its responsibilities: “Our mission is to provide quality petrochemical products and services in the most efficient and responsible manner to generate outstanding shareholder and customer value.” (Exxon, 2012)

Economic profit validates actions which create customers. Only by meeting customer needs and building customer relationships can an organisation achieve profitable growth (Doyle, 2000). By these means, marketing creates value for customers in order to capture value for the business and its shareholders.

Consequently, the value created by marketing can be considered from the buyer perspective (competitive offer), the seller perspective (customer equity) and the buyer-seller perspective (relationships, partnerships and alliances).

Buyer value (the worth of an object or condition, relative to competing offerings) has been measured in various ways.[1] Today, relativism dominates the discourse on customer value. Marketing’s definition of customer value accounts for this:

Customer perceived value = perceived benefits / perceived costs

According to theory of wealth maximisation, a consumer will choose the good or service which they believe provides the most favourable benefit to costs ratio (Kronman, 1980). Perceived benefits include physical attributes, service attributes, associated prestige and technical support. Costs consist of purchase price, opportunity costs, risk of failure and other sacrifices made in the exchange. Companies create differential advantage based on superior benefits and/or costs.

Conclusion

Marketing has great potential to create value for firms and customers. In contrast to previous business philosophies, the marketing concept focusses on building profitable buyer-seller relationships based on competitively satisfying customer needs. Marketing’s assured philosophical foundations are attractive in the uncertain context of the global integration of markets, rising consumer expectations and transformative technologies.

By managing long-term relationships and responding to customers’ needs, rather than encouraging short-term profit, marketing has become a driver of competitive growth with benefits to all business stakeholders reflected in increases in share value.


[1] Neoclassical economics posits value is determined by the market. In classical economics, value describes the amount of labour saved through the consumption of an object or service. ‘Real value’ measures the utility of market offerings (Peter and Olson, 1993).