Business Marketing: Strategies, Systems, and Research
Unit 17: Introduction to Business Address
17.1 The Concept of Marketing
Commercial activity is intrinsically linked with the existence of human beings. In terms of trade, either through barter or sale, it is necessary for our survival. Trade is an activity almost as old as man, but the meaning of carrying out and the competition for this activity, known as marketing, has evolved over time. In today’s competitive environment, where supply exceeds demand in almost all markets, knowledge on how to perform commercial activity effectively and efficiently is of vital importance to the success and survival of businesses.
Marketing or trading system: It is responsible for carrying out the terms of trade between the company and its market. An exchange act occurs when a natural or legal person comes into contact with another to get something they want, offering something in return. The necessary conditions for exchange are:
- At least two parties should be involved.
- Each party must have something of value to the other.
- Each party must have the ability to communicate the offer.
- Each party must have the freedom to accept or reject the offer.
- Each party must have the desire and willingness to negotiate.
Under this idea, one might consider the marketing system as the last stage of the company’s exploitation cycle. However, this consideration is only partially true today, given the level of competition. A company’s success depends on producing a product that meets the right characteristics to satisfy the needs of consumers as best as possible. If the company does not plan to sell the finished product, there will be competitors offering better ones. Therefore, marketing can also be considered as the first stage of the exploitation cycle, being in charge of studying the market to identify customer needs and communicate them to the production management. The marketing or trading system is the part of the company that maintains market relationships in their dual role (knowing the demand and output production). The American Marketing Association (AMA) defines it as an organizational function and a set of processes to create, communicate, and deliver value to consumers and to manage customer relationships in ways that benefit the organization and its stakeholders. From this concept, we can draw three considerations:
a) The most important part of marketing is not selling the product. The sale is a one-way process from the firm to the client. Yet, marketing must be understood as a two-way process that includes the physical flow of the product from the enterprise to customers and the information flow that comes from the client to the company and allows for their needs to be met.
b) Through the exchange, it must be ensured that all parties involved win. The company meets its economic goals, and customers can meet their needs. Thus, the exchange of products should not be understood as the end of marketing but as a means to satisfy customer needs. The study of these needs should guide all business decisions at the company. Marketing must:
- Identify the needs of people: We understand psychological necessity as the lack of something physical.
- Align wishes: A desire is the way a person expresses their willingness to meet a need. We must emphasize that there can be no desire without a necessity, although the reverse is not true. Often, critics of marketing say that it creates artificial needs, but marketing only creates desires.
- Stimulate demand: Demand is the realization of a wish. Once a desire is generated, it must be converted or persuaded to buy a certain product or brand. But for a desire to become a demand, it is vital that the person has the capacity and financial resources.
c) The objective of marketing should not be to reach a settlement with the customer off-sale. Marketing must create and maintain stable and lasting relationships with customers. This evolution from transaction marketing to relationship marketing involves all the activities entrusted to create long-term relationships (with customers, suppliers, etc.) in order to gain and maintain preferences and business with these agents. The marketing area has expanded. Although it was originally concerned exclusively with products (goods and services) sold by companies, today it can also be applied to ideas and conduct marketing activities:
- Public administrations, when campaigning for citizens to pay taxes.
- NGOs, for example, raising money to sponsor children.
- Political parties, seeking to convince citizens to get their vote.
- Consumer associations, environmentalists, etc.
17.2 Direction of Marketing
It is responsible for managing the commercial activities of the company.
Functions:
- Define the market where the company will compete.
- Analyze the situation in that market. This research should focus on the analysis of demand, consumer behavior, and the microenvironment. The results of these tests may lead to reconsidering the enterprise market where it competes.
- Decide on the strategies and actions for this trade to develop. It has four basic instruments and variables: product, price, distribution, and communication. The combination of these results in the marketing mix of the company.
For the analysis of the situation, as well as for the best alternative marketing mix, marketing management has the support of a set of measures and techniques that constitute the marketing information system. The aim of marketing management is to satisfy customer needs and satisfy them as best as possible. To meet the needs and wants of customers with offers of services and products, achieving customer satisfaction requires commitment throughout the organization and the general direction:
- They must provide the necessary resources.
- The engineering and operations departments must design and manufacture products with the features customers demand.
- The human resources department should train personnel to care properly for customers.
- The ultimate purpose of marketing management is to help the company have a market orientation.
Market orientation: It can be defined as the generation of market information throughout the entire organization on the current and future needs of customers, the dissemination of such information to all departments, and the response to it throughout the organization. A market-oriented company has the following basic elements:
- Customer Focus: Understanding customer needs should guide the decisions taken in the company.
- Integration and Inter-departmental coordination: The commitment to create customer value must be understood and accepted by all departments, not just the marketing department.
- Profit orientation: Customers must be satisfied in the long run to generate maximum benefit for the company.
17.3 Information System for Business Address
In a globalized environment that is constantly changing, the information needs of businesses are multiplying. Currently, companies have to meet a wide range of knowledge about markets, customers, competitors, environmental trends, and the effectiveness of their strategies. For all that, they need information. Knowledge and information are generated by both utility to the user, which lets them make the best decisions. Information has become, in these times, an essential resource for marketing management that intends to manage that business under a market orientation. Information helps to reduce the level of uncertainty, achieve better results, and ultimately, a better competitive position in markets. The times in which we live are characterized more by information overload than by scarcity. Sometimes systems collapse because of this overload. It is essential for correct management to ensure that every manager in the company receives timely information processing to make their own decisions. To combine these needs for information management and ensure its availability, organizations create the so-called International Marketing System. The SIM can be defined as all persons, equipment, or procedures designed to collect, classify, analyze, evaluate, and distribute timely information to the address you need to make marketing decisions. For this, it is based on the structure of the SIM, organized as follows:
- Internal Record System: Its purpose is to capture, classify, and evaluate data from daily activity and routine operations of the company, i.e., routine information. A major source of internal data is derived from the order-delivery-bill cycle that allows collecting data on orders, sales, stocks, and prices. This system should also incorporate data on production, collections, refunds, complaints, current and potential customers, reports on sales decisions, and all decisions taken in relation to commercial activity. All these data can be analyzed to know the company’s current situation and to highlight opportunities and threats. The big advantage is its low cost and high availability, despite which many organizations do not sufficiently exploit this valuable information.
- Marketing Intelligence System: Its purpose is to capture, classify, evaluate, and store data relevant to both the micro-enterprise and the microenvironment, especially everything related to consumer behavior, competitor movements, and industry trends and developments. On all these aspects, useful information can be obtained (economic and commercial studies, general or sectoral, published by public and private stakeholders, including governments, chambers of commerce, etc., in newspaper articles, journals, and public databases).
- Commercial Research System: Its purpose is to respond to problems and opportunities specific to the trade area that occasionally arise and for which the information available in external data systems and marketing intelligence is not enough. The Commercial Division often needs information on specific aspects, and specific research requires the development of a measure.
- Support System for Marketing Decisions: While the previous three are focused on collecting information, this one is specialized in processing and analysis in order to provide the most useful information for decision-making. Particular relevance, brevity, and easy understanding of the reports are valued. For its function, it uses statistical tools. This system allows answering the following problems: how to differentiate market segments, pricing, sales, and customer selection of the portfolio to be offered a new product.
17.4 Commercial Research
Commercial or market research is a component of the SIM but is generally understood as a complete process that incorporates data analysis and final report preparation. Market research assistance:
- Identifies and defines marketing activities and problems.
- Learns more about customers, their tastes, and preferences.
- Launches new products with better chances of success.
- Designs marketing strategies.
- Evaluates the results.
- Proposes amendments to the marketing strategy.
This applies commercial research objective methods that could obtain information that reflects the reality of the facts and helps management make better business decisions.
Phases of Commercial Research:
1) Formulating the research problem: Describe the problem, becoming aware of it and its definition is vague. Gives rise to the need for information, which is new information. It may arise from the need to solve a problem (e.g., a decline in sales), to evaluate an opportunity (e.g., introducing a non-alcoholic beer), or to evaluate the strategy adopted by the address (e.g., measuring customer satisfaction).
2) Determination of research design: This involves a precise definition, which in turn implies clearly defining the objectives of the research to be done and devising a set of questions or hypotheses that the research must solve or contrast. The proper design objectives or questions are set to be the problem and its nature.
There are two main types of research designs: exploratory and conclusive. The latter, in turn, can be descriptive and causal.
3) Preparation of research:
1) Determine the information needed to solve the problem. Secondary information already exists, is prepared, and is published. It may have been generated by the company itself or by third parties and may be disposed of for being stored in the company (internal) or outside (external). External secondary information can be obtained free of charge or purchased from companies specializing in collecting information. Primary information is collected specifically for the research problem; therefore, it must be generated through qualitative or quantitative research.
2) Determining the method of information obtained: When necessary, primary information must be obtained. It depends on the type of problem and the proposed research design. There are two techniques to obtain them:
a) Qualitative Techniques: They are very flexible and usually include a small number of sample elements (respondents). They allow for the exploration of problems and are essentially the hypothesis of group dynamics, in-depth interviews, and observation.
b) Quantitative Techniques: They usually involve the use of structured questionnaires and include a large number of interviewers, as they require that the results can be projected to the population. They are primarily survey research, observation, and experimentation.
3) Questionnaire design: The questionnaire is the formal instrument or medium used routinely to collect primary information. Its design is an issue of great importance to obtain reliable and valid data (what must be asked, in what order, how it is asked).
a) Exploratory Designs: These are usually the first to be applied in any research. It is not known whether further research is required to reach conclusions. They are best when there is little information about the problem or when it is of a general character. Its basic objective is to recover information about the problem to transform it into a well-defined problem; therefore, it does not seek conclusive evidence. Exploratory studies are based on the use of published information and the application of research methods based on small samples, such as group dynamics, in-depth interviews, and observation.
b) Conclusive Designs: Its basic objective is to provide conclusive evidence on the questions and hypotheses raised. They are suitable when the problem is well-defined. They are more formal and rigid in their approach to exploration and use research methods based on high-quality samples. They can be descriptive: Its basic objective is to describe quantitatively the behavior of the variables of interest. It uses the survey by obtaining a sample to generalize the results to the population. Grounds: Its basic objective is to identify and determine the causal relationship between the variables of interest. A causal design can be used to test the extent to which advertising increases sales. Causal designs apply the experimental method or experiment.
c) Master Plan Design: The sample is a subset of the population selected to represent it for study. It may consist of individuals, households, causes, etc.
The objective of this stage is to ensure the representativeness of the sample so that the study methods can be generalized to the population.
4) Performance of field work: This phase involves the collection of information through the questionnaire. Its development is conditioned by the type of communication established with the sample, which may be personal, telephone, Internet, or mail.
5) Information processing: Prior to tabulating and analyzing the information gathered by field work, it must be processed, which involves various activities (editing, coding, design database, recording, and verification).
6) Tabulation and analysis: Tabulation aims at the initial exploration of the data obtained by offering the basic results. It involves the memory and the orderly and summary of raw data (stored in the file) on a table or other summary format. The analysis involves the development of different operations on the raw data to obtain results and conclusions that are not directly observable. Depending on the number of variables analyzed, the analysis can be univariate, bivariate, or multivariate.
7) Communication of the research report: The findings and conclusions of the investigation should be communicated to the general direction, reflecting the development of a formal written report and conducting an oral presentation.