Marketing as a system of interacting business activities

“Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products to target markets to achieve organisational objectives” - William J. Stanton

On the basis of the above definition, it can be said that:

·         The entire system of business activities should be market or customer oriented, and aimed at recognising and satisfying the wants of customers.

·         Marketing is an integrated process rather than a fragmented process.

·         Marketing activities start with the generation of the product idea and end only after the wants of the consumers are satisfied.

With reference to the definition given by William J. Stanton, we would now discuss:

ü      The marketing system

ü      Strategic plans

ü      Satisfaction of customer wants and

ü      Selected market segments

The marketing system

Marketing is a system of integrated business activities. The marketing system consists of several coordinated business activities which are known as marketing functions. Marketing functions are involved in the marketing of goods or services that are produced or rendered by the organisation. Some important functions of marketing are:

• Functions of research (marketing research, product planning and development, etc)
• Functions of exchange (buying, assembling and selling, etc)
• Functions of physical treatment (standardisation, grading, branding, storage, etc
• Functions of facilitating exchange (salesmanship, advertising, insurance, etc)

Marketing as a system serves as a link between the organisation and the society. The activities of marketing are meant to provide benefits to the entire society. These benefits can be provided by a sound and efficient marketing system.

The marketing system not only operates in an environment outside the organisation, but it operates in an organisation inside the organisation also (which are the macro and micro environments respectively).

The micro environment consists of the factors close to an organisation that affect its ability to serve its customers, some of them being- the organisation itself, the suppliers, marketing intermediaries, customer markets, competitors and the general public at large.

On the other hand, the macro environment consists of the larger societal forces that affect the micro environment some of them being- demography, economic environment, natural factors, technology availability, and political and social forces.

It is also to be noted that the marketing system serves as a link between the marketing concept and the marketing process.

Strategic plans

The activities that constitute the marketing system are designed in a manner so as to develop strategic plans in forms of marketing mix. The marketing mix basically comprise of the four Ps- Product, Price, Promotion and Place or Physical Distribution.

Each of the above Ps should be designed in a manner that is most appropriate for the target group of customers. Also, there should be a proper matching and integration of the various elements of the marketing mix in order to evolve an efficient system. A separate strategy has to be developed for each of the above Ps, which in turn need to be integrated with the other strategies of the organisation so as to achieve organisational goals. For instance, the product mix may be further classified and sub divided on the basis of the attributes, design, support services, etc, which have to be integrated with the other components of the marketing mix accordingly so as to achieve organisational goals.

Satisfaction of customer wants

The most important function of marketing is to satisfy the needs and wants of the customers. An organisation will be able to grow only if customers are satisfied. Satisfied customers not only come back for the fulfilment of their wants, but also tell others about their experiences with the organisation, leading to more and more people to try out the product/service being offered, which in turn increases the customer base and ensures growth. Customer satisfaction also directly results into customer loyalty. The reverse would happen in case of unsatisfied customers.

Today, more and more organisations are realising the importance of customer satisfaction, and are aiming for Total Customer Satisfaction, where customer satisfaction is both a goal and a marketing tool for companies. Organisations regularly provide financial and other incentives to the product to retain customer. This is because losing customers can dramatically affect the profitability and the market position of an organisation. It has been estimated that the cost of attracting a new customer is almost five times higher than the cost of retaining an existing customer!

Market Segmentation

Market Segmentation may be defined as the process of dividing a potential market into distinct sub-markets of consumers with common needs and characteristics. It is essential for an organisation to divide the market into different segments because the total market for a product or service is quite large and heterogeneous. Segmenting is done on the basis of identifying groups of customers who share a similar set of need and wants.

Segmentation is generally done on the following parameters

·         Geographic segmentation (on the basis of region, state climate, city, etc)

·         Demographic segmentation (on the basis of age, sex, income, education, religion, etc)

·         Psychological segmentation (on the basis of personality, life style, etc)

·         Behavioural  segmentation (on the basis of benefits sought, user status, loyalty status, usage rate, etc)

·         Value Based segmentation (on the basis of profitability, etc)

For the segmentation to be effective, the segmentation done should be measurable, sustainable, differential, accessible and actionable.

After a proper segmentation, a marketing mix has to be developed for each segment, and an organisation can go for mass marketing, multi-segment marketing, micro marketing, etc.

The customer is the focus of the organisation which aims to build a strong and profitable relationship with the customer. The organisation aims to attain its objective of having a profitable relationship with its customers by developing a sound marketing strategy. The market segmentation, targeting and positioning helps the organisation to develop an appropriate target market and a prospective customer base. Segmentation helps the organisation to divide the total market into small segments based on different characteristics and features.

The marketing strategy helps the organisation to design a proper and the most suitable product mix comprising of the four Ps- Product, Price, Place and Promotion. The marketing strategy is in turn developed by proper and extensive market analysis, planning, implementation and control.

Thus, it can be concluded that marketing is an integrated set of activities, which are performed to attain the objective of customer satisfaction.

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