MARKETING CHALLENGES IN THE 21st CENTURY
The marketing concept has changed dramatically over the last several decades, and recently the
focus has increasingly moved to customers (versus products and selling) marketing globally and the
various technology issues that impact the market. In addition, there is renewed emphasis in
marketing on creating and innovating with new and better products and services rather than just
competing against other firms and following the marketing patterns established by competitors.
A. Porter’s 5 Forces Model of Competition:
Marketing is facing different challenges in the 21st century to meet these Before entering the
business Porter model can be used to analyze the environment both for new and existing business
and can be used to overcome and meet the challenges.
• Threat of New Entrants Ratio of new entrants in the industry greater the ratio greater will be intensity of competition
• Bargaining Power of Buyers: When competition is intense and number of manufacturer is greater the buyer have more options for product switching over this will increase the buying power of buyer
• Threat of Substitute: As obvious from the term greater the threat of new entrants will result in greater higher
completion that in tern will result in increase in the number of substitutes
• Bargaining Power of Suppliers: Greater number of the supplier will provide the stronger buying power to the manufacturer/customer and vice versa
• Rivalry Among Competing Firms in Industry: Larger number of the manufacturers and greater number of product variety increases the rivalry among the competitors, which demands for more quality and customer satisfy9ng products in order to meet the competition.
- A. The information technology revolution
The information age, particularly the advent of the Internet is having a major impact on the
direction of marketing science and practice.
Digitalization and Connectivity: The flow of digital information requires connectivity Intranets,
Extranets, and the Internet are key drivers of the “new economy
- Technologies for Connecting:
b. The major force behind the new connectedness is technology.
c. The boom in computer, telecommunications, and information technology, as well as the
merging of these technologies, has had a major impact on the way businesses bring value to their
customers.
1). Using today’s powerful computers, marketers create detailed databases and use them to
target individual customers with offers designed to meet their specific needs and buying patterns.
2). Cell phones; fax machines, and CD-ROM to interactive TV are just a few of the tools
being used to make connections.
a). Electronic commerce allows consumers to shop and buy without ever leaving home.
b). Virtual reality displays, virtual shopping, and virtual salespeople are just a few of the
changes that consumers seem to be embracing. The Information Superhighway (and its backbone--
the Internet) will link customers to companies in ways that were unimagined only a few years ago.
The Internet is a vast and burgeoning global web of computer networks, with no central
management or ownership. The user-friendly World Wide Web has changed us all.
1). The Internet has been hailed as the technology behind a new model for doing business.
2). New applications include:
a). Internet--connecting with customers.
b). Intranets--connecting with others in the company.
c). Extranets--connecting with strategic partners, suppliers, and dealers.
3). Marketplaces have now become market spaces.
2). However, new opportunities abound.
- Connections with Customers
Today, most marketers are realizing that they don’t want to connect with just any customers.
Instead, most are targeting fewer, potentially more profitable customers.
1). Greater diversity and new consumer connections have meant greater market
fragmentation.
a). Marketers have responded by moving to more segmented marketing where they
target carefully chosen sub markets or even individual buyers.
2). At the same time, companies are analyzing the value of the customer to the firm. What
value does the customer bring to the organization? Are they worth pursuing?
a). Connect with those that will be bring in profits.
h. Connect for a customer’s lifetime.
1). Rather than always looking for new customers, the focus has now shifted to keeping
current customers and building lasting relationships based on superior satisfaction and value.
2). Long-term profits have superseded short-term gain.
3). Companies are spending more time considering “share of customer” and less time
worrying about “share of market.”
a). Employees are being trained in cross-selling.
b). Up-selling is now a common practice.
Today, beyond connecting more deeply, many companies are also taking advantage of new
technologies that let them connect more directly with their customers.
1). Products are now available via telephone, mail-order catalogs, kiosks, and electronic
commerce.
2). Business-to-business purchasing over the Internet has increased even faster than online
consumer buying.
3). Some firms sell only via direct channels (Example: Dell Computer,
Amazon.com).
4). Other firms use a combination of traditional selling and direct selling methods.
Direct marketing is redefining the buyer’s role in connecting with sellers.
1). Buyers are now active participants in shaping the marketing offer and process.
2). Some companies allow buyers to design their own products online.
3). Some marketers have hailed direct marketing as the “marketing model of the next
millennium.”
- Connections with Marketing’s Partners
Connecting inside the company--traditionally, marketers have played the role of intermediary,
charged with understanding customer needs and representing the customer to different company
departments, which then acted upon these needs.
1). Marketing no longer has sole ownership of customer interactions.
a). Now, every employee must be customer-focused.
b). Companies are reorganizing their operations to align them better with customer
needs.
c). Teams coordinate efforts toward the customer.
Connecting with outside partners--most companies today are networked companies, relying heavily
on partnerships with other firms.
1). Supply chain management--the supply chain describes a longer channel, stretching from
raw materials to components to final products that are carried to final buyers. Each member of
the supply chain creates and captures only a portion of the total value generated by the supply
chain.
2). Supply chain management allows all partners to strengthen relationships for mode of
payment and delivery.
3). Strategic alliances--companies need strategic partners.
a). Many strategic alliances take the form of marketing alliances--can be product or
service oriented in which one company licenses another to produce its product, or two companies
jointly market their complementary products.
b). Alliances could be promotional, logistical, or even pricing in nature.
c). Companies must be careful when choosing partners so as to complement strengths
and offset weaknesses.
- Connections with the World Around Us
Marketers are taking a fresh look at how they connect with the broader world around them.
1). Global connections--geographical and cultural differences and distances have shrunk
dramatically in the last decade.
2). Today, almost every company, large or small, is touched in some way by global
competition.
a). Firms are challenged by international competitors in their once safe domestic
market.
b). Companies are not only exporting, but buying more components and supplies from
abroad.
c). Domestically purchased goods and services are hybrids (with components coming
from many international sources).
d). The secret for business success in the next century will be to build good global
networks.
- The New Connected World of Marketing
Smart marketers of all kinds are taking advantage of new opportunities for connecting with their
customers, marketing partners, and the world around them.
1). The old marketing thinking saw marketing as little more than selling or advertising. It emphasized:
a). Customer acquisition.
b). Short-term profit.
c). Goal--sell products.
- The new marketing thinking believes that improving customer knowledge and customer connections is a corporate goal.
a). Target profitable customers.
b). Find innovative ways to capture and keep these customers.
c). Form direct connections and build lasting customer relationships.
• Use targeted media.
• Integrate communications.
• Use technologies to provide connections.
• View suppliers and distributors as partners, not adversaries.
• Deliver superior value.
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