Change of Marketing Management
Fifty years ago, Philip Kotler introduced marketing management approach to the world as “A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others” (Kotler et al 2005 p.6). In this definition, meeting customers’ needs and wants is the main idea matters and he extended this idea into a completed marketing management later. He classified it into five main steps: analysis, planning, implementation, control with the idea that marketing is finding out customers’ needs and matching their needs with products. He detailed different sub-steps under each main step to construct a clear menu for other scholars to learn and use, including analyzing customers’ needs, branding the product, symbolizing the brand, making slogan, and bringing cultural facts into the product. After applying his principle, companies benefited from a huge rise in sales for years and became well-known in a short time. As a result, Kotler’s marketing principle played a substantial role in marketing studies for decades and it is still the most popular approach used today. However, with fifty years’ development, the market environment has changed quite a lot in economic and technological aspects and the consumption behavior of customers has changed as well. The marketing management today has to be reformed to adapt the changes to keep functioning.
Increasing income enables customers to afford various products simultaneously. Open market enables customers to compare similar products globally. Ecommerce enables customers to communicate with products’ users easily. The asymmetric of information reduced, productivity increased, and merely monopoly remained. In other words, today’s market is a globalized, high competitive market. This highly competitive market put marketing management to an extremely essential stance than ever before. So what is the most functioning marketing management approach nowadays? Before thinking about how to code the new approach, we have to realize the fact that not only companies attempt to brand themselves from other competitors in today’s market, customers are also highly interested in labeling themselves by picking certain brand. One of the vivid examples along with the fact is that, in the USA, Macbook users create the slogan “Once go Mac never go back” to claim their attitude towards computer market. Moreover, the explosive growth of bloggers and Web celebrities in detailed categories on the social medium also elaborates the tendency of characteristic labeling. Compare to the traditional marketing management theory that let customers’ desires lead the market, it is actually more effective for companies to become as customers’ desires. As a result, in terms of think about suitable marketing management approach for today’s market, no matter for a company or an individual, it is important to establish a differentiable social character that its followers or fans could stick with and to be able to label themselves by acknowledge the company or celebrity. There are four aspects to support this statement.
Firstly, customers today would like to label themselves with different social character in all social medium and they spend large portion of their time on social medium than real life. Online chatting used to be bilateral way of communication through MSN and other chat rooms. With time passed by, we have various social platforms now. Users could use those platforms to post article, pictures and videos to share their life with the public. Online social media is not limited to dialogs between two people or a group of people. It becomes as the platform that everyone can freely comment and communicate with other users without actually knowing them in reality. According to the report of Social Media Users Worldwide from 2010 to 2021, “In 2019, it is estimated that there will be around 2.77 billion social media users around the globe, up from 2.46 billion in 2017… In 2017, 71 percent of internet users were social network users and these figures are expected to grow…In 2016, more than 81 percent of the United States population had a social media profile. As of the second quarter of 2016, U.S. users spend more than 215 weekly minutes on social media via smartphone, 61 weekly minutes via PC, and 47 minutes per week on social networks via tablet devices. ” (Page 2). This group of data proves how deeply customers are related to social medium and they could stand for other customers since they are the majority already. The emergent of online bloggers and web celebrities in different sections elaborate customers today are labeling themselves with different social characters again. The most of the older generation of bloggers was more like writing dairy online, sharing their routine life without having a specific category. Today’s bloggers are different. They are specializing in one sector, such as cooking, making up, skin care, clothes matching. Not only these bloggers and web celebrities are labeling themselves, their followers are also trying to labeling themselves by following these bloggers and web celebrities. As a trend, people start to use hash tag to label themselves. Under different hash tag of those social medium, including Twitter, Youtube, Tumblr, Pinterest and Instagram, are different labels customers put on themselves. In the article Hashtags Explained: the Complete Guide to Hashtags in Social Media, “…there are a number of reasons why you want to use hashtags in social media…Hashtags help you get found by your target audience. Many people do research by searching on specific hashtags. By using the hashtags that are of interest to your ideal customer, you can increase the chances of being found….”(Page 4). This supports the perspective mentioned above that company should differentiating its product from others and let customers with the same labeling need to find its product. People follows Ana Cheri, an American girl posting gym pictures on Instagram with 4.6 million followers, usually would like to label them as healthy, fit and discipline. They are also the potential customers of sports brands, gym membership, and salads restaurants. Meanwhile people follows Keiyamazaki, a Japanese cook posting daily breakfast pictures on Instagram, may label them as hedonism. It may be harder to sell sports instruments or gym clothes to them and push them to go to gym and on diet. Another way of relate social media users to product is in the following example. If a blogger hash tag himself or herself as stress fashion follower, he or she would wear Supreme for sure. Without wearing Supreme, it is hard to claim their understanding of street fashion.
Secondly, customers today have the ability to be stick with one brand because of the improvement in average income than fifty years ago and it will improve more in the future. In the concern of wealth increment, customers now have more ability to afford products that have similar function and would remain such ability in the future. Stated in the report World Economic Situation and Prospects: Febuary 2017 Briefing, NO.99, “A modest global recovery is expected over the next two years, with world gross product forecast to grow by 2.7 per cent in 2017 and 2.9 per cent in 2018…GDP in the United States of America …estimate of 1.5 per cent reported in the WESP 2017. The accumulation of non-farm inventories made a strong positive contribution to GDP growth in the final quarter of the year, and will support more solid growth in 2017….Economic activity in Western Europe will remain subdued, with growth expected to stay at 1.8 per cent in the European Union (EU) for 2016-2018. In the EU member States from Eastern Europe and the Baltics region, economic growth remains on a higher trajectory than in the EU-15”.(Page 6,7). The global economy is recovering from the 2007 crisis began in Wall Street. Customers are expected to spend more with the economy recovery. Higher purchasing power ensures the foundations of companies to generate various lines of products to enforce its brand characteristic and to attract loyal customers. In today’s competitive market, returning customers play an essential role for companies to survive and develop. Loyal customers already own one product from the company would not mind to purchase another similar one, as long as they believe using this company’s product could label their social character as what they want to show to other people. For example, Nintendo claimed it sold 15.24 million units of Nintendo hardware in 2016 along with 16.41 million units of hardware in 2017. The newly released product Nintendo Switch contributed 5.67 million units of sales to the increment of 2017. Compared to Nintendo’s most sold product Play Station, Nintendo Switch is actually the mini version of Play Station with portable character. However, loyal customers who already owned Play Station still go to the store and queue in the line to get a Switch. One of the main reasons for Nintendo fans to purchase switch is that they believe purchasing the newest Nintendo product would make them as the hard-core tech enthusiastic group in other people’s perspective. Another classic example to support this fact is the one of the top five American companies — Apple. Even though ordinary people may regard Ipad as an amplifying version of Iphone with less function that cannot make a phone call, Apple fans would still pay for it. Besides repeat purchasing similar products, the average replacement period of Apple devices is one and half year. This coincident with the frequency that Apple release new products. This is to say, majority of Apple products’ owners would replace their devices into the newest version spontaneously. The reason behind this phenomenon is similar to the case of Nintendo Switch. Apple users usually label them as the group of people who are able to mix fashion and high-tech together. Owning the newest Apple product would prove this perspective. These two examples point out above were not about products worth 5 GBP. The cheapest electric devices those two companies offer are around 200 GBP. However, such expensive products can also earn loyal customers. Moreover, the anthropologist Susan Kresnicka mentioned in her article Why Understanding Fans is the New Superpower (Guest Column), “…Over the last two years running the Research and Insights team at Troika, I’ve watched many of our clients come to similar conclusions about the importance – and value – of fans and fandom. Many of them have shifted their language, now targeting “fans” instead of “viewers” or “audiences.”… Marketing strategies are increasingly crafted to drive not just breadth but depth of engagement. And the conversation has in large part moved from how to “manage” fans to how to “relate” to fans, even learn from them….” This is due to make customers need the products than to make products satisfies customers’ needs. If customers believe that it would enforce their social characters through continuously purchase new generations of the products from a certain company despite how many similar ones they already own. If a company purely works on developing products to satisfy customers’ needs in today’s market, it may lose its competitiveness eventually and fade out away from the market. On the contrary, companies create their images with differentiate social character, customers would automatically come and purchase their products.
Thirdly, globalization put challenges for companies promoting products solely by unique function and old strategy need to be changed. The market is highly competitive. When a country opens its market to foreign producers, it brings benefits to local customers and hurts to local producers the same time. Globalization in trading has been promoted for a long time and made a remarkable result. World Trade Organization (WTO) now consists of 164 countries, total annual revenue contains 99% of world trading amount. Specifically mentioned by Theodore Levitt in the article The Globalization of Markets, “The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each—at high relative costs. The global corporation operates with resolute constancy—at low relative cost—as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere. The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each—at high relative costs. The global corporation operates with resolute constancy—at low relative cost—as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere. The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each—at high relative costs. The global corporation operates with resolute constancy—at low relative cost—as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere.” (Page 3 Theodore Levitt) This elaborate the severe problem globalization brings to companies. Globalization does not only bring dynamic to the open market, it also broadens customers’ shopping catalog and enables them to compare similar products from different countries. So the competitiveness companies facing is globally larger than the past. It has to take actions to fight back in order to survive in this new market environment. With the same function product, one way for company to differentiate its product from others is to classify its product to a group of people that interested in label themselves with certain social character. If it insists on applying the traditional idea of finding customers’ needs, it would be replaced quickly. Information became more and more transparent within one industry. One firm release a new product, another firm will release a similar one straight after. After a while, every firm in this industry would be able to produce similar products. Even in technology industry, it is so hard to be monopoly in one section. When Amazon introduced the idea of storage clouds to the public, it was a brand new concept. Now, most of the technology companies are running their own clouds. We have Microsoft Azure (the storage clouds running by Microsoft), Ali Clouds (the storage clouds running by Alibaba) and more. It is impossible to distinguish brands from products purely. One of the most typical examples is in the cosmetic market. Women never stop preventing their beauty from aging. Cosmetic industry has existed for hundreds of years, started from pharmacy to today’s various skin care brands. It is not surprising to find out that every skin care brand available in the market covers complete product line from hydrating, sun protection, whitening to anti-aging. No brand only target one particular skin problem. This is because of the complex of skin conditions. Different individual with certain skin requirement may find different brands suit them better. It is hard to judge one brand is better over another one in general. In this case, how would a brand stand out under this nearly perfect competitive market? Aesop, established in 1987, is an Australian local cosmetic brand that heavily relies on local sales. However, it suddenly started to become popular worldwide in 2015, after few Web celebrities post pictures of its retail stores on Instagram. The strongly distinctive interior design of its retail store makes a certain group of customers believe that using Aesop means they are so artsy even in small details — choosing cosmetic brands. Within one year, Aesop expanded its footmark to the USA and Europe. In 2017, it grandly opened its first store in Singapore, then Hong Kong. Now, they provide worldwide shipping service. The approach Aesop use to win the market share in this long standing industry is not making a break of products’ function. It simply makes customers believe its products could give them a different social character than other brands. Developing various products functioning in particular skin problem is the approach of finding out customers’ needs. This approach worked well when customers had limited brands to choose from. With years of globalization, customers in most of the countries would get access to products from other countries, what would strength the company’s competitiveness in such market? Satisfying customer needs is no longer the best option, making customers believe they need the product and brand to label their social character is the effective way of marketing management.
Last but not least, Ecommerce reduced information asymmetric, makes exaggerating advertisement impossible. Before the launch of eBay in 1995, customers need to go to physic stores to purchase grocery, living goods, clothes and home appliance. They were not able to get a customer review of those products in the store. They basically judge the products by the descriptions given from salesmen, posters and TV advertisements. This way to promotion was treated as a typical approach in traditional marketing management approach. It was widely believed that advertisement was the most effective solution for companies to communicate with potential customers and convince them to buy the product. Back to the early 90’s, customers spend most of their leisure time watching TV and it was the golden age for TV shopping industry. The host would introduce the several products in the TV program and test them in the show. Hosts would exaggerate the advantage of those products and try to sell them as many as they can. However, with the launching of Ecommerce, customers get the chance to read reviews of the product online and communicate with product’s users easily before making the purchasing decision. The reviews written by the buyers seem more convincing than the advertisement made by the producers. According to the Global Ecommerce Report 2017 written by Ecommerce Foundation, 55% of customers would research products’ review online before making purchase decision and the number is expected to increase in 2018. Promotion is not solely controlled be the sellers or producers anymore. When potential customers highly value the review of the product owners, the company is facing the challenge of making every single customer happy and satisfied with the product they bought. Actually it is hard to make one product suits all customers. Moreover it is hard to ban customers from writing negative comments of one product. So if a company does not give customers certain social character through product, it would easily lose the potential income due to the negative review online. Goes back to the example quoted above of Nintendo. If the negative review of Nintendo Switch was written by a buyer that never get to video games before and actually does not have interest of play it again, the influence of this negative review would be limited. Customers that believe owning Nintendo Switch is the sign of staying trending will still purchase the product. And customers that have strong enthusiasm to play video games anytime anywhere will still buy it. Because that single customer does not have the same intuitive as the rest customers in terms of buying Nintendo Switch, his or her comment would not be taken serious. Once again, this proves how important to change the idea of satisfying customers’ needs to becoming as customers’ needs.
In conclusion, the market environment have changed economic and technical in the past fifty years. The traditional principle of marketing that meets customers’ needs is losing its market. Not only companies have brands today, customers are also trying to label themselves. Those labels could be trendy, hard-core tech enthusiasm, fashion, street fashion, healthy, discipline and so on. They are all about the image customers show the public, using different brands of products is one way they adapt to enforce their social character. In order to boost sales, market products, it is important to make the products or the brands become the customers’ needs. Making customers believe using such product or brand is a solid statement of their social character. This is the new approach of market management for today’s market.