Over the last few decades, the concept of marketing has changed dramatically. Currently the concentration is rapidly transferred to customers (versus goods and selling) global marketing.
Moreover there are many problems regarding technology that influence marketing. Furthermore, there is regenerated focus in marketing on producing & innovating better & new goods and services rather than only fighting against other business organizations follow the patterns of market developed by the rivalry business organizations.
We may explain this rivalry easily with the help of Porter’s 5 forces model of competition.
Porter’s 5 Forces Model of Competition
There are several challenges in the 21st century that are faced by markets. Porter Model is used to before entering the business in order to study the market both for new and current business organizations.
Porter’s Model is used to minimize and face those challenges. Following are the 5 forces of Porter Model of Competition
Threat of New Entrants
As the ratio of new participants in the industry increases, the ratio of intensity of competition increases.
Bargaining Power of Buyers
In case of increased competition there are many producers in the industry. So there are more options of switching the products in front of purchasers. Resultantly the purchasing power of purchasers will increase.
Threat of Substitute
As cleared that increase in the threat of new participants, the competition will increased, which in turn increased the number of substitutes.
Bargaining Power of Suppliers
As the number of suppliers increased, there is solid purchasing power provided by the supplier to the customers/manufacturers and vice versa.
Rivalry among Competition Business in Industry
When there is increased number of manufactures and increased variety of products then rivalry among competitors is enhanced.
This will result in demand for products having higher quality and satisfaction of customers in order to face the competition. Let’s check it below in further more detail.
(A) – The Information Technology Revolution
The science of marketing is greatly influenced by technological age especially with the invention of internet.
- Technologies for Connecting
01 – The streaming of digital information needs link of Extranets, Intranets and the Internet is the basic forces of the new economy.
02 – Technology is the main force that is behind the new connections.
03 – The expansion of telecommunication, computers & information technology and also merging of these technologies play an important role in making the products value able.
- Marketers make detailed database sand employed them to target the individual customers with offers made to fulfill their particular needs and purchasing patterns by employing recent powerful computers.
- Other connecting tools include fax machine, cell phones, TV and CD-ROM.
- With the help of ecommerce, consumers buy and shop without going out of their homes.
- Few alterations that consumers embrace include virtual shopping, virtual reality displays and virtual sales persons. The consumers are connected with the companies through superhighway especially the Internet.
- Connections with Customers
Recently, the marketers consider that they should not just only link to consumers. Instead most of marketers select target customers who are potential.
01 – The market fragmentation increased when there is increase in customer connection & diversity. Sub markets and individual buyers are concentrated by the marketers by responding and moving to segmented marketing in order to target the customers.
02 – The business organizations analyze the worth of their customers to the business at the same time. How much value is given by the customer to the business organization?
Are the customers value pursuing? The customer can be maintained lifetime. Now instead of bringing new customers to the organization, it is best for the organization to engage the current customers and maintain a long life relationships with those customers by providing them higher value and satisfaction and ensuring the proper profits.
Share of customers is more focused by the companies rather than share of the market. Training of employees is done in cross-selling. The common practice is up selling now-a-days. Recently business organizations focus more on directly linked with their customers by using new technologies.
Products are now offered through mail order catalogs, telephone, kiosks and electric commerce. Business to business buying has enhanced much quickly than online consumer purchasing.
Some business organizations sold only their product only through direct channels like Amazon.com, Dell Computer.
03 – The redefining of role of connection of purchaser with the vendor is referred to as direct selling. The marketing offers and process include the role of purchaser. Some business organizations permit the customers to build their own products online.
- Connections with Marketing Partners
The marketers play an important role of intermediaries within the business organization by getting the needs of the customers and then pointing out those needs to different departments of the business organization which further making decisions in the light of highlighted needs of customers.
It is not only the duty of marketer to make interactions with the customer. In fact every employee of the business organization considered its customers.
Business operations are reorganized in order to meet them against needs of their customers. Efforts of teams are coordinated towards the customers. Recently most of business organizations are networked and trust heavily on other business organizations through partnership.
A longer channel that that starts from raw material and go further to elements of finished products that are delivered to the final purchasers is referred to as supply chain.
Every participant of the supply chain adds and obtains some part of worth to the total worth produced by the supply chain.
- Connections With the World Around Us
Currently marketers focus on how they linked with the environment around the business organization. In the last decade, cultural difference and geographical distance have reduced dramatically.
How the size of the business organization is (either small or large), it is influenced by the global competition. Business organizations in safe domestic market face challenges from competitors of international markets.
Business organizations which are exporting their products purchase more elements and supplies from outside their countries. In the next century, the accomplishment of a business organization heavily relies on the development of good global networks.
- The New Connected World of Marketing
New opportunities are considered by smart marketers for linking with their marketing partners, customers and the world around them.
The old concept of marketing focuses on just selling or advertising. It concentrated on the following.
- Capturing customers
- Short term profit
- Goal of just selling the products
On the other hand the new marketing concept considered that it is the goal of the entire business organization to enhance customer information and satisfaction of customers. It includes the following
- Profitable customers are targeted
- Innovative methods are find out to acquire & maintain these customers
- Develop direct links and establish forever customer relationships.
(B) -Rapid Globalization
The distance between two countries is minimized through development in the technology and economy. The innovation in the connecting technologies brings the world in a form of global village.
With the advent of quicker transportation, communication and financial flows, the world is shrinking increasingly. In recent era of 21st century the business organizations cannot focus only to their domestic markets, even if those domestic markets are larger.
There are many global industries and the business organizations that work globally accomplish increase brand awareness and lower costs.
Another dark side of global marketing is that it is risky because of the reason of unstable governments, trade barriers, variable exchange rates, protectionist tariffs and other prohibitive factors.
Global marketing into the 21st century include the following
01 – The world is reducing in a quick manner with the advent of financial flows, communication and transportation.
02 – The business organizations that work domestically and not consider foreign competitors face problems when these business organizations consider themselves in the backyard of foreign competitors. The business organizations that work only in home or domestic markets may not only the risk of losing its own home market but also lose the chance of move in the new markets.
03- Although there are some business organizations that prevent the foreign imports through protectionism but this not proper solution to the problem and in the long run this will increase the living cost as well as protection of inefficient business organizations.
04 – The business organizations which delay in taking steps towards internationalizing will lose the opportunity of growing in the global market.
05 – The business organizations that work in global market takes advantages of in their costs and reputation in aspects of marketing, financing, R & D and production as compared to the business organizations working domestically
(C)- The Changing World Economy
The economy of world is changed as the new markets are opening with rising richness in the developing countries, but still there are many areas that contain poverty and slow economies.
Marketers deal with many opportunities and challenges in the new economy. The new economy provides the customers more chance to make decision in their choice regarding their product selection.
The businesses and marketing practices have and will alter as both the businesses and consumers have recently real time and virtual access to the millions of offers, options, products, prices, competitors, people and sources of information that is not provided previously.
Resultantly the marketing mix is altered as business organizations and marketers specify new utilization of effective customer relationship management and intangible assets which is quite different from simple marketing.
This is assumed that marketers & marketing will change in the future with the new economy & Internet as there is enhanced & quicker continued growth & change rate despite of recession, dot.com bust, and other important political, economic & social adjustments.
(D) – The Call for More Ethics & Social Responsibility
A new interest in ethical conduct in business has been emerged with the problems reasoned by pollution in Eastern Europe or elsewhere and the greed of 1980’s.
The social & ethical responsibility of marketers has increased in their social & environmental actions as the environmentalism and consumerism movements mature.
In future, the environmental movements and social responsibility will place even tight demands on business organizations. The business organizations that resist will be compelled into compliance by consumer outcries or legislation.
- High Prices
It can be misleading to keep high costs of distribution. Among other causes, the customers try to understand about the product. So it is costly to promote & advertise the product. Brands deliver quality standards and psychological benefits.
Distribution costs include providing the product not simply promoting it. In competitive marketplace the customers mostly have real choices, on the basis of which high promotion & advertising costs are set. In uncompetitive industries excessive markups is the exception on the contrary the rule.
Strategic decisions on pricing decisions can be influenced by the ethics such as market skimming versus market penetration.
- High Costs of Distribution
It is mostly said that middleman markup prices more than worth of their services because they are greedy.
Policies and guidelines should be included in a comprehensive implementation of marketing ethics for specifying the relationship of business organizations with their distributors.
- High Advertising & Promotion Costs
Recently marketing is also charged of pushing prices up in order to cover the costs of sales promotion and heavy advertising.
The marketers have unique opportunity to proactively specify the needs of strict advertising ethical standards, when viewed in the light of enhancing activism among groups of customers to regulate advertising.
A statement on ethics in advertising could be adopted by the marketers in order to promote proper information exchange, encourages innovative & creative message production.
- Excessive Gross Profit Margins of Middlemen
The gross profit margins of middlemen are too much which are addressed by the critics.
- Deceptive Practices
Deceptive pricing contains practices like wrong advertising “wholesale” or “factory” prices or a highly increased minimization in prices from a fake enhanced price list.
Practices like overstating the performance or features of the product, running rigged contests and enticing the customers to the store for a bargain that is out of stock are referred to as deceptive promotion.
Deceptive packaging contains not filling the package to the top, describing size in misleading manner or exaggerating package contents through subtle design.
- High Pressure Selling People
High pressure people are free to react to the tactics of selling. Moreover purchasers are allowed to back out of a purchase for large ticket items or return the products in most states that offer “cooling off” periods.
- Unsafe Products
Harming Product is illegal mostly. Broad guidelines can be given by the corporate marketing policies that must be followed by everyone in the business organization.
- Product Development
Ethical codes may influence the product development searching more suitable products or alteration is salutary product concepts to create them more suitable.
(E) – The New Marketing Landscape
The new marketing landscape is a fast-paced, evolving and dynamic function of all these opportunities and changes. There is no static formula for achievement.
Customer is regarded king in the marketing and all the struggle of the business organization rate directed towards satisfaction of customer. This gives new landscape to the development and marketing of linking technologies, which are playing basic role in this regard.
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