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he
old
marketing
concept-the
management
philosophy
first
articulated in the 1950s is a relic of
an earlier period in economic history. Most
of its assumptions are no longer appropriate
in the competitive global markets of the
1990s. As the marketplace evolves under the
converging pressures of changing. And as
organizations change, so must the role of
marketing within them.
In the traditional business environmental,
transactions are conducted in a competitive
market
place
between
hierarchical,
divisionalized, bureaucratic organizations
and their customers.
Today, however, the world is moving rapidly
toward of economic activity based on longterm relationships and partnerships among
economic actors in the loose coalitional
drame-works of network organizations.
To survive in the future, every business will
have to be customer-focused, market-driven,
global in scope, and flexible in its ability to
deliver superior value to customers whose
preferences and expectations change
continuously as they are exposed to new
product offerings and communications about
them.
Global competition is now a fact of economic
life for the industrialized nations as well as
for most of the developing economies. The
global marketplace is a real for the small
EXECUTIVE
BRIEFING
This article, the first in a two-part series,
outlines a new marketing concept. The
original marketing concept was horn in
the post-war economy of scarcity, pent-up
consumer
demand,
and
throwing
consumer confidence; the new one
thrives in a world of affluence,
sophisticated and informed consumers,
economic
pessimism,
and
global
competitors committed to delivering
superior value based on their distinctive
competencies. The marketer's key
strategic weapon is knowledge of
customers and their dynamic definition of
value. From the local savings bank to the
largest multinational corporation, the
focus of every company must he on
managing loyalty among employees and
carefully chosen customers.
VALUE-DELIVEY STRATEGY
CUSTOMER KNOWLEDGE
the
market
segmentation and targeting decision thus
establishes the criteria by which the firm will
be judged in the marketplace.
Selecting the right customers becomes the
critical strategic choice, the polestar form
everything that happens in the business,
most especially, development of the product
offering. The product is a variable; the
customer is the given.
Under both the old market targeting and
positioning are essential requirements for
effective strategic planning. In the new
marketing concept, however, the focus is
sharpened by adding the idea of the value
proposition.
The value proposition is the verbal statement
that matches up the firms distinctive
competencies with the needs and
preferences of a carefully defined set of
potential customers. Its a communication
device that links the people in an
organization
with
its
customers,
concentrating
employee
efforts
and
customer expectations on things that the
company does best in a system for delivering
superior value. The value proposition creates
serving
themboth production
and
marketing costsare too high.
The objective of the old massproduction/mass marketing paradigm was
producing products in sufficient quality at a
cost most people could afford. Low cost still
is a necessary condition for profitability, but
the new mass-customization paradigm is
based on the goal of developing, producing,
and delivering affordable goods and services
with enough variety and customization that
nearly everyone finds exactly what he or she
wants.
With the commitment to continuous
improvement that came out of the total
quality movement and rising customer
expectations, firms learned to live with
dynamic process change instead of stable
processes. The next and final step is to make
the form of the product as dynamic as the
process that produces it.
The concept of mass customization is easier
to understand in the case of services because
there is no factory that must be tuned for
flexibility. Even in the production of services,
however, Quinn points out that some
"'factory-like" technology, such as a
computer and a database, usually can be
accessed in modular form in the background,
allowing the service provider to assemble
components into a service package that
appears to be completely tailored to an
individual customer.
When a traveler contacts a travel agent or
airline sales representative, for example, she
selects destination, time of day, class of
travel, routing, seat location. A special meal,
payment terms, and other variables that
represent a unique product. Her product is
"assembled"
in
the
computerized
reservations system where it is "held in
inventory" until it is delivered at the time of
travel. But it is truly a unique product; it
literally has her name on it, and
CUSTOMER AND EMPLOYEE LOYALTY ARE
RELATED; EACH REINFORCES THE OTHER.
The
famous
Saturday
morning
management staff meetings.
Several company cheers regularly repeated
in employee meetings. For example, every
employee pledges to greet any customer
who is within 10 feet of him. "So help me.
Sam!"
"Be an agent for the customer" is one of
the specific values articulated as part of the
Wal-Mart culture.
To perpetuate the Wal-Mart culture, each
new store is headed up by a manager with at
least seven years of Wal-Mart experience.
Assistant managers, in contrast, are moved
about every two years to give them
additional experience and exposure to the
Wal-Mart culture. Most employees/
associates own stock in the company.
Everyone is focused on serving the customer
and beating the competition. It is the