Music Industry Marketing 1

The Marketing Concept and the 3 stages of Marketing

Music Industry Marketing 1 (DJ2P 34)

Marketing concept is:

the philosophy that an organisation should try to provide products that satisfy customers' needs through a co-ordinated set of activities that also allows the organisation to achieve its goals.

Music Industry Marketing 1 (DJ2P 34)

How is it done?
Companies that research their customers needs & wants and respond to this data to offer better products and / or services are said to be marketing oriented.
Ultimately these companies will undertake a series of marketing research process in order to gain a competitive advantage over their rivals in the marketplace. This is The Marketing Concept.

Music Industry Marketing 1 (DJ2P 34)

Product Orientation (stage 1)

The Industrial Revolution began in the mid -18th century fuelled by steam technology and the development of the railways, electricity, scientific management principles and the division of labour, automation and factory processes.

Music Industry Marketing 1 (DJ2P 34)

 A limited form of mass production was possible for the first time. This was an age of inventors, engineers and innovative production processes. It was also a time when the levels of goods demanded exceeded their supply. The consumers were those who had moved to the new towns and cities looking for employment in the new mills and factories. It was commercially possible for manufacturers to concentrate first and foremost on increasing production and doing so as efficiently as possible, making more to sell at low prices. Firms relied on selling whatever they could manufacture.
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Cities & towns began to expand.

Greenock had been a small fishing village but with the transatlantic trade in goods arriving in the newly built harbours factories and mills soon flourished manufacturing goods such as:
Shipbuilding
Paper Pottery

Glass
Barrel making Sugar refining
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 As a strategy, a purely production-orientation can be successful during periods of shortage and/or limited competition. It can work only if the company is so technically advanced that customers have to buy from them or not at all, or where the aim is to produce at the lowest possible cost.
So the production-oriented period is characterised as an era where demand outstripped supply. Companies aimed to benefit from the economies of scale that resulted from buying raw materials and component parts in bulk quantities and using the new mechanised processes to keep labour costs down. he company bosses themselves could afford to ignore those people who did not want what they made; the level of demand for most goods was so high that they knew that someone would buy. The attitude that prevailed at the time can be summed up as a Take it or leave it! approach to business.

Music Industry Marketing 1 (DJ2P 34)

The period dominated by a Production Orientation focused on:

manufacturing processes supply arrangements maintaining low unit costs

achieving productivity
profit through volume It de-emphasised: customer needs market requirements
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The Production Orientation stage, dominated by a focus on production, lasted until around the 1930s in Britain.

Music Industry Marketing 1 (DJ2P 34)

Sales Orientation
Improvements in mass production technology meant that an even greater range of products (from cars to household equipment) could be produced relatively cheaply, but by an increasing number of competing suppliers. Eventually supply began to match and exceed demand, as the number of manufacturers grew. The Great Depression of the 1930s did not help; money was very scarce and demand needed to be fuelled by a more active approach. Selling activities proliferated. When production levels overtook demand, there was a change of emphasis towards sales. Promotional effort was marshalled to move the goods that the factories were making. Products were to be pushed in the marketplace, using a Hard Sell approach.

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 Arguably, for the first time, customers were being offered a real choice in the marketplace. Production levels in many sectors continued to exceed sales. At the same time, consumers themselves were wealthier and more knowledgeable about the products they wanted, and they exercised the power that this choice gave them. There was an increasing need to employ salespeople who would move the volume necessary to retain production efficiencies. These salespeople in their turn were heavyweights, concentrating on selling rather than on discovering what people were prepared to buy. Companies spent huge amounts of money in an often failed attempt to hold onto sales levels.
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 This was the time in commercial history when the commercial traveller and sales representatives emerged - many of them unscrupulous. They were people paid on a commission basis, designed to get results in the form of sales at any cost! The variety of Hard Sell methods used included an assortment of financial incentives to increase sales levels, discounting, money-off offers, aggressive (sometimes fraudulent) sales techniques, and the emergence of credit arrangements to spread the cost of purchasing. Advertising was widespread. The dogma of this period can be summarised in the phrase: Sell what you can make!
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 This era saw the early development of many of the marketing functions - advertising, promotion, and selling while not embracing the marketing concept itself.

The development of these functions can largely be attributed to the fact that consumers did not value the products on offer and were not prepared to commit to them in the longer term.
Sales-oriented techniques were (and still are to an extent) used extensively in the sale of one-off purchases such as encyclopaedias and insurance; their purpose in such cases is to break down the clients resistance and most consumers are naturally wary of such practices.

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Marketing Orientation
Following on from the 1960s, we again saw a shift in emphasis

The overall aim of all companies has remained the same: to make profit and to increase that profitability over time.
But in this final evolutionary stage, companies began to recognise that it is seldom possible to maximise profit and volume simultaneously. The 1960s were characterised as a time of higher standards of living than ever before, higher levels of income, spending power, and consumption. In the 1960s, with the advent of more and more luxury goods, and greater levels of competing companies vying to supply them, the American principles of marketing reached Britain.
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 They began to accept that it made sense to first of all determine what customers wanted. Production could then be geared up to produce goods for which there was a demand, rather than waste time and money in producing goods without reference to customers, or spend scarce resources trying to persuade them against their will that they should buy. A more sophisticated approach to managing the exchange process had arrived! It was one which recognised that, although price is an important determinant of demand for many products, it is seldom the only one and often not the most important.
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Consumers had grown up.

Manufacturers relied on retailers to sell their goods for them, resulting in long chains of distribution which separated manufacturers from the ultimate buyers of the goods they produced. Market research techniques developed to bridge that gap, to allow the manufacturers to speak to and consult with consumers, to maintain relevance in their product ranges. These same large companies saw themselves operating in a time of accelerated change. Constant reference to consumers and their needs was essential if the companies were to survive in a highly competitive business environment. Consumers themselves were then, and are now, faced with a huge selection of products, both goods and services. Most consumers, however, cannot buy everything they might want - they must make choices.

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Marketing-oriented companies MANAGE THE RISK of trading in highly sophisticated markets. They do this by:
paying attention to and reviewing all aspects of product policy, from branding, packaging, and new product development to product withdrawal when needs change (PRODUCT) pricing according to market knowledge, earning profit through reducing risk and ACTIVE competition (PRICE)

distributing goods by the most appropriate channel(s) to match end user need (PLACE)
selling and promoting products in a way which emphasises the benefits of ownership for the consumer and avoiding manipulation and hard sell approaches (PROMOTION) co-ordinating all these activities in a way that shapes the company focus, and maximises its ability to respond to the forces of the marketplace
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The evidence is clear - if customers needs are ignored, the business will very likely fail!

End of presentation

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