1. 0 Marketing: An Introduction There are several definitions for marketing mentioned in marketing textbooks. A general thinking about marketing is only selling and promotion. Every day we see so many television commercials, newspapers ads, and sales calls, which shows that someone always try to sell something. A general definition of marketing: the act or process of buying and selling in a market. During the past three decades, marketing concepts has been changed.
The focus of marketing from the product to the customer, but objective was still profit, and the means of achieving the objective was selling or agree the potential customer to exchange their money for the company’s product. So, the marketing is a social and managerial process by which groups and individuals obtain what they need and what they want through creating, offering and freely exchanging products and services of values with others. For managerial definition, marketing as ? ‘the art of selling products. ” Peter Drucker has defined marketing as: ??
There is always, one can assume, be need for selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sell itself. Ideally marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. ” (Kotler, P. , 2000, pp. 7-8) Peter Drucker also makes clear that: ? ‘Marketing is so basic that it cannot not be considered a separate function within the business.. it is, first, a central dimension of the entire business.
It is the whole business? seen from the customer’s point of view. Concern and responsibility for marketing must, therefore, permeate all areas of the enterprise. ” He also makes an emphasis on the basic function of the marketing is marketing and innovation. ?’Marketing and Innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center. ” His concept of marketing as a philosophy is valid, but that philosophy must be operationalized.
The firm must undertake a set of activities or tasks to create a customer or defeat competitors. A definition given by Tim Cohn (Marketing Consultant and Author): the definition of marketing is to find out what your costumer want and then give it to them. ” Whereas, Marketing is defined by the Chartered Institute of Marketing is: ? ‘the management function responsible for identifying, anticipating and satisfying customer needs profitably. It’s all about delivering the right product, at the right price and in the right place and ensuring customers are kept happy with that they get.
” (Cohn, T. , 1995, pp. 1-2) Kotler et al (2005), defines marketing, ? ‘as a social and managerial process by which individuals and groups obtain what they need and what they want through creating and exchanging products and value with others. ” (See Fig. 01) So marketing must not be understand in an old fashioned way of making a sale- telling and selling- but in a new way of satisfying customer needs. (For more details see Appendix-1: The 4 Principles of Marketing and Appendix-2: The Nature of Marketing) Fig. 01: Core Marketing Concepts 2. 0 Lambin’s Strategic Concept of Marketing.
By the 1990s, the concept of marketing has been totally outdated and that the times demanded a strategic concept of marketing that is a major evolution in the history of the marketing thought, focus of marketing is shifted from the customer or the product to the customer in the context of the broader external environment. Knowing everything about customer is not enough. To succeed in the market, marketers must know the customer in a context including the competition, government policy and regulation, economic, and political macro factors that shape the evolution of markets.
Perhaps one of the most appropriate and popular strategic marketing theories has been given by Jean Jacques Lambin. This theory has market-oriented approach, as it not only challenges the traditional concepts of marketing, it adopts and emphasizes on the ? functional’ role of marketing. His theory enlarges the market definition to include the principle players such as competitors, distributors, as well as prescribes, as well as the various customer groups present in the wider macro-marketing environment. He also takes into account the marketing strategy and shows how strategic decisions are implemented at the organization’s operation level.
Lambin (2000) states that ? ‘ marketing is a business philosophy and an action-oriented process which is valid for every organization in contact with its constituency of users. ” He make the distinction between marketing as a ? ‘system of thought” (or strategic marketing) and as an ? ‘active process” (or operational marketing). The theory of market driven management is one of the modern technique, which has developed to bring significannot changes into a business through addressing the principle aspects affecting the performances of the business.
Some of the aspects including aggressive competition, rapid technology changes, and utilizing of spare capacity, increasing requirements and demands of the clients and raising costs of the products and services. The market driven management generally follows the 5C’s. These are ? Cost, Capabilities, Customers, Competitors, and Cross functional teams’. His theory of market driven approach gives an excellent module for any organization. 3. 0 Critical Analysis of GE (General Electric) Marketing Strategy 3. 1 Company Overview
In 1890, Thomas Alva Edison established the Edison General Electric Company in Menlo Park, New Jersey and at the same time Charles A. Coffin was growing his business, The Thompson Company. It was very difficult for Edison and Coffin to remain competitive based their own technologies. So the two companies united in 1892 and formed The General Electric Company. ?’I never perfected an invention that I did not think about in terms of service it might give others” -Thomas Alva Edition, GE Founder (MGT 3301 – GE presentation, pp. 1-2) From more than 125 years, GE has been admired for his performance and spirit.
The businesses that they invent and build fuel the global economy and improve people’s life. Today GE has more than 11 technology, services and financial business (see fig. 02) with more than 315,000 employees in 160 countries around the world. Fig. 02: GE’s Business Services (See more details-Appendix-3 ? ‘GE’s Business Services”) Imagine, solve, build and lead-these four words express what is to be part of GE. Their action-oriented nature says about who they are and should serve to energize themselves and their teams around leading change and driving performance (see fig. 03). Fig.
03: Four GE’s Business Values and Actions (See Appendix-4, GE’s Business Values and Actions) 3. 2 Marketing Philosophies of GE GE is a very big organization, which has more than 11 diversified business areas. GE Marketing Network is a division of General Electric, is a diversified, global technology and services company, which provides high quality marketing services and materials to their customer’s unique and specific marketing objectives. GE Marketing Network helps it customers to drive top-line growth and prosper in the new economy. GE offers an integrated suite of digital and traditional marketing services.
The goal of GE is to achieve worldwide leadership in each of its businesses. To achieve this leadership, GE’s strength depends on 5 key growth initiatives: Technical Leadership, Services, Customer Focus, Growth Platforms, and Globalization. GE is committed to leadership in the next generation of technology. They are well positioned to drive growth for the future with technical excellence in each business by developing a global technical capability, increasing new product, growth, and investing in global research. GE is more customers focused which ensure that everything which they provides value to their customers.
It means creating a partnership that- combined with their expertise in financial, service and technology industries-maximizes customer profitability and ensures quality. GE provides better services to their customers to retain their loyalty. Their services have grown from the traditional activities of parts replacement and reconditioning of machines to a larger and broader vision. Their new vision includes investing in their business and technology to improve performances on their installed base and the way they actually serve it. Through higher technology, they reengineer the installed base.
By, doing so, they improve their customer’s competitive positions. Kotler, et al (2005), says, marketing management as carrying out tasks to achieve desired exchanges with target markets. What philosophy should guide these marketing efforts? What weight should be given to the interests of the organization, customers, and society? There are 5 alternative concepts under which organizations conduct their marketing activities: the Production, Product, Selling, Marketing, and Societal marketing concepts. GE marketing philosophy follows the Marketing Concepts although they are product and customer focus.
The marketing concept holds that achieving organizational goals depends on determining the needs and wants of the target markets and delivering the desired satisfactions are more effectively and efficiently than competitors do. The marketing concept takes an outside-in perspective. It starts with a well-defined market; focuses on customer needs, coordinate all the marketing activities affecting customers and makes profits by creating long-term relationships based on customer value and satisfaction. Under this concept, customer focus and values are the paths to sales and profits. The marketing concept of GE: ?
‘We’re not satisfied until you are”. The marketing concept does not mean that a company should try to give all consumers everything they want. The purpose of marketing is not to maximize customer satisfaction, but to meet customer needs profitably. 3. 3 GE’s Marketing Strategy GE never launches a new product or campaign without a detailed marketing plan. Their marketing network helps them to develop or update marketing plan to put them on track. It will help them to evaluate their marketing opportunities and see how they align with their overall business plan. Together, they determine: ? How to reach their marketing objectives.
?Whom to target. ?What media to use. ?When to implement the plan. ?How to measure program effectiveness. ?Level of budget investment required to meet goals. So, the strategic planning involves adapting the firm to take advantages of opportunities in its constantly changing environment. ?? Strategic marketing is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. ” It relies on developing a clear company mission, supporting objectives, a sound business portfolio, and coordinated functional strategies.
(Armstrong and kotler (2001), pp. 27-28) strategic marketing is a process of discovering what your customer want and make sure that a company should meet their needs takes a lots of work. But is much easier if company should follow some steps (see fig. 04). To achieve the business goals GE follows some major strategic marketing steps. Step-1: Define the business opportunity. A good understanding of the market conditions, competitions, and their own strengths and weaknesses will help them to point out in the right direction. ?Review existing baseline research, and other feedback.
?Perform additional research if required. ?Formulate solutions to meet business goals. Step-2: Develop the plan. GE follows some strategic plans, which includes: ?Detailed descriptions of the targeted customers. ?Overall media strategies or combinations. ?Matrix to determine campaign effectiveness. ?Project milestones and detailed budget. Step-3: Implement the plan. Hence they agree on the timing and the budget, together they implement the plan. ?Write, design and produce material. ?Purchase any media space. ?Implement campaign and fulfillment. Step-4: Measure the results.
The measurement tools include surveys, brand recall studies, inquiry level measurements from all channels, new sales leads, web click through rates and actual sales. A well planned marketing strategy helps GE is to meet their business goals and put them on a course for success. 3. 4 Analysis of GE’s Market Driven Management GE is not only follows the 4P’s marketing model but it follows the 7P’s marketing concept to compete with their rivals. (See more details on Appendix- , Marketing mix 7P’s Model) As an example, in 1989, GE paid $50 million for the 50. 1% of Tungsram Co.
a Hungarian state owned manufacturer which has a healthy market share in both eastern and western Europe. The joint venture with the Hungarian government is a key part of the GE’s marketing strategy to expand their markets in both eastern and western Europe. GE’s Strategy, like that of most companies entering in the East European ventures to gain the market position. This is the way GE’s use this strategy to acquire the market position, by penetrating the market needs. (A brief case study of GE plastics, which proves the Lambin’s Theory of market driven strategy given in Appendix-5, Case study of GE plastics must refer.
) Fig. 04: Strategic Marketing Process As we have discussed GE’s marketing strategy, in a large organization, development of marketing plans is the responsibility of each strategic business unit (SBU). An SBU is a unit of a company that is large enough and homogeneous enough to be considered a separate profit center that formulates its own independent business strategy. Thus the corporate plans of very large firms with many SBUs to expand and which to contract. There are number of models available to help businesses manage these corporate ?
‘portfolios” of the subsedieries. There are three best known models for the portfolio analysis, are the BCG matrix, the GE model, and the Diversification risk matrix. Keegan et al (2002), defines Portfolio Analysis is ? ‘A way to assess needs, allocate resources, and spread risk across SBUs which, taken together, contribute to the achievement of corporate objectives. ” The General Electric model is the perfect model for the portfolio analysis. The GE model plots industry attractiveness on one axis and competitive strength on the other axis.
Industry attractiveness is defined as market growth plus overall market size and industry profitability and competitive strength replaces market share as the dimension by which the competitive position of each SBU is accessed. Competitive strength likewise includes a broader range of factors other than just the market share that can determine the competition (see Fig. 05). Fig. 05: The GE Matrix Model 3. 5 GE’s Competitor Analysis and Competitive Strategy GE always aimed to be number one or two in any market. It was entering because that was Jack Welsh’s (Chairman and CEO) policy.
So it was no surprise when they invested in the European lamp market with factories in Spain and Hungary, to achieve that. No one operates in vacuum, so you must know what your competitors are doing that is better than you and where you are better than they. In developing a competitive strategy organizations must not lose sight of the competition. The amount of competitive challenge varies with the product category. GE also faces indirect and direct competitions with their rivals. (Keegan et al (2002) defines, indirect competition as: ?
‘ a product that is in a different category but functions as an alternative purchase choice” and direct competition as: ? ‘a product or brand in the same category. ” The main competitors of the General Electric are: ALSTOM ?Specialize in energy, ship buildings and marine systems and transport infrastructure. ?Acquire ABB (Asian Brown Boveri, a leading competitor to GE) SIEMENS ?Electronic and Electrical Engineering Company. 6 groups:-Automation and control, information and communications, medical, power, transportation, and Lighting.
Provides industrial automation and control, information and communications, lighting, power transmission, and transportation ?Very similar to GE; strong brand name equity, has business operations in over 190 countries. GE follows Porter’s 5 Forces Model to compete with their competitors. Porter’s competitive forces model is one of the most often used business strategy tools and has proven its usefulness on numerous occasions. Porter’s model is particularly strong in thinking outside-in. it is used to make an analysis of the attractiveness of an industry structure.
The competitive forces analysis is made by the identification of 5 fundamental competitive forces: ?The entry of competitors (how easy or difficult is it for new entrants to start to compete, which barriers do they exist) ? The threat of substitutes (how easy can our product or services be substituted, especially cheaper) ? The bargaining power of the buyer (how strong is the position of buyers, can they work together to order large volumes) ? The bargaining power of suppliers (how strong is the position of the sellers, are there many or only few potential suppliers, is there a monopoly) ?
The rivalry among the existing players (is there a strong competitions between the existing players, is one player very dominant or all equal in strength/size) As a sixth factor could be added: government. Fig. 06: Porter’s Competitive Forces Model GE’s strategies with their competitors are: 1. Rivalry among competitors. ?ALSTOM and SIEMENS, in particular. ?Creating competitive advantages to gain bigger market share. ?Acquisitions, mergers and joint ventures ?Battle for innovation and technological improvements. 2. Potential of New Entrants. ?Adaptac (1981) and Adaptech Technology (1983).
?Late bloomers, but slowly gaining market share. ?Does not pose too much of a threat to GE, ALSTOM or SIEMENS for now. ?Tough for new entrants to pinch a sizable chunk of market share from GE, ALSTOM or SIEMENS. 3. Suppliers. ?Materials, parts, components, other resources. ?Vertically integrated (GE Advanced Plastics, GE Consumers and Industrial manufacturing). ?Has to be aware of suppliers that might integrate forward. 4. Substitutes. ?Has many substitutes that might pose a threat. ?Very small diversified which means that GE is spreading the risk of failure in every market.
?Eg. GE’s NBC-Universal’s substitutes are pirated VCD’s or DVD’s. 5. Buyers. ?Similar to its substitutes, GE has a broad line of buyers, ranging from consumers to large corporations. ?Eg. GE Healthcare’s buyers are Hospitals and pharmacies. 3. 6 SWOT Analysis of GE Strengths ?Global strength and recognition 5th in Fortune 500 list, operating in more than 160 countries ? Excellent management Proven leadership and business model Confident investors ? raising capital ?Diverse product range Long Term (GE Aircraft engines) Short Term (GE Lighting, Plastics, NBC)
Financial Services (contributes to 40% of GE’s revenue) Spreading the risk of failure in every market and not just one Weaknesses ?Company size/ acquisition restriction Eg. GE’s planned acquisition of Honeywell International, a diversified technology and manufacturing company, specializing in aerospace products, was rejected by the EU ? Energy Segment Underperforming, no signs of near future recovery ?Flexibility Large and diverse businesses might overstretch the company and reduce reaction times to shifts in targeted markets. Opportunities ?
Research and Development Immense capital allows GE to contribute a lot to R&D for product development and improvement ? Increased geographic growth Global expansion = more opportunities (Eg. China) ?Merger between NBC and Vivendi Further opportunities in the media business ?Improved customer services Adopted a new customer focus initiative Threats ?Exposure to global economy Economy slowdown would affect GE, since 40% of the revenue is generated overseas Exposed to currency fluctuations ?Intense scrutiny after Enron More transparency and disclosure; skeptical investors.
Public image of all large companies suffered ?Competition Constant change in technology heats up competition Very diverse:- tough to be the best in all industry 3. 7 GE brand Analysis GE maintains the Six Sigma Standards. ?Must produce no more than 3. 4 defects per million opportunities. ?An “opportunity” is defined as a chance for nonconformance, or not meeting the required specifications; GE strives to be flawless in executing their key processes. 6 Key Areas ?Critical to Quality ?Defect ?Process Capability ?Variation ?Stable Operations ?Design for Six Sigma (To know more about Six Sigma, See Appendix-6, what is Six Sigma) GE has a very strong brand name.
Last couple of years GE digitalized each single activity and operation by creating a digital nervous system. The objective behind the strategy of making everything digital is to monitor everything in real time. The value of a strong brand lies in the impression left with anyone who comes into contact with the organisation. In a business to business context, this places greater emphasis on people issues. Compare this with consumer products where values may be conveyed by product promotion and packaging.
The most compelling reasons for effective branding is to achieve loyalty and support a premium price. Purchasers rely on experience and their often long-held attitudes about a brand. Successful brands are often focused on one specific market segment. This is where the product becomes differentiated, easy to identify and is usually of high quality. This brings an emotional affinity to the product by members of the target segment. The diagram (Fig. 07) below shows how this can be achieved. The crucial factors are to understand how customers currently perceive your company and product, and how your staffs perceive then as well.
The you need to define what aspirational values would move your product to its desired market position. Being able to describe the aspirational brand values in the form of a simple statement provides an operating framework for staff. Any decision, behaviour, or promotional collateral can then be tested against the brand value statement. This is the point when you decide whether re-branding could work for you. Fig. 07: Branding Strategy Leading Edge has the research techniques to establish what the customers’ brand values are – and the extent to which your company and your competitors are satisfying them.
We have experience of running the facilitation and workshop process to give you the tools to manage your brand. A well-constructed brand statement makes it easy to design a very specific image that everyone in the organisation understands and works towards. It may be ? the company way’. This doesn’t mean that it is inflexible and not customer-focused, but that everyone instinctively understands what is acceptable and what is not. (Source: www. lead-edge. co. uk) The product quality of the GE is very high with high diversified product range (see fig. 08) Fig.
08: Product & performance quality range of GE 3. 8 GE’s Promotion or Selling Strategy GE generally uses these methods to promote their products: E-buy, E-make and E-sell E-buy tackles GE’s global suppliers, interacting with them in a better and faster pace. An example to this respect was observed in GE’s web-based auctions, which fetched more than 680 million dollars in 2001 alone. In addition, there was the factor of precious time saved from these auctions. Prior to the adoption of digital technology, GE’s customers were not quite aware of the products, or what GE actually expected from their buyers.
With the introduction of new system, buyers are able to buy off pre-negotiated contracts, which save precious time, money as well as investments and efforts, which would otherwise be wasted. E-sell is one where interaction with the GE global customers is speeded up. An example to this respect is the GE Polymerland Web, which has helped customer’s easy access to for researching GE’s resin products and prices. An accomplishment to this respect is the GE strategy of cutting some 300,000-phone calls per year to service its representatives across the globe.
The result of this tremendous cutting is rise in speeds at which customers gain access to GE, and the response by GE, as also cutting unit’s costs by 35 percent over a five year period. Using the technique of E-selling, GE has also gained its sales as well as cutting back on costs by up to 60 percent, aside from enhancing the speed of the entire operations. There are some more media by which GE promote their product and keep in touch with their customers, stakeholders, shareholders and their employees: ?E-mail marketing and E-Newsletters. ?E-Seminars. ?E-sales. ?E-marketing. ?Direct Mailing. ?Advertising. ?Printed Materials.
?Multimedia. ?Web-Design. 4. 0 Conclusion 5. 0 Appendices Appendix-1 The 4 Principles of Marketing (4 Ps) by Tim Cohn Marketing Consultant www. marketingprinciples. com “Marketing and innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center. ” —Peter Drucker The 4 Principles of Marketing are a good starting point for developing your marketing plan. The following are the interpretation of E. Jermone McCarthy’s 4 Ps (4 Principles of Marketing) Marketing Principles -1
Product Individual goods, product lines, or services. Strategy: This is obviously the most important part of any business. In order for a product or service to succeed, it must offer clear, distinct and non-arguable value to the buyer. Supply and demand are the judge and jury. Tactics: Includes features, accessories, installation, instructions, service, warranty, packaging, and brand names. Marketing Principles -2 Place (Distribution Channels) Getting the product or service to the customer. Strategy: The saying – location, location, location holds true for new products more so than any other type of product.
If consumers don’t know your product exists – how can they buy it? Tactics: Channels, distribution systems, middlemen, warehousing, transportation, fulfillment, and shipping. Marketing Principles -3 Price Strategy: Price meets it own demand. Price points are a function of the degree of innovation found in the product. The more innovation and thus value added, the more latitude you have in setting a price. Tactics: Setting a price that serves the customer well and maximizes profits to the company is a must. Price flexibility, level pricing, introductory pricing, discounts, allowances, geographic terms.
Marketing Principles -4 Promotion Communication with the customer Strategy: Communication is defined as: Message sent. Message received. Message acted upon. If the product has been designed with customer desires and needs in mind, the communication necessary for getting a customer to pay for the product is already known and replicated in the media used to reach them. Tactics: Personal selling, mass selling, sales promotion, sales personnel, advertising, media selection, copywriting. My definition of marketing is to find out what your customers want and then give it to them.
Peter Drucker’s definition of marketing is: “Marketing and innovation are the two chief functions of business. You get paid for creating a customer, which is marketing. And you get paid for creating a new dimension of performance, which is innovation. Everything else is a cost center. ” A general definition of marketing: The act or process of buying and selling in a market. First, the theory Marketing is defined by the Chartered Institute of Marketing as ‘the management function responsible for identifying, anticipating and satisfying customer needs profitably’.
It’s all about delivering the right product, at the right price and in the right place, and ensuring customers are kept happy with what they get. Appendix-2 The Nature of Marketing John McCann My definition of marketing Marketing is the process of understanding and influencing markets. Marketing as a process Marketing is a process that marketing managers execute. In a number of instances, a marketing manager does not manage people, but manages the marketing process. A product manager is an example of such a marketing manager; s/he manages the marketing process for a product within a larger marketing organization.
We, as consumers, see the results of that process in the form of products, stores, shopping malls, advertisements, sales pitches, promotions, prices, etc. This process usually involves four phases. Analysis Markets must be understood, and this understanding flows from analysis. Marketing managers spend weeks analyzing their markets before they undertake the development of marketing plans for influencing those markets. Planning Once a market is understood, marketing programs and events must be designed for influencing the market’s customers and consumers, and even the firm’s competitors.
The marketing events are executed in the markets: advertisements are run, prices are set, sales calls are made, etc. Monitoring Markets are not static entities and thus must be monitored at all times. After events execute, they need to be evaluated. The planning assumptions upon which the upcoming events are based must be continually tested; they they are not longer true then the events may need modification. Managing the Marketing Mix Marketing managers can control or influence four aspects of the firm’s output: its products, promotions, prices, and the places that all of these are offered.
Product Product management involves the design of the physical product along with its packaging and warranties, the positioning of that product in terms of the benefits it delivers, and the development of the product’s brand identify. Promotion It is generally not true that consumers will beat a path to your door if you have a superior product; they must be told about it and induced to buy it … thus the need for promotion. Promotion includes personal selling, advertising, sales promotions, and public relations.
Pricing strategies and tactics must be determined for the product, and then followed to set prices for all the sizes and variants of the product. The result is usually a price schedule that includes the regular price, volume discounts, payment terms, seasonal