Marketing Assignment: Journal Review

The 4 P’s of Marketing, also known as the marketing mix, are the essential tools that

an organization uses to make major marketing decisions that help it best serve its

target customers. Although, as times have progressed, the four P’s have been

expanded to seven or eight P’s and have also been transformed into a consumer-

oriented model called the four C’s, but the 4 P’s – product, price, place, promotion are

still considered the most important variables that help attract customers to a business.

A business exists so that it can profit by selling its products and services to

customers. An important part of a firm’s goal is to meet the existing and latent needs

of its customers, now and in the future. This makes the new product development

process intrinsic to a firm’s operations.

Global Products and the new product development process

Rama Yelkur and Paul Herbig, in their article “Global products and the new

product development process” (1996), emphasize the significance of “timely and

responsive new product development” in the “highly competitive global

environment”. They argue that the rapidly changing dynamics of the global market

require that a firm promptly cater to the needs of both the product developers and the

buyers. They say that the traditional new product development process is successive

and consists of eight stages whereby concluding one leads to the next (which

translates into a lot of time required for execution of project). In this scenario to

ensure smooth operations effective inter-departmental communication becomes

imperative. Break down of communication during any point of the process can result

in failure of the project.

Yelkur and Herbig thus formulated a solution for the difficulties presented by the

traditional new product development project, which they called concurrent marketing.

The model they present suggests, “joint functioning of engineering, marketing, market

research, R&D and management”. They advise that the organization should employ

cross-functional teams to concurrently (simultaneously) complete the various tasks

involved in new product development.

The article goes on to propose some practical changes that companies may adopt to

shorten and improve their new product development process and these serve their

target customers in a better manner.

A cointegration analysis of demand: implications for pricing

In this article Sanjog R. Misra and Minakshi Trivedi aim to provide managers with

a model to design and develop an optimal pricing strategy. Several complex pricing

models have been developed over the years but they all fall short in that the average

manager is unable to implement them in real life. Through their research Misra and

Trivedi have developed a model that is at once sophisticated statistically but also

simple to implement practically.

Most statistical analysis at the time the article was published in 1997 used linear

models of regression to devise pricing strategies. However, if the dependent variable

(example sales) is non-stationary while the independent variable (example price) is

stationary then the regression would be termed as “spurious”. This is because the

coefficients would artificially be inflated. Artificially inflated values mean that if a

manager were to use these models he would come to erroneous conclusions, which

could have serious financial implications for the organization.

Trivedi and Misra’s analysis shows that the “problem of nonstationarity – a

common one for many of the frequently used variables in multiple regression has to

be accounted for if the parameter estimates are to be meaningful”. They have thus

redesigned the basic regression model to accommodate non-stationary models so that

they managers can come up with a strategy that is truly optimal. They call this the

cointegration regression model.

Distribution systems, loyalty and performance

Marketing is not only about the right product at the right price but also about

putting the product in the right place at the right time. This brings us to the 3rd P of

marketing: Placement. A company often finds that the key to its success is having a

good distribution system in place. Without efficient distribution channels a firm

would be unable to reach out to its customers and thus would lose not only potential

but also existing customers resulting in decreased profitability.

Chen and Lai in their article aim to prove the point made above. In addition to this

they also examine the influence of customer loyalty and agent turnover on the

performance of a firm.

The authors have taken a sample from Taiwanese life insurers and have gauged

their performance based on efficiency scores and profitability. Based on the univariate

and regression results Chen and Lai have come to the conclusion that profitability is

positively related to customer loyalty. Loyal customers lead to greater profits. Also,

the agent turnover rate was found to be inversely related to technical and cost

efficiency thus leading to lower profitability.

The most important finding was that the use of single distribution channels proved

to be more profitable than the use of multiple distribution channels. Even though the

literature review of the article (Thornton and White, 2001) suggests that firms using

multiple channels have lower costs and may generate more revenue the research by

Chen and Lai proves otherwise.

The article provides valuable insight to the factors affecting a firm’s performance

but it does have obvious limitations; the sample is limited to Taiwanese life insurance

companies. This means that the findings of the research most probably do not apply to

other industries. The authors suggest that future research should be focused on the

relationship between a firm’s distribution system strategy and its growth opportunity.

Global behavior, unique responses: consumption within cultural frameworks

The 4th and last P of marketing is promotion. An organization may have the right

product at the right price in the right place at the right time but it is all of no use if the

consumer has no information about the product. Promotion is not only providing the

customer with information but also subtly convincing him/her of the need of the

product in his/her life.

In this globalized world all companies are faced with a marketing problem i.e.

whether or not to localize its products. Yelkur and Herbig (1996) stated that

“proponents of the “standardization” approach to international marketing claim that it

offers benefits in terms of increasing managerial control, reducing costs, simplifying

strategic planning efforts, and taking advantage of home-country headquarters

expertise”. While this may be true, it should be kept in mind that globalization does

not necessarily mean the homogenization of cultures: the important cultural

differences between the different regions of the World must not be forgotten. Walle

has expressed the same concerns in his article.

The author recognizes that while MNCs may target several target markets with the

a single product and marketing strategy, they need to recognize the different

interpretations of the same marketing strategy across different world views, doing so

will allow them to truly understand the consumption process.

Mr. Walle then goes on to explain how “the Marlboro Man” is perceived in

different cultures around the World. In North America, where this icon was

conceived, the Marlboro man is reminiscent of the frontier era of the terrain. Even

though America is no more the “Wild West”, Americans still relate to the “virility and

superiority” of Marlboro’s cowboy.

When the author travelled to Berlin, he saw how the Marlboro man was interpreted

in an entirely different light. The Marlboro man represented freedom to the oppressed

East Germans. Furthermore, in Africa, the Marlboro man represented yet another set

of hopes and dreams. In the under-developed, poverty stricken region the Marlboro

man represented “high social class, economic success, and the mainstream

establishment”.

Walle thus establishes that while “the product and its promotion were

homogeneous; the meaning and response were not”. The author then tries to find a

model that deals with the above problem. First he enters into a critique of Barbara

Stern’s deconstructive model. He has termed her model “state-of-the-art of consumer

research” and at the same time “overly complex”. He then goes on to propose his own

model, which he considers simple and easy to implement. This model is called the

ambiguity/transformation theory and is based on folklore literature.

Walle identifies two aspects of communication: ambiguity and concreteness.

According to him, communication must be concrete and unambiguous if the receiver

is to understand the message as intended by the communicator. Ambiguous

communication, on the other hand, allows multiple interpretations in that people

project their hopes, fears and dreams into the meaning of the communication. As in

the case of the Marlboro man, a degree of unintended ambiguity was good in that it

allowed the image to be transformed albeit positively. Companies may want to build

in ambiguity in their messages when targeting multiple target markets. However, the

different worldviews of cultures around the world should be carefully studied to

prevent any negative projection of the company. The amount of ambiguity to be

engineered in promotional messages is considered to be more of a strategic choice

than an academic problem.

Bibliography

Walle, A. H., (1997),"Global behaviour, unique responses: consumption within

cultural frameworks", Management Decision, Vol. 35 Iss: 10 pp. 700 - 708

Chen, M.S., Lai, G. C., (2010),"Distribution systems, loyalty and performance",

International Journal of Retail & Distribution Management, Vol. 38 Iss: 9 pp.

698 - 718

Misra, S. R., Trivedi, M., (1997),"A cointegration analysis of demand: implications

for pricing", Pricing Strategy and Practice, Vol. 5 Iss: 4 pp. 156 - 163

Yelkur, R., Herbig, P., (1996),"Global markets and the new product development

process", Journal of Product & Brand Management, Vol. 5 Iss: 6 pp. 38 - 47