Marketing, as we know it today, is a fairly recent development in the world of business. To fully appreciate how it came to being, it will be useful to see how the stage in a market’s maturity affects how businesses can best sell to the market.
Stage 1. Supply < Demand
When supply is less than demand, manufacturers generally have no problems selling whatever they produce. This is what is typically called a sellers’ market and the sellers have the upper hand in these situations. The market is hungry for the product and has the disposable income to pay for it.
If your objective was to be the biggest and market dominant force, then you would want to take advantage of such situation by scaling up your production as quickly as possible in order to take as much of the market as you can. You will want an emphasis on capacity maximization, whether it is through your own manufacturing or through strategic partnerships, along with an emphasis on expanding your distribution as swiftly as possible. The mindset behind this is that the demand is there, so you just have to produce as much of your product as you can in order to meet it. This mindset is called production orientation.
Brands like Lucky Me! Instant Noodles and CD-R King began by aggressively rolling out affordable products as widely as possible. Low price and wide availability were seen to be the keys to dominating the market.
Stage 2. Supply < Demand, Competition Growing
The entry of competitors in a potentially huge market space generally leads to innovations as challengers strive to make their offerings different enough. Improved quality, new and better features, better comfort, and better design—all of which are undertaken with the hope that the product will speak for itself and that consumers will choose your products based on the merits of your wares. This mindset is called product orientation and it is often colloquially referred to as “building a better mousetrap.”
Many passionate. entrepreneurs operate this way, sincerely believing that if they can make the best product out there, then the market will come storming into their doors. It does not always work but when it does, it is often driven by a strong word of mouth. In today’s climate of pervasive social media utilization, well thought-out products that receive a lot of online endorsements can do very well. It does not always happen though.
The phenomenon of Maginhawa street, situated near the University of the Philippines in Quezon City, becoming an oasis of must-try food places was largely built on a strong word of mouth.
It is mostly shared via social media sites such as Facebook and Instagram. Food places here strive to be interesting. In return, social media netizens get something to share on their timelines when they visit.
Stage 3. Supply > Demand
When businesses begin to crowd into a limited market space, then competition can get quite fierce. Especially if the businesses are not particularly savvy in either offering least cost options or in differentiating their products. In such cases, it is the sales force that may best come to the rescue. The sales force becomes the front liners who take matters into their hands and push the products directly to the customers. Using sales organizations to push your product is called sales. orientation.
When it works, it can work for the benefit of all parties. Insurance, for instance, is sold this way. Consumers do not normally look for insurance (it is an example of what is referred to as an unsought good, which is why the industry behaves as if supply was greater than demand) and typically avoid thinking about it. But a salesperson who can properly explain the advantages of a good insurance policy can effectively make the life of the consumer better.
On the other hand, when it does not work, a sales orientation can quickly turn into hard-selling, which can be annoying to customers.
With a glut of condominium developments in Metro Manila, realtor firms have resorted to mobilizing salespeople in malls and other public places, handing out flyers and begging passersby to consider their projects. It has come to the point that many shoppers try to avoid these salespeople whenever they could.
Stage 4. Supply > Demand, Customer-centric Strategies Emerge
As competition becomes fierce, firms soon realize that a better way to compete would be by prioritizing customer needs more than their own. When the mindset moves to this sphere, then this is the starting point for a marketing orientation.
The marketing orientation begins with identifying and understanding a particular target market because, to put it plainly, you cannot please everyone.’ Are you targeting men or women? A particular age group? A particular income segment? What are their interests, attitudes, and lifestyles? What do they really need?.
Products are then designed according to what could best fit the needs of the target market, priced according to their typical budgets, sold where it is most convenient for them, and promoted in a way that best catches their attention.
A well-thought-out marketing strategy could (hopefully) lead to products that delight customers, leading them to become loyal patrons who will buy products from your company again and again. Happy customers are an asset because they will tell an average of five people about their delightful experience. (Gitomer 2011)
Take note then: this objective of making customers loyal and getting them to be satisfied repeat buyers is the end result that marketing seeks to accomplish. If a customer buys from you just once, then you may attain your short-term sales targets, but then you still have the problem of searching for (and fighting for) your next customer. On the other hand, if you focus your efforts on building a loyal customer base, then you will have a market that practically assure_s you of regular sales for the long term. This leads to a more predictable sales and less anxiety about achieving sales goals in the future.
However, it is a two-way street. In return for their loyalty, customers expect your product quality to be consistent, predictable, and reliable. They need to be assured that you will always provide them with the same (or better) level of experience as they have come to expect from the start.
Apple is a case study in successful marketing. It has built up a near fanatic “fan base” of customers who eagerly anticipate each and every new product offering. Never mind that most of its products are made in China or that its prices are set at a very high premium compared to competing products. What is important is that they maintain their products’ levels of design excellence, engineering quality, and legendary ease of use.
Marketing, as it turns out, offers many strategic advantages for its serious practitioners. These include the opportunities for building loyal markets, creating relevant products that directly address customer needs, and potentially making a difference in the world through products and services that truly delight the market.