Marketing Management Practices and Porter's Five Forces

 

Marketing Management Practices and Porter's Five Forces

INTRODUCTION

Marketing constitutes as one of the most important activities for the business structure of the present time when the market faces extremely tough competition. When the world economy grows at a larger scale and the human needs and desires diversify to make room for varied elements and subjects it becomes very difficult for a particular product or commodity or even a particular service to find its consumers and retain them for a longer period of time. Moreover, the market has extended to include various services and even education besides the existing products and commodities in the expanding arena of the market. Owing to the increasing number of products and services in the market which are completely operational it becomes immensely important for the manufacturing companies and the provider organizations to project the offerings to a larger section of the consumers and more importantly, in an effective way. Thus the need of good and intelligent marketing activities come to the fore and has become extremely important phenomenon in the due course of time (Aaker and Joachimsthaler, 2000).

Marketing Management

In order to prepare a marketing plan for a company selling a particular product in the form of commodities, services or qualitative offerings, it is very important to analyze the marketing environment. It gives the company a scope to have an idea of the market scenario the company has to face when into the business structure. According to Assael et al., (1995) marketing environment analysis refers to the analysis of the different external and internal factors that constitute a business organization. There are quite a few factors that constitute to form the marketing environment. A complete analysis of all the factors gives the researcher a distinct idea about the needs and requirements for a given marketing environment. This in turn helps the researcher in finding out the ways in which new strategies can be formulated to facilitate the easy and fast increase in the sales volume of the company, in this case an increase in the number of students getting enrolled in the college and the rising popularity of the college.

The college is named as “Globe Trotter – A Tourism and Hospitality Institute” reflecting the specialization of the college. The name would give the people an idea about the purpose of the college which is offering tourism and hospitality courses. The college is situated in Crumlin, which is a town and community in South Wales, surrounded by the historic boundaries of the Monmouthshire. The setting up of schools, colleges and universities or the learning institutes altogether, needs a perfect environment. The suitable environment makes the process of learning more fruitful and ensures complete participation of the student, makes them more involved with the learning process. The newly set up institute needs a good marketing plan to make the maximum number of people to know of its existence and ensure a high number of student enrolment. For this very purpose the institute needs to draw up a well thought out marketing plan which will start with making an analysis of the marketing condition.

The analysis of the marketing environment goes a long way in providing success to the project and increasing its efficiency. The importance and roles of marketing environment analysis can be briefed in an organized order. Firstly, an analysis of the marketing environment of the concerned organization or company provides a scope to study the environment in which the company or organization is operating, in the first place (Baker, 2000). Knowing the environment makes it comparatively easier for the marketer to look out for the scopes for designing an efficient strategy and work on it. In the long run it would play a major role in ensuring successful plan for the successful market position of the company. Secondly, the analysis of the marketing environment helps in achieving the marketing goals of the concerned company or organization. During the analysis of the environment a detailed study about the market scenario is being made and in the due process the strengths and weaknesses of the market condition surfaces up. This provides a scope for making a marketing plan that would make up for the weaknesses and would make the plan stronger and ensure its success (Blythe, 2001).

Thirdly, during the analysis of the market scenario it studies all the factors of the business environment of the company that gives the company a clear estimate of its scope of business and probability of its success or failure. This will help the organization in setting up its expectations about the performance of the company and response from the consumers that can be measured in terms of quantity and not only in terms of quality. Fourthly, the detailed study about the business factors during the formulation of the marketing plan helps in assessing the factors that determine the business in the prevailing market and its impact of the marketing environment. Finally, during the study about the market scenario it exposes the major environment scenario categorized as macro (external) environment and micro (internal) environment factors of the business environment. The internal as well as external factors together create a combined impact of the market in terms of consumer behavior towards the adopted policies and offerings.

According to the observations of Vrontis and Pavlou (2008) the macro (external) environment consists of the culture, society, economical, political, technological and even legal ambit of the working scenario. Macro environment is the external environment of the organization that holds crucial place of importance for the success of mentioned college, both financial as well as corporate success (Davies, 1998).  The macro environment for the company is very important for the survival of the company and a proper maintenance of the same is required in order to avoid any crisis or even for the purpose of dealing with the crisis as per the demand of the situation. On the other hand, the micro (internal) environment means the elements which are directly related with the functions of the organization like the education format, course fees, advertisement of the college, the teachers, students and other direct stakeholders of the company. It is very important to keep a close watch and study the micro environment because it is highly responsible for the success or failure of the organization (Beniger, 1986).

According to Porter (1980) the Five Forces Analysis formulated by him is a process for analyzing the market situation, for analyzing the business and develop the required strategies for the concerned business. The process of industry analysis formulated by Porter uses the economics of the industrial organization. According to him, it is the economics of the industrial organization that derives the five forces on which the entire mechanism stands. Not only this but they even decide the intensity of the competition and makes the market more attractive in terms of the offered competition and the prospect of activities resulting from the competitive atmosphere. Among the five factors three of them refer to the competition that the college would face from the external sources while the remaining two of the factors refers to the competition that the college would face from the internal sources. The Five Forces Analysis designed by Porter provides the college an opportunity to study and analyze the risk factors and adopt a marketing plan that would help the college in averting the threatening risks (Ellwood, 2002).

The Five Forces as stated by Porter (1980) for analyzing the competition faced by the concerned organization, in this case the college, will be helping the managing board of the college in preparing a marketing plan that will help it successfully achieve the target or objectives of the college. Among the Five Forces of market analyzing plan as stated by Porter the first force is the threat of the new entrants. With time the numbers of educational institutions are increasing very rapidly (Fill, 2002) increasing the competition between the different educational institutes. The already established colleges face a competition from the newly established colleges because the new colleges would have better infrastructure, better technologies that makes education more interactive, induces participation and in a way adds more quality to the education process and its ultimate end result and this will make education more interesting for the students. As a result the students will be drawn towards such colleges and the new entrants providing such facilities will attract more students than the existing colleges (McDonald, 2001).

The schools and colleges besides providing the education are even not charitable institutes so they do have a commercial outlook and commercial interests to look after their commercial gain so they need to more enrolment of the students for earning from their fees and maintaining the institution. When the new colleges attract more students with its advances features, the new entrants pose a threat to the existing colleges. The second factor of the Five Factors identified by Porter is the threat of the substitute products and services; in this case it is the other means of providing education or the alternative education system that has gained its due importance with time and changing attitude of the individuals. The alternative education system dilutes the presence of education system in the formal way but insists on imbibing knowledge in an all pervasive manner such that the individual is benefitted with an all round development instead of only academic expertise (McMartin, 1995).

   The third factor of the Five Forces of market analysis as stated by Porter is the bargaining tendency and power of the customers, in this case it would be the tendency if the parents and in some cases the students for expecting more facilities than what are offered. The expectation of the parents or guardians from the institutes basically have always been more than what are offered and so they tend to be somewhat dissatisfied with the  offered features and expect more from the institutes. This place is utilized by the competing institutions and thus can be considered as a threat to some institution. When the students and their parents turn out to be dissatisfied with the present college they can easily shift their ward to different college which they generally do. The marketing professionals should take care of that the students do not leave their college because that would contribute to the negative reputation for the company and this would further cause decrease in the number of enrolled students (Van Auken, 2002).

The fourth factor is the bargaining power of the suppliers which in this case in the faculty of the college. The faculty and the non-teaching staffs’ even engagement in bargaining of their needs and requirements in the form of salary, holidays and different policies. The college which offers such a high salary and other related facilities are more preferred by the professors and other non-teaching staffs. So this has to be kept in mind while formulating policies and regulations. The final factor of the Five Factors stated by Porter is the intensity of the rivalry of the competition. In order to have the advantageous position the colleges engage in the competition of proving itself as the best college and attract the students by applying any mean that would provide them an edge in the competition. This provides a threat to the organization from the other competing colleges. Thus the stated five factors were proposed by Porter for analyzing the market condition for any given organization. These five factors should be considered by this particular college for making a complete and effective analysis of the market situation and prepare an effective marketing plan (Weilbacher, 1993).

 

SECTION 2: MARKETING RESEARCH

The educational institution are established with the responsibility of offering education to the individuals but the underlining factor that makes it similar to the business houses is that the education offered there comes in exchange of a cost that has to be borne by the parents or guardians of the students. The higher educational institutions which offer specialised education have higher course fees structure and are thus subject to various speculation by the investing parents or guardians of the students. The colleges thus need to be very specific in targeting the group of people who can be converted into the students of the college. The marketing of the college has to be very strong so that the college gets a very good projection to the audiences and the messages can successfully convince the audience in enrolling themselves or their wards into the college. In order to prepare a successful marketing plan it is necessary to conduct a thorough study about the subject, study the strengths and weaknesses and prepare plan that would cover up the anomalies and provide much stronger features that would project the college as one of the best colleges to study into. This calls for the need of a proper marketing research.

Carrying on a research for the formulation of a proper marketing plan is very essential in ensuring its success and making the plan more efficient. The marketing research plays some important role in the success of the marketing of the college and secures the maximum number of students for the academic session. According to McCutcheon (2012) the marketing research plays varied roles in deciding the fate of the marketing plan and the business in the larger scenario. Marketing research plays a number of functions for the particular company which employs the particular marketing research. According to McCutcheon (2012) there are four primary types of functions performed by the marketing research. The first of the functions played by marketing research is the exploratory function. The exploratory function of the marketing research helps in when the researcher is completely unaware of the marketing condition.

It also helps when the researcher has limited knowledge about the market and even when the researcher is quite unsure about the outcome of the research activities. The marketing research process helps in having an idea about the market scenario and the possible outcome of the marketing activity. This gives the researcher a scope to make an idea about the market and design a workable plan for the same. The exploratory function of the market research also gives scope for understanding the reasons for a gradual loss of the company or poor performance of the products in the market. The exploratory market research could also be used to understand the though process of the consumers in making their purchasing decisions. In this case the exploratory market research could be used in studying the mindset of the residents in the adjoining area, the demographics and attitude towards education. According to the findings of the research the target audience would be chosen and marketing plan would focus on the target audience and with a specific attitude to bring out the required perception of education. When the researcher would know the details the marketing plan would become stronger and more efficient in registering a success (Ziethmal and Bitner, 2003).

The second function of marketing research is to perform the descriptive function. The descriptive function of the market research is to collect all the relevant information about the market, the process of marketing, and present the facts and information before the board so that the workable and most suitable marketing plan can be designed and implemented. The third function of the marketing research is the diagnostic function. The diagnostic function of the marketing research refers to the analysis of the data that have been collected through research of the market and studying the relationship between the data and different phenomenon. This function of the market research helps in deciphering the logical reasons for the nature, constraints and particular attitude of the market. In this context the marketing research would help the researcher in understanding the logical reasons for the attitude of the target audience.

Understanding the logical reasons would enable them to draw up a more workable marketing plan and work on it. The communication made during the process of marketing of the college the messages disseminated during the process would address the reasons that is putting constraints and preventing the success of the marketing procedure. It will help the college overcoming the hurdles and provide the advantage to increase the probability of its success. The marketing research also plays predictive function. By predictive function it means that the data and other relevant information collected during the process of marketing research would allow the researcher in making a collective judgment or predict the trend of the market that is to follow. The predictive function also allows the researcher in making a prediction about the outcomes the marketing decisions taken by the board and even about the reaction of the consumers on the decisions taken regarding the policies that affect the consumers directly or indirectly. When the market conditions are predicted it becomes easier for designing the activities for achieving the goals or set target of the managerial board of the college (Baker, 2000).

For carrying out the market research it is needed to follow a pre-defined set of methodologies. It helps in making the process more systematic; result oriented, and thus has more probability of success than failure. There are different methodologies that can be followed by a researcher for conducting a particular research. For this particular project the methodologies which would best suit the purpose are firstly, it would be survey. It would give a very clear picture of the demography of the area, data regarding the economic and political condition of the area of the college. It will also provide details about the people who are also the target audience. The second research method would be observation. The elements of the market that would indirectly affect the functioning of the market needs to be monitored closely. For this very purpose, the elements of the market need to be observed. The final method is the field trials. During field trials the success of the adopted methods would be tested thus making it correct.

 MARKETING PLAN

The establishment of a college has to be planned with measured steps so that it can serve the purpose of its fundamental reason of establishment, that is, education as well as manage itself well as an organization that can generate revenue and maintain itself. For this very purpose it is very important to have a clear financial goal of the organization and chalk out a plan that helps in the successful achievement of the goal. When the college is at the very initial stage of its construction and before it gets to start functioning it needs to have a clear idea about the specialised education that it would offer and the segment of the students that it would target. It needs to make it clear to itself, that is, the managing board of the college, the place in which the college aims to reach. The concept of S.M.A.R.T. was coined by Peter Drucker and was put to use for the very first time by George T. Doran in the year 1981 (Fill, 2002).

The abbreviation of S.M.A.R.T stand to reflect the very objectives that needs to be adopted by the college which are namely “Specific” which means that the college needs to have an exact idea about its goals and not a general and common goal the more specific the goal of the college the more successful it becomes. General goals will give the college a moderate approach and average success. When the college has some general goals the efforts gets bifurcated to different directions and mostly misses to cause impact on the area that needed to create the maximum impact. As a result the effort does not bring out any successful result. With more such unsuccessful plans the college would move farther away from creating the much needed impact in the minds of the audience and most importantly the target audience. The second one is the “Measurable” which means that the college needs to follow a procedure that would check the success of the performance of the organization in attaining its goals from time to time. In this way it will measure the efficiency of the plans and programs adopted by them. It will help the managerial board of the college to evaluate their performances from time to time.

It also provides them the scope to improve and rectify their mistakes. Having knowledge of the areas where it went wrong and the areas where it stands weak the college would be in a better position to apply more effective plans and thus ensure its possibilities of success. The third of the objectives is “Attainable” which means that the college should set the goals which are very could be attained by the activities adopted by them; it should not set impractical goals that cannot be attained. Setting higher goals is not the way to achieve maximum success. The goals when complimented by the practicality of the process are what that makes it successful. Not meeting the goals which are set to be achieved adds to the negativeness of the project and adds to the reasons of its failure. Moreover, by setting impractical goals it will complicate the procedure for the college and take it far from achieving its objectives. Thus the college should set up goals that are very much attainable, even if those are smaller one but they would be significant in the long run to contribute to the success of the college (McDonald, 2001).

The fourth one among the five objectives of S.M.A.R.T. is “Relevant”. The term “Relevant” in this context and as one of the elements of S.M.A.R.T. means setting goals, aims or objectives that is very much in sync with the nature and objective of the college. The goals of the organization is set for fulfilling its major and long term objectives which is largely dependent of the nature of the organization and the function it serves to the society. For instance, the college cannot have goals for becoming the top ranking sports body of the nation; it won’t be in sync with the nature and objective of the college. It is so because college is an educational institution that strives to offer quality education to its students and play a role in constructing a better society by providing quality education along with high moral values. The final element is “Time-bound” which means that the objectives set out by the college will have to have a deadline, that is, they have to be achieved with a specific period of time. When the objectives are not specified within a perfect time period it loses its credibility, efficiency and also drifts away from its aims.

Once the objectives are decided, it becomes necessary to define the process of reaching to the aims and set out objectives successfully. When sketching out the procedure of achieving the aims and objectives it is important to implement the theory of Segmentation, Targeting and Positioning popularly known as the STP. According to this theory the product, in this case the education offered by the college, has to be primarily segmented to provide a specific market for the product. After a product is segmented from the other existing products it has to find its target customers. The existence of the product without its customers is superficial and is of no use to the company. In this specific case it is the existence of the students that is very important for the college. The marketing plans needs to identify the students for the college. Once the audience of the marketing communication messages is identified it will ease out the process of drafting the marketing plan. After identifying the audience of the marketing communication messages the product needs to be positioned in the specific market. In this case the education slated to be offered by the college has to be placed into the identified market. The positioning of the product is of immense importance because it will be the deciding factor in deciding its brand value in the later stage. The higher the brand value the higher the demand of the product in the market.

As the marketing plan is drawn up and implemented it needs to be evaluated from time to time. In the present age when marketing of a particular product or services plays the major part of ensuring its popularity it is very important for the college to check the qualitative aspect and success of the adopted marketing plan. The outcome of the marketing plan could be qualitatively assessed by the number of students getting enrolled into the college and the increasing popularity of the college. The other factor that will help to assess the success of the marketing plan is the number of people talking about the college outside the ambit of its reach. The purpose of the marketing plan was to ensure greater projection of the college to its target audiences. The success of the plan could be measured by the survey to know the number of people aware of the college.

Conclusion

Based on the above discussion, it was found that the college needs to ascertain the impact and influence of internal and external factors along with deriving an influential marketing plan that will help in highlighting the value of the college. It is also important to understand that competition in the form of existing colleges and institutes can dampen the prospects of the college and thus differentiation strategies need to be formulated and implemented to be different in terms of offering courses and value. Overall, it was concluded that the prospects of the proposed college can be quite good considering the theoretical value but the overall significance and value can only be determined by assessing the overall benefits and value generated by the college at the macro level.

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