Topic: If the premise is that marketing creates value, then explain marketing’s role in the organization.
In the modern economic society, marketing has been very close to everyone’s life. There are also some organizations such as enterprises, schools, institutions and government which are adopting various marketing activities every day in order to create more benefits for themselves. Drucker (1974) has stated that the purpose of marketing is to make selling surplus. The aim of marketing is to fully realize and understand customers, in order to enable products or service to fit customers and sell itself.
Thus, marketing’s role as a driver of an organization’s value chain will be stressed as value chains are increasingly shaped by consumer expectations and demands. This essay will clarify how the marketing’s role in Sony to be a value creator in various ways. In order to illustrate how marketing create value to the firm, it is necessary to understand the definition of marketing. What is marketing on earth? Marketing is a managerial function and a set of courses for communicating, creating, managing customer relationships and delivering value to customers in ways that benefit the organization and its stakeholders (American Marketing Association),date?. Marketing, by means of exchanging, results in obtaining the required products and service. Exchanging, the proceeding steps of value creation, usually will benefit mutually and further the exchanging of mutual values. The essence of marketing is aimed at creating customers’ value and satisfaction. A precise definition to the studies of marketing as given by Kotler (2004) is that the profitably contented with the requirement. Moreover, marketing assigns all those activities which accelerate services or the movement of goods from the producer to the consumer. In other words, it means those activities connected with distribution, advertising, promotion, merchandising, product planning, publicity, research and development, transportation, sales and services or warehousing of goods (Indiainfoline, 2002). Sony is a company with a reputable name and a great trade of brand recognition worldwide. The company rapidly presented itself to the world as a technological inventor capable of creating many consumer-friendly first such as the Walkman, the transistor radio, and the camcorder, although it started a small Japanese telecommunications company in Tokyo. Based on Southgate (1994), a brand is not a name, graphic device or logo. It is a part of intangible values in the minds of consumers. A strong brand is therefore alive, complex, rich and enormously powerful. However, Sony is facing profits and sales are down or are gradual down, R&D and capital investment cost are arising, competitors are moving in with copycats, the struggle between VHS and Beta and the research for a smash hit product such as the Walk-in or the Trinitron. According the survey of Business Week (2005), Sony, No.28, which declines 16% in brand value in the 2005 ranking. Although the firm is pioneered the Walkman, left Apple to reform portable MP3 players, as well as digital downloading and organizing of music.
Thus, the R&D group becomes a key element of corporate strength, or weakness, with the company highly dependent on its ability to deliver significant new technology, when expected (Webster, 1990). Similarly, Urban and Hauser (1980) indicated that the firm need a strategy for development. It must learn and understand how consumers perceive products, what needs exist, what consumer preferences are relative to the needs, and how consumers choose among products. This essay focuses on deep product strategy as a value creator to Sony. Marketing acts a central role in translating marketing information into products and afterward positioning these products in the target market from new product development process (Song, Montoya-Weiss, & Schmidt, 1997). Also, the effective development and management of products can be an important factor in determining whether a company will succeed in gaining business from the major account market (Turner, 1990).
Sony implemented restructuring plan recently, pointed at putting the struggling consumer electronics giant back on its feet, but got a doubtful response when the company presents of its new Walkman type a portable music player. A news from Taipei Times (2005) described that Sony’s content-to-product strategy and the new plan disappointed those looking for a more radical departure at a company that is struggling with the likes of Apple, which marries style and high-tech sophistication in its must-have iPod music player. The company’s plan lacks in details and similar to earlier plans which have not worked, Nomura Securities analyst Eiichi Katayama told. New products are a necessary response, if the firm is to retain its marketing effectiveness, to changing customer preferences and dynamic competition in the marketplace. A stagnant product line is good evidence that an industrial firm has failed to keep up with advancing technology and the state-of-the-art in its industry (Webster, 1990). In addition, a source of new product stimulus is a customer request to produce a specific product that the customer has designed (Urban & Hauser, 1980).
Sony needs to approach an effective managerial strategy of new product development that is likely to achieve success, but at the same time minimize risk. According to Magrath and Higgins (1992), innovation need satisfy consumer needs. These needs may relate to new product designs with appeal, new product uses, or the innovative developing of new groups of product users. Moreover, a more sophisticated strategy to react to competition is the “second but better” strategy. The firm waits until the competitor’s product is revealed and then not only copies it, but improves on it. The objective here is to be flexible and efficient so as to produce a product that will be superior to the competition without incurring the heavy market developmental expense for the product. Another approach to development is through the notion that someone must buy a product. The marketing strategy is based on finding consumer needs and then building a product to fill them (Urban & Hauser, 1980). Similarly, a firm’s new product strategy is increasingly recognized as a critical part of the total business plan. The key product strategies are developing highly innovative products, introducing products that meet customer needs more effectively, and introducing products with unique features for customers (Cooper, 1983).
Sony flaunted its PSX, the enhanced PlayStation 2 video-game machine. It also works as analog TV, a DVD recorder, music player and digital photo album. The design of a single machine that has a little bit of everything seems logical and attractive to customers. Some analysts argue that audiovisual equipment and the game machine don’t necessarily go together since the life cycles of AV machinery are much shorter, requiring constant upgrades. Moreover, the product doesn’t match the market, Kazumasa Kubota says, analyst with Okasan Securities Co. in Tokyo. The PSX may sell in amounts when it first goes on sale, but it will be hard to keep the sales going (Kageyama, 2003). Many as 90% of new products may fail in the market because many companies are scrambling to develop innovative high technology products. Then a definite need for the product exists in the market which must be determined. In addition, competitive products must be analyzed to assess by the market and segmented to identify target markets that will obtain greatest profits from the product and offer competitive advantages (Lucas & Bush, 1984).
Sony made itself into poor positioning and misunderstands of consumer needs. Urban and Hauser (1980) stated that positioning is the identification of a set of psychological need attributes and the description of the level of each attribute for a new product. The companies should pay much attention to the positioning issue as their discuss new product design. One of the major efforts in successful new product design is to define a good psychological positioning and a set of physical features to back it up. In order to avoid products failure, Moon (2005) analyzed companies can change customers mentally classify their products by positioning these products in unexpected ways. The firms through reverse, breakaway and stealth positioning are to shift consumers’ thinking in order to create a profitable place to ply their merchandises. In addition, different customers are likely to have different needs requiring some adjustment of the product. This means that the selection of customers, market segmentation strategy, is the key, long-term strategic choice for the industrial firm (Webster, 1990). Indeed, product position is strategically important because it can take years to create, it is difficult to change, and it affects business success and competitive strategy. A product or service position involves the set of associations with the product. It is created over time, often from a large assortment of sources such as the product design, the advertising, the store in which it is bought, and who uses it (Aaker, 1988).
A product does not have novelty to benefit from original new positioning, nor does it have to be past its prime. The old rule of the product life cycle is by simply challenging consumers’ notions. Thus, from time to time, it makes sense for a company to review its product portfolio. Such a review can usefully be conducted once or twice per year. Grouping products according to approximate stage in the product life cycle may be a useful first step: new products; growth products; mature products; and declining products. Effective marketing may be successful in retarding the inevitable progress of the product life cycle and may bring the market back to an earlier stage, such as moving from maturity back to growth (Webster, 1990). Because of global competition and rapid technological advances, high technology products such as digital cameras and notebook computers have short life cycles. The company may upgrade its characteristics over time for renewing the competitiveness of a product. While products contain a set of features with some alternatives for each, design involves complex decisions: which features to upgrade, when to upgrade, and what alternatives should be chosen. The decisions will help managers in deciding the content and timing of promotions to maximize life cycle profit. And it merges traditionally made by various operations in the enterprise (product design, process design engineering, marketing, production planning and supply chain management) (Damodaran & Wilhelm, 2005).
Today, marketing’s role in the organization has become more and more important. Proper market strategy, intelligent product definition and execution of without mistakes will separate winners from losers in a market economy with very little opportunities for error. Sony is trying to pursue innovation by diversifying its core technologies. But the firm neglects a customer-need orientation as an organizing principle for new product development. For example, the new portable walkman is not satisfying consumer demands. Understanding the needs of the customer is an axiom found in all product development literature. As the result, companies should evaluate and refine to produce a product with consumer psychological attributes which indicate a high probability of success in the market. In addition, the new product marketing program requires careful definition of market segments. Positioning is a central strategic issue in the marketing of new products, although positioning is often thought to apply only in a consumer market context. Sony’s product positioning such as PlayStation 2 doesn’t match the markets. In order to avoid new products failure, the firms can change consumer’s thinking through reverse, breakaway and stealth positioning. Without developing and marketing new products, a firm must struggle to keep profitable growth. Also, a strategic view of the product portfolio can help to stimulate the development of new products.