Marketing System Issues - Assignment Example

Section-1 Exchange Logics: In this case, the formation of aggregate and the motivation behind the same has been on account of rise in market share due to market penetration up to bottom of pyramid. Various entities which came along to fulfill this demand were the raw material suppliers, the final product manufacturer, the marketing and distribution entity (unilever), the certifying agency (for sustainable processes), the retailers, NGOs and Self Help groups and the consumers across societal and demographic groups. All the entities except the end consumer and the certifying agency were driven by sustainable economic value. The end consumers in the developing areas were driven by their personal need fulfillment and the consumer in the developed areas apart from the need satisfaction were also driven by their concern for sustainable development. Also, the certifying agencies for sustainable processes were driven by well-being of the environment and human race. Looking overall, the concern for sustainable development and satisfied consumer base with profitable trade are the value propositions driving the exchange process. Flows & Roles: There are various market flows associated with this case which includes information, ownership, possession, financing, promotion and payments etc. However, the prominent among all these is the flow of information. Information has played a very crucial role from the perspective of makeover of marketing channel in the context of the case. Due to dissemination of information, there was prevalent concern for sustainable development as well as a there was a business proposition to enhance the market share by serving the untapped market. As a result, a distinct market evolved at the bottom of pyramid which was earlier untapped and was now able to fulfill its need. Further, in the developed areas, the distinct market was constituted by consumers who along with their need satisfaction also wanted sustainable growth. Various roles being played by the involved entities in this case was like supplying (raw material suppliers), sourcing & processing (Manufacturers), marketing & distribution (Unilever), possession exchange (retailers), consumer awareness (NGOs and Self help groups) and Certification. However, there are many other roles being played by entities but these are the key ones. Networks & Organizing Principle: The network in the given case seems quite complex wherein the there are various entities playing each of the aforesaid roles. The company was able to drive through this business proposition with the coordinated effort of all the involved entities. The rural sector in the developing areas was penetrated as the various NGOs and self help groups were involved in empowering the consumer base by making them aware that they can afford to fulfill their needs in line with the main stream consumers. On the other hand, the consumers in the developed areas were not worried only about their need fulfillment but were equally concerned of the sustainability of the whole business proposition and its governance. In the given case, the certifying agency played a vital role of governance, which was based on the principle of sustainability. It helped in checking the suppliers and the company to adhere to the laid down norms of sourcing and processing the products. Though, the company was driven by economic benefits, the certification on its products helped it to showcase its image as a corporate concerned for sustainability. Thus, governance apparently played a role to develop a relationship of trust among the company and the end consumers. Assortments to the buyers: In its essence, Layton’s idea of a marketing system is to innovate and come out with various assortments, so that market as a whole can be served along with deriving economic and social well-being for the entities as well as the society. Assortments are the varieties of products, services, ideas, values that are offered to the entities of the marketing system. In the given context of the case, the company came out with a win-win situation to satisfy the needs of the consumers in the rural areas by providing them products in smaller quantity at the price which they can afford. Has it not been the case, these consumers at the bottom of the pyramid would have never been able to afford the products in quantities similar to the main stream consumers. Also from the perspective of the values, the assortment can be considered rich as it was not only providing profit benefit to the suppliers and producers, it was delivering overall need fulfillment to the consumers as well as a sustainable business process to the society. Specialization: Specialization helps strengthen the marketing system and makes it sustainable. In the given case, the first level of specialization was offered by raw material suppliers as well as the producers who were able to adapt sustainable ways of sourcing and production. They were able to meet the increased demand in the market which now had penetrated to the bottom of pyramid too. The next level of specialization was offered by Uniliver itself, which was able to provide economically profitable marketing and distribution process in a sustainable way to the untapped consumer base at the bottom of pyramid. The rural distribution through NGOs and Self Help groups also brought in their specialization by providing the requisite reach for the distribution among the end consumer. Another aspect of specialization was offered by the certification agency which had the know how to lay down the standards so that all the associated entities adhere to it for realizing the sustainability. Growth & Well Being: Through the individual specialization, the network benefited itself with association of each other. Thus a marketing system was able to deliver the individual benefits together with the overall social and economic well being. The overall idea to realize the economic benefits, consumer need fulfillment and the sustainability was only realized through sharing of the specialization among the entities. There were three factors that influenced the involvement of the various entities in fulfilling the end user demand of the product in way that lead to a sustainable business process benefiting the overall society. The first factor was maximizing the economic efficiency. This was achieved to an extent by Unilever by designing the marketing and distribution in an innovative way that empowered the entities like NGOs and Self Help groups to reach to the end user with an offer that was affordable to them for their need fulfillment. The second factor was regarding maintaining the sustainability of the whole business process. Here the marketing system was empowered by the certifying agencies which made sure that all the involved entities, be it the raw material suppliers or the product manufacturers, followed the laid down criterion of sustainability. Moreover, the company also made realistic plans for the same so that the results were achievable. They never went big bang on certifying their all products. However, they laid down periodic targets for the same and made sure that they were achieved as per the plan. The third determining factor that shaped the actors involvement for this product was ensuring the integrity. Unilever, not only was concerned about the economic profit or its corporate brand image while taking on the market penetration in a sustainable manner. It also made the stakeholders realize the importance of the same. As evident from the case, even the stakeholders agreed to invest small portion of their profit back into the process to achieve the sustainable business process. Section-2 The given case presents provides an overview of marketing system in the perspective of societal well being. As part of our curriculum, there have been two school of thoughts put forward to analyze the influence of marketing system in economic well being and on overall quality of life. One of the prominent models put forward is that of Layton’s and the other is put forward by William Wilkie. Layton’s model has tried putting emphasis on the well being of marketing system which in turns have significant effect on the quality of life and hence the overall economic well being of society in general. It argues that without an efficient marketing system in place, the advantage of technological knowhow, robust pro development institutional framework and desirable division of labor cannot achieve the required growth in the quality of life. Thus while all other factors are desirably important, the existence of an efficient marketing system becomes mandatory for achieving the economic well being in the society. On the other hand, William has emphasized more on particular economic sense of the stakeholders rather than the general social well being. Advocating the free market theory, this school of thought believes that individual well being in broader sense bring the social well being. Based on the above deliberation, it is quite evident that the given case falls closer to Layton’s model. Figure 1: Layton’s Model for the Marketing System in the given case Section-3 The organization growth was mainly focused on the availability of a large untapped market which had similar needs as that of main stream consumers but was not able to afford the product offerings as it is. Thus there was a need of the repackaging to make the products affordable to them. Another set of consumer base was more inclined towards sustainable ways of fulfilling its needs. Thus the company had to change its ways of doing its business in a way to make it compliant to the norms of sustainability. Here the important role of governance was being played by the certifying agencies which made sure that the complete value chain adapted to the stipulations of sustainability. By resorting to above two strategies, Unilever was able to increase its market base through penetrating into untapped bottom of pyramid. Further it was able to win the loyalty and trust of the consumers having concerns for the sustainable development. Section-4 The company, as presented in the case, had segmented the market based on demographics. There were two broad segments into which the whole market has been segmented. The first one is that of developing markets. Here the company had strategy to penetrate into the untapped market. The rural mass, which had unfulfilled need, was seen as vital growth component of this strategy. However, the main stream product offerings and assortment needed change to make the offerings affordable to this market. Like providing the personal care products in sachets rather than big packets. The other segment was carved out of the main stream consumers in the developed markets. They had expectations of getting their need fulfilled, but at the same time they had very high concern for the sustainable way in which the whole business process was carried out. For this segment Unilever had another set of strategy, which included adapting to sustainable processes, sourcing and certification to win and maintain the customer trust and loyalty. Section-5 The company had multiple brands of the products which were spread across food, personal and body care. Each brand had its unique identity which needed a streamlined strategy as per the changed focus of the company. The company was able to manage 400 product brands as such. Section-6 The given case makes a very interesting proposition of pricing strategy. The company in order to penetrate the market in the developing area, where the product quantity and the affordability was an issue, adapted a very innovative pricing strategy. It provided the product in demand in small quantities without compromising the margins, so that the price for the product offerings was affordable by the end user and the company was able to do the business profitably and sustainably. Thus bulk breaking formed the base of this innovative pricing strategy. Section-7 The given case does not reveal any significant change in the company’s promotion strategies. However, an important aspect that needs to be highlighted here is that the certification on the product from the perspective of adaption to the sustainable ways of doing business also worked as medium to communicate to the end consumers especially in the developed market. This communication garnered the required trust and loyalty in the various product brands that the company was offering. Section-8 Channel of distribution has been a very important issue dealt in this case. The distribution strategy adopted by the company, especially in the developing market, had been pivotal to the overall expansion strategy of the company. Unlike the formal distribution setup for main stream market, Unilever was able to leverage the rural based NGOs and self help groups to reach to the bottom of the pyramid. The case has also highlighted that this strategy was an economically profitable in and had been able to empower all the stakeholders associated with it. Read More