The paper "Understanding Marketing System" is a great example of a Marketing Case Study. A marketing system can be defined as a network of various entities, which can be an individual, a group individuals, a corporate, a network or a combination of these, related either directly or indirectly, in a sequence or together, participating in exchange of goods or services against some value, which leads to fulfillment of demand of that goods or services from customer or end-users. Primarily, it may happen that, a marketing system may be conceptualized at one or multiple levels of aggregation.
In such cases, the entities comprising the network are themselves marketing systems. However, while modeling any marketing system, the selection of various entities that need to be included, becomes a crucial step. This is crucial as these selections further decide the boundaries of the system and defines its input and output. In marketing parlance, assortment can be depicted as the demand leveling or smoothing functionality. This usually correlates to the diversity of product lines that a manufacturer provides, or that a retailer stocks. Product assortment refers to the length of offerings, i.e.
the number of products in the product line or it can refer to the product breadth, i.e. the number of product lines that a company offers. It can also refer to the product depth, i.e. the different varieties of products in the product line. Another important aspect of product assortment is the consistency of the product line. Consistency often depicts the relationship between products in their final destination. A network in the marketing system is the distribution arrangement that is connecting the various marketing entities so that the goods and services reach the customer or end-user.
It can be understood as a web of associations among a manufacturer or service provider and its supporting stakeholders like customers, employees, wholesalers, retailers, etc. A product or a service can be provided through a unique link in the network or it can be provided through multiple levels also. A marketing channel can be defined as a business structure comprising of interdependent entities, which extends in its reach from point of production to the end-user or consumer. The primary purpose of any marketing channel is to physically move the products to the place of its final consumption.
Thus marketing channels create an uninterrupted supply chain that performs or supports the marketing channel functions (Stern et al, 2001). Channel members offer economies to the supply process in the form of specialization and division of labor, overcoming inconsistency in quantity, assortment, time, and space, and providing contact efficiency. Entities in any marketing system execute one of the three important functions. The first and foremost is transactional functions, which involve connecting and advertising, negotiating, and risk-taking.
The second one is that of logistical functions and involves physical distribution, storing, and sorting, etc. The last but not the least is the facilitating functions like financing or carrying out marketing research etc. Let us understand the marketing system with a real-life example and for the same let us take the case of ‘ Amway’ . This globally rebound brand has been famous on account of its uniqueness in terms of the successful multi-level marketing system. The company mainly deals in cosmetic and health care products which are sold by levels of entities connected through a network.
The exchange logic is here is the sale of the products against the commission paid to the various members as per their level. The company if would have sold the product through other stores, it would anyway have spent on the commission. But the marketing and advertisement cost is being saved as this role is being played by the network members itself. Moreover, the members also carry some inventory with them and hence execute the flow of sorting and transfer of physical passion. Thus the core of this marketing system, the organizing principle can be social networking.
The consumer buys a product from an acquaintance and hence the element of trust builds up with every sale and hence provides sustainability to the overall marketing system. There is also a range of assortment not only in terms of the product verticals and product lines but also in terms of the way the products are finally provided to the end-user. Ultimately the well being through consumption of the quality products is achieved for the end-user. The sales layer also benefited through a coordinated effort in terms of recurring commissions.
Also, they are able to gain the trust of the consumers over the period of time.
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