Text 5. KEY TERMS AND CONCEPTS

Peter Drucker says that the only valid definition of business purpose is to create customers. Creating a customer means finding a product or service that many people want and need. Human activity directed at satisfying these needs by provision of respective goods and services is known as marketing.

A set of actual and potential buyers is called market. This term originally stood for a physical location where buyers (those who buy) and sellers (those who sell) gathered, now the term is used in a more general sense – the buyers themselves, and the sellers constitute the industry which provides the product (anything that can be offered to a market for attention, acquisition, and use that might satisfy a need or want). The market the company wants to win is called target market. The economic forces that prevent easy penetration and exit from the market are called market barriers. The relations between the buyers and sellers on the market are called transactions. Transaction marketing is a part of the larger idea of relationship marketing, which focuses on building a relationship with a company's profitable customers. (Build good relations and profitable transactions will follow!)

Due to the fact that marketing aim is promotion of transactions, marketing and promotion are often thought to be the same. In fact, marketing is much wider than promotion, which is but one of its components. All elements that work together in order to produce satisfied customers are known as marketing mix. Its main components include product itself (anything that can be offered to a market for attention and purchase), its price (money to be paid for a product), its promotion (advertising and other means of making the product attractive for its potential buyers), and place (distribution channels or a location where the transaction occurs). As the initial letter of all components is "P", marketing mix is often referred to as four Ps.

The activities designed to make marketing more effective are usually referred to as marketing management. Marketing management includes the analysis, planning, implementation and control of programs designed to create, build, and maintain beneficial transactions.

LESSON 1: CUSTOMER ORIENTATION AS A MARKETING BASIS

Reading:

The purpose of any business is to create and maintain profitable customers. Customers are attracted and retained when their needs are met, and they also talk favorably to others about their satisfaction. That is why the customer's satisfaction leading to profit is the central goal of hospitality marketing. And what about profits? Hospitality managers sometimes act as if today's profits are primary, and customer satisfaction is secondary. This attitude eventually sinks a firm as it finds fewer repeat customers and faces increasingly negative reputation. Good managers understand that profits are best seen as the result of running a business well, rather than as its sole purpose. Managers who try to maximize short-run profits are short-selling both the customer and the company. Consider the following episode, which is rather typical for a restaurant business. A customer arrived at a restaurant before closing time and was greeted with "What do you want?" Somewhat surprised, the customer replied that he would like to get a bite to eat. A surly voice informed him that the restaurant was closed. The customer pointed to a sign on the door stating that the restaurant was open until nine. "Yeah, but the time I clean up and put the food away it'll be nine, so we're closed." The customer left and went to another restaurant a block away.

Let's think for a moment. Why was the customer treated so shabbily? Perhaps the employee wanted to leave early, or she suffered from a headache, or she had personal or family problems. Consider these reasons and others. How many are really valid? All of us have aches and family problems, and places to go. So does the customer, and as long as we depend on customers for our livelihood, their needs come first.

What really happened in this episode is that the employee once served a customer right before closing time, resulting in the employee working until ten thirty. Instead of being thanked for staying late, she was reprimanded for putting in extra time. The managers wanted to keep down overtime expenses. But they don't realize that they are losing customers and hundreds of dollars of future business. Service falls short when employees are trying to please their immediate boss forgetting about the needs of the customer. People employed in hospitality industry are part of the product their company is selling. How they answer the phone, greet customers, and solve customer's problems is very important. Marketing calls upon everyone in the company to be customer-oriented, not only the personnel of the marketing department. Everyone in the organization has to make decisions based on the impact on the customer. Satisfying his needs is a priority in any business.

Exercises:

1. Find in the text the following topical words and phrases, make sure that you are able to explain in English what they mean, and add them to your working vocabulary:

to retain a customer, to run a business, short-run profit, to be reprimanded, overtime expenses.

2. Write out from the text the sentences or their parts which contain the words and phrases given below and translate them into Russian:

primary, to sink a firm, closing time, a surly voice, to clean up, to treat smb shabbily, a valid reason, livelihood, to fall short, to short-sell a company.

3. Answer the following questions using the topical words and phrases:

1. Why should the company's profits be secondary to the customer's satisfaction?

2. Why do short-run profits short-sell the company?

3. When did the customer arrive at the restaurant?

4. Why did he insist on being served?

5. How did the waiter explain her unwillingness to serve the customer?

6. What did the customer do?

7. Why was the waiter rude?

8. Do you agree that the customer's problems should have priority over the employee's?

9. Why is it necessary for everyone employed in a hospitality company to be engaged in marketing operations?

LESSON 2: MARKETING MANAGEMENT PHILOSOPHIES

Reading:

Marketers operate within a dynamic global environment. Every decade calls on them to think freshly about their marketing objectives and practices. Rapid changes can quickly make yesterday's winning strategies out of date. As Peter Drucker once observed, a company's winning formula for the last decade will probably defeat it in the next decade. Anyhow, there are several more or less complete concepts under which organizations can conduct their marketing activities.

The Production Conceptis one of the oldest philosophies guiding sellers. It holds that consumers will favor products that are available and affordable, and therefore managers should focus on the production and distribution efficiency. As a result, management may become so focused on production that they forget the customer. We all have surely experienced a common production-oriented restaurant after normal dining hours. It may be one-third filled, yet all customers are forced to cluster in one section, thus creating unnecessary density.

The Product Conceptholds that customers prefer existing products, and the job management is to perfect them. This theory misses the point that customers might turn to entirely different products which satisfy their needs better, such as motels instead of hotels or fast-food shops in student centers instead of cafeterias.

The Selling Conceptholds that consumers will not buy unless the organization undertakes a large selling and promotion effort. It focuses on sales and does not worry about satisfaction of a buyer after it. The selling concept does not establish a long-term relationship with the customer, since the focus is on getting rid of what the organization has, rather than creating a product to meet the needs of the market.

The Marketing Conceptis a more recent business philosophy and one that is rapidly adopted in the hospitality industry. It holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively than competitors. This concept is often confused with the selling concept, but there is an essential difference between them. The selling concept focuses on existing products, the marketing concept focuses on customer needs.

The Societal Marketing Conceptis the newest marketing idea. It holds that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfaction more effectively and efficiently than competitors in a way that improves the society's welfare.

Exercises:

1. Find in the text the following topical words and phrases, make sure that you are able to explain in English what they mean, and add them to your working vocabulary:

out-of-date, to favor, distribution efficiency, production-oriented, dining hours, a promotion effort.

2. Write out from the text the sentences or their parts which contain the words and phrases given below and translate them into Russian:

a global environment, a winning strategy, a decade, it holds that..., affordable, to cluster, to miss the point, long-term relationships, to be adopted, effectively and efficiently.

3. Answer the following questions using the topical words and phrases:

1. Why is it necessary to change marketing strategies every next decade?

2. What did Peter Drucker say about marketing strategies?

3. What are the main concepts of marketing activities?

4. What should managers focus on, according to the Production Concept? Explain the weak points of this concept.

5. What does the Product Concept hold and what points does it miss?

6. What should the managers focus on, according to the Selling Concept? Explain the weak points of this concept.

7. What is the main difference between the approaches of the Selling Concept and of the Marketing Concept?

8. Explain the main idea of the Societal Marketing Concept.

LESSON 3: MARKETING HIGHLIGHTS

Reading:

Twenty million people pass through the famous golden arches of McDonald's each day, which means that 96% of all Americans eat there each year. This company now serves 145 hamburgers per second. Credit for this performance belongs to a strong marketing orientation: McDonald's knows how to serve people and adapt to changing con­sumer wants. McDonald's has mastered the art of serving customers, and it carefully teaches the basics to its franchisees and employees, all of whom take training courses at McDonald's "Hamburger University" in Illinois. The company monitors product and service quality through continuous surveys and puts great energy into improving production methods in order to simplify operations, bring down costs, speed up service, and bring greater value to customers. Beyond these efforts, each McDonald's restaurant works to become a part of its neighborhood through involvement in everyday community problems.

In 4.700 restaurants outside the US, McDonald's carefully customizes its menu and service to local tastes and eating habits. It serves pasta salads in Rome and wine with its McNuggets in Paris. When McDonald's opened its first restaurants in Moscow, it quickly won the hearts of Russian customers. However, the company had to overcome some monstrous hurdles in order to meet its high standards for consumer satisfaction in this new market. It had to educate suppliers, employees, and even consumers about McDonald's way of doing things. Technical experts were brought from Canada to teach Russian farmers to grow Burbank potatoes for French fries. It trained Russian managers at Hamburger University and subjected each of new employees, who didn't know a Chicken McNugget from an Egg McMuffin, to 20 hours of training on such things as cooking meat patties, assembling Big Macs, and giving service with a smile. Customers waiting in line were shown videos telling them everything from how to order and pay at the counter to how to handle a Big Mac. And in its usual way, McDonald's began at once to build com­munity involvement. On opening day, it held a kick-off party for 700 Muscovite orphans, and it donated all opening-day proceeds to the Moscow Children's Fund. As a result, the new Moscow restaurant got off to a very successful start.

McDonald's focus on customers has made it the world's largest food-service organization. It now captures about 20% of America's fast-food business. The company's huge success has also been reflected in the increased value of its stock over the years: 150 shares of McDonald's stock purchased for less than $6.000 in 1965 would be worth more than a million dollars today!

Exercises:

Date: 2016-01-03; view: 4006