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Aim marketing know and understand customer so well product

Drucker also went on to say that "the two most important functions of a business are Innovation and Marketing" as they are the only two functions that contribute to profit while all others are costs. This article is primarily devoted to Drucker's early views on Marketing. His views appeared in many cases at random in his writings and are difficult to organize as a coherent discussion of marketing.

As such I have attempted to organize them in the order of the "Four Ps of the Marketing Mix" Product, Price, Place, and Promotion for discussion purposes wherever possible, although Drucker did not label them as such. Many a sales manager has been renamed "marketing vice president"—and all that happened was that costs and salaries went up. But the starting point is still our products, our customers, and our technology. The starting point is still the inside. Marketing "The difference between marketing and selling is more than semantic.

  • Michael Marks, founder of the Florida-based Indian River Consulting Group has specialized in the field of industrial distribution for over 30 years and is no doubt the foremost authority on distribution in the United States;
  • The following are some other selected Drucker quotes on Product with a few of my brief observations;
  • What does the customer buy altogether?

Selling focuses on the needs of the seller, marketing on the needs of the buyer. This is one of the more famous business articles and is frequently referenced in modern marketing literature. It first tries to look at the entire business. And second, it tries to look not at our customer, our market, our products, but at the market, the customer, his purchases, his satisfaction, his values, his buying and spending patterns, his rationality.

He observed that a company might be happy with achieving 30 percent market share for a particular product, however this also means that 70 percent of the market is not buying from you. The following are some of the areas to be investigated or questions to be asked in the market analysis as suggested by Drucker: What is it being bought for? Who is the non-customer? Why does he not buy our products?

What does the customer buy altogether? What do customers—and non-customers buy from others? What satisfaction do they give that they cannot get from our products? What product or service would fulfill the satisfaction areas of real importance—both those we now service and those we might serve? What would enable the customer to do without our product or service? This is more closely associated with substitute products—gas prices forcing people to buy smaller cars vs.

SUVs, using public transportation more, etc.

  1. The need for continuous innovation based on a deep understanding of customer needs. There is only one valid definition of business purpose.
  2. What is it being bought for?
  3. One of his more interesting comments was this. Yes, it is a good time to be in marketing.
  4. Students of Drucker will note that in his later years he focused primarily on society as in his description of the "Five Certainties" and "The Next Society," perhaps another article in this series as many of his observations in these areas are now contributing to the problems faced by developed nations. Selling focuses on the needs of the seller, marketing on the needs of the buyer.

Who are our non-competitors—and why? Whose non-competitor are we? Possibly identifying opportunities outside our industry. Drucker suggested "going outside" to obtain answers to these questions but did not really provide any tools for doing so.

Peter Drucker on Sales and Marketing

Various methods for obtaining this information from questionnaires, focus groups, conjoint analysis, etc. The following are some other selected Drucker quotes on Product with a few of my brief observations. But nobody can make or supply satisfaction as such—at best, only the means to attaining them can be sold and delivered. Only by asking the customer, by watching him, by trying to understand his behavior can one find out who he is, what he does, how he buys, how he uses what he buys, what he expects, what he values and so on.

They cover both too much and too little. Price Drucker dealt with Price in more detail in his discussion of the Five Deadly Business Sins that might be the topic of another article in this series, and so it will only briefly be commented on here.

In Managing for Results 1964 he wrote, "But price is only a part of value. There is a whole range of quality considerations which are not expressed in price: Strategies for Growing Customer Value 2004 dealt with this issue in his discussion of "Economic Benefits and Value Creation" where he identified the total cost of purchases as consisting of disposal costs, ownership costs, maintenance costs, usage costs, acquisitions costs, and the price paid for the product.

Marketing IS Business: The Wisdom of Peter Drucker

Drucker also omitted discussions of the other elements that are typically covered under the discussion of Price such as list price, discounts, allowances, payment period, terms, and other concepts such as elasticity, bundling, and so forth. Place This element of the Marketing Mix generally consists of channels, coverage, assortments, locations, inventory, and transportation. Once again, Drucker did not cover all of these elements in any detail and tended to focus more on distribution channels.

One of his more interesting comments was this: But, though equally obvious, it is often overlooked that there has to be a market for the product not exactly rocket science here. There also have to be distributive channels to get the product from the producer to the market. But many businessmen—especially makers of industrial products—are as unaware that they use distributive channels, let alone that they depend on them.

  • Essentially, Drucker was ahead of his time in describing these marketing communications strategies but he unfortunately did not expand on the concept in his later years while the other contributors to the field of marketing did;
  • What satisfaction do they give that they cannot get from our products?
  • As such I have attempted to organize them in the order of the "Four Ps of the Marketing Mix" Product, Price, Place, and Promotion for discussion purposes wherever possible, although Drucker did not label them as such.

Drucker continued to stress in his early writings on marketing that marketing channels and in particular, industrial distribution were not well understood as evidenced by the following quotes: He then went on to comment: Management can order a product modification; it cannot order a market modification, or a modification of distributive channels.

There is no distributive channel which is not, at the same time, also a customer. In either role he is crucial to the producer.

Indeed, I have never seen a decision with respect to distributive channels that was not obsolescent five years later and badly in need of new thinking and fundamental change. Markets as well as distributive channels deserve a good deal of attention and study—much more than they usually receive. Considerable literature exists on marketing channels and the work performed by these channels.

Michael Marks, founder of the Florida-based Indian River Consulting Group has specialized in the field of industrial distribution for over 30 years and is no doubt the foremost authority on distribution in the United States. His book Working at Cross-Purposes: How Distributors and Manufacturers Can Manage Conflict Successfully 2005 provides a great deal of insight on how these channels can be designed, managed, and changed if necessary.

Promotion The promotional element of the Marketing Mix generally consists of sales promotion, advertising, the sales force, public relations, direct mail, telemarketing, and the Internet. Drucker commented on some of these elements over the years. Drucker on Advertising With respect to advertising, Drucker wrote in Managing for Results 1964"There is a good deal of evidence that national advertising, though ostensibly directed at the consumer, is most effective with the retailer, is indeed the best way to move him to promote a brand.

What Drucker was describing here in this quote, however, might be considered today as "Push vs. Pull" marketing communications strategies. Roger Best described these two strategies when he wrote, "The objectives of pull-through marketing communications are to build awareness, attraction, and loyalty and to reduce search costs. When pull marketing communications are successful, customers seek out certain products or services and, in essence, by the interest they create, pull the product through the channel.

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A pull strategy requires channel intermediaries to carry certain products or brands in order to attract and satisfy target customers. The objective in this case is to motivate channel intermediaries to carry a particular product brand and, in this way, make it more available to customers.

Essentially, Drucker was ahead of his time in describing these marketing communications strategies but he unfortunately did not expand on the concept in his later years while the other contributors to the field of marketing did. An added note from the Hidden Persuaders mentioned the results of a management consulting firm study that concluded that accepting the word of a customer as to what he wants is "the least reliable" index the manufacturer can have on what he ought to do to win customers.

Perhaps Drucker aim marketing know and understand customer so well product somewhat idealistic when he wrote about marketing eliminating the need for selling if the function was performed well. In Management 1973he wrote, "There will always, one can assume, be a need for some selling. But the aim of marketing is to make selling superfluous.

The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. All that should be needed then is to make the product or service available, i. As can be seen, Personal Selling is still the most cost-effective tool in gaining the order along with Sales Promotion. Cost-Effectiveness of Different Promotional Tools Marketing professionals differentiate how the various promotional tools are used, based on whether the marketer is addressing the consumer or the business market.

With respect to the consumer market, marketers spend in order of priority on sales promotion, advertising, personal selling, and public relations, while for the business market they spend on personal selling, sales promotion, advertising, and public relations. They also noted that personal selling is used more with complex, expensive, and risky goods and in markets with fewer and larger sellers, therefore, business markets. Summary Drucker's early focus on the customer and non-customers and going outside contributed to a greater understanding of what the purpose of a business is.

With respect to profit, he felt that it was essentially a measurement of how well the organization was creating customers.

Drucker was ahead of many in calling attention to the difference between sales and marketing but unfortunately, did not really build on his early contributions to the discipline. Students of Drucker will note that in his later years he focused primarily on society as in his description of the "Five Certainties" and "The Next Society," perhaps another article in this series as many of his observations in these areas are now contributing to the problems faced by developed nations.