“ The centrality of marketing in creating growth and shareholder value suggests a new role for marketing both as a discipline and function… the concept of marketing that will make it more effective in tomorrow’s boardroom is one of contributing to the creation of shareholder value. It can be defined as follows: Marketing is the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage. Doyle, P., (2000), Valued-Based Marketing, Chichester: Wiley, p29. By reference to academic literature, critically evaluate Doyle’s definition of marketing. Indicate how a company could apply this definition to create and manage its marketing strategy. Answer
In recent years, marketing is suggested a new role both as a discipline and function because of the significance of marketing in order to create growth and shareholder value as well. The concept of marketing will become one of contributing to the creation of shareholder value. In this paper, Peter Doyle’s definition of marketing will be evaluated and the example of some companies, which succeed in applying this definition to create and manage its marketing strategy, will be given. According to Doyle (2008), the principal goal in commercial companies is to maximize shareholder value. The essence of the shareholder value approach is the long-term sustainability of the organization through the creation of lasting value. In commercial company, shareholder value can be created when the shareholder return exceeds the share cost- is the return that shareholders expect to obtain in order to feel sufficiently remunerated (Fernandez, 2001). However, shareholder value is often confused with maximizing profits (Doyle, 2012). Maximizing profitability is short-term and may result in eroding long-term competitiveness through action such as cost cutting and shedding assets to produce quick improvements in earnings. Maximizing shareholder value, on the other hand, requires long-term thinking, the identification of changing opportunities and investment in the building of competitive advantage. However, non-profit organizations do not work for money as a result, shareholder value of those is not related to financial matters. The goals of these organizations are depended on the purpose and the structure of the organization (Anheier, 2000). Take Oxfam as an example, its goal is seeks one overall outcome: to bring about positive change in the lives of people living in poverty. Therefore, financial matters are not the most important goal of Oxfam and in order to achieve the goal, Oxfam generates money from different sources (i.e. people donate their old and unwanted clothes and items to Oxfam’s shops and Oxfam sells it to the consumers. They also get private donations given to them by people who want to help). They will use this money to makes to help people in Africa get the basic things they need to a hygienic and healthy life such as wells, health care, schools, loos and farms. The marketing concept emerged in the mid-1950s, business shifted from a product-centered (“make-and-sell” philosophy) to a customer-centered (“sense-and-respond” philosophy). According to Theodore Levitt (1960), the marketing concept is different with the selling concept. He stated that selling focuses on the needs of the sellers whereas marketing on the needs of customers. Selling is preoccupied with the seller’s need to convert his product to cash; marketing with the idea of satisfying the needs of the customer by means of the product. Kotler and Keller(2007) suggested that the marketing concept plays an important role in achieving organizational goals because it helps organization operates more effectively than competitors in creating, delivering, and communicating superior value to its chosen target markets. It is understood that the marketing concept holds that, in increasingly dynamic and competitive markets, the...
Please join StudyMode to read the full document