APPLICATION OF THE MARKETING MIX IS NO LONGER RELEVANT FOR CONTEMPORARY APPROACHES TO MARKETING

Ever since its emergence in 1900-1910 (Egan 2008), marketing has proved to be an extremely dynamic and evolving field. Changes take place in this field in a span of less than 5-6 years. This reflects the fast pace of theoretical as well as practical advancements in this arena. The prime concept of marketing - the marketing mix has its origin in the 60s when Neil Borden (1964) identified twelve controllable marketing elements which, if managed properly would result in a successful business. Soon after, Jerome McCarthy (1964) reduced these 12 elements to the indisputable 4Ps – Product, Price, Promotion and Place. Just like new technologies and market trends have shaped every discipline, marketing is no exception. Constantinides (2006) listed the decade-wise milestones in the evolution of marketing - the broadening of the marketing concept during the 70's; the emphasis on the exchange transaction in the 80's; the emergence of Relationship Marketing and Total Quality Management in the 90's (Yudelson 1999); the emergence of Information and Communication Technologies in the 21st century. In order to understand whether the marketing mix is relevant for contemporary approaches, an understanding of what these contemporary approaches are and how they differ from conventional approaches is important. Constantinides (2006) pinpointed the major factors that resulted in the birth of contemporary approaches. These are - market saturation; economic crisis (1970s); increasing global competition; inconsistent and unpredictable consumer behaviour. Two important contemporary approaches are relationship marketing (Coviello, Brodie and Munro 1997) and business- to- business marketing (Constantinides 2006). Relationship marketing can be further categorised into (a) Database marketing (b) Network marketing (c) Interaction marketing and (d) IT based marketing (Coviello, Brodie and Munro 1997). It is difficult to judge a subject as vast and dynamic as marketing and arrive at a conclusion. There are a number of constraints on evaluating the relevance of the marketing mix in the present scenario. Therefore, it needs to be judged in a manner that is integrative or holistic rather than paradigm or sector specific. Two broad perspectives to carry out the analysis can be:-

1. Domain based ; 2. Market based.

Domain based analysis revolves around the evolution of marketing from traditional to contemporary practices. Market based analysis is based on the diversity of marketing practices in different economic conditions. The main objective of this essay is to evaluate the applicability of the marketing mix for contemporary practices by carrying out a domain based and markets based analysis with the help of a few examples and thus, arrive at a conclusion. DOMAIN BASED ANALYSIS Consumer behaviour has undergone a series of changes. One significant shift is the transition from mass marketing to segment or even personalised marketing. As a result, innovation, customer orientation, relationship management and networking have become indispensible (Kotler, Armstrong, Saunders, Wong 2001). Based on this, Constantinides (2006) has identified two main drawbacks of the marketing mix – (1) internal orientation; and (2) lack of personalisation. These are discussed in the light of relationship marketing and industrial marketing. Relationship marketing and Industrial marketing against ‘the marketing mix’ paradigm A significant development in marketing has been the rise of relationship marketing. According to Lindgreen, Palmer and Vanhamme (2004), organisations are investing more in attracting, developing and retaining customers. The rationale behind this is that it is more expensive to win a new customer than to retain an existing profitable customer. In such a situation, relationship marketing proves to be more successful since it takes into consideration the changing markets and constomer expectations of a personalised market place, whereas, the marketing mix focuses on product rather than customer needs (Lauterborm 1990; Rozenberg, Czepiel 1992). The marketing mix has also been criticised on the ground that it allows one way communication only, thereby, restricting any kind of interaction or feedback from the customers (Gummesson 1994, 1997; Grönroos 1994; Goldsmith 1999). This leaves no scope for improvement and deprives the customer of adequate power, which may lead to customer dissatisfaction.

Under the umbrella of relationship marketing, also comes interaction marketing, which focuses on creation of interpersonal relationships through continuous and mutual interactions. The companies try to position themselves favourably in the market by developing successful relationships internally amongst themselves, externally with other businesses as well as with their customers. A good example is collaboration between Proctor and Gamble and Wal-Mart. CASE OF PROCTOR AND GAMBLE AND WAL-MART These two companies started collaborating in the '80s when retailers shared very little information with manufacturers. The two giants built a software system that ensured a smooth flow of information between their distribution centers. When P&G’s products run low at the distribution centers, the system sends an automatic alert to P&G to ship more products. It lets P&G monitor the shelves through real-time satellite up-links that send messages to the factory whenever a P&G item is scanned at the Wal-Mart register. With this kind of up-to-date information P&G knows when to make, ship and display more products at the Wal-Mart stores. This assists P&G in inventory management and helps Wal-Mart ensure cost-effectiveness and thereby, offer lower prices always (Lindgreen, Palmer and Vanhamme 2004).

Similarly, database marketing has also added to the relevance of contemporary approaches. This reflects the effect of all-pervasive information technology and increasing need of interaction with customers (Fletcher, Wheeler and Wright 1992). It uses the customer data available with the firm to establish a long term relationship with the customer both to the benefit of firm and constomer. For example, Tesco widely implements database marketing through the use of club cards (Mesure, 2003). Yet another arm of relationship marketing is network marketing, where firms use interpersonal or social networks to market products and services. These networks can be among different businesses or between businesses and their customers. Network marketing, when used with effective coordination, not only results in cost effectiveness but also leads to better satisfaction of customer expectations. A successful example is that of Star alliance and One World. CASE OF STAR ALLIANCE Star alliance is the world’s largest network of airlines which was founded in 1997. The airlines in

this network compete together against others. It is difficult for the customers to tell if they are travelling with Scandinavian Airlines or Air Canada. As a result of which, these airlines have to focus on providing supreme service to their customers rather than strategising against each other. They seek resource exchange and market access resulting in benefit for all and a strong market positioning (Lindgreen; Palmer and Vanhamme 2004).

Today, when relationship marketing seems to be outmanoeuvring the marketing mix, the applicability of the 4Ps is also being questioned in the light of industrial marketing, which focuses on mutual dependence and close relationships between industrial buyers and sellers (Constantinides 2006). The quality of industrial marketing is based on the quality of interdependence between firms (Turnbull, Ford and Cunningham 1996). Davis and Brush (1997) suggested that the marketing mix is not suitable for industries that are technically inclined, since the focus is more on consumer goods. Davis and Brush (1997) also argued that the marketing mix ignores international elements, which cannot be ignored by firms operating today. Anderson and Narus (1999) further add that business marketing relies upon efficient management of relationships and networks which cannot be achieved by the marketing mix alone. Thus, strong evidence and research back the proposition that the marketing mix is more relevant theoretically and less significant as a managerial tool-kit. Figure1 shows the shift in marketing from transaction marketing based on the marketing mix to relationship marketing, which is one of the contemporary approaches.

MARKET BASED ANALYSIS It is necessary to recognize that marketing practices are different across economies as well. For example, what is applicable in advanced market economies of Australia, USA, etc. may be quite different from the practices prevalent in Ivory Coast. For this analysis, one example each of a developed market economy and transition market economy has been considered. The main aim is to compare contemporary approaches with the classical marketing mix paradigm in the background of two diverse economies. In a highly developed market like that of USA, relationship marketing is practiced much more than transaction marketing based on the marketing mix paradigm (Coviello, Roderick, Brodie, Danaher and Johnston 2002). The classical marketing mix is said to be outdated because of saturated and mature markets (Grönroos, 1996; Coviello and Brodie, 1998), which have become more and more dominant here. In these markets, consumers have a range of choices and businesses have to face a high level of competition. There is an increasing necessity to differentiate from the competing brand. The scope of such differentiation is really low in terms of the features of the product. One way firms can score in the eyes of customers is by providing quality service and building strong long term relationships (Morgan and Hunt, 1994). Similarly, in industrial marketing, relations with professional buyers and the value of information concerning their functions as well as the competencies of individuals in buying centres have been emphasized (Grönroos, 2000). A generalisation can be made about the developed markets that

contemporary approaches have surpassed the traditional marketing mix. Survival of a business in such a market only on the basis of the traditional marketing mix is uncertain. On the other hand, the markets in the transition economy of Russia function differently. They are characterised by the shift from a centrally planned economy to a free economy and the repercussions of the economic breakdown of 1998 (Åslund, 2002 as cited in Wagner, 2004). The amount of money available with the consumers in Russia varies significantly with occupation and location. Nearly one-third of the retail sales in Russia are realised in Moscow (Wagner, 2004), which suggests that Russian markets are still developing. Contemporary approaches are relevant in comparatively advanced markets of Russia, like those in Moscow. At the same time, according to the studies of Homburg et al., 2000 and Coviello et al., 2002, the relevance of traditional transaction marketing based on the marketing mix still holds for current practices in Russian markets. Wagner (2004) pinpoints contemporary approaches like relationship marketing have not gained the expected level of importance because of the low intensity of marketing activities and scant resources invested in marketing in Russia. Wagner (2004) also gives a justification that the set of serious competitors in Russia is limited to a few international organisations and the already existing Russian organisations which have gone global. Therefore, based on the studies of Wagner (2004) and Coviello et al. (2002), it can be concluded that the contemporary approaches are not relevant in Russian markets currently because of the vast scope of growth they can still experience. Whereas relationship marketing is gaining a strong hold in large markets like Moscow, transaction marketing based on the marketing mix is more relevant in less developed areas. The purpose of considering two diverse markets of USA and Russia is to show the effect that prevalent business environments can have on different marketing approaches.

CONCLUSION An established fact about marketing is that it is an ever-changing and evolving field and is indispensable for the survival of any business whether domestic or international irrespective of its scale i.e. small, medium or large. Because of the vastness of this discipline and its dynamic nature, it may be unfair to judge the significance of the marketing mix in the current

environment, only on the basis of trends in one type of market. It is true that markets all over the world are moving towards advancement almost unidirectionally. As a result, consumers are having more choices and therefore competition is increasing amongst businesses. In such a scenario, competing businesses need to bring about differentiation and think beyond the marketing mix and come out with innovative marketing techniques. This proposition has resulted in the evident growth of the contemporary marketing approaches. Contemporary approaches like relationship marketing and industrial marketing have become the new foundations for businesses in advanced markets of USA, Finland, Sweden and Australia. But at the same time, it is premature to make a generalisation about the decreasing popularity of the marketing mix for contemporary approaches for markets in transition economies and developing economies. Therefore, although contemporary approaches have become extremely important to marketers because of changing consumer expectations and dynamic market conditions, yet the concept of marketing mix forms the basis for all marketing practices and by ignoring it completely, marketers will undermine the very importance and integrated capabilities of contemporary approaches.

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