Question

Ethics in the Workplace:How does Porters Five Forces apply to Marketing and Business Practices? Four Eras in the History of Marketing

Answer 1

The Porter's five forces model and framework can be used for analyzing the competition that a business faces in its market. The model helps to know the intensity of competition and therefore the analysis can be crucial towards knowing whether a market is profitable for a business or not. The analysis also applies to the marketing and business practices, which are conceptualized and implemented in lieu of the outcomes of the analysis, and which aim to make the business successful and profitable by addressing the right issues.

Created by Michael. E. Porter, the 5 forces model is used for knowing the attractiveness of a given market. It applies to market practices and can be an important strategic tool through which a company can analyze its competition to a better extent. The outcomes of the analysis may guide the marketing and business practices. The model can assess the risk, opportunity, and profitability level more realistically. The findings can also be used for developing and creating strategic advantages over the other competing firms, in a healthy and competitive market environment.

The five forces that should be analyzed to know the competitive intensity in any market, and to create the right marketing and business strategies are given below.

1. The threat of new entrants

Any industry and market that offers higher returns, will be definitely attracting the new companies and businesses, which will be detrimental to the profitability of an existing firm. Capital requirements, barriers to entry (like patents), economies of scale, government policies, and customer loyalty are some aspects that should be analyzed here.

2. Competitive rivalry

A good understanding of the competitor rivalry and the marketing strategies undertaken by the competitors can help towards marketing a product better. Price is also an important factor. Firms can adopt both proactive and reactive approaches to overcome the competitor effort to win the market. Companies should also analyze aspects and areas including quality/features of their offerings in lieu of the competitor’s, customer loyalty, competitor marketing/advertising resources, and others.

3. Threat of substitution

The competitors may also offer new products having different technologies or other features/aspects, for solving the needs of customers. For example, customers can switch to smartphones over regular phones. The ease with which buyers can switch to the new products, differentiation, number of substitutes, and cost of product/service substitution for the end buyers are some aspects that impact substitution. The business practices stress heavily on innovation to overcome the threat of substitution.

4. Customer’s bargaining power

Buyer concentration on the number of firms ratio also impacts the firm success in a market. When the buyer has a greater number of choices and few numbers of firms are operating in the business segment, the buyer has greater power. Therefore buyers can put pressure on a firm. The analysis results provide inputs through which the right marketing practices can be undertaken, so as to overcome adverse effects of greater buyer power. Some areas that need to be analyzed include differentiation of offerings from the rest of the competitors, information relating buyer characteristics, and price sensitivity among others.

5. Power of suppliers

The number of suppliers may also impact the competitiveness of a business. If there are a few buyers serving to a given business segment, they would have greater power, as the situation would be close to a monopoly. The marketing and business practices should aim to overcome the deficit. Some factors that need to be analyzed include supplier switching costs, the strength of the distribution channel, the concentration of suppliers in lieu of the concentration of firms, and competition among suppliers.

Eras in the History of Marketing

Marketing had been practiced in different forms since centuries, but the actual use of the term marketing for describing the commercial activities related to selling and buying of services and products was used only in the latter part of 19^th century. “History of Marketing” was a full-fledged academic disciple and field in the early part of the 20th century. Below are the four Eras of marketing.

Production era: This era lasted from AD 1869 to AD 1930. Businesses in this era focused heavily on production. The industries were in the infancy stage and technology was used to derive greater “economies of scale” benefits. At this time period, companies bothered the least about the perception and taste of customers, and only produced those products that they were good at manufacturing.

Sales era- The Sales era started in the 1930s and lasted up until 1950s. Companies undertook investments in developing new products and also advertised heavily the benefits of these new products in their respective markets. Many new different forms of advertising, including advertising on television, print media, and personal selling took birth in this era.

Marketing era- This era started in the 1950s and lasted till 1970s. It was marked by a heavy focus on both existing and latent needs of customers. Businesses started to indulge in marketing and business activities that could make them sustainable, scalable and which provided for a long term and friendly relationship with the customers. The emphasis on profitability and sales decreased while that towards engaging in a better customer relationship increased.

Societal marketing era/ Value added marketing era- During the 1970s, the business organization started to realize that they also have a responsibility towards society and the community they serve. Corporate Social Responsibility of CSR became more important and the businesses started to also take notice of the long-term interests of society while marketing and doing business. While profits were still necessary and important, the businesses started to realize that the interest of the customers and society should not be at stake. This period lasts to date and has seen the maximum refinement of marketing practices and principles.