The article by Lafferty and Hult vividly portrays that in modern marketing, the systems approach turns on the central theme that marketing reality occurs in European countries. A business, or its connection with others, is represented by some suitable system that may culminate in a physical replica, chart, flow diagram, series of equations, simulation model, or just a concept. Lafferty and Hult underlines that the survival and growth of systems is largely determined by the effectiveness of flows and communications. Marketing systems contain “flows” of products, services, finances, and equipment through channels and communications to and from marketplace. The systems approach utilizes one type of model — a systems model. This model recognizes a total marketing system that must be supported and reinforced so that the company can survive, adjust, change, and function efficiently. While marketing and management coordination, it recognizes conflict and competition among units, the necessity for subsystem concessions, an the fact that resources must be used to maintain the system itself as well as to attain goals. Marketing managers have the major responsibility of recognizing the relationships among the elements of the systems. The must comprehend their potential combinations, and coordinate and integrate business factors so that goals are achieved effectively. To a large extent the adoption of a systems perspective depends on the individual manager and his perception of the factors of variability in the system, the interaction of inputs, and the predictions of outputs resulting from the inputs (McDonald and Christopher, 2003).
As firms become conglomerates of companies, this distinction tends to disappear. Although the systems-perspective direction tends to prevent suboptimization, it does not preclude the analysis of subsystems. Since management cannot analyze everything at the same time, it must digest smaller pieces. In the atomistic system there is a tendency toward equilibrium among separate elements. The organic whole is a system with structured components joined together in a fully determined and inflexible pattern. In between are the loosely coupled systems — and marketing systems are often of this type. They adapt to the environment by changing objectives, technologies, manpower, and organizational arrangements (Lafferty and Hult, 2001).
The main trends singled out by Lafferty and Hult involve “total implementation of marketing, lack of skills to develop a heightened marketing approach, lack of understanding of what marketing entails, and limited financial resources” (2003, p. 43). The external perspective of marketing systems relates various elements and activities of the total marketing unit. It presents a macro perspective of a marketing system. It shows that internal company resources (such as manufacturing capacity, labor, and finances) are linked with external resources (such as advertising and marketing-research agencies, banks, and transportation agencies) to develop a marketing mix. The assessment of opportunity, planning and programming, and the organization and control of marketing, must be undertaken to develop and manage the micro system. The actual system is depicted by the combination and integration of marketing inputs into a product and service mix, a distribution mix, and a communications mix that form a cohesive whole — a marketing mix. This mix is designed to meet the requirements of specific marketing segments or to develop a customer-prospect mix.
The authors underline that when distinct marketing operations are differentiable, a marketing system may be recognized. When marketing activities are distinguishable and unique, and cannot be managed effectively within existing operating systems, they are perceived as separate systems. Then a system external to existing systems is required to control and service these activities. Thus, a new management system is created. Large systems are comprised of several management systems. Two concepts, coordinancy and linkages, are fundamental to the integrated characteristics of the systems viewpoint. The first of these reflects the joining of marketing elements and marketing subsystems into a total system. It is internally focused and concerned with the integration of component parts-the interfaces at terminals. Coordinancy is applied directly to implementation of the marketing mix where advertising, personal selling, product development, physical distribution, channels, pricing, sales promotion, and other marketing factors are integrated to achieve the desired impact on the market place.
Lafferty, and Hult (2003) state that business and market planning linkages are focused, and refer to the joining together of two or more major systems that can and do function as separate, distinct, and independent middle-range or large systems. For instance, independent business systems sometimes join together to create a more effective marketing system. In this situation, the marketing system is comprised of combinations or groupings of individually functioning systems, as in voluntary chains. This concept is also important in the implementation of a total marketing-management concept where linkages of manufacturers, wholesalers, retailers, agencies, and consumers must be achieved There are two linkage levels in marketing systems. The new business links marketing to the external business, environment, often with the aid of many agencies existing outside the firm, such as marketing research agencies, advertising agencies, transportation agencies, and financial institutions. The new business links marketing to the other functional activities within the firm, such as finance, production, personnel, purchasing, and accounting.
Modern systems focus attention on broader issues than those usually contained in any one marketing subgroup such as sales or product development. By so doing they add greatly to the formulation of overall corporate and marketing strategy and objectives. Under the systems approach business is seen as an integrated production process — a coordinated whole. Marketing is coordinated with, rather than confronted with, manufacturing or finance. Systems thinking stresses adaptive change and adjustment. It emphasizes the dynamic impact of market environments and the need for corporate adjustment. A decision hierarchy is established, and decisions made at the level of the total system are more important than those at any subsystem level. Thus conflicts and tradeoffs among subsystems are considered. What is best for the whole system need not be for any one department or particular element. For example, decisions about the total marketing budget could be unfavorable to any one department, such as advertising or marketing research.
In sum, the article demonstrates that the systems approach, followed by many European and post soviet Union countries, focuses on internal relationships. It encourages the development of integrated marketing systems working together to achieve predetermined goals. The approach recognizes that marketing resources must be allocated to maintain the system itself. Marketing issues may be raised about the appropriate structural forms that marketing systems should adopt. Survival and systems effectiveness are the ultimate tests, and those elements and arrangements approved by the marketplace over time are best.
Bibliography
- Hollensen, S. (2007), Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition.
- Lafferty, B. A., & Hult, G. T. M. (2001) ‘A synthesis of contemporary market orientation perspectives’, European Journal of Marketing, 35 (1/2), pp. 92–109.
- McDonald M., Christopher M. (2003), Marketing: A complete Guide. Palgrave Macmillan.
- Reed, P. (2006). Strategic marketing planning, Thomson Victoria.