Studying management is a means to an end of contributing towards the running of a successful business or organisation. In a previous blog post I have shared a view about marketing (a key business management process) being a people business because (i) the market is about people as consumers, (ii) in Business to Business, negotiation is done by people and (iii) non-profit making organisations need to attract the people who make use of their services, engage the people to run them and earn fund raising support. In a short space, I would like to share some perspectives about how topics in management and social sciences can be factored in strategic and day to day marketing practice.
A basic economic concept is that the market is composed of consumers who have both needs and wants. These can be unlimited, however both world resources and personal resources are limited. It is a reality that people do have needs which they ought to satisfy in order to survive but they also have wants. Commonly, they try to have a mixture of both, for example, people need to eat but need not frequent a restaurant, they need to buy clothes but these do not need to be branded. In practice, human nature is very dynamic. People’s wellbeing is influenced by society, their lifestyle, how they look and what they do. This implies that when faced with a business situation such as introducing or growing a product or service on the market, many elements of the different subjects studied in management and those of human behaviour come to play.
When assessing how important a product or service is for the market, one can consider Maslow’s hierarchy of needs, the place in society where the target market segment falls and how much of the market that same product or service will satisfy. Another element which the market will consider is the price it is ready to pay for the product or service. This does not only depend on the quality of the product itself but on the value which the consumer attributes to it. A concept we find in economics is elasticity (e.g. price elasticity of demand). This is a theory which in principle tries to measure how flexible the price of a product or service can be, in relation to its effect on customer demand. When seeking to purchase a car, a customer may consider a five hundred euro difference in price if it has attributes to which the customer gives value to. Understanding the value and the ability to quantify it can give businesses that welcome added margin.
Management theory also presents the case of the external environment which businesses need to adapt to. Technology, as one example, is developing fast within our society. Technology is there to help business in ways such as in making production systems more efficient, in providing management information systems, for use and analysis of data for decision making and to offer tools to communicate with customers personally. However, technology remains a tool. Businesses are run by people and consumer’s needs and wants are effected by economic, sociological, psychological, behavioural, competitive and other factors which influence the dynamic market conditions.