How a marketing firm can benefit from the adoption of the system approach?

System

A system is made of components and their interrelationship. It is a set of units with relationship among them. In other word, a system is a network of interrelated and interacting components to achieve desired goals. Regularly interacting group of activities forming a unified whole is known as system. Solar system, natural system, economic system, political system, educational system, marketing system are some of the examples of systems. Their parts and sub systems interact with each other in order to achieve common objectives or goals.
According to J.A. Morton –“A system is an integrated assembly of specialized parts acting together for common purpose.”

According to Fremont E. Kast and James E. Rosenzweg –“A system is an organized, unitary whole composed of identifiable boundaries.”
According to S. A. Sherlekar –“A system is a set of interacting or independent components or groups co-ordinated to form a unified of objectives.”
Now we can conclude that a system is a set of objects together with the relationship among them and their objectives. It is consist of several sub-systems interact each other and work for common objectives. Problems arise in each sub-system affects the performance of whole system.

System can be of two types. They are as follows:
  1. Open system: In an open system, there are interactions between the system and its environment. Open system responds to change. All marketing organizations are open systems.
  2. Closed system: A closed system is one, which does not interact with its environment. It is self-sufficient entity. Automatic machinery system is an example of closed system

System Approach in Marketing

Simply, a system is made of components and their interrelationship. It is an integrated assembly of specialized parts acting together for common purpose. In this regards, a marketing system is a unified whole composed of interrelated and interacting parts to achieve desired objectives.
According to S. A. Sherlekar -“A system is a set of interacting or independent components or groups co-ordinated to form a unified of objectives. Likewise marketing system is also an integrated assembly of interrelated and interacting parts to achieve organization’s marketing objectives.”

According to W. J. Stanton –“Marketing system consists of two interacting elements – the marketing organization and its target market. These two elements are connected by two sets of flows. One the distribution of product/service to its customers in exchange for some kind of payment and the other flow is an information flow from the market to the organization.”
We can apply system approach in marketing. A firm’s marketing system is the set of significant institutions and flows that connect an organization to its market.
System approach in marketing can be made clear with the following figure:
System Approach in Marketing
Under the system approach, marketing is viewed as an organized and integrated effort to secure customer satisfaction and profit. Marketing itself is considered as a subsystem of economics, legal and competitive marketing system. The systems approach also integrates commodity, functional, institutional, and managerial approaches. It emphasizes the importance of the use of right information. Markets can be understood only through the study of marketing information. The system model (inputs-processing, output-feedback) places emphasis on the inputs of resources, outputs produced and it enables the determination of marketing programs to achieve those objectives. System approach to marketing includes the following factors. They are: objectives, inputs, processing, outputs, and feedback.
  1. Objectives: Objectives consist of profit matching products with markets, etc.
  2. Inputs: Inputs consist of capital, raw material, physical assets, human resource, information, machines and technology, management tools and in general, marketing mix elements.
  3. Processing: Processing consists of product planning and development, pricing, distribution and promotion.
  4. Outputs: Outputs consist of products, services, profit, customers’ satisfaction, social responsibility, goal integration etc.
  5. Feedback: Besides these, system approach also includes feedback which provides information to redesign inputs and processing.

Marketing is an open system. It interacts with environment. Definitely, system approach in marketing is used as an orderly method of dealing with marketing problems because it has many benefits. A marketing firm can get many benefits by using system approach in marketing.

Benefits of System Approach

We can apply system approach in marketing. A firm’s marketing system is the set of significant institutions and flows that connect an organization to its market. System approach to marketing has many benefits such as:

1. Synergistic effect

Synergistic is the combined effect of the components of a system that exceeds the sum of their individual effects. 2 + 2 = 5 is the result of synergistic effect. The systems approach in marketing generates synergistic effect. This idea has been well adapted in the marketing system where each sub-system works in close cooperation and coordination in order to achieve higher level results in terms of customer satisfaction or market share. Such-optimization is avoided because all sub-systems work efficiently in a coordinated manner.

2. Marketing effectiveness

By using systems approach in marketing a firm can efficiently coordinate and utilize the marketing resources. It helps to achieve marketing objectives. Under the system approach, all marketing activities and resources are efficiently utilized and coordinated. They look at the total picture and carefully design the marketing mix by giving needed importance to all the elements which definitely enhances the effectiveness or marketing.

3. Environmental adaptation

Marketing is an open system which interacts with its environment. In the interaction process it receives inputs form the environment in the forms of information, trends and resources and it also provides outputs to the environment in the forms of goods, services, ideas and experiences. Changing forces in the environment are carefully responded in designing the marketing program. By adopting systems approach, a firm can carefully consider the changing forces in the environment in designing marketing program. It helps to adopt environment changes.

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