The 21st century is characteristically dominated by rapid changes and more competition. Today’s market place is plagued by technological advances, globalization and continuing social and economic shifts. Today’s marketing development according to Philip Kotler can be summed up in a single theme “connectiveness”. More than ever before, we are all connected to each other and to thinks near and around us.
Additionally, we are connecting in new and different ways such that where it once took us weeks or months to travel; we can now travel around the globe in only a matter of hours or days. Where it once took days or weeks to receive news about important world events, we now see them as they are occurring through live satellite broadcasts. Where it once took days or weeks to correspond with others In distant places, they are now only moments away by phone or internet.
The marketing challenges in the 21st century have been ably described by Philip Kotler and Michael Porter. In the views of Michael Porter, Marketing challenges are as a result based on five forces of competition according to the industry within which a company is formed. These five forces are; bargaining power of suppliers, threats of new entrants, the bargaining power of buyers, competitive power of rivalry and then threat of substitute product.
According to Porter’s analysis, the company’s marketing activities is superior to the extend that it has competitive advantage over the five forces in its industry. An industry in this case is a group of firms where firms produce products which are close substitutes for each other. In this view, in an industry, competition always works to drive the rate of return on invested capital towards the rate that would be earned according to economists in perfectly competitive industry.
Rates of return that are greater than the so called completive rate will stimulate an inflow of capital either form new entrants or from existing competitors making additional investments. On the other hand, rates of return below this competitive rate will result into withdraw from the industry and an overall decline into the level of activities and competition.
New entrants to the industry bring new capacity, new desire to gain market, shares and postions and very often new approaches to serving customer needs. However, decisions to become a new entrant in the industry is often accompanied by major commitment of resources. On the other hand, existing players have been known to erect certain barriers that would deter potential new entrants from entering their industry.
According to Michael Porter, there are eight major possible sources of barriers to entrance in the presence or absence to which determine the extent of the rate of entry in the industry. These sources of barriers are; economies of scale, product differentiation, capital requirements, switching costs, access to distribution, government policy, cost advantages and expected competitor response.
In the views of Philip Kotler in today’s marketing is mostly affected by the extent to which activities are driven by connectiveness. I.e. connection through the computer, information, communication and transportation with customers, marketing partners and the world around us.