chapter 01 (fundamentals of marketing)

Marketing Management by Arun Kumar and N Meenakshi© Vikas Publishing House Pvt. Ltd. 2006

CHAPTER 1FUNDAMENTALS OF

MARKETING


LEARNING OBJECTIVES• The marketing concept: An understanding of the

nature of marketing, its key components and limitations.

• The difference between production orientation and marketing orientation

• Service concept of marketing • Experience concept of marketing • Differing roles of efficiency and effectiveness in

achieving corporate success • Differences between market-driven and internally

driven businesses


Learning Objectives (contd.)

• Profile of customer-centric organizations • How an effective marketing mix is designed, and

the criticisms of the 4-Ps approach to marketing management

• Need for segmentation, targeting and positioning • Relationship between characteristics, market

orientation, adoption of a marketing philosophy and business performance


UNDERSTANDING MARKETING

• Process of finding out customer needs and serving those needs profitably

• Profit is a legitimate goal of a business organization

• Essence of marketing is providing desired value to customers

• Marketing should be considered a central business function


THE MARKETING CONCEPT

• All activities are focused upon providing customer satisfaction

• Every employee in an organization is a marketer

• Internal communication


PRODUCTION CONCEPT

• Inward looking orientation

• Management becomes cost focused

• Objective is cost reduction

• Business mission is focused on current production capabilities

• Manufacture products and aggressively sell them to customers


SELLING CONCEPT

• Product or service is not designed and made according to customer’s requirements

• Customer has to be persuaded to believe that the product or the service meets his requirements

• Customer dissatisfied and bad-mouths company

• Marketing makes selling redundant


PRODUCT CONCEPT • Companies become centered on constantly

improving the product

• Myopic focus on the product

• No attention on the other ways in which customers can fulfill their needs – MARKETING MYOPIA

• Customer does not buy a product, he buys an offering that fulfills his needs


SERVICE CONCEPT• Customers buy services, not products

• Service model of marketing instead of selling the title to the products

• Hindrance: Mindset of the customer and marketer, and their unwillingness to experiment with this model

• Can be easily applied in businesses like automobiles, carpeting, furnishing, and for most consumer durable items


EXPERIENCE CONCEPT • Create an experience around the product to

make it memorable • Reaffirm it with cues at every customer

interaction point • Experiences are inherently personal for a

customer• An experience should be built around a well

defined theme


Experience Concept (Contd.)

• Companies must introduce cues that affirm the nature of the experience to the guest

• Eliminate anything that diminishes, contradicts, or distracts from the theme

• Customers purchase memorabilia as a physical reminder of an experience

• The more senses an experience engages, the more effective and memorable it becomes


EFFICIENCY VERSUS EFFECTIVENESS

• An efficient company produces its products and services economically

• An effective company serves the needs of the customers

• No inherent conflict between being efficient and effective


• An inefficient but an effective company can remain in business though its profits would be lower

• An ineffective but an efficient company will not survive

• Choosing to become effective reflects the marketing orientation of the company

Efficiency Versus Effectiveness (Contd.)


MARKET VERSUS INTERNALLY DRIVEN BUSINESSES

MARKET DRIVEN BUSINESS

INTERNALLY DRIVEN BUSINESS

Display customer concern throughout the business

Fail to understand the real concerns of customers

Expenditure on marketing research is an investment

Marketing research is non-productive activity and rely on anecdotes and received wisdom

Understand competitors’ objectives and strategies, and anticipate competitive actions

Content to underplay the competition

Marketing spend is an investment that has long term consequences

Marketing expenditure Is superfluous that never appears to produce benefits


MARKET DRIVEN BUSINESS

INTERNALLY DRIVEN BUSINESS

Employees who take risks and are innovative in serving customers rewarded

Reward time serving, and ability to not make mistakes

Search for latent markets – markets that no other company has exploited

Happy to stick to their existing products and markets

Sensitive, fast and flexible to be able to respond to changes in the market

produce me-too copies of offerings already in the market

• Impact of marketers’ commitments

Market Versus Internally Driven Businesses (Contd.)


PROFILE OF CUSTOMER-CENTRIC ORGANIZATIONS

• Shared values and beliefs

• Skills in understanding and responding to customers

• Market intelligence

• Formal and informal means of information dissemination

• Responsiveness


• Desire to serve customer needs better than competition

• Organizational structure must reflect marketing strategy

• Clear communication

Profile of Customer-centric Organizations (Contd.)


LIMITATIONS OF THE MARKETING CONCEPT

• Marketing concept as an ideology

• Marketing and society

• Marketing as a constraint to innovation


MARKETING MIX

• PRODUCT

• PRICE

• PLACE

• PROMOTION

• CRITICISM OF THE 4Ps APPROACH TO MARKETING


CHARACTERISTICS OF AN EFFECTIVE MARKETING MIX

• Marketing mix should match customer needs

• True source of competitive advantage

• Well blended to form a consistent theme

• Match corporate resources


• SEGMENTATION, TARGETING, AND POSITIONING

Segmentation

Target markets

Positioning

• MARKETING ORIENTATION AND BUSINESS PERFORMANCE

Characteristics Of An Effective Marketing Mix (Contd.)