Introduction to Marketing

Discussion Question

“Marketing” is everywhere and touches everyone’s life in a way...

What is

marketing?...your own comments...

8 - 2

Introduction to Marketing

Marketing deals with identfying and meeting human and social needs

“meeting needs profitably”

“generating customer value at a profit” “managing profitable customer

relationships by delivering superior value to customers”

What is Marketing?

No single correct definition or approach Common subject matters:

The ability to satisfy customers, The identification of favorable marketing

opportunities, The need to create an edge over competitors, The capacity to make profits to enable a viable

future for the organization, The use of resources to maximize a business’

market position, The aim to increase market share mainly in

target markets

Core Concepts of Marketing

Needs, wants, and demands

Productsand services

Value, satisfaction, and quality

Exchange, transactions,

and relationships

Markets

Core Concepts of Marketing (cont.)

Needs, Wants, Demands Needs : Basic human requirements Wants : Needs directed to specific objects Demands : Wants for specific products

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ExperiencesExperiences PersonsPersons PlacesPlaces

OrganizationsOrganizations IdeasIdeasInformationInformation

Core Concepts of Marketing (cont.)

ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Don’t Result in the Ownership of Anything

Discussion Question

Consider Starbucks:

What do they market?

Goods? Services?

or?

Core Concepts of Marketing (cont.)

Total Quality Management Involves Improving the Quality

of Products, Services, and Marketing Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is

“Customer Satisfaction”

Value Gained From Owning a Product and Costs of Obtaining the Product is

“Customer Value”

Core Concepts of Marketing (cont.)

Exchange and Transactions Exchange : Obtaining a desired product from someone by

offering something in return Conditions for exchange to exist: There are at least 2 parties Each party has something that might be of value to the other

party Each party is capable of communication and delivery Each party is free to accept or reject the exchange offer Each party believes it is apropriate or desirable to deal with the

other party Transaction : Trade of values between two or more parties

ExchangesExchanges TransactionsTransactions

Relationships Relationships Building a Marketing

Network Consisting ofThe Company and All

Its SupportingStakeholders

Core Concepts of Marketing (cont.)

Core Concepts of Marketing (cont.)

Relationships and Networks Relationship Marketing: to build long-term relations

with its customers, suppliers and distributors Network : Entity consisting of the company itself and

its supporting key groups

Core Concepts of Marketing (cont.)

Markets Market : All potential customers sharing a particular

need or want who might be willing and able to engage in exchange to satisfy that need or want

Marketers and Prospects Marketer : Someone seeking one or more prospects

who might engage in an exchange of values. Prospect : Someone is as potentially willing and able

to engage in an exchange of values

Core Concepts of Marketing (cont.)

People Who Exhibit Need

Resources to Exchange

Willingness to Exchange

Potential Buyers

Market –

Buyers who share a

particular need or want that can

be satisfied exchange or relationships.

Actual Buyers

A Simple Marketing System

Industry(a collection

of sellers)

Market(a collection

of buyers)

Goods/services

Money

Communication

Information

Marketing defined as...

Process by which individuals and groups obtain what they need and

want through creating and exchanging products and value

with others.

Simply put: Marketing ğ the delivery of customer satisfaction at a profit.

More Definitions of Marketing A social and managerial process by which individuals and

groups obtain what they need and want through creating, offering and exchanging products and services of value with others.

The management process responsible for identifying, anticipating and satisfying customer requirements profitably.

Marketing consists of individual and organizational activities that facilitate and enhance satisfying exchange relationships in a dynamic environment through the creation, servicing, distribution, promotion and pricing of goods, services and ideas

More Definitions of Marketing (cont.)

From the societal perspective; some marketers describe marketing as the creation and delivery of a standart of living.

From the managerial perspective; marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of goods and services to create exchanges that satisfy individual and organizational goals.

More Definitions of Marketing (cont.)

Marketing management ğ the art and science of choosing target markets and building profitable relationships with them. Getting, keeping, and growing customers through

creating, delivering, and communicating superior customer value

Marketing management can be defined in broader terms as “demand management”; Marketers aim to influence the level, timing and

composition of demand to meet organizational goals.

Marketing Management as Demand Management

Marketing management is concerned not only with finding and increasing

demand, but also with changing or even reducing it :

Demarketing’s aim is to reduce the number of customers or to shift their demand temporarily or permanently

(e.g. move traffic away from a popular tourist attraction during peak demand times)

Marketing Management

Marketing management is theart and science

of choosing target markets and getting, keeping, and growing

customers throughcreating, delivering, and communicating

superior customer value.

Marketing Management Tasks

Developing marketing strategies

Capturing marketing insights

Connecting with customers

Building strong brands

Shaping market offerings

Delivering value

Communicating value

Creating long-term growth

Evolution of Marketing Thought

Production Era (1850s-1920s) Industrial revolution; mass production Few products and little competition

Sales Era (1920s-1950s) The focus was on personal selling and advertising Sales seen as the major means for increasing profits

Mktg Era (1950s-present) Customer orientation replaced the “hard sell” of the

sales-led era Determination of the needs and wants of customers

before introducing products or services

Evolution of Marketing Thought

Relationship Marketing Era: 1990s- Marketing era has recently shifted from being

“transaction-based” ğ to focusing on “relationships”

The argument ğ traditional marketing practices focused on attracting new customers rather than retaining existing ones.

It is equally important to hang on to such new customers so that they become repeat buyers and long term loyal customers

“customer relationship management”!

Evolution of Marketing Thought:Customer Relationship Management

Customer relationship management ğ is seen as the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Marketers have began to devote their attention: to winning new customers (transaction mktg) to building up on-going relationships to maintain their

loyalty and custom (relationship mktg) Attracting, retaining, and growing customers Relationship building blocks ğ customer value and

customer satisfaction Customer retention and customer loyalty

New Era in Marketing...The Millenium...

..from Relationship Marketing to... Network marketing E-marketing Community marketing Buzz marketing Digital marketing Mobile marketing ... ... ...

Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that offer the most quality, performance,

or innovative features

Consumers will buy products only ifthe company aggressively

promotes/sells these products

Focuses on needs/ wants of target markets & delivering value

better than competitors

Company Orientations Towards the Marketplace

Production Concept

Consumers will favor those products that are widely available and low in cost.

Managers concentrate on achieving high production efficiency and wide distribution.

The assumption is valid at least in 2 situations : The demand for a product exceeds supply (suppliers will

concentrate on finding ways to increase production) The product’s cost is high and has to be decreased to

expand the market.

Product Concept

Consumers will favor those products that offer the most quality, performance or innovative features.

Managers in product-oriented organizations concentrate on making superior products and improving them over time.

The assumption ğ the customers will admire well-made products and can evaluate product quality and performance

This concept may lead to marketing myopia

Selling Concept

Agressive selling and promotion Assumptions are;

Consumers must be convinced of buying company products

Company is powerful in generating effective selling and promotion to stimulate more buying

This concept is mostly used by firms which have overcapacity.

The aim is “to sell what they make rather than make what the market wants.”

Short-term profits are more important and customer dissatisfaction may occur

Marketing Concept

Key to achieving organizational goals consists of being more effective than competitors in creating, delivering and communicating customer value to target markets.

The marketing concept has 4 important components :

1. Target market2. Customer needs3. Integrated marketing4. Profitability through customer satisfaction

MarketIntegratedmarketing

Profits throughcustomer

satisfactionCustomer

needs

(b) The marketing concept

FactoryExistingproducts

Selling andpromotion

Profits throughsales volume

Startingpoint Focus Means Ends

(a) The selling concept

Marketing and Sales Concepts Contrasted

Marketing Concept (cont.)

Target market ğ homogenous group of customers to whom the company wishes to appeal

Customer needs Consumers may not be fully conscious of their needs It may not be easy to articulate these needs They may use words that require some interpretation Customer-oriented thinking ğ to define customer

needs from the customer’s point of view Sales revenue ğ New customers + Repeat customers “Customer Retention” vs. “Customer Attraction” Customer satisfaction is a function of the product

perceived performance and buyer’s expectations

Marketing Concept (cont.)

Integrated Marketing1. Various marketing functions must work

together for customer satisfaction (coordination of 4Ps; marketing mix elements)

Marketing Mix ğ controllable variables the company puts together to satisfy its target market(s).

Product: Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns

Price: List price, discounts, allowances, payment period, credit terms

Promotion: Sales promotion, advertising, sales force, public relations, direct marketing

Place: Channels, coverage, assortments, locations, inventory, transport

Marketing Concept : The 4 Ps

Marketing Concept : The The 44 Ps Ps ğğ The 4 Cs The 4 Cs

MarketingMix

Product

Price Promotion

Place

CustomerSolution

CustomerCost

Communication

Conven-ience

Marketing Concept (cont.)

Integrated Marketing (cont.)2. Marketing must be well coordinated with

other departments in the company;all departments have to work together to satisfy customers’ needs and wants

Profitability through customer satisfaction

To achieve profits as a result of creating superior customer value

Selling – Marketing...

“There will always be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be

needed is to make the product or service available.”

Peter Drucker

Customers

Front-line people

Middle Management

TopManagement

Marketing Concept (cont.) Traditional Organization Chart

Marketing Concept (cont.) Customer-Oriented Organization Chart

Customers

Front-line people

Middle management

Topmanage-

ment

Customers Cus

tom

ers

Societal Marketing Concept

Company’s negative effects on society Conflict between consumer wants and long-

term social welfare Marketing managers should be concerned

with social responsibility The societal marketing concept ğ

Company’s task is to determine needs and wants of target markets & to satisfy them more effectively and efficiently than competitors, in a way that preserves or enhances the consumer’s and society’s well-being

Societal Marketing Concept

Societal Marketing

Concept

Company(Profits)

Consumers(Want Satisfaction)

Society(Human Welfare)