lecture 1 marketing concepts

8/4/2019 Lecture 1 Marketing Concepts

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Marketing Management

Irina P.

Shirochenskaya,PhD (Marketing)



Marketing Management:course outline

The course is specially tailored toenlarge knowledge in the field of

strategic marketing, and to give aclear picture of new trends in

marketing as well as to give more

practical skills in the field ofmarketing.



The course structure

Duration: 17/6 weeks (February, 2 – May, 25)

Weeks 1 - 7 : strategic planning issues,segmentation, positioning

Week 8 : mid-term test – March, 23

Weeks 9 – 16 : marketing mix strategies

Week 17 : group project presentations



The course structure

3 classes per week, including :

Lecture (theoretical issues)

Seminar (case analysis, questiondiscussion)

Mini-Project presentation (individual orin small groups of 2-4 students),project discussion



Group project presentation

Prepared in small groups of 4-5 students

Choose a company Russian or overseas or

imaginary Develop a strategic plan for its development

Present your plan during an oral 20 minutepresentation

The presentation is assessed both by thetutor (50%) and the students (50%).

Written report (15 pages)



Coursework

Attending at least 75% of the classes

Active participation in all classactivities

Contributing to the topics discussed



Text:

Essential reading : Ph. Kotler Marketing Management –The

Millennium Edition Prentice Hall 2000 Recommended reading:

Phillip Kotler. Marketing Management 12-th edition. – Pearson Int. 2005

Lambin J.-J. Strategic Marketing. McGraw Hill. 2000 Peter Doyle. Marketing Management and Strategy –2

Edition Prentice Hall, 1998 Porter M. Competitive strategy: Techniques for

Analysing Industries and Competitors, Free Press, 1980

Rudelius W. Marketing, 6th edition,, 2001 ”



E-mail :

[email protected]

mailto:[email protected]

mailto:[email protected]



Lecture 1

Introduction to marketingmanagement.

Marketing concepts.



MARKETING: some definitions (1)

Marketing is a societal process bywhich individuals and groups obtain

what they need and want throughcreating, offering, and freelyexchanging products and services of

value with others. Marketing is the art of selling

products.



MARKETING: some definitions (2)

There will always, one can assume, 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 then is to make the product or service available.

Peter Drucker



Types of marketing (1)

1. Marketing as business philosophyand managerial concept

2. Marketing as a set of effective andefficient tools needed for a company’ssuccessful activity in competitiveenvironment

3. Marketing as a vital part of acompany’s managerial system



Strategic Marketing

Operational/TacticalMarketing

Holistic Marketing



Strategic marketing

Strategic marketing – company’s activitiesdirected at achieving business goals bycreating and delivering value to the market.Strategic marketing looks at creating andmaintaining long-term profitability andmaximizing company’s stock value.

The marketing staff must segment themarket, select the appropriate target and

develop the offer’s value positioning. TheSTP formula is the essence of strategic marketing (Ph. Kotler)



Operational/Tactical marketing

Tactical/operational marketing – company’s

activities aimed at getting a certain sales

volume at established markets by usingtactical operations (i.e. directed at product,place, price and promotion)

Developing specific product features, prices,

promotion and distribution – part of tactical marketing (Ph. Kotler)



Make the product Sell the product

Ma

ke

Pro

duc

e

Des

ign

pro

duct

Se

ll

Pri

ce

Adv

ertis

e/Pr

om

ote

Dis

trib

ute

Ser

vice

Traditional physical progress sequence



Provide the

value

Choose the

value

Communicate

the value

Cust

ome

r

seg

men

tatio

n

Ma

rke

t

sel

ect

ion

Value

posi

tion

ing

Pro

duct

dev

elop

men

t

Ser

vic

e

de

vel

op

me

nt

Pricin

g

So

urc

ing

Ma

kin

g

Salesforce Salespromo

tion

Advertis

ing

Strategic marketing Tactical

marketing

Value creation and delivery sequence



Holistic marketing

Company’s activity viewed as a

universal, all-embracing process,

including certain types of marketing: Integrated marketing

Internal marketing

Relationship marketing

Social (oriented) marketing



Marketing management

Marketing (management) is theprocess of planning and executing the

conception, pricing, promotion, anddistribution of ideas, goods, services tocreate exchanges that satisfy

individual and organizational goalsThe American Marketing Association



Market-oriented strategic planning

A managerial process of developing a viable fit between the organization’s

objectives, skills and resources and its changing market opportunities.

The aim of strategic planning is to

shape the company’s business and products so that they yield target profits and growth.



Marketing planning process

In order to understand MM it is vitallyimportant to understand marketing

planning process. It starts from marketing concepts,

marketing audit, through to developingobjectives and marketing strategies.

Implementing the plan is one themost challenging areas in business



Тendencies of modern businessdevelopment

Business globalization

Emergence of multinational and

transnational (Unilever, Coca-cola,Siemens, IKEA, Microsoft, City bank,etc)

Development of Franchising International branding



Current trends of changes in modern

companies (1)

Reengineering: From focusing on functionaldepartments to reorganizing by key processes, eachmanaged by multidiscipline teams.

Outsourcing: From making everything inside thecompany to buying more goods and services fromoutside if they can be obtained cheaper and better. Afew companies are moving toward outsourcingeverything, making them virtual companies owning veryfew assets and, therefore, earning extraordinary rates ofreturn.

E-commerce: From attracting customers to stores andhaving salespeople call on offices to making virtually allproducts available on the Internet. Business-to-businesspurchasing is growing fast on the Internet. Personalselling can increasingly be conducted electronically.

C d f h i d



Current trends of changes in modern

companies (2)

Benchmarking: From relying on self-improvement tostudying "world-class performers" and adopting "bestpractices."

Alliances: From trying to win alone to forming networksof partner firms.

Partner-suppliers. From using many suppliers to usingfewer but more reliable suppliers who work closely in a"partnership" relationship with the company.

Market-centered: From organizing by products toorganizing by market segment.

Global and local: From being local to being both globaland local.

Decentralized: From being managed from the top toencouraging more initiative and "entrepreneurship" atthe local level



Procter & Gamble



Strategic Alliances



Major marketing themes as the millenniumapproaches (1)

Relationship marketing: From focusing ontransactions to building long-term, profitablecustomer relationships. Companies focus on theirmost profitable customers, products, andchannels.

Customer lifetime value: From making a profit oneach sale to making profits by managing customerlifetime value.

Customer share: From a focus on gaining marketshare to a focus on building customer share.Companies build customer share by offering alarger variety of goods to their existing customers.They train their employees in cross-selling and up-

selling.



Relationship marketing

Marketing should be considered in thebroader context of the wider public and society,that is carry out marketing activity in the way

that is socially acceptable, ethically drivenproactively incorporated into the organization’s

vision, mission, culture and day-to-daybusiness activity.

Recognition of corporate social responsibility isan important part of business behaviour and akey marketing issue in today’s world



Major marketing themes as the millenniumapproaches (2)

Target marketing: From selling to everyone to trying to bethe best firm serving well-defined target markets.

Individualization: From selling the same offer in the sameway to everyone in the target market to individualizing and

customizing messages and offerings. Customers will beable to design their own product features on the company'sWeb page.

Customer database: From collecting sales data to building arich data warehouse of information about individual

customers' purchases, preferences, demographics, andprofitability.

Integrated marketing communications. From heavy relianceon one communication tool such as advertising or salesforce to blending several tools to deliver a consistent brand

image to customers at every brand contact.



Major marketing themes as themillennium approaches (3)

Channels as partners: From thinking ofintermediaries as customers to treating them aspartners in delivering value to final customers.

Every employee a marketer: From thinking thatmarketing is done only by marketing, sales, andcustomer support personnel to recognizing thatevery employee must be customer-focused.

Model-based decision making: From makingdecisions on intuition or slim data to basingdecisions on models and facts on how the

marketplace works.



Concepts in marketing

Production concept

Product concept

Selling concept

Market concept

Societal concept



Production concept

Consumers will prefer products thatare widely available and inexpensive

Developing or underdevelopedmarketers

Mass production and low costs

Price sensitive customers



Product concept

Consumers will favour the products thatoffer most quality, performance and

innovative features Constant product improvement

Consumers admire well-made products andappreciate quality

Products with little or no marketing input

“Marketing myopia”



Selling concept

Consumers and businesses if left alone willnot buy enough. The organizations mustundertake the aggressive selling and

promotion effort Overcapacity and unsought goods

To sell what we want rather than make

what the market wants Public identifies marketing as promotion

and selling



Marketing concept

The key to achieving its organizationalgoals consists of a company being

more effective and efficient in creatingcustomer value to its chosen targetmarkets



Marketing vs. selling concept

“ Selling focuses on the seller;marketing on the needs of the buyer.Selling is preoccupied with the

seller’s need to convert his products into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming.”

Theodore Levitt

D t i t f C t



Factory Products

Sellingand

Promotion

ProfitsthroughSales

Promotion

Target

market

Customer

needs

Integrated

marketing

Profitsthrough

Customersatisfaction

Determinants of Customer Delivered Value

The selling concept

The marketing concept



Four pillars of marketing concept

1. Target market

2. Customer needs

3. Integrated marketing4. Profitability



Types of Customer Needs

1. Stated needs (the customer wants an inexpensivecar)

2. Real needs (the customer wants a car whose

operating cost, not its initial price, is low)3. Unstated needs (the customer expects good

service from the dealer)

4. Delight needs (the customer would like the dealerto include a gift of a U.S.road atlas)

5. Secret needs (the customer wants to be seen byfriends as a savvy consumer



Types of marketing based on needs

1. Responsive marketing.

A responsive marketer finds a stated need and fills it.

2. Anticipative marketing

An anticipative marketer looks ahead into what needs customers may have in the near future.

3. Creative marketing A creative marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond.



Integrated Marketing

Integrated marketing takes place on two levels:

1. First, the various marketing functions - salesforce, advertising, customer service, product

management, marketing research - must worktogether.

2. Second, marketing must be embraced by the

other departments; they must also "thinkcustomer." ("Marketing is far too important tobe left only to the marketing department!“ -David Packard of Hewlett-Packard )



Integrated Marketing

External marketing is marketing directed atpeople outside the company.

Internal marketing is the task of hiring,training, and motivating able employeeswho want to serve customers well.

Internal marketing must precede external

marketing. It makes no sense to promiseexcellent service before the company's staffis ready to provide it.



Profitability

The ultimate purpose of the marketing concept is to helporganizations achieve their objectives.

The major objective of private firms is profit;

The major objective of nonprofit and public

organizationst is surviving and attracting enoughfunds to perform useful work.

Private firms should not aim for profits as such but toachieve profits as a consequence of creating

superior customer value.A company makes money by satisfying customer

needs better than its competitors.

Traditional Organization Chart versus Modern



a) Traditional organization chart (b) Modern customer-oriented organization chart

Source: Ph. Kotler “Marketing Management”

Traditional Organization Chart versus ModernCustomer-Oriented Company Organization Chart



In your opinion, how many

companies follow thisconcept?



Unfortunately, notmany!



And still …….

Body ShopProcter & Gamble ,Marriot Hotels,

Wal-Mart,Nordstrom,

Sony,Toyota,Cannon,

IKEA,

Electrolux,Nokia,Lego,

Marks & Spencer,Disney

And some others …



How about Russian

companies?

Are there any?If you know, please share

with us!



Why follow this concept?

Sales decline

Slow growth

Changing buying patterns

Increasing competition

Increasing marketing expenditures



Determine the needs, wants and interests oftarget markets and deliver desiredsatisfaction more effectively and more

efficiently than competitors in a way thatpreserves consumer’s and society’s well-being

Build social and ethical consideration to the

marketing practices Balance between conflicting criteria of

profits, consumer wants and public interest

Societal concept



Social responsibility:definitions

The obligations and accountability to society of individuals and organizations above and beyond their primary functions and interests .

Corporate social responsibility relates to

actions which are above and beyond that required by law. (McWilliams and Siegel,2001)

Social responsibility: definitions



Social responsibility: definitions(2)

Corporate social responsibility is one of business'contributions to achieving sustainabledevelopment. It is about business behavingresponsibly towards society and theenvironment ensuring economic development issustainable.

It is a term describing the way in which businessestake account of the impacts of their operation,processes and products on the economy,society and the environment on a local,regional, national and global level; maximizingbenefits to the business as well as society andthe environment, whilst minimizing any

downsides.

M k ti d i l



Marketing and social

responsibility

Corporate social responsibility (CSR) refers tothe attention of business to:

community involvement

socially responsible products andprocesses

socially responsible employee relation



Egg's Corporate SocialResponsibility Statement

Our core values at Egg are honesty, integrity and respect for people. We respect our

people's individuality and diversity,encouraging them to develop their careers in

a stimulating environment in keeping with our values. Our customers are the reason weexist and we constantly look to offer them the

products and services that put them in control of their money.ww.egg.com



Environmentalist™ - green marketing

Wastage, effluent, emissions of fumes and acid rainhave to be taken seriously by manufacturers. Dueto the high level of industrialization in the modern

world, the environment is under constant threatfrom global warming.

In recent times we have experienced severe weathereffects, such as heavy rain, gales and significantflooding. All of this relates to environmentalism and

as such means that organizations must in the futureconsider their strategy in relation to these issues.



In January 2007 Marks and Spencer announced a £200 million 'eco-plan tomake it carbon neutral in 5 years, as its contribution to the battle againstclimate change. By 2012 MS said it would be carbon neutral, send nowaste to landfill and 'set new standards in ethical trading'.Marks and Spencer will also focus on sourcing its food from the UK andIreland as it looked to reduce air freight costs. Food brought into the UK byplane would be labeled 'flown'.

Marks and Spencer are contributing towards the significant debate aboutlong-term sustainability of business and resources, and aim to cut energyconsumption and use renewables. It suggests that the plan they have inplace would be consistent with taking 100 000 cars off the road each year.Marks and Spencer's actions signal the first in a range of changes that seeorganizations aiming to tackle the enormous challenges of climate changeand waste.

This is a very good example of 'green marketing' particularly as Marks andSpencer confirmed that they will continue to sell great qualify, stylish andinnovative products, but want to increase sales as opposed to costs,making the customer experience as important and valuable but changingbusiness practices to retain profitability.

www.marksandspencer.com

Marks and Spencer go Carbon Neutral



The rise in consumerism

A major element of social responsibility isconsidering the impact of consumerism. Althoughconsumers have had rights, enforceable by law, formany years, they have not really been effectivebecause of the cost of taking legal action.

The consumerist movement is a way of takingagreed action for specific purposes, such asopposing the building of an additional airportterminal at Heathrow in London. Such schemes are

often associated with local initiatives. The consumer movement is a diverse collection of

independent individuals, groups and organizationsseeking to protect the rights of consumers.



Consumerism: what is it?

Consumerism is an organized movementof concerned citizens and government toenhance the rights and powers of buyersin relation to sellers (Kotler, P., 1995) (Strategic Marketing for Non-Profit Organizations, 5th edition, Prentice Hall).

Is a social force designed to protect theconsumer by organizing legal, moral and

economic pressures on business (Cravens, D. and Hills, G. (1970) 'Consumerism: APerspective for Business', Business Horizons, 13, 21- 23).



What is the situation

concerning consumerism in Russia?

What about othercountries?



Thank you for attention

lecture 1 marketing concepts

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