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LECTURE 1


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About the Course


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Course Objectives

Introduce YOU to the concept of Marketing

Role of Marketing in the organization and Society

Understand its objective in the overall management

process

Topics include market segmentation, product development, promotion,

distribution, and pricing.


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Assessment

MID-TERM 1 15 %

MID-TERM 2 15 %

FINAL 25 %

CLASS TUTORIALS / DISCUSSIONS 15 %ASSIGNMENTS / QUIZES 10 %

FINAL REPORT 20 %

TOTAL 100 %


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What Feedback Will You Receive?

Feedback in class on presentations

Responses to questions raised in and after lectures

Responses on email to questions raised there or throughother channels: usually answers will be shared with the whole

class

Informal feedback on class work and presentations will be

given throughout the course


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Giving Me Feedback

Informally in class

End of course questionnaires

Via e-mail


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Method of Communication

General queries (I may reproduce your questions

through other channels here and answer them here).

Lecture, seminar & assessment material

Web links

Do notuse non-university e-mails to e-mail me- I

may not reply.


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Communication Details

fb.com/groups/IOBMPOM14

Principles of Marketing - Shaheer Mehkari

[email protected]


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Important Notice

Be punctual

Turn your phone to silent!

Prepare material beforehand

Join in class discussions Listenwhen somebody else is

speaking

Ask questions

Work hard Support each other

READ THE BOOK


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What is Marketing?

The Process by which companies create value for customersand build strong customer relationships in order to capturevalue from customers in return

- Kotler & Armstrong


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Marketing is

managing profitablecustomer

relationships.

What is Marketing?


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2-fold objectives Attract new customers by providing superior value

Retain current customers by delivering satisfaction

What is Marketing?

Attract new

CustomersRetain Current

Customers


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What is Marketing

Marketing is the activity, set of institutions, and processes

for creating, communicating, delivering, and exchanging

offerings that have value for customers, clients, partners,and society at large.

AMA New Definition of Marketing, 2007


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What is Marketing

Marketingconsists of individual and organizational activities

that facilitate and expedite satisfying exchange relationships

in a dynamic environment through the creation, distribution,

promotion and pricing of goods, services and ideas.

Chartered Institute of Marketing


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What Marketing is not

A sophisticated form of selling done by graduates

Advertising, sales promotion, selling, PR, direct mail,

market research

What the marketing department does

A process which increases costs

An irrelevance to what I do


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M RKETING

PROCESS


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The Marketing Process

THIS PROCESS SHOWS MARKETING IN A NUTSHELL


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UNDERSTAND THE

MARKET PLACE AND

CUSTOMER NEEDS

AND WANTS

The Marketing ProcessStep 1

NEEDS, WANTS AND DEMANDS

Need: State of felt deprivation, part of humannature

I am hungry

Wants: The form human needs take asshaped by culture and individual personality

I want burger

Demands:Human wants that are backed by

culture and individual personality

KFC Zinger Burger or McDonalds McChicken

Important Terms: Need, Wants, Demand


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UNDERSTAND THE

MARKET PLACE AND

CUSTOMER NEEDS

AND WANTS


MARKET OFFERING

Some combination of products, services,

information, or experiences offered to amarket to satisfy a need or want

Important Terms: Marketing Myopia

Products Services Experiences


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CUSTOMERS BUY

EXPERIENCESAND BENEFITS..


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UNDERSTAND THE

MARKET PLACE AND

CUSTOMER NEEDS

AND WANTS


MARKETPLACE / MARKET

The set of actual and potential buyers of aproduct or service

A market is an aggregate of people who, asindividuals and/or organizations, have theneed, ability, willingness, and authority topurchase products. (Dibb, Simkin, Pride andFerrell, 1997)

The buyers share a need or want that can be satisfiedthrough exchange relationships.


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CONSUMER RESEARCH

PRODUCT DEVELOPMENTCOMMUNICATION

DISTRIBUTIONPRICING

SERVICE

CORE MARKETING ACTIVITIES


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UNDERSTAND THE

MARKET PLACE AND

CUSTOMER NEEDS

AND WANTS


MARKETPLACE / MARKET

The set of actual and potential buyers of aproduct or service

A market is an aggregate of people who, asindividuals and/or organizations, have theneed, ability, willingness, and authority topurchase products. (Dibb, Simkin, Pride andFerrell, 1997)

The buyers share a need or want that can be satisfiedthrough exchange relationships.


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DESIGN A CUSTOMER-DRIVEN MARKETING

STRATEGY


MARKETING MANAGEMENT

Marketing ManagementThe art and science of choosing target markets

and building profitable relationships with themBasically application of principles of marketing

A good marketing strategy should seek to answerWhat customer will we serve? (Target market)

How to serve them? (Value proposition)

Important Terms: Marketing Management


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STRATEGY


WHAT CUSTOMERS TO SERVE?

HOW CAN WE SERVE THEM BEST?

Important Terms: Target Market, Value Proposition, Market Segmentation,Target Marketing, Customer Management, Demand Management


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SELECTING CUSTOMERS TO SERVE

SEGMENTATION

Example: SUV, SEDAN, HATCHBACK, COUPE etc.

TARGET

Example: Selecting Sedan Category

Positioning Example: BMW 7 Series (Luxury Sedan)

Value Proposition

Example: BMW (The Ultimate Driving Machine)


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STRATEGY


MARKETING MANAGEMENT ORIENTATIONS

.

Marketing Production Product

SellingSocietal

Marketing


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PRODUCTION - ORIENTED FIRM

.

ProductionCapabilities

ManufactureProducts

Customer

Consumers buy products that are inexpensive and widely available

Focus is on improving production and distribution

Used when: Demand>Supply or Production cost too high or no competitionFord T-bird You can have any color as long as its black

Examples: Utilities, Food basics

Disadv: Marketing Myopia


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SELLING - ORIENTED FIRM

.

ProductionCapabilities

ManufactureProducts

AggressiveSales Effort

Aim atMultiple

Customers

Consumers will not buy enough unless the organization undertakes an

aggressive selling and promotion strategy

Sell what they make rather than make what market wantsUseful for unique products or where customer awareness is low

Example: Insurance

Disadv:short term customer relationship


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MARKETING- ORIENTED FIRM

.

Actual &potential

customer wantsand needs

Potentialmarket

opportunity

Productioncapabilities /

MarketingProgram

Marketproducts &

servicesCustomers

Achieving organizational goals depends on knowing the needs and wants

of target markets and delivering the desired satisfaction better than

competitors do

From make and sell to sense and respond. Finding right customers for the product toRight product for your customers

Customer-driven approach, begins with customers not product or factory

Example: Unilever Research

Strive to understand not only existing but latent needs (IPAD, IPOD)

Feedback


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SOCIALLY - ORIENTED FIRM

.

Addresses the conflict between consumers short term wants and long-runwelfare

Example: Unilever, Johnson & Johnson and all major companies incorporate

Corporate social responsibility in their mission statements now.

Enlightened marketing that holds

that a company should make

good marketing decisions by

considering, consumers wants,the companys requirements,

consumers long-run interests,

and societyslong-run interests


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CONSTRUCT A

MARKETING PROGRAM

THAT DELIVERS

SUPERIOR VALUE


PUTTING STRATEGY INTO ACTION

The tools that are used to put this strategy into

action is called the Marketing Mix.

Important Terms: Marketing Mix, Product, Price, Place, Promotion


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


BUILDING CUSTOMER RELATIONSHIPS

Customers form expectations about the valueand satisfaction that the market offering willdeliver.

Customer Relationship Management (CRM)

Overall process of building and maintainingprofitable customer relationship by delivering

superior customer value and satisfaction

FOCUS ON ACQUIRING, KEEPING AND GROWING CUSTOMERS


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


Customer Value /Customer Perceived value

Difference between all the benefits and all the costsof a marketing offer relative to those of acompeting offer.

Why should a customer buy IPhone and not Sony?


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VALUE

Its unwise to pay too much, but its unwise to pay toolittle. When you pay too much you lose a little money,that is all. When you pay too little you sometimes loseeverything, because the thing you bought was incapableof doing the thing you bought it to do. The common lawof business balance prohibits paying a little and getting alot. It cant be done. If you deal with the lowest bidder,its well to add something for the risk you run. And if youdo that you will have enough to pay for something

better.John Ruskin (1819-1900)

(Advertisement, Waterways World, August 2002)


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


Customer Value/Customer Perceived value

Difference between all the benefits and all the costs

of a marketing offer relative to those of acompeting offer

Why should a customer buy IPhone and not Sony?


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


Customer satisfaction

The extent to which a products perceivedperformance matches a buyers expectations


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PERCEIVED PERFORMANCE < BUYER EXPECTATION = DISSATISFACTION

PERCEIVED PERFORMANCE = BUYER EXPECTATION = SATISFACTION

PERCEIVED PERFORMANCE > BUYER EXPECTATION = DELIGHT

REMEMBER: NOTHING AT THE COST OF PROFITS!


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


CUSTOMER RELATIONSHIP TOOLS

How to establish loyalty and lasting relationship?

Loyalty programs (Supermarkets)Frequent Flyer programs (Airlines)Membership programs (Clothingmanufacturers etc)Reward programs (Hotels, Banks)

OUT OF SIGHT - OUT OF MIND!


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BUILD PROFITABLE

RELATIONSHIPS AND

CREATE CUSTOMER

DELIGHT


PARTNER RELATIONSHIP MANAGEMENT

Work Closely with Partners

Internal PartnersOutside the companyChannel Marketing(distributors, suppliers, retailers etc)

EVERYONE SHOULD BE A PART-TIME MARKETER


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CAPTURE VALUE FROM

CUSTOMERS TO CREATEPROFITS AND CUSTOMER

QUALITY


CAPTURING VALUE FROM CUSTOMERS

The outcome of creating customer value:

Customer Loyalty and RetentionShare of market/share of customerCustomer Equity

.

Good CRM Delight LoyaltyGood Wordof Mouth

MoreCustomers

More Profit

Customer Loyalty and Retention


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The value of the entire stream of

purchases that the customerwould make over a lifetime ofpatronage.

CUSTOMER LIFE TIME VALUE

Losing A Customer

Quantifiable Loss Of More ThanA Single Sale


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CAPTURE VALUE FROM

CUSTOMERS TO CREATEPROFITS AND CUSTOMER

QUALITY


CAPTURING VALUE FROM CUSTOMERS

Growing share of Customer:

The portion of customers purchasing that a

company gets in its product categories.

Banksshare of wallet

Airlinesshare of travel

.

Add varietyCrosssell and Upsell

Example: Amazon.com, Virgin Group, Insurance companies


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The Marketing ProcessStep 5BUILDING RIGHT RELATIONSHIP WITH RIGHT CUSTOMERS

.

Butterflies

Good fit between

companys offering and

customers needs; high

profit potential

True Friends

Good fit between companys

offerings and customers

needs and customer needs;

highest profit potential

Strangers

Little fit between


customers needs;

lowest profit potential

Barnacles

Limited fit between


customers needs; low

profit potential

High profitability

Low profitability

Short term

customers

Long term

customers

Potential

Profitability

Projected Loyalty


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New Marketing Landscape

Changing business environmentnew challenges formarketing.

Major trends

New Digital Age More connected and informed customers, suppliers,

distributors.

New ways of managing customers

Interneta turnaround Online focus groups, social networking websites (Orkut,

Facebook), Blogs, online shops, Teleconferencing etc.

.


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New Marketing Landscape

Rapid Globalization Global customers

Global competitors

International partners/supply chain

Made in China

Ethics and Social Responsibility Corporate Social Responsibility

Automobile companies, Oil companies, Unilever, Mobilink Foundation

Not-for-Profit Marketing Population control advertising (Greenstar), etc.

.


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Join Group

Read Course Outline

Read Assigned Case Study

Check your name for

groups


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