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MAANZ InternationalMarketing in Black and White

Introduction to MarketingDr Brian Monger

Copyright February 2013. This Power Point program and any associated documents remain the intellectual property and the copyright of the author and MAANZ International. These notes may be used only for personal study

associated with in the above referenced course and not in any education or training program. Persons and/or corporations wishing to use these notes for any other purpose should contact MAANZ (www.marketing.org.au)

for written permission.

Marketing In Black and White 1

MAANZ International

• MAANZ International, is an internet based professional and educational institute which

has operated for over 25 years.

• MAANZ International offers Professional Memberships;

• Marketing Courses (Formal and Short)• And Marketing Publications

• www.marketing.org.au


Dr. Brian Monger

• Brian Monger is the CEO of MAANZ International and a Professional marketer and consultant with over 40 years

experience.

• This presentation is based on slides produced to support the Marketing Textbook, Marketing in Black and White,

published by Pearsons



Introduction

• The purpose of this presentation is to illustrate the pervasiveness and diversity of marketing activities in the world, to demonstrate the

significance of these activities in your life and work, and to encourage you to read thought‐

fully and inquisitively. • Marketing is a fundamental human activity; it

plays a significant role in society. • Effective management of marketing activities is

essential to the success of any organisation.


Success•Success comes from a combination of luck and good

management. •Good luck alone cannot be relied on.

•Successful organisations manage (scarce) resources to achieve the best results (return on our investments of money, skills, time

etc.)

•Marketing is an effective way of applying resources where they will have the best return on investment.


Introduction

• The essence of marketing is exchange ‐ trading value for value ‐ for the purpose of satisfying

human wants.

• Exchange is a fundamental human activity; it develops whenever and wherever people exist.

• Exchange activities are one of the major driving forces in the economic development of

societies.


The Concept of a ‘Business’

• We can define a business as an organised or managed activity aimed at exchanging value

with its market(s) •

• The business (eg supplier, seller, originator, etc) has a value proposition or product (eg goods, an idea, place, program, services, technology, etc) and it wants to get something back for it (sell it) for payment (eg money, barter, goodwill, more business, etc) from a buyer (the market ‐ buyer,

customer and consumer).

A Business Model

Processes andActivities

Product (Goodsand Services)

Portfolio

FinancialViability

Supplier andFacilitatorNetwork

Resources andCapabilities

CustomerInteraction

BusinessModel

Figure 1.1



Basic assumptions and the approach to business in this book

•It doesn’t matter what type of organisation it is or what sort of market the business operates in, this

book is based on the following assumptions:•Most organisations want to continue to be in

business. They want customers to come back. It is not just about short‐term objectives.

•If you want to make a profit, you need first to create customers.

FIGURE 1.2 The key business development questions facing an organisation

Where will theorganisation

compete best?(The market)

How will theorganisation

succeed?Mangement

Strategy and tactics

Whatcompetencies and

resources areneeded?

What is ourValue Offer?

What do wewant?

OrganisationalVision Goals and

Objectives

Where are wenow?

Marketing Audit

What are ourcompetencies and

competitiveadvantages?

?

WhatEnvironmental

factors willplay a role?

Macro EnvironmentCompetition

SuppliersIntermediaries



The Key Components of any Organisation’s Business

• 1. A market: The people or organisations who will buy, rent or hire your product. Without a market (the

source of your payment), you have no basis for exchange.

• 2. A value proposition/product (goods and services, anything of value to offer): What you believe the

market will want and will pay for.• 3. Operations: How you produce and/or offer your

product for exchange.• 4. Management and organisation: How you manage your resources and activities in relation to producing your product. This includes management of the above

operations as well as financial management.


Generally when referring to ‘marketing’, people use the term in any of the following three ways:

• 1. To describe some part of a firm’s internal organisation or a job title, such as the ‘marketing department’ or ‘marketing director’.

• 2. To describe certain functions within an organisation, such as advertising, market research, merchandising, sales or product

management. These functions can conveniently be described by the collective term ‘marketing’ to distinguish them from other activities coming under the headings of ‘production’, ‘finance’ and the other

subdivisions of an organisation.• 3. To indicate a particular approach to business or a management

attitude in relation to customers and their needs. This ‘business philosophy’ has become known as the marketing concept


The Marketing Concept

• The marketing concept puts customers at the centre of the company's activities.

• The organisation is then concerned with satisfying customers' needs


Marketing

• 'What the customer thinks he/she is buying, what he/she considers value, is decisive ‐ it determines what a business is, what it produces and whether it will prosper.'

• The marketing approach is of value not only in commercial situations but in any

'transaction' (exchange of values between two parties), including 'social marketing'.


Marketing Defined

• 1. Marketing is the business philosophy that centres on the needs of the buyer.

• 2. Marketing is the management process of identifying and satisfying customer needs,

(while also achieving the objectives of the firm).

• 3. Marketing is the way in which an organisation matches its own needs and resources with the wants of its customers.


Marketing Defined

• 4. The purpose of marketing is to create and retain a customer by understanding that

customers needs, profitably.

• 5. Marketing is the process of getting the right product (or value offer) to the right consumer at

the right price at the right time.

• 6. Marketing is the process of exchange to satisfy the needs of producer and consumer.


The Marketing ConceptPeter Drucker, says:

• It is the customer who determines what a business is.

• It is the customer alone whose willingness to pay for a good or service converts economic resources into wealth, things into goods.

• What the business thinks it produces is not of first importance ‐ especially not to the future

of the business and to its success...


The Marketing Concept•Because its purpose is to create a customer, the business enterprise has two ‐ and only these two ‐ basic functions: marketing and innovation.

•Marketing and innovation produce results; all the rest are 'costs'.


Marketing is Not a New Concept.

• There is nothing new in the idea that the entire activity of a business should be devoted to serving its customers’ interests. Indeed, it is suggested that marketing and trading are the world’s oldest social

activities.

• The 18th‐century economist Adam Smith (1891) wrote: ‘Consumption is the sole end and purpose of all production; and the interest of the

producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer…..’


MAANZ International says:

•The marketing concept is a philosophy. It makes the customer, and the satisfaction of their needs, the focal point of all business activities.

•Marketing is a philosophy and a process involving all the activities designed to generate and facilitate any exchange intended to satisfy human needs and wants.


MAANZ International says:

•Marketing is essentially about effectively managing the resources of an organisation so that it meets the (changing) needs of the target market (customer) on whom the organisation depends, in a way that best satisfies the objectives of that organisation. •(www.marketing.org.au.marketing glossary)


Customers and Their Behaviour

• Since the customer is the focal point of all business activity, we must be clear about

how customers behave.•

• Because marketing is concerned with satisfying people's needs, we must

understand what those needs are and the ways in which people go about getting them

satisfied.


The Four Basic Questions of Marketing

• 1. What is the situation we are dealing with? ‐• 2. Who are they? Marketing recognises that not

everyone is going to be a customer.• 3. What do they want? What value do they

seek? What are the key preferences and expectations of customers and potential

customers?• 4. What do we want? (the marketing

organisation/supplier/seller)


Exchange

•Marketing means more than simply advertising or selling a product; it involves developing and

managing a product that will satisfy certain needs. •Marketing focuses on making the product

available at the right place, at the right time, and at a price that is acceptable to customers.

Figure 1.3 The basic marketing exchange

Seller Buyer

Something of Value

Something of Value



The Competitive Situation•Marketing is not carried out in a vacuum but usually in a highly competitive situation.


The Five Common Business Styles

• For the first style, some organisations focus on a product or operations‐centred approach.

• They try to develop a technically superior value proposition (product).

• This approach is used by many technology/engineer‐driven organisations.

• In the second style, organisations become focused on maintaining their production capacity. A production‐centred approach is about getting business at any

price in order to maintain production.


The Five Common Business Styles

• In the third style, known as the promotional or selling approach, businesses decide that customers can be persuaded to buy their

products. Persuasive communication is a useful aspect of marketing, but it is not enough on its

own to guarantee success.

• These three styles or approaches are known as ‘push’ approaches ‐ that is, they put the

organisation’s perspective ahead of that of the market.


The ‘Low Price’ Focus

• The fourth style is the most persistent of all non‐marketing approaches. This is the ‘low price is

the answer to all problems’ approach. • Price is an important factor in marketing; but it is only one factor and it is rarely well understood outside of the value‐based marketing approach

that this book takes.

• Not everyone wants the product with the lowest price ‐ but everyone wants the best value.


Variations

• The product concept ‐ consumers favour products that offer the most quality,

performance and features.• The production concept ‐ buyers favour products

that are available and cheap. The focus is on improving

• production and distribution efficiency.• The selling concept ‐ consumers will not buy enough of the organisation’s products unless the organisation undertakes a large‐scale selling and

promotion effort.


A Wider View of Marketing

• The marketing concept is applicable in non‐commercial situations, where profit ‐ at least in the strict sense ‐ is not one of the key objectives.

•• The term ‘social marketing’ is often used in this

context.

• Government departments, the police, trade unions and trade associations, environmental groups and churches can all be said to have ‘customers’ and to be offering ‘products’.


The Marketing Plan

• There are four primary questions to be asked when developing a marketing plan in connection with a marketing‐

focused approach to business.

• 1. What situation are we dealing with? Everything relates differently in different situations or contexts. Are we talking

about an entertainment or a machine business tool?• 2. Who are our customers? Marketing recognises that not everyone is going to be a customer. The organisation needs to determine who the best markets (target segments) are.

Where should investments and efforts be focused to achieve the best results?


Four Primary Questions• 3. What do they want? What value do they seek? What are the key preferences and expectations of

customers and potential customers ?• 4. What do we want (the marketing

organisation/supplier/seller) ? Determining their goals and objectives enables the organisation to better understand which markets to target in an

effort to utilise its talents and resources to the best effect.

• These questions are the bases for developing an effective business development strategy that will

enable the organisation to fulfil the customer’s needs better than competitors can.


Understanding the Market

• Apart from our four basic questions, a marketing plan should also answer these additional questions:

• Is there a demand for the organisation’s value proposition (product ‐ goods and services) ?

• Are there competitors who provide the same or similar propositions ?

• Can we effectively compete in value terms (price, quality and delivery) ?

• Will this market meet our goals and objectives? Will it give us the projected profit and meet our

organisational needs ?


The ‘Marketing Mix’ Approach•The marketing mix describes the key elements of marketing in a marketing strategy for a target market. The elements of a marketing mix are the variables which have to be carefully designed and managed to meet the needs of the defined

target segment.

•The 4 Ps, or marketing mix, is the best‐known model or approach to understanding the elements of marketing and is

particularly useful in developing marketing plans. All marketing plans should consider the following marketing mix

elements (variables).

Product Price/Payment

CommunicateValue

Promotion

Environment Influences

Environment Influences

InternalConstraints

ExternalConstraints

TargetSegment

ExternalConstraints

InternalConstraints

TheOrganisation

Delivering ValuePlace(ment)

TheMarketing

Mix



The Product Variable.

• A product can be anything ‐ a good, a service, an idea a person or a place.

• The product variable deals with consumers' product wants and designing a product with

the desired characteristics. • It also involves the creation or alteration of packages and brand names and may include

decisions about guarantees and repair services.


A Value Offer Or Proposition

• What the organisation offers to its customers in response to its concept of what they value

and will invest in possessing.

• We can define the value proposition (product offer) as a bundle of tangible and intangible attributes that could potentially satisfy customers’ needs, wants or desired

outcomes.


A Value Acquisition

• What the customer actually gets when they buy (acquire) the product. It includes everything that the customer will experience after the purchase

has been made.

• Organisations often forget that aspects of the offer that have nothing to do with them, have

not been designed by them and are not controllable by them, form part of what a

customer gets.


The Distribution Variable. (Place or Placement)

•To satisfy consumers, products must be available at the right time in a convenient

location, a useful form and at a price which is appropriate.


The Promotion Variable•The promotion variable relates to activities used to inform one or more groups of people about an organisation and its products or programs. The promotional mix includes:

•advertising•sales promotion (including direct marketing)•personal selling•marketing public relations (MPR/publicity).


The Price Variable

• The price variable relates to activities associated with establishing pricing and payment policies and determining product or program prices.

• Price is only one component of the marketing mix.

• Usually, it is poorly conceived and used ‐ which is why a newer marketing approach, the marketing exchange and value concept discussed in the next section, is useful.


The Value Planning Model

• Another marketing variables approach is the VPM

• Instead of the 4 P’s it focuses on:

• Understanding Value• Configuring Value

• Communication Value• Delivering Value

Figure 1.6 The Value Exchange Model

Supplier/Producer

ValueOffer/Proposition

(Something of Value)Product - Goods and Services

Buyer/Consumer

Payment/Investment/Sacrifice(Something of Value)

Money/BarterGoodwill

PROCESS OF EXCHANGE

Intermediaries/FacilitatorsOther Inputs

Other Inputs

UsePartner(s)

ValueAcquisition

Other Inputs



The Value Exchange Approach toMarketing

• In essence, a market transaction is about exchanging value. The essential meaning of the marketing

concept is trying to get value (payment) from the market through offering value to it.

• Marketing is concerned with adding maximum value to a value offer to make it attractive and desirable to

buyers while at the same time achieving for the organisation the best returns on its investment (iemost commonly, but not exclusively, a profit).

• The marketer’s challenge is to create attractive exchange value(s).

The Value Chain

Inbound LogisticsGoods and Services Out Bound LogisticsOperations

(production)

Support Structure(Human Resource Management;

Technology;

SUPPLY

Marketing

DistributionServices Customers

DEMAND

ADDING VALUE


Situational/Environmental Factors

OrganisationalGoals andObjectives

Value Sought

OrganisationalResources

InvestmentNeeded

OrganisationalStrategy

UnderstandingValue

Creating andConfiguring Value

CommunicatingValue

Delivering Value

TargetSegment

The Value PlanningModel

Value Planning Model


The two sides of the Value Exchange Model

Benefits andOutcomesReceived

Value Sought

Investments

DesiredBenefits andOutcomes

Investments

Value Sought

Value Exchange

CUSTOMER SUPPLIER



Value and Competitors• In the modern marketplace, customers are faced with a wide choice of products that potentially offer them value.

It is important that an organisation understands the influence that competitors have on customers.

• Value is comparison‐based ‐ that is, it is perceived in terms of competitive offerings. For a competitive

advantage to eventuate, an organisation must be seen to provide better value than its competitors. This requires a good understanding of the competitors’ strengths and

weaknesses, their capabilities and, most importantly, the customer’s value perception of their offerings.


Adding Value• The value‐adding chain is essentially a series of individual

and organisational activities that add value throughout the process of delivering value to an end user (eg from

raw material such as sugar cane to a Mars bar).

• The ‘primary activities’ include: inbound logistics, production, outbound logistics, sales and marketing, and

maintenance. The ‘support activities’ include: administrative infrastructure management, human

resources management, R&D and procurement. The costs and value drivers are identified for each value activity.

RawMaterials

RawMaterials

Processor

FP

M

Processor

FP

M

Supplier

FP

M

Intermediary(e.g. aRetailer

Supplier

Supplier

Supplier

Buyer

User

Processor, SupplierManufacturer, Intermediary

Internal VAS (Value AddingService) (e.g. Production; Marketing; Finance)

External VAS (ValueAdding Service/Input)

IntermediaryFacilitator

FIGURE 1.7 A value‐adding systemMarketing In Black and White 51

52

END

Marketing In Black and White

• These slides were originally developed to support the Marketing in Black and White textbook Written by Brian

Monger and published by Pearsons.

• For more information about MAANZ International and articles about Marketing, visit:

• www.marketing.org.au• http://smartamarketing.wordpress.com• http://smartamarketing2.wordpress.com

• . http://www.linkedin.com/groups/MAANZ‐SmartaMarketing‐Group‐2650856/about

• Link to this site ‐ ‐ http://www.slideshare.net/bmonger for further presentations


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