Lect 1,2 & 3

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Introduction to Marketing

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KEY ISSUES

What is marketing?

Do you plan to use marketing in yourcareer?

What are the benefits of a marketingcareer?

What are my marketing career options?

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How MarketingRelates to Your Career

Marketing yourself within your career

Developing a Marketing Orientation

Marketing your work unit

Marketing as a general managementresponsibility

Managing inter-firm alliances

Functional marketing positions

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Benefits of a Marketing Career

Provide service to others

Relate your organization to the world

Enjoy an entrepreneurial job Connect to people

Earn rewards for performance

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The Role of Marketing

the business enterprise has two

and only these twobasic functions:

marketing and innovation

-Peter Drucker,Management (1973), p. 6

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Marketing Career Paths

Advertising

Direct Marketing

Brand Management Public Relations

Sales & SalesManagement

Marketing Models &Systems Analysis

Distribution ChannelManagement

InternationalMarketing

Marketing Research

New ProductPlanning

Retail Management

E-Commerce Business-to-Business

Marketing

Services Marketing

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UNDERSTANDING MARKETING

Process of finding out customer needs andserving those needs profitably

Profit is a legitimate goal of a business

organization Essence of marketing is providing desired valueto customers

Marketing should be considered a centralbusiness function

All activities are focused upon providingcustomer satisfaction

Every employee in an organization is a marketer Internal communication

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Marketing Managers JobRole Description Example

Interpersonal

Figure Head

Leader

Liaison

Perform s Dut ies of Ceremonial Nature

Takes Responsib i l i ty of Work of

Subordinates

Makes Contact out of Vert ical Chain of

Command

Takes Impo rtant Cl ients to Lunc h

Motiv ates Sales Force

Meets w ith Procurement Director of

the Clients

InformationalMonitor

Disseminator

Spokesperson

Scans Environm ent for Info.

Shares Info. With Others

Sends Info. Outside the Organization

Gets info from sup pl iers about a

new Products

Gives Informat ion & Shares

Makes speeches, presentat ions to

change & get favourable legislat ion

DecisionalEntrepreneur

Disturbance Handler

Resource Allocator

Negotiator

Seeks to impro ve and adapt to

chang ing Envi ronment

Responds to High Pressure

Disturbances

Decides who w il l get what in the

Organizat ion

Bar ains w i th Others

Ass igns New Ideas for Produ ct Dev.

Addresses Consumer Boycot t

Init iated by a Spl. Interest Gro up.

Determines the Al loc at ion of

Promot ion Budget across Brands

Negotiates Sales Terms w ith a

Member of the Distr ibut ion Channel

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Marketing Defined

A social and managerialprocess by which individuals

and groups obtain what theyneed and want throughcreating and exchanging

products and value withothers.

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What is Marketing Management?

Marketingmanagementis the

art and science

of choosing target markets

and getting, keeping, and growing

customers through

creating, delivering, and communicatingsuperior customer value.

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A Definition of Marketing

Market ing:the process of planning and

executing the conception, pricing,

promotion, and distribution of ideas,goods, services, organizations, andevents to create and maintain

relationships that will satisfy individual

and organizational objectives.

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American Marketing Associationsnew officialdefinition of marketing released August 2004:

Marketing is an organizational function and a setof processes for creating, communicating anddelivering value to customers and for managing

customer relationships in ways that benefit theorganization and its stakeholders.

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Difference between Selling and Marketing

Emphasis is on the product Emphasis on consumer needs and wants

Company manufactures the product first and then

decides to sell it

Company first determines customers needs and

wants and then decides on how to deliver a product

to satisfy these wants

Management is sales volume oriented Management is profit oriented

Planning is short-run-oriented, in terms of todays

products and markets

Planning is long-run-oriented,in terms of new

products tomorrowsmarkets and future growth

Stresses needs of seller Stresses needs and wants of buyers

Views business as a goods producing process Views business as consumer satisfying process

Emphasis is on staying with existing technology and

reducing costs

Emphasis is on innovation in every sphere, on

providing better value to the customer by adopting a

superior technology

Different departments work in highly separate watertight compartments

All departments of the business operate in anintegrated manner, the sole purpose being

generation of consumer satisfaction

Cost determines price Consumer determines price, price determines cost

Selling views customer as the last link in business Marketing views the customer as the very purpose in

business.

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Marketing Old vs. New

Old view of marketing:

Making a sale -- Telling and Selling

New view of marketing:

Satisfying customer needs

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The marketplace isnt what it used to be

Changing technology

Globalization

Deregulation

Privatization

Empowerment

Customization

Convergence

Disintermediation

T diti l O i ti

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Customers

Front-line people

Middle Management

Top

Management

Traditional OrganizationChart

C t O i t d O i ti

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Customers

Front-line people

Middle management

Top

manage-

ment

Customer-Oriented OrganizationChart

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Industry

(a collection

of sellers)

Market

(a collection

of Buyers)

Goods/services

Money

Communication

Information

Simple Marketing System

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A Simple Model of the Marketing Process

Understand the

marketplace andcustomer needs

and wants

Capture value fromcustomers to createprofits and customer

equity

Create value fo rcustomers and

build customer relationships

Capture value f rom

customers in return

Design a customer-

driven marketingstrategy

Build profitablerelationships and create

customer delight

Construct a

marketing programthat delivers superiorvalue

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Manufacturermarkets

Services,money

Governmentmarkets

Services,money

Services

Services,money

Taxes

Taxes,goods

Taxes,goods

Taxes,goods

Money Money

Consumermarkets

Intermediary

marketsGoods, services

Goods, services

Resources Resources

Resourcemarkets

Money Money

Structure of Flows

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What Can Be Marketed?

Goods

Services

Experiences Events

Persons

Places

Properties

Organizations Information

Ideas

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Goods

Cars Steel Food Items Consumer Durables FMCG

Services

Legal Opinions

Management Consultancy Software Solutions Interior Decoration Design

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Experiences

Essel World Water Park Yoga Classes

Cricket Camp

Events

Miss India Trade Show Cricket Match A.R. Rahman Evening

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Persons

Budding Artist Madhura Nagendra New Writer

Places

Ajantha Caves Mira Road Mahabaleshwar

India

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Properties

Shristi Towers Infrastructure Bonds Technology Park

Office Spaces

Organizations

King Fisher Airlines

New Business Schools Old Age Homes

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Information

Software CDs Encyclopedia Computer/Technical Magazines

Ideas

Say No to Drugs Low Fat Food for Good Health Drunken Driving is Dangerous

In the Factory we produce Cosmetics ; in Stores we sellHope - CharlesRevlon of REVLON

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Product or Offering

Value and Satisfaction

Needs, Wants, and Demands

Exchange & TransactionsRelationships & Networks

Target Markets & Segmentation

Marketing Channels

Supply Chain

Competition

Marketing Environment

Core Concepts of Marketing

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Core Marketing Concepts

Target markets and marketsegmentation

Marketplace, market-space,

metamarkets Marketers & prospects

Needs, wants, demands

Product offering and brand

Value and satisfaction

Exchange and transactions

Relationship and networks

Marketing channels

Supply chain Competition

Marketing environment

Marketing program

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Key Customer Markets

Consumer Markets

Business Markets

Global Markets Nonprofit and Government markets

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Target markets & segmentation Differences in needs, behavior, demographics

or psychographics are used to identify

segments. The segment served by the firm is called thetarget market.

The market offering is customized to the

needs of the target market.

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Shopping can take place in a: Marketplace (physical entity, Lowes)

Marketspace (virtual entity, Amazon)

Metamarketsrefer to complementary goodsand services that are related in the minds ofconsumers.

Marketersseek responses fromprospects.

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A Productis any offering that can satisfy a needor want, while a brandis a specific offering froma known source.

When offerings deliver value and satisfactiontothe buyer, they are successful.

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Exchangeinvolves obtaining a desired productfrom someone by offering something in return.Five conditions must be satisfied for exchange to

occur. Transactioninvolves at least two things of value,agreed-upon conditions, a time of agreement, anda place of agreement.

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Exchange vs. Transaction

Exchange:Act of obtaining a desired object from

someone by offering something in return.

Transaction:

A trade of values between two parties.

One party gives X to another party andgets Y in return. Can include cash, credit,check, or barter.

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For an exchange to occur..

There are at least two parties. Each party has something that might be of

value to the other party.

Each party is capable of communicationand delivery.

Each party is free to reject the exchange

offer. Each party believes it is appropriate or

desirable to deal with the other party.

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Relationship marketingaims to build long-term mutually satisfying relations with keyparties, which ultimately results inmarketing network between the companyand its supporting stakeholders.

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Marketing Channels

Communication channels

Distribution channels

Service channels

Deliver messages to andreceive messages fromtarget buyers.

Includes traditional media,non-verbalcommunication, and storeatmospherics.

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Marketing Channels



Service channels

Display or deliver thephysical products or

services to the buyer /user.

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Marketing Channels



Service channels

Carry out transactionswith potential buyers

by facilitating thetransaction.

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A supply chainstretches from raw materials tocomponents to final products that are carried tofinal buyers.

Each company captures only a certainpercentage of the total value generated by thesupply chain.

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The Marketing Concept

Achieving organizational goals requires thatcompany be more effective than competitors increating, delivering, and communicating

customer value. Four pillars of the marketing concept:

Target market Customer needs

Integrated marketing Profitability

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Changes in the Marketplace

Globalization, technological advances, andderegulation have created many challenges: Customers

Brand manufacturers

Store-based retailers

Both companies and marketers have beenforced to respond and adjust.

New Marketing Challenges

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EmergingChallenges

NonprofitMarketing

New

MarketingLandscape &InformationTechnology

EthicalConcerns

Globalization

Changing

WorldEconomy

New Marketing Challenges

45

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What are Consumers Needs,

Wants, and Demands?

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Needsdescribe basic human requirements suchas food, air, water, clothing, shelter, recreation,education, and entertainment.

Needs become wantswhen they are directed tospecific objects that might satisfy the need. (Fastfood)

Demandsare wants for specific products backed

by an ability to pay.

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Types of Needs

Physical:

Food, clothing, shelter, safety

Social:

Belonging, affection

Individual:

Learning, knowledge, self-expression

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I want it, I need it..

5 Types of Needs

Stated needs

Real needs Unstated needs

Delight needs

Secret needs

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This Is a Want

Wants- form thata human needtakes, asshaped by

culture andindividualpersonality.

Thi I D d

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This Is Demand

Demand

Wants Buying Power

D d St t & Mkt T k

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Demand States & Mktg. Tasks

Negative Demand (Vaccination, Low GradeStudents)Positive Promotion, Analysis & RedesignProduct

No Demand(Students Reluctance for Advanced OR,Old Workers Disinterested in new skills Learning)

Promote Benefits, Positive Impacts Sales Latent Demand(Calorie-free Fat Rich Yummy Fat

Food, Excellent Roads during Monsoon)DevelopProducts and Cater to the Demand

Declining Demand(Less Students for Arts, AudioCassetts)Change Product/ Service Feature andReverse the Trend.

D d St t & Mkt T k

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Demand States & Mktg. Tasks

Irregular Demand(Less Crowded Suburban Trains inthe Opposite Direction, Less Crowd for Morning Showson Weekdays) - Promotion, Shifting of Offices

Full Demand(Water Supply in Mumbai, Demand for

MMS in Good Schools)Maintain, Improve, Live uptoCustomersExpectations

Over-Full Demand( Hill Stations in Summer, MumbaiGoa Bus in Season)Demarket by Increasing Fares

and Control Demand

Unwholesome Demand(Tobacco, Alcohol, Gutka,Smuggled Goods)Fear Messages, Reduced

Availability, Punishment

Need / Want Fulfillment

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Need / Want Fulfillment

Needs and Wants Fulfilled through a Market ingOffer :

Some combination of products, services, information,or experiences offered to a market to satisfy a need orwant.

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EFFICIENCY Vs. EFFECTIVENESS

An efficient company produces its products and serviceseconomically

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 inbusiness though its profits would be lower

An ineffective but an efficient company will not survive

Choosing to become effective reflects the marketingorientation of the company

MARKET VERSUS INTERNALLY

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MARKET VERSUS INTERNALLYDRIVEN BUSINESSES

MARKET DRIVEN

BUSINESS

INTERNALLY DRIVEN

BUSINESS

Display customer concernthroughout the business

Fail to understand the realconcerns of customers

Expenditure on marketing

research is an investment

Marketing research is non-

productive activity and rely onanecdotes and receivedwisdom

Understand competitorsobjectives and strategies,and anticipate competitiveactions

Content to underplay thecompetition

Marketing spend is aninvestment that has long

term consequences

Marketing expenditure Issuperfluous that never

appears to produce benefits

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MARKET DRIVEN

BUSINESS

INTERNALLY DRIVEN

BUSINESS

Employees who take risks

and are innovative inserving customers rewarded

Reward time serving, and

ability to not make mistakes

Search for latent marketsmarkets that no other

company has exploited

Happy to stick to theirexisting products and

markets

Sensitive, fast and flexible tobe able to respond tochanges in the market

produce me-too copies ofofferings already in themarket

MARKET VERSUS INTERNALLYDRIVEN BUSINESSES (Cont)


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Expectation Performance

810

If performance is lower than expectations, satisfaction is low.

If performance is higher than expectations, satisfaction is high.

Expectation Performance

108

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Enhancing Value

Marketers can enhance the value of an offeringto the customer by: Raising benefits.

Reducing costs.

Raising benefits while lowering costs.

Raising benefits by more than the increase in costs.

Lowering benefits by less than the reduction in costs.

Marketing Management

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The art and science of choosing targetmarkets and building profitablerelationships with them.

Questions to ask:

1. What customers will we serve?

What is our target market?

2. How can we best serve these customers?

What is our value proposition?

Segmentation and Target Marketing

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Segmentation and Target Marketing

Market Segmentation:

Divide the market intosegments of customers

Target Marketing:

Select the segment tocultivate

#1 #2


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Finding and increasingdemand, also changing orreducing demand, such as indemarketing.

DemandManagement

Temporarily or permanentlyreducing the number of

customers or shifting theirdemand.

Demarketing

Marketing Management Philosophies

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Marketing Management Philosophies

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

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Company Orientations

The orientation or philosophy of the firmtypically guides marketing efforts. Severalcompeting orientations exist:

Production concept Product concept Selling concept Marketing concept Customer concept Societal marketing concept

Company Orientations Towards the

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Production Concept

Product Concept

Selling Concept

Marketing Concept

Consumers prefer products that arewidely 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 targetmarkets & delivering value

better than competitors

p yMarketplace

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Theodore Levitts Marketing Myopia, cont.

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Theodore Levitt s Marketing Myopia, cont.

What is the difference between marketingand selling?

The difference between marketing and

selling is more than semantic. Sellingfocuses on the needs of the seller,marketing on the needs of the buyer.Sellingis preoccupied with the sellers need toconvert the product into cash; marketingwith the idea of satisfying the need of the

customer .


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The Marketing Mix

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The Marketing Mix

Customer

Needs

Product Price

Promotion Distribution

Figure Holistic Marketing Dimensions

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Figure Holistic Marketing Dimensions

The Four Ps

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The Four Ps

The Marketing Mix

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The Marketing Mix

The set ofcontrollable,

tactical marketingtools that the firmblends toproduce theresponse it wantsin the targetmarket.

Consists of the 4Ps

1. Product2. Price

3. Place

4. Promotion

The 4 Ps of the Marketing Mix

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The 4 P s of the Marketing Mix

The 4 Ps & 4 Cs of the

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The 4 P s & 4 C s of theMarketing Mix

4 Ps - Sellers

View Product

Price

Place Promotion

4 Cs - Buyers View

Customer Solution Customer Cost

Convenience

Communication

Loyalty and Retention

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oya y a d e e o

FinancialBenefits

SocialBenefits

StructuralTies

Customer Relationship Groups

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Customer Relationship Groups

Projected loyalty

High

Profitability

Low

Long-termcustomers

Short-termcustomers

Good fit betweencompanys offerings and

customers needs; high

profit potential

Limited fit betweencompanys offerings and

customers needs; low

profit potential

Little fit between companys

offerings and customers

needs; lowest profitpotential

Good fit betweencompanys offerings and

customers needs; highest

profit potential

Strangers

Butterflies True Friends

Barnacles

The Internet

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The Internethas been hailed as thetechnology behind a New Economy.

Marketing applications include: Click-and-mortar companies

Click-only companies Business-to-business e-commerce

Business-to-business transactions online

are expected to reach $4.3 trillion in 2005. By 2005, 500,000 companies will use the

Internet to do business.

The New Digital Age

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The New Digital Age

The recent technology

boom has had a majorimpact on the waysmarketers connectwith and bring value

to their customers.

Documents

Lect 1,2 & 3