Principles of Marketing

Instructor: Khaled BekhetMaastricht School of Management

Marketing Program-Session 1

Today’s Agenda Review Syllabus Overview of the Marketing Concepts and

creating customer value.

1st Session Course Description“An introduction to the basic concepts underlying

marketing, marketing definition, needs, wants, demands, product, Exchange, Market, creating customer value, customer satisfaction, Production Concept Vs Product Concept Vs Selling concept Vs Marketing concept.. And Societal Marketing Concept

Next Session we’ll discuss: Marketing Mix, Market segmentation, target market selection Consumer and industrial buyer behavior …”

Review Syllabus

Course Objectives

Review Syllabus

Understand basic concepts in Marketing Your ability to analyze Marketing problems.

Learn how to develop a

marketing plan.

COURSE STRUCTURECOURSE STRUCTURE

Readings

Lectures

Assignments

Project

Exam

Recommended Text Books Principles of Marketing by Phil ip Kotler

and Gary Armstrong, 2005, (11th Edition) Prentice –Hall Inc.

Fundamentals of Marketing by Stanton, Etzel and Walker, 2005, (8th Edition) McGraw Hill Inc.

Marketing by Joel R. Evans and Barry Berman, 2004, (9th Edition) Atomic Dog Publishing

Question ： Is marketing good or evil?

If you think marketers have an image problem

What People Think of Marketers

Marketers are faddish, irresponsable, … don’t think like business people …

McKinsey & Company, CEO/CMO Survey, 2005

Too many marketers have become so specialized that they don’t think in terms of the company’s big picture.

Philip Kotler

Marketers are frivolous and difficult to approach

Australian Society of Certified Public Accountants

What is Marketing, anyway?

AdvertisingAdvertising

SalesSales

PromotionsPromotions

Public Public relationsrelations

SponsorshipsSponsorships

PricingPricing

Retail ingRetail ing

Direct mailDirect mail

CataloguesCatalogues

BillboardsBil lboards

E-E-

commercecommerce

Shopping Shopping

channelschannels

PackagingPackaging

DeliveryDelivery

ServiceService

Research

Research

Coupons

Coupons

Marketing Everywhere!Understanding marketing helps you when: You buy a new pair of shoes, or go to the

grocery store. You open a new bank account. You apply for a job. You watch television.

In Fact People Buy 3 Things

….. Essential needs (Food, Shelter, ..), Solutions, Things to feel good.

What is Marketing?

What is Marketing?

MarketingMarketing is the total system of business activities designed to plan, price, promote, and distribute want-satisfying products, services, and ideas to target markets in order to achieve organizational objectives- AMA

Simple: The delivery of CS at profit.

This is your 1st homework :)

In your own words…

What’s marketing ?

Key Words in the Definition

total system: not an ad hoc approach business activities: but not just for

businesses plan, price, promote, distribute: the

application of the marketing mix need-satisfying: meeting customers’ needs products, services, ideas: not just

products target markets: not a broad-brush

approach objectives: the customer’s as well as the

firm’s

Why StudyWhy StudyMarketing?Marketing?

Contributions to Individual Organizations

Critical to the successof the firm.

CostsAbout 50% of total

Product/service costsare marketing costs.

CareersAbout 25 to 33% of the

work force holdmarketing positions.

Contributions to SocietyMarketing decisions

affect the lives of individual consumers and

society as a whole.

Basic Concepts Underlying Marketing

NeedsWants Demands Products ExchangeMarkets

Needs The most basic concept underlying

marketing is that of human needs.

The needs are built in human nature itself. It is not invented by marketers.

When the needs are not satisfied, a person will try to reduce it or look for an alternative that will satisfy it.

Wants Human wants are desires for specific

satisfaction of deeper needs.

Human needs may be few, but their wants are numerous.

Wants are continually shaped and re-shaped by social forces and institutions such as families, Mosque, church, schools and business corporations.

Wants Marketers do not create needs, but

influence wants.

They suggest and inform consumers about certain products.

Marketers persuade them to purchase, stressing the benefits of such products.

Demands People have almost unlimited wants but

limited resources. They want to choose products that provide

the most value and satisfaction for their money.

When backed by purchasing power, wants become demand.

That is, demand is “want for specific products that backed up by an ability”.

Demands Many desire a car such as Mercedes Benz,

Toyota, BMW, Honda etc. but only a few are really willing and able to buy one.

It is therefore important for marketing executives to measure not only how many people want their company’s products, but also measure how many of them would actually be willing and able to buy them.

Products People normally satisfy their wants and needs

with products offered in the market.

A product can be defined as anything that can be offered to someone to satisfy a need or want.

A product can be an object, service, activity, person, place, organization or idea.

People do not buy physical objects for their own

sake. For example why women buy lip stick and why would you buy a toothpaste?????????.

But, It is not Just Products There could be a good, a service, or an idea.

Exchange Marketing takes place when people decide

to satisfy needs and wants through exchange.

Exchange is therefore the act of getting a desired object from someone by giving something in return.

Figure 1-1: The Give and Get of Marketing

MarketsA market is defined as a set of all actual and potential buyers of a product and service. These buyers share particular needs or wants that can be satisfied through exchange.

Simple Marketing System

Producer/Seller Consumer

Communication

Product/Service

Money

Feedback

Who is the Focus? Customers

The purchasers of organizations’ products; the focal point of all marketing activities. The Target Market

Starbucks focuses on its target market to meet their needs

Discussion Questions

Is customer satisfaction enough?Is customer delight necessary?

Do not feel scary, It is not Homework, We will discuss about that in class ..NOW !!!!

It’s All About Satisfaction customer satisfaction, leads to long-term

profitability and success. Whenever things of value are being

exchanged, marketing principles apply: consider exactly what is being exchanged (it’s “give” and “get”)

Marketing today is the role of all company’s operations and departments which influence satisfaction

Marketing principles apply in all organizations

…and Creating Value Successful marketing involves meeting or

exceeding customer expectations When expectations are exceeded,

customer satisfaction or delight results

Marketing is very much about adding value through a broadly-defined value proposition

The value proposition comprises everything the company offers its customers – must be defined very broadly

Value may is not only about price

8

Creating Customer Value

Product benefitsService benefitsRelational benefitsImage benefits

Monetary costsTime costsEnergy costsPsychological

costs

Customer value

Perceived benefits

Perceived sacrifice

Positive Negative

Value = benefits – costs – risk As perceived ‘Solution to Financial & Unfulfilled by consumers my problem’ Opportunity Promises Costs

A value proposition

Creating Value Proposition Value proposition contains aspects of CS. Many aspects contribute to customer

satisfaction: The emotional connection with customers Interaction with the firm and it employees The technical performance of the firm Support services and systems The core product or service offered

Ability to add value and to differentiate as a firm focuses more on the top levels

The Production Concept Consumers will favor those products that

are widely available and low in cost.

Therefore increase production and cut down costs.

And build profit through volume.

The Product Concept

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

Therefore, improve quality, performance and features.

This would lead to increased sales and profits.

The Selling Concept

Consumers , if left alone , will not buy enough of company’s products.

Therefore, promote sales aggressively.

And, build profit through quick turnover.

The Marketing Concept The key to achieving organizational goals

consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. As per Kotler et all, 1996

And build profit through customer satisfaction And loyalty And Innovation.

(Quote of P. Drucker-7Sources of Innovation )

Marketing and Sales Concepts Contrasted

Evolution of the Societal Marketing Concept The Production Concept –Existing -Scales The Product Concept- Features The Selling Concept-Aggressive Promo The Marketing Concept-Integrated Societal Marketing Concept- New

Deliver value to customers in a way that improves customers’ and society’s long term well being.

Marketing Myopia – Fit or Feature?

Management’s failure to recognize a company’s scope of business.

Sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products.

They focus on the “wants” and lose sight of the “needs.”

Need a drill?

Need a cloth?

Your 2nd Homework and Last

Can you Think of some Can you Think of some marketing myopias that marketing myopias that might crossed into your might crossed into your life? This is your 2life? This is your 2ndnd and and last homework today?last homework today?

People buy holes, not drills!

Fashion, status, reference groups approval, and warmth, but not coats!

The Marketing Myopia

The New View of Marketing 4R The modern marketing concept emphasis

today is on keeping existing customers as well as getting new ones

Four principles guide marketing- 4R: retention: keeping them coming back referrals: encourage them to

recommend us relationships: build an emotional

connection recovery: solve problems as they arise

Next ClassMarketing Mix and Market segmentation, Target

Markets selection, Consumer and industrial buyer behavior

Discussion Session: 2 Case Studies

Next Class Debate:What is the Marketing Mix?, What are the Market

coverage different strategies?, What are Steps in Segmentation, Targeting, and Positioning? How would you segment consumer and Industrial Markets

THANK YOU