LECTURE 1

About the Course

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.
Learning Outcomes
A comprehensive understanding of basic marketing principles.

Clearly explain the marketing concept and critically analyze the
various marketing principles.

Apply course knowledge into the overall business process.

Understand the constraints and challenges that marketing faces.

Understand that there are a variety of possible tools and tactics
that can be used in marketing and when and how to apply them.
Assessment
MID-TERM 1 15 %
MID-TERM 2 15 %
FINAL 25 %
CLASS TUTORIALS / DISCUSSIONS 15 %
ASSIGNMENTS / QUIZES 10 %
FINAL REPORT 20 %
TOTAL 100 %
Assessment - Details
CLASS TUTORIALS / DISCUSSIONS (15 Marks)
5 marks are reserved for Case Study discussions
5 marks are reserved for Class Participation
5 marks are reserved for In-Class discussions

ASSIGNMENTS / QUIZES (10 Marks)
5 marks are reserved for marketing article presentation
5 marks are reserved for quizzes

FINAL REPORT (20 Marks)
This is a group project which will entail the entire course learning. Details will
be furnished in next class
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 through
other channels: usually answers will be shared with the whole
class

Informal feedback on class work and presentations will be
given throughout the course
Giving Me Feedback
Informally in class

End of course questionnaires

Via e-mail
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.
Communication Details
fb.com/groups/IOBMPOM14
Principles of Marketing - Shaheer Mehkari
msmehkari@gmail.com
Important Notice

Be punctual
Turn your phone to silent!
Prepare material beforehand
Join in class discussions
Listen when somebody else is
speaking
Ask questions
Work hard
Support each other
READ THE BOOK

What is Marketing?

The Marketing Process
Create value for customers.
Capture value from customers.

Changing Marketing Landscape

Summary

Assignment
AGENDA
What is Marketing?











The Process by which companies create value for customers
and build strong customer relationships in order to capture
value from customers in return
- Kotler & Armstrong


Marketing is
managing profitable
customer
relationships.

What is Marketing?


2-fold objectives
Attract new customers by providing superior value
Retain current customers by delivering satisfaction
What is Marketing?
Attract new
Customers
Retain Current
Customers
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


What is Marketing


The management process which identifies, anticipates and
supplies customer requirements efficiently and profitably"

Dibb, Simkin, Pride and Ferrell (1997) Marketing, page 5.


What is Marketing

Marketing consists 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


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



The Marketing Process
THIS PROCESS SHOWS MARKETING IN A NUTSHELL
UNDERSTAND THE
MARKET PLACE AND
CUSTOMER NEEDS
AND WANTS
The Marketing Process Step 1
NEEDS, WANTS AND DEMANDS

Need: State of felt deprivation, part of human
nature
I am hungry

Wants: The form human needs take as
shaped 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
UNDERSTAND THE
MARKET PLACE AND
CUSTOMER NEEDS
AND WANTS
The Marketing Process Step 1
MARKET OFFERING

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

Important Terms: Marketing Myopia
Products Services Experiences
CUSTOMERS BUY
EXPERIENCES
AND BENEFITS..
UNDERSTAND THE
MARKET PLACE AND
CUSTOMER NEEDS
AND WANTS
The Marketing Process Step 1
CUSTOMER VALUE & SATISFACTION

Customers form expectations about the
value and satisfaction that the market
offering will deliver.

EXCHANGES AND RELATIONSHIPS

Companies want to build a strong exchange
relationship with their audience by
delivering superior customer value.

UNDERSTAND THE
MARKET PLACE AND
CUSTOMER NEEDS
AND WANTS
The Marketing Process Step 1
MARKETPLACE / MARKET

The set of actual and potential buyers of a
product or service

A market is an aggregate of people who, as
individuals and/or organizations, have the
need, ability, willingness, and authority to
purchase products. (Dibb, Simkin, Pride and
Ferrell, 1997)

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

CONSUMER RESEARCH
PRODUCT DEVELOPMENT
COMMUNICATION
DISTRIBUTION
PRICING
SERVICE
CORE MARKETING ACTIVITIES
UNDERSTAND THE
MARKET PLACE AND
CUSTOMER NEEDS
AND WANTS
The Marketing Process Step 1
MARKETPLACE / MARKET

The set of actual and potential buyers of a
product or service

A market is an aggregate of people who, as
individuals and/or organizations, have the
need, ability, willingness, and authority to
purchase products. (Dibb, Simkin, Pride and
Ferrell, 1997)

The buyers share a need or want that can be satisfied
through exchange relationships.
DESIGN A CUSTOMER-
DRIVEN MARKETING
STRATEGY
The Marketing Process Step 2
MARKETING MANAGEMENT

Marketing Management
The art and science of choosing target markets
and building profitable relationships with them
Basically application of principles of marketing

A good marketing strategy should seek to answer
What customer will we serve? (Target market)
How to serve them? (Value proposition)

Important Terms: Marketing Management
DESIGN A CUSTOMER-
DRIVEN MARKETING
STRATEGY
The Marketing Process Step 2
WHAT CUSTOMERS TO SERVE?

HOW CAN WE SERVE THEM BEST?
Important Terms: Target Market, Value Proposition, Market Segmentation,
Target Marketing, Customer Management, Demand Management
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)
DESIGN A CUSTOMER-
DRIVEN MARKETING
STRATEGY
The Marketing Process Step 2
MARKETING MANAGEMENT ORIENTATIONS




.
Marketing Production Product
Selling
Societal
Marketing
The Marketing Process Step 2
PRODUCTION - ORIENTED FIRM




.
Production
Capabilities
Manufacture
Products
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 competition
Ford T-bird You can have any color as long as its black
Examples: Utilities, Food basics
Disadv: Marketing Myopia
The Marketing Process Step 2
PRODUCT - ORIENTED FIRM




.
Production
Capabilities
Design
Products
Manufacture
Products
Customer
Consumers buy products that offer the most quality, performance or
innovative features


Example: Mobile phones and high-tech goods manufacturers
Disadv: Marketing myopia
The Marketing Process Step 2
SELLING - ORIENTED FIRM




.
Production
Capabilities
Manufacture
Products
Aggressive
Sales Effort
Aim at
Multiple
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 wants
Useful for unique products or where customer awareness is low
Example: Insurance
Disadv: short term customer relationship
The Marketing Process Step 2
MARKETING- ORIENTED FIRM




.
Actual &
potential
customer wants
and needs
Potential
market
opportunity
Production
capabilities /
Marketing
Program
Market
products &
services
Customers
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 to
Right 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
The Marketing Process Step 2
SOCIALLY - ORIENTED FIRM




.




Addresses the conflict between consumers short term wants and long-run
welfare

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 societys long-run interests
CONSTRUCT A
MARKETING PROGRAM
THAT DELIVERS
SUPERIOR VALUE
The Marketing Process Step 3
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

BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4
BUILDING CUSTOMER RELATIONSHIPS


Customers form expectations about the value
and satisfaction that the market offering will
deliver.

Customer Relationship Management (CRM)

Overall process of building and maintaining
profitable customer relationship by delivering
superior customer value and satisfaction

FOCUS ON ACQUIRING, KEEPING AND GROWING CUSTOMERS
BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4
Customer Value /Customer Perceived value

Difference between all the benefits and all the costs
of a marketing offer relative to those of a
competing offer.

Why should a customer buy IPhone and not Sony?

VALUE


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

John Ruskin (1819-1900)
(Advertisement, Waterways World, August 2002)


BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4
Customer Value/Customer Perceived value

Difference between all the benefits and all the costs
of a marketing offer relative to those of a
competing offer

Why should a customer buy IPhone and not Sony?

BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4


Customer satisfaction

The extent to which a products perceived
performance matches a buyers expectations




PERCEIVED PERFORMANCE < BUYER EXPECTATION = DISSATISFACTION


PERCEIVED PERFORMANCE = BUYER EXPECTATION = SATISFACTION


PERCEIVED PERFORMANCE > BUYER EXPECTATION = DELIGHT



REMEMBER: NOTHING AT THE COST OF PROFITS!
BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4
CUSTOMER RELATIONSHIP TOOLS


How to establish loyalty and lasting relationship?

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


OUT OF SIGHT - OUT OF MIND!
BUILD PROFITABLE
RELATIONSHIPS AND
CREATE CUSTOMER
DELIGHT
The Marketing Process Step 4
PARTNER RELATIONSHIP MANAGEMENT

Work Closely with Partners

Internal Partners
Outside the company Channel Marketing
(distributors, suppliers, retailers etc)

EVERYONE SHOULD BE A PART-TIME MARKETER
CAPTURE VALUE FROM
CUSTOMERS TO CREATE
PROFITS AND CUSTOMER
QUALITY
The Marketing Process Step 5
CAPTURING VALUE FROM CUSTOMERS

The outcome of creating customer value:

Customer Loyalty and Retention
Share of market/share of customer
Customer Equity




.
Good CRM Delight Loyalty
Good Word
of Mouth
More
Customers
More Profit
Customer Loyalty and Retention
The value of the entire stream of
purchases that the customer
would make over a lifetime of
patronage.
CUSTOMER LIFE TIME VALUE
Losing A Customer


Quantifiable Loss Of More Than
A Single Sale


CAPTURE VALUE FROM
CUSTOMERS TO CREATE
PROFITS AND CUSTOMER
QUALITY
The Marketing Process Step 5
CAPTURING VALUE FROM CUSTOMERS

Growing share of Customer:
The portion of customers purchasing that a
company gets in its product categories.

Banks share of wallet
Airlines share of travel




.
Add variety
Cross sell and Up sell
Example: Amazon.com, Virgin Group, Insurance companies
The Marketing Process Step 5
BUILDING 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
companys offering and
customers needs;
lowest profit potential
Barnacles
Limited fit between
companys offering and
customers needs; low
profit potential
High profitability
Low profitability
Short term
customers
Long term
customers
Potential
Profitability
Projected Loyalty
New Marketing Landscape
Changing business environment new challenges for
marketing.

Major trends

New Digital Age
More connected and informed customers, suppliers,
distributors.
New ways of managing customers
Internet a turnaround
Online focus groups, social networking websites (Orkut,
Facebook), Blogs, online shops, Teleconferencing etc.

.
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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