Professional Documents
Culture Documents
What Is Marketing?
Marketing deals with identifying and meeting human and social needs. One of the
shortest definitions of marketing is "meeting needs profitably."
Marketing Management
The art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer value.
Scope of Marketing
Marketing people are involved in 10 types of entities:
Goods
Services Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas
The Eight different states of demand:
Negative demand: if a major part of market dislikes the product and may even pay a
price to avoid it vaccinations, gall bladder operations etc.
No Demand: Target consumers may be unaware of or uninterested in the product. Ex.
College students may not be interested in foreign language courses.
Latent demand: Market feels strong needs for some products like harmless cigarettes
Declining demand: Market for the product declines. Then marketer need to know the
causes and rectify
Irregular demand: Demand of many products and services are seasonal.
Full demand: sometimes full demand is there.
Overfull demand: sometimes demand is higher than what organization can handle.
Unwholesome demand: Unwholesome products will attract organized efforts to
discourage consumption. Like unselling campaigns against cigarettes, alcohol, handguns.
Consider the following major customer markets
Consumer market: mass consumer goods and services such as soft drinks, toothpaste,
air travel etc.
Business Markets: Companies selling business goods and services face well trained and
well informed professional buyers. They buy goods for their utility or to make or resell a
product to others.
Global markets: goods and services for global marketplace. They have to decide which
country to enter , how to enter, has to have a fit the cultural practices etc.
Nonprofit and Governmental Markets: goods to nonprofit organizations like churches,
universities, governmental agencies need to be priced carefully. They have to follow long
government procedures to get this market.
Product
Product Variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
Returns
Figure 1.5
Promotion
Sales promotion
Price
Advertising
List Price
Sales Force
Discounts
Public Relations
Allowances Direct Marketing
Payment Period
Credit Terms
Place
Channels
Coverage
Assortments
Locations
Inventory
Transport
McCarthy classified these tools into four broad groups that he called the four Ps of marketing:
Product, Price, Place and Promotion.
Company orientation towards the market place
There are five competing concepts under which organizations conduct marketing activities: the
production concept, selling concept, marketing concept, customer concept and societal marketing
concept.
The Production Concept:
The production concept is the oldest concept in business. The production concept holds that
consumers will prefer products that are widely available and inexpensive. Managers of
production-oriented business concentrate on achieving high production efficiency, low costs and
mass distribution. They assume that consumers are primarily interested in product availability
and low prices.
The Selling Concept:
The selling concept is another common business orientation. The selling concept holds that
consumers and businesses, if left alone, will ordinarily not buy enough of the organizations
products. The organization must, therefore, undertake an aggressive selling and promotion effort.
The Marketing Concept
The marketing concept holds that the key to achieving its organizational goals consists of the
company being more effective than competitors in creating, delivering, and communicating
customer values to its chosen target markets.
The marketing concept rests on four pillars:
1) Target market
2) Customer needs
3) Integrated marketing
4) Profitability.
Societal Marketing Concept
The Societal Marketing Concept holds that the Organizations task is to determine the needs,
wants and interests of target markets and to deliver the desired satisfaction more effectively and
efficiently than competitors in a way that preserves and enhances the consumers and the societies
well being.
It calls for social and Ethical considerations in marketing. They must balance the conflicting
criteria of Company profits, consumer want satisfaction and Public Interest. In an age of
environmental deterioration, resource shortage, explosive population growth, world hunger and
poverty and lack of Social Services Marketers needs to be sensitive on these issues.
A firm needs to constantly track and monitor new developments in the internal and external
environment. For when the marketplace changes, the company will have to rethink the
implementations, programs, strategies, or even objectives.
Marketing metrics is the set of measures that helps firms to quantify, compare, and interpret their
marketing performance.
2) Measuring Marketing Plan Performance
Marketers today have better marketing metrics for measuring the performance of marketing
plans.31 They can use four tools to check on plan performance: sales analysis, market share
analysis, marketing expense-to-sales analysis, and financial analysis.
3) Profitability Analysis
Companies can benefit from deeper financial analysis, and should measure the profitability of
their products, territories, customer groups, segments, trade channels, and order sizes.
4) Estimating Current Demand
We are now ready to examine practical methods for estimating current market demand.
Marketing executives want to estimate total market potential, area market potential, and total
industry sales and market shares.
5) Estimating Future Demand
Companies commonly use a three-stage procedure to prepare a sales forecast. They prepare a
macroeconomic forecast first, followed by an industry forecast, followed by a company sales
forecast.
Lead qualification the next task is to qualify which of the suspects are really good prospects,
and this is done by interviewing them, checking for there financials, and so on.
Importance of retaining customers
Acquiring new customers costs 5 times more than retaining old ones A 5% reduction in customer
defection can increase profits by 25% to 85% Customer profit rates tend to increase over the
lifetime of the customer.
Computing cost of lost customers
A company must define and measure retention rate
The company must distinguish the causes of customer attrition and identify those that can be
managed better. Not much can be done for customer who leave the region or go out of business
but much can be done about the customer who leaves because of poor service shoddy products or
high prices.
Information search
Evaluation of
alternatives
Purchase Decision
Postpurchase
Behaviour
Organizational Buying is the decision making process by which formal organizations establish
the need for purchased products and services and identify, evaluate and choose between
alternative brands and suppliers.
Business market versus consumer market
Characteristics that contrast with consumer market
Fewer buyers
Larger buyers
Close supplier- customer relationship (customization)
Geographically concentrated buyers
Derived demand
Inelastic demand
Fluctuating demand
Professional purchasing
Several buying influences
Multiple sales calls
Direct purchasing
Reciprocity- buyers selecting suppliers who also buy from them.
Leasing- instead of buying heavy equipment.
Buying Situations
There are three types:
Straight rebuy- Purchasing department reorders on a regular basis. The buyer chooses from
suppliers on an approved list. The suppliers make an effort to maintain product and service
quality and propose automatic reordering systems. The out-suppliers attempt to offer
something new or exploit dissatisfaction with existing supplier.
Modified rebuy- The buyer wants to modify product specifications, prices, delivery requirements
and other terms. This involves additional decision participants on both sides. The in-suppliers
become nervous and out-suppliers try to offer a better deal.
New task- The purchaser buys a product or service for the first time.
Stages in New task buying: Awareness, Interest, Evaluation, Trial and Adoption.
Participants in the business buying process
The Buying center is composed of all those individuals and groups who participate in the
decision making process, who share some common goals and risks arising from the decisions.
Major Influences
The major influences on buying behavior are: Environmental, Organizational, Interpersonal and
individual.
Buying- discrete transactions, relations are arms-length and adversarial, buyer focus is short term
and tactical. Buyers assume that value pie is fixed, and they must bargain hard to maximize
benefits. Buyers use two tactics: commoditization and multi-sourcing.
Procurement- Buyers seek quality improvements and cost benefits. More collaborative with
smaller no of suppliers working in close cooperation with customers. The goal is to establish
win-win relationship.
Supply management- Purchasing is more of a strategic value adding operation. Focus is on
improving value chain from raw materials to end-users. Buyer behaves as a lean enterprise
operating under demand pull rather than supply push.
generation, nationality, social class. These variables are the most popular basis for distinguishing
customer groups. One reason is that consumer wants, preferences, usage rates are often
associated with demographic variables. Another reason is that demographic variables are easier
to measure even when the target market is defined in non-demographic terms.
Psychographic segmentation:
Buyers are divided into different groups based on personality and values. People within the same
demographic group can exhibit very different psychographic profiles such as their Lifestyle,
Personality & Values
Behavioral Segmentation
Buyers are divided into groups on the basis of their knowledge of, attitude toward, use of, or
response to a product.
Evaluation of market segments
Factors to be looked at : (a) segments overall attractiveness (b) companys objectives and
resources
Selecting the market segments
Single market concentration: firm gains strong knowledge of segments needs and achieves strong market
presence
Selective specialization: firm selects a no. of segments, each objectively attractive and appropriate
Product specialization: firm specializes in making a certain product that it sells to several segments
Market specialization: firm concentrates on serving many needs of a specific customer group
Full market coverage: firm attempts to cover all customer groups with all the products they
might need.
Undifferentiated marketing: firm ignores market segment differences and goes after the whole
market with one offer
Differentiated marketing: firm operates in several market segments and designs different
programs for each segment