Introduction to Marketing

KEY ISSUES
What is marketing? Do you plan to use marketing in your career? What are the benefits of a marketing career? What are my marketing career options?

How Marketing Relates to Your Career

Marketing yourself within your career Developing a Marketing Orientation Marketing your work unit Marketing as a general management responsibility Managing inter-firm alliances Functional marketing positions

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

The Role of Marketing

the business enterprise has two and only these two basic functions: marketing and innovation
-Peter Drucker, Management (1973), p. 6

Marketing Career Paths

Advertising Direct Marketing Brand Management Public Relations Sales & Sales Management Marketing Models & Systems Analysis Distribution Channel Management International Marketing Marketing Research New Product Planning Retail Management E-Commerce Business-to-Business Marketing Services Marketing

UNDERSTANDING MARKETING
Process of finding out customer needs and serving those needs profitably Profit is a legitimate goal of a business organization Essence of marketing is providing desired value to customers Marketing should be considered a central business function All activities are focused upon providing customer satisfaction Every employee in an organization is a marketer Internal communication

Marketing Managers Job

Role
Interpersonal
Figure Head Leader Liaison Performs Duties of Ceremonial Nature Takes Responsibility of Work of Subordinates Makes Contact out of Vertical Chain of Command Scans Environment for Info. Shares Info. With Others Sends Info. Outside the Organization Seeks to improve and adapt to changing Environment Responds to High Pressure Disturbances Decides who will get what in the Organization Takes Important Clients to Lunch Motivates Sales Force Meets with Procurement Director of the Clients Gets info from suppliers about a new Products Gives Information & Shares Makes speeches, presentations to change & get favourable legislation

Description

Example

Informational
Monitor Disseminator Spokesperson

Decisional
Entrepreneur Disturbance Handler Resource Allocator Negotiator Assigns New Ideas for Product Dev. Addresses Consumer Boycott Initiated by a Spl. Interest Group. Determines the Allocation of Promotion Budget across Brands Negotiates Sales Terms with a Member of the Distribution Channel

Bargains with Others

Marketing Defined A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

What is Marketing?
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

What is Marketing Management?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

A Definition of Marketing
Marketing: the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives.

American Marketing Associations new official definition of marketing released August 2004:
Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Difference between Selling and Marketing

Emphasis is on the product Company manufactures the product first and then decides to sell it Emphasis on consumer needs and wants Company first determines customers needs and wants and then decides on how to deliver a product to satisfy these wants Management is profit oriented Planning is long-run-oriented,in terms of new products tomorrows markets and future growth Stresses needs and wants of buyers Views business as consumer satisfying process Emphasis is on innovation in every sphere, on providing better value to the customer by adopting a superior technology All departments of the business operate in an integrated manner, the sole purpose being generation of consumer satisfaction Consumer determines price, price determines cost Marketing views the customer as the very purpose in business.

Management is sales volume oriented Planning is short-run-oriented, in terms of todays products and markets Stresses needs of seller Views business as a goods producing process Emphasis is on staying with existing technology and reducing costs

Different departments work in highly separate water tight compartments

Cost determines price Selling views customer as the last link in business

Marketing Old vs. New

Old view of marketing: Making a sale -- Telling and Selling

New view of marketing: Satisfying customer needs

The marketplace isnt what it used to be

Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation

Traditional Organization Chart

Top Management Middle Management Front-line people Customers

Customer-Oriented Organization Chart

Customers

Front-line people
Middle management Top management

Simple Marketing System

Communication

Industry (a collection of sellers)

Goods/services
Money

Market (a collection of Buyers)

Information

A Simple Model of the Marketing Process

Create value for customers and build customer relationships

Understand the marketplace and customer needs and wants

Design a customerdriven marketing strategy

Construct a marketing program that delivers superior value

Capture value from customers in return

Build profitable relationships and create customer delight

Capture value from customers to create profits and customer equity

Structure of Flows
Resources Money

Resource markets
Taxes, goods

Resources Money

Manufacturer markets

Services, money Services, money

Taxes

Taxes, goods Services, money

Government markets
Services

Consumer markets

Taxes, goods
Money

Money Goods, services

Intermediary markets Goods, services

What Can Be Marketed?

Goods Services Experiences Events Persons
Places Properties Organizations Information Ideas

What Can Be Marketed?

Goods
Cars Steel Food Items Consumer Durables FMCG

Services
Legal Opinions Management Consultancy Software Solutions Interior Decoration Design

What Can Be Marketed?

Experiences
Essel World Water Park Yoga Classes Cricket Camp

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

What Can Be Marketed?

Persons
Budding Artist Madhura Nagendra New Writer

Places
Ajantha Caves Mira Road Mahabaleshwar India

What Can Be Marketed?

Properties
Shristi Towers Infrastructure Bonds Technology Park Office Spaces

Organizations
King Fisher Airlines New Business Schools Old Age Homes

What Can Be Marketed?

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 sell Hope - Charles Revlon of REVLON

Core Concepts of Marketing

Target Markets & Segmentation Needs, Wants, and Demands Product or Offering Value and Satisfaction
Exchange & Transactions Relationships & Networks Marketing Channels

Supply Chain Competition Marketing Environment

Core Marketing Concepts

Target markets and market segmentation 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

Key Customer Markets

Consumer Markets Business Markets Global Markets Nonprofit and Government markets

Core Marketing Concepts

Target markets & segmentation
Differences in needs, behavior, demographics or psychographics are used to identify segments. The segment served by the firm is called the target market. The market offering is customized to the needs of the target market.

Core Marketing Concepts

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

Metamarkets refer to complementary goods and services that are related in the minds of consumers. Marketers seek responses from prospects.

Core Marketing Concepts

A Product is any offering that can satisfy a need or want, while a brand is a specific offering from a known source. When offerings deliver value and satisfaction to the buyer, they are successful.

Core Marketing Concepts

Exchange involves obtaining a desired product from someone by offering something in return. Five conditions must be satisfied for exchange to occur. Transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

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 and gets Y in return. Can include cash, credit, check, or barter.

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 communication and delivery. Each party is free to reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.

Core Marketing Concepts

Relationship marketing aims to build longterm mutually satisfying relations with key parties, which ultimately results in marketing network between the company and its supporting stakeholders.

Core Marketing Concepts

Marketing Channels
Communication channels Distribution channels Service channels

Deliver messages to and receive messages from target buyers. Includes traditional media, non-verbal communication, and store atmospherics.

Core Marketing Concepts

Marketing Channels
Communication channels Distribution channels Service channels

Display or deliver the physical products or services to the buyer / user.

Core Marketing Concepts

Marketing Channels
Communication channels Distribution channels Service channels

Carry out transactions with potential buyers by facilitating the transaction.

Core Marketing Concepts

A supply chain stretches from raw materials to components to final products that are carried to final buyers. Each company captures only a certain percentage of the total value generated by the supply chain.

Core Marketing Concepts

Four levels of competition can be distinguished by the level of product substitutability: Brand competition Industry competition Form competition Generic competition

The Marketing Concept

Achieving organizational goals requires that company be more effective than competitors in creating, delivering, and communicating customer value. Four pillars of the marketing concept:
Target market Customer needs Integrated marketing Profitability

Changes in the Marketplace

Globalization, technological advances, and deregulation have created many challenges:
Customers Brand manufacturers Store-based retailers

Both companies and marketers have been forced to respond and adjust.

New Marketing Challenges

New Marketing Landscape & Information Technology

Nonprofit Marketing

Ethical Concerns

Emerging Challenges
Changing World Economy

Globalizati on

45

What are Consumers Needs, Wants, and Demands?

Core Marketing Concepts

Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education, and entertainment. Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food) Demands are wants for specific products backed by an ability to pay.

This Is a Need

Needs - state of felt deprivation including physical, social, and individual needs.

Types of Needs
Physical:
Food, clothing, shelter, safety

Social:
Belonging, affection

Individual:
Learning, knowledge, self-expression

I want it, I need it..

5 Types of Needs Stated needs Real needs Unstated needs Delight needs Secret needs

This Is a Want
Wants - form that a human need takes, as shaped by culture and individual personality.

This Is Demand
Wants Buying Power

Demand

Demand States & Mktg. Tasks

Negative Demand (Vaccination, Low Grade Students) Positive Promotion, Analysis & Redesign Product 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) Develop Products and Cater to the Demand Declining Demand (Less Students for Arts, Audio Cassetts) Change Product/ Service Feature and Reverse the Trend.

Demand States & Mktg. Tasks

Irregular Demand (Less Crowded Suburban Trains in the Opposite Direction, Less Crowd for Morning Shows on Weekdays) - Promotion, Shifting of Offices Full Demand (Water Supply in Mumbai, Demand for MMS in Good Schools) Maintain, Improve, Live upto Customers Expectations Over-Full Demand ( Hill Stations in Summer, Mumbai Goa 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

Needs and Wants Fulfilled through a Marketing Offer :

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

Marketing Myopia
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.

EFFICIENCY Vs. EFFECTIVENESS

An efficient company produces its products and services economically 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 in business though its profits would be lower An ineffective but an efficient company will not survive Choosing to become effective reflects the marketing orientation of the company

MARKET VERSUS INTERNALLY DRIVEN BUSINESSES

MARKET DRIVEN BUSINESS Display customer concern throughout the business Expenditure on marketing research is an investment INTERNALLY DRIVEN BUSINESS Fail to understand the real concerns of customers Marketing research is nonproductive activity and rely on anecdotes and received wisdom Content to underplay the competition

Understand competitors objectives and strategies, and anticipate competitive actions Marketing spend is an investment that has long term consequences

Marketing expenditure Is superfluous that never appears to produce benefits

MARKET VERSUS INTERNALLY DRIVEN BUSINESSES (Cont)

MARKET DRIVEN BUSINESS INTERNALLY DRIVEN BUSINESS

Employees who take risks Reward time serving, and and are innovative in ability to not make mistakes serving customers rewarded Search for latent markets markets that no other company has exploited Happy to stick to their existing products and markets

Sensitive, fast and flexible to produce me-too copies of be able to respond to offerings already in the changes in the market market

Value and Satisfaction

Expectation
8

Performance
10

Expectation
10

Performance
8

If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high.

Enhancing Value
Marketers can enhance the value of an offering to 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
The art and science of choosing target markets and building profitable relationships 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

#1
Market Segmentation:
Divide the market into segments of customers

#2

Target Marketing:
Select the segment to cultivate

Marketing Management
Demand Management
Finding and increasing demand, also changing or reducing demand, such as in demarketing.

Demarketing

Temporarily or permanently reducing the number of customers or shifting their demand.

Marketing Management Philosophies

Societal Marketing Concept

Marketing Concept
Selling Concept Product Concept Production Concept

Company Orientations
The orientation or philosophy of the firm typically guides marketing efforts. Several competing orientations exist:
Production concept Product concept Selling concept Marketing concept Customer concept Societal marketing concept

Company Orientations Towards the Marketplace

Production Concept Product Concept Selling Concept Marketing Concept
Consumers prefer products that are widely available and inexpensive Consumers favor products that offer the most quality, performance, or innovative features Consumers will buy products only if the company aggressively promotes/sells these products

Focuses on needs/ wants of target markets & delivering value better than competitors

Theodore Levitts Marketing Myopia

What are business leaders myopic about? Four self-deceiving conditions causing firms to believe that they are in a growth industry:
1. Expanding and more affluent population 2. No competitive substitutes 3. Mass production and declining unit costs 4. Preoccupation with the product

Theodore Levitts Marketing Myopia, cont.

What is the difference between marketing and selling? The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert the product into cash; marketing with the idea of satisfying the need of the customer .

Societal Marketing Concept

The Marketing Mix

Product
Price Customer Needs Promotion

Distribution

Figure Holistic Marketing Dimensions

The Four Ps

The Marketing Mix

The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Consists of the 4 Ps
1. 2. 3. 4. Product Price Place Promotion

The 4 Ps of the Marketing Mix

The 4 Ps & 4 Cs of the Marketing Mix

4 Ps - Sellers View
Product Price Place Promotion

4 Cs - Buyers View
Customer Solution Customer Cost Convenience Communication

Loyalty and Retention

Financial Benefits Social Benefits

Structural Ties

Customer Relationship Groups

Butterflies
High Good fit between companys offerings and customers needs; high profit potential

True Friends
Good fit between companys offerings and customers needs; highest profit potential

Profitability

Strangers
Low Little fit between companys offerings and customers needs; lowest profit potential Short-term customers

Barnacles
Limited fit between companys offerings and customers needs; low profit potential Long-term customers

Projected loyalty

The Internet
The Internet has been hailed as the technology 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

The recent technology boom has had a major impact on the ways marketers connect with and bring value to their customers.