Chapter # 01

Defining marketing for the

twenty-first century

3/27/2018 Sarif Mohammad Khan

 Chapter Questions
2

 Why is marketing important?

 What is the scope of marketing?
 What are some fundamental marketing
concepts?
 How has marketing management changed?
 What are the tasks necessary for successful
marketing management?

S. M. Khan 3/27/2018
 The importance of Marketing (1)
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 Financial success often depends on marketing ability

 Many company created a chief marketing officer
 Sears, levi’s, GM, Kodak are rethinking their business
model
 Even market leader such as Microsoft, Wal-mart and
Nike recognize that they can not afford to relax
 Jac Walech, GE’s brilliant former CEO repeatedly
warned his company “ change or die”

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 Definition of market

Traditional View was a physical place where buyer and

seller gather to buy and sell goods.
Economics now define market as a collection of buyer and
seller who transact over a particular product and product
class.
Marketer view the sellers as constituting the industry and
the buyers as constituting the market .
Thus market is a set of actual and potential buyer of a
specific goods or service.
 Definition of marketing
Meeting need profitably
Marketing means managing markets to bring about profitable
exchange relationships by creating value and satisfying needs
and wants.
Marketing is the process of creating value for the customer
and in response capturing value in return.
 The importance of Marketing (2)
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 Marketing manager must make major decisions ..

 Features of new product
 Price

 Where to sell
 How much to spend for advertisement or sell

 The marketing memo: Marketer’s frequently asked questions

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 The scope of Marketing
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 To be a marketer you need to understand

 What marketing is
 How it works
 What is marketed and
 Who does the marketing

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 What marketing is
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 Marketing is an organizational function and a set of

process for creating, communicating and delivering
value to customers and for managing customer
relationships in ways that benefit the organization
and its stake holders (AMA)
Marketing is a social & managerial process by which
individuals and groups obtain what they need and
want through creating and exchanging products and
value with others.

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 Definition of marketing Management
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 The arts and science of choosing target markets and

getting, keeping and growing customer through
creating, delivering, and communicating superior
customer value.

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 How it works-Exchange and Transaction (1)
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 Exchange: The act of obtaining a desired product

from someone by offering something in return.
 Self produce, by beg, by force and by product,
service & money – one of the four
 Five conditions:
• Two parties;
• Value to the other party;
• Capable to communicate and delivery;
• Free to accept and reject and
• Appropriate or desirable;

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 How it works-Exchange and Transaction (2)
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 Transaction: A transaction is a trade of values

between two or more parties
 Involve several dimension:
• At least two things of values;

• Agreement (Time and Place);

• Legal support

 Barter Transaction
 Transfer

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 What is Marketed (1)?
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 Goods: Constitute the bulk of most countries'

production and marketing effort
 Services: Services include the work of hotels,
barbers etc.
 Experiences: Firm can create, and market
experiences - Climbing Everest
 Events: Marketers promote events-Olympic, Eid,
National day
 Persons: Celebrity marketing -Artists, musicians,
lawyer etc.
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 What is Marketed (2)?
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 Places: Cities, states, regions, and whole nations

 Properties: Real (Real state), Financial (stocks and
bonds)
 Organizations: Work build a strong, favorable
image in the mind of their target publics
 Information: Info. can be produced and marketed
 Ideas: Market offering includes a basic idea;
products and services are the plat form for delivering
benefit of Idea; social idea-family planning

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 Who does Markets?
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 A marketer is someone seeking a response from

another party, called the prospect
 Marketing managers seek to influence the level,
timing and composition of demand to meet the
organization’s objective
 Eight demand states are possible..
 Negative demand  Irregular demand
 Nonexistent (no) demand  Full demand
 Latent demand  Overfull demand
 Declining demand  Unwholesome demand

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 Demand states and marketing tasks (1)
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 Negative demand : Major part dislikes, even pay a

price to avoid it - gallbladder operation - redesign,
lower price, more promotion (Conventional Marketing)
 No demand : Unaware and uninterested - new
firming method - connect benefit with people’s natural
needs and interested (Stimulating Marketing)
 Latent demand : Need can not be satisfied by
existing product -harmless cigarettes - measure size
of the market (Development Marketing)

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 Demand states and marketing tasks (2)
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 Declining demand : Causes of decline, re-stimulated

the target market by changing feature, design &
effective communication (Creative Marketing)
 Irregular demand : Varies on seasonal, daily or
even hourly basis – flexible pricing, promotion and
other incentives (Synchro-marketing – find ways to
alter demand pattern)
 Full demand : Maintain, changing customer
preferences, competition, improve product quality
and measure customer satisfaction (Maintenance
Marketing)
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 Demand states and marketing tasks (3)
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 Overfull demand : Discourage-raising price, reducing

promotion (De-marketing)
 Unwholesome demand : discourage consumption of
unwholesome products like alcohol, cigarettes, large
family - fear message, price hikes, reduce
availability-alcohol, handguns (Customer Marketing)

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 Definition of market
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 Traditional View was a physical place where buyer

and seller gather to buy and sell goods
 Economics now define market as a collection of
buyer and seller who transact over a particular
product and product class (Overall accepted)
 Marketer view the sellers as constituting the industry
and the buyers as constituting the market
 Thus market is a set of actual and potential buyer of
a specific goods or service

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 Structure of Flows in a Modern
Exchange Economy (Figure 1.1)
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 A Simple marketing system (Figure 1.2)
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 Key Customer Markets
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 Consumer markets (tree market who sell

timber/wood)
 Business markets (office supplier)
 Global markets (oil, gas)
 Nonprofit and Governmental markets (charity,
postal service)

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 Marketplace, Marketspace, and
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Metamarket

 The marketplace is physical, as when one goes

shopping in a store.
 Marketspace is digital, as when one goes shopping
on the internet.
 Meta market- cluster of complementary products and
services that are closely related in the minds of
consumers but are spread across a diverse set of
industries – automobile.

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 The new marketing realities
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1. Major societal forces

2. New consumer capabilities
3. New company capabilities

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 1. Major societal forces
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 Network information  Heightened competition

technology  Industry convergence
 Globalization
 Retail transformation
 Deregulation
 Disintermediation
 Privatization

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 2. New consumer capabilities
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 A substantial increase in buying power

 A greater variety of available goods and services
 A great amount of information
 Greater ease in interacting and placing and
receiving orders
 An ability to compare noted on products and
services
 An amplified voice to influence peer and public
opinion

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 3. New company capabilities
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 Powerful information and sales channel, website(s)

 Researchers can collect fuller and richer
information..
 Internal communication by using the internet

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 Marketing Management Philosophies
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The Production Concept

The Product Concept

The Selling Concept

TheMarketing
MarketingConcept
Concept

The Holistic Marketing Concept

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 Production Concept
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 This concept holds that consumers are interested

primarily in product that are available & highly
affordable
 Marketing objectives
 Cheap, efficient production
 Intensive distribution

 Make sense
 developing country
 If the company want to expand the market
 If D>S
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 Product Concept
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 The concept holds that consumers will buy the product

that offers them the highest quality, the best
performance, and innovative features
 Marketing objectives:
- Quality improvement

Tendency toward Marketing Myopia

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 Selling Concept
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 The concept holds that consumers will not buy enough

of the organization’s products unless the organization
undertakes a large-scale selling and promotion
effort.
 Marketing objectives:
– Sell, sell, sell
 Lack of concern for customer needs and satisfaction

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 Marketing Concept
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 This philosophy holds that to be successful, a company

must determine the needs and wants of a specific
target markets and deliver the desired satisfactions
better than the competitors
 Marketing objectives:
– Profits through customer satisfaction
Marketing concept achieve superior performance
Reactive market orientation ( expressed needs)
Proactive marketing orientation (latent needs)
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 Sales & Marketing Concepts Contrasted
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Starting Focus Means Ends

Point

Selling Profits
Existing
Factory and through
Products
Promoting Volume

The Selling Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The Marketing Concept

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 Holistic Marketing Concept
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 Based on development, design and implementation of

marketing programs, processes and activities that
recognizes their breadth and interdependencies
 It holds that “everything matters” in marketing and a
broad an integrated perspective is often necessary

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 Holistic Marketing Concept (2)
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 Holistic Marketing Concept (3)
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 Relationship marketing: has aim to build mutually

satisfying long-term relationship with key parties like
customers, suppliers, distributors etc. for making a
strong marketing network
 Integrated marketing: activities to create,
communicate and deliver value to customers through
diversified set of integrated activities e.g. 4 P’s of
marketing, communication mix, offering mix etc.

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 Holistic Marketing Concept (4)
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 Internal marketing: ensuring that everyone in the

organization embraces appropriate marketing
principles (see table 1.1)
 Sales force, advertising, customer service, product
management, marketing research must work together
 Marketing must be embraced by other department

 Social responsibility: marketing understanding social,

ethical, environmental & legal concern of society
 societal marketing concept
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 Core Concepts (1)
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 Needs, Wants and Demands:

 Needs are the basic human requirements-food, air,
water, clothing, shelter etc.
 Needs become wants when they are directed to
specific objects that might satisfy the need- rice, soft
drink, mango etc.
 Demand are wants for specific products backed by
an ability to pay and willing to buy

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 Core Concepts (2)
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 Segmentation, Target markets and positioning

 Market segments - can be identified by examine
demographic, psychographics and behavioral
differences among buyers
 The marketer then decides which segment(s) present
the greatest opportunity - which are its target market
 Positioning – to occupy a clear and distinctive place in
the mind of consumer by delivering central benefit (s)

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 Core Concepts (3)
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 Product, Offering and Brand

 Product - is anything that can be offered to
satisfy a need or want
 Offering which can be a combination of products,
services, information and experiences
 A brand is a offering from a known source

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 Core Concepts (4)
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 Value and Satisfaction

 Value: Benefits / Costs =
(Functional benefits + Emotional benefits) /
(Monetary costs + Time costs + Energy costs + Psychic
costs)
 Satisfaction : The extend to which Product Perceived
Performance matches with Customer Expectation
 PPP > CE = Highly Satisfied Customer
 PPP < CE = Dissatisfied Customer
 PPP = CE = Satisfied Customer

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 Core Concepts (5)
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 Marketing Channels
 Communication channels deliver and receive
message from target buyers - include newspapers,
magazines, radio, television, mail, telephone,
billboards, posters, and the internet
 Distribution channels - used to display, sell and
deliver physical products & services - include
distributors, wholesalers, retailers and agents
 Services channels - used to carry out transactions
with potential buyers - warehouse, transportation,
banks and insurance
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 Core Concepts (6)
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 Supply Chain –
a longer channel from raw materials to final
products that are carried to final buyers

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 Core Concepts (7)
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 Competition: Includes all the actual and potential

rival offerings and substitutes that a buyer might
consider.
 Four levels of competition - Example (Thirst)
Brand competition (Coca Cola vs. Pepsi-Cola)
Industry competition (tea vs. coffee industry)
Form competition
Generic competition

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 Core Concepts (8)
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 Marketing Environment - consists of the task

environment and the broad environment
 The task environment - includes the immediate
actors –the company, suppliers, distributors, dealers,
and the target customers
 The broad environment - consists of six components:
demographic, economic, natural, technological,
political-legal, social-cultural environment

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 Marketing Mix
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 The marketing mix is the set of marketing tools the

firms uses to pursue its objectives in the target market

Four Ps Modern Mkt mgt 4 Ps

• Product • People
• Price • Process
• Place • Program
• Promotion • Performance

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 Marketing Mix
46

 The marketing mix is the set of marketing tools the

firms uses to pursue its objectives in the target market

Four Ps Four Cs
• Product • Customer solution
• Price • Customer cost
• Place • Convenience
• Promotion • Communication

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 Marketing Mix
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Marketing Mix

Product Place
Variety Channel
Quality Coverage
Design Target Locations
Features Customers Transportation
Brand name Inventory
Packaging Price Promotion
Size List price Advertising
Service Discount Personal selling
Warranties Allowances Sales promotion
Returns Payment period Public relation
Credit terms Direct marketing
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 Marketing mix strategy
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Promotion mix
Sales
Promotion
Offering mix Advertising

 Products Sales force Distribution Target

Company

channel customer
 Services Public
 prices relations
Direct mail,
telemarketing
and internet
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 Shift in Marketing Management (1)
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 From marketing does the marketing to everybody

does the marketing
 From organizing by product units to organizing by
customer segments
 From making everything to buying more goods and
services from outside (out-sourcing)
 From using many suppliers to working with fewer
suppliers in a partnership (partnership supplier)

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 Shift in Marketing Management (2)
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 From relying on old market positions to uncovering

new ones
 From emphasizing tangible assets to emphasizing
intangible assets
 From building brand through advertising to
building brands through performance and
integrated communications
 From attracting customers through stores and
salespeople to making product available online

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 Shift in Marketing Management (3)
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 From selling to everyone to trying to be the best

firm serving well defined target markets
 From focusing on profitable transactions to
focusing on customer lifetime value
 From focusing on gaining market share to a focus
on building customer share
 From being local to being “glocal” – both global
and local

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 Shift in Marketing Management (4)
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 From focusing on financial scorecard to marketing

scorecard
 From focusing on shareholders to marketing
stakeholders

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 Marketing management tasks
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 Developing marketing strategies and plans

 Capturing marketing insights
 Connecting with customers
 Building strong brands
 Shaping the market offerings
 Delivering value
 Communicating value
 Creating long term growth
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 Marketing Debate
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Does marketing creating or

satisfying needs ?

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