UNDERSTANDING MARKETING

Evolution, Orientations and Concepts

My Friends Project..
 What is Marketing?
• Marketing is the process of planning and
executing the conception, pricing, promotion,
and distribution of ideas, goods, and services
to create exchanges that satisfy individual and
organizational objectives.

• More simply: Marketing is all about

satisfying needs (...profitably and
fairly)!!!
 Marketing is an Exchange of Value
• An exchange is the process by which some
transfer of value occurs between a buyer and a
seller.
– At least two people or organizations must be willing to
make a trade, and
– Each must have something the other values.
– Most exchanges occur in the form of a monetary
transaction.
 Why is Marketing
Important?
• Marketing Creates Utility
– Form Utility
– Place Utility
– Time Utility
– Possession Utility
• Marketing’s Role in the Firm
– A firm’s marketing-related decisions must affect and
be affected by its other operations such as accounting
and manufacturing.
Why is Marketing Important?

• Marketing’s Role in Our Daily Lives

• Marketing’s Role in Society
Company Orientations Towards
the Marketplace
Consumers prefer products that are
Production
Production Concept
Concept widely available and inexpensive

Consumers favor products that

Product
Product Concept
Concept offer the most quality, performance,
or innovative features

Consumers will buy products only if

Selling
Selling Concept
Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing
Marketing Concept
Concept markets & delivering value
better than competitors
When Did Marketing Begin?
Product •Most Efficient Production &
Product Orientation
Orientation Distribution
•Seller’s Market

Selling •Marketing as a Sales Function

Selling Orientation
Orientation •Buyer’s Market

Customer
Customer Orientation
Orientation •Satisfies Customers’ Needs
and Wants
•Total Quality

•Benefits to Customers, Plus

New
New Era
Era Orientation
Orientation Firm’s Employees,
Shareholders, and Communities.
 The PILLSBURY
First Era in 1869 - 1930s.
The idea for the formation of the company
came from the availability of high quality
wheat and the proximity of water power –
NOT from the availability and proximity of
growing major market areas or the demand
for better less expensive, more convenient
flour products.
The principal concern here was with
PRODUCTION
 The PILLSBURY
In this Era The company’s Philosophy
might have been stated as: “ We are
professional flour millers. Blessed with a
supply of the finest North American wheat,
plenty of water power, and excellent milling
machinery, we produce flour of high
quality. Our basic function is to mill high
quality flour, and of course we must hire
salesman to sell it just as we hire
accountants to keep our books.”
 The PILLSBURY

Second Era in 1930s – 60s (Sales

Orientation).
This was the era of sales when for the first
time the co began to be highly conscious of
the consumer, her wants and her prejudices
as a key factor in business equation. The first
step along the road to become a marketing
company has been taken.
The principal concern here was with SALES.
 The PILLSBURY
In this Era The company’s Philosophy might have
been stated as: “ We are a flour milling company,
manufacturing a number of products for the
consumer market. WE must have a first rate
sales organization which can dispose of all the
products we can make at a favorable price. We
must back up this sales force with consumer
advertising and market intelligence. We want our
salesman and our dealers to have all the tools
they need for moving the output of our plants to
the consumer.”
 The PILLSBURY
Second Era in 60s and beyond (Marketing
Orientation).
This was the era of product research and for the
first time co felt the need to select the best new
products. The first step the co took to set up a
marketing department which developed criteria for
determining which products to market. The criteria
were nothing more or less than those of the
consumer itself.
The principal concern here was with Consumer
Markets
 The PILLSBURY

In this Era The company’s Philosophy might have

been stated as: “ We make and sell products for
consumers.”
 Customer Delivered Value

Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

 How is Marketing Done?
Marketers Develop and Implement a Marketing
Plan Based on the Following Information:

Organization’s
Organization’s Strengths
Strengths
and
and Weaknesses
Weaknesses

Opportunities
Opportunities and
and Threats
Threats to
to the
the
Organization
Organization in
in the
the Marketplace
Marketplace

Organization’s
Organization’s Overall
Overall Objectives
Objectives
 The Substance of Marketing

Want To Enter the Watch Business!!!

You Must Make A Set Of Important

(Marketing Related) Decisions!!!

WHAT ARE THESE DECISIONS???

The Probable Decisions are…!!!

To which consumer should I sell my

watches?
How should I define the consumer I hope to
serve?
Should I think in terms of geography,
perhaps the country in which my consumer
lives?
Or may be the consumer’s income or sex
or fashion orientation is more important?
The Probable Decisions are…!!!

What Product or Products should I offer?

For example should I offer digital or
analog, ornate or simple, multifunction or
single function?
How much should I charge for each watch?
Should I offer discounts to people who pay
cash or who buy in large amounts?
The Probable Decisions are…!!!
Should I sell direct to consumers or through
stores, and if through stores, what type of
stores?
Do I want to offer my product in several
types of outlet or only in one type?
How do I select and service the particular
outlets I Chose?
Finally, How do I convince the store to carry
my brand?
The Probable Decisions are…!!!

How should I communicate to the

consumers to whom I wish to sell?
Do I use advertising, and if so in what
media?
How do I reach the stores? Do I use sales
people?
Should the salespeople visit the stores or
should they just telephone them?
Needs, Wants and Benefits

Difference Between a
Consumer’s Actual State and
Needs
Needs Some Ideal or Desired State.
I’m Hungry!

Desire to Satisfy Needs in

Wants Ways That are Culturally and
Socially Influenced. Let’s go
eat a cheeseburger.

Outcome Sought by a
Benefits Consumer That Motivates
Buying Behavior. Now I’m
full; I feel better.
Markets, Consumers and Demand

Market
Customers Customers
who share a common
need that can be
satisfied by a
specific product DEMAND
AND
who are willing, able Potential
and have the authority Customers
to make the exchange.
 The Four Ps: The Tools
The Four Cs: The Ends

Marketing
Mix

Place
Product

Conven-
Customer
Solution Price Promotion ience

Customer Communication
Cost
The Other 4Cs: The Participants

The
Participants

Competitors
Company

Consumer Channel
 Marketing’s Tools: The Marketing Mix

Product
Product Price
Price
Good, Assignment
Assignmentof
ofValue
Good,Service,
Service,Idea,
Idea,Place,
Place,Person
Person Value

Tools
Tools that
that Are
Are Used
Used Together
Together toto Create
Create aa Desired
Desired
Response
Response Among
Among aa Set
Set of
of Defined
Defined Customers
Customers

Place
Place Promotion
Promotion
Availability
Availabilityof
ofProduct
Product Activities
Activitiesto
toInform
InformConsumers
Consumers
Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
 Customer-Oriented
Organization Chart
Customers

Front-line people

Middle management

s
C

er
us

om
t

Top
om

t
us
manage-
er

C
s

ment
Evolving Views of Marketing’s Role

Finance
Production
Production Finance
Human
resources
Marketing Human
resources Marketing

a. Marketing as an b. Marketing as a more

equal function important function
 Evolving Views of Marketing’s Role

Production on
cti

Fi
du

na
ro

nc
P

e
Marketing Customer
re
Hu ur

ce M
so

ur an
ar

s
m ces

ce
n ke

so m
an

Fi tin

re Hu
g

c. Marketing as the d. The customer as the

major function controlling factor
Evolving Views of Marketing’s Role

Production

Marketing

Customer
re
Hu ur
so

e
m ces

n c
an

n a
Fi

e. The customer as the controlling

function and marketing as the
integrative function
 Changing Marketing Architecture

INDUSTRIAL AGE INFORMATION AGE

(Past) (Current and Future)
• Customer Driven • Customer Driving
• One-way • Infinite Reach
• Finite Reach • Time Saving
• Time Delay • Information
• Information Abundance
Constraints
How Marketing is Changing?
• From Exchange / Transaction to Customer Value
• From Suppliers Making Marketing Decisions to
Customers Driving Those Decisions
• From Physical Channels to Seamless Channels
• From Market Segments to Segments of Size One
• From Personal Based Communication Campaign
to Permission Based Communication Campaign
Views on the Marketing Processes

5-C Analysis S-T-P Marketing 4 P’s Marketing Plan

Customer Segmentation Product
Competitor Targeting Pricing
Company Positioning Promotion
Context Place
Collaborators

The Functional View

Views on the Marketing Processes

Understanding Capturing Delivering Sustaining

Creating
Customer Customer Customer Customer
Customer
Value Value Value Value
Value

The Process View

 Understanding Customer Value

• Value is defined as the perceived worth in

monetary units of the of the set of
economic functional / technical and
psychological benefits received by the
customer in exchange for the price paid
for for a product offering, taking into
consideration the available offerings and
prices.
- Anderson, Jain and Chintagunta(1993)
Understanding Customer Value

Psychological

Functional Economic
 MARKETING’S CONTRIBUTION
WITHIN THE FIRM
Corporate / Business Unit Level
• The Policy Question: How to develop a
Customer Focus?
• Marketing’s Answer: Bring the Voice of the
customer in the organization
• Tools: Mkt Research, Customer Visits, Market
Orientation Audits
 MARKETING’S CONTRIBUTION
WITHIN THE FIRM
Product Level
• The Policy Question: How to best adapt to the
market?
• Marketing’s Answer: Develop a value
proposition and competitive positioning based
on customer needs
• Tools: Customer and Competitor analysis
 MARKETING’S CONTRIBUTION
WITHIN THE FIRM
Executional Level
• The Policy Question: How to best take the
product to market?
• Marketing’s Answer: Integrate the product,
pricing, placement and promotion policies to
deliver what the target market wants.
• Tools: Consumer Research, Product Testing,
Communication Research, Channel Audits etc.
 Plea From an Anonymous
Customer
• Don’t Sell me Clothes, Sell me a sharp appearance,
style and attractiveness.
• Don’t Sell me a House, Sell me comfort, contentment,
a good investment and a pride of ownership.
• Don’t Sell me Toys, Sell my children happy moments.
• Don’t Sell me Insurance, Sell me peace of mind, and a
great future for my family and me.
• Don’t Sell me Books, Sell me pleasant hours and the
profits of knowledge.
• Don’t Sell me Computers, Sell me the pleasure and
profits of the miracles of modern technology.
 The Moral is…..

• Don’t Sell me THINGS, Sell me Ideas,

Feelings, Self-respect, Home, Life and
Happiness.

PLEASE DON’T SELL ME

THINGS
Scanning the Marketing
Environment
 Objectives
• Tracking & Identifying Opportunities in the
Macroenvironment
• Demographic, Economic, Natural,
Technological, Political, & Cultural
Developments
 Macroenvironmental Influences on
the Marketing Mix

Physical Science
environ. &
Tech.

Economic
Socio- Marketing
&
cultural Mix Competition

Political
Demo-
&
graphic
Legal
 Macroenvironment:
Physical Environment

• Ecological systems • Geography

• Natural resources • Pollution levels
• Climate – Water & Air
 Demographic Environment

Worldwide
WorldwidePopulation
PopulationGrowth
Growth
Population
Population Age
AgeMix
Mix
Ethnic
EthnicMarkets
Markets
Educational
Educational Groups
Groups
Household
Household Patterns
Patterns
Geographical
Geographical Shifts
Shiftsin
in Population
Population
Shift
Shift from
from Mass
MassMarket
Marketto
toMicro
Micromarkets
markets
 Economic Environment

Income
Income Distribution
Distribution
Subsistence
Subsistenceeconomies
economies
Raw-material-exporting
Raw-material-exportingeconomies
economies
Industrializing
Industrializingeconomies
economies
Industrial
Industrialeconomies
economies

Savings,
Savings, Debt,
Debt, & &
Credit
Credit Availability
Availability
 Changing
Changing Role
Role
of
of Government
Government

Higher
HigherPollution
Pollution Natural Shortage
Shortageof
of
Levels
Levels Environment Raw
Raw Materials
Materials

Increased
Increased Costs
Costs
of
of Energy
Energy
Accelerating
Accelerating Pace
Pace Unlimited
Unlimited Opportunities
Opportunities
of
of Change
Change for
for Innovation
Innovation

Issues
Issues in
in the
the Technological
Technological
Environment
Environment

Varying
Varying Increased
Increased
R
R&&DD Budgets
Budgets Regulation
Regulation
Increased
Increased
Legislation
Legislation
Political-
Political-
Legal
Legal
Environment
Environment

Special-
Special-
Interest
Interest
Groups
Groups
Social/Cultural Environment

Of Of Of
the Universe Oneself Others
Views
Views
That
That Express
Express
Values
Values

Of Of Of
Nature Society Organizations
Social/Cultural Environment
 s
THE FOUR C

Company
 The Four Cs: Company

• Total organization
• Interactive
• Flexibility
• Entrepreneurial approach
• Intrapreneurial approach
 The Four Cs: Customers -
Economic Utility
• Form Utility
• Place Utility
• Time Utility
• Possession Utility
The Four C : Competitors
s

• Levels
– Product class
– Product category
– Brands
• Type
– Price
– Form
– Time
– Location
 Four Types of Competition

Price-based

Location-based Quality-based

Time-based
 The Four C :Collaborators
s

• Alliances
• Networks
• Informal partnerships
• Suppliers
• Virtual corporations