Introduction to Marketing

Marketing is a social and managerial

process by which individuals and
groups obtain what they want and
need through creating, offering and
exchanging products of value with
others
OLD view of NEW view of
marketing: marketing:

Making a sale Satisfying

—“telling and customer needs
selling”
 Marketing Management

The process of planning and executing the

conception, pricing, promotion, and distribution
of ideas, goods, services to create exchanges
that satisfy individual and organizational goals
American Marketing Association (1937)
Importance of Marketing to Organizations

The basic reason for firm’s existence is customers want

satisfaction.
Marketing is the only revenue-producing activity for

the firm.
Marketing has become increasingly important for

service firms and not-for-profit organizations.

The Importance of Marketing in Your Life

Marketing is a large part of your daily life.

Consumers are exposed to 3,000 commercial

messages a day.
Studying marketing will make you a better-

informed customer.
Marketing probably relates -- directly or indirectly

-- to your career aspirations.

 Utility
Marketing creates
utilities:
Extend to which a product
satisfies customer’s needs
& wants  Place utility makes a
product accessible to
 Time utility makes a potential customers
product available where they want it.
when they want it.
 Form utility is  Possession utility is created
created when a raw when ownership is
material is transferred to the buyer.
converted to  Allows the buyer to use the
product as he wishes
finished goods
 Marketing Mix

Marketing
Mix

Product Price Place Promotion

 The 4 Ps & 4Cs

Marketing Convenience
Mix

Product Place

Customer
Solution Price Promotion

Customer Communication
Cost
9
 The sub components of the four Ps
Product : Price:
Features Credit terms
Design Payment
Brand period
Package Discount
Service Commission
Warranty Price
Quality
Style
 The sub components of the four Ps

Place: Promotion:
Channels Advertising
Location Sales promotion
Stock Publicity
Delivery Selling
Transport communication
Wholesaling
Retailing
Core concepts of Marketing
 Needs , Wants & Demands

Needs are basic human requirements which need to be fulfilled in order to

survive.

The needs become wants when they are directed to specific objects that
may satisfy the need.

Demands are wants or desires backed by ability to pay & willingness to

buy specific products.

Wants + Buying Power = Demand

Cost

Cost is the monetary value of what is purchased.

Integrated marketing

It means trying together the activities of the

other departments of the organisation also to
serve the customer’s needs.
 Marketing Myopia

 Proposed by Theodore Levitt

 Marketing shortsightedness

OCCURS WHEN A MARKETER IS PREOCCUPIED

WITH PRODUCT DEVELOPMENT,
MANUFACTURING & SELLING AND IGNORES
CUSTOMER’S NEEDS WNATS & INTERESTS
Demarketing

Marketing to reduce demand temporarily or

permanently
 Internal marketing

It is the task of hiring, training and motivating

able employees who want to serve customers

well.
 Symbiotic Marketing

The readiness or willingness of one or more non

related companies to put together resources to
exploit an emerging market opportunity
 Product

Product is any offering that can satisfy a need or a

want.

Brand is an offering from a known source , which

identifies a seller’s product & differentiates it from
the competitors’ product.
 WHAT IS
MARKETED????
Goods or
Products
Services
Experiences
Events
Properties
Places
Organizations
information
ideas
Persons
 Classifications of Products

•Divided into two categories according to expected

buyers:

Consumer
Industrial
Convenience goods
Production goods
Shopping goods

Specialty goods Support goods

Unsought goods
Classifications of Products - Consumer
 Convenience goods/services
 Consumed quickly and regularly and are inexpensive

 Shopping goods/services
 Purchased less often, comparisons such as brand, style,
performance, color, and price have more influence
 Specialty goods
 Important and expensive, customers get what they
want and will pay for it
 Unsought goods
 Products that a customer purchases when he is faced with a
sudden trouble
Classifications of Products- Industrial
goods
Production goods: goods that are solely used
for production
 Raw material
 Component parts
 Process material
Support goods: products that facilitate
production process
 Capital equipment
 Accessory equipment
 Consumable supplies: not part of final product,
consumed during production & delivery of product
 Types of Markets

Consumer markets:

Individuals and households that buy goods and

services for personal consumption
 Types of Markets

Business markets:

Buy goods and services for further

processing or for use in their production
process
 Types of Markets

Reseller markets :

Buy goods and services in order to resell

them at a profit
 Types of Markets

Government markets:

Agencies that buy goods and services in

order to produce public services or
transfer them to those that need them
 Types of Markets

International markets:
Buyers of all types in foreign countries
 Difference between marketing and selling
Selling
1. Selling starts with the seller
and is preoccupied all the
time with the needs of the
seller.
2. Seller is the centre of the
business universe
3. Seeks to quickly convert
products into cash.
Marketing
1. Marketing starts with the
buyer & focuses constantly
on the needs of the buyer.
2. Buyer is the centre of the
business universe
3. Seeks to convert customer
needs into products.
 Difference between Marketing and Selling

Selling Marketing

1. Views business as a goods 1. Views business as a customer

producing process satisfying process

2. The firm makes the product 2. The firm first identify the
first and then figures out how needs of the customer and
to sell it and make profit. match the product with the
identified need.
 Difference between marketing and selling

Selling Marketing
1. Cost determines the price 1. Consumer determines price;
price determines cost.

2. Transportation, storage and 2. They are seen as vital

other distribution functions services to be provided to the

are perceived as mere customer, keeping

extensions of the production customer’s convenience in

function. focus.
Difference between marketing and selling

Selling Marketing

1. In firms practising selling, 1. Marketing is the central function of

production is the central the business. The entire company

functions of the business or business is organised around

the marketing function

2. Views the customer as the very

2. Selling views the customer as
purpose of the business. See the
the last link in the business .
business from the viewpoint of the
customer.
Evolution of marketing concept

Features: mass
production, demand
exceeds supply
Production Era Philosophy: supply
Till creates its own demand
late
1920s
Motto: to sell what is
produced
 Evolution of marketing concept

Features: mass
production, supply
exceeds demand
Sales Era Philosophy: customer
Till 1950s will not buy if there is no
hard selling
Emphasis: distribution,
sales promotion
Evolution of marketing concept

Features: customized
production
Philosophy:
Marketing Era determination of
1950s customer’s needs &
satisfying them
Emphasis: proper
marketing mix strategy
 Evolution of marketing concept

Features: products
offered in the best
interest of the consumers
Social marketing Philosophy:
1970s improvement in the
quality of life
 Evolution of marketing

Involves building long

term mutually satisfying
Relations with key
Relationship Marketing parties , in order to earn &
retain their long term
1990s till date preference & business.
 RELATIONSHIP MARKETING

Marketers have realized that the success of marketing depends upon relationships with
:

Customers
Distributors
Dealers
Suppliers

The operating principle is simple:

build an effective network of relationships with key stakeholders & profits
will follow.
 Dell Focuses on Building a Relationship With
Customers

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

+
 5 Levels of investment to build long term
relationship with customers

BASIC MARKETING

REACTIVE MARKETING

ACCOUNTABLE MARKETING

PROACTIVE MARKETING

PARTNERSHIP MARKETING
Marketing Management Philosophies

Production Concept:
 Consumers Favor:
 Widely available
 Highly affordable
 Management’s Focus: “engineer”

 Improving production efficiency

 Improving distribution efficiency
Marketing Management Philosophies

PRODUCT CONCEPT:
 Consumers Favor:
 Quality, performance, innovative features
 Management’s Focus: “inventor”

 Making superior products

 Continuous product improvements
Marketing Management Philosophies

SELLING CONCEPT:
 Consumers Favor:
 Not buying, or not buying enough
 Management’s Focus: “hard sell salesperson”
 Large-scale selling and promotion effort
 Coaxing and pushing people to buy
Marketing Management Philosophies

The Marketing Concept:

DETERMINATION OF CUSTOMER’S REQUIREMENTS & SUPPLYING

PRODUCTS TO SATISFY THEIR REQUIREMENTS

Marketing Management Philosophies

Societal Marketing Concept =

Consumer Satisfaction + Company ‘ s Profits +

Society’s well being
Societal Marketing Focuses on satisfying customer needs &
wants while enhancing individual & societal well-being

Society
(Human Welfare)

Societal
SocietalMarketing
Marketing
Consumers Concept Company
Concept
(Wants) (Profits)
 How organisations & marketing are
changing???
Customers:
 Expect higher quality, service & customisation
 Perceive fewer product differences
 Show less brand loyalty
 Obtain extensive product information & shop
intelligently
 Greater price sensitivity in their search for value.

LEAD TO INCREASING PROMOTION COSTS

& SHRINKING PROFIT MARGIN
 Organisation’s responses & adjustments

Reengineering
Outsourcing
E-commerce
Benchmarking
Alliances
Partner suppliers
Global & local markets
Decentralisation
 Marketer’s responses & adjustments

Customisation
Relationship marketing
Target marketing
Maintain customer database
Integrated marketing communication: blending
several marketing tools to extract maximum benefits
Delivering customer value &
satisfaction
 Value

It is the ratio between what the customer gets

and what he gives
 SATISFACTION

a person’s feelings of pleasure or

disappointment resulting from comparing a
product’s perceived performance (or outcome)
in relation to his or her expectations.
 Customer Satisfaction
Satisfaction = Performance (P) – Expectation (E)

Performance
exceeds
expectations

P>E
Performance
Performance Customer is
falls short of
matches
expectations highly
expectations
P<E satisfied
P=E
Customer is or
dissatisfied Customer is delighted !
satisfied
 TOTAL CUSTOMER VALUE

THE BUNDLE OF BENEFITS CUSTOMERS

EXPECT FROM A GIVEN PRODUCT/ SERVICE

= product value + service value + personnel value =

image value
 Total Customer Cost

The bundle of costs customers expect to incur in

evaluating, obtaining, using & disposing the
product/service.
= monetary cost + time cost + energy cost + psychic
cost
 Customer Value

(Product,
(Product,Service,
Service,
Total
Total Customer
Customer Personnel,
Personnel,&&
Value
Value Image
ImageValues)
Values)
-- Total
Total Customer
Customer
(Monetary,
(Monetary,Time,
Energy,
Time,
Energy,&&
Cost
Cost Psychic
PsychicCosts)
Costs)
== Customer
Customer (Profit
(Profitto
tothe
the
Delivered
Delivered Value
Value Consumer)
Consumer)
 Value chain
 Proposed by Michael Porter

 It is a tool for identifying ways to create more customer

value
 Identified nine strategically relevant activities that creates

value & cost in a specific business

 The primary activities are inbound logistics, operations,

outbound logistics, marketing and sales and service

 The support activities are procurement, technology

development, human resource management & firm

infrastructure.
 Steps in the value providing process

 Value selection

 Value creation/ value delivery

 Value communication

 Value enhancement
 Customer Retention

Customer retention is about developing loyal customers & building long term
relationships.

The key to customer retention is customer satisfaction.

A Highly satisfied customer

 always stays loyal to the company .

 pays less attention to competing brands & is less sensitive to price.
 Costs less to serve than new customers as the transactions are routinized.
 Talks favorably about the company & its products.