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Introduction to Marketing

Introduction to Marketing. Presentation and Discussion. Introduction. Marketing is simple, yet complex.

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Introduction to Marketing

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  1. Introduction to Marketing Presentation and Discussion Charles Blankson, Ph.D., Department of Marketing & Logistics

  2. Introduction • Marketing is simple, yet complex. • We are all involved in marketing and: “the enigma of marketing is that it is one of man’s oldest activities and yet it is regarded as the most recent of the business disciplines (Baker, 1976). Charles Blankson, Ph.D., Department of Marketing & Logistics

  3. Introduction contd. • Marketing came into existence with the first barter exchange (e.g. the barter trade in ancient Egypt, Songhai and Ghana empires in Africa etc.) when someone realized that exchanges add value for both parties. • This was the first real step forward in economic development. • Marketing has evolved (like other practices such as architecture, medicine, engineering) over the centuries to where it is today (Michael Baker). Charles Blankson, Ph.D., Department of Marketing & Logistics

  4. Introduction contd. • According to Peter Drucker, the first test of any business is not the maximization of profit but the achievement of sufficient profit to cover the risks of economic activity and thus avoid loss. • Customers are the foundation of a business and their purpose of existence. • In other words, customers are the mainstay of the business. Charles Blankson, Ph.D., Department of Marketing & Logistics

  5. Introduction contd. • As Peter Drucker puts it: There is only one valid definition of business purpose: to create a customer. • It is the customer who determines what business is… • What the business thinks it produces is not of first importance, especially not to the future of the business and to its success in the market place. • The customer determines what a business is, what it produces and whether it will prosper (Drucker). Charles Blankson, Ph.D., Department of Marketing & Logistics

  6. What is Marketing? • It is the most interesting, dynamic, versatile of all academic disciplines. • It is both theoretical and practical in nature. • It yields real results in the form of profits and/or satisfaction of business aims/objectives. Charles Blankson, Ph.D., Department of Marketing & Logistics

  7. What is Marketing? contd. • It is a multidisciplinary (economics, psychology, sociology, history, statistics…) management process of identifying and satisfying consumer and organizational needs profitably. • The aim of marketing is to make profit and/or satisfy business objectives. • Thus, overall, it enhances human and national economic development/progress. • Compare (a) Advanced countries and underdeveloped countries? And (b) a profitable business and a less profitable business? Charles Blankson, Ph.D., Department of Marketing & Logistics

  8. Definition • 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 goals. • Source: The American Marketing Association (AMA) (see www.ama.org). Charles Blankson, Ph.D., Department of Marketing & Logistics

  9. Definition • Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably. • Source: The Chartered Institute of Marketing (CIM) (UK) (see www.cim.co.uk) Charles Blankson, Ph.D., Department of Marketing & Logistics

  10. Recent formal Definition of 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. • Source: American Marketing Association, 2004 Charles Blankson, Ph.D., Department of Marketing & Logistics

  11. Role of Marketing • Organizational Resources • Effective match Specification of Target Market • Customer Satisfaction Organizational Aims/objectives Charles Blankson, Ph.D., Department of Marketing & Logistics

  12. The Marketing Concept • The Marketing Concept states that if a business or organization is to achieve profitability, the entire organization must be oriented towards satisfying consumer needs, wants and aspirations. Charles Blankson, Ph.D., Department of Marketing & Logistics

  13. The Marketing Concept contd. • In other words, The Marketing Concept holds that the key to success is through determining the needs/wants/aspirations of target markets and delivering these more effectively and efficiently than competitors. Charles Blankson, Ph.D., Department of Marketing & Logistics

  14. The Marketing Concept (key issues) • Organizations must concentrate on the customer and not the product or the company. • Organizations should revolve round the customer and not the other way around. • The purpose of a business is to create and keep a customer (Theodore Levitt). Charles Blankson, Ph.D., Department of Marketing & Logistics

  15. Elements of the Marketing Concept • Consumer/customer Orientation • Total Organization effort • Profitability/achievement of objectives. Charles Blankson, Ph.D., Department of Marketing & Logistics

  16. Criticisms of the Marketing Concept • Do customers really know their needs/wants/aspirations? • The choice of either consumer or competitive orientation. • Adapting to change (rigidity,inflexibility of the concept). • Conflict with social responsibility. • Limits in the applicability of the concept (e.g. the arts, ideology such as political parties, environmentalists – greenpeace, religions – churches/synagogues etc…… Charles Blankson, Ph.D., Department of Marketing & Logistics

  17. Some Criticisms of Marketing • Too many advertisements are annoying, misleading, or both. • There are too many unnecessary products. • Middlemen raise prices but don’t add value. • Marketing makes people materialistic. • Most of the criticisms result from misunderstandings about marketing (Perreault & McCarthy, 1999). Charles Blankson, Ph.D., Department of Marketing & Logistics

  18. Do you know your market? • What is the product or service being offered? • What are the market trends in the industry? • What is the market? • Who are your customers? And what are they looking for? • Who are your competitors? And how do they operate/react/behave? • Why do (should) your customers buy your product/service rather than that of your competitors? Charles Blankson, Ph.D., Department of Marketing & Logistics

  19. What is a Market ? • According to Kotler (2004), “a market consist of all the potential customers sharing a particular need or want who might be willing and able (i.e., propensity to) to engage in exchange to satisfy that need or want”. • Source: Kotler, P. (2004), Marketing Management, Prentice-Hall, Englewood Cliff, NJ. Charles Blankson, Ph.D., Department of Marketing & Logistics

  20. Market Types • Consumer Markets. • Industrial/Business to Business Markets. • Reseller (Retailers, Distributors) Markets. • Publics (Government agencies/departments/institutions). • International/global Markets. Charles Blankson, Ph.D., Department of Marketing & Logistics

  21. What is Market(ing) Orientation? • The process of applying the marketing concept in the market place. • Maintaining a customer orientation. • All departments work together guided by customer needs/wants/aspirations. • Focus on profits/objectives. • Source: Kohli and Jaworski (1990); Narver and Slater (1990). Charles Blankson, Ph.D., Department of Marketing & Logistics

  22. Market Orientation • Production Orientation --1850s -> 1930s • Sales Orientation -- 1930s -> 1950s Time • Marketing Orientation -- 1960s -> ?? • Consumer Relationship Marketing (CRM) -- 1990s -> ?? Charles Blankson, Ph.D., Department of Marketing & Logistics

  23. Production Orientation • Focus on the means of production, and assumes customers will want the product/service. Charles Blankson, Ph.D., Department of Marketing & Logistics

  24. Product Orientation • Focus on the technical perfection of the product/service seen through the producer’s (firm) eyes. Assumes customers will perceive product/service in the same way and thus buy. Charles Blankson, Ph.D., Department of Marketing & Logistics

  25. Selling Orientation • Focus on persuading (usually aggressive) customers to buy products which do not usually match their requirements. This is unlikely to lead to repeat buy/business. Charles Blankson, Ph.D., Department of Marketing & Logistics

  26. Customer Orientation • Focus on discovering customer needs (basic survey/question & answer type) and satisfying them. This is unlikely to make best uses of production and other organizational resources. Charles Blankson, Ph.D., Department of Marketing & Logistics

  27. Marketing Orientation • Focus on the identification of customers needs, organizational resources and objectives. Achieve effective match through market segmentation, targeting, positioning and resource development (see also Role of Marketing). Charles Blankson, Ph.D., Department of Marketing & Logistics

  28. So how do you define Market(ing) Orientation? • Market orientation is the organization-wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization-wide responsiveness to it (Kohli and Jaworski, 1990). Charles Blankson, Ph.D., Department of Marketing & Logistics

  29. Definition of Market Orientation contd. • According to Narver and Slater (1990), Market orientation comprises three components: • Customer orientation • Competitor orientation and • Interfunctional co-ordination. Charles Blankson, Ph.D., Department of Marketing & Logistics

  30. Measuring Market Orientation construct • Top Management • Interdepartmental Dynamics • Organizational Systems • Market (customer) Orientation • Employees • Environment • Business Performance. • Source: Kohli and Jaworski (1990) Charles Blankson, Ph.D., Department of Marketing & Logistics

  31. Measuring Market Orientation construct contd. • Customer Orientation • Customer commitment activities • Creation of customer value • Understanding customer needs • Measuring customer satisfaction • Offering after sales service • Competitor Orientation • Salespeople share competitor information • Responding rapidly to competitors’ actions • Top managers discuss competitors’ strategies • Targeting opportunities for competitive advantage • Interfunctional Coordination • Engaging in interfunctional customer calls • Sharing information among functions • Integrating all functions in strategy • Contribution of all functions to customer value • Sharing resources with other functions. • Source: Narver and Slater (1990) Charles Blankson, Ph.D., Department of Marketing & Logistics

  32. Social Responsibility and Marketing Ethics • Social responsibility concerns a firm’s obligation to improve its positive effects on society and reduce its negative effects. • Marketing ethics are the moral standards that guide marketing decisions and actions. Charles Blankson, Ph.D., Department of Marketing & Logistics

  33. Final comments on Market Orientation • An organization’s success in a dynamic business environment is more dependent on adaptation to changing and evolving customer needs/wants. • Higher degree of market orientation emanates from a changing and dynamic market environment. • Lower degree of market orientation can be evidenced in a market with a fixed set of customers whose preferences are stable. Here, few changes are expected in the marketing mix deliberation. • Kohli and Jaworski (1990) Charles Blankson, Ph.D., Department of Marketing & Logistics

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