Introduction to marketing Learning objectives:

Created by Introduction to marketingLearning objectives: After reading this chapter, you should be able to: • Define marketing and discuss its core concepts. • Define marketing management and examine how marketers manage demand and build profitable customer relationships. • Compare the five marketing management philosophies. • Differentiate the parts of the marketing process and show how they relate to each other. • Understand the importance of marketing • To gain insight into the basic elements of the marketing concepts and its implementation. Prepared by Jude A

7. To understand the major components of a marketing strategy and the marketing mix 8. To gain a sense of general strategic marketing issues, such as marketing opportunity analysis, target market selection and marketing mix development. 9. To grasps the ethos and structure of this presentation. Prepared by Jude A

Created by Introduction to marketing Today’s successful companies have one thing in common. Like Nike, their success comes from a strong customer focus and heavy commitment to marketing. These companies share an absolute dedication to sensing, serving and satisfying the needs of customers in well-defined target markets. Prepared by Jude A

Marketing is about customers. Customers are essential component of a marketing system. Creating customer value and satisfaction is at the very heart of modern marketing thinking and practice. Today, marketing is practiced widely all over the world. Many people think that only large companies operating in highly developed economies use marketing, but sound marketing is crucial to the success of every organisation, whether large or small, domestic or global. Prepared by Jude A

Created by Marketing fundamental – Marketing mix, marketing strategy, marketing environment Political Target market strategy Product/brand Posi tioning Product price Buyer/consumer satisfaction place Social Economic people process promotion Physical evidence Differential advantage Competitive edge Ecological Technological Customer satisfaction The marketing mix Legal Marketing strategy The marketing environment Prepared by Jude A

Introduction to Marketing Marketing Definitions Chartered Institute of Marketing Philip Kotler The management process responsible for identifying , anticipating and satisfying customer requirements profitability’ Satisfying needs and wants through an exchange process Learnmarketing.net ‘Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer’ (P.Tailor – Learnmarketing.net 7/00) The common theme is meeting needs and providing benefits. Prepared by Jude A

Created by Introduction to marketing • What is marketing? There are so many definitions of marketing: According to Philip Kotler – Principles of marketing 4th European Edition ‘Marketing is 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’. Prepared by Jude A

According to the Chattered Institute of Marketing (CIM definition) ‘Marketing is ‘the management process which identifies, anticipates and satisfies customer requirements efficiently and profitably’. ( This is the most widely used and accepted definition of marketing) Thus, operative marketing involves the processes of market research, new product development, product life cycle management, pricing, channel management as well as promotion. Prepared by Jude A

Created by Introduction to marketing According to Dibb and Sally in the Marketing concepts and strategies, Marketing consists of individual and organizational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas ( by Dibb, 2000) Prepared by Jude A

Created by Introduction to marketing ‘Marketing means working with markets to bring about exchanges for the purpose of satisfying human needs and wants. It is a process by which individuals and groups obtain what they need and want creating and exchanging products and value with others’. (Kotler, 2000). "Marketing is the ongoing process of moving people closer to making a decision to purchase, use, follow...or conform to someone else's products, services or values. Simply, if it doesn't facilitate a "sale" then it's not marketing." (encyclopedia) Prepared by Jude A

Marketing, as suggested by the American Marketing Association, 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" Prepared by Jude A

Created by Introduction to Marketing • Philip Kotler in his earlier books defines as: "Marketing is human activity directed at satisfying needs and wants through exchange processes". Prepared by Jude A

“Marketing is the discipline concerned with solving people’s problems with products and services profitably.” Procter & Gamble Prepared by Jude A

“The difference between selling and marketing is that selling is getting rid of what you have, while marketing is having what people want.” Ted Levitt Prepared by Jude A

“The business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Peter Drucker Prepared by Jude A

“Marketing is the engine that drives business.” Phil Kotler Prepared by Jude A

“Marketing may be the engine which drives business, but in most companies the engine is broken: most marketing programs don’t work as well as they could or should.” Clancy and Krieg Prepared by Jude A

Created by Core marketing concepts: Needs, wants and demands Markets Marketing offers (products, Services and experiences) Core marketing Concepts Exchange, transaction And relationships Value and satisfaction Prepared by Jude A

Created by Introduction to Marketing • In popular usage, "marketing" is the promotion of products, especially advertising and branding. However, in professional usage the term has a wider meaning that recognizes that marketing is customer centered. • Products are often developed to meet the desires of groups of customers or even, in some cases, for specific customers. McCarthy divided marketing into four general sets of activities. • His typology has become so universally recognized that his four activity sets, the Four Ps, have passed into the language. Prepared by Jude A

Created by Introduction to Marketing • The are now 7 p’s of the marketing mix: Originally, there were 4 but due to more research work, 3 additional elements known as the soft elements have been added: namely people physical evidence and processes. • Product: The Product management and Product marketing aspects of marketing deal with the specifications of the actual good or service, and how it relates to the end-user's needs and wants. • Pricing: This refers to the process of setting a price for a product, including discounts. Price is the monetary value of a good or service. The amount of money you pay to obtain a product. • Promotion: This includes advertising, sales promotion, publicity, and personal selling, and refers to the various methods of promoting the product, brand, or company. • Placement or distribution refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to “where” a product or service is sold, e.g. in which geographic region or industry, to which segment (young adults, families, business people, women, men, etc.). • People • Physical evidence • processes • These 7 elements are often referred to as the marketing mix. A marketer can use these variables to craft a marketing plan. Prepared by Jude A

Created by Introduction to Marketing • As well as the standard four Ps (Product, Pricing, Promotion and Placement), there are also sometimes considered an extra three, totaling seven and known together as the extended marketing mix. These are: • People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customers' eyes, they are generally inseparable from the total service. As a result of this, they must be appropriately trained, well motivated and the right type of person. Prepared by Jude A

Process: This is the processes involved in providing a service and the behaviour of people, which can be crucial to customer satisfaction. Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This therefore means that potential customers perceive greater risk when deciding whether or not to use a service. To reduce the feeling of risk, thus improving success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, or testimonia Prepared by Jude A

Created by Introduction to Marketing • Prior to the advent of market research, most companies were product-focused, employing teams of salespeople to push their products into or onto the market, regardless of market desire. A market-focused, or customer-focused, organization instead first determines what its potential customers desire, and then builds the product or service. Marketing theory and practice is justified on the belief that customers use a product/service because they have a need, or because a product/service has a perceived benefit. • Two major aspects of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management). • An emerging area of study and practice concerns internal marketing, or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers. • Once a marketer has converted the prospective buyer, base management marketing takes over. The process for base management shifts the marketer to building a relationship, nurturing the links, enhancing the benefits that sold the buyer in the first place, and improving the product/service continuously to protect her business from competitive encroachments Prepared by Jude A

For a marketing plan to be successful, the mix of the four "Ps" must reflect the wants and desires of the consumers in the target market. Trying to convince a market segment to buy something they don't want is extremely expensive and seldom successful. Marketers depend on marketing research, both formal and informal, to determine what consumers want and what they are willing to pay for. Marketers hope that this process will give them a sustainable competitive advantage. Marketing management is the practical application of this process. The offer is also an important addition to the 4P's theory. Most companies today have a customer orientation (also called customer focus). This implies that the company focuses its activities and products on customer needs. Generally there are two ways of doing this: the customer-driven approach and the product innovation approach. Prepared by Jude A

Created by Introduction to Marketing • In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs. Prepared by Jude A

Created by THE IMPORTANCE OF MARKETING • Marketing Activities are used in many organisations today • Marketing activities are important to businesses and the economy • Marketing knowledge enhances consumer awareness • Marketing costs consume a sizeable portion of buyer’s incomes Prepared by Jude A

Created by Marketing - introduction • Marketing consists of activities • Marketing is performed by individuals and organisations • Marketing facilitates satisfying exchange relationships. THE BASIC PRIORITIES OF MARKETING INCLUDES THE FOLLOWING • Satisfying customers • Identifying/maximising marketing opportunities • Targeting the ‘right’ customers • Facilitating exchange relationships • Staying ahead in dynamic environments • Endeavouring to beat or pre-empt competitors • Utilising resources/assets effectively • Increasing market share • Enhancing profitability Prepared by Jude A

Created by THE MARKETING CONCEPT ( MARKETING ORIENTATION/The marketing oriented strategy).1960s-today The marketing concept focuses on customers. A company that adopts the marketing concepts does the following Puts customers at the centre of all business decision-making and planning Marketing research to better satisfy customers. Prepared by Jude A

THE MARKETING CONCEPT ( MARKETING ORIENTATION/The marketing oriented strategy).1960s-today • A marketing oriented firm (also called market orientation, the marketing concept, consumer focus, or customer focus) is one that allows the wants and needs of customers and potential customers to drive all the firm's strategic decisions. • The firm's corporate culture is systematically committed to creating customer value. The rationale is that the more a company understands and meets the real needs of its consumers, the more likely it is to have happy customers who come back for more, and tell their friends • This process can entail the fostering of long term relationships with customers. In order to determine customer wants, the company usually needs to conduct some form of marketing research. Overall, the marketer expects that becoming marketing oriented, if done correctly, will provide the company with a sustainable competitive advantage. Prepared by Jude A

The concept of marketing orientation was developed in the late 1960s and early 1970s at Harvard University and at a handful of forward thinking companies. It replaced the previous sales orientation that was prevalent between the mid 1950s and the early 1970s, and the production orientation that predominated prior to the mid 1950s. Since the concept was first introduced in the late 1960s, it has been modified, repackaged, and renamed as "customer focus", "the marketing philosophy", "market driven", "customer intimacy", "consumer focus", "customer driven", and "the marketing concept". Prepared by Jude A

Created by Application of the concept • Customer focus can been seen as a process that involves three steps. First customer wants are researched, then the information is disseminated throughout the firm and products are developed, then finally customer satisfaction is monitored and adjustments made if necessary. • The process can be applied at the individual level (called personalized marketing), the group level (called market segmentation), and occasionally at the mass level (mass marketing). The larger the group size, the more difficult the concept is to apply Prepared by Jude A

Techniques that firms use to understand the customer include: Quantitative marketing research - such as; surveys and questionnaires Qualitative marketing research - such as; focus groups and advisory panels Market research and industry research - such as; Porter 5 forces analysis Face-to-face meetings with customers Face-to-face meetings with frontline staff - sales reps, clerks, and receptionists Customer complaints department Customer hotlines - Web and telephone Visits to customers' facilities Frequent user programs and databases User groups - Beta testing Conferences Prepared by Jude A

Created by Application of the concept • Richard Heiens of the University of South Carolina Aiken published a detailed overview of the market orientation concept in the Academy of Marketing Science Review (2000). In this article, the author examines the choices between a competitor and customer focus. • A marketing oriented firm will typically show the following characteristics: • Extensive use of various marketing research techniques • Broad product lines • Emphasis on a product's benefits to customers rather than on product attributes • Use of product innovation techniques, such as; brainstorming, concept testing, and force field analysis. • The offering of ancillary services like credit availability, delivery, installation, and warranty • Customer satisfaction and complaint monitoring procedures, including; exit interviews, customer complaints database, and Web and telephone information hotlines. • Organizational structure in which the marketing manager reports directly to the CEO. Prepared by Jude A

Created by Other forms of orientation. Production-orientation(1900-1930s) Product-orientation Sales-orientation(1930s-1960s) Prepared by Jude A

Created by The Production Orientation or concept The production concept concentrates on production and distribution economies. This is based on the notion that customers will choose lower priced products that are readily available. Companies that focus on overproduction of products, thinking the more the products are produced the more the prices will be lowered and the more customers will demand the products. Such companies are production oriented. Prepared by Jude A

Created by PRODUCT ORIENTATION The product concept is focused on product quality. Some companies tend to focus on product quality as the key to marketing. Those companies that focus on the product quality are product oriented. A production orientation dominated business thought from the beginning of capitalism to the mid 1950's. Business concerned itself primarily with production, manufacturing, and efficiency issues. This view point was encapsulated in Says Law which states Supply creates its own demand (from the French economist Jean-Baptiste Say). To put it another way, If a product is made, somebody will want to buy it. The reason for the predominance of this orientation is there was a shortage of manufactured goods (relative to demand) during this period so goods sold easily. Prepared by Jude A

The implications of this orientation are: Product lines were narrow Pricing was based on the costs of production and distribution Research was limited to technical product research Packaging was designed primarily to protect the product promotion and advertising was minimal Prepared by Jude A

Created by The sales (selling) concept or orientation This is of course based on the notion that customers need to be persuaded to buy through aggressive selling and promotion Some companies focus more on sales promotion and other promotional strategies. They believe in more promotion as the key to marketing their products. Companies that applies the sales concept is sales oriented. Prepared by Jude A

The sales orientation era ran from the mid-1950s to the early 1970s, and is therefore after the production orientation era but before the marketing orientation era. During WWII world industry geared up for accelerated wartime production. When the war was over this stimulated industrial machine turned to producing consumer products. By the mid-'50s supply was starting to out-pace demand in many industries. Businesses had to concentrate on ways of selling their products. Numerous sales techniques such as closing, probing, and qualifing were all developed during this period and the sales department had an exalted position in a company's organizational structure. Other promotional techniques like advertising, and sales promotions were starting to be taken seriously. Packaging and labeling were used for promotional purposes more than protective purposes. Pricing was usually based on comparisons with competitors (called competitor indexing). Prepared by Jude A

Created by MARKETING AS A BUSINESS FUNCTION Marketing is the function of management.Management has to control, co-ordinate, plan, motivate, analyze and organize marketing activities:The marketing manager has to perform the following: Marketing / market researchPlanningEnvironmental analysisMarket segmentation, targeting and positioning.Marketing mix implementationMarketing is not only the function of the marketing manager. Marketing should be part and parcel of each and every department of the company.The various departments such as Human Resource, Production, Logistics, Finance, Stock and Technical departments have to corporate with the marketing department Prepared by Jude A

Created by MARKETING MANAGEMENT Marketing management is a business discipline focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand in a manner that will achieve the company's objectives. Prepared by Jude A

There is no universally accepted definition of the term. In part, this is due to the fact that the role of a marketing manager can vary significantly based on a business' size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product category or brand with full profit & loss responsibility. In contrast, a small law firm may have no marketing personnel at all, requiring the firm's partners to make marketing management decisions on a largely ad-hoc basis. In the widely used text Marketing Management (2006), Philip Kotler and Kevin Lane Keller define marketing management as "the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering, and communicating superior customer value." Prepared by Jude A

Created by MARKETING MANAGEMENT From this perspective, the scope of marketing management is quite broad. The implication of such a definition is that any activity or resource the firm uses to acquire customers and manage the company's relationships with them is within the purview marketing management. Additionally, the Kotler and Keller definition encompasses both the development of new products and services and their delivery to customers. Prepared by Jude A

Noted marketing expert Regis McKenna expressed a similar viewpoint in his influential 1991 Harvard Business Review article "Marketing is Everything." McKenna argued that because marketing management encompasses all factors that influence a company's ability to deliver value to customers, it must be "all-pervasive, part of everyone's job description, from the receptionists to the Board of Directors.“ This view is also consistent with the perspective of management guru Peter Drucker, who wrote: "Because its purpose is to find and keep customers, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are 'costs.'" Prepared by Jude A

Created by MARKETING MANAGEMENT • But because many businesses operate with a much more limited definition of marketing, such statements can appear controversial, or even ludicrous to some business executives. This is especially true in those companies where the marketing department is responsible for little more than developing sales brochures and executing advertising campaigns. • The broader, more sophisticated definitions of marketing management from Drucker, Kotler and other scholars are therefore juxtaposed against the narrower operating reality of many businesses. • The source of confusion here is often that inside any given firm, the term marketing management may be interpreted to mean whatever the marketing department happens to do, rather than a term that encompasses all marketing activities -- even those marketing activities that are actually performed by other departments, such as sales, finance, or operations. • If, for example, the finance department of a given company makes pricing decisions (for deals, proposals, contracts, etc.), that finance department has responsibility for an important component of marketing management -- pricing. Prepared by Jude A

Created by Consumer Costs and benefits Organization Individual Patient Student Volunteer Voter Reader Source: Principles of marketing by Dr. Frances Brassington & Dr Stephen Pettitt; chp 1 pg 7 OVERVIEWING THE MARKETING PROCESS: MARKETING AS AN EXCHANGE PROCESS: money Tesco / Asda Coke, Fanta Medical treatment Insurance premiums H Private hospital Fees Education University Non-profit Youth group Time Sense of community service Political party Vote Sense of economic/social progress Public library Taxes A good read Prepared by Jude A

Created by EXCHANGE BETWEEN BUYER AND SELLER Something of value Money, credit, donations, labour, goods Buyer (consumer) Seller (provider) Something of value Goods, services and ideas Prepared by Jude A

Created by Key definitions HUMAN NEED – A state of felt deprivation Human WANT – The form that a human need takes as shaped by culture and individual personality. DEMAND – Human wants that are backed by buying power (or the ability to pay for the products). MARKETING OFFER – Some combination of products, services, information, or experiences offered to a market to satisfy a need or want. CUSTOMER VALUE – The consumer’s assessment of the product’s overall capacity to satisfy his or her needs. CUSTOMER SATISFACTION – The extent to which a product’s perceived performance matches a buyer’s expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the buyer is satisfied or delighted. Prepared by Jude A

EXCHANGE – The act of obtaining a desired object from someone by offering something in return. TRANSACTION – A trade between two parties that involves at least two things of value, agreed-upon conditions, a time of agreement and a place of agreement. RELATIONSHIP MARKETING – The process of creating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders. MARKET – The set of all actual and potential buyers of a product or service. MARKETING MANAGEMENT – The art and science of choosing target markets and building profitable relationships with them. DEMARKETING – Marketing to reduce demand temporarily or permanently – the aim is not to destroy demand, but only to reduce or shift it. Prepared by Jude A

Created by Key definitions Production concept – The philosophy that consumers will favour products that are available and highly affordable, and that management should therefore focus on improving production and distribution efficiency. PRODUCT CONCEPT – The idea that consumers will favour products that offer the most quality, performance and features, and that the organisation should therefore devote its energy to making continuous product improvements. SELLING CONCEPT – The idea that consumers will not buy enough of the organisation’s products unless the organisation undertakes a large-scale selling and promotion effort. Prepared by Jude A

Introduction to marketing Learning objectives: