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MGT301

Principles of
Marketing
Lecture-4
Summary
of
Lecture-3
Information Buying

Risk Taking Selling

Marketing
Functions
Financing Transporting

Standardizing
and Grading
Storing
Demarketing

 …Marketing to reduce demand temporarily or


permanently; the aim is not to destroy demand
but only to reduce or shift it.
Customer Relationship
Management
 Loyal customers provide  But the angry gossip of
more and more credible disloyal customers can
referrals devastate a firm!
Today’s Topics
Marketing in Historical
perspective and
Evolution of Marketing
How has Marketing Changed Over
Time?
How it Started
1.The Production Concept (Mass Production) (prior
to 1920’s):
Mass produce @ lowest cost -Distribute @ affordable
price
No options for consumer
2. The Product Concept (1920-1950’s):
Build a More Innovative Product
Build a Better Mousetrap
3. Selling Concept (1940’s-1980’s)
- Few product-- sell, sell, sell!
- Largest volume at any price
- Focus on one time transaction
Until the ‘90’s
“Transaction Marketing” – focus one time sale
Focus on product
4. Marketing Concept (1990’s and beyond)
-Idea: identify most profitable customers who value your
service/product the most and build relationships with
those individuals
- Customers become more demanding/empowered
- Able to produce based on customers needs:
- Technological advances allow for customer tracking
databases
 Relationship Marketing (1990’s)

 Definition: Marketing is the process of establishing


and maintaining mutually beneficial exchange
relationships with customers and other
stakeholders

 KEEP CUSTOMERS FOR LIFE!!!


Marketing Philosophies
PRODUCT SOCIETAL
CONCEPT MARKETING
CONCEPT

KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
PRODUCTION CONCEPT
CONCEPT
CONCEPT

SELLING
CONCEPT
The Production Concept

..Holds that consumers will favor products that are


available and affordable.
Implies work towards mass production and low
cost
The Product Concept
…Assumes customers favor products that offer the
most quality, performance, and features.
Implies firm should strive to continually upgrade
product and product features.
The Selling Concept

…The idea that customers will not buy enough of


the organization’s products unless the
organization undertake a large scale selling and
promotion efforts.
..Business assumption that consumers will resist
purchasing nonessential goods and services with
the attitude toward marketing that only creative
advertising and personal selling can overcome
consumers’ resistance and convince them to buy.
Inside-out perspective: Assumes people need to be sold
on whatever it is the firm has decided to offer. 1st:
Decide what to produce; 2nd: Figure out how to get
people to buy what you have.
Implies lots of selling/promotional activities are
needed to move product
After WWII

Shortages in goods ended.


Economy changed from a seller’s market to a buyer’s
market.
Seller’s market: marketplace characterized by a
shortage of goods and/or services.
Buyer’s market: marketplace characterized by an
abundance of goods and/or services.
The Marketing Concept

…Holds that achieving organizational goals depends


upon determining the needs and wants of target
markets and delivering the desired satisfactions
more effectively and efficiently than do
competitors.
Marketing Concept Components

 Means of achieving goals


 determine needs and wants
– implies research and/or appropriate assumptions
 Target markets
– implies clear target groups: people whose
needs/want you will try to fill
 Satisfaction
 Competitors acknowledged
Marketing Era

With a continually increasing buyer’s market,


marketing would no longer be regarded as a
supplemental activity performed after completion of
the production process.
The marketer would play a lead role in product
planning.
Marketing and selling would no longer be synonymous
terms.
Marketing Concept Vs. Selling
Concept

Marketing Concept: Selling Concept:


Begin with customer Begin with what firm
needs wants to produce
Develop 4 Ps in light of Given products, persuade
customer needs customers to buy
“Have what you can get “Get rid of what you
rid of” have.”
Selling
A company makes a product and then uses various
selling methods to persuade customers to buy it.
Marketing
Company finds out what the customer wants and
develops a product to satisfy those wants while
yielding a profit.
SOCIETAL MARKETING CONCEPT: ….in a way that
maintains or improves the consumer’s and the
society’s well-being.

Typical thinking in 1990


Marketer must act in a socially responsible manner.
External environment’s influence on firm’s
marketing program.
Society
Society
(Human
(Human Welfare)
Welfare)

Societal
Societal
Marketing
Marketing
Concept
Concept

Consumers
Consumers Company
Company
(Satisfaction)
(Satisfaction) (Profits)
(Profits)
Relationship Era
 Relationship marketing: development and
maintenance of long-term, cost-effective exchange
relationships with individual customers, suppliers,
employees, and other partners for mutual benefit.
 Strategic alliances: partnerships with vendors and
retailers play major roles in relationship marketing.4
Relationship Marketing
Effective relationship marketing relies heavily on
information technologies such as computer databases
that record customers’ tastes, price preferences, and
lifestyles along with the increase of electronic
communications. Some examples are frequent buyer
clubs/cards.)
Marketing Management

 Marketing management is “the art and science of


choosing target markets and building profitable
relationships with them.”
 Creating, delivering and communicating superior
customer value is key.
Marketing Management

Customer Management:
– Marketers select customers that can be served well
and profitably.
Demand Management:
– Marketers must deal with different demand states
ranging from no demand to too much demand.
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
Production i on
ct

Fi
u

na
o d
r

n
P

ce
Marketing Customer
re
Hu ur

ce M

ur an
ar
so

s
n
ma ces

ce
a ke

so m
in tin

re Hu
F
n

c. Marketing as the d. The customer as the


major function controlling factor
Production

Marketing

Customer
re
Hu ur
so
ma ces

ce
n
n

na
Fi

e. The customer as the controlling


function and marketing as the
integrative function
r e
h e
i t
o p
s st
t’
Le
Summary

How has Marketing Changed Over


Time?
PRODUCT SOCIETAL
CONCEPT MARKETING
CONCEPT

KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
PRODUCTION CONCEPT
CONCEPT
CONCEPT

SELLING
CONCEPT
Society
Society
(Human
(Human Welfare)
Welfare)

Societal
Societal
Marketing
Marketing
Concept
Concept

Consumers
Consumers Company
Company
(Satisfaction)
(Satisfaction) (Profits)
(Profits)
Production

Marketing

Customer
re
Hu ur
so
ma ces

ce
n
n

na
Fi

The customer as the controlling


function and marketing as the
integrative function
Next….

 Marketing Challenges in the 21st century


MGT301
Principles of
Marketing
Lecture-4