Introduction to

Marketing

Theaimofmarketingistoknowandunderstan
dthecustomersowellthattheproductorse
rvicefitshimandsellsitself.

P.Drucker

Preview

Discuss what is marketing and core concepts of

marketing and review some possible definitions
See the evolution of marketing thought and discuss
various orientations toward marketplace
Focus on modern marketing concept, identify four
pillars of modern marketing
Describe 4Ps of marketing, as elements of total
marketing mix
Discuss modern marketing concept comparing it
with selling concept and extending it with
relationship marketing concept

Introduction to Marketing
Marketing;
Satisfying

customer needs
Meeting needs profitably
Generating customer value at a profit

Managing profitable customer relationships by

delivering superior value to customers

What is Marketing?

No single correct definition or approach

Common subject matters:

The ability to satisfy customers,

The identification of favorable marketing opportunities,
The need to create an edge over competitors,
The capacity to make profits to enable a viable future for
the organization,
The use of resources to maximize a business market
position,
The aim to increase market share mainly in target
markets

What is Marketing?
Marketing a process by which
companies create value for customers and
build strong customer relationships to
capture value from customers in return

What is Marketing?
The Marketing Process

Capture
value from
customers
in return

Create value forcustomers and

build customer relationships

Understand
Understand
the
the
marketplace
marketplace
and
andcustomer
customer
needs&wants
needs&wants

Design
Designaa
customercustomerdriven
driven
marketing
marketing
strategy
strategy

Construct
Constructaa
marketing
marketing
program
programthat
that
delivers
delivers
superior
superior
value
value

Build
Build
profitable
profitable
relationships
relationships
and
andcreate
create
customer
customer
delight
delight

Capture
Capture
value
valuefrom
from
customers
customers
to
tocreate
create
profits
profitsand
and
customer
customer
quality
quality

Understanding the Marketplace

and Customer Needs:

Core Concepts of Marketing

Needs, wants,
and demands
Markets

Exchange,
and relationships

Products
and services

Value and
satisfaction

Core Concepts of Marketing

Needs, wants, and

demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange and
relationships
Markets

Need

State of felt deprivation

Basic human requirements

Wants

Needs directed to specific

objects
The form of needs as
shaped by culture and the
individual

e.g. needs food

e.g. wants a BigMac

Demands

Wants which are backed by

buying power

Core Concepts of Marketing

Needs, wants, and

demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange and
relationships
Markets

Marketing offering

Combination of
products, services,
information or
experiences offered to a
market that satisfy a
need or want
Offer may include
services, activities,
people, places,
information or ideas

Core Concepts of Marketing

Marketing myopia is
focusing only on existing
wants and losing sight
of underlying consumer
needs.

Market offerings are not

limited to physical
products; UNCF
successfully markets the
idea that A mind is
terrible thing to waste.

Core Concepts of Marketing

Products
Anything that can be Offered to a Market to Satisfy a Need or Want

Experiences
Experiences

Persons
Persons

Organizations
Organizations

Information
Information

Places
Places

Ideas
Ideas

Services
Activities or Benefits Offered for Sale That Are Essentially
Intangible and Dont Result in the Ownership of Anything

Core Concepts of Marketing

Needs, wants, and

demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange and
relationships
Markets

Value

Customers form
expectations regarding
value
Marketers must deliver
value to consumers
Set the right level of
expectations (not to low or high)

Satisfaction

What is the benefit of having

a satisfied customer?

Core Concepts of Marketing

Needs, wants, and

demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange and
relationships
Markets

Exchange
The act of obtaining a
desired object from someone
by offering something in
return
The response may be more
than simply buying or trading
products and services

One exchange is not the goal,

relationships with several
exchanges are the goal

Relationships are built through

delivering value and satisfaction

Marketing network consists

of the company and all its
supporting stakeholders

Core Concepts of Marketing

Needs, wants, and

demands
Marketing offers:
including products,
services and experiences
Value and satisfaction
Exchange and
relationships
Markets

Market

Set of actual and potential

buyers of a product
These buyers share a
particular need or want that
can be satisfied through
exchange relshps
Marketing means managing
markets to bring about
profitable customer relshps

Simple Marketing System

Communication

Industry

(a collection
of sellers)

Products/services
Money

Information

Market

(a collection
of Buyers)

Main Elements in a Marketing System

Core Concepts of Marketing

Marketing system consists of all of the actors

(suppliers, company, competitors,
intermediaries, and end users) who are affected
by major environmental forces such as:
Demographic
Economic
Physical
Technological
Politicallegal
Socio-cultural

Marketing defined as...

Process by which individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others.
Simply put: Marketing the delivery of
customer satisfaction at a profit.

Designing a Customer-Driven
Marketing Strategy

Marketing management the art and science of

choosing target markets & building profitable
relationships with them.

This definition must include answers to 2 questions:

What customers will we serve?
How can we best serve these customers?

Getting, keeping, and growing customers through

creating, delivering, and communicating superior
customer value

Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve

Market segmentation refers to dividing the

markets into segments of customers
Target marketing refers to which segments to
go after

Designing a Customer-Driven
Marketing Strategy

Marketing management involves managing

demand involves managing customer
relationships

Marketers aim to influence the level, timing and

composition of demand to meet organizational goals.

Marketing management is concerned

not

only with finding and increasing demand,

but also with changing or even reducing it

Demarketing marketing to reduce demand temporarily

or permanently; the aim is not to destroy demand but to
reduce or shift it

Designing a Customer-Driven
Marketing Strategy
Marketing management:

Customer management & Demand management

ChoosingaValueProposition
The value proposition is the set of benefits or
values a company promises to deliver to
customers to satisfy their needs

Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

Production Concept

Consumers will favor those products that are

widely availableandhiglyaffordable.
Managers concentrate on achieving high
productionefficiencyandwidedistribution.
The assumption is valid at least in 2 situations :
The demand for a product exceeds supply (suppliers will
concentrate on finding ways to increase production)
The products cost is high and has to be decreased to
expand the market.

Product Concept

Consumers will favor those products that offer

the mostquality,performanceandfeatures.
Managers in product-oriented organizations
concentrate on making superiorproducts and
improving them over time.
The assumption the customers will admire
well-made products and can evaluate product
quality and performance
This concept may lead to marketingmyopia

Selling Concept

Consumers will not buy enough of the firms

products unless it undertakes a large scale selling
and promotion effort

Consumers must be convinced of buying company

products
Company is powerful in generating effective selling and
promotion to stimulatemorebuying
Agressive selling & promotion

Mostly used by firms which have overcapacity.

The aim is to sell what they make rather than make
what the market wants.
Short-termprofits are more important

(customer dissatisfaction may occur)

Marketing Concept

Achieving organizational goals depends on

knowing the needs and wants of the target
markets and delivering the desired satisfactions
better than competitors do

4 pillars of modern marketing :

1. Target market
2. Customer needs
3. Integrated marketing
4. Profitability through customer satisfaction

Marketing and Sales Concepts Contrasted

Starting
point

Focus

Means

Ends

Factory

Existing
products

Selling and
promotion

Profits through
sales volume

(a) The selling concept

Market

Customer
needs

Integrated
marketing

Profits through
customer
satisfaction

(b) The marketing concept

Marketing Concept (cont.)

1)

Targetmarket homogenous group of customers to

whom the company wishes to appeal

2)

Customerneeds

Consumers may not be fully conscious of their needs

It may not be easy to articulate these needs
They may use words that require some interpretation
Customer-orientedthinking to define customer needs
from the customers point of view
Sales revenue New customers + Repeat customers
Customer Retention vs. Customer Attraction
Customer value and customer satisfaction are building
blocks of customer relationship management

Marketing Concept (cont.)

3)

IntegratedMarketing
1.

Various marketing functions must work together for

customer satisfaction (coordination of 4Ps; marketing
mix elements)

Marketing Mix controllable variables the company puts

together to satisfy its target market(s).
Product: Product variety, quality, design, features, brand name,
packaging, sizes, services, warranties, returns
Price: List price, discounts, allowances, payment period, credit
terms
Promotion: Sales promotion, advertising, sales force, public
relations, direct marketing
Place: Channels, coverage, assortments, locations, inventory,
transport

Marketing Concept - The 4 Ps

Marketing Concept - The 4 Ps The 4 Cs

Marketing
Mix
Place

Product

Customer
Solution

Convenience
Price

Customer
Cost

Promotion

Communication

Marketing Concept (cont.)

IntegratedMarketing(cont.)
2.

4)

Marketing must be well coordinated with other

departments in the company;
all departments have to work together to satisfy
customers needs and wants

Profitabilitythroughcustomersatisfaction

To achieve profits as a result of creating superior

customer value

Selling Marketing...
There will always be need for
some selling. But the aim of marketing is to
make selling unnecessary.
unnecessary The aim of
marketing is to know and understand the
customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer who
is ready to buy.
PeterDrucker

Societal Marketing Concept

Companys negative effects on

society
Conflict
between
consumer
wants and long-term social
welfare
Societal marketing concept is
the idea that a company should
make good marketing decisions
by considering consumers
wants, the companys
requirements, consumers longterm interests, and societys
long-run interests

Societal Marketing Concept

Society
(Human Welfare)

Societal
Marketing
Concept
Consumers

Company

(Want Satisfaction)

(Profits)

Constructing an Integrated
Marketing Program

The marketing mix is the set of tools (four Ps)

the firm uses to implement its marketing
strategy.It includes product, price, promotion, and
place.

Integrated marketing program is a

comprehensive plan that communicates and
delivers the intended value to chosen customers.

Building Customer Relationships

Customer Relationship Management (CRM)

The overall process of building and maintaining profitable

customer relationships by delivering superior customer
value and satisfaction

Relationship Building
Blocks

The aim to
increase consumer
lifetime value!
to gain a greater
proportion of an
existing
customers
purchases over
a long period

Our slogan 5+Million More Smiling Customers is

not about reaching sales targets but about whether
we are able to provide greater satisfaction to a
greater number of customers...
The goal is to improve customer satisfaction which
translates to an increased number of smiling
customers.
Tokuichi Uranishi
Ex Vice President,
Toyota Motor Corporation

Building Customer Relationships

Customer Relationship Levels and Tools

Building Customer Relationships

The Changing Nature of Customer Relationships

Relating with more carefully selected customers

uses selective relationship management to target
fewer, more profitable customers
What value does the customer bring to the organization?
Are they worth pursuing? customer profitability analysis

Relating more deeply and interactively by

incorporating more interactive two way relationships
through blogs, Websites, online communities and
social networks

Building Customer Relationships

The Changing Nature of Customer Relationships

Relating for the long term uses customer

relationship management to retain current
customers and build profitable, long-term
relationships
Focus has shifted to:
keeping current customers, and
building lasting relationships based on superior
satisfaction and value

It costs 5 to 10 times as much to attract a new customer

as it does to keep a current customer satisfied.

Building Customer Relationships

Partner relationship management

involves working closely with partners in
other company departments and outside
the company to jointly bring greater value to
customers

Building Customer Relationships

Partner Relationship Management

Partners inside the company every function

area interacting with customers
Electronically
Cross-functional

teams

Partners outside the company how

marketers connect with their suppliers,
channel partners, and competitors by
developing partnerships

Capturing Value from Customers

Creating Customer Loyalty and Retention

Customer lifetime value (CLV) is the value

of the entire stream of purchases that the
customer would
make over a
lifetime of
patronage

CLV shows true

worth of a customer

Capturing Value from Customers

Growing Share of Customer

Share of customer is the portion of the

customers purchase that a company gets
in its product categories
Achieved through offering greater variety,
cross-sell and up-sell strategies.

Capturing Value from Customers

Customer equity is
the total combined
customer lifetime
values (CLVs) of all
of the companys
customers
A measure of the
firms performance

Capturing Value from Customers

Building Customer Equity

Building the right relationships with the right

customers involves treating customers as
assets that need to be managed and
maximized
Different types of customers require different
relationship management strategies

Build

the right relationship with the right

customers

Evolution of Marketing Thought

How marketing has become

marketing as we understand it
and apply its practices today?

Evolution of Marketing Thought

Production Era (1850s-1920s)

Sales Era (1920s-1950s)

The focus was on personal selling and advertising

Sales seen as the major means for increasing profits

Mktg Era (1950s-present)

Industrial revolution; mass production

Few products and little competition

Customer orientation replaced the hard sell of the sales-led era

Determination of the needs and wants of customers before
introducing products or services

Relationship Marketing Era: 1990s

Marketing era has recently shifted from being transaction-based

to focusing on relationships
Both attracting and retaining customers

Evolution of Marketing Thought:

New Era in Marketing (The Millenium)
..from Relationship Marketing to...
Network marketing
E-marketing
Community marketing
Buzz marketing
Digital marketing
Mobile marketing
... ... ...

The New Marketing Landscape

Major Developments

The New Marketing Landscape

Challenges

Digital age
Globalization
Ethics and social
responsibility
Not-for-profit
marketing

Growth of the Internet

Advances in
telecommunications,
information,
transportation

Customer research and

tracking
Product development
Distribution
New advertising tools
24/7 marketing through the
Internet

The New Marketing Landscape

Challenges

Digital age
Globalization
Ethics and social
responsibility
Not-for-profit
marketing

Geographical and
cultural distances
have shrunk

Greater market coverage

More options for
purchasing and
manufacturing
Increased competition
from foreign competitors

The New Marketing Landscape

Challenges

Digital age
Globalization
Ethics and social
responsibility
Not-for-profit
marketing

Marketers need to
take great
responsibility for the
impact of their
actions

The New Marketing Landscape

Challenges

Digital age
Globalization
Ethics and social
responsibility
Not-for-profit
marketing

Many organizations
are realizing the
importance of
strategic marketing

Performing arts
Government agencies
Colleges, universities
Hospitals

So, What Is Marketing?

Pulling It All Together