What is marketing


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What is marketing

  1. 1. What is Marketing? Type of Organizations that use Marketing. Origins of Marketing. Exchange and Utility. Marketing Management Philosophies. Importance of the Marketing Concept. Test your knowledge Please Email alex@udel.edu any comments Return to Syllabus. Return to Homepage.What is marketing?Definition of marketingMarketing is the process of planning and executing the conception, pricing,promotion, and distribution (4 Ps) of ideas, goods and services to create exchanges(with customers) that satisfy individual and organizational objectives.Satisfying customer needs (creating utility) through the exchange process.Create a Marketing Mix (4ps): Product. Chapter 11, Chapter 12 Price. Chapt 13 & 14 Promotion. Chapter 18, Chapter 19, Chapter 20 Distribution (Place). Chapter 17To satisfy Target Market(s) (customers)Chapter 9Handout...Taco BellTaco Bell was used as an example...Marketing Mix: Product...Border Lights, a new menu of "light foods" Price.....Value Pricing as with their other menu items Promotion...Various media and methods, a commercial that appeared during the 1995 Superbowl to announce the arrival. Distribution...Taco Bell has increased its points of access (where you can by its products) by a factor of 4 over the last couple of years...including gas stations etc.Target Market(s):
  2. 2. Current fast food customers (typically male, 14 -34 year olds) and/or Health conscious who do not currently purchase fast food??Return to Contents ListType of organizations that use marketing. All!! Corporations: ie Pepsi, Coke, GM etc. Government: promoting the health plan, politicians during elections Hospitals: A Philadelphia hospital, competing for maternity patients, offered a steak and champagne dinner (sales promotion) with candlelight for new parents. Other hospitals, in an effort to attract physicians, have installed services such as saunas, chauffeurs, and private tennis courts. Schools: University of Delaware MBA program Churches: Many churches are redesigning their service offering to better meet the needs of their target audience so as to keep members and financial support. US Army: A marketing plan to attract recruits. Postal Service:1993 launch of the Elvis Presley stamp was a major media event. Fans in Nashville lined up at midnight, postmasters warned that sales were "first come first served, no limit", and one post office postmarked envelopes with the no longer used :Return to Sender--Address Unknown" messageReturn to Contents ListOrigins of Marketing.When did marketing first evolve? Division of labor. Specialization. Led to the Exchange of goods etc. Exchange is key to marketing, without an exchange, there is no need to market.Return to Contents ListExchange and UtilityThe criteria needed for an exchange to occur: Must have something of value to exchange Need to be able to communicate Must be able to exchange (under 21 drinking)
  3. 3. Must want to exchange At least 2 people needed for an exchange to occurThe exchange process creates Utility.Utility is the satisfaction, value, or usefulness a user receives from a good or aservice.When you purchase an automobile, you give up less (in $s) than the value of thecar (to you)...the ability to get you from A to B, safely, in a timely manner etc.There are four types of utility: Form--production of the good, driven by the marketing function. EXAMPLE?? Baskin Robbins turns cream, sugar and milk into icecream. Place--make product available where customers will buy the product. EXAMPLE?? Food truck at a construction site. Time--make product available when customers want to buy the product. EXAMPLE?? Pathmark, open 24 hours a day, 365 days a year, has time utility compared to Landhope Farms etc. Possession--once you own the product, do what you want with it, ie. eat itAn example of a service that offers all types of utility:24 Hour pizza delivery service.Marketing performs the exchange functions that makes the total utility of the product a reality to consumers.Return to Contents ListThe Marketing Management PhilosophiesMarketing management can be described as carrying out the tasks that achievedesired exchanges, between the corporation, and its customers.There are a number a different philosophies that guide a marketing effort. Production Concept Demand for a product is greater than supply. o To increase profit, focus on production efficiencies knowing all output can be sold. Also useful concept when increasing production raises economies of scale etc. to reduce price. Henry Ford, "Doesnt matter what color car you want, as long as it is black."...A typical quote during the production era. o Dominant era: From mid C19th to early C20th, industrial revolution etc.
  4. 4. Selling Concept Demand for a product is equal to supply. o Emphasis is needed to sell the product to increase profits. Focus on advertising. o Useful for unsought goods, i.e., encyclopedias, funeral plots. Political candidates, selling important, not post consumer satisfaction. o Dominant era: 1920s to Mid 1930s WWII to early 1950sMarketing Concept Supply for a product is greater than demand, creatingintense competition among suppliers. o Company first determines what the consumer wants, then produces what the consumer wants, then sells the consumer what it wants. o Dominant era: 1930s to WWII 1950s to present.LL Bean 1912, founded on the marketing concept, in his first circular:"I do not consider a sale complete until goods are worn out and the customerstill satisfied. We will thank anyone to return goods that are not perfectlysatisfactory...Above all things we wish to avoid having a dissatisfiedcustomer."To illustrate the marketing era/concept Peter Drucker, in 1954 said:"if we want to know what business is we must first start with itspurpose...There is only one valid definition of business purpose: to create acustomer. What business thinks it produces is not of first importance-especially not to the future of the business or to its success. What thecustomer thinks he/she is buying, what he/she considers "value" is decisive-it determines what a business is, what it produces, and whether it willprosper."-Peter Drucker, The Practice of Management, 1954, P.37John B McKitterick, President of General Electric, 1957, addressing theAMA said:"It is customer oriented, integrated, profit oriented philosophy of business."Still need to make a profit "meeting needs profitably"Handout...`Do Call Us: More companies...Example of using the marketing concept...1-800 #s listen to your customers,test product ideas on them etc.Improvements in technology have enabled marketers to become moreconsumer oriented, helping develop Relationship marketing 1:1 marketingFor the launch of Windows 95, Microsoft has contracted five additionalcompanies (including Unisys and DEC) to handle the anticipated overlaodin demand for the 1-800 #. They had the capacity available to handle 40,000
  5. 5. phone calls in the first day (twice their usual capacity), but still left customers waiting for service. Societal Marketing Concept: Focus on other stakeholders, as well as the business and its customers. Need to balance 3 items o Company profits o Customer wants o Societys interests The difference between short term consumer wants and long term consumer welfare. An example of a company adopting the Societal concept: Starkist...Dolphin Safe Tuna Actually more expensive than regular tuna, but is more appealing due to societys concerns. Handout...Hooters Tries to Do Good Work.. An example of the societal marketing concept...although the ethics of accepting monies from Hooters may be questioned (i.e. exploitation of women??) For another example of Societal Marketing Concept...Visit the Body Shop and pick up some of their leaflets.What era are we in now?We are still essentially in the marketing era, since that is the dominant concept, butincreasing pressure is being put on to companies to adopt the societal concept.Return to Contents ListImportance of the marketing concept. According to the Customer Service Institute, it costs as much as five times as much to acquire a new customer than it does to service an existing one. Customers tell twice as many people about a bad experience over a good one. According to the American Marketing Association (AMA), for an average company, 65% of its business comes from its presently satisfied customers. Introduction Strategic Market Planning SWOT Analysis Mission Statement Organizational Goals Corporate Strategy
  6. 6. Marketing Planning Marketing Management Please Email alex@udel.edu any comments Return to Syllabus Return to HomepageIntroductionIt is necessary to discuss strategic market planning and marketing early in thecourse. A strategic market plan gives direction to a firms efforts and betterenables it to understand the dimensions of marketing research, consumeranalysis, and product, distribution, promotion, and price planning, which will bediscussed in later classes.We will look at an overview of the strategic marketing process including thedevelopment of: SWOT Analysis Mission Statement Organizational Goals Corporate Strategy Marketing strategyThe strategic market plan is not a marketing plan, it is a plan of all aspects of anorganizations strategy in the market place.The process of strategic market planning yeilds a marketing strategy(s) that is theframework and the development of the marketing plan.Developing a marketing plan is your group project assignment. A marketing plandeals primarily with implementing the market strategy as it relates to targetmarket(s) and the marketing mix.Return to Contents ListStrategic Market PlanningA Strategic marketing plan is an outline of the methods and resources required toachieve organizational goals within a specific target market(s).
  7. 7. "Describes the direction [an organization] will pursue within its chosenenvironment and guides the allocation of resources and effort" - Peter Bennett,Dictionary of Marketing Terms, AMA 1988Strategic planning requires a general marketing orientation rather than a narrowfunctional orientation.All functional areas must include marketing and must be coordinated to reachorganizational goals. It is a heirarchal process, from company wide to marketingspecific. (Marketing concept, implemented from top down.)Company wide, SBU specificA firm can be broken down into several strategic business units. Each SBU is adivision, product line, or other profit center within the parent company.An SBU has its own strategic plan and can be considered a seperate business entitycompeting with other SBUs for corporate resources.For example Pepsico Companies SBUs include: KFC Taco Bell Pizza Hut Mountain Dew Lipton Tea Brands Frito LayIE The College of Business and Economics is an SBU of the University of Delaware.A strategic plan gives: Direction and better enables the company to understand mkt. function dimensions Makes sure that each division has clear integrated goals Different functional areas are encouraged to coordinate Assesses SW & OT Assesses alternative actions It is a basis for allocating company resources A procedure to assess company performanceThe strategic planning process may include the following, although this differsfrom one organization to another:
  8. 8. Develop a SWOT analysis Develop Mission Statement that evolves from the SWOT analysis Develop Corporate Objectives that are consistent with the organizations mission statement. Develop corporate strategy to achieve the organizations objectives. [if the organization is made up of more than one SBU, then follow loop again for each SBU, then proceed] Marketing (and other functional objectives) must be designed to achieve the corporate objectives Marketing Strategy, designed to achieve the marketing objectives.The strategic market planning process is based on the establishment oforganizational goals and it must stay within the broader limits of the organizationsmission, that is developed taking into consideration the environmentalopportunities and threats and the companies resources and distinctcompetancies.A firm can then assess its opportunities and develop a corporate strategy.Marketing objectives must be designed so that they can be accomplished throughefficient use of the firms resources.Corporate strategy is concerned with issues such as diversification, competition,differentiation, interrelationships between business units and environmental issues.It attempts to match the resources of the organization with the opportunities andrisks of the environment (SWOT). Corporate strategy is also concerned withdefining the scope and roles of the SBUs of the firm so that they are coordinated toreach the ends desired.Return to Contents ListSWOT AnalysisA SWOT Analysis examines the companies: Strengths...Internal Weaknesses...Internal Opportunites...External Threats...ExternalBy developing a SWOT analysis, a company can determine what its distinctivecompetancies are. This will help determine what the organization should be in
  9. 9. business for, what its mission should be.Return to ContentsMission StatementHandout Visioning Missions becomes...Reason to be? Invisible hand etc.Product Terms...outdatedTechnology Terms...outdatedMarket Terms...keep in touch with consumers needsi.e. AT&T is in the communications business not the telephone business.Visa...allows customers to exchange values...not credit cards3M solves problems by putting innovation to work.Should not be too narrow...or...too broadShould be based on distinctive competancies of the corporation, determined fromthe SWOT analysisThe following are example mission statementsReturn to Contents ListOrganizational goalsOrganizational goals are derived from the mission, corporate strategy is derivedfrom the organizational goals.Goals must specify the end results that are desired, that are measurable and withina particular time frame.SMAC Specific Measurable Achieveable ConsistentReturn to Contents ListCorporate StrategyIssues include:
  10. 10. Scope of Business-----What Business you are in?? Resource deployment----How you are going to use your resources?? Competitive advantage----What are your competitive advantages?? Coordination of Production, Marketing, Personnel etc.---- Coordination process??Tools for strategic market planningThe following are some of the many tools that are used in developing corporatestrategy, they are supplements not substitutes for managements ownjudgement: BCG Product Portfolio Management o Star o Cash Cow o Problem Child (Question Marks) o Dog SWOT analysis Product Life Cycle ConceptA separate strategy is needed for each SBU Intense Growth-mkt penetration/development, product development in related markets. o Market Penetration...more products to the same market o Market Development...same product to new markets o Product Development...new products to same market Diversified Growth-new products new markets Horizontal (unrelated products to current markets)/Concentric (NPNM) Integrated growth Forward/Backward/Horizontal Disneys Purchase of Capital Citys/ABC, a content provider purchasing distributionHandout Mattel Toy....Handout Ben & Jerrys New CEO...What should B&J do?Develop SWOT AnalysisPropose MissionGoalsStrategy: Market Penetration
  11. 11. Market Development Product Development DiversificationBen & Jerrys HomepageBen & Jerrys SWOT Analysis Return to Contents ListMarketing Planning.Marketing plans vary by: Duration Scope Method of Development, bottom up/top downObjective is to create a Marketing plan. A plan for each marketing strategydeveloped.Marketing strategy encompasses selecting and analysing the target market(s) andcreating and maintaining an appropriate marketing mix that satisfies the targetmarket and company. A Marketing strategy articulates a plan for the best use of theorganizations resources and tactics to meet its objectives. Do not pursue projectsthat are outside the companies objectives or that stretch the companies resources.Plan includes: Executive summary Situation Analysis Opportunity and Threat Analysis Environmental Analysis Company Resources Marketing Objectives Marketing Strategies to include: o Target market (Intended) A target market is group of persons/companies for whom a firm creates and maintains a Marketing Mix that specifically fits the needs and preferences of that group. Does the company have the resources to create the appropriate MM and does it meet the companys objectives. o Develop a marketing mix-how to reach the target market. The marketing mix is designed around the buying motive-emphasizing the marketing concept. The marketing environment effects the marketing mix, which is only controllable to a certain extent (the
  12. 12. MM). Before developing the MM, need to determine the needs of the target market. Financial Projections Controls and EvaluationsMarketing control process consists of establishing performance standards,evaluating the actual performance by comparing it with the actual standards, andreducing the difference between the desired and actual performance.Return to Contents ListMarketing Management.The planning, Organizing, Implementing and Controlling the marketing activitiesto facilitate and expidite exchanges effectively (NEED TO ACHIEVEORGANIZATIONAL OBJECTIVES) and efficiently (MINIMIZING ORGANIZATIONALRESOURCES). Therefore to facilitate highly desirable exchanges and to minimizethe cost of doing so. Effective planning reduces/eliminates daily crises.