MARKETING• What is a market? What is marketing?• A market is a customer or group of customers.• Marketing on the other hand is a management process responsible for identifying, anticipating and satisfying customer needs profitably. Marketing more than any other business function deals with customers. Building customer relationships based on customer value and satisfaction is at the heart of modern marketing.
Marketing• To be successful companies must be market orientated.• According to Percy a market orientation is a mgt culture where beating competition through the creation of superior customer value is the paramount objective throughout the business not only to the people in the marketing department.• The element of a market led orientation are culture, value, norms, mindset, behaviour, capabilities i.e. the ability to sense what the customer wants and to tie in these with what the company can do, strategic thinking and the organisation. All of these are directed towards understanding, satisfying and retaining customers.• According to Percy organisations have no choice they have to follow the market in order to survive.
Marketing defined• What does the term marketing mean? Many people think of marketing only as selling and advertising. No wonder everyday we are bombarded with television commercials, newspaper ads, direct mail offers, sales calls and internet ads. Although they are important they are only two of many marketing functions and are often not the most important ones. Selling and ads are only the tip of the marketing iceberg.• Today marketing must be understood not in the old sense of making a sale, but in the new sense of satisfying customer needs. If the Marketer does a good job of understanding customer needs, develops products that provide superior value, and prices, distributes and promotes them effectively, these will sell very easily. So selling and advertising are only a part of a larger “marketing mix”.
Value Based MarketingToday there has been much more focus on shareholder value in many organisations than there was in the past. Marketers today must deliver customer value that in turn builds shareholder/owner value. Proponent of value based marketing argue that to compete effectively, a co needs to do more than build a brand or build relationships, it has to build value. Companies need to deliver value proposition to their customers.As Doyle says “it is by delivering superior value to customers that mgt can in turn deliver superior value to shareholders.
Marketing• Broadly we will define marketing as a social and managerial process by which individuals and groups obtain what they need and want thru creating and exchanging products and value with others.• NEEDS, WANTS, & DEMANDSThe most basic concept underlining marketing is that of human needs. Human needs are states of felt deprivation. They include basic physical needs for food, clothing, warmth, safety; social needs for belonging and affection etc. These needs were not created by marketers they are a basic part of human makeup.
Wants & Demand• Wants are the form of human needs that are shaped by culture and individual personality. A student may need food but may want Big Mac, chips and drink from McDonald’s. Wants are shaped by one’s society and are described in terms of objects that will satisfy needs. When backed by purchasing power they become DEMANDS. Given their wants and resources, people demand products with benefits that add up to the most value and satisfaction.Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs, wants and demands. They conduct customer research and analyse thousands of customer sales, warranties and service data. They stay very close to the customer. E.g. supermarket managers sometimes mingle with customers to learn more about how to offer them superior value.
Value and Satisfaction• Customers usually face a broad array of products and services that might satisfy a need. How do they choose among these many marketing offers? Consumers make choices based on their perceptions of the value and satisfaction that various products and services deliver.Customer Value – this is the difference between the values the customer gains from owing and using a product and the cost of obtaining the product.Customers form expectations about the value of various marketing offers and buy accordingly. How do they form their expectations? Customers expectations are based on past buying experiences, the opinions of friends, and marketer and competitor information and promises.
Customer Satisfaction• Customer satisfaction with a purchase depends on how well the products performance lives up to the customer’s expectations. Customer satisfaction is a key influence on future buying behaviour. Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and say negative things about the product to others.• Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If they raise expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships.
The concept of a MarketIn marketing terms a customers needs or wants tend to mean a product. The product may be tangible or intangible. It is still something that the customer wants to in other to solve a problem or it is something they wish to have.People can satisfy their requirements or wants in 4 ways:1. Self solution (coming up with the answer to the problem themselves).2. Force (threatening or stealing)3. Begging4. Exchange (offering something of value to the owner)The last method exchange, is based on a mutually beneficial outcome to both parties. This form of exchange summarises marketing. In every case, both parties give or exchange something of value to each other.TYPES OF MKTS:In marketing there are two types of markets. CONSUMER AND INDUSTRIAL MKTS.DIFFERENCES BTN THEM
Industrial Consumer• Promotion specific or more • Mass marketing specific • Shorter product life cycle• Usually longer product life • Lower price levels cycle • Mass sales• Higher price levels • After sales warranties are• Technical sales people usually more general professionally qualified • Advertising TV or press more• After sales spares and general warranties are features in the • High volume market sales offering• Low volume market• Advertising – technical press highly specific
Marketing Management Orientation• There are 5 alternative concepts under which organisations conduct their marketing activities:The Production conceptThe Product conceptThe selling conceptThe Marketing conceptThe Societal marketing concept
The Production Concept• The production concept holds that consumers will favour products that are available and highly affordable. Therefore management should focus on improving production and distribution efficiency. This concept is one of the oldest orientation that guides sellers.• The production concept becomes useful only when demand for a product exceeds supply. Here management should look for ways to increase supply. Or where product’s cost is too high and improved productivity is needed to bring it down. For example Henry Ford’s whole philosophy was to perfect the production of the Model T ford so that its cost could be reduced and more people can afford it.
The Production Concept• Although useful in some situations, the production concept can lead to marketing short-sightedness. Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objectives – satisfying customer needs.
The Product Concept• The product concept holds that consumers will favour products that offer the most in quality, performance and innovative features, thus an organisation should devote energy to making continuous improvements. Some manufacturers believe that if they can build a better mousetrap, the world will beat a path to their door. But they are often shocked, customers may be looking for a better solution to the mouse problem but not necessarily a better mouse trap. They might be looking for a chemical mouse spray or something that works better than a mousetrap.
The Selling concept• Many companies follow the selling concept, which holds that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. The concept is typically practiced with unsought goods. Those that buyers do not normally buy. Example insurance or blood donations. Most firms practice the selling concept when they face overcapacity. Their aim is to sell what they make rather than make what the market wants.
The Marketing Concept• The marketing concept holds that achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product centred philosophy, the marketing concept is a customer centred “sense and respond” philosophy. Many successful well known companies have adopted the marketing concept. For example Dell computer, Virgin group, Tesco, Asda etc. The aim is to build customer satisfaction and customer retention.
The marketing ConceptThe marketing concept has been expressed in many different colourful ways:Meeting needs profitablyFind wants and fill them.Love the customer not the productHave it your way (Burger King)You are the Boss (United Airlines)Putting people first (British Airways)
Traditional organisational chart vmodern customer-oriented company organisation chart
The Societal Marketing Concept• The Societal marketing concept holds that the organisation should determine the needs, wants and interests of the target markets. It should then deliver superior value to customers in a way that maintain or improve the customer’s and the society’s well being.• Consider the fast food industry. Most people see them as offering tasty and convenient food at reasonable prices, yet many consumers and environmental groups have voiced their concerns. They argue that the fried chicken, chips, burgers are high in fat and salt.
4Ps / 4CsFOUR Ps Four CsProduct Customer solutionPrice Customer costPlace ConveniencePromotion Communication
Product• What is a Product?• A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.• OR Skinner defines a product as “anything that satisfies a need or want and can be offered in an exchange”.• The iphone, DVD player, Toyota Rav4, BMW 5 series, tea at Starbucks, and advice from the doctor are all products. Broadly defined products include physical objects, services, events, persons, places, ideas, organisations and so on.• Services are a form of products that consists of activities, benefits, or satisfactions offered for sale that are intangible and do not result in the ownership of anything. Examples are Banking, hotel, airline seeing the lawyer or doctor, or the nurse.
Product• A product is a key element in the marketer offering. Marketing mix planning begins with the formulation of an offering that brings value to the customer and satisfies a need. This offering becomes the basis upon which the company builds profitable relationship with customers.
LEVELS OF PDTS AND SERVICES• Product planners need to think about products and services on three levels. Each level adds more customer value. The most basic is the CORE BENEFIT, which addresses the question “WHAT IS THE CUSTOMER REALLY BUYING”. When designing products, marketers must first define the CORE, problem-solving benefit or services that consumers seek.
LEVELS OF PDTS AND SERVICES• At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, design, a quality level, a brand name and packaging. For example a Sony camera is an actual product. It’s name, parts styling, features, packaging and other attributes have all been combined carefully to deliver the CORE benefit – a convenient, high quality way to capture important moments.
LEVELS OF PDTS AND SERVICESFinally there must be an AUGMENTED product around the core benefit and actual product by offering additional consumer services and benefits . Sony must offer more than just a camera. It must provide consumers with a complete solution to their picture taking problems. Thus when customers buy the camera, Sony and its dealers might also give buyers a. - Warranty on parts, quick repair services, instructions on how to use the products and a free number to call should they have any problems.
Product and Service Classification• Products and services fall into two broad classes: Consumer products and Industrial products.CONSUMER PRODUCTS:Products bought by the final consumer for personal consumption.Marketers usually classify these products based on how consumers go about buying them.1. CONVENIENCE PDTS: these are products which are usually bought frequently, immediately and with a minimum of comparison and buying effort. E.g. soap, newspaper, fast food.These products are usually low priced, and marketers place them in many locations to make them readily available when customers need them.
PRODUCT & SERVICES CLASSIFICATION2. Shopping Products:These are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price and style.When buying shopping products consumers spend much time and effort in gathering info and making comparison. E.g. furniture, clothing, used cars, airline, hotel, electrical appliances.Shopping product marketers usually distribute their products thru fewer outlets but provide deeper sales support to help the customers in their comparison efforts.
PRODUCT & SERVICES CLASSIFICATTION3. Speciality Products:These are consumer products and services with unique characteristics or brand identification for which a significant group of buyers are willing to make a special purchase effort. E.g.s include specific brands of cars, designer clothes and so on.
PRODUCT & SERVICES CLASSIFICATTION4. Unsought Products:These are products that the consumer either does not know about or knows about but does not normally think of buying. Most major new innovations are unsought until the consumer becomes aware of them thru advertising. E.g.s include life insurance, blood donations etc. By nature unsought products require a lot of advertising, personal selling and other marketing efforts.
Industrial Products• These are products that are purchased for further processing or for use in conducting a business. So the distinction between a consumer product and Industrial product is based on the PURPOSE for which the product is bought. E.g.. If a consumer buys a car for family use, this is a consumer good. If he same consumer buys he same car for use as a taxi, this becomes an industrial product• The 3 groups of Industrial products and services include: Materials and Parts, Capital items & Supplies and Services.
Industrial Products• Materials and Parts include raw materials and manufactured materials and parts. Raw materials consist of farm products (wheat, cotton, livestock, fruits, vegetable) and Natural products (fish, lumber, crude petroleum, iron, ore)• Capital items are industrial products that aid in the buyer’s production or operations. Eg.s include generators, large computer systems, elevators. In offices they may even include fax machines, computers, desks etc.
Industrial Products• Supplies and Services:These may include operating supplies such as (lubricants, coal, paper, pencils) repairs and maintenance items (paint, nails, brooms).Supplies are the convenience products of the Industrial field because they are usually purchased with minimum effort.Business Services may include window cleaning, computer repair etc.