Introduction toMARKETİ NG Rahul Pratap Singh Kaurav Asst. Professor, Vikrant Institute of Management
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
INTRODUCTİON TO MARKETİNGMarketing; “Satisfying customer needs” “Meeting needs profitably” “Generating customer value at a profit” “Managing profitable customer relationships by delivering superior value to customers”
WHAT İS MARKETİNG? 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
MARKETİNG PROCESS Capture value from Create value for customers and customers build customer relationships in return Capture Capture Understand Understand Design aa Construct aa Build value from value from Design Construct Build the the customer- marketing profitable customers customers customer- marketing profitable marketplace marketplace driven program that relationships to create to create driven program that relationshipsand customer and customer marketing delivers and create profits and profits and marketing delivers and createneeds&wants needs&wants strategy superior customer customer customer strategy superior customer value delight quality quality value delight
CORE CONCEPTS OF MARKETING Needs, wants, and demands Markets Products and services Exchange, Value and transactions, satisfaction and relationships
CORE CONCEPTS OF MARKETING Need Needs, wants, and demands Basic human requirements Marketing offers: including State of felt deprivation products, services and Example: Need food experiences Wants Value and satisfaction Needs directed to specific objects Exchange, transactions and The form of needs as shaped by relationships culture and the individual Example: Want a Big Mac Markets Demands Wants which are backed by buying power
CORE CONCEPTS OF MARKETING Needs, wants, and demands Marketing offering Marketing offers: including Combination of products, products, services and services, information or experiences that satisfy a experiences need or want Value and satisfaction Offer may include services, Exchange, transactions and activities, people, places, information or ideas relationships Markets
CORE CONCEPTS OFMARKETING ProductsAnything that can be Offered to a Market to Satisfy a Need or Want Experiences Experiences Persons Persons Places PlacesOrganizationsOrganizations Information Information Ideas Ideas Services Activities or Benefits Offered for Sale That Are Essentially Intangible and Don’t Result in the Ownership of Anything
MARKET OFFERİNGS- EXAMPLES Marketing ideas (social marketing) This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m. “Friends Don’t Let Friends Drive Drunk”
CORE CONCEPTS OF MARKETING Value Needs, wants, and demands Customers form expectations Marketing offers: including regarding value products, services and Marketers must deliver value to experiences consumers Value and satisfaction Satisfaction Exchange, transactions and A satisfied customer will buy again and tell others about their relationships good experience Markets
CORE CONCEPTS OF MARKETING Value Gained From Owning a Product and Costs of Obtaining the Product is “Customer Value” Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is “Customer Satisfaction”Total Quality Management Involves Improving the Quality of Products, Services, and Marketing Processes
CORE CONCEPTS OFMARKETING Exchange Needs, wants, and demands The act of obtaining a desired object from someone by offering Marketing offers: including something in return products, services and Transaction experiences Trade of values between two or Value and satisfaction more parties Exchange, transactions and One exchange is not the goal, relationships with several exchanges are relationships the goal Markets Relationships are built through delivering value and satisfaction Marketing network ğ consists of the company and all its supporting stakeholders
CORE CONCEPTS OFMARKETING Needs, wants, and demands Market Marketing offers: including Set of actual and potential products, services and buyers of a product experiences Marketers seek buyers that are profitable Value and satisfaction Exchange, transactions and relationships Markets
SIMPLE MARKETING SYSTEM Communication Products/services Industry Market(a collection (a collection of sellers) Money of Buyers) Information
MARKETING DEFİNED 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 ğ the delivery of customer satisfaction at a profit.
MORE DEFİNİTİONS OF MARKETİNG• A social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products and services of value with others.• The management process responsible for identifying, anticipating and satisfying customer requirements profitably.• Marketing consists of individual and organizational activities that facilitate and enhance satisfying exchange relationships in a dynamic environment through the creation, servicing, distribution, promotion and pricing of goods, services and ideas
MORE DEFİNİTİONS OF MARKETİNG(CONT.) From the societal perspective; some marketers describe marketing as the creation and delivery of a standart of living. From the managerial perspective; marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of goods and services to create exchanges that satisfy individual and organizational goals.
MARKETİNG MANAGEMENT Marketing management ğ the art and science of choosing target markets and building profitable relationships with them. This definition must include answers to 2 questions: What customers will we serve? How can we serve these customers best? Getting, keeping, and growing customers through creating, delivering, and communicating superior customer value Marketing management involves ğ managing demand ğ involves managing customer relationships
MARKETİNG MANAGEMENT Marketing management can be defined in broader terms as “demand management”; 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! Demarketing’s aim is to reduce the number of customers or to shift their demand temporarily or permanently (e.g. move traffic away from a popular tourist attraction during peak demand times)
EVOLUTİON OF MARKETİNG THOUGHT How marketing has become “marketing” as we understand it and apply its practices today?
EVOLUTİON OF MARKETİNG THOUGHT Production Era (1850s-1920s) Industrial revolution; mass production Few products and little competition 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) Customer orientation replaced the “hard sell” of the sales-led era Determination of the needs and wants of customers before introducing products or services
EVOLUTİON OF MARKETİNG THOUGHT Relationship Marketing Era: 1990s- Marketing era has recently shifted from being “transaction-based” ğ to focusing on “relationships” The argument ğ traditional marketing practices focused on attracting new customers rather than retaining existing ones. It is equally important to hang on to existing customers so that they become repeat buyers and long term loyal customers “customer relationship management”!
COMPANY ORIENTATIONS TOWARDS THEMARKETPLACE Consumers prefer products that areProduction ConceptProduction Concept widely available and inexpensive Consumers favor products that Product Concept Product Concept offer the most quality, performance, or innovative features Consumers will buy products only if Selling Concept Selling Concept the company aggressively promotes/sells these products Focuses on needs/ wants of targetMarketing ConceptMarketing Concept markets & delivering value better than competitors
PRODUCTİON CONCEPT Consumers will favor those products that are widely available and low in cost. Managers concentrate on achieving high production efficiency and wide distribution. 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 product’s cost is high and has to be decreased to expand the market.
PRODUCT CONCEPT Consumers will favor those products that offer the most quality, performance or innovative features. Managers in product-oriented organizations concentrate on making superior products and improving them over time. The assumption ğ the customers will admire well-made products and can evaluate product quality and performance This concept may lead to marketing myopia
SELLİNG CONCEPT Agressiveselling and promotion Assumptions are; Consumers must be convinced of buying company products Company is powerful in generating effective selling and promotion to stimulate more buying This concept is mostly used by firms which have overcapacity. The aim is “to sell what they make” rather than “make what the market wants.” Short-term profits are more important (customer dissatisfaction may occur)
MARKETİNG CONCEPT Key to achieving organizational goals consists of being more effective than competitors in creating, delivering and communicating customer value to target markets. 4 pillars of modern marketing : 1. Target market 2. Customer needs 3. Integrated marketing 4. Profitability through customer satisfaction
MARKETING AND SALES CONCEPTSCONTRASTED Starting point Focus Means Ends Existing Selling and Profits through Factory products promotion sales volume (a) The selling concept Customer Integrated Profits through Market needs marketing customer satisfaction (b) The marketing concept
MARKETİNG CONCEPT (CONT.)1) Target market ğ homogenous group of customers to whom the company wishes to appeal2) Customer needs 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-oriented thinking ğ to define customer needs from the customer’s point of view Sales revenue ğ New customers + Repeat customers “Customer Retention” vs. “Customer Attraction” Customer satisfaction is a function of the product perceived performance and buyer’s expectations
MARKETİNG CONCEPT (CONT.)3) Integrated Marketing 1. Various marketing functions must work together for customer satisfaction (coordination of 4Ps; marketing mix elements) Marketing Mix ğ 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
MARKETİNG CONCEPT - THE 4 P’S Ğ THE 4 CS Marketing Pro Mix duc t Pla ce ConvenienceCustomer Pri c e ProSolution mo tio n Customer Cost Communication
MARKETİNG CONCEPT (CONT.) Integrated Marketing (cont.) 2. Marketing must be well coordinated with other departments in the company; all departments have to work together to satisfy customers’ needs and wants4) Profitability through customer satisfaction To achieve profits as a result of creating superior customer value
SELLING – MARKETİNG... “There will always be need for some selling. But the aim of marketing is to make selling superfluous. 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.” Peter Drucker
MODERN MARKETİNG CONCEPTTRADITIONAL ORGANIZATION CHART Top Management Middle Management Front-line people Customers
CHART C us Fr on t om M t -li er id n s dl e e m pe ers an op ag lem T em an op enm a Custom en ge t t - MODERN MARKETİNG CONCEPT CUSTOMER-ORIENTED ORGANIZATION
RELATİONSHİP MARKETİNG CONCEPT Customer Relationship Management ğ the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Itdeals with all aspects of acquiring, keeping and growing customers Relationship building blocks ğ “customer value” and “customer satisfaction” “Customer retention” and “customer loyalty” The intention ğ to gain a greater proportion of an existing customer’s purchases over a long period (increase “consumer lifetime value”!)
RELATİONSHİP MARKETİNG CONCEPT“Our slogan ‘5+Million More Smiling Customers’ is notabout reaching sales targets but about whether we are ableto provide greater satisfaction to a greater number ofcustomers...The goal is to improve customer satisfaction whichtranslates to an increased number of ‘smiling customers.” Tokuichi Uranishi Executive Vice President, Toyota Motor Corporation
CONNECTIONS WITH CUSTOMERS – NOT ALL CUSTOMERS ARE EQUAL• Most marketers are targeting fewer, potentially more profitable customers.• Asking: ▫ What value does the customer bring to the organization? ▫ Are they worth pursuing? – customer profitability analysis• 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.
CUSTOMER RELATİONSHİPMANAGEMENT CAPTURING VALUEFROM CUSTOMERS Key Concepts Customer delight leads to Customer Loyalty and emotional relationships and Retention loyalty Share of Customer Lifetime Value Customer Customer Equity (CLV) shows true worth of a customer
CUSTOMER RELATİONSHİPMANAGEMENT CAPTURING VALUEFROM CUSTOMERS Key Concepts Share of customer’s purchase Customer Loyalty and in a product category. Retention Achieved through offering Share of Customer greater variety, cross-sell and Customer Equity up-sell strategies.
CUSTOMER RELATİONSHİPMANAGEMENT CAPTURING VALUEFROM CUSTOMERS Key Concepts The combined customer lifetime values of all current Customer Loyalty and and potential customers. Retention Measures a firm’s Share of Customer performance, but in a Customer Equity manner that looks to the future. Choosing the “best” customers is key
SOCİETAL MARKETİNG CONCEPT Company’s negative effects on society Conflict between consumer wants and long-term social welfare Marketing managers should be concerned with social responsibility The societal marketing concept Company’s task is to determine needs and wants of target markets & to satisfy them more effectively and efficiently than competitors --in a way that preserves or enhances the consumer’s and society’s well-being.
MARKETS MARKET SEGMENTS MARKET SEGMENTS Groups of customers with different wants, Groups of customers with different wants, buying preferences or product-use behavior buying preferences or product-use behavior TARGET MARKET TARGET MARKET A market segment for which A market segment for which the seller designs a marketing mix the seller designs a marketing mix
MARKET SEGMENTATION Process of dividing the total market Process of dividing the total market for a good or service into several smaller, for a good or service into several smaller, internally homogeneous groups internally homogeneous groups Members of each group are Members of each group are similar with respect to the factors similar with respect to the factors that influence demand that influence demand
PROCESS OF MARKETSEGMENTATION Identify wants within a market Identify wants within a market Identify characteristics that Identify characteristics that distinguish the segments distinguish the segments Determine size and satisfaction Determine size and satisfaction
MARKET SEGMENTATIONCONDITIONS Measurable Measurable Segment is Segment is and and Accessible Accessible Obtainable Data Obtainable Data Large enough Large enough to be to be Profitable Profitable MICROMARKETING MICROMARKETING Treat each single customer Treat each single customer as a separate segment as a separate segment
MARKET SEGMENTATION - FIRSTCUT Customer’s reason for buying Customer’s reason for buying CONSUMER CONSUMER Purchase for personal use Purchase for personal use BUSINESS BUSINESS Purchase to use in organizations, Purchase to use in organizations, to resell, or to make other products to resell, or to make other products
SEGMENTATION BASES FOR CONSUMER MARKETS1.Geographic1.Geographic Possible Market Segments Possible Market Segments Region Region --North, South, North, South, Urban- Rural Urban- Rural East West East West --Coastal, Non-coastal Coastal, Non-coastal Climate Climate --Metro, Large towns, Metro, Large towns, Small towns Small towns Metro, A, B, C Metro, A, B, C --Rural, Urban Rural, Urban --Villages > 1000, Villages > 1000, Etc. Etc. < 1000 population etc < 1000 population etc
SEGMENTATION BASES FOR CONSUMER MARKETS2.Demographic2.Demographic Possible Market Segments Possible Market Segments Age Age --< 6M, 4-6 Yrs, 20-40, < 6M, 4-6 Yrs, 20-40, Gender Gender 50+ etc 50+ etc --Male, Female Male, Female Family life-cycle Family life-cycle --Young couples w/o Young couples w/o children, Bachelor etc children, Bachelor etc Income Income --10K-20K/M, >50K/M 10K-20K/M, >50K/M -- Graduate, PG, Graduate, PG, Education, etc. Education, etc. Engineers etc Engineers etc
SEGMENTATION BASES FOR CONSUMER MARKETS3.Psychographic3.Psychographic Possible Market Segments Possible Market Segments Personality Personality --Introvert/Extroverts, Introvert/Extroverts, Achievers, etc Achievers, etc Life-style (Activities, Life-style (Activities, --Spiritual, Yoga, Music Spiritual, Yoga, Music Interests & Opinion) Interests & Opinion) Politics, Business etc Politics, Business etc --Strength of Values Strength of Values such as fun, love & such as fun, love & Consumer values Consumer values warmth, relationship warmth, relationship Etc. Etc.
SEGMENTATION BASES FOR CONSUMER MARKETS 4.Behavioral 4.Behavioral Possible Market Segments Possible Market Segments--Virtually forBenefits desired Virtually for all desired all Benefitsproducts products--Heavy, Medium, Heavy, Medium,rate Usage rate UsageLow user, Non-user Low user, Non-user
SEGMENTATION BASES FOR BUSINESS MARKETS1.Customer1.CustomerLocation Possible Market Segments Possible Market SegmentsLocation Region Region --North, South, North, South, Country Country East West East West --Coastal, Non-coastal Coastal, Non-coastal Town etc Town etc --Metro, Large towns, Metro, Large towns, Small towns Small towns --Rural, Urban Rural, Urban --Europe, Asea Europe, Asea
SEGMENTATION BASES FOR BUSINESS MARKETS2.Customer2.CustomerType Possible Market Segments Possible Market SegmentsType Industry Industry --Steel, Cement, Textile Steel, Cement, Textile Size Size --Large, Small, Medium Large, Small, Medium --Centralized, Decentr- Centralized, Decentr- Organizational structure Organizational structure allized, allized, --Price, Price & quality, Price, Price & quality, Purchase Criteria Purchase Criteria process for selection process for selection Etc. Etc.
SEGMENTATION BASES FOR BUSINESS MARKETS3.Transaction3.TransactionCondition Possible Market Segments Possible Market SegmentsCondition Buying Situation Buying Situation --Straight/Modified Straight/Modified Usage Rate Usage Rate re-buy, New Buy re-buy, New Buy --Non/Light/Heavy user Non/Light/Heavy user Purchase Process Purchase Process -- Competitive Bidding, Competitive Bidding, Leasing, Service etc Leasing, Service etc Order Size Order Size --Large, small etc Large, small etc --More frequent, More frequent, Service Reqrmt Service Reqrmt occasional, etc occasional, etc
TARGET-MARKET STRATEGY Market-aggregation Market-aggregation Strategy Strategy “mass-market” “mass-market” “undifferentiated-market” “undifferentiated-market” Single Single and and Marketing Marketing Strategy Strategy “shotgun” “shotgun” Product differentiation Product differentiation Strategy Strategy
TARGET-MARKET STRATEGY Single-Segment Single-Segment Strategy Strategy “concentration ”” “concentration One One Marketing Marketing Mix Mix NICHE NICHE MARKETERS MARKETERS
SELECTING A TARGET MARKETGUIDELINES Compatible Compatible with company’s goals with company’s goals Match Match market opportunity market opportunity with resources with resources Profit that Profit that justifies investment justifies investment Competitors Competitors are few and/or weak are few and/or weak
POSITIONING Firm creating and maintaining Firm creating and maintaining in the minds of a target market a particular in the minds of a target market a particular image relative to competing products image relative to competing products THREE STEPS Select position concept Design the feature that conveys position Coordinate the marketing mix to convey position
MARKET POSITIONING Positioning is defined as the process of designing the company’s products and image to occupy a unique place in the target market’s mind. Many marketers favor promoting only one major benefit and Rosser Reeves called it as “a unique selling proposition”. Some unique selling propositions (USPs) companies use are best quality, best service, lowest price, best value, safest, more advanced technology, etc. 67
THE FOUR MAJOR POSITIONING ERRORS• Under positioning: Some companies find that buyers have only an unclear idea of the brand.• Over positioning: Buyers have very narrow image of the brand.• Confused positioning: Buyers have confused image of the brand because the company has made too many claims or changed the brand positioning too frequently.• Doubtful positioning: Buyers do not easily believe the claims made by brands about the product’s features, price or manufacturer. 68
BASES OF POSITIONING THEPRODUCT 1. Attribute positioning: The company positions itself on the basis of attribute like size or number of years in existence. Sunfeast positions its snacky brand as bigger, lighter and cheaper. 2. Benefit positioning: The company positions its product as leader in providing a certain benefit. For example Santro positioned itself as India’s simplest car to drive. 3. Use or application positioning: The company positions its products as best for certain use or application. For example, Kenstar positioned its products as unexpectedly cold. 4. User positioning: The company positions its product as best for some user group. For example, Parle-G positions the boy in the advertisement as rock star targeting the kids and boys. 69
BASES OF POSITIONING THE PRODUCT5. Competitor positioning: The company claims its products as better than a named competitor.6. Product category positioning: The company positions its product as leader in certain product category. For example, Bajaj CT 100 was positioned as leader in the entry segment bikes.7. Quality or price positioning: The product is positioned as offering the best value. For example, the vegetable oil brand Dhara positions itself as ‘anokhi shuddata, anokha asar’. This means the company offers unique purity and unique effect. 70
FORECASTING MARKET DEMAND MARKET SHARE Proportion of total sales of a Product during a stated period in a specific market that is captured by a single firm brand x brand y our company brand z MARKET FACTOR 1) exists in the market 2) is measurable 3) is related to the demand for a product in a known way
FORECASTING MARKET DEMAND MARKET POTENTIAL MARKET POTENTIAL Total sales of a Total sales of a Product during a Product during a Period in a market Period in a market under under ideal conditions ideal conditions
FORECASTING MARKET DEMAND SALES POTENTIAL SALES POTENTIAL Portion of market potential Portion of market potential that a specific company that a specific company could expect could expect under ideal conditions under ideal conditions
FORECASTING MARKET DEMAND SALES FORECAST SALES FORECAST Estimate of sales Estimate of sales For one company For one company during a period during a period in a specific market in a specific market assuming assuming a defined marketing plan a defined marketing plan
METHODS OF SALES FORECASTING Market-Factor Market-Factor Survey of Survey of Analysis Analysis Buyer Intentions Buyer Intentions Test Past Sales Past Sales Test Marketing and and Marketing Trend Analysis Trend Analysis Sales-Force Sales-Force Executive Executive Composite Composite Judgment Judgment
CHALLENGES IN NETWORKED WORLDOF MARKETING Challenges Growth of the Internet Advances in • Digital age telecommunications, information, transportation • Globalization Customer research and tracking • Ethics and social Product development responsibility Distribution New advertising tools • Not-for-profit marketing 24/7 marketing through the • Marketing relationships Internet
Challenges in Networked World of Marketing Challenges Geographical and cultural• Digital age distances have shrunk• Globalization Greater market coverage More options for purchasing• Ethics and social and manufacturing responsibility Increased competition from• Not-for-profit marketing foreign competitors• Marketing relationships
CHALLENGES IN NETWORKED WORLDOF MARKETING Challenges Marketers need to take Digital age great responsibility for the Globalization impact of their actions Ethics and social responsibility Not-for-profit marketing Marketing relationships
CHALLENGES IN NETWORKED WORLDOF MARKETING Challenges Many organizations are • Digital age realizing the importance of strategic marketing • Globalization Performing arts • Ethics and social Government agencies responsibility Colleges, universities • Not-for-profit marketing Hospitals • Marketing relationships
CHALLENGES IN NETWORKED WORLDOF MARKETING Challenges Profits through managing • Digital age long-term customer equity Improve customer knowledge • Globalization Target profitable customers • Ethics and social Keep profitable customers responsibility • Not-for-profit marketing • Marketing relationships