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Introduction to marketing


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Includes some of the basic concepts central to marketing

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Introduction to marketing

  1. 1. Marketing Management - 1 <ul><li>Rajeev Roy </li></ul>
  2. 2. What is ‘Marketing’? <ul><li>Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders </li></ul><ul><li>Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. </li></ul>
  3. 3. Marketing vs Sales <ul><li>Peter Drucker </li></ul><ul><li>“ The aim of marketing is to make sales superfluous” </li></ul>
  4. 4. Marketing vs Sales <ul><li>Marketing is a more comprehensive process </li></ul><ul><li>Sales – focus on needs of Seller </li></ul><ul><li>Marketing – focus on needs of buyer </li></ul><ul><li>Selling has a short term outlook.. Marketing has a long term vision </li></ul>
  5. 5. Importance of Marketing <ul><li>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. </li></ul><ul><li>Customers tell twice as many people about a bad experience over a good one. </li></ul><ul><li>For an average company, 65% of its business comes from its presently satisfied customers. </li></ul>
  6. 6. Marketing Myopia <ul><li>There is no ‘growth’ industry </li></ul><ul><li>Belief that growth is assured by an expanding and affluent population </li></ul><ul><li>Belief that there is no competitive substitute for the industry’s major product </li></ul><ul><li>Too much faith in mass production </li></ul><ul><li>Preoccupation with the product and with R&D </li></ul>
  7. 7. Demand <ul><li>Negative Demand </li></ul><ul><li>Non-existent Demand </li></ul><ul><li>Latent Demand </li></ul><ul><li>Declining Demand </li></ul><ul><li>Irregular Demand </li></ul><ul><li>Full Demand </li></ul><ul><li>Overfull Demand </li></ul><ul><li>Unwholesome Demand </li></ul>
  8. 8. <ul><li>Needs </li></ul><ul><li>Wants </li></ul><ul><li>Demand </li></ul>
  9. 9. <ul><li>Segmentation </li></ul><ul><li>Targeting </li></ul><ul><li>Positioning </li></ul>
  10. 10. Marketing Product Customer Solution Price Cost Place Convenience Promotion Communication 4 Ps 4 Cs
  11. 11. 5 C's <ul><li>Customer (customer needs, segments, consumer behavior) </li></ul><ul><li>Company Skills (brand name, image, production capability, financial strengths, organization, etc.) </li></ul><ul><li>Competition (actions are interrelated, market environment) </li></ul><ul><li>Collaborators (downstream wholesalers or retailers, upstream suppliers) </li></ul><ul><li>Context (culture, politics, regulations, social norms) </li></ul>
  12. 12. Changes <ul><li>Marketing Department to Marketing Organisation </li></ul><ul><li>Focus on Product Unit to focus on Segments </li></ul><ul><li>Working with fewer suppliers </li></ul><ul><li>Emphasis on intangible assets </li></ul><ul><li>Online interactions </li></ul><ul><li>Market share vs share of wallet </li></ul><ul><li>Glocal </li></ul><ul><li>Stakeholders vs Shareholders </li></ul>
  13. 13. Marketing Challenges <ul><li>The danger of 1P marketing </li></ul><ul><li>Training </li></ul><ul><li>Getting reliable/useful customer info </li></ul><ul><li>Low cost, high quality competition </li></ul><ul><li>Power of distributors/retailers </li></ul><ul><li>Measuring impact of marketing </li></ul>
  14. 14. Marketing Sins <ul><li>The firm is not sufficiently market-focused or customer-driven </li></ul><ul><li>The firm does not fully understand its target customers </li></ul><ul><li>The firm needs to better define its competitors and monitor them </li></ul><ul><li>The firm is not good at finding new opportunities </li></ul><ul><li>The firm has not managed well its relationship with stakeholders </li></ul>
  15. 15. Cont.. <ul><li>The firm’s market plans and planning processes are deficient </li></ul><ul><li>The firm’s products need tightening </li></ul><ul><li>Weak brand building and communication </li></ul><ul><li>The firm is not well organised to carry on marketing </li></ul><ul><li>Lacking in use of technology </li></ul>
  16. 16. Core Competency <ul><li>It is a source of competitive advantage </li></ul><ul><li>It has an application in a wide variety of markets </li></ul><ul><li>It is difficult for competitors to emulate </li></ul>
  17. 17. Porter’s Generic Strategies <ul><li>Overall Cost Leadership </li></ul><ul><li>Differentiation </li></ul><ul><li>Focus </li></ul>
  18. 18. SWOT
  19. 19. SWOT <ul><li>Only accept precise, verifiable statements </li></ul><ul><li>Ruthlessly prune long lists of factors, and prioritize factors so that you spend your time thinking about the most significant factors. </li></ul><ul><li>Apply it at the right level - for example, at product or product line level, rather than at the much vaguer whole company level. </li></ul><ul><li>Supplement it with other option-generation tools - none is likely to be completely comprehensive. </li></ul>
  20. 20. STEP <ul><li>Socio-Cultural </li></ul><ul><li>Technological </li></ul><ul><li>Economic </li></ul><ul><li>Political / Legal </li></ul><ul><li>Natural </li></ul>
  21. 21. Porter’s Five Forces
  22. 22. Supplier Power <ul><li>The market is dominated by a few large suppliers </li></ul><ul><li>There are no substitutes for the particular input, </li></ul><ul><li>The suppliers customers are fragmented </li></ul><ul><li>The switching costs from one supplier to another are high, </li></ul><ul><li>There is the possibility of the supplier integrating forward </li></ul><ul><li>The buying industry hinders the supplying industry in their development </li></ul><ul><li>The buying industry has low barriers to entry. </li></ul>
  23. 23. Customer Power <ul><li>They buy large volumes, </li></ul><ul><li>There is a concentration of buyers, </li></ul><ul><li>The supplying industry comprises a large number of small operators </li></ul><ul><li>The supplying industry operates with high fixed costs </li></ul><ul><li>The product is undifferentiated </li></ul><ul><li>Switching to an alternative product is relatively simple </li></ul><ul><li>Customers have low margins and are price-sensitive, </li></ul><ul><li>Customers could produce the product themselves, </li></ul><ul><li>The product is not of strategic importance for the customer, </li></ul><ul><li>There is the possibility for the customer integrating backwards. </li></ul>
  24. 24. Entry Barriers <ul><li>Economies of scale </li></ul><ul><li>High initial investments and fixed costs, </li></ul><ul><li>Cost advantages of existing players due to experience curve </li></ul><ul><li>Brand loyalty of customers </li></ul><ul><li>Protected intellectual property like patents, licenses etc, </li></ul><ul><li>Scarcity of important resources, e.g. qualified expert staff </li></ul><ul><li>Distribution channels are controlled by existing players, </li></ul><ul><li>Existing players have close customer relations </li></ul><ul><li>High switching costs for customers </li></ul><ul><li>Legislation and government action  </li></ul>
  25. 25. Competitive Rivalry <ul><li>There are many players of about the same size, </li></ul><ul><li>Players have similar strategies </li></ul><ul><li>There is not much differentiation between players and their products, hence, there is much price competition </li></ul><ul><li>Low market growth rates (growth of a particular company is possible only at the expense of a competitor), </li></ul><ul><li>Barriers for exit are high </li></ul>