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intro to marketing slides

  1. 1. What is marketing?Introduction to marketing Marketing is the management process which identifies, anticipates, and supplies customer requirements efficiently and profitably (Chartered MAN40037 Institute of Marketing, 2004) Marketing and Operations Management AMA define marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and Krzysztof Kubacki society at large (2009) Management of exchangeMarketing is what happens at the interface between the What marketing is not!organisation and its publicsMarketing is about promoting and increasing exchanges It is not a magic wandbetween the organisation and its customersMarketers are the people who manage the exchange It is not sellingprocess It is not persuading people to buy things they don’tFair exchange is always good, because both parties end wantup better off It is not as effective as all that in practiceDrucker: “the aim of marketing is to make selling It is not an exact sciencesuperfluous. The aim of marketing is to know andunderstand the customer so well that the product orservice fits him and sells itself. Ideally, marketing shouldresult in a customer who is ready to buy. All that should beneeded then is to make the product or service available” Marketing management The marketing concept philosophiesThe production concept The customer is king • focus on production and distribution If we do not satisfy our customers’ needs, they will goThe product concept • focus on quality, performance and innovation to someone who willThe selling concept Marketers focus on identifying people’s needs • undertakes large-scale selling and promotion effortsThe marketing concept Marketers focus on turning needs into wants • determining needs and wants of the target markets Marketing delivers a lifestyleThe societal marketing concept Marketing means viewing the whole organisation • determining needs, wants and interests of the target markets from the customer’s viewpoint • effective and efficient achieving desired satisfactions • improves consumer’s and society’s well being 1
  2. 2. Understanding customers Reasons NOT to be customer- centred People buy things to meet their needs (not yours!) It’s easier to understand your own needs than to Consumers are different (they are a lot like people in understand the needs of others that respect) Customers are fickle, variable, and unreliable (unlike Emotional issues play a large part in the buying us) decision Customers are harder to reduce to numbers than are Human beings are not pussy-cats. We have much products more complex needs The managing director is the only customer we need to please Reasons to BE customer- The 7P model (the service mix) centred Product‘There is only one boss – the customer. And he can fire Physical Peopleeveryone in the company from the chairman on down, evidencesimply by spending his money somewhere else’ Price PromotionQuote by Sam Walton, founder of WalMart Stores, theworld’s largest retail company Process Place The marketing mix Problems with 7 P model Product: a bundle of benefits It pigeonholes issues and activities in an unrealistic Price: that which is paid for the item way Place: where the exchange takes place It implies that we are doing things to customers rather Promotion: Marketed-controlled communications than responding to their needs. about the firm and its products It ignores aspect such as competition People: The from-line employees of the organisation It is based on words starting with ‘P’ not on concepts who deal with the customer starting with ‘Customer’, e.g.: Process: the activities involved in the exchange - product – customer benefit Physical evidence: tangible proof that the exchange - price – customer cost has occurred - promotion – customer communication 2
  3. 3. Criticisms of marketing Marketing ethics Price • High costs of distribution The marketing concept philosophy is based on • High advertising and promotional costs customer service and mutual benefit • Excessive mark-ups Deceptive pricing, promotion and More than ever before marketers are dealing with packaging sophisticated consumers who are more demanding High pressure selling and expectant of premium service and products as Shoddy or unsafe products well as demanding an ethical and socially Planned obsolescence responsible marketing ethos Poor service to disadvantaged consumers Marketing’s impact upon Marketing ethics societyNot all companies follow these principles and there are Creating false wants and too much materialismmany that have dubious marketing practices thatadversely affect innocent consumers and the wider Too few social goodssociety as well Cultural pollution – Advertising driving children to increase demandsMarketers face difficult decisions and many dilemmas in upon their parents; ‘pester power’pursuit of profit and the balancing act of meeting Too much political powerconsumers’ desires, generating profit and accounting tosocietal welfare Marketing’s impact on other Relationship marketing businesses Critics charge that marketing practices can affect Some customers are worth more than others other companies and reduce competition. Three It is cheaper to keep an existing customer than find a issues: new one – Acquisition of competitors Existing customers can easily be encouraged to buy – Marketing practices that create barriers to entry more, and more often – Unfair competitive marketing practices The lifetime value of a customer can be extremely high 3
  4. 4. Relationship marketing vs. transactional marketing Bad practices resulting from transaction marketing Transaction marketing Relationship marketingFocus on single sale Focus on customer retention Reactive approach to customer complaintsOrientation on product features Orientation on product benefits Failure to recognise the needs of long-term customersShort-time scale Long-time scale Greater expenditure than necessary on promotionLittle emphasis on customer High emphasis on customerservice service Inner conflict between production and marketingLimited customer commitment High customer commitmentModerate customer contact High customer contactQuality is the concern of the Quality is the concern of allproduction department Types of relationship marketing Problems with relationship marketing Basic – Sale of product with no support and/or follow-up. Works well in B2B, not so well on B2C markets Reactive – Sale of product with minimal support. Tends to ignore smaller customers or older Accountable customers who have limited lifetime value – Following sale of the product, the salesperson follows up Forces changes which may be irreversible if the and checks that all is going well. Customer suggests improvements that are acted upon. relationship ends Proactive Puts too much emphasis on a few customers: too – Company contacts the existing customers finding out if many eggs in one basket current product is meeting their needs. Defining future needs and putting forward suggestions. Can breed complacency Partnership – Company continuously works with the customers to discover ways to deliver better value. Why has relationship marketing failed in B2C? People do not want to marry their mortgage provider People have closer relationships with their coffee brand than with their bank People are suspicious of firms’ motives Too much seduction, not enough commitment 4