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 exchange
Marketing is what happens at the interface between the
What marketing is not!
organisation and its publics
Marketing is about promoting and increasing exchanges
It is not a magic wand
between the organisation and its customers
Marketers are the people who manage the exchange
It is not selling
process It is not persuading people to buy things they don’t
Fair exchange is always good, because both parties end want
up better off It is not as effective as all that in practice
Drucker: “the aim of marketing is to make selling It is not an exact science
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. All that should be
needed then is to make the product or service available”
Marketing management The marketing concept
philosophies
The production concept The customer is king
• focus on production and distribution
If we do not satisfy our customers’ needs, they will go
The product concept
• focus on quality, performance and innovation to someone who will
The selling concept Marketers focus on identifying people’s needs
• undertakes large-scale selling and promotion efforts
The marketing concept
Marketers focus on turning needs into wants
• determining needs and wants of the target markets Marketing delivers a lifestyle
The 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
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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 People
everyone in the company from the chairman on down,
evidence
simply by spending his money somewhere else’
Price Promotion
Quote by Sam Walton, founder of WalMart Stores, the
world’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
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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
society
Not all companies follow these principles and there are Creating false wants and too much materialism
many that have dubious marketing practices that
adversely affect innocent consumers and the wider Too few social goods
society as well Cultural pollution
– Advertising driving children to increase demands
Marketers face difficult decisions and many dilemmas in upon their parents; ‘pester power’
pursuit of profit and the balancing act of meeting Too much political power
consumers’ desires, generating profit and accounting to
societal 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
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4. Relationship marketing vs.
transactional marketing Bad practices resulting from
transaction marketing
Transaction marketing Relationship marketing
Focus on single sale Focus on customer retention Reactive approach to customer complaints
Orientation on product features Orientation on product benefits Failure to recognise the needs of long-term
customers
Short-time scale Long-time scale
Greater expenditure than necessary on promotion
Little emphasis on customer High emphasis on customer
service service Inner conflict between production and marketing
Limited customer commitment High customer commitment
Moderate customer contact High customer contact
Quality is the concern of the Quality is the concern of all
production 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
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