Marketing Basics

Tuesday, August 8, 2017 1
Marketing and its Core Concepts,
Marketing Management and its Tasks,
and Philosophies

Marketing in the Twenty-First Century:
 Objectives: we will address the following
 What is marketing ?
 What are the core marketing concepts?
 What is Marketing Management?
 What are the tasks of marketing Management
(Demand Management)?
 What orientations do companies exhibit in the
marketplace? (Philosophies of Marketing)

What is marketing
 How you would define marketing?
 Chances are that each one will come up with a somewhat
different answer.
 One popular conception of marketing is that it primarily
involves sales.
 Others view marketing as consisting of advertising or
retailing activities.
 For some, market research, pricing, or product planning
may come to mind.
 While all these activities are part of marketing, it
encompasses more than just these individual elements.
 Effective marketing requires coordination of all these
activities

Definitions of Marketing
 Marketing, more than any other business function, deals with
customers.
 Understanding, creating, communicating, and delivering
customer value and satisfaction are at the heart of marketing.
 Simply it is “the delivery of customer satisfaction at a profit.”
 Two goals 1) To attract new customers by promising superior
value 2) To keep current customers by delivering satisfaction.
 “Marketing is creation and the delivery of standard of living to a
society”. Malcolm McNair
 “Marketing is the process of planning and executing the conception,
pricing, promotion and distributing of ideas, goods and services to
create exchanges that satisfy individual and organizational
objectives”. AMA

Definitions of Marketing
 “Marketing is a social and managerial process
whereby individuals and groups obtain what they
need and want through creating and exchanging
products and value with others”. Kotler & Gary
Armstrong
 To explain this definition, we examine the following
terms: needs, wants, and demands; products and
services, value, satisfaction, and quality; exchange,
transactions, and relationships; and markets. (Core
Concepts of Marketing)

Core Marketing Concepts
Needs, wants,
and demands
Value and
Satisfaction and quality
Exchange,
transactions,
and relationships
Markets Marketing offers
(products, services,
experiences)

Needs, Wants, and Demands
 Needs - states of felt deprivation
(physical needs, such as for food and safety,
plus more complex social needs such as for belonging, and
individual needs such as knowledge and self-expression)
Basic part of human makeup, NOT created by marketing
(e.g., I am hungry)
 Wants - form that a human need takes as
shaped by culture and individual personality
(Marketing actively shapes wants)
(e.g., I want a Pizza, Biryani, and a soft drink)
 Demands - human wants backed by buying
power
(e.g., I have money to buy this meal)

Products and Services (Marketing offers)
 People satisfy their needs and wants with products and
services.
 A product is anything that can be offered to a market to satisfy
a need or want.
 The concept of product is not limited to physical objects-
anything capable of satisfying a need can be called a product.
 More broadly defined, products also include other entities such
as experiences, persons, places, organizations, information,
and idea. Thus, the term product includes much more than just
physical goods or services.
 Remember: Offer (product, etc.) is only a tool to satisfy a
customer need/want, or solve a problem –
 Sellers may suffer from “marketing myopia”-They forget that a
product is only a tool to solve a consumer problem..

VALUE, SATISFACTION, AND QUALITY
 Value
 Consumers choose products and services on their perceptions
of value that various products and services deliver.
 Customer Value is the difference between the values the
customer gains from owning and using a product and the costs
of obtaining the product.
 Customer Satisfaction
 It is product’s perceived performance in delivering value
relative to a buyer’s expectations.
 Performance < customer’s expectations = dissatisfied.
 Performance = expectation, the buyer is satisfied.
 Performance > expectations, the buyer is delighted.
 Outstanding companies aim to delight customers by exceeding
customer expectations.

Customer Satisfaction
Expectations are largely based on marketer
information and promises – must create
realistically high expectations
Reality = satisfaction has been declining
Performance
falls short of
expectations
P < E
Customer is
dissatisfied
Performance
matches
expectations
P = E
Customer is
satisfied
Performance
exceeds
expectations
P > E
Customer is
highly
satisfied
or
delighted !
Satisfaction = Performance (P) – Expectation (E)

Customer Satisfaction
 As satisfaction increases, so does loyalty
 Tremendous difference between the loyalty of highly satisfied
(delighted) versus just satisfied customers, especially in
competitive markets
 Harvard Study – “Completely satisfied” customers were
42% more likely to be loyal than were merely “satisfied”
customers
 AT&T study – 70% “satisfied” customers defect
 Xerox study – “highly satisfied” customers are 6x more
likely to repurchase

VALUE, SATISFACTION, AND QUALITY
 Customer satisfaction is closely linked to quality.
 In recent years, may companies have adopted Total Quality
Management (TQM) programs, designed to constantly improve
the quality of their products, services, and marketing
processes, quality has a direct impact on product performance
and hence on customer satisfaction.
 In the narrowest sense, quality can be defined as “freedom
from defects.”
 But most customer-centered companies define quality in terms
of customer satisfaction.
 Thus, the fundamental aim of today’s total quality movement
has become total customer satisfaction.
 Quality begins with customer needs and ends with customer
satisfaction.

Exchanges Transactions
Relationships
Building a Marketing
Network Consisting of
The Company and All
Its Supporting
Stakeholders
How Do Consumers Obtain Products and
Services ?

Exchange, Transactions, and Relationships
 Marketing occurs through exchange. Exchange is the act of
obtaining a desired object from someone by offering something
in return.
 Exchange is only one of many ways that people can obtain a
desired object. As a means of satisfying needs, exchange has
much in its favor.
 Five conditions are necessary for exchange.
 1) There are at least two parties.
 2) Each party has something of value to other.
 3) Each is capable of communication
 4) Each is free to accept or reject the offer
 5) Each believes it is desirable to deal.

Exchange, Transactions, and Relationships
 A transaction is marketing’s unit of measurement.
 A transaction consists of a trade of values between two parties:
one party gives X to another party and gets Y in return.
 For example, you pay a dealer INR 25000 for a television set.
 Beyond creating short-term transactions, marketers need to
build long-term relationships with valued customers,
distributors, dealers, and suppliers.
 Ultimately, a company wants to build a unique company asset
called a marketing network.
 A marketing network consists of the company and all its
supporting stakeholders: customers, employees, suppliers,
distributors, retailers, ad agencies, and others with whom it has
built mutually profitable business relationships.
 The operating principle is simple: Build a good network of
relationships with key stakeholders and profits will follow.

Who Purchases Products and Services?
Market
Market
Actual and potential
buyers who share
a particular need or
want that can be
satisfied through
exchange
relationships
Needs
or wants
Resources to
exchange
Willingness to
exchange
Actual
buyers
Potential
buyers

The Scope of Marketing or What Can Be
Marketed?
 Marketing is not
confined only to
products. Its scope is
much more than that.
The following can be
marketed.
Goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas

Marketing Management
 “In order to deal with exchange process, there is a
need for considerable amount of work and skills”.
 Here comes the role of marketing management.
 The analysis, planning, implementation and control
of programs designed to create build and maintain
beneficial exchanges with target buyers for the
purpose of achieving organizational objectives.
(Kotler)

Marketing Management
Marketing
Management
Art and Science of
choosing target
markets and
building
profitable
relationships
with them
Demand
Management
Finding and
increasing demand;
(also changing or
reducing demand,
i.e.,“demarketing”)
Profitable
Customer
Relationships
Attracting new
customers, and
retaining and
building
relationships
with current
customers

Marketing Management Tasks
 The popular image of marketing manager is to stimulate the
demand for the companies products.
 Marketing Management has the task of influencing the level,
timing and composition of demand in a way that will help the
organization to achieve its objectives. Therefore, marketing
management is essentially a demand management.
 Companies form an idea of desired level of transaction with
target market. The actual demand may be equal, lower or higher
than the desired level depending upon the type of demand
state.
 The marketing management has to deal with different demand
states for its product and services and perform various tasks
for maintaining the desired level of transactions with the target
market.
 We will discuss these demand stages and tasks of marketing

Demand States
 Marketing managers deal with these tasks by
carrying out various marketing functions such as
marketing research, advertising, sales promotion,
pricing, product development, distribution etc. .
 The various demand states and the corresponding
marketing tasks will be discussed next.
 Some of the demand states are common and others
are rare (not common).

Demand States (Cont)
 Negative Demand State
 A market is in a state of negative demand if the major part of the
market dislikes the product and may even pay a price to avoid it.
 The marketing task is to analyze why the market dislikes the product
and whether a marketing program consisting of product redesign,
lower prices and more positive promotion can change beliefs and
attitudes.
 The marketing task here is known as Conversional Marketing i.e.
converting the negative to positive. (Not common)
 No Demand State
 Target consumers may be unaware of or uninterested in the
product.
 The marketing task is to find ways to connect the benefits of
the product with the consumers needs and interests.
 The task of marketing is called Stimulational Marketing

 Latent Demand State
 Consumers may have need but no any existing product.
 There is a strong latent demand for many products which may not be
available to the consumers at a particular point of time.
 The marketing task is to develop goods to satisfy the demand.
 This task of MM is known as Developmental Marketing.
 Falling/Declining Demand State
 Every organization faces declining demand for its products.
 The marketer must analyze the causes of decline and develop effective
marketing strategies.
 The marketing task is to reverse declining demand
 This marketing task is known as Remarketing.

 Irregular Demand State
 Many products face demand that varies on a seasonal or daily
basis causing problems of idle or overworked capacity.
 Marketing task is to synchronize the demand with the
production. Marketing task is known as Synchromarketing.
 Full Demand State
 Here, the actual demand of a product is equal to the desired
state of demand. From the organizational point of view, this is
the best demand state.
 The organization must maintain or improve its quality and
continually measure consumer satisfaction.
 This marketing task is known as Maintenance Marketing.

 Overfull Demand State
 Here the actual demand is more than the desired level.
 Here, the company has to find ways to reduce the demand
temporarily or permanently by discouraging demand and take
steps as raising prices and reducing promotion or service.
 This marketing task is known as Demarketing.
 Unwholesome Demand State
 There are certain products and services which are considered
to be harmful to society if their consumption is continued.
These are considered by the society as unwholesome.
 Unselling campaigns have been conducted against cigarettes,
alcohol, hard drugs, and large families.
 The marketing task is to give up these products by using fear
messages, price hikes and reduce availability.
 The marketing task is known as Countermarketing.

DEMAND STATE MARKETING TASKS
Negative Demand Conversional Marketing (Rare)
No Demand (Nonexistent Stimulational Marketing (Rare)
Latent Demand Developmental Marketing.
Falling/Declining Demand Remarketing
Irregular Demand Synchromarketing.
Full Demand Maintenance Marketing
Overfull Demand Demarketing (Rare)
Unwholesome Demand Countermarketing
Demand States and Marketing Tasks

Building Profitable Customer Relationships
 Managing demand means managing customers. A company’s demand
comes from two groups:
 New customers: Traditionally, emphasis has been on attracting new
customers and creating transactions with them. But changing
demographic, economic, and competitive factors mean that there are
fewer new customers. The costs of attracting new customers are rising.
 Repeat customers: The emphasis is shifting toward retaining profitable
customers and building lasting relationships with them. Losing a
customer means losing not just a single sale but also lifetime’s worth of
purchases and referrals.
 The key to customer retention is superior customer value and
satisfaction.

Company Orientations Toward the
Marketplace or Marketing Philosophies
 we described marketing management as carrying
out tasks to achieve desired exchanges with target
markets.
 What philosophy should guide these marketing
efforts? What weight should be given to the interests
of the organization, customers, and society? Very
often these interests conflict.
 There are five alternative concepts under which
organizations conduct their marketing activities

Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Mktg. Concept
Marketing Management Orientations/Philosophies
Based on different assumptions about:
- what customers want - what marketers should do

Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
•Consumers favor products that are
available and highly affordable.
•Improve production and distribution.
•Consumers favor products that offer
the most quality, performance, and
innovative features.
•Consumers will buy products only if
the company promotes/ sells these
products.
•Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
•Focuses on needs/ wants of target
markets & delivering superior value.
Marketing Management Philosophies

Production Concept
Late 1800s & Early 1900s
Demand > Supply; High Costs
(Still appropriate under these limited circumstances)
 Consumers Favor:
 Widely available
 Highly affordable
 Management’s Focus: “engineer”
 Improving production efficiency
 Improving distribution efficiency
 DANGER: Marketing Myopia
 Focuses too narrowly on company operations, not on customer
needs/wants
 Company “falls in love” with its operations, not with its customers

Product Concept
Late 1940s (Post-World War II)
Demand < Supply
 Quality, performance, innovative features
 Management’s Focus: “inventor”
 Making superior products
 Continuous product improvements
 DANGER: Marketing Myopia
 Focuses too narrowly on physical products, not on underlying
customer needs/wants
 Company “falls in love” with its products, not with its customers
 Makes products that customers don’t care about (don’t need/want)
 Over-improve (customers don’t care about the improvements)

Selling/Sales Concept
Late 1940s (Post-World War II)
Demand < Supply
 Not buying, or not buying enough
 Management’s Focus: “hard sell salesperson”
 Large-scale selling and promotion effort
 Coaxing and pushing people to buy
 DANGER: “Sell what you can make”
(versus “make what you can sell”)
 Most customers who are dissatisfied do not buy again
 Most customers who are dissatisfied spread bad word-of-mouth

Marketing Concept
1950s – Present
Demand < Supply
 Products that satisfy their wants and needs
 Management’s Focus: “customer centered”
 Understanding needs and wants of customers – what
they need/want the product to do for them
 Underlying and latent needs as well as stated needs
 Delivering desired satisfactions better than
competitors do
 NOTE: “better than competitors” – keeps best of the production
and product concepts

Marketing & Selling/Sales Concepts Contrasted
Factory
Existing
products
Selling
and
promoting
Profits
through
sales volume
The Selling Concept (“inside-out”)
Starting
Point Focus Means Ends
Market
Customer
needs
Integrated
marketing
Profits through
customer
satisfaction
The Marketing Concept (“outside-in”)

Marketing Concept: Pillars
Marketing Concept
Profitability through
SatisfactionIntegrated Marketing
Consumer NeedsTarget Market:

Late 20th Century – Still emerging
Recognizes potential conflict
 Products that satisfy their wants and needs
 Management’s Focus: “customer centered”
 Understanding needs and wants of customers – what
they need/want the product to do for them
 Delivering desired satisfactions better than
competitors do
 Also satisfy the society’s objectives along with the
consumers needs

Late 20th Century – Still emerging
Recognizes potential conflict
Societal
Marketing
Concept
Company
(Profits)
Consumers
(Short-term want
satisfaction)
Society
(Long-term consumer & societal welfare)
Maintain & improve
long-term well-being
Social responsibility
Be ethical
Do good:
• customer-oriented,
• environment,
• innovative (real,
valued) product
improvements
• sense-of-higher-
mission, give back
Stop doing bad f

Marketing Basics

Recommended

Recommended

More Related Content

Similar to Marketing Basics

Similar to Marketing Basics (20)

Recently uploaded

Recently uploaded (20)

Marketing Basics