MARKETING MANAGEMENT
1
Defining
Marketing
for the
21st Century
MARKETING MANAGEMENT
In this chapter we will address the following
questions:
 What is the new economy like?
 What are the tasks of marketing?
 What are the major concepts and tools of
marketing?
 What orientations do companies exhibit in the
marketplace?
 How are companies responding to the
new challenges?
Old Economy VS New Economy
The old economy is based on the
Industrial Revolution and on managing
manufacturing industries
WHILE …
The new economy is based on the Digital
Revolution and the management of
information.
The New Economy placed the following
capabilities in the hands of consumer:
 Substantial increase in buying power
 Greater variety of available goods and services
 Great amount of information about practically
anything
 Greater ease in interacting and placing and receiving
orders
 An ability to compare notes on products and
services
AND placed the following capabilities in
the hands of companies:
Operate powerful new information and sales channels
 Collect richer information about markets, customers,
prospects, and competitors
 Speed up internal communication among employees
 Have two-way communications with customers and
prospects
 Send promotional tools easily and quickly
 Able to customize offerings
 Improve purchasing, recruiting, training and internal
and external communication.
 Maintain cost saving while improving accuracy and
service quality.
Marketing and Exchange
• What is marketing?
The process of planning and executing the
conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that satisfy individual and
organizational objectives
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Selling is only the tip of the iceberg
“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. All that should be
needed is to make the product or
service available.”
Peter Drucker
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What is Exchanged in Marketing?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
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4 Types of Markets
1.
2.
3.
4.
Consumer Market: (consumption)
Business Markets: (saving/resell)
Global Markets: (different offering mix)
Nonprofit and Governmental Market:
(bids)
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Marketing Concepts and Tools
 Market: a collection of buyers and sellers
 Marketplace: a physical market (store)
 Marketspace: a digital market (Internet:
e.g., www.secondlife.com)
 Metamarket: markets involving closelyrelated products and services (e.g.,
www.edmunds.com)
 Marketer and Prospect: A marketer is
someone seeking a response from another
party, called the prospect.
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A Simple Marketing System
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Structure of Flows in a Modern
Exchange Economy
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Marketing Concepts and Tools
 Needs: the basic human requirements
 Wants: specific objects that might satisfy
the need
 Demand: wants for specific products
backed by an ability to pay.
Examples:
An American needs food but wants a hamburger, French fries and soft
drink.
Many people want a Mercedes, only a few are able and willing to buy
one.
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Marketing Debate
Does Marketers Create or
Satisfy Needs?
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Marketing Concepts and Tools
 Product: a value proposition
 Offering: intangible value proposition (a
combination of products, services,
information and experiences (Volvo)
 Brand: is an offering from a know source
Examples:
McDonald
Lexus
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Only the best is good enough for Lexus customers
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Marketing Concepts and Tools
Value is a ratio between what customer
gets and what he gives
Value = Benefits/Costs
How to increase value?
 Raise benefits
 Reduce costs
 Raise benefits and reduce costs
 Raise benefits by more than the raise of costs
 Lower benefits by less than the reduction of costs
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Marketing Concepts and Tools
 Exchange: a process of obtaining a
product/service from someone by offering
something
For exchange to occur, there must be:
• Two parties
• Each with something of value to the other
• Capable of communication and delivery
• Free to accept/reject the offer
• Agreement to terms
Example: Caterpillar
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Marketing Concepts and Tools
 Transaction: a trade of values between
two or more parties.
Does Transaction differs from
Transfer
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Marketing Concepts and Tools
 Relationship: building mutually
satisfying long-term relations with key
parties (customers, suppliers, distributor)
in order to earn and retain their business.
 Network: building mutually profitable
business relationships between the
company and its supporting stakeholders.
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Marketing Concepts and Tools
 Marketing channels: a way/mean to
reach target market.
Three kinds of marketing channels:
Communication channels
Distribution channels
Service channels
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Marketing Concepts and Tools
 Supply Chain: longer channel stretching
from raw materials to components to final
products that are carried to final buyers.
 Competition: all actual and potential
rival offerings and substitutes that a buyer
might consider.
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Marketing Concepts and Tools
Four (4) levels of competition:
1.
2.
3.
4.
Brand competition: A company sees its competitors as
other companies offering similar products and services to
the same customers at similar prices.
Industry competition: A company sees its competitors
as all companies making the same product or class of
products.
Form competition: A company sees its competitors as
all companies manufacturing products that supply the
same services.
Generic competition: A company sees its competitors
as all companies that compete for the same consumer
dollars. (Example: Volkswagen)
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Marketing Concepts and Tools
 Marketing Environment: actors that
impact the company’s offerings (task &
broad environment).
 Marketing Program: a numerous
decisions on the mix of marketing tools to
use.
 Marketing Mix: a set of marketing tools
the firm uses to pursue its marketing
objectives in the target market.
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The Four Ps
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The Four Ps
The Four Cs
Marketing
Mix
Place
Product
Customer
Solution
Price
ConvenPromotion ience
Communication
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Marketing-Mix Strategy
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Marketing Management
• Marketing Management (Kotler):
is the analysis, planning, implementation, and
control of marketing programs designed to
create, build, and maintain mutually beneficial
exchanges and relationships with target markets
for the purpose of achieving organizational
objectives.
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Company Orientations to the Marketplace
(Marketing Management Philosophies)
1. Production concept: assumes
consumers favor those products that are
widely available and affordable. (Focus:
wide distribution; high volume).
2. Product concept: assumes consumers
will favor those products that offer the
most quality, performance, and features.
(Focus: Superior product)
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Company Orientations to the
Marketplace, cont.
3. Selling concept: assumes that
consumers will either buy or not enough
of the organizations’ products unless the
organization makes a substantial effort to
stimulate the customer’s interest in the
product. (Focus: needs of the seller)
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The purpose of marketing
is to sell more stuff to
more people more often
for more money in order
to make more profit
Coca-Cola’s former
Vice president
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Company Orientations to the
Marketplace, cont.
4. Marketing concept: holds that the key to
achieving organizational goals consists in
determining the needs and wants of target
markets and delivering the desired
satisfactions more effectively and efficiently
than competitors. (Focus: different needs of
buyers)
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Marketing and Selling Concepts
Contrasted
Starting
Point
Factory
Focus
Products
Means
Selling
and
Promoting
Example Ends
e.g., Profits
through
Volume
(a) The Selling Concept
Market
Customer
Needs
Integrated
Marketing
e.g., Profits
through
Satisfaction
(b) The Marketing Concept
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Theodore Levitt’s “Marketing Myopia,” cont.
–What is the difference between marketing
and selling?
–“The difference between marketing and
selling is more than semantic. Selling
focuses on the needs of the seller,
marketing on the needs of the buyer.
Selling is preoccupied with the seller’s
need to convert the product into cash;
marketing with the idea of satisfying the
need of the customer ….”
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Marketing Concept Four Pillar
1. Target Market: tailored marketing programs
2. Customer Needs:






Giving customer what they need is not enough; companies
must help customers learn what they want.
Stated, Real, Unstated, Delight & Secret Needs. (Inexpensive
car example)
Responsive, Anticipated & Creative Marketer.
Market-driving firm VS Market-driven firm.
Make and sell VS Sense and respond Philosophy.
Why it’s important to satisfy target customers? (Customer
retention)
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Marketing Concept Four Pillar
3. Integrated Marketing: all company’s departments
work together to serve the customer’s interests.
a. External marketing:
directed at people outside the company.
b. Internal marketing:
the task of hiring, training, and motivating able
employees who want to serve customers well.
Which one is more important?
4. Profitability
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Traditional Organization Chart
Top
Management
Middle Management
Front-line people
Customers
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Modern Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Top
management
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What makes companies adopt
marketing concept?
1.
2.
3.
4.
5.
Sales decline
Slow growth
Changing buying patterns
Increasing competition
Increasing marketing expenditures
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Company Orientations to the
Marketplace, cont.
5. The customer concept:
•
•
Customer is the lifeblood of any company
Customer is the King
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The Customer Concept
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Company Orientations to the
Marketplace, cont.
6. The societal marketing concept: to
determine the needs, wants, and interests
of target markets and to deliver the
desired satisfaction more effectively and
efficiently than competitors in a way that
preserves or enhances the consumer’s
and the society’s well-being.
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Societal Marketing Concept
Marketing Managers Must
Balance
Profits
Public
Interest
Promote sale of
goods and services
Long-term needs for a
safe and healthy
environment
Dalrymple & Parsons/Marketing
Management 7th edition: Chapter 1
16
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How are companies responding to the
new challenges?
1.
2.
3.
4.
5.
6.
7.
8.
9.
Reengineering
Outsourcing
E-Commerce
Benchmarking
Alliances
Partner-Suppliers
Market-central
Global and local
Decentralization
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