MARKETING BASICS
z
INDUSTRIAL MANAGEMENT
TEM 313
MD. GOLAM SAROWER RAYHAN
LECTURER, TEM, BUTEX
Market
❑ Collection of all the actual or potential buyers and sellers those
are involved in buying and selling is market.
❑ The seller sells goods and services to the buyer in exchange of
money.
❑ There has to be more than one buyer and seller for the market to
be competitive.
❑ RMG market is comprised of potential foreign buyers (USA,
Europe etc.) and local suppliers (factories) for RMG products.
Marketing
•Marketing is a social and managerial process by which
individuals and organizations obtain what they need and
want through creating and exchanging value with others.
•Marketing is the process by which companies create value
for customers and build strong customer relationships in
order to capture value from customers in return.
Definition of Marketing from Specialists
•According to American Marketing Association (2004) - "Marketing
is an organizational function and set of processes for creating,
communicating and delivering value to customers and for managing
relationships in a way that benefits both the organization and the
stakeholder.“
•According to Eldridge (1970) - "Marketing is the combination of
activities designed to produce profit through ascertaining, creating,
stimulating, and satisfying the needs and/or wants of a selected
segment of the market."
A Simple Marketing System
Communication
Goods/Services
Industry
(a collection
of sellers)
Customer
(a collection
of buyers)
Money
Information
Nature of Marketing
1. Marketing is an Economic Function
2. Marketing is a Legal Process by which Ownership Transfers
3. Marketing is a System of Interacting Business Activities
4. Marketing is a Managerial function
5. Marketing is a social process
6. Marketing is a philosophy based on consumer orientation
and satisfaction
7. Marketing has dual objectives - profit making and consumer
satisfaction
Scope of Marketing
1. Study of Consumer Wants and Needs
2. Study of Consumer behavior
3. Production planning and development
4. Pricing Policies
5. Distribution
6. Promotion
7. Consumer Satisfaction
8. Marketing Control
Customer focus of Marketing
•
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Marketing is used to
identify the customer,
satisfy the customer, and
keep the customer.
• The adoption of marketing strategies requires businesses
to shift their focus from production to the perceived needs
and wants of their customers as the means of staying
profitable.
Meta Markets
•
A concept proposed by Mohan Sawhney, describes a cluster of
complementary products and services that are closely related in the
minds of consumers but are spread across a diverse set of
industries.
•
The automobile meta market consists of automobile manufacturers,
new and used car dealers, financing companies, insurance
companies, mechanics, spare parts dealers, service shops, auto
magazines, classified auto ads in newspapers, and auto websites on
the Internet.
Marketers vs Prospects
• A marketer is someone who is seeking a response
(attention, purchase, vote, donation) from another
party, called the prospect.
• Marketers
• Prospects
sellers/industries
buyers/customers
Needs, Wants and Demand
•
Needs describe basic human requirements such as food, air, water,
clothing, and shelter. People also have strong needs for recreation,
education, and entertainment.
•
These needs become wants when they are directed to specific
objects that might satisfy the need. An American needs food but
wants a hamburger, French fries, and a soft drink.
•
Demands are wants for specific products backed by an ability to pay.
Many people want a Mercedes; only a few are able and willing to buy
one.
Customer Value
•
In terms of marketing, the product or offering will be successful if it
delivers value to the target buyer.
•
Value as a ratio between what the customer gets and what he gives.
•
Value =
•
•
•
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•
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Functional benefit: technical functioning ability of a product
Emotional benefit: psychological satisfaction of a customer
Monetary costs: monetary payment done to own a product
Time costs: time invested to buy a product
Energy costs: energy lost in buying a product
Psychic costs: measure the stress of having to think about a transaction
Benefits
Functional benefits + emotional benefits
=
Monetary costs + time costs + energy costs + psychic costs
Costs
Customer Satisfaction
Customer satisfaction is dependent on the product’s
perceived performance relative to a buyer’s expectations.
•If performance is lower than expectations, satisfaction is low.
•If performance is higher than expectations, satisfaction is high.
Customer satisfaction often leads to consumer loyalty.
Some firms seek to DELIGHT customers by exceeding expectations.
Marketing Mix/ 4 Ps of Marketing
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.
McCarthy classified these as four broad groups that he called the four Ps of marketing:
Product
Price
Product variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
Returns
List price
Discounts
Allowances
Payment period
Credit terms
Place
Channels
Coverage
Assortments
Locations
Inventory
Transport
Promotion
Sales promotion
Advertising
Sales force
Public relations
Direct marketing
3 Ps of Marketing
•People - The individuals involved in the sale and purchase of
products or services come under people
•Process - Process includes the various mechanisms and
procedures which help the product to finally reach its target market
•Physical Evidence - With the help of physical evidence, a marketer
tries to communicate to get benefits of a product to the end users.
4 Cs of Marketing
In the current scenario, the four C’s has thus replaced the four P’s of marketing making
it a more customer oriented model.
Koichi Shimizu in the year 1973 proposed a four C’s classification.
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Commodity - (Replaces Products)
Cost - (Replaces Price)
Channel - (Replaces Place)
Communication - (Replaces Promotion)
Robert F. Lauterborn gave a modernized version of the four C’s model in the year
1993. According to him the four C’s of marketing are:
•
•
•
•
Consumer
Cost
Convenience
Communication
Marketing Channels
• To deliver Messages
to target buyer
• Receive Message
from target buyer
• To display or deliver
the physical product
or service to the
buyer or user.
• newspaper, radio,
television, mail,
telephone, billboards,
posters, Internet.
• Physical distribution
channels
• service
distribution channels
• Dialogue Channel (Email)
• Monologue Channel
(advertisement)
• warehouses,
transportation
vehicles, and various
trade channels such
as distributors,
wholesalers, and
retailers.
• to effect transactions
with potential buyers
• distributors and
retailers
• banks and insurance
companies
Market Competition
• A company sees its
competitors as
other companies
that offer similar
products and
services to the
same customers at
similar prices.
• Volkswagen might
see its major
competitors as
Toyota, Honda, and
other
manufacturers of
medium price
automobiles, rather
than Mercedes or
Hyundai.
• A company sees its
competitors as all
companies that make
the same product or
class of products.
• Thus, Volkswagen
would be competing
against all other car
manufacturers.
• A company sees its
competitors as all
companies that
manufacture
products that
supply the same
service.
• A company sees its
competitors as all
companies that
compete for
the same consumer
dollars.
• Volkswagen would
see itself
competing against
manufacturers of all
vehicles, such as
motorcycles,
bicycles, and
trucks.
• Volkswagen would
see itself
competing with
companies
that sell major
consumer valued
products, foreign
vacations, and new
homes.
Marketing Environment
Task Environment
• the immediate actors involved
in producing, distributing, and
promoting the product/ offering
• including the company,
suppliers, distributors,
dealers, and the target
customers.
• Also including marketing
research agencies, advertising
agencies, Web site designers,
banking and insurance
companies, transportation and
telecommunications companies
Broad Environment
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•
•
•
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Demographic environment
Economic environment
Natural environment
technological environment
political-legal environment
social-cultural environment
Marketing Process
Create value for customers and build customer relationships
Understand the
marketplace and
customer needs
and wants
Design a
customer-driven
marketing
strategy
Construct
integrated marketing
program To delivers
superior value
Build profitable
relationships and
create customer
delight
Capture value from
customers in return
Capture value from
customers to create
profits and customer
equity
Model of Consumer Behavior
Product
Marketing and
Other Stimuli
Economic
Price
Technological
Place
Political
Promotion
Cultural
Buyer’s
Decision
Process
Product Choice
Brand Choice
Dealer Choice
Buyer’s Black Box
Buyer’s Response
Characteristics
Affecting
Consumer
Behavior
Purchase
Timing
Purchase
Amount
Characteristics Affecting Consumer Behavior
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•
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Cultural
Social
Personal
Psychological
Types of Buying Decisions
High
Involvement
Low
Involvement
Significant
differences
between
brands
Complex
Buying
Behavior
VarietySeeking
Behavior
Few
differences
between
brands
DissonanceReducing Buying
Behavior
Habitual
Buying
Behavior
The Buyer Decision Process
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
Market Segmentation
•Buyers in any market differ in their wants, resources, locations,
buying attitudes, and buying practices.
•Through market segmentation, companies divide large,
heterogeneous markets into smaller segments that can be reached
more efficiently and effectively with products and services that match
their unique needs.
• Four important segmentation issues are:
I. Segmenting consumer markets
II. Segmenting business markets,
III. Segmenting international markets,
•
Market SegmentationSegmenting consumer market
Major variables for segmenting consumer markets:
1. Geographic (nations, regions, states, countries, cities)
2. Demographic (age, gender, family size, family life cycle, income,
occupation, education, religion, race, generation, and nationality)
3. Psychographic (social class, lifestyle, or personality characteristics)
4. Behavioral (knowledge, attitudes, uses, or responses to a product)
Market SegmentationSegmenting business market
Business buyers can be segmented geographically, demographically (industry,
company size), or by benefits sought, user status, usage rate, and loyalty status,
customer operating characteristics, purchasing approaches, situational factors,
and personal characteristics.
Market SegmentationSegmenting International market
•International markets can be segmented by geographic location, grouping
countries by regions such as Western Europe, the Pacific Rim, the Middle East, or
Africa.
Requirements for Effective Segmentation
Measurable
• Size, purchasing power,
profiles of segments can
be measured.
Accessible
• Segments can be
effectively reached and
served.
Substantial
Actionable
• Segments are large or
profitable enough to
serve.
• Effective programs can be
designed to attract and
serve the segments.
Differentiation
Beyond deciding which segments of the market it will target, the
company must decide on a value proposition—how it will create
differentiated value for targeted segments and what positions it wants to
occupy in those segments.
Product Differentiation
✓ Physical Attribute Differentiation
✓ Service Differentiation
✓ Personnel Differentiation
✓ Location Differentiation
✓ Image Differentiation
Product Position
•A product’s position is the way the product is defined by consumers on
important attributes—the place the product occupies in consumers’ minds
relative to competing products.
•Products are made in factories, but brands happen in the minds of
consumers.
•Consumers are overloaded with information about products and
services.
•They cannot re-evaluate products every time they make a buying
decision.
•To simplify the buying process, consumers organize products, services,
and companies into categories and “position” them in their minds.
Product Life Cycle (PLC)