MARKETING I
HANDOUT I
Introduction
Basic Concepts of Marketing
Different Orientations towards Marketing.
Instructor:
Dr. S. Sahney
Vinod Gupta School of Management, IIT Kharagpur
Source of Slides: 1. Kotler and Keller 2. Rajan Saxena
3. Self
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Financial success often depends on marketing
ability.
Finance, operations, accounting, and other business
functions will not really matter if there isn't sufficient
demand for goods and services so the company can
make a profit.
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I. Characteristics Of Current Millennium:
a) A Global Society
- Technology has reduced the gap between different societies.
- Emergence of a global society
b) A Global Market: “glocal”—both global and local.
- Emergence of Global Markets
- Customers expect global products and services at local prices.
- Universal phenomenon
c) Basis for Competitive Advantage
- Knowledge and value creation
- CUSTOMER
d) Impact on Marketing:
- Fast business; Customer expectations have increased.
- You should be possible to offer products and services just at the
time when their idea has occurred in the customer's mind.
- New forms of distribution.
e) Impact on Business:
- Product life cycles would be shorter
- Role of R&D and Innovation has increased.
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II. What is Marketing?
Marketing is about identifying and meeting human and
social needs.
One of the shortest good definitions of marketing is
"meeting needs profitably.”
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Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating, offering, and freely exchanging
products and services of value with others.
The American Marketing Association offers the
following definition:
- “Marketing is an organizational function and a set of
processes for creating, communicating, and delivering
value to customers and for managing customer
relationships in ways that benefit the organization and its
stakeholders.
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Selling is only the tip of the iceberg
“There will always be a 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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MARKETING AS A “PROCESS”:
- Marketing involves an exchange transaction between
the buyer and the seller.
- Marketing emphasises on the mutual satisfaction of
both—the buyer and the seller.
-Development of a long-term relationship between them.
MARKETING AS A “MANAGERIAL FUNCTION”:
-Understanding consumer needs
-Environmental scanning and market opportunity analysis
-Development of competitive marketing plan and strategy
such that an organisation is able to satisfy not only the
consumer needs but also achieve its objectives
-Implementation of marketing plan and development of
tactical plans to overcome problems at the market place;
and
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-Development of control mechanisms.
III. What is Marketing Management?
Marketing management is the art and science of choosing
target markets and getting, keeping, and growing customers
through creating, delivering, and communicating superior
customer value.
According to the American Marketing Association:
Marketing (management) is the process of planning and
executing the conception, pricing, promotion, and distribution of
goods, services, and ideas to create exchanges with target groups
that satisfy customer and organizational objectives.
The Marketing Process:
-consists of analyzing marketing opportunities, researching
and selecting target markets, designing marketing strategies,
planning marketing programs, and organizing, implementing,
and controlling the marketing effort.
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IV. What is Marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
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-10 types of entities.
i) Goods: Foods and beverages, clothes, cars, TV’s.
ii )Services: Airlines, hotels, car rental firms, barbers and
beauticians, accountants, lawyers, management consultants.
iii) Experiences: Nicco Park, Esselworld.
iv) Events: Time-based events, such as the Olympics, company
anniversaries, major trade shows, sports events, and artistic
performances.
v) Persons: Celebrity marketing is a major business.
vi) Places: Places—cities, states, regions, and whole nations—
compete actively to attract tourists, factories, company
headquarters, and new residents.
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vii) Properties:
-Intangible rights of ownership
-Could be rights of ownership of either real property (real estate)
or financial property (stocks and bonds).
viii) Organizations:
- Organizations actively work to build a strong, favorable image in
the minds of their target publics. E.g., Philips puts out ads with a
line, “Lets make things better”.
ix) Information:
- Schools and universities produce and distribute at a price to
parents, students, and communities. Other examples,
encyclopedias, software, CD’s.
x) Ideas:
- Every market offering includes a basic idea.
- Social marketers are busy promoting such ideas as “say no to
drugs”, “Save the environment”, “Be Eco-friendly rainforest” etc.
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V. What is a Market?
Originally the term market stood for the place where buyers
and sellers gathered to exchange their goods.
Economists use the term market to refer to a collection of
buyers and sellers who transact over a particular product or
product class.
Marketers often use the term market to cover groupings of
customers.
They view the sellers as constituting the industry and buyers
as constituting the market.
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A market consists of all the potential customers sharing a
particular need or want who might be willing and able to
engage in exchange to satisfy that need or want.
Thus the size of the market depends upon the number of
persons who exhibit the need, have resources that interest
others, and are willing to offer these resources in exchange
for what they want.
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Markets, Market Place, Virtual & Meta Markets:
Market is a set of existing & potential buyers for a defined
product or service.
Limits of the market are often defined by geography and is
invariably time specific.
Market place is a place where one goes for shopping; it is
physical.
The market space (virtual market) is digital in nature.
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Mohan Sawhney has proposed the concept of a metamarket
to describe a cluster of complementary goods and services
that are closely related in the minds of consumers but are
spread across a diverse set of industries.
Meta markets: The convergence of suppliers of all
complementary products and services that are closely related
to a product in consumers mind.
For example, when a consumer buys a house, he needs
finance, furnishings, household goods, interior designing, a
construction firm and a dealer. When all come together, a
meta market is created.
Another example, the automobile meta-market consists of:
- automobile manufacturers, new car and used car dealers,
financing companies, insurance companies, mechanics, spare
parts dealers, service shops, auto magazines, classified auto
ads in newspapers, and auto sites on the Internet.
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VI. Who Markets?
A marketer is someone who seeks a response (from
another party), called the prospect.
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VII. How is Marketing Done?
-Marketing follows a logical process.
-The marketing planning process consists of:
i) analyzing marketing opportunities;
ii) selecting target markets;
iii) designing marketing strategies;
iv) developing marketing programs; and
v) managing the marketing effort.
-Increasingly, marketing is not done only by the marketing
department.
-Marketing needs to affect every aspect of the customer
experience, all possible touch points-store layouts, package
designs, product functions, employee training, and shipping
and logistics methods.
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Marketing Management Tasks
 Develop market strategies and plans
 Capture marketing insights
 Connect with customers
 Build strong brands
 Shape market offerings
 Deliver value
 Communicate value
 Create long-term growth
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VIII.Core Concepts of Marketing:
-needs, wants, and demands
-products and services: offerings and brands
-value, cost, and satisfaction
-exchange, transactions, and relationships
-target markets, positioning and segmentation
-competition
-marketing environment
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a) Needs, Wants and Demands:
- A human need is a state of felt deprivation of some basic satisfaction.
- they are the basic human requirements.
-These needs are not created by their society or by marketers; they preexist; primary needs and secondary needs.
- These needs become wants when they are directed to specific objects
that might satisfy the need.
- Wants are desires for specific satisfiers of these deeper needs; Wants
are shaped by one's society.
Demands are wants for specific products that are backed by an ability
and willingness to buy them.
Wants become demand when supported by purchasing power.
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❖Marketers do not create needs;
❖Needs preexist marketers.
❖Marketers, along with other societal factors, influence
wants.
❖Marketers influence demand by making the product
appropriate, attractive, affordable, and easily available to
target consumers.
❖Companies must measure not only how many people
want
the'
product but also how many would actually be willing and
able to buy it.
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b) Products and Services: Offerings and brands:
-People satisfy their needs and wants with goods and
services.
-The term product is used to cover both.
A product is anything that can be offered to satisfy a need or
want.
Companies address needs by putting forth a value
proposition, a set of benefits, they offer to customers to
satisfy their needs;
-The intangible value proposition is made physical by an
offering, which can be a combination of products, services,
information, and experiences.
A brand is an offering from a known source; it leads to the
creation of a brand image.
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c) Value, cost and satisfaction:
The product/offering will be successful if it delivers value
and satisfaction to the target buyer.
The buyer chooses between different offerings on the basis
of which is perceived to deliver the most value.
Value can be seen as primarily a combination of quality,
service, and price (QSP), called the customer value triad.
Value increases with quality and service and decreases with
price.
Value proposition: a set of benefits they offer to
customers to satisfy their needs.
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Value is a ratio between what the customer gets and
what he gives.
The marketer can increase the value of the customer
offering in several ways:
·
Raise benefits
·
Reduce costs
·
Raise benefits and reduce costs
·
Raise benefits by more than the raise in costs
·
Lower benefits by less than the reduction in costs.
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-Value is a central marketing concept.
-Marketing can be seen as the identification, creation,
communication, delivery, and monitoring of customer
value.
Satisfaction reflects a person's comparative judgment of
a product's perceived performance (or outcome) in
relation to expectations.
-If product performance falls short of expectations, the
customer is dissatisfied and disappointed. If it matches
expectations, the customer is satisfied-and if it exceeds
expectations, the customer is delighted.
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d) Exchange, transactions and relationships:
- Marketing emerges when people decide to satisfy needs
and wants through exchange.
- the act of obtaining a desired product from someone by
offering something in return.
For exchange to take place, five conditions must be
satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to the
other party.
3. Each party is capable of communication and delivery.
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4. Each party is free to accept or reject the exchange offer.
5. Each party believes it is appropriate or desirable to deal
with the other party.
If these conditions exist, there is a potential for
exchange. Exchange is a value-creating process because
it normally leaves both parties better off than before the
exchange.
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Relationship marketing has the aim of building mutually
satisfying long-term relations with key parties—customers,
suppliers, distributors—in order to earn and retain their
business.
The ultimate outcome of relationship marketing is the
building of a unique company asset called a marketing
network.
A marketing network consists of the company and its
supporting stakeholders (customers, employees, suppliers,
distributors, retailers, ad agencies, university scientists, and
others) with whom it has built mutually profitable business
relationships.
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e) Target markets, Positioning and
Segmentation:
A marketer can rarely satisfy everyone in a market.
Therefore, marketers identify and profile distinct groups
of buyers who might prefer or require varying product and
service mixes by
examining demographic, psychographic, and behavioral
differences among buyers.
-The marketer then decides which segments present the
greatest opportunity-which are its target markets.
-For each target market, the firm develops a market
offering that it positions in the minds of the target buyers
as delivering some central benefit(s).
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f) Competition:
-Competition includes all the actual and potential rival
offerings and substitutes that a buyer might consider.
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g) Marketing environment:
-The marketing environment consists of the task environment
and the broad environment.
-The task environment includes the immediate actors involved
in producing, distributing, and promoting the offering, such as
the company, suppliers, distributors, dealers, and the target
customers.
-In the supplier group are material suppliers and service
suppliers such as marketing research agencies, advertising
agencies, banks and insurance companies, transportation
companies, and telecommunications companies.
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-Distributors and dealers include agents, brokers, manufacturer
representatives, and others who facilitate finding and selling to
customers.
-The broad environment consists of six components:
demographic environment, economic environment, physical
environment, technological environment, political-legal
environment, and social-cultural environment.
-Marketers must pay close attention to the trends and
developments in these environments and make timely
adjustments to their marketing strategies.
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Marketing Environment
Demographi
c
Economic
Sociocultural
Politicallegal
Technologic
al
Natural
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IX. What is Marketing Mix?
The marketing mix is the set of marketing tools the firm
uses to pursue its marketing objectives in the target market.
McCarthy has classified these tools into four broad groups;
he has termed them as Ps of marketing: product, price,
place, and promotion.
The marketing program consists of numerous decisions
on the mix of marketing tools to use.
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THE FOUR P’S
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MARKETING MIX VARIABLES
Product
Goods, services, or ideas that satisfy
customer needs
Distribution
The ready, convenient, and timely
availability of products
Promotion
Activities that inform customers about
the organization and its products
Pricing
Decisions and actions that establish
pricing objectives and policies and set
product prices
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Robert Lauterborn suggested that the 4Ps correspond to
the customers' 4Cs:
4 Ps
4 Cs
Product
Customer needs and
wants
Price
Cost to the customer
Place
Convenience
Promotion
Communication
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The marketplace isn’t what it used to be….




Changing technology
Globalization
Deregulation
Privatization
 Customer
Empowerment
 Customization
 Industry Convergence
 Heightened competition.
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XI. Orientations towards the Marketplace:
The competing concepts under which organizations have
conducted marketing activities include:
-production concept
-product concept
-selling concept
-marketing concept
-customer concept
-societal marketing concept
-holistic marketing concept
The first three are of limited use today.
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1. Production Concept:
- One of the oldest concepts in business
- Consumers will prefer products that are widely available
and inexpensive.
- Managers of production-oriented organizations
concentrate on achieving high production efficiency and
wide distribution coverage; high production efficiency,
low costs, and mass-distribution.
- This orientation makes sense in developing countries,
where consumers are more interested in obtaining the
product than in its features.
Example, China, largest PC manufacturer takes advantage
of the huge inexpensive labour pool to dominate the market.40
2. Product Concept:
- Consumers will favor those products that offer the most
quality, performance, or innovative features.
-Managers in these product-oriented organizations focus
their energy on making superior products and improving
them over time.
-The product concept leads to "marketing myopia," a
focus on the product rather than on the customer's need.
-Further, new or improved products will not necessarily
be successful unless they are priced, distributed,
advertised, and sold properly.
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3. The Selling concept:
-Consumers and businesses, if left alone, will ordinarily not
buy enough of the organization’s products; buying inertia or
resistance.
Therefore, the organization must undertake aggressive
selling and promotion effort.
-Their aim is to sell what they make rather than what the
market wants.
-The selling concept is practiced most aggressively with
unsought goods, goods that buyers normally do not think of
buying, such as insurance, encyclopedias, etc.
-Most firms practice the selling concept when they have
overcapacity, aiming to sell what they make rather than
making what the market wants.
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4.The Marketing concept:
The 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.
- The marketing concept emerged in the mid-1950s and challenged the
preceding concepts.
- Instead of a product-centered, "make-and-sell" philosophy, there was
a shift to a customer-centered philosophy.
- The job is not to find the right customers for your product, but the right
products for your customers.
-The key to achieving organizational goals is being more
effective than competitors in creating, delivering, and
communicating superior customer value to your target
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Contrast between the Selling and Marketing
Concepts:
Theodore Levitt drew a perceptive contrast between the
selling and marketing concepts
1. Selling focuses on the needs of the seller;
Marketing on the needs of the buyer.
2. Selling is preoccupied with the seller's need to convert his
product into cash;
Marketing with the idea of satisfying the needs of the
customer by means of the product and the whole cluster of
things associated with creating, delivering and finally
consuming it.
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3. The selling concept takes an inside-out perspective. It
starts with the factory, focuses on existing products, and
calls for heavy selling and promoting to produce profitable
sales.
The marketing concept takes an outside-in perspective. It
starts with a well-defined market, focuses on customer
needs, coordinates all the activities that will affect
customers, and produces profits by satisfying customers.
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5.The Customer Concept:
Today many companies are moving beyond the
marketing concept to the customer concept.
- a growing number of today's companies are now
shaping separate offers, services, and messages to
individual customers; CUSTOMIZATION.
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The Customer Concept
Starting
point
Individual
customer
Focus
Customer
needs
and
values
Means
One-toone
marketing
integration
and
value
chain
End
Profitable growth
through capturing
customer
lifetime value
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Contrast between the Marketing and Customer
Concepts:
Marketing Concept: works at the level of customer
segments
Customer Concept: works at the level of individual
customers
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6. The Societal Marketing Concept:
- The societal marketing concept holds that the
organization's task is to determine the needs, wants, and
interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the
consumer's and the society's well-being.
- The societal marketing concept calls upon marketers to
build social and ethical considerations into their
marketing practices.
- They must balance and juggle the often conflicting
criteria of company profits, consumer want satisfaction,
and public interest.
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7. Holistic marketing concept:
The holistic marketing concept is based on the
development, design, and implementation of marketing
programs, processes, and activities, that recognizes their
breadth and interdependencies.
Holistic marketing recognizes that “everything matters”
with marketing and that a broad, integrated perspective is
often necessary.
Four components of holistic marketing are:
- relationship marketing
- integrated marketing
- internal marketing
- performance marketing.
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Holistic Marketing
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a) Relationship marketing has the aim of building mutually
satisfying long-term relationships with key parties—customers,
suppliers, distributors, and other marketing partners.
The ultimate outcome of relationship marketing is the building of a
unique company asset called a marketing network.
A marketing network consists of the company and its
supporting stakeholders (customers, suppliers, distributors,
retailers, ad agencies, university scientists, and others) with
whom it has built mutually profitable business relationships.
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b) Integrated Marketing:
-The marketer’s task is to devise marketing activities and assemble fully
integrated marketing programs to create, communicate, and deliver value
for consumers.
Two key themes of integrated marketing are:
-Many different marketing activities are employed to communicate and
deliver value.
-All marketing activities are coordinated to maximize their joint efforts.
c) Internal Marketing
Holistic marketing incorporates internal marketing, ensuring that
everyone in the organization embraces appropriate marketing principles.
Internal marketing must take place on two levels:
- At one level, the various marketing functions (sales force, advertising,
customer services, product management, and marketing research) must
work together.
- Secondly, marketing must be embraced by the other departments— they
must “think customer.”
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IV
Social Responsible Marketing:
- Holistic marketing incorporates social responsibility marketing and
understanding broader concerns, and the ethical, environmental, legal, and
social context of marketing activities and programs.
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Types of Corporate Social Initiatives
 Corporate social marketing
 Cause marketing
 Cause-related marketing
 Corporate philanthropy
 Corporate community involvement
 Socially responsible business practices
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Corporate social marketing:
- Supporting behavior change campaigns
Cause marketing:
- Promoting social issues through efforts such as
sponsorships, licensing agreements, and advertising
Cause-related marketing:
- Donating a percentage of revenues to a specific cause
based on the revenue occurring during the announced
period of support
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Corporate philanthropy:
- Making gifts of money, goods, or time to help non profit
organizations, groups, or individuals
Corporate community involvement:
- Providing in-kind or volunteer services in the community
Socially responsible business practices:
- Adapting and conducting business practices that protect
the environment, and human and animal rights
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XII. Shifts in Marketing Management:
- From marketing does the marketing to everyone does the
marketing.
- From organization by products units to organizing by
customer segments.
- From making everything to buying more goods and services
from outside.
- From using many suppliers to working with fewer suppliers
in a “partnership.”
- From relying on old market positions to uncovering new
ones.
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- From emphasizing tangible assets to emphasizing
intangible assets.
- From building brands through advertising to building brands
through performance and integrated communications.
- From attracting customers through stores and salespeople
to making products available online.
- From selling to everyone to trying to be the best firm
serving a well-defined target market.
- From focusing on profitable transactions to focusing on
customer lifetime value.
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- From a focus on gaining market share to a focus on
building customer share.
- From being local to being “glocal”—both global and
local.
- From focusing on the financial scorecard to focusing on
the marketing scorecard.
- From focusing on shareholders to focusing on
stakeholders.
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