Unit 5
Marketing
Text A
What Is Marketing?
Think of marketing as an exchange. Think of marketers as people who help to manage
exchanges. People have been exchanging goods for goods, or goods for services, or services for
services since time began.
Marketing probably started with one cave man finding he had too much meat, but no fresh
vegetables. So he made a deal with a man who had vegetables, but no meat. A simple exchange.
So much meat for so many vegetables. Both cave men were happy. Both had exchanged
something they valued for something of equal value. In time, groups of people came together into
villages. Then the exchanges became more involved. One man would fix a roof in return for
chickens and eggs. He would then exchange some of the eggs for bread at the baker’s. Another
may have sharpened all the knives in a home in exchange for having his garden dug. Both
exchanged services rather than goods.
Simple exchanges soon became impossible. The barter system means that too many actual
goods have to be moved about. So people invented money. Before money, a person’s wage could
be paid in either chickens or pigs but he or she could not get change. After money was invented,
all goods or services could be sold for cash, and the cash was used to buy what was needed. We
still use money today. We use money to help us buy and sell quickly and easily.
Marketing is a central focus for this exchange process. We define marketing as a social and
managerial process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others. To explain this definition, we examine
the following important terms: needs, wants and demands; products; value, satisfaction and quality;
exchange, transactions and relationships; and markets.
The most basic concept underlying marketing is that of human needs. Humans have many
complex needs. These include basic physical needs for food, clothing, warmth and safety; social
needs for belonging and affection; and individual needs for knowledge and self-expression. When
a need is not satisfied, a person will try either to reduce the need or look for an object that will
satisfy it. People in less developed societies might try to reduce their desires and satisfy them with
what is available.
Wants are the form taken by human needs as they are shaped by culture and individual
personality. A hungry person in Australia, Singapore might want a hamburger, chips and cola.
Wants are described in terms of objects that will satisfy needs. As people are exposed to more
objects that arouse their interest and desire, producers try to provide more want-satisfying
products and services.
People have almost unlimited wants but limited resources. Thus, they want to choose
products that provide the most value and satisfaction for their money. When backed by buying
power, wants become demands. Consumers view products as bundles of benefits and choose
products that give them the best bundle for their money.
1A market consists of people or organizations with needs to satisfy, money to spend, and the
willingness to spend it, while a target market consists of a group of customers (people or
organizations) at whom the seller directs a marketing program. A firm may have a single target
market, and most likely, have multiple target markets. Target market selection must be based on
careful analysis of market opportunities.
The combination of the four controllable variables — product, price, place, and promotion
(the four Ps) that comprise a company’s marketing program is termed the 2marketing mix. The
four Ps, or four elements of the marketing mix are explained as follows:
Product — planning and developing the right goods and /or services to be marketed,
changing the existing products, adding the new ones, selecting the right assortment, package and
brand.
3Price— setting the right price for firm’s products or services after estimating the customers’
reaction to price changing, making a decision about discount rates and allowances offered to
different buyers.
Place — choosing the right middlemen after comparing a variety of 4channel members,
selecting the channel patterns.
Promotion — informing and persuading the market regarding new or old products, putting
advertisement, enhancing personal selling and 5sales promotion.
Text B
SWOT Analysis —the First Step of Success in Marketing
The 2marketing plan is one of the most important outputs of the marketing process. It relies
very heavily on an analysis of the industry, the business and the product situation. The SWOT
analysis is an analytical tool which is used in market planning. The analysis of the strengths and
weaknesses focuses on internal factors which can allow the organization to determine what it does
well and what it needs to improve. Opportunities and threats are external factors.
Strengths capture the positive aspects internal to your business that add value or offer you a
competitive advantage. This is an opportunity to remind yourself of the value existing within your
business. Identifying your strengths will help you decide on which areas you can rely. You are
likely to see better returns for your effort in these areas.
Weaknesses refer to any limitation that a public transit organization might face in 3marketing
strategy development or implementation. Weaknesses should also be examined from the
customers’ perspective since the customers often identify weaknesses not readily identifiable to
the organization. Your weakness will tell you which areas need special attention —thus turning
them into strengths. Alternatively, you might decide that these are areas which you should avoid.
Opportunities refer to favorable conditions in the environment that could produce rewards for
the public transit organization if acted upon properly. Opportunities are areas which the business
needs to attack: they offer earning potential. You will need a strategy that allows you to make the
most of the opportunity which exists.
Threats are external factors beyond your control that could place your marketing strategy, or
the business itself, at risk. Identifying threats allows you to take actions if they should occur,
before they can affect your business negatively. These challenges are unfavorable economic trends
that could lead to reduced revenues or profits. Competition, whether existing or potential, is
always a threat. Your existing competitors can make moves that can undermine your business.
Other threats could be government regulations, changes in customer behavior that reduces sales,
or new technology that reduces the demand for your current products or services.
Now, let’s look at the SWOT analysis of 4Starbucks Corporation:
Strengths
Starbucks Corporation is a global coffee brand built upon a reputation for fine products and
services. It has almost 9000 cafes in almost 40 countries. Starbucks was one of the 5Fortune Top
100 Companies to Work For in 2005. The company is a respected employer that values its
workforce. The organization has strong ethical values and an ethical mission statement as follows,
“Starbucks is committed to a role of environmental leadership in all facets of our business.”
Weaknesses
Starbucks has a reputation for new product development and creativity. However, they
remain vulnerable to the possibility that their innovation may falter over time. The organization
has a strong presence in the United States of America with more than three quarters of their cafes
located in the home market. It is often argued that they need to look for a portfolio of countries, in
order to spread business risk. The organization is dependant on a main competitive advantage, the
retail of coffee. This could make them slow to diversify into other sectors if the need should arise.
Opportunities
Starbucks are very good at taking advantage of opportunities. New products and services can
be retailed in their cafes, such as 6Fair Trade products. The company has the opportunity to expand
its global operations. New markets for coffee such as India and the 7Pacific Rim nations are
beginning to emerge. 8Co-branding with other manufacturers of food and drink, and brand
9franchising to manufacturers of other goods and services both have potential.
Threats
Who knows if the market for coffee will grow and stay in favor with customers, or whether
another type of beverage or leisure activity will replace coffee in the future? Starbucks are
exposed to rises in the cost of coffee and dairy products. Since its conception in 10Pike Place
Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and
copy cat brands that pose potential threats.
Text C
People are the Brand in Service Industry
Introduction to Service Industry
Put in the most simple terms, services are deeds, processes, and performances. The service
offered by Johnson, MacMillan, & Allen are not tangible things that can be touched, seen, and felt,
but rather are intangible deeds and performances. 1Compatible with our simple, broad definition is
one that defines services to “include all economic activities whose output is not a physical product
or construction, is generally consumed at the time it is produced, and provides added value in
forms (such as convenience, amusement, timeliness, comfort or health) that are essentially
intangible concerns of its first purchaser”. Each of these services may include a final, tangible
report or, in the case of employee training, tangible instructional materials. Otherwise, the entire
service is represented to the client through problem analysis activities, meetings with the client,
follow-up calls, and reporting a series of deeds, processes, and performances. Similarly, the core
offerings of hospitals, hotels, banks, and utilities comprise primarily deeds and actions performed
for customers.
Service work exists for a variety of reasons, principally to:
1. 1.Enable the client to meet needs which he would otherwise be unable to meet, e.g.,
distant voice communication.
2. 2.Offer the client alternatives which are superior in cost, time, convenience, etc., e.g.,
public transportation.
3. 3.Meet a wide variety of human psychological and physiological needs, e.g., amusement,
freedom from disagreeable tasks, opportunity for learning and creativity.
People are the Brand
When we buy services, we generally buy the time and skills of a live person—a lawyer, an
accountant, an auto mechanic. But we also realize that most services involve a good deal of
behind-the-scenes collaboration. Siegfried the auto mechanic doesn't personally fix every car in
his shop: Much of the actual work will be done by employees we'll never meet, whose expertise
and methods we know nothing about.
So why do we feel compelled to meet Siegfried in person before we take our car to his shop?
Because Siegfried, unlike his services, is tangible: We can meet him, shake hands with him, and
talk to him about cars. If we like and trust Siegfried, we take for granted that the intangible
services his shop provides will reflect the same qualities we see in him as an individual. Siegfried
literally personifies his company’s brand.
In fact, human qualities often define service brands even when there’s no obvious Siegfried
to personify the service. We “fly the friendly skies” of an airline and we look for a bank that's
“cooperative”.
In terms of marketing strategy, the “people as brand” concept has several important
implications:
 Name the company after a person: Many of the strongest service brands are simply the names
of founders—2Arthur Andersen, Walt Disney, Jenny Craig. Names like these suggest that the
company is guided by the founder’s personal values and respects.
 If necessary, invent a character: When there’s no real person to embody an abstract service,
marketers sometimes create fictional people to personify brand attributes. 3General Motors’ Mr.
Goodwrench, Dell’s Uncle Dudley—these characters help us visualize service qualities (such as
“reliable” and “responsive”) that otherwise might not come across as credible.
 Showcase top talent: Founders and chief executives are the natural spokespeople for service
companies, but customers also like to see that a company has genuine depth of talent. Top
consultants and managers should play a prominent role at seminars and user group meetings,
they should come along on sales calls, and they should be highly visible on the company Web
site. People are the power features of a service product.
Don’t overlook rank-and-file employees: Service brands are also shaped by our day-to-day
dealings with supporting technicians, installers, trainers, and account managers. It’s no accident
that 4FedEx employees almost always seem trim-looking and eager, while their counterparts at the
Post Office are more likely to look out of shape and unmotivated. If rank-and-file employees don’t
consistently embody the values in a service brand, the brand will very quickly lose its meaning.