Introduction
ProblemtoSolving
marketing
concepts
1
What you’ll learn...
What is
marketing?
Marketing
What does it
involve?
What is the
marketing mix?
2
About
Marketing
3
Marketing in the 21
century
WHY
4
What is marketing?
• Marketing…
– is not ADVERTISING
– is not SELLING
– is not PROMOTION
• “The aim of marketing is to make
selling unnecessary.” Peter Drucker
(1973)
5
What is marketing?
• Businesses need to sell
products if they are to
achieve their
objectives.
• Marketing is about
ensuring that
businesses can sell as
many products as
possible in order to
make profits.
6
What does it involve?
•
•
•
•
•
•
Marketing is a very complex concept.
It involves:
Research
Product design
Setting prices
Making sure the customer knows
about products
• Choosing how and where to sell
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Why is it needed?
• Each year millions of new products are
launched:
Without careful
marketing these
products would
fail
8
“Marketing is the science and art of exploring,
creating and delivering value to satisfy the needs
and wants of a target market maintaining loyalty
at a profit.”
Professor Philip Kotler
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Needs
Eat, Dress, Move
Wants
Cheeseburger, Tuxedo, Car
Marketer
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This Is Demand
Wants
Buying Power
“Demand”
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First Task: Detect Needs
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Marketing’s first task: discovering consumer needs
Organization’s
marketing focus
Discover consumer needs
Information about needs
Potential consumers: The market
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What is a Market?
Potential consumers make up a
market, which is:
1.
People
2.
with the Desire and
3.
with the Ability to Buy a
specific product.
14
Marketing’s Second Task: Satisfying Consumer
Needs
Organization’s marketing focus
Concepts
for
products
Discover consumer needs
Information about needs
Satisfy consumer needs
Find the right combination of:
• Product
• Price
• Promotion
• Place
Goods, services, ideas
Potential consumers: The market
15
The Target Market
Because the organization obviously can’t
satisfy all consumer needs, it must
concentrate its efforts on certain needs of
a specific group of potential consumers
This is the target market -- one or more
specific groups of potential consumers
toward which an organization directs its
marketing programme
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Customer Development
Suspects
First-time
Repeat
Prospects customers customers
Disqualified
prospects
Clients Advocates Partners
Inactive or
ex-customers
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Marketing Vs Sales
Is there a
difference?
18
The Marketing Concept
• Organizations must concentrate on
the customer and not the product or
the company
• Organizations should revolve round
the customer and not the other way
around
• The purpose of a business is to create
and keep a customer
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The Selling Concept
• Focuses on matching your product or
•
•
service features and benefits in a way that
suits the prospect sales
process is any thing that you do to close
the sale and get signed agreement or
contract
It is any thing that engages you with the
prospect or customer on a personal level
rather than at a distance
20
The Major Role of Marketing
and Selling
People DO NOT buy products
people buy
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Marketing
Management
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Building Customer
Relationships
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Relationship Marketing
Relationship marketing is linking the organization
to its individual customers, employees,
suppliers, and other partners for their mutual
long-term benefits.
Mutual long-term benefits between the
organization and its customers require links to
other vital stakeholders-- including suppliers,
employees, and “partners” such as wholesalers
or retailers in a manufacturer’s channel of
distribution.
24
How Marketing became so
important?
25
Four different orientations in the history of business
Production era
Sales era
Marketing concept era
SocietalMarketing era
1860 1880 190019201940 196019802000
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The Marketing Mix
The marketing mix is the combination of
variables that a business uses to carry out
its marketing strategy and meet customer
needs.
The marketing mix is often called the 4Ps:
• Product
• Price
• Place
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• Promotion
The Marketing Mix
• The tools available to a business to gain the
•
•
reaction it is seeking from its target market in
relation to its marketing objectives
7Ps – Price, Product, Promotion, Place, People,
Process, Physical Environment
Traditional 4Ps extended to cope with today's
changing environment
28
The Marketing Mix
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Product
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Product
• Product’ refers to the functions and features
•
•
•
of a good or service
Should satisfy the needs of the customer
May have a Unique Selling Proposition (USP)
‘Product’ also includes a range of factors such as
packaging, quality, warranties, after-sales
service and branding
31
Product
• The firm must come up with a product
or service that people will want to
buy.
• It must fulfil some need
or want.
• It must be (or at least seem) unique.
32
Product
• Methods used to
improve/differentiate
the product and increase
sales or target sales more
effectively to gain
a competitive advantage e.g.
– Extension strategies
– Specialised versions
– New editions
– Improvements – real or
otherwise!
– Changed packaging
– Technology, etc.
Image copyright: www.freeimages.co.uk
33
The Product Life Cycle
• The product lifecycle looks at the sales of
a product over time
34
Stages in the Product Lifecycle
Development – high costs but no sales
Launch – high expenditure on promotion and
product development, low sales
Growth – sales increase and product should
break-even
Maturity – sales stabilise, less expenditure on
promotion needed, revenue & profit should be
high
Decline – sales decline, extension strategies can
be adopted or the product withdrawn
35
Extension Strategies
Extension strategies should maintain or
increase sales. They include:
• Modifying the product
• Reducing the price
• Adding a feature
• Promoting to a
different market
sector
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Product or service or brand
BMW
Core Product
Freedom to travel
Sheraton
Flight
Zamalek Football Club
Excitement and
leisure
ALICO
Room service
An airline journey
T-shirts – photos
with players
Insurance policy
Cooling
Augmented
Product
A motor car
Rooms
Egypt Air
UNIONAIR
Actual Product
Finance
Warranty
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Price
38
Price
The price of a product will depend on:
• The cost to make it
• The amount of profit desired
• Other objectives of the business
• The price competitors charge
• The price customers are willing to pay
– Is there a high demand?
– Is demand sensitive to changes in price?
39
Price
• The price must be one that
• Pricing Strategy
the customer thinks is good
value for money.
• This is not the same as
being cheap!
• Prices have a great
psychological effect on
customers.
- International
– Comparative
– Cost plus
40
Price Leader/Taker
Price leader – businesses that dominate
the market can often dictate the price
charged for a product. Other businesses
follow this lead
Price taker – businesses have to charge
the market price. This is often the case
where there are many small firms
competing against each other
41
Pricing Strategies & Tactics
• Skimming
• Launching with a high price when there is
little competition, then reducing the price
later. Often used with technology.
• Penetration
• Low price charged initially to penetrate the
market and build brand loyalty; prrice is
then increased e.g. introductory offers on
magazines.
42
Pricing Strategies & Tactics
• Competitive
• A similar price is charged to that of
competitors’ products.
• Loss leader
• Products may be sold at a price lower than
the cost to produce it. Often used by
supermarkets to encourage people into
the store where it is hoped they will buy
other products.
43
Pricing Strategies & Tactics
• Psychological
• A price is set which customers perceive as
lower than it is e.g. €39.99 instead of €40
44
Price
• Pricing Strategy
• Importance of:
– knowing the market
– elasticity
– keeping an eye
on rivals
Image copyright: www.freeimages.co.uk
45
Promotion
46
Promotion
• Strategies
•
to make the
consumer aware of
the existence of a
product
or service
NOT just advertising
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Promotion
The aims of promotion are to:
• Raise awareness
• Encourage sales
• Create or change a brand image
• Maintain market share
• Increase market share
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Promotion
Above-the-line promotion
This uses advertising media over which a
firm has no direct control e.g. television,
radio and newspapers
Below-the-line promotion
This uses promotional media which the firm
can control e.g. direct mail, sales
promotions and sponsorship
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The promotional message should
Grab
Attention
Stimulate
Create
Interest
Desire
Promote
Action
51
Promotional Activities
• Advertising e.g. TV, billboards and
internet.
• Sales promotions e.g. Loyalty cards,
BOGOF, discounts & free gifts
• Sponsorship – a business pays to be
associated with another firm, event or
cause
52
Promotional Activities
• Direct mailing – promotional material is
sent to potential customers by post/email
• Public relations – building the
relationship between the firm and the
public by enhancing its reputation
53
Promotional Mix
Most businesses use a combination of
different promotional activities.
The chosen promotional mix will depend on:
• Cost
• Target market
• Product
• Competitors
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Place
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Place
• The means by which products and
services get from producer
to consumer and where they can be
accessed by the consumer
• The more places to buy the product and
the easier it is made to buy it, the better
for the business (and the consumer?)
56
Place
• Products should be conveniently available
for customers to buy
• ‘Places’ include:
• Stores
• Mail order
• Telesales
• Internet - The use of e-commerce (promoting and
selling on the internet) has grown massively over recent years
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58
Jobber
• One that buys merchandise from
manufacturers and sells it to retailers
59
People
60
People
• People represent the business
• The image they present can be important
• First contact often human – what is the lasting image
they provide to the customer?
• Extent of training and knowledge of the product/service
concerned
• Do staff represent the desired culture
of the business?
61
People
• People represent the business
– The image they present can be important
– First contact often human – what is the lasting image
they provide to the customer?
– Extent of training and knowledge
of the product/service concerned
– Mission statement – how relevant?
– Do staff represent the desired culture
of the business?
62
People
• People represent the business
– The image they present can be important
– First contact often human – what is the lasting image
they provide to the customer?
– Extent of training and knowledge
of the product/service concerned
– Mission statement – how relevant?
– Do staff represent the desired culture
of the business?
63
Process
64
Process
• How do people consume services?
• What processes do they have to go through
•
to acquire the services?
Where do they find the availability
of the service?
–
–
–
–
–
–
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology
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Physical Environment
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Physical Environment
•
•
•
•
•
•
•
•
•
The ambience, mood or physical presentation of the environment
Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets,…..).
Brochures.
Furnishings.
Uniforms.
Business cards.
The building itself (such as prestigious offices or scenic
headquarters).
• Mailboxes and many others . . . . . .
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Physical Environment
• The ambience, mood or physical presentation of
the environment
–
–
–
–
–
–
–
Smart/shabby?
Trendy/retro/modern/old fashioned?
Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music?
Smell?
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Stages in Consumer Decision
WordProcess
of- Mouth
Awareness
Advertising
Interest
Channel
Decision
Product /
Service
Action
Price
Satisfaction
70
The Marketing Mix
•
•
•
•
•
•
•
•
•
Blend of the mix depends upon:
Marketing objectives
Type of product
Target market
Market structure
Rivals’ behaviour
Global issues – culture/religion, etc.
Marketing position
Product portfolio
– Product lifecycle
– Boston Matrix
71
Marketing Model
Target Market
Aware
Intention to
Purchase
Understand
Believe
Above the Line
Want
Below the Line
Find
Point of Purchase
Experience
Behavior
Buy
Revenue
Use
Value
Prefe
r
Loyal
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Marketing Management Philosophies
Production
Sales
Competing
Philosophies
Market
Societal Marketing
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Marketing Management Philosophies
Philosophy
•
Production
Sales
Market
Societal
Key Ideas
Focus on efficiency of internal operations
Focus on aggressive techniques for
overcoming customer resistance
Focus on satisfying customer needs and wants
Focus on satisfying customer needs and
wants while enhancing individual and
societal well-being
74
The Marketing Concept
Focus on
Customer Wants
and Needs
Integrate Organization’s
Activities to Satisfy
Customer Needs and
Wants
Achieve Organization’s
Long Term Goals by
Satisfying Customer
Wants and Needs
75
Comparing Sales and Market
Orientations
Organization’s
Focus
Sales
Orientation
Market
Orientation
Firm’s
Business
For
Whom?
Primary
Profit Goal?
Tools to
Achieve
Inward
Selling goods Everybody Maximum Primarily
promotion
and services
sales
volume
Outward
Satisfying
wants and
needs
Specific
Customer
groups
of people satisfaction
Coordinated
use of all
marketing
activities
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Developing Competitive Advantage
Competitive
Advantage
Customer
Value
Customer
Satisfaction
Customer
Relationships
77
Evolving Marketing Mix
• The marketing mix will evolve over time
• The product portfolio may grow as a
business becomes more established
• More expensive promotional activities may
be adopted as a firm’s revenue increases
• More outlets may be opened, or products
sold via the internet
• Price may change as demand changes
78
Value and Satisfaction
Expectation
8
Performance
10
Expectation
Performance
10
8
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
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Why Do So Many Products Fail?
80