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© Kotler, Keller, Ang, Leong & Tan,, 4th Edition

Marketing Management

An Asian Perspective1-1

UNDERSTANDING

MARKETING MANAGEMENT

PART

1




DefiningMarketing for the

21st Century

Chapter

1




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Why is marketing important? What is the scope of marketing? What are some fundamental marketing

concepts? How has marketing management

changed? What are the tasks necessary for

successful marketing management?

In this chapter, weaddress the

followingquestions:




Asian brands prominently advertised in New York’s Time Square




The Importance of Marketing

Financial success depends on marketing

No demand - no business

Marketing decisions tough – What to design

– What prices to offer

– Where to sell

– How much to spend on advertising…




Marketing

An organizational function & processes

to create, communicate & delivervalue to customers

& manage customer relationshipsto benefit organization & stakeholders

Scope of Marketing –What is Marketing?




Scope of Marketing –What is Marketing?

Eg: When Sony designed PlayStationSwamped with orders – WHY?“Right” product – marketing

“Aim of marketingknow & understand customer so well

product fits him & sells itself…”




Scope of Marketing – Exchange and Transactions

Exchange

Process to obtain desired

product from someone

by offering

something in return




Scope of Marketing – Exchange and Transactions

For exchange potential to exist, 5 conditions:

1. At least 2 parties2. Each has thing of value to the other3. Capable of communication & delivery4. Free to accept/reject offer5. Believes it desirable to deal with the

other




Lexus ads & campaign slogan ““The Passionate Pursuit of Perfection”The Passionate Pursuit of Perfection”

express its marketing philosophy: Only the best is good enough for its customersOnly the best is good enough for its customers

““WE COULD HAVE LEFT WELL ENOUGH ALONE. WE COULD HAVE LEFT WELL ENOUGH ALONE.

BUT THAT WOULD HARDLY BE VERY CHARACTERISTIC. BUT THAT WOULD HARDLY BE VERY CHARACTERISTIC.

NOW WOULD IT?”NOW WOULD IT?”




Scope of MarketingWhat is Marketed?

goods

services

ideas

information

organizations

properties

places

events

personsexperiences

10entities




The Singapore Zoological Gardens offers varied experiences - host wedding reception - jungle

breakfast with an orang utan




Billboard adsBillboard adsfrom

Tourism Thailand

Promote Thailand

where one

can find happiness

through shopping,

outdoor activities &

sightseeing




Scope of Marketing – Who Markets?

MARKETERS AND PROSPECTS

A marketer seeks response from

prospect

If 2 parties seek to sell something to

each other, both are marketers





MARKETERS AND PROSPECTS8 demand states of consumers

1 Negative demand

Dislike product & pay to avoid it

2 Non-existent demand

Not aware/interested in product

3 Latent demandNeed not satisfied by existing

product

4 Declining demand

Buy less often or none

5 Irregular demand

Purchase vary on periodic basis

6 Full demandAdequately buy all products in

market

7 Overfull demand

More want product than can be satisfied

8 Unwholesome demand

Attracted to products- undesirable social

consequences




A traditional dry goods & fruit market in Hanoi targeting local residents




Figure 1.1Structure of Flows in a Modern Exchange Economy





KEY CUSTOMER MARKETS Consumer Markets

Sell mass consumer goods & services Business Markets

Sell business goods & services Global Markets

Sell goods & services in global market Non-profit & Governmental

MarketsSell goods to nonprofit organizations




Global Global marketingmarketing

Wall climbing

on CokeCoke ad

attract attention & customers

at 1st ChinaInternational

Beverage Festival in Beijing




Figure 1.2 A Simple Marketing System




New Consumer CapabilitiesNew Consumer Capabilities

The digital revolution - new capabilities in hands of consumers & businesses. What they have today that they didn’t have yesterday:

1) Substantial increase in buying power

2) Greater variety of goods & services

3) Great amount of information

4) Easier to interact, place & receive

orders

5) Able to compare products & services




marketplacemarketplace a physical place

marketspacemarketspace a digital place

metamarketmetamarket a cluster of related

products in consumers’

minds, from diverse industries


MARKETPLACES, MARKETSPACES, & METAMARKETS




The 10 Rules of Radical MarketingThe 10 Rules of Radical Marketing

1. CEO own marketing function2. Marketing start & stay small & flat3. Get face-to-face with customers4. Use market research cautiously5. Hire passionate missionaries, not

marketers6. Love & respect customers as

individuals7. Create community of consumers8. Rethink marketing mix9. Compete with competitors - fresh ideas 10.Be true to the brand




Scope of Marketing – How Business & Marketing are

Changing Changing technology

Globalization Deregulation

Privatization Customer empowerment

Customization Heightened competition

Industryconvergence

Disintermediation




Scope of Marketing – How Business & Marketing are

Changing Changing

technologyi-modei-mode (Japan)

Internet from cell phones

emails, access websites

when commuting when waiting for

friends indispensable service




CustomerCustomer

empowermentempowerment

NAM HEONG Traditional Malaysian coffee shop On banner www.oldtownwhitecafe.com




Industry convergence

CosmoneuticalCosmoneuticalss::

Dermatology drugsAd by Shiseido: Japanese cosmetics firm

Cleanser, lotion, medication

Sold in Japan -drugstores




Company Orientations Toward the Marketplace

What philosophy should guide a company’s marketing efforts?

What relative weights should be given to the interests of organization,

customers & society?

Very often these interests conflict




Company Orientations Toward the Marketplace - The Production

Concept

Consumers prefer products - widely available & inexpensive

Production oriented businesses– Production efficiency, low costs

& mass distribution Huge cheap labor Market expansion




Company Orientations Toward the Marketplace - The Product Concept

Consumers favor products with most quality, performance or

innovative features

Focus on making & improving productsMight commit “bettermousetrap” fallacyNew product may not succeed unless priced, distributed, advertised & sold properly




Company Orientations Toward the Marketplace - The Selling Concept

Consumers do not buy enough products, if left alone

“Purpose of marketing - sell more - to more people - more often - for more

money - to make more profit”

Goods buyers don’t normally buy Sell what is made not what market

wants Hard selling - high risks




Company Orientations Toward the Marketplace - The Marketing Concept

Customer-centered

“Sense-&-respond” philosophy

Right products for customers

Not right customers for products

Better than competitors - create, deliver & communicate superior value to target markets




Company Orientations Toward the Marketplace - The Marketing Concept

Selling - needs of seller Marketing - needs of buyer

Selling - convert product to cashMarketing - satisfy buyer with product




Company Orientations Toward the Marketplace - The Holistic Marketing

Concept

Holistic marketingHolistic marketingDevelop, design & implement

marketing programs, processes & activities

that recognize breadth & interdependencies

Holistic marketing recognizes that“everything matters”



An Asian Perspective1-37Figure 1.3 Holistic Marketing Dimensions





ConceptRELATIONSHIP MARKETING

Relationship marketing satisfying long-term relationships with key parties to earn & retain business

Marketing network company & supporting stakeholders mutually profitable business

relationships





ConceptRELATIONSHIP MARKETING

Company deal with customers one at Company deal with customers one at a time due to computers & Interneta time due to computers & Internet

Eg: BMW allows buyers to design own

model from many variations 80 % of cars bought in Europe

- built to order





ConceptINTEGRATED MARKETING

The marketer’s task

devise marketing activities &

assemble fully integrated programs

to create, communicate, & deliver

value for consumers




Figure 1.4 The 4 P Components of the Marketing Mix



An Asian Perspective1-42Figure 1.5 Marketing-Mix Strategy





Concept INTEGRATED MARKETING

Four PsFour Ps Product Price Place Promotion

Four CsFour Cs Customer

solution Customer cost Convenience Communication




2 key themes - integrated marketing:

Different marketing activities employed

All marketing coordinated to maximize joint effects

Design & implementationof any marketing activity

done with all others in mind


Concept INTEGRATED MARKETING





ConceptINTERNAL MARKETING

Ensure all in firm embraces marketing principles

Hire, train & motivate able employees who want to serve customers well





ConceptSOCIAL RESPONSIBILITY MARKETING

Social responsibility Social responsibility

marketingmarketing

Understand broader concerns &

ethical, environmental, legal & social

context of marketing activities

Marketers to consider role they play in

social welfare





ConceptSOCIAL RESPONSIBILITY MARKETING

Are firms that satisfy consumer wants acting in best long-run interests of consumers & society?

Fast-food - tasty but unhealthy Convenient packaging - leads to waste Satisfy consumers but hurt health, environment

McDonald’s Add healthier items (salads) Environmental initiative (paper wraps replace foam box)




Bharat Petroleum India – get drivers use Pollution Under Control grade petrol - HOW?

Compare hazards of vehicle pollution with smoking

To To reducereduce pollution:pollution:




Fundamental Marketing Concepts, Trends & Tasks – Core Concepts

NEEDS, WANTS, AND DEMANDS

Needs are basic human requirements

Needs become wants when directed to objects that satisfy the need

Demands are wants for products backed by ability to pay




Fundamental Marketing Concepts,

Trends & Tasks – Core ConceptsNEEDS, WANTS, AND DEMANDS

Stated needs

Real needs

Unstated needs

Delight needs

Secret needs

5Types

OfNeeds




Fundamental Marketing Concepts, Trends & Tasks – Core ConceptsTARGET MARKETS, POSITIONING, AND

SEGMENTATION

Divide market into segments

Greatest opportunity - target markets

Target marketTarget market Market offering positioned in minds

of target buyers as beneficial




Positioning:

A Volvo ad focuses on

the company’s

central benefit:

SafetySafety

“The 1st SUV with Anti-Rollover Technology”





OFFERINGS AND BRANDS

Intangible value proposition made

physical by an offering, like products, services

A brand - offering from known source





VALUE AND SATISFACTION

Value - perceived tangible & intangible benefits & costs to customers

Value = quality + service + price (QSP)

““customer value triad”customer value triad”

Satisfaction - comparative judgments from perceived performance compared to expectations





MARKETING CHANNELS

To reach target market, 3 kinds of

marketing channels:

Communication channels Distribution channels

Service channels





SUPPLY CHAIN

Supply chain - channel - raw materials to components to final products

Eg: supply chain for women’s purses - from hides – tanning – cutting - manufacturing & channels to customers





COMPETITION

Competition

All actual & potential rival

offerings & substitutes that

buyer might consider




Fundamental Marketing Concepts,

Trends & Tasks – Core Concepts MARKETING ENVIRONMENT

Task environment - those who produce, distribute & promote offering

The broad environment has 6 components: demographiceconomicphysicaltechnologicalpolitical-legal & social-cultural





MARKETING PLANNING

The marketing planning process

Analyze marketing opportunities

Select target markets

Design marketing strategies

Develop marketing programs &

Manage marketing effort




Figure 1.6 Factors Influencing Company Marketing Strategy




Fundamental Marketing Concepts, Trends & Tasks

14 shifts to marketing management in 21st century

1 marketing does marketing to

everyone does marketing

2 organize by product units to

organize by customer segments

3 make everything tobuy more goods from outside

4 use many suppliers tofewer suppliers in “partnership”

5 rely on old market positions to

uncover new ones

6 emphasize tangible assets to

emphasize intangible assets

7 build brands through advertising to

build brands through performance & integrated communications




Fundamental Marketing Concepts, Trends & Tasks

8Attract customers to stores & salespeople to

make products available online

9 Sell to everyone tobe best at serving defined target

10

Focus on profitable transactions to

focus on customer lifetime value

11

focus to gain market share to

focus to build customer share

12

Being local tobeing “glocal”- global & local

13

Focus on financial scorecard to

focus on marketing scorecard

14

Focus on shareholders to focusing on stakeholders

14 shifts to marketing management in 21st century




Fundamental Marketing Concepts, Trends & Tasks –

Marketing Management Tasks

Develop marketing strategies & plans Capture marketing insights &

performance Connect with customers Build strong brands Shape the market offering Deliver value Communicate value Create successful long-term growth




Marketing Debate —Does Marketing Create or Satisfy Needs?

Marketing has often been defined in terms of satisfyingcustomers’ needs and wants. Critics, however, maintainthat marketing does much more than that and createsneeds and wants that did not exist before. According tothese critics, marketers encourage consumers to spendmore money than they should on goods and services

theyreally do not need.

Take a position: Marketing shapes consumer needs and

wants versus Marketing merely reflects the needs and wants of consumers.

Final discussion

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