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Chapter 1 Understanding Marketing
The future is not ahead of us. It has already happened.
Philip Kotler
2
The learning objectives:
•What is Market?•What is Marketing and marketing management?•Marketing core Concepts•Marketing management philosophies
1. Market
Market means that customers who have purchased or want to purchase a certain product or service.
Market = population+ Purchasing Power + Purchasing Need
Examples:How to understand the market of purified water what is the market of Nike?how to understand the Nike’s market?
Market
• Consumer Market• Business Market• Global Market• Nonprofit and Government Markets
Consumer Market
The aim of buying is to consume for their own or somebody who has something to do with in consumer market.
Business Market
Business buyers buy goods for their utility in enabling them to make or resell a product to others for the purpose of making profits.
Global Market
Companies selling their goods and services in the global marketplace face additional decisions and challenges.
Nonprofit and Government Markets
Companies selling their goods to nonprofit organizations such as churches, universities, charitable organizations, or government agencies.
Simple Marketing System
Industry(a collection
of sellers)
Market(a collection
of Buyers)
Goods/services
Money
Communication
Information
2.Defining Marketing
Marketing is a societal 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.
- Philip Kotler
Marketing
Is the process of planning and executing the conception,pricing,promotion,and distribution of ideas,goods,services to create exchanges that satisfy individual and organizational goals.
The Scope of Marketing
Goods ServicesExperience EventsPersons PlacesProperties OrganizationsInformation Ideas
Target Market and Segmentation
• the relationship between the industry and market•Marketplace & Marketspace• five basic markets
Marketplace and Marketspace
•Marketplace is physical, as when one goes shopping in a store,•Marketspace is digital, as when someone shopping on the internet.
Five Basic Market (figure 1.2 P9)
•Manufacturer markets•Resource markets•Government markets•Intermediary markets•Consumer markets
Manufacturermarkets
Services,Services,moneymoney
Governmentmarkets
Services,Services,moneymoney
ServicesServices
Services,Services,moneymoney
TaxesTaxes
Taxes,Taxes,goodsgoods
Taxes,Taxes,goodsgoods
Taxes,Taxes,goodsgoods
MoneyMoney MoneyMoney
Consumermarkets
IntermediarymarketsGoods, servicesGoods, services Goods, servicesGoods, services
ResourcesResources ResourcesResourcesResourcemarkets
MoneyMoney MoneyMoney
Structure of Flows
The Four PsThe Four Ps
MarketingMix
Product
Price Promotion
Place
The Four CsThe Four Cs
CustomerSolution
CustomerCost
Communication
Conven-ience
MarketIntegratedmarketing
Profits throughcustomer
satisfactionCustomer
needs
(b) The marketing concept
FactoryExistingproducts
Selling andpromotion
Profits throughsales volume
Startingpoint Focus Means Ends
(a) The selling concept
Customer Delivered Value
Customers
Front-line people
Middle Management
TopManagement
Traditional Organization Chart
Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Topmanage-
ment
Customers Cus
tom
ers
Evolving Views of Marketing’s Role
a. Marketing as anequal function
FinanceProduction
Marketing Humanresources
b. Marketing as a moreimportant function
Finance
Humanresources
Marketing
Production
Evolving Views of Marketing’s Role
c. Marketing as themajor function
Marketing
Finance
Hum
an
resources
Production
d. The customer as thecontrolling factor
Customer
Human
reso
urces
FinanceProductio
n
Marketing
Evolving Views of Marketing’s Role
e. The customer as the controllingfunction and marketing as the
integrative function
Customer
Marketing
Production
Hum
an
resources
Finance
Marketing management
The analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organization objectives
3.Core Concepts of Marketing
Product or Offering Product or Offering
Value and Satisfaction Value and Satisfaction
Needs, Wants, and DemandsNeeds, Wants, and Demands
Exchange and Transactions Exchange and Transactions
Relationships and Networks Relationships and Networks
Target Markets & Segmentation Target Markets & Segmentation
Marketing Channels Marketing Channels
Supply Chain Supply Chain
Competition Competition
Marketing Environment Marketing Environment
Products and
Services
Value, satisfaction,and quality
Needs, wants,and demands
Exchange, transactions,and relationships
Markets
CoreMarketingConcepts
CoreMarketingConcepts
Needs, Want, and Demands
•Needs describe basic human requirements.•Want are shaped by one’s society.•Demands are wants for specific products backed by ability to pay.•examples
NeedsNeeds - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am thirsty
WantsWants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Coca-Cola.
DemandsDemands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola.
Demand States and Marketing Tasks
• No demand• Latent demand• Declining demand• Irregular demand• full demand• Overfull demand• Unwholesome demand
How do Consumers ObtainProducts and Services?
How do Consumers ObtainProducts and Services?
ExchangesExchanges - act of obtaining a desired object from someone by offering something in return.
Transactions Transactions - trade of values between parties. Usually involves money and a response.
RelationshipsRelationships - building long-term relationships with consumers, distributors, dealers, and suppliers.
Value and satisfaction
Benefits• functional benefits• emotional benefits
Costs•Monetary costs•Time costs•Energy costs•Psychic costs
Value and satisfaction
benefitsValue = ----------------- costs
Exchange and transaction
“Exchange” is the act of obtaining a desired object from someone by offering something in return.“transaction” is a trade between two parties that involves at least two things of value, agreed-upon conditions a time of agreement, and a place of agreement.
Relationship marketing
The process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.
Product and service
Product---Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfying a want or need. It includes physical objectives, services, persons, places, organizations and ideas.Service--- any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
4.marketing philosophies
The production concept
The product concept
The selling concept
The marketing concept
The societal marketing concept
Production ConceptProduction Concept
Product ConceptProduct Concept
Selling ConceptSelling Concept
Marketing ConceptMarketing Concept
Consumers prefer products that are widely available and inexpensive
Consumers favor products that offer the most quality, performance,
or innovative features
Consumers will buy products only ifthe company aggressively
promotes/sells these products
Focuses on needs/ wants of target markets & delivering value
better than competitors
Company Orientations Towards the Marketplace
Customers
Front-line people
Middle Management
TopManagement
Traditional Organization Chart
Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Topmanage-
ment
Customers Cus
tom
ers
Marketing ManagementMarketing Management
Marketing ManagementImplementing programs to create exchangeswith target buyers to achieve organizational
goals
Finding and increasing demand, alsochanging or reducing demand
Demand Management
Attracting new customers and retaining current customers
Profitable Customer Relationships
Evolving Views of Marketing’s Role
a. Marketing as anequal function
FinanceProduction
Marketing Humanresources
b. Marketing as a moreimportant function
Finance
Humanresources
Marketing
Production
Evolving Views of Marketing’s Role
c. Marketing as themajor function
Marketing
Finance
Hum
an
resources
Production
d. The customer as thecontrolling factor
Customer
Human
reso
urces
FinanceProductio
n
Marketing
Evolving Views of Marketing’s Role
e. The customer as the controllingfunction and marketing as the
integrative function
Customer
Marketing
Production
Hum
an
resources
Finance
The production concept
the production concept holds that consumers will prefers products that are widely available and inexpensive.
The product concept
The product concept holds that consumers will favor those products that offer the most quality,performance,or innovative features.
The selling concept
The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort
The marketing concept
The marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating,delivering,and communicating customer value to its chosen target markets
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 satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.
Society(Human Welfare)
Society(Human Welfare)
Consumers(Wants)
Consumers(Wants)
Company(Profits)
Company(Profits)
SocietalMarketingConcept
SocietalMarketingConcept
EmergingChallengesEmerging
Challenges
NonprofitMarketing
New Marketing
Landscape &InformationTechnology
EthicalConcerns Globalization
ChangingWorld
Economy
New Marketing ChallengesNew Marketing Challenges
53
Marketing’s Future
“It (marketing) encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view.”
• Peter Drucker
Marketing has become the job of everyone.