DTM5043

POLYTECHNICSMINISTRY OF EDUCATION MALAYSIA

DEPARTMENT OF TOURISM AND HOSPITALITY

TOURISM AND HOSPITALITY

Marketing Defined:“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others”Marketing is about managing profitable customer relationships

- Attracting new customers- Retaining and growing current customers

The Marketing ProcessA Five-Step Process

1. Understand the marketplace and customer needs and wants

2. Design a customer-driven marketing strategy3. Construct a marketing program that delivers

superior value4. Build profitable relationships and create

customer delight5. Capture value from customers to create

profits and customer quality

1. Understand the marketplace and customer needs and wants

2. Design a customer-driven marketing strategy3. Construct a marketing program that delivers

superior value4. Build profitable relationships and create customer

delight5. Capture value from customers to create profits

and customer quality

Understanding the MarketplaceCore Concepts

Needs, wants, and demands

• Need– State of felt deprivation

– Example: Need food

• Wants– The form of needs as shaped by culture and the individual

– Example: Want a Big Mac

• Demands– Wants which are backed by buying power

Understanding the Marketplace

Core Concepts

Marketing offers: including products, services and experiences• Marketing offer

– Combination of products, services, information or experiences that satisfy a need or want

– Offer may include services, activities, people, places, information or ideas

Understanding the Marketplace

Core Concepts

Value and satisfaction

• Value– Customers form expectations regarding value

– Marketers must deliver value to consumers

• Satisfaction– A satisfied customer will buy again and tell others about their good

experience

Understanding the Marketplace

Core Concepts

Exchange, transactions and relationships

• Exchange– The act of obtaining a desired object from someone by offering

something in return

– One exchange is not the goal, relationships with several exchanges are the goal

– Relationships are built through delivering value and satisfaction

Understanding the Marketplace

Core Concepts

Markets

• Market– Set of actual and potential buyers of a product

– Marketers seek buyers that are profitable

Marketing Management

• Marketing management is the art and science of choosing target markets and building profitable relationships with them.– This definition must include answers to two

questions:• What customers will we serve?

• How can we serve these customers best?

Selecting Customers and CreatingValue

• Customer Management

– What customers will we serve?

– Marketers select customers that can be served profitably

• Value Proposition

– How can we serve these customers best?

– Includes the set of benefits or values a company promises to deliver to consumers to satisfy their needs

Marketing OrientationsMarketing Orientations

Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

MARKETING CONCEPTS

Introduction:

What philosophy should guide a company marketing and selling efforts?

What relative weights should be given to the interests of the organization, the customers, angsociety? These interest often clash, however, an organization’s marketing and selling activities should be carried out under a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility.

The Production Concept

• This concept is the oldest of the concepts in business.

• It holds that consumers will prefer products that are widely available and inexpensive.

• Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution.

• They assume that consumers are primarily interested in product availability abd low prices.

• This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.

The Product Concept

• This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features.

• Managers focusing on this concept concentrate on making superior product and improving them over time.

• They assume that buyers admire well-made product and can appraise quality and performance.

• However, these managers are sometimes caught un in love affair with their product and do not realize what the market needs.

• Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door.

The Selling Concept

• This another common business orientation.• It holds that consumers and businesses, if left alone, will

ordinarily not buy enough of the selling company’s product. • The organization must, therefore, undertake an aggressive

selling and promotion effort. • This concept assumes that consumers typically show buying

inertia or resistance and must be coaxed into buying.• It also assumes that the company has a whole battery of

effective selling and promotional tools to stimulate more buying.

• Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants.

The Marketing Concept

• This is a business philosophy that challenges the above three business orientations.

• Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering and communicating customer value to its selected target customers. The marketing concept rest on four pillars: target market, customer needs, integrated marketing and profitability.

• The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling.

• The marketing concept has evolved into a fifth and more refined company orientation: The Societal Marketing Concept.

• This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing concept

• This concept holds that the organization’s task is to determine the needs, want, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept).

• Additionally, it holds that this all must be done in a way that preserves or enchances the consumer’s and the society’s well-being.

• This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services.

• Are companies that do an excellent job of satifying consumer wants nesessarily acting in the best long-run interests of consumers and society?

• The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.

The Marketing Plan

• Transforms the marketing strategy into action

• Includes the marketing mix and the 4P’s of marketing

– Product

– Price

– Place

– Promotion

Building Customer Relationships

• CRM – Customer relationship management

• The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and growing customers.

Value and Satisfaction

• Perceived Value

– The customer’s evaluation of the difference between benefits and costs.

– Customers often do not judge values and costs accurately or objectively.

• Customer Satisfaction

– Product’s perceived performance relative to customer’s expectations

Perceived Value- The customer’s evaluation of the difference between benefits and costs.- Customers often do not judge values and costs accurately or objectively.

Customer Satisfaction- Product’s perceived performance relative to customer’s expectations

Not All Customers are Equal

• Basic Relationships

– Low-margin customers

• Full Partnerships

– Key customers

• Selective relationship management

– Weeding out unprofitable customers

Capturing Value from Customers

Key Concepts

• Customer Loyalty and Retention

• Customer delight leads to emotional relationships and loyalty

• Customer Lifetime Value shows true worth of a customer

Capturing Value from Customers

Key Concepts

• Share of Customer

• Share of customer’s purchase in a product category.

• Achieved through offering greater variety, cross-sell and up-sell strategies.

Capturing Value from Customers

Key Concepts

• Customer Equity• The combined customer lifetime values of all

current and potential customers.

• Measures a firm’s performance, but in a manner that looks to the future.

• Choosing the “best” customers is key

Marketing Landscape

Challenges

• Digital age

• Growth of the Internet• Advances in telecommunications, information,

transportation– Customer research and tracking– Product development– Distribution– New advertising tools– 24/7 marketing through the Internet

Marketing Landscape

Challenges

• Globalization

• Geographical and cultural distances have shrunk– Greater market coverage

– More options for purchasing and manufacturing

– Increased competition from foreign competitors

Marketing Landscape

Challenges

• Ethics and social responsibility

• Marketers need to take great responsibility for the impact of their actions– Caring capitalism is a way to differentiate your company

Marketing Landscape

Challenges

• Not-for-profit marketing

• Many organizations are realizing the importance of strategic marketing– Performing arts

– Government agencies

– Colleges

– Hospitals

– Churches

Marketing Landscape

Challenges

• Marketing relationships

• Profits through managing long-term customer equity– Improve customer knowledge

– Target profitable customers

– Keep profitable customers

What is Marketing

The process of building profitable customer relationships by creating value for customers and capturing value in return