FUNDAMENTALS OF MARKETING

LEARNING OBJECTIVESThe marketing concept: An understanding of the nature of marketing, its key components and limitations. The difference between production orientation and marketing orientation Service concept of marketing Experience concept of marketing Differing roles of efficiency and effectiveness in achieving corporate success Differences between market-driven and internally driven businesses

Learning Objectives (contd.)Profile of customer-centric organizations How an effective marketing mix is designed, and the criticisms of the 4-Ps approach to marketing management Need for segmentation, targeting and positioning Relationship between characteristics, market orientation, adoption of a marketing philosophy and business performance

UNDERSTANDING MARKETINGProcess of finding out customer needs and serving those needs profitably Profit is a legitimate goal of a business organization Essence of marketing is providing desired value to customers Marketing should be considered a central business function

What is marketing?Marketing is building profitable customer relationships. The aim of marketing is to create value for customers and to capture value in return. Companies know if they take care of their customers ( delivering on their promises) , market share and profits will follow. Definition: We define marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging value with others.

The Marketing ProcessUnderstand the marketplace and customer needs and wants.Design a customer-driven marketing strategy.Construct a marketing program that delivers superior value.Build profitable relationships and create customer delight.Capture value from customers to create profits and customer equity.

Marketing process

UnderstandThe marketplaceAnd customer needsAnd wantsDesign a Customer-drivenMarketing strategyConstruct a Marketing programThat deliversSuperior valueBuild profitableRelationships andCreate customer delightCapture value fromCustomers toCreate profits and Customer quality

Understanding the marketplace and consumer needs: There are five core marketplace concepts; 1- Needs, wants, and demands; Needs are states of felt deprivation. All humanity have the same needs;Physical needs:Food, clothing, shelter, safety.Social needs:Belonging, affection.Individual needs:Learning, knowledge, self-expression

Understanding the marketplace and consumer needs: There are five core marketplace concepts;Wants; are needs shaped by culture and individual personality. Example; An American needs for food but wants a Big Mac. A Chinese needs for food but wants frog legs. Demands are wants combined with buying power. Example; Porsche or Kia.

Marketers spends time and money for a market research to understand the customers needs, wants, and demands.

Understanding the marketplace and consumer needs: There are five core marketplace concepts; 2- Products, Services, Experiences consumer needs and wants are fulfilled through a marketing offer, which is some combination of products, services, or experiences offered to a market to satisfy a need.Products; tangible, like food, goodsetc.Services; intangible, banking, telecometc.Experiences; Brand experiences, like theater.

Understanding the marketplace and consumer needs: Marketing MyopiaSellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products. They focus on the wants and lose sight of the needs. An article published by Harvard Business school defined the term marketing Myopia;Marketing myopia is true for all companies who define their markets too narrowly. urging organizations to define their industries broadly to take advantage of growth opportunities. Experience shows that when a business has redefined its market, it has continued to grow as new targets are set .

Understanding the marketplace and consumer needs: There are five core marketplace concepts; 3- Value and SatisfactionIf the performance and the customers experience is lower than expectations, then customer satisfaction is low.If the performance and the customers experience meets expectations, then the customer is satisfied.If the performance and the customers experience exceeds expectations, then the customer is delighted.

Understanding the marketplace and consumer needs: There are five core marketplace concepts; 4- Exchange, transactions, and relationshipsExchange. The act of obtaining a desired object from someone by offering something in return.Transaction - consists of a trade values between two parties.The goal of marketers is to build solid relationship with customers and retaining them by delivering superior value.

Understanding the marketplace and consumer needs: There are five core marketplace concepts; 5- Markets The set of all actual and potential buyers of a product. Sellers must search for buyers, both buyers and sellers are carried out by marketing.

Dr. RosebloomThe Evolution of Marketing

Dr. Rosebloom

Dr. RosebloomOrientation: Dominant time period: The Evolution of MarketingProduction EraBusiness philosophy focusing on manufacturing efficiency; demand exceeds supply = sellers marketPrior to the 1920s

Dr. Rosebloom

Dr. RosebloomOrientation: Dominant time period: Sales EraBusiness philosophy focusing on selling existing products; supply exceeds demand = buyers marketPrior to the 1950sThe Evolution of Marketing

Dr. Rosebloom

Dr. RosebloomOrientation: Dominant time period: Marketing EraBusiness philosophy focusing on consumer wants and needs; any supply/demand situationLast half of 20th centuryThe Evolution of Marketing

Dr. Rosebloom

Dr. RosebloomOrientation: Dominant time period: Relationship Marketing EraBusiness philosophy focusing on reinforcing the customer-oriented focus of the marketing eraLast decade of 20th centuryThe Evolution of Marketing

Dr. Rosebloom

THE MARKETING CONCEPTAll activities are focused upon providing customer satisfaction Every employee in an organization is a marketer Internal communication

PRODUCTION CONCEPT Inward looking orientation Management becomes cost focused Objective is cost reduction Business mission is focused on current production capabilities Manufacture products and aggressively sell them to customers

SELLING CONCEPTProduct or service is not designed and made according to customers requirements Customer has to be persuaded to believe that the product or the service meets his requirements Customer dissatisfied and bad-mouths companyMarketing makes selling redundant

PRODUCT CONCEPT Companies become centered on constantly improving the product Myopic focus on the product No attention on the other ways in which customers can fulfill their needs MARKETING MYOPIACustomer does not buy a product, he buys an offering that fulfills his needs

SERVICE CONCEPTCustomers buy services, not products Service model of marketing instead of selling the title to the products Hindrance: Mindset of the customer and marketer, and their unwillingness to experiment with this model Can be easily applied in businesses like automobiles, carpeting, furnishing, and for most consumer durable items

EXPERIENCE CONCEPT Create an experience around the product to make it memorable Reaffirm it with cues at every customer interaction point Experiences are inherently personal for a customerAn experience should be built around a well defined theme

Experience Concept (Contd.)

Companies must introduce cues that affirm the nature of the experience to the guest Eliminate anything that diminishes, contradicts, or distracts from the theme Customers purchase memorabilia as a physical reminder of an experience The more senses an experience engages, the more effective and memorable it becomes

EFFICIENCY VERSUS EFFECTIVENESS An efficient company produces its products and services economically An effective company serves the needs of the customers No inherent conflict between being efficient and effective

An inefficient but an effective company can remain in business though its profits would be lowerAn ineffective but an efficient company will not survive Choosing to become effective reflects the marketing orientation of the company Efficiency Versus Effectiveness (Contd.)

MARKET VERSUS INTERNALLY DRIVEN BUSINESSES

MARKET DRIVEN BUSINESSINTERNALLY DRIVEN BUSINESSDisplay customer concern throughout the business Fail to understand the real concerns of customers Expenditure on marketing research is an investment Marketing research is non-productive activity and rely on anecdotes and received wisdom Understand competitors objectives and strategies, and anticipate competitive actions Content to underplay the competition Marketing spend is an investment that has long term consequences Marketing expenditure Is superfluous that never appears to produce benefits

Impact of marketers commitmentsMarket Versus Internally Driven Businesses (Contd.)

MARKET DRIVEN BUSINESSINTERNALLY DRIVEN BUSINESSEmployees who take risks and are innovative in serving customers rewardedReward time serving, and ability to not make mistakes Search for latent markets markets that no other company has exploited Happy to stick to their existing products and markets Sensitive, fast and flexible to be able to respond to changes in the market produce me-too copies of offerings already in the market

PROFILE OF CUSTOMER-CENTRIC ORGANIZATIONS Shared values and beliefs Skills in understanding and responding to customers Market intelligence Formal and informal means of information dissemination Responsiveness

Desire to serve customer needs better than competition Organizational structure must reflect marketing strategy Clear communication Profile of Customer-centric Organizations (Contd.)

LIMITATIONS OF THE MARKETING CONCEPT Marketing concept as an ideologyMarketing and society Marketing as a constraint to innovation

MARKETING MIXPRODUCTPRICEPLACEPROMOTIONCRITICISM OF THE 4Ps APPROACH TO MARKETING

CHARACTERISTICS OF AN EFFECTIVE MARKETING MIX Marketing mix should match customer needs True source of competitive advantage Well blended to form a consistent theme Match corporate resources

SEGMENTATION, TARGETING, AND POSITIONING Segmentation Target markets Positioning MARKETING ORIENTATION AND BUSINESS PERFORMANCE Characteristics Of An Effective Marketing Mix (Contd.)

Designing a customer- driven marketing strategySegmentation and Targeting Selecting customer to serve; first dividing the market into segments, Second select the segment to be our target market. Porsche company target customers with high income.Deciding on a value proposition; A set of benefits or values it promises to deliver to consumers to satisfy their needs. means the company must decide how it will differentiate itself from other competitors. Porsche promises driving performance and excitement. They say what a dog feels when the leash breaks.

*Chapter 1 page 7*****