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1. Introduction to Marketing

1. Introduction to Marketing

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Marketing

Marketing is everywhere, it touches all of us every day of our lives – It is embedded in everything we do, from the clothes we wear to websites we click on!

Selling is only the tip of the iceberg

―There will always be a need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.” Peter Drucker

Difference between Selling and Marketing
SELLING
1. Selling starts with the seller and is preoccupied all the time with the needs of the seller

MARKETING
Marketing starts with the buyer and focuses constantly on the needs of the buyer

2. Seeks to quickly convert products into cash 3. Concerns itself with the tricks and techniques of getting the customer to part with their cash for products available with the salesman
4. Views business as goods producing process

Seeks to convert customer needs into products Emphasizes on fulfilling the needs of the customer

Views business as customer satisfying process

Difference between Selling and Marketing
SELLING MARKETING 5. Overemphasizes the exchange aspect Concerns itself primarily with the value without caring for ‗value satisfaction‘ satisfaction that should flow to the customers from the exchange 6. The firm first makes the product and then figures out how to sell it 7. Sellers preferences dominates the formulation of the marketing mix 8. Emphasis is on staying with existing technology and reducing cost The product is a consequence of a market research effort Buyer determines the shape the marketing mix should take Emphasis on innovation in every sphere; on providing better value to the customer by adopting better technology

Difference between Selling and Marketing
SELLING
9. Cost determines the price

MARKETING
Consumer determines the price, price determines the cost

10. Transportation, storage and other Distribution is seen as a vital distribution functions are seen as function keeping customers mere extensions of the production convenience in focus function

11. Different departments operate as All departments operate in an highly separate water tight compartments integrated manner, the sole purpose being generation of customer satisfaction
12. Selling views customers as the last link in business Marketing views the customer as the very purpose of the business, sees the business from the point of view of the customer

Marketing in Practice  ―Marketing is far too important to leave to the marketing department‖ – David Packard of Hewlett Packard .

was due to a deep understanding of the market needs and customer requirements. . in a market earlier dominated by threewheeler load carriers.Good Marketing is No Accident The roaring success of four-wheeler Tata Ace.

and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders – American Marketing Association . communicating.What is Marketing? “Marketing is meeting needs profitably‖ Marketing is an organizational function and a set of processes for creating.

. and growing customers through creating. keeping.What is Marketing Management? Marketing management is the art and science of choosing target markets and getting. and communicating superior customer value. delivering.

What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas .

machines etc (Durables and non durables) Services – As economies advance a growing proportion of their economies focus on marketing of services. engineers etc provide service Events – Time based events. doctors. electronic goods. bankers. bungee jumping etc . Hotels. cosmetics.What is marketed?     Goods – Physical products like automobiles. teachers. airlines. example a theme restaurant. management consultants. company anniversaries etc Experiences – Marketing an experience. artistic performances. trade shows. sporting events. an amusement park ride.

nations etc are marketed to attract companies. Abishek Bachchan has got a 8 crore payment for first 8 shoot of “What an idea sirji” campaign of Idea mobile services. new residents etc. Gujarat is marketed as „Vibrant Gujarat‟. all get help from celebrity marketers.What is marketed?     Persons – Celebrity marketing. high profile lawyers. Organisations – Organisations actively work to build strong image in the minds of the customers. regions. India – „Incredible India‟ Properties – Properties here refer to real estate example – Ambi valley. financiers. states. tourists. It shows how well Abishek has marketed himself to get such high payments Places – Cities. Sahara City or financial property like stocks and bonds. Philips – Sense and Simplicity . Artists. CEO‘s. marketing for presidential candidate.

Social marketers are promoting ideas about encouraging family planning. in the store we sell hope” . Even companies selling physical products attempt to add value by the use of information. Charles Revson of Revlon has observed.Every market offering includes a basic idea. discouraging smoking etc. TV news channels. magazines. . Idea .What is marketed?   Information – Books. “ In the factory we make cosmetics. newspapers.

Marketing Can Promote Ideas – Ad against smoking .

vote. Marketers are skilled at stimulating demand for a company's product offering's). purchase. donation from a potential customer or prospect. timing.Who Markets   Marketer .A person or organization seeking a response attention. and composition of demand to meet the organization's objectives . Marketing Managers seek to influence the level.

Demand States Negative Nonexistent Latent Declining Irregular Full Overfull Unwholesome .

Example .Customers may be unaware or uninterested in a product offering . Example . . products using animal fat (for vegetarians) Nonexistent Demand .Customers may share a strong need that cannot be satisfied by an existing product offering.Alternative energy car.Products tested on animals (people concerned about animal welfare).Demand states    Negative Demand . strong need for a drug to fight Parkinson's disease.funeral plot .Customers dislike a product offering and may pay a price to avoid it. family planning operation Latent Demand .

and all are in demand (Lux.Customer purchases vary on seasonal. Example – Hindustan Unilever sells a variety of different products. airlines are in demand during holiday periods Full demand . Example – Hotels. ponds etc. monthly. daily or even hourly basis. example – Opel car of GM not doing well Irregular demand .) .Customer begin to buy a product offering less frequently or not at all.Customers are adequately buying all product offerings put into the marketplace. pears.Demand states    Declining / falling Demand .

oil (Demarketing*.Save Oil) Unwholesome demand . Example – Petrol.Demand states   Overfull demand .Too many customers would like to buy a product offering. Example Cigarettes .Customers may be attracted to product offerings that have undesirable social consequences.

Core Marketing Concepts    Needs. and demands Product. positioning. segmentation   Value and satisfaction Marketing channels . Market Target markets. wants.

Marketing Concepts        Needs . acquisition. use or consumption Market – A set of actual and potential buyers of a product Exchange – The act of obtaining a desired object from someone by offering something in return Target Markets.a human need is a state of felt deprivation Stated need – The consumer wants an inexpensive car Real need – The consumer wants a car whose operating cost is low Unstated need – Consumer expects good service from the dealer Delight needs – The consumer would like an onboard navigation system Secret needs – The customer wants his friends to see him as a savvy consumer Want – The form taken by human need as they are shaped by culture and individual personality Demand – Human wants backed by buying power Product – A product is anything that can be offered to a market for attention. therefore marketers start by dividing the market into segments . Positioning and segmentation – A marketer can rarely satisfy everyone in a market.

Value reflects the sum of perceived tangible and intangible benefits and cost to the customers. the marketer uses three kinds of marketing channels – communication channels. distribution channels and service channels . service and price Marketing channels – To reach the target markets. It is primarily a combination of quality.Marketing Concepts   Value and satisfaction – The offering of the company will be successful if it delivers value and satisfaction to the target buyer.

.Positioning – Luxury of a car and thrill of a SUV Press ads of the Scorpio focused on the functional features of the vehicle and the television ads focused on emotional benefits.

A Simple Marketing System .

financing companies. insurance companies. departments) Marketspace (digital. spare part shops etc ) . online) Metamarket (A cluster of complimentary products and services that are closely associated in the minds of the customer.Marketplaces and Marketspaces    Marketplace (physical stores. auto sites on the internet. service shops. The automobile meta market consists of automobile manufacturers. used car dealer.

com .marutitruevalue.www.

Key Customer Markets Consumer Markets Global Markets Business Markets Nonprofit/ Government Markets .

Sony. Procter and Gamble . and backing it with suitable communication (Advertising plays a big role) Example – food grains. ensuring its availability. adapting communications to different cultures etc Example . Much of the brand strength depends on developing a superior brand image. dairy products. Airline tickets Business Markets – Companies selling business goods and services to businesses often face well trained. soaps etc. well informed buyers who are skilled in evaluating competitive offerings (Advertising can play a role but the sales force.Key Customer Markets    Consumer Markets – Companies selling mass consumer goods and services such as soft drinks. price. They must decide which countries to enter. entry mode. pricing in different regions. and the company‘s reputation for reliability is important) Example – Industrial chemicals and adhesives Global Markets – Companies selling goods and services in global market place face additional challenges.

Key Customer Markets  Nonprofit and Governmental Markets – Companies selling their goods to such markets need to price their services carefully as these buyers have limited purchasing power. Example CRY .

The New Marketing realities The marketplace isn‘t what it used to be… Information technology Globalization Deregulation Privatization Competition Convergence Consumer resistance Retail transformation .

.. Intranet and extranet. targeted advertising & rational pricing.g. Deregulation: Many countries have de regulated industries to create competition and greater opportunities.     Information Technology: Digital revolution has created an information age. Globalization: Technologies advances in transportation and communication has made it easier for the companies to market in other countries and for the consumer to purchase from markets in other countries. high inventory. rampant advertising and high discounting. The information age promises accurate level of production. The industrial age was characterized by mass production & consumption. Tele communication Industry in India. Today‘s business is carried over internet.The new market realities. E. Privatization: Countries have converted Public companies to private companies or increase their stake to improve their efficiency.

resulting in more advertising and promotion costs and shrinking margins. At the same time the big retailers are challenged by catalogue houses. . Industry Convergence: The companies are realizing the opportunities for back word and forward integration & therefore the industry boundaries are blurring at a increasing speed. direct mail order by news paper. Retail Transformation: Big retailers are giving tough time to small family shop because of the price advantage and variety offered. home shopping TV and e commerce on the internet. To counter this the malls are offering coffee shops and children play area to offer a total shopping experience. Same is the case with IBM and Wipro who are offering total solution.The new market realities… • • • Heightened Competition: Big brands are facing competition from forging as well as domestic brands. internet. Once chemical. This is aggravated by the powerful retailers who are now marketing their own brands over the limited shelf space. telephone. now pharmaceutical companies are going into biotech research for more control and profit.

E. for online dot.• • Consumer Resistance: Excessive marketing and hard sell are resulting in consumers rejecting the products Disintermediation: The early success of Yahoo.com has threatened the traditional model Distributor.g. retailers. . Many established companies are now also making their products online to take benefit of the new economy. Amazon etc. Dell Direct. whole seller.

The New Marketing realities…. New Consumer Capabilities      A substantial increase in buying power A great amount of information about practically anything Greater ease in interacting and placing and receiving orders An ability to compare notes on products and services An amplified voice to influence public opinion .

New Company capabilities         Internet Research Speed of internal information Speed of external information ―buzz‘ Better target marketing Mobile marketing Differentiated goods Improved purchasing. recruiting. training. and communications .

Company Orientations Production Product Selling Marketing .

Henry ford believed that if the cost is reduced. He did not bother about the consumer preferences and even joked that – ―customers can have ford in any color provided it is black!‖ .Company Orientations towards market place  Production Concept – It is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive (Maximize output and achieve a lower unit cost) . more people would buy Ford Model T. Managers of production oriented companies concentrate on achieving high production efficiency and distribution.

.

Company Orientations towards market place  Product concept – proposes that consumers favor products that offer the most quality performance or innovative features A product oriented firm fails to achieve great marketing success despite turning out a quality product due to failure in determining the needs of the customer For example an organization may bring out a new modified version of mouse trap for mice menace but the customer may want a better solution and not a better mouse trap It can lead to marketing myopia .

insurance etc .Company Orientations towards market place  Selling concept – This concept holds that consumers if left alone will not buy enough of the organizations products. for example Encyclopedias. The organization must therefore undertake an aggressive selling and promotion effort Firms producing products which have non-existent demand usually follow this strategy.

Dell computers does not produce a perfect computer for the target market. Proactive marketing orientation—researching or imagining latent consumers‘ needs through a ―probeand-learn‖ process. business shifted to customer centered ―sense and respond‖ philosophy   Reactive market orientation—understanding and meeting consumers‘ expressed needs. rather provides a product platform on which each person customizes the features he desires in the computer . Instead of a product centered philosophy.Company Orientations towards market place  Marketing Concept .It emerged in the mid-1950‘s.  Companies that practice both reactive and proactive marketing orientation are implementing a total market orientation.

superior performances or superior service. Other examples are Kingfisher airlines (first airline to offer personal entertainment system to all passengers). better technology. in 2006 introduced smart package which is used for transporting human organs. Tata‘s Nano. Google It also includes process innovation example – IBN news channel which was first to involve viewers in news production Logistics firm FedEx . . The superiority is achieved through developments of new features. Apple.Market driven organizations     Their products reflect customer needs and represent solution to customer‘s problems as reflected by Nokia‘s cell phones and Tata‘s Ace Mini truck Their products are perceived as superior to competition.

2. 10. 9. Apple GE Toyota Motor Procter and Gamble FedEx Johnson & Johnson Microsoft Wal-Mart stores Berkshire Hathaway Honda Motor .Some of the most admired companies in the world 1. 3. 7. 5. 4. 6. 8.

employees. design. Relationship marketing  . other companies. Internal marketing 2. Integrated marketing 4. processes. and activities that recognizes the breath and interdependencies of their efforts.  Holistic marketing recognizes that ―everything matters‖ with marketing—the consumer. and implementation of marketing programs. as well as society as a whole. competition.Holistic Marketing Concept Holistic marketing can be seen as the development. Socially responsible marketing 3. Holistic marketing: 1.

Holistic Marketing Dimensions .

The Customer Pyramid Most profitable customers Platinum What segment spends more with us over time. spreads positive word-of-mouth? Gold Iron Lead Least profitable customers What segment costs us in time. effort and money yet does not provide the return we want? What segment is difficult to do business with? .Relationship marketing – concentrating on the right customers . costs less to maintain.

Integrated Marketing   The Marketers task is to create. Price. Place and Promotion . communicate and deliver value for the customer McCarthy classified these activities as marketing mix tools of 4 broad kinds which he called the 4 P‘s of Marketing – Product.

Ltd. 1-48 .The Four P‘s Copyright © 2009 Dorling Kindersley (India) Pvt.

4 P‘s from the buyers point of view From the buyers point of view. the four dimensions which represent customer value are indicated by the acronym SIVA  Solution – How can I solve my problem?  Information – Where can I learn about it?  Value – What is the total damage/sacrifice?  Access – Where can I find it? .

Performance Marketing   Financial Accountability Social Responsibility Marketing Social Initiatives • Corporate social marketing • Cause marketing • Cause-related marketing • Corporate philanthropy • Corporate community involvement • Socially responsible business practices .

licensing agreements. advertising Example McDonald‘s promotion of immunization campaign McDonald‘s sponsorship of Forest at Sydney Corporate Philanthropy Making gifts of money. goods or time to help non profit organizations Providing in kind or volunteer services to community McDonald‘s contribution to charities McDonald‘s catering meals for firefighters in Australia Corporate Community Involvement .Corporate Social Initiatives Type Corporate Social Marketing Cause Marketing Description Supporting Behavior change campaigns Promoting social issues through efforts such as sponsorship.

Corporate Social Initiatives Type Socially responsible business practices Description Adapting and conducting business practices that protect the environment and human and animal rights Donating a percentage of revenue for a specific cause based on the revenue occurring during the announced period of support Example McDonald‘s requirement that the living space for hens should be increased in farms McDonald‘s earmarking $1 for children‘s charities from every big Mac and pizza sold on McHappy day Cause related marketing .

Marketing is tricky and making the right decisions is not always easy.Chief Marketing officer       Financial success often depends on marketing ability. The functions of the CMO are Strengthening the brands Measuring marketing effectiveness Driving new product development based on customer needs Gathering meaningful customer insights Utilizing new marketing technology . Many firms have created a Chief Marketing Officer (CMO) to put marketing on an equal footing with other Chief Executives such as a CFO and CEO.

Do agree with the statement? Give reasons . Does marketing shape consumer needs? or Does marketing merely reflect the needs and wants of consumers? 2.Marketing Debate: Take a Position! 1. ‗All organizations need marketing‘ (business and non business sectors).

5. 8. What is Marketing ? Detail the differences selling and marketing. How have marketing practices shifted to accommodate and even leverage these forces? What is different orientations towards the market place? What are the 4 P‘s of Marketing? What is Holistic Marketing? . globalization. 4. What are the different demand states? Consider the societal forces noted in the chapter (e. information technology. What is Marketed? Explain Metamarket with an example.Important questions 1. 3.. 7. retail transformation). deregulation.g. 2. consumer resistance. 6.

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