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Sales and Promotion of Agricultural Machineries Part I Introduction to Marketing 1.1.

Marketing Introduction Many large and small organizations seek success. Major factors contribute to making a business successful - strategy, dedicated employees, good information systems, excellent implementation. However, today's successful companies at all levels have one thing in common - they are strongly customer-focused and heavily committed to marketing. These companies share an absolute dedication to sensing, serving and satisfying the needs of customers in well-defined target markets. They motivate everyone in the organization to deliver high quality and superior value for their customers, leading to high levels of customer satisfaction. These organizations know that if they take care of their customers, market share and profits will follow. Marketing, more than any other business function, deals with customers. Creating customer value and satisfaction are at the very heart of modern marketing thinking and practice. Although we will explore more detailed definitions of marketing later in this chapter, perhaps the simplest definition is this one: Marketing is the delivery of customer satisfaction at a profit. The goal of marketing is to attract new customers by promising superior value, and to keep current customers by delivering satisfaction. Many people think that only large companies operating in highly developed economies use marketing, but some marketing is critical to the success of every organization, whether large or small, domestic or global. In the business sector, marketing first spread most rapidly in consumer packaged-goods companies, consumer durables companies and industrial equipment companies. Within the past few decades, however, consumer service firms, especially airline, insurance and financial services companies, have also adopted modern marketing practices. Business groups such as lawyers, accountants, physicians and architects, too have begun to take an interest in marketing and to advertise and to price their services aggressively.

And no wonder. and often not the most important ones. for every day we are bombarded with television commercials. The American Marketing Association offers the following formal definition: Marketing is an organizational function and a set of processes for creating. The aim is to know and understand the customer so well that the product or service fits .1 Core marketing concepts What is Marketing? What does the term marketing mean? Marketing must be understood not in the old sense of making a sale . and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.a set of marketing tools that work together to affect the marketplace.. Someone is always trying to sell us something. Although they are important.. taxes or selling! Therefore. Many people think of marketing only as selling and advertising. they are only two of many marketing functions. Coping with exchange processes calls for a considerable amount of work and skill. a leading management thinker.'selling' . It seems that we cannot escape death. has put it this way: 'The aim of marketing is to make selling superfluous. and sells itself. Peter Drucker. direct mail and sales calls.but in the new sense of satisfying customer needs. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. . communicating. develops products that provide superior value. newspaper ads. these goods will sell very easily. you may be surprised to learn that selling and advertising are only the tip of the marketing iceberg.Figure 1. distributes and promotes them effectively. If the marketer does a good job of identifying customer needs. This does not mean that selling and advertising are unimportant. We see marketing management as the art and science of choosing target markets and getting. it means that they are part of a larger marketing mix . Rather.

marketing's unit of measurement! – Monetary transactions and barter transactions . (Customer) Value: a ratio between what the customer gets and what he gives. food => hamburger) – Shaped by culture and personality Demands – When wants are backed by buying power Products A product is any offering that can satisfy a need or want. – Obtaining a desired object from someone by offering something in return – Offerings could be money. and communicating superior customer value. . of expectations. Value and satisfaction. part of human makeup – Physical and social needs Wants – The form needs take (e. persons. Marketing can be defined as: ―a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others:'' To explain this definition. experiences. product. The customer gets benefits and assumes costs. – A trade of values between two parties. places. Is difference between ―value gained by owning and using a product‖ and ―cost of obtaining the product‖. If the product's performance falls short. and ideas. exchange. events. Figure 1.keeping.1 shows that these core marketing concepts are linked. a time of agreement and a place of agreement.. or delighted. information. If performance matches or exceeds expectations the buyer is satisfied. – Value gained not necessarily monetary – Similarly cost of obtaining not necessarily monetary – Customers act on perceived value [and perceived cost] Customer satisfaction: The extent to -which a product's perceived performance matches a buyers expectations. delivering.g. Transaction: A trade between two parties that involves at least two things of value.. wants and demands of products. Marketing Core Concepts Needs – States of felt deprivation. we examine the following important terms: needs. properties. with each concept building on the one before it. service. services. Quality: Is closely related to satisfaction – Narrow definition: no defects – Broad definition: ability to satisfy customer needs [circular definition!] Exchange: The act of obtaining a desired object from someone by offering something in return. the buyer is dissatisfied. transactions and relationships. such as one of the 10 basic offerings of goods. organizations. and growing customers through creating. and markets. agreed-upon conditions.– Service: Any activity or benefit that one party can offer to another which is essentially intangible and does not result in ownership of anything.

Changing demographics. Relationship marketing aims to build longterm mutually satisfying relations with key parties—customers. adequate demand. but also with changing or even reducing it. companies are now going all out to retain current customers and build lasting customer relationships. – Marketing network – company and all its supporting stakeholders Market – Economist's definition– Place (virtual or physical) where buyers and sellers meet Market – Marketer's definition– The set of actual and potential buyers of a product – The sellers of a product are considered as the ―industry‖ Industry – Marketer's definition – The sellers of a product 1. Marketing Management Marketing management can be defined as the analysis.3. but this is too limited a view. Consumer and Organizational Buying Behavior 1. implementation and control of programmes designed to create.Relationship marketing: The process recreating. A company's demand comes from two groups: new customers and repeat customers. suppliers. Companies today are facing some new marketing realities. Most people think of marketing management as finding enough customers for the company's current output. The organization has a desired level of demand for its products. a slowgrowth economy. Customers . irregular demand or too much demand. However. Many companies are now fighting for shares of flat or fading markets. Beyond designing strategics to attract new customers and create transactions with them. more sophisticated competitors and overcapacity in many industries . Thus. long-term relationships with them. Managing demand means managing customers. At any point in time. it costs five times as much to attract a new customer as it does to keep a current customer satisfied. build and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.3. and marketing management must find ways to deal with these different demand states. 1. Thus.1. In fact.2. which in turn involves managing customer relationships. marketing management involves managing demand. there may be no demand.all of these factors mean that there are fewer new customers to go around. planning. the costs of attracting new customers are rising. Marketing management is concerned not only with finding and increasing demand. maintaining and enhancing strong. The key to customer retention is superior customer value and satisfaction. the focus today is shifting towards retaining current customers and building profitable. distributors—in order to earn and retain their long-termpreference and business. Attracting new customers remains an important marketing management task. valuable relationships with customers and other stakeholders.

Marketers must figure out what is in the buyer's black box. the firm may deal with one or more customer markets: for example. iv. Figure 1. Their starting point is the stimulus .Figure 1. Consumer markets consist of individuals and households that buy goods and services for personal consumption. companies and academies have researched heavily the relationship between marketing stimuli and consumer response. Business markets buy goods and services for further processing or for use in their production process. Types of customer market The company must study its customer markets closely. whereas iii. Unilever has to communicate detergent brand benefits to consumers as well as maintaining a dialogue with retailers that stock and resell its branded products. Reseller markets buy goods and services to resell at a profit. resellers and governments.3. nursing homes.individuals and households "who buy goods and services for personal consumption. Consumer Buying Behavior Consumer buying behavior: the buying behavior of final consumers . 1. Therefore.2 shows six types of customer market. including consumers. producers.2 Marketing stimuli consist of the four Ps: product. Each market type has special characteristics Chat call for careful study by the seller. hospitals. ii. price. This shows that marketing and other stimuli enter the consumer's 'black box1 and produce certain responses. place and promotion. i. Institutional markets are made up of schools.2. Government markets are made up of government agencies that buy goods and services in order to produce public services or transfer the goods and services to others who need them. prisons and other institutions that provide goods and services to people in their care. vi. Consumer market is a set of all the individuals and households who buy or acquire gvods and services fire personal consumption. At any point in time.1. how do consumers respond to various marketing stimuli that the company might use? The company that really understands how consumers will respond to different product features. International markets consist of buyers in other countries. The central question for marketers is. v. Other stimuli .response model of buyer behavior. prices and advertising appeals has a great advantage over its competitors.

religions. shift to concern for health => new market opportunities Subculture – Groups of people with shared value systems based on common life experiences and situations such as nationalities. help us to ask the right questions. political and cultural.g. All these stimuli enter the buyer's black box. but the models can help us imderstand consumers. economic. The marketer wants to understand how the stimuli are changed into responses inside the consumer's black box. Figure 1. income.include significant forces and events in the buyer's environment. purchase timing and purchase amount. This chapter first looks at buyer characteristics as they affect buying behaviour. and other variables Social Factors Groups Membership groups– Person belongs to. dealer choice. the buyer's decision process itself affects the buyer's behaviour. and teach us how to influence them. ractial groups. technological. geographic location Social class – Society's relative permanent and ordered divisions– Members share similar values. brand choice. eduaction. and has a direct influence on the person Reference groups– Serve as points of comparison in forming attitudes or behavior– Does not require membership in the group E. and behavior – Class is defined by a combination of occupation. Second. which has two parts.3 Model of consumer behavior Characteristics affecting consumer behavior Cultural factors Culture Most basic cause of wants and behavior. largely learned– Cultural influences on buying behavior vary greatly – Cultural shifts – e. interests. and then examines the buyer decision process. First. aspirational group – a group to which the person wants to belong . where they are turned into a set of observable buyer responses product choice. wealth. the buyer's characteristics influence how he or she perceives and reacts to the stimuli. We will never know what exactly is in the black box or be able perfectly to predict consumer behaviour.g.

Market Structure and Demand . The business buying process is the decision-making process by which business buyers establish the need for purchased products and services. The main differences are in market structure and demand. determine where. Characteristics of Business Markets In some ways. furniture etc are age related Occupation– Blue collar => more rugged clothes. the nature of the buying unit. business markets are similar to consumer markets. business markets differ in many ways from consumer markets. clothes. and the types of decision and the decision process involved. sports. products). when. social events) – Interests (food. rented or supplied to others. It also includes retailing and wholesaling firms that acquire goods for the purpose of reselling or renting them to others at a profit. income/wealth and business cycle Lifestyle – Activities (work. fashion.2 Companies that sell to other business organizations must do their best to understand business markets and business buyer behaviour.g. Roth involve people who assume buying roles and make purchase decisions to satisfy needs. evaluate and choose among alternative brands and suppliers.Opinion leaders– People in a reference group who because of some characteristics exert influence on others Family-most important buying ―organization‖ Roles and status Role = activities people are expected to perform according the the persons around them Status = reflects the general esteem given to role by society Personal factors Age and life-cycle stage– Tastes in food. business. and identify. shopping. hobbies. family recreation) – Opinions (about themselves. Personality and self-concept Personality = unique psychologicla characteristics that lead to relatively consistent and lasting responses to one's own environment Self-concept = self-image = people's possessions contribute to and reflected their identities (―we are what we have‖) Psychological factors Motivation Motive (drive) = need sufficiently pressing to direct the person to seek satisfaction Drive = strong internal stimulus that calls for action Motive = drive actualized towards a stimulus object Cues = minor stimuli. white collar => more business suits Economic situation– Buying behavior affected by e. social issues. etc. and how persons responds Beliefs and attitudes Belief = descriptive thought that a person has about something – can be Business Markets The business market consists of all the organizations that buy goods and services to use in the production of other products and services that are sold. However.

business buying is done by trained purchasing agents. of the Buying Unit Compared with consumer purchases.2 A model of business buyer behavior Model for buying behavior The environment – Marketing stimuli – Product. The more complex the purchase. Often.  Business markets are also more geographically concentrated. political. total demand for many business products is not affected much by price changes. competetive The buying organization – The buying center = people participating in buying process – Buying decision process – Influences from the rest of the organization Buyer responses – Product or service choice – Supplier choice – Order quantities . promotion – Other stimuli – Economic. Mercedes buys steel because consumers buy cars. especially in the short ultimately derives from the demand for consumer goods.  Further. The demand for many business goods and services tends to change more Nature.The business marketer normally deals with far fewer but far larger buyers than the consumer marketer does. place. cultural. a business purchase usually involves more buyers and a more professional purchasing effort. Therefore. the more likely that several people will participate in the decision-making process. business markets have more fluctuating demand. Buying committees made up of technical experts and top management are common in the buying of primary goods.  Finally. price. technological. business marketers must have well-trained salespeople to deal with well-trained buyers.  Figure 7. business demand is derived demand . who spend their working lives learning how to buy well.  Many business markets have inelastic demand: that is.

and advertising expenditures in the short run. Modified rebuy – buyer wants to modify product specifications. Thus. Four Ps Four Cs Product Customer solution Price Customer cost Place Convenience Promotion Communication . Straight rebuy – buyer reorders without modification. major role in selecting and negotiating.g. place.g. Ps of marketing: product. New-task – first time purchase => the riskier and larger the purchase. purchasing agents have authority to prevent seller from seeing the buyer Major challenge – Roles sometimes difficult to recognize – Highest rank not necessarily same as highest influence 1. influence specifications slightly  Deciders – formal or informal power to select or approve final suppliers. terms.3. Typically. based on past satisfaction => very few participants ii. price. the firm typically makes fewer period-to-period marketingmix changes in the short run than the number of marketing. e. Marketing-mix decisions must be made to influence the trade channels as well as the final consumers. the firm can change its price. These tools constitute a marketing mix: Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. e. technical personnel  Buyers – formal authority. the more participants Participants in the business buying process  Users – who will use the product or service  Influencers – help define specifications.– Delivery terms and times – Service terms – Payment Major types of buying situations i.1 Marketing mixes Marketing Mix Marketers use numerous tools to elicit the desired responses from their target markets. in routine buying often same as buyers  Gatekeepers – control the flow of information between participants. it can develop new products and modify its distribution channels only in the long run. Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four Cs. price. or suppliers => involves more participants iii. However. and promotion.mix decision variables might suggest. sales-force size.

which leads to the lowest costs. which in turn can translate into either lower prices or higher margins. who might require separate products or marketing mixes. Market Segmentation. Targeting and Positioning Market segmentation The traditional argument for mass marketing is that it creates the largest potential market.1.. – Customers too scattered – Customers too varied in buying practices – Companies vary in their ability to serve a segment Firms are focusing on the buyers who have greater interest in the values they create best (―rifle‖ approach in contrast to ―shotgun‖ approach) Market segmentation means dividing a market into distinct groups of buyers with different needs. many factors now make mass marketing more because. 1. characteristics or behaviours. .. However.1.Winning companies are those that meet customer needs economically and conveniently and with effective communication.

face fewer competitors Niche marketing  Focus on subgroups within segments = Narrowly defined segment. Select the target segment(s) positioning 1. Segmentation 3. Develop measures of segments attractiveness 6. distributing. buying attitudes and buying practices. or a ―sub segment‖ of a segment  Normally only one or a few competitors– Opportunity for small companies  Customers need to be willing to pay a price premium  In todya's markets. We discuss each of these steps in turn. segmenting business markets. Markets consist of buyers. adapt offering to closely match the needs of the market  Benefits – market more efficiently. In this section. multivariate segmentation. fine-tune products/prices/programs. resources. and buyers differ in one or more ways. Develop profile of resulting segments Targeting 5. Identify bases for segmenting the market 4. companies divide large. Develop positioning for each target segment 2. niches are the norm .The company identifies different ways to segment the market and develops profiles of the resulting market segments. we discuss seven important segmentation topics: levels of market segmentation. segmenting consumer markets. They may differ in their wants. Through market segmentation. developing market segments and requirements for effective segmentation. and promoting the same product to all consumers  Argument: largest potential market => lowest costs => low prices or high profits  Nowadays problematic because of (a) splintering of consumer segments and (b) proliferation of distribution channels and advertising media Segment marketing  Broad segment. locations. heterogeneous markets into smaller segments that can be reached more efficiently with products and services that match their unique needs. only consumers it can serve best. Market positioning is setting the competitive positioning for the product and creating a detailed marketing mix. Market targeting involves evaluating each market segment's attractiveness and selecting one or more of the market segments to enter. segmenting international markets. Develop marketing mix for each target segment Levels of segmentation Mass marketing  Mass producing.

appeal to that Mass distribution.g. neighborhoods.g. Citibank offers customized banking services to different neighborhoods  May have problems – reduce economies of scale. undifferentiated may be suicidal Positioning Product position = The way the product is defined by consumers on important attributes .Micromarketing  Local marketing– Cities. mass marketing. logistics problems. e. Dell Computer Market targeting Evaluating market segments  Segment size and segment growth  Right size and growth rate  Structural factors – competitors and substitutes  Relative power of buyers and suppliers  Note: largest size or growth not necessarily most desirable – a small company might aim for a segment with less absolute size or growth if it has less competitors Company objectives and resources Company should have strengths that can provide basis for competing in the segment => offer superior value and gain advantage over competitors Selecting market segments Target market = set of buyers who share common needs or characteristics that the company decides to serve Market coverage strategies Undifferentiated marketing = mass marketing – Focus on what is common in all buyers.low => undifferentiated  Competitors' marketing strategy => if competitors already using differentiated or concentrated marketing. specific stores – E. etc – Often difficult to compete with focused competitors Differentiated marketing – Target several segments and design separate offers for each – Claim – developing a stronger position within several segments creates more total sales than undifferentiated marketing across all segments Concentrated marketing – Firm goes after a large share of one or a few segments / niches – Shared marketing mix for all segments – Attractive when resources are limited Choosing a coverage strategy is based on:  Company resources – limited => concentrated  Product variability – low => undifferentiated  Product life cycle stage => undifferentiated in the beginning  Market variability (how differentiated market?) . markets-of-one marketing  Mass customization – moden technology allows for efficient production of customized products. dilution of brand image  Individual marketing = one-to-one or customized marketing.

The place the product occupies in the consumers' minds relative to competing products  Consumers simplify their buying process by categorizing => positioning Choosing a positioning strategy 1) Identifying a set of possible competitive advantages to build on 2) Choosing the right competitive advantages 3) Selecting an overall positioning strategy The company must then communicate and deliver the chosen position to the market  .