8/18/2013

Introduction to Marketing and Marketing Environment
Lecture 1

Learning Goals
1. 2. 3. 4. 5.

Define marketing and the marketing process. Explain the importance of understanding customers and identify the five core marketplace concepts Identify the elements of a customer-driven marketing strategy and discuss the marketing management orientations. Discuss customer relationship management and creating value for and capturing value from customers Describe the major trends and forces changing the marketing landscape
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What is Marketing?
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
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8/18/2013

The Marketing Process A Five-Step Process
1. 2. 3. 4. 5.

Understand 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 quality
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Understanding the Marketplace
Core Concepts
  

Need
◦ State of felt deprivation ◦ Example: Need food

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Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

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

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Understanding the Marketplace
Core Concepts
  

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

  

Needs, wants, and demands Marketing offers: including products, services and experiences Value and satisfaction Exchange, transactions and relationships Markets

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services and experiences Value and satisfaction Exchange. transactions and relationships Markets 1-9 3 . and demands Marketing offers: including products. and demands Marketing offers: including products. transactions and relationships Markets 1-8 Understanding the Marketplace Core Concepts    Market ◦ Set of actual and potential buyers of a product ◦ Marketers seek buyers that are profitable    Needs. relationships with several exchanges are the goal ◦ Relationships are built through delivering value and satisfaction    Needs. transactions and relationships Markets  Satisfaction ◦ A satisfied customer will buy again and tell others about their good experience 1-7 Understanding the Marketplace Core Concepts    Exchange ◦ The act of obtaining a desired object from someone by offering something in return ◦ One exchange is not the goal. wants.8/18/2013 Understanding the Marketplace Core Concepts    Value ◦ Customers form expectations regarding value ◦ Marketers must deliver value to consumers    Needs. and demands Marketing offers: including products. services and experiences Value and satisfaction Exchange. wants. wants. services and experiences Value and satisfaction Exchange.

10 Selecting Customers and Creating Value  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 1 .11 Marketing Orientations Marketing Management   Production concept Product concept   Selling concept Marketing concept • Societal marketing concept 1 .8/18/2013 Marketing Management  Marketing management is the art and science of choosing target markets and building profitable relationships with them.12 4 . ◦ This definition must include answers to two questions:  What customers will we serve?  How can we serve these customers best? 1 .

keeping and growing customers. It deals with all aspects of acquiring.  1 .8/18/2013 The Marketing Plan Transforms the marketing strategy into action  Includes the marketing mix and the 4P’s of marketing  ◦ ◦ ◦ ◦ Product Price Place Promotion 1 .15 5 .13 Building Customer Relationships CRM – Customer relationship management  The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. ◦ Customers often do not judge values and costs accurately or objectively.  Customer Satisfaction ◦ Product’s perceived performance relative to customer’s expectations.14 Value and Satisfaction  Perceived Value ◦ The customer’s evaluation of the difference between benefits and costs. 1 .

 Achieved through offering greater variety.8/18/2013 Not All Customers are Equal    Basic Relationships ◦ Low-margin customers Full Partnerships ◦ Key customers Selective relationship management ◦ Weeding out unprofitable customers 1 . cross-sell and up-sell strategies.16 Capturing Value from Customers Key Concepts Customer Loyalty and Retention  Share of Customer  Customer Equity  Customer delight leads to emotional relationships and loyalty  Customer Lifetime Value shows true worth of a customer  1 .  1 .17 Capturing Value from Customers Key Concepts Customer Loyalty and Retention  Share of Customer  Customer Equity  Share of customer’s purchase in a product category.18 6 .

but in a manner that looks to the future.19 Marketing Landscape Challenges        Digital age Globalization Ethics and social responsibility Not-for-profit marketing Marketing relationships 1 . Measures a firm’s performance.8/18/2013 Capturing Value from Customers Key Concepts Customer Loyalty and Retention  Share of Customer  Customer Equity     The combined customer lifetime values of all current and potential customers. Choosing the “best” customers is key 1 .20 Growth of the Internet Advances in telecommunications. transportation ◦ ◦ ◦ ◦ ◦ Customer research and tracking Product development Distribution New advertising tools 24/7 marketing through the Internet Marketing Landscape Challenges       Digital age Globalization Ethics and social responsibility Not-for-profit marketing Marketing relationships 1 .21 Geographical and cultural distances have shrunk ◦ Greater market coverage ◦ More options for purchasing and manufacturing ◦ Increased competition from foreign competitors 7 . information.

8/18/2013 Marketing Landscape Challenges       Digital age Globalization Ethics and social responsibility Not-for-profit marketing Marketing relationships 1 .22 Marketers need to take great responsibility for the impact of their actions ◦ Caring capitalism is a way to differentiate your company Marketing Landscape Challenges       Digital age Globalization Ethics and social responsibility Not-for-profit marketing Marketing relationships 1 .24 Profits through managing long-term customer equity ◦ Improve customer knowledge ◦ Target profitable customers ◦ Keep profitable customers 8 .23 Many organizations are realizing the importance of strategic marketing ◦ ◦ ◦ ◦ ◦ Performing arts Government agencies Colleges Hospitals Churches Marketing Landscape Challenges       Digital age Globalization Ethics and social responsibility Not-for-profit marketing Marketing relationships 1 .

8/18/2013 What is Marketing?  The process of building profitable customer relationships by creating value for customers and capturing value in return 1 . 9 .25 Strategic Planning & Marketing Environment Strategic Planning  The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.

Setting company objectives and goals.  Should be market oriented and defined in terms of customer needs. Defining the company mission. 3. The Mission Statement  A statement of the organization’s purpose. 2. 4.8/18/2013 Steps in Strategic Planning 1. ◦ What it wants to accomplish in the larger environment. Designing the business portfolio. The Mission Statement  Questions the mission statement should answer include: ◦ ◦ ◦ ◦ What is our business? Who is our customer? What do consumers value? What should our business be? 10 . Planning marketing and other functional strategies.

 Should be motivating. Should be specific.  Should fit the market environment.   Designing the Business Portfolio   The business portfolio is the collection of businesses and products that make up the company.8/18/2013 The Mission Statement: Should be realistic. or sometimes a single product or brand. or no investment. less.  Should be based on distinctive competencies. a product line within a division. ◦ develop growth strategies for growth or downsizing.  11 . The company must: ◦ analyze its current business portfolio or Strategic Business Units (SBUs). ◦ decide which SBUs should receive more. Can be a company division. Strategic Business Unit (SBU)  A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses.

Market ◦ Customers grouped by:     Geographic Demographic Psychographic Behavioral Segmentation 2. existing products Product Development ◦ Existing markets. existing products Market Development ◦ New markets. Market Positioning ◦ Market segment is a groups of consumers who respond in similar ways to marketing efforts. new products Diversification ◦ New products. new markets Marketing Strategy Strategy 1. 12 .8/18/2013 Marketing’s Role in Strategic Planning • • • • • Provide a guiding philosophy Identify attractive opportunities Design effective strategies Build strong value chains Form superior value delivery networks Product/Market Expansion Grid     Market Penetration ◦ Existing markets. Target marketing 3.

Market Positioning Marketing Mix The marketing mix includes controllable and tactical marketing tools known as the 4P’s • The 4P’s include •     Product Place Promotion Price 13 . Target marketing 3.8/18/2013 Marketing Strategy Strategy 1. Market ◦ Evaluation of each segment’s attractiveness ◦ Selection of segments with greatest long-term profitability ◦ A company can choose one or several segments to target Segmentation 2. distinctive and desirable place in positioning Segmentation 2. Market ◦ The place the product occupies in the consumer’s mind ◦ Products are positioned relative to competing products ◦ Marketers look for clear. Market Positioning Marketing Strategy Strategy 1. Target marketing 3.

List price.8/18/2013 The Marketing Mix • Product: ◦ Variety. payment period and credit terms. ◦ Marketing Control  Evaluate results. transportation. • Place: o • Promotion: ◦ Advertising. when. assortments and inventory. • Price: o The 4 Ps & the 4 Cs of the Marketing Mix  4 Ps – Seller’s View ◦ ◦ ◦ ◦ Product Price Place Promotion  4 Cs – Buyer’s View ◦ ◦ ◦ ◦ Customer Solution Customer Cost Convenience Communication Managing the Marketing Effort  Four marketing management functions: ◦ Marketing Analysis  SWOT analysis is key. where. quality. locations. ◦ Marketing Planning  Create brand marketing plan. take corrective action. design. sales promotion. 14 . coverage. logistics. and how. discounts. allowances. ◦ Marketing Implementation  Determine who. Channels. packaging and services. brand name. features. public relations and personal selling.

 SWOT Analysis  Opportunities: External factors that the company may be able to exploit to its advantage. Threats: Current and emerging external factors that may challenge the company’s performance. Weaknesses: Internal limitations that may interfere with a company’s ability to achieve its objectives.  Managing the Marketing Effort Marketing Functions • • • • ◦ Finding opportunities ◦ Avoiding threats ◦ Understanding strengths ◦ Analyzing weaknesses Analysis Planning Implementation Control 15 .8/18/2013 SWOT Analysis  Strengths: Internal capabilities that may help a company reach its objectives.

8/18/2013 Managing the Marketing Effort Marketing Functions • • • • ◦ Marketing plans include:  Executive summary  Analysis of current situation  Objectives  Targets and positioning  Marketing mix  Budget  Controls Analysis Planning Implementation Control Managing the Marketing Effort Marketing Functions • • • • ◦ Plans are turned into action with day-to-day activities ◦ Good implementation is a challenge Analysis Planning Implementation Control Managing the Marketing Effort Marketing Functions • • • • ◦ Evaluation of the results of marketing strategies ◦ Checks for differences between goals and performance Analysis Planning Implementation Control 16 .

8/18/2013 Measuring Effectiveness  Return on marketing (marketing ROI) ◦ The net return from a marketing investment divided by the costs of the investments The Marketing Environment The Marketing Environment  Marketing Environment: ◦ The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers   Microenvironment ◦ ◦ Includes the actors close to the company Involves larger societal forces Macroenvironment 17 .

Customers 5. Suppliers 3. Competitors 6. physical distribution firms. Publics ◦ Marketers must watch supply availability and pricing ◦ Effective partnership relationship management with suppliers is essential intermediaries Microenvironment Actors 1. The company 2. Publics ◦ Marketing must consider other parts of the organization including finance. The company 2. sell and distribute goods to final buyers ◦ Include resellers. Suppliers 3. Marketing 4. Customers 5. purchasing. Competitors 6. marketing services agencies and financial intermediaries ◦ Effective partner relationship management is essential intermediaries 18 . operations and accounting ◦ Marketing decisions must relate to broader company goals and strategies intermediaries Microenvironment Actors 1. Publics ◦ Help to promote. Marketing 4. Competitors 6. Marketing 4. R&D. Suppliers 3.8/18/2013 Microenvironment Actors 1. Customers 5. The company 2.

Suppliers 3. Marketing 4. Suppliers 3. The company 2. Marketing 4. Customers 5. Customers 5. Customers 5. The company 2. Suppliers 3. Publics ◦ The five types of customer markets  Consumer  Business  Reseller  Government  International intermediaries Microenvironment Actors 1. Marketing 4.8/18/2013 Microenvironment Actors 1. Publics ◦ A group that has an actual or potential interest in or impact on an organization ◦ Seven publics include:  Financial  Media  Government  Citizen-action  Local  General  Internal intermediaries 19 . The company 2. Competitors 6. Competitors 6. Competitors 6. Publics ◦ Conducting competitor analysis is critical for success of the firm ◦ A marketer must monitor its competitors’ offerings to create strategic advantage intermediaries Microenvironment Actors 1.

location. occupation and other statistics Economic Environment  Consists of factors that affect consumer purchasing power and spending patterns. age.  Changes in Income ◦ 1980s – consumption frenzy ◦ 1990s – “squeezed consumer” ◦ 2000s – value marketing  Income Distribution ◦ ◦ ◦ ◦ Upper class Middle class Working class Underclass 20 . density. gender.8/18/2013 The Macroenvironment Macroenvironmental Forces Demographic Economic  Natural   Technological Political  Cultural   Demographic Environment  Demographic Environment: ◦ The study of human populations in terms of size. race.

consumers and the interests of society ◦ Increased emphasis on socially responsible actions 21 . government agencies and pressure groups that influence or limit various organizations and individuals in a given society ◦ Legislation affecting businesses worldwide has increased ◦ Laws protect companies.8/18/2013 Natural Environment  Natural Environment: ◦ Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities  Trends ◦ Shortages of raw materials ◦ Increased pollution ◦ Increased government intervention Technological Environment ◦ The most dramatic force shaping our destiny ◦ Rapidly changing force which creates many new marketing opportunities but also turns many existing products extinct Political Environment  Consists of laws.

Responding to the Marketing Environment  “There are three kinds of companies: those who make things happen. those who watch things happen. perceptions.8/18/2013 Cultural Environment  Made up of institutions and other forces that affect a society’s basic values. preferences and behaviors.” 22 . and those who wonder what’s happened.

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