What is Marketing?

Fundamentals of Marketing
Management
Process by which individuals and groups
Dr. P.V. (Sundar) Balakrishnan
obtain what they need and want through
creating and exchanging products and
value with others.

Managing World-Class Organizations Simply put:

Marketing is the delivery of customer
satisfaction at a profit.

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The Marketing Objective Activities in the Marketing Process ...

‰ Identify needs of customers that company can

“Satisfy the needs of a group of customers better satisfy
than the competition.”
‰ Design a Product (“bundle of benefits”) that
‰ Distinguish from Selling or Advertising: satisfies those needs - better than existing
– merely a subset of marketing actions used to products.
satisfy consumer needs.
‰ Promote / communicate these benefits in order
‰ Marketing focuses on the use of all the firm’s to motivate purchase
controllable influences to satisfy the customer.
‰ Price at the right level so that consumers are
willing & able to buy the product and the firm’s
profit goals are met
‰ Make the product available at the right Place so
that exchange is facilitated
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Broad Objective of Marketing Core Marketing Concepts

‰ To grow the business by adapting it to changes in the

Needs, wants,
environment :
and demands
‰by monitoring
‰changes in customer needs Products
Markets
‰changes in competition and services
‰changes in the company’s own skills /
resources
‰looking for opportunities & threats that arise from
these changes Exchange,
Value,
‰initiate tactical actions that “fit” the co’s offering transactions, satisfaction,
to these opportunities / threats. and relationships
and quality

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 Consumer’s Needs, Wants and Demands Products & Services:

z Needs - state of felt deprivation for basic items

such as food and clothing and complex needs
such as for belonging. Products
Anything that can be Offered to a Market to Satisfy a Need or Want
– i.e. I am hungry.
z Wants - form that a human need takes as
shaped by culture and individual personality. Experiences Persons Places

– i.e. I want a burger, fries, and a soft drink.

z Demands - human wants backed by buying Organizations Information Ideas
power.
– i.e. I have money to buy this meal.
Services
Activities or Benefits Offered for Sale That Are Essentially
Intangible and Don’t Result in the Ownership of Anything
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Products
How Do Consumers Choose Among Products and
Services? DMP
z A bundle of Attributes that provide Consumers
with certain Benefits.
Value Gained From Owning a Product and
z Also called Costs of Obtaining the Product is
– Resource; Marketing Offer; Customer Solution Customer Value
z Ex: Drill Bits.
Product’s Perceived Performance in Delivering Value
– Benefits provided? Relative to Buyer’s Expectations is
z Sellers who focus on the Specific product rather Customer Satisfaction
than the Benefits provided suffer from “Marketing
Myopia”. Total Quality Management Involves Improving the
Quality of Products, Services, and
Marketing Processes

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How Do Consumers Obtain Products and What is a Market?

Services?

People Who
Exhibit Need Market –
Transactions: Ethical Actual
Exchanges: Buyers who
Factors
Unit of Measurement Buyers
share a
Situational
Fundamental Concept Unexpected
Resources to particular need
Exchange or want that
Relationships
Building a Marketing can be satisfied
Attitudes
through
Network Consisting of
Relationship Marketing:

The Company and All of Potential

exchange
Others or
How does Saturn build lasting relationships with customers?

Its Supporting Buyers

Stakeholders
Willingness to relationships.
Exchange
Click or Press Space Bar to Return

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 Modern Marketing System
Marketing Management

Suppliers
Marketing Demand Profitable
Management Management Customer
Company Relationships
Competitors
(Marketer) Implementing Finding and
programs increasing Attracting new
Environment

Environment
to create demand, also customers and
Marketing exchanges changing or retaining and
with target reducing building
Intermediaries demand such
buyers relationships
to achieve as in with current
organizational Demarketing customers
End User goals
Market
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Marketing Management Philosophies Societal Marketing Concept

Society
•Consumers favor products that are (Human Welfare)
Production Concept available and highly affordable.
•Improve production and distribution.

•Consumers favor products that offer

Product Concept the most quality, performance, and
innovative features.

Selling Concept •Consumers will buy products only if Societal

the company promotes/ sells these Marketing
products.
Concept
Marketing Concept •Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
Consumers Company
Societal Marketing Concept •Focuses on needs/ wants of target (Want Satisfaction) (Profits)
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Basic Marketing Concept

Marketing vs. Sales Concepts

• Achieving the SATISFACTION of the Customers’ Needs

Starting
Focus Means Ends
Point
Selling Profits
Existing
While Factory and through
Products Promoting Volume

The Selling Concept

• Achieving the OBJECTIVES of the Organization
Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The Marketing Concept

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Evolution of Marketing The Marketing Concept
To achieve organizational (& Societal) goals
Marketing as Organizational Philosophy by determining the needs and wants of
customers and delivering the desired benefits
more effectively and efficiently than
Production Selling Marketing
competitors.
Philosophy Philosophy Philosophy z “There is only one valid definition of business
purpose: to create a customer.”
- Peter Drucker
z “Everything starts with the customer.”
- Lou Gerstner, CEO of IBM
“Creating shareholder wealth is not the
Marketing purpose of the business. It is the reward for
Concept creating customer value.”
- Michael Tracy and Fred Wiersema in CFO magazine
This is going on today at
Internet Time!
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Connecting With Customers

Market Orientation

z Market Segmentation: determining distinct groups

An organization that has a market
orientation focuses its efforts on
continuously collecting information about
customers’ needs and competitors
capabilities, sharing this information across
departments, and using the information to
create customer value.
of buyers (segments) with different needs,
characteristics, or behavior.
z Market Targeting: evaluating each segment’s
attractiveness and selecting one or more segments
to enter.

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Developing the Marketing Mix Marketing Framework

Product Price
“Goods-and-service” Amount of money
combination that a that consumers
company offers a have to pay to
target market Obtain the product

Target
Customers
Activities that
Inform, persuade target Intended
customers to buy Positioning
the product
Company activities
Promotion that make the
product available

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Source: Robert Dolan, HBS Note S #24
 Recasting the 6C - 4P Framework in Value
The new view – 6 Cs Framework Terms
CONTEXT
Creating
Customers
Value

Communicating
Value
Competitors COMPANY Complementors

• Customer • Product Delivering

• Company Value
• Price
Collaborators • Competitor
• Collaborators • Place Capturing
Customer value your product more if the
• Complementors Value
complementor’s product is present (e.g.,
Complementor • Context • Promotion
hot dog producer and mustard producer!)
Sustaining
Customer value your product less if the Value
Competitor
competitor’s product is present
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Consumer Benefits

Relationship Marketing
Create value for consumers and benefit producers through
the four utilities:
• Form utility–having a product or service in the form you The hallmark of developing and maintaining
want it by to make it more appealing to buyers.
effective customer relationships is today
• Time utility–having a product or serviced when you want it. called relationship marketing, linking the
• Place utility–having a product or service where you want it. organization to its individual customers,
employees, suppliers, and other partners
• Possession utility–helping buyers to take possession of a for their long term benefit.
product or service.

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Connections With Customers

Customer Relationship Management (CRM)

z Most marketers are targeting

fewer, potentially more
profitable customers. Customer relationship management is the
z Asking: process of identifying prospective buyers,
– What value does the customer understanding them intimately, and
bring to the organization? developing long-term perceptions of the
– Are they worth pursuing?
organization and its offering so that buyers
z Focus has shifted to:
– keeping current customers, will choose them in the marketplace.
and
– building lasting relationships
based on superior satisfaction
and value.
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 Technologies for Connecting
The Marketing Process
z The Value Delivery Sequence
Two Views of the Value-Delivery Process
Learn About & Create Products &
Track Customers Services Tailored to
With Databases Meet Customer Needs
Connecting Technologies in
Computers,
Telecommunications,
Information, & Transportation
Help To:

Communicate With Distribute Products

Customers in Groups What aspects of
the Internet
make it a good
forum for
More Efficiently &
Or One-on-One Effectively
marketing?

How do Web
companies
compete with
brick and mortar
companies?

Balakrishnan Click or press spacebar to return

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The New Marketing Paradigm

Old view
z Marketing as a Function
z Separate Function
z Product Management
z Feature Positioning for mass
market
z Domestic Focus
z Consumers
z Short-term sales, share objectivez
z Transactions
z Limited use of IT
z “Self-sufficiency” bias
z Price discounts
z Product quality
z Media and sales “power”;
efficiency
New view
z Marketing as a Business Philosophy
z Integrated with other functions
z Market and Account management
z Benefit positioning for segmented
markets
z Global focus
z Value creation for all Stakeholders
Long-term profit and satisfaction
z Long-term relationship partnerships
z Expanded use of IT strategies
z Co-marketing and strategic alliances
z Value-based pricing
z Quality provider
z Message effectiveness

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