INTRODUCTION TO

MARKETING
MRK440 - Strategic Marketing

Overview
➔ History of marketing & Schools of thought
➔ Marketing philosophies
➔ Definition
➔ Marketing process
➔ Value marketing

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 Main Marketing eras
n Pre-academic Marketing thought
n Before 1900
n Traditional approach

n 1900 - 1950
n Paradigm shift
n 1955 - 1975
n Paradigm broadening
n 1975 - present

Emergence of Marketing / Marketing and Democracy

n Capitalism: economic n Communism:

system in which the
means of production are
primarily privately owned
and operated for profit,
with the investment of
capital being also
determined privately;
and decisions regarding
production, distribution,
and prices of goods,
services, and labor are
determined in a free
market and affected by
the forces of supply and
demand.
Communism refers to
a conjectured future
classless, stateless
social organization
based upon common
ownership of the
means of production,
and to a variety of
political movements
which claim the
establishment of such
a social organization as
their ultimate goal.
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 Opposite views
n Selling n Marketing
n Hobbes n Rousseau
n Foucault n Sartre
n Organizational n Consumers’ power
power
n Theory Y: employee
n Theory X: employee
motivated and are
lazy and need
supervision self-motivated

n Inside out approach n Outside in approach

n Push strategy n Pull Strategy

Marketing philosophies
➔ Inside-out approaches
⇾ The production concept
⇾ The product concept
⇾ The selling concept
➔ Outside-in approaches
⇾ The marketing concept
⇾ The societal marketing concept

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 Specialization and Fragmentation
Marketing is now a relationship, based on the creation of value
for customers and benefits for the organization and stakeholder.

Definition
n Marketing is an organizational function and a set of
processes for creating, communicating and delivering value
to customers and for managing customer relationships in
ways that benefit the organization and its stakeholders.

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 Main differences
n Marketing is now an organizational function and process,
whereas it was previously perceived predominantly as a
process.
n The new definition no longer explicitly recognizes the
marketing mix, and instead focuses on the concept of "value
creation" for the firm, and for the customer.
n Gone is the explicit focus on creating exchange as the core of
the marketing definition – value is now the core of marketing.
n Broadly speaking, the revision of the definition moves
marketing away from the shorter term transactional-exchange
orientation and into an area which has a greater emphasis on
the longer term relationship, value and stakeholder benefit.

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Definition of Needs
➔ Needs are state of felt deprivation
⇾ Basic, physical needs for food, clothing, warmth, and
safety.

⇾ Social needs for belonging and affection.

⇾ Individual needs for knowledge and self-expression.

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 Maslow’s Hierarchy of Needs
➔ Biological and Physiological needs - air, food, drink, shelter,
warmth, sex, sleep, etc.
➔ Safety needs - protection from elements, security, order,
law, limits, stability, etc.
➔ Belongingness and Love needs - work group, family,
affection, relationships, etc.
➔ Esteem needs - self-esteem, achievement, mastery,
independence, status, dominance, prestige, managerial
responsibility, etc.
➔ Self-Actualization needs - realizing personal potential, self-
fulfillment, seeking personal growth and peak experiences.

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Wants and demand

➔ A human want is the form that a human need takes as
shaped by culture and individual personality.

➔ Demand: wants backed by buying power.

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 Exchange and transaction
➔ Exchange is the act of obtaining a desired object from
someone by offering something in return.

➔ Transaction is marketing’s unit of measurement.

⇾ Most involve money, a response, and action.

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Value and satisfaction

➔ Value: is the difference between the gain from owing the
product and the cost of buying it.

➔ Satisfaction: the perceived performance of delivering the

expected value

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 Customer perceived value

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Marketing needs and wants

Needs
Exchange Value
Wants
Transaction Satisfaction
Demand

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 Definition – Value Marketing
➔ Marketing is an organizational function and a set of processes for
creating, communicating and delivering value to customers and for
managing customer relationships in ways that benefit the organization
and its stakeholders.

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Managing profitable relationships

Market:
Supply: Profitable
Actual and
industry relationship
potential
buyers

satisfaction
superior value

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 Satisfaction vs. loyalty
• Research has shown that there are more differences (loyalty)
– between customers that are satisfied and completely
satisfied

– than those that are less satisfied and those that are
merely satisfied.

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Loyalty

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 Loyalty vs Satisfaction

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Customer Lifetime Value

➔ Definition: a stream of purchases that the customer would
make over a lifetime of patronage.

➔ It costs five to ten times as much to attract a new customer

as it does to keep a current customer satisfied.

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 Customer relationships vs
Target market

• Strategically important customers

– A company with many low-margin customers may only
seek to establish basic relationships.

– A company with few customers and high margins may

want to create full partnerships.

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 Customer relationship management vs partner
relationship management

➔ Customer relationship management: The overall process of

building and maintaining profitable customer relationships
by delivering superior customer value and satisfaction
➔ Marketers must practice partner relationship management,
they have to working closely with partners in other company
departments and outside the company to jointly bring
greater value to customers

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Partnering with others in the company

¡ Each company department can be thought of as a link in the
company’s value chain

¡ Value chain: how each department carries out value-creating

activities
¡ A company’s value chain is only as strong as its weakest link
¡ Success depends on how well each department performs its
work of adding value for customers and on how well the
activities of different departments are coordinated

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 Partnering with others in the Marketing System

¡ The company must look into the value chains of its

suppliers, distributors, and ultimately, its customers
¡ More companies today are “partnering” with the
other members of the supply chain to improve the
performance of the customer value delivery
network
¡ Competition is between the networks created by
competitors

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Stages in the Adoption Process

➔ Awareness: where the consumer becomes aware
of the new product, but lacks information about
it.
➔ Interest: in which the consumer is stimulated to
seek information about the new product.
➔ Evaluation: in which the consumer considers
whether trying the new product makes sense.
➔ Trial: in which the consumer tries the new
product on a small scale to improve his or her
estimate of its value.
➔ Adoption: in which the consumer decides to
make full and regular use of the new product.
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Product Adoption/Product Lifecycle

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