Introduction to Marketing п

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Marketing Management Philosophies
Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

Holistic Marketing Concept

Customer Driven
 Marketing Management
Philosophies
• The Production Concept
– Management focus on production and
distribution efficiency
– Consumers favour
• Readily available products
• Affordable products

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 The Production Concept

Management •High production and

Focuses marketing efficiency

• Economies of Scale- the cost advantages that

an enterprise obtains due to expansion
 The Production Concept (cont.)

Common Sources for Economies of Scale

 Purchasing -bulk buying of materials through long-term
contracts
 Managerial – increasing the specialization of managers
 Financial – obtaining lower-interest charges when
borrowing from banks and having access to a greater
range of financial instruments
 Marketing – spreading the cost of advertising over a
greater range of output in media markets
 Technological – ability adopt less costly technologies
Ford Model-T Car
 Major Risk of Production Concept

Focusing too narrowly on their own operations and

loosing sight of the real objective – “Satisfying
customer needs and building customer relationships”.
 Marketing Management
Philosophies
• The Product Concept
– Consumers favour products offering
• Highest quality
• Best performance
• Most innovative features

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 The Product Concept (Cont.)

Can lead to Marketing Myopia - “focus on the

product rather than the consumer need”.

Marketing Myopia
The mistake of paying more attention to the
specific products a company offers than to the
benefits and experiences sought by customers
(Harvard Professor Theodore Levitt)
 The Product Concept (Cont.)

• “Build a better mousetrap, and the world will beat a

path to your door”

Do you think people need a better mousetrap?

 The Product Concept (Cont.)

People do not want a better mousetrap, but they want

a better solution to mouse problem
 Marketing Management
Philosophies
• The Selling Concept
– Sell what you make
– Typically for unsought goods
– Focus on sales transactions
– Driven by excess capacity

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 Marketing Management
Philosophies
• The Marketing Concept
– Focus on customer wants and needs
– Delivering satisfaction
• More effectively than competition
• More efficiently than competition

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 Marketing Management
Philosophies
Starting Focus Means Ends
point

Existing Selling and Profits through

Factory products promoting sales volume

The selling concept

Customer Integrated Profits through

Market needs marketing satisfaction

The marketing concept

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 Marketing Management
Philosophies
• The Societal Marketing Concept
– Maintain or improve well-being of consumers
and society
• Focus on customer wants and needs
– Delivering satisfaction
• More effectively than competition
• More efficiently than competition
– Maintains or improves consumers’ and
society’s well-being
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Marketing Management
Philosophies
Society (human welfare)

Societal
marketing
concept

Consumers Company
(want satisfaction) (profits)

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What Marketing is?

“Meeting needs profitably”

Human needs
Company needs/objectives
Social needs

 “Deliver a higher standard of living”

 Role of Marketing in Society

“Deliver a higher standard of living”

• Standard of living of the people of any

society is determined by the level and
quality of marketing activities

• Creating a flow of goods and services

from firm (production)sector to
household (consumption) sector
 Marketing Management
Philosophies
• The Holistic Marketing Concept

 The holistic marketing concept is latest development in

marketing thought.
 According to Philip Kotler, “the holistic marketing concept
is based on the development , design, and implementation
of marketing programs, processes, and activities that
recognizes their breadth and interdependencies.”
 This concept is an integration of the marketing concept and
societal marketing concept.
 Fundamental Principles Of Holistic
Marketing Concept
• Relationship Marketing:- It has the aim of building mutually
satisfying long-term relations with key parties.

• Integrated Marketing:- There must be a full integration of the

marketing programs to create, communicate, and deliver superior
value to customers.

• Internal Marketing:- It is based on the notion that every body

within organization is a marketer .

• Performance Marketing:- Holistic marketing incorporates

performance marketing and understanding the returns to the
business from marketing activities and programmes, as well as
addressing broader concerns and their legal, ethical, social and
environmental effects
Marketing Senior Other Communications Product &
department management departments Services
Channel

Integrated
Internal
Marketing
Marketing

Holistic
Marketin
g

Relationship
Performance
Sales Marketing
Marketing
revenue
Community
Brand &
customer
equity
Ethics Legal Customers Partners
Environment Channel
 Strategic Planning
• The process of developing and maintaining
a strategic fit between the organization’s
goals and capabilities and its changing
marketing opportunities

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Strategic Planning
Corporate Strategic Planning

Strategic Business Unit (SBU)

Business Unit Strategy

Functional Strategy

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 Strategic Planning: Steps

Setting Planning,
Defining Designing
company marketing,
the the
objectives and other
company business
and goals functional
mission portfolio
strategies

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 Strategic Planning:
Mission Statement
• Mission Statement
– Purpose
– Guides people’s efforts
– Understand values
– Ethical behaviour

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 Strategic Planning:
Mission Statement Criteria
• Market-oriented
• Realistic
• Specific
• Appropriate for the environment
• Based on competencies
• Motivating

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Designing the Business Portfolio
The Big Picture
Business Portfolio: The collection of
businesses and products that comprise the
company

Analyzing Plan
Develop cross-
the
growth functional
current
strategies strategies
portfolio

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Designing the Business Portfolio:
Analyzing the Current Portfolio
• Portfolio analysis: A tool that management
uses to identify and evaluate the various
businesses that make up the company
• Identify key businesses
• Assess attractiveness of each business
– BCG Approach one option
• Determine appropriate support level
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 Designing the Business Portfolio:
The BCG Growth-Share Matrix
Market growth rate

Star Question mark

High

???
Cash cow Dog
Low

High Low
Relative market share
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Designing the Business Portfolio:
Analyzing the Current Portfolio
• Problems with Matrix Approaches
– Difficult and time consuming
– Costly to implement
– Difficult to define SBUs
– Focus is on current business over future
– Overemphasis on market share and growth
• Today, strategic planning is decentralized

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Designing the Business Portfolio:
Developing Growth Strategies
Existing New
products products

Existing
1. Market 3. Product
markets
penetration development

New 2. Market
markets 4. Diversification
development

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Designing the Business Portfolio:
Developing Growth Strategies
• Competitive position may be a determinant
of strategy
– Involves competitive analysis
Market-leaders

Market-followers

Market-challengers

Market-nichers

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Designing the Business Portfolio:
Developing Growth Strategies
• Achieving competitive advantage
– Overall cost leadership
– Differentiation
– Focus

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Designing the Business Portfolio:
Developing Growth Strategies
• Gain leadership positions by delivering
superior value to customers
– Operational excellence
– Product leadership
– Customer intimacy
• Clear chosen strategy leads to success
• Middle-of-the-road strategies do worst

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Designing the Business Portfolio:
Developing Growth Strategies
• Customer relationship marketing
– Creating, maintaining, and enhancing strong
relationships with customers and other
stakeholders
– Losing a customer means losing them for LIFE!

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Designing the Business Portfolio:
Customer Value
Product Services Personnel Image
Value Value Value Value

Total Customer
Value Customer
Delivered
Total Customer Value
Value

Monetary Time Energy Psychic

Cost Cost Cost Cost
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Designing the Business Portfolio:
Customer Satisfaction
• Depends on product’s actual performance
relative to buyer’s expectations
• Different degrees of satisfaction
• Based on expectations
– Past buying experiences
– Word of mouth
– Marketing information

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Designing the Business Portfolio:
Developing Growth Strategies
• Loyalty and retention are related to
customer satisfaction
• Growing “share of customer”
• Build loyalty through:
– Financial benefits
– Club marketing programs
– Social benefits
– Add structural ties
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Designing the Business Portfolio:
Planning Functional Strategies
• Marketing’s Role
– Guiding philosophy is the
marketing concept
– Identify opportunities
– Evaluate potential
– Develop unit marketing
strategies

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Designing the Business Portfolio:
Planning Functional Strategies
• Collaboration Between
Functions
– Marketing provides customer
perspective
– All functions critical to
satisfaction
– Inherent conflict between
functions

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 The Marketing Process
Demographic- Technological-
Marketing
economic natural
Channels
environment environment

Product

Suppliers Place Target Price Publics

Consumers

Promotion

Political- Social-
legal Competitors cultural
environment environment

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 Managing the Marketing Effort
Analysis

PLANNING IMPLEMENTATION CONTROL

Measure Results
Strategic Plans
Carry Out Evaluate Results
Plans

Marketing Plans Corrective

Action

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 Marketing Plan Contents
• Executive summary
• Current marketing situation
• Analysis of opportunities and threats
• Objectives and issues
• Marketing strategy
• Action programs
• Budgets
• Controls 2-43
 Marketing Implementation
Fit with company culture

Decision and
Reward systems

Organization
structure

People

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 Marketing Department
Organization
• By marketing function performed
• By geographic areas covered
• By product or brand responsibility
• By markets served
• Multiple approaches for large companies

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Marketing Control
Set Goals

Measure
Performance

Evaluate
Performance

Take Corrective
Action

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 Few More Concepts
• Marketing Channels
Consumer Marketing Channels
Industrial Marketing Channels

• Supply Chain
All the activities involved in supplying an end
user with a product or service

• Marketing Environment 1-47

 Consumer Marketing Channels

0-level channel
Manufacturer Consumer

1-level channel
Manufacturer Retailer  Consumer

2-level channel
Mfg  Wholesaler Retailer  Consumer

3-level channel
Mfg  Wholesaler Agent  Retailer  Consumer
Manufacturer Industrial Marketing Channels

Consumer
Industrial
distributors

Manufacturer’s
representative

Manufacturer’s
sales branch
 Supply Chain

Supplier Network Customer Network

Transformation
System

Second Tier First Tier First Tier Second Tier

Suppliers Suppliers Customer Customer

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 Marketing Environment
A company marketing environment consists of the actors and forces that affect the
company’s ability to develop and maintain successful transactions and relationships
with its target customers.
Marketing Environment

Micro environment Macro environment

Controllable Partially Uncontrollable

Co Organization Suppliers Demographic
Management Customers Economic
Resources Dealers Ecological
M Mix Competitors Technological
Community Political 1-51
( Social groups) Sociological
THANK YOU

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