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The Marketing

Concept and Process

The Marketing Concept: What It Is


and
What It Is Not
The marketing concept has suffered in two
ways:
First, it has been established as optimal
management philosophy when it is not
necessarily so in all instances, and
Second, we can see many examples of poor
marketing practice that have been adopted in
the name of the marketing concept .
.It is time that we relearn the marketing
concept.

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The Marketing Concept: What It Is


and
What It Is Not

The marketing concept


Customer focus, profits, and
integration of organizational
efforts.

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The Marketing Concept: What It Is


and
What It Is Not
Customer orientation
Satisfying

its customers at a profit


Determining the needs and wants of
target markets
Discovering the wants of a target
audience and then creating the
goods and services to satisfy
them

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The Marketing Concept: What It Is


and
What It Is Not

Kotlers social definition:


Marketing is 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.
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The Marketing Concept: What It Is


and
What It Is Not

Many Things Can Be


Marketed!
Goods
Places
Services

Properties

Experiences Organizations
Events

Information

Persons

Ideas
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What is Marketing?
Core Marketing Concepts
Needs, wants,
and demands
Marketing
offers: including
products,
services and
experiences

Value and
satisfaction
Exchange,
transactions
and
relationships
Markets
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The Marketing Concept: What It Is


and
What It Is Not

The conditions under


which the marketing
concept offers the proper
guidance to the marketer:

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The Marketing Concept: What It Is


and
What It Is Not
To the extent that the organization
relies on exchange as the means
of obtaining compliance with
organizations needs, we describe
that organization as engaging in
marketing.
Strive

to understand exchange
partners and tailor offerings for them
through what is called the marketing
mix (Borden 1964).
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The Marketing Concept: What It Is


and
What It Is Not

it is important to recognize that


under some circumstances, the
production concept or the sales
concept would be a more
appropriate management
philosophy for the organization than
the marketing concept.

Can you give some examples?


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The Marketing Concept: What It Is


and
What It Is Not
.customers are not necessarily good
sources of information about
their needs a decade from now
sometimes customers have to learn
about new technologies, beliefs, and
ways of behaving
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The Marketing
Myopia

In 1960, Theodore Levitt wrote


"Marketing Myopia," a widely
quoted and frequently reprinted
Harvard Business Review article.
Chapter eight in Theodore Levitt's
book - The Marketing
Imagination (New York: The Free
Press, 1986).
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The Marketing
Myopia
What does the term marketing

myopia means?
What were the evidence and
examples used to illustrate the
notion of marketing myopia?
How is the self-deceiving cycle
related to marketing myopia?
Is this notion of marketing myopia
still valid today, and explain?
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The Marketing
Myopia
Marketing myopia was
initially described as a firm's
shortsightedness or
narrowness when attempting
to define its business.
The key question what
business are you in?
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The Marketing
Myopia
Levitt cites the railroads and
Hollywood as examples of
"industries that have been and
are now endangering their
futures by improperly defining
their purposes." Their problem,
he says, is they were "productoriented instead of
customer-oriented.
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The Marketing
Myopia

Warning of the dangers of being


product-oriented rather than
customer-oriented - creating the
Ford Edsel, New Coke or
smokeless cigarettes, as it were,
rather than products consumers
wanted.
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The Marketing
Myopia

According to Levitt, "the


organization must learn to
think of itself not as
producing goods or services
but as buying customers,
as doing the things that will
make people want to do
business with it."
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The Marketing
Myopia
Since its publication,
corporate leaders have
moved from productorientation toward marketorientation.

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The Marketing
Myopia
Customer orientation has also been
considered as a type of marketing myopia.

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The Marketing
Myopia
Firms overemphasize the
satisfaction of customer
wants and needs and as a
result ignore competition.

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The Marketing
Myopia
Competitor orientation has
been proposed as a
replacement for the customer
orientation; with this
orientation, a firm's strategy is
influenced by its competitors
(Oxenfeldt and Moore, 1978).
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The Marketing
Myopia
The marketing myopia described by Levitt
has also evolved into a planning myopia

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The Marketing
Myopia
Businesses need to take
Levitt's idea to its ultimate
end

do not just sell a product, sell the


solution to a problem.

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The Marketing
Myopia

Oil companies have followed that strategy by


developing minimarts in service stations.
Digital Equipment Corp. earned one-third of its $7
billion in revenue from computer maintenance
services.
General Motors Acceptance Corp. financial
services accounted for $1 billion of the
automaker's $4 billion in 1985 revenues, and
Gerber Products is opening day care centers as
well as acquiring baby-related product
companies.
By recognizing customer needs, these companies
have used available corporate resources to enter
nonmanufacturing segments of the market.

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The Marketing
Myopia
The marketing myopia to
the world market

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The Marketing
Myopia
Yves Doz, Jose Santos and Peter J.

Williamson draw on some examples of


companies that are major successes
because they sought knowledge in
other countries, such as
Shiseido,

the Japanese cosmetic company


that looked to France to become once again
a leading player.
Little Scandinavian Nokia overtook Motorola
in the early days of the mobile wars simply
by monitoring the radar for emerging
phenomena in markets around the world.

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The Marketing
Myopia
Innovating using local knowledge,
perfecting your product and
service to meet the needs of
customers in your home market,
and benchmarking yourself
against domestic competitorseach of these has become a high
risk strategy.
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The Marketing
Myopia
After all, cellular telephony had been invented
in America-at Bell Laboratories, and Motorola
was among the first to massproduce mobile
telephones.
So then, how did Nokia, a little-known upstart
from the edge of the Arctic Circle leave
Motorola behind and manage to become the
global leader in mobile telephony?
Nokia was the first to see the potential of
a cellphone as a fashion accessory from
observations of its customers in Asia.
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The Marketing
Myopia

Nokia has the ability to plug into knowledge


about new technologies and emerging
customer needs from every corner of the world.
It understood the need for customised handsets from
its experience in Europe, where it first became
apparent that there were different segments of users.
Observing pilot users across Scandinavia, it was
among the first to recognise that digital technology
could dramatically improve the functionality of
mobile phones.
And in China, India and Africa, it saw that mobile
phones could potentially become substitute for wireline phones.

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The Marketing
Myopia
While Nokia prospected the world
for insight about promising
technologies, diverse customer
behavior and new ways to use mobile
phones, Motorola continued to
develop its products based on its
knowledge of the customers and
technologies in its U.S. backyard.

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The Marketing
Myopia
The result: Motorola missed the shift to
digital mobile telephony and the growing
strength of the European GSM standard. It didn't
see the potential to turn the phone into a fashion
icon; it was slow to take on board the new ways
mobiles were being used and to recognise that a
broader, but more fragmented user base would
spell the end of "one-size-fits-all" products.
This myopic approach to competition , and
the failure to engage fully with the rest of the
world and capture the potential of global markets
and the innovative ideas in them, would cost
Motorola dearly.

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The Marketing
Myopia
The types of marketing myopia can be
classified along two dimensions:
1. the management's definition of the firm, and
2. the firm's business environment perspective.

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The Marketing
Myopia
The second dimension concerns the
firm's business environment
perspective. In essence, these firms
have an inward orientation toward that
industry.
Firms with a single-industry perspective
are preoccupied with the actions and
reactions of immediate competitors.

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The Marketing
Myopia
In addition, they are considered to have inbred
management. Some managers have spent the
greater part of their professional careers in one
industry.
Inbred management is not necessarily
undesirable, but it is potentially detrimental
when it fosters the contention that it can learn
nothing from firms in other industries, and it
keeps its firm perceptually insulated from such
other firms.
For example, managers of the cold breakfast
cereal firm may be concerned only with the
actions and reactions of other cold cereal firms.
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The Marketing
Myopia
Firms with a multi-industry
perspective, on the other hand,
have a broader view of the market.
While they are concerned with
immediate competitors, they also
realize that firms in other
industries can serve as sources of
innovative strategies as well as
being potential competitors.
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The Marketing
Myopia
Such management is said to be crossbred, in that managers may have
experience in a broad range of
industries or they are willing to learn
from firms facing similar situations in
other industries.
Firms with a multi-industry perspective
are outwardly oriented and not
perceptually insulted from other
industries.
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The Marketing
Myopia

The combination of the


two dimensions produces a
matrix with four types of
firms:

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The Marketing
Myopia
1. classic myopia, with a productdefinition/single-industry perspective,
2. competitive myopia, with a
customer-definition/single-industry
perspective,
3. efficiency myopia, with a productdefinition/multi-industry perspective,
4. innovative myopia, with a
customer-definition/multi-industry
perspective.
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The Marketing
Myopia
Marketing managers who wish to
achieve the innovative firm
orientation should:

1.take a generic view of their firm or industry,


2.monitor other industries,
3.engage in benchmarking to determine the
objectives for relevant areas of marketing,
4.recruit marketing people, and
5.be flexible enough to apply unique
solutions to problems.

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Case Study
Amazon.com
Strong sales, no
profits
Customer-driven
to its core
Each customers
experience is
unique

Provides great
selection,
good value,
discovery and
convenience
A true online
community

Discussion: Will Amazon.com Surv


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What is Marketing?
Marketing is managing profitable
customer relationships
Attracting new customers
Retaining and growing current
customers

Marketing is NOT synonymous


with sales or advertising
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Marketing
Management
Marketing management is
the art and science of
choosing target markets and
building profitable
relationships with them.
Creating, delivering and
communicating superior
customer value is key.
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Marketing
Management
Customer Management:
Marketers select customers
that can be served well and
profitably.

Demand Management:
Marketers must deal with
different demand states
ranging from no demand to
too much demand.

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Marketing
Marketing
Management
Management
Management Orientations
Selling
Production
concept
concept
Marketing
Product
concept
concept
Societal marketing concept
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CRM
CRM Customer
relationship
management . . .

is the overall process of building


and maintaining profitable
customer relationships by
delivering superior customer
value and satisfaction.
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CRM
It costs 5 to 10 times MORE
to attract a new customer
than it does to keep a
current customer satisfied.
Marketers must be
concerned with the lifetime
value of the customer.
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CRM
Customer value/satisfaction
Perceptions are key
Meeting/exceeding
expectations creates
satisfaction
Loyalty and retention
Benefits of loyalty
Loyalty increases as
satisfaction levels increase
Delighting consumers
should be the goal
Growing share of customer
Cross-selling

Key Concepts
Attracting,
retaining and
growing customers
Building customer
relationships and
customer equity

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CRM
Customer equity

Key Concepts
Attracting,
retaining and
growing customers
Building customer
relationships and
customer equity

The total combined


customer lifetime
values of all
customers.
Measures a firms
performance, but
in a manner that
looks to the future.

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CRM
Key

Customer relationship
Concepts levels and tools

Attracting,
retaining and
growing customers
Building customer
relationships and
customer equity

Target market typically


dictates type of
relationship
Basic

relationships
Full relationships

Customer loyalty and


retention programs
Adding

financial benefits
Adding social benefits
Adding structural ties

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Marketing Challenges
Technological advances, rapid
globalization, and continuing
social and economic shifts are
causing marketplace changes.
Major marketing developments
can be grouped under the
theme of Connecting.
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world

Advances in computers,
telecommunications,
video-conferencing, etc.
are major forces.
Databases allow for
customization of
products, messages
and analysis of needs.

The Internet

Facilitates anytime,
anywhere connections
Facilitates CRM
Creates marketspaces
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world

Selective relationship
management is key.
Customer profitability
analysis separates
winners from losers.

Growing share of
customer
Cross-selling and upselling are helpful.

Direct sales to
buyers are growing.
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world

Partner relationship
management
involves:
Connecting inside
the company
Connecting with
outside partners
Supply

chain
management
Strategic alliances
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Marketing Challenges
Connecting
Via technology
With customers
With marketing
partners
With the world

Globalization
Competition
New opportunities

Greater concern for


environmental and
social responsibility
Increased marketing
by nonprofit and
public-sector entities
Social marketing
campaigns
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