Introduction to Marketing

Prof. N. Bandyopadhyay
 Content Flow
• Core marketing concepts

• Company orientations

• Marketing mix and its elements

• Concept Application Questions

 Marketing
• Marketing is the process of planning and
executing the conception, pricing, promotion
and distribution of ideas, goods and services
to create exchanges that satisfies individuals’
and goals of the company.
 What is Key Customer
marketed? Markets
• Goods • Consumer Market
• Services • Business Market
• Events
• Experience • Global Market
• Persons • Non Profit and Governmental
• Places Market
• Properties • Marketplace: Physical
• Organization • Marketspace: Digital
• Information • Meta market: A cluster
• Ideas complimentary products and
services
 Core Marketing Concepts
• Needs, Wants, and Demands
• Segmentation, Targeting and Positioning
• Offerings and Brands
• Customer value
• Customer Satisfaction
• Customer Loyalty
• Exchange / Transaction
• Marketing Channels
• Supply Chain
• Competition
• Marketing Environment
 Need, Want & Demand
Need: A human need is a state of deprivation of some basic satisfaction.

Stated Need / Real need/ Secret need

Want: Wants are desires for specific need satisfiers.

Eg. An Indian need food & want biriyani.
Want may be culturally conditioned by society

Demand: Demands are wants for specific products that are backed by
purchasing power & willingness to buy them.
Eg. Many people want a Mercedes but only few of them are able &
willing to buy it.
 Offerings and Brands
• Goods
• Goods + Services
• Services

• Brand: A brand is the identity of a specific product, service, or

business. A brand can take many forms, including a name, sign, symbol,
color or may be a combination of all. A legally protected brand name is
called a trademark. The word brand has continued to evolve to
encompass identity - it affects the personality of a product, company or
service.
 Segmentation, Targeting and Positioning
Market segmentation is the process of dividing the total market into
relatively distinct homogeneous sub-groups of consumers with similar
needs or characteristics that lead them to respond in similar ways to a
particular marketing programme.
A market segment is a portion of a larger market in which the individuals,
groups, or organizations share one or more characteristics that cause
them to have relatively similar product needs.

Targeting: Evaluate the market segment (on the basis of overall

attractiveness and firm’s objectives and resources) and target
the segment.

Product positioning is a decision reached by a marketer to try to

achieve a defined brand image relative to competition within a
market segment. Product positioning decisions are strategic
decisions and have an impact on long-term success of the brand.
 Customer Value
• Value-Component Models:
• Kauffman’s theory (1998): states that three value perceptions govern the
consumer’s decision of acquiring the goods and services are of three types:
Esteem Value, Exchange Value (Worth) and Utilitarian Value.

• Kano’s (1994) model: which states that the attributes of the products or services
may be act as Dissatisfiers, Satisfiers or Delighters.
 Customer Value (Contd….)

• Benefit/Cost Ratio models:

Customer perceives an offering valuable when the benefits
received from the product and/ or services exceeds that
sacrifices (costs) incurred to acquired that. In nutshell,
benefit / cost ratio models can e presented as the following:
• Customer Perceived Value = (Total customer benefit – Total
Customer Costs)
• Total Customer Benefit =
Product benefit + Service Benefit + Personal Benefit + Image
benefit
• Total Customer Costs=
Monetary Costs + Non Monetary Costs (Time, Energy, and
Psychological Costs)
 Satisfaction
• Disconfirmation of Expectation

• Positive Disconfirmation: Satisfaction

• Negative Disconfirmation: Dissatisfaction

 Customer Loyalty
Loyalty is a deeply held commitment to rebuy or repatronise a
preferred product or service consistently in the future, causing
repetitive same-brand or same brand-set purchasing, despite
situational influences and marketing efforts.
- R.L. Oliver, 1999

Basic types: Cognitive / Affective

 Exchange/Transaction

• Exchange is the act of obtaining a desired product from someone by

offering something (which is of some value to other) in return.

• Whether exchange actually takes place depends upon whether two

parties can agree on terms of exchange that will leave them both better
off (or at least not worse off) than they were before the exchange.
Exchange is frequently described as value creating process because
exchange normally leaves both parties better off.

• Exchange is a process rather than an event. Two parties are engaged in

a exchange if they are negotiating and moving toward an agreement.
When an agreement is reached we say that a transaction takes place.

• A transaction is a trade of value between two or more parties. It

involved several dimensions: at least two things of value, agreed upon
conditions, a time of agreement & a place of agreement.
• Transaction may be Monetary or Barter transaction
 Supply Chain
• A supply chain is a system of organizations,
people, technology, activities, information and
resources involved in moving a product or
service from supplier to customer. Supply
chain activities transform natural resources,
raw materials and components into a finished
product that is delivered to the end customer
 The Marketing Environment

• External Macro environment: Demographics,

Social and Cultural, Economic, Technology,
Competition, Political and Legal

• External Microenvironment: The Market,

Suppliers, Intermediaries.

• Organization’s internal environment: HR,

(Overall Orientation)
Company Orientations
 Company Orientation towards
marketplace (Ref. Philip Kotler)
• The Production concept
• The Product concept
• The selling concept
• The marketing concept
• The Holistic Marketing Concept
 Production Concept/Orientation
• Consumers will prefer products that are
widely available and inexpensive. Focus is on
high production efficiency, low cost and mass
distribution
 Product Concept/Orientation
• Consumers will favor products that offer the
most quality, performance or innovative
features. Focus on making superior products
and improving them over time.
 Selling Concept/Orientation
• Consumers and businesses, if left alone, will
not buy enough and so aggressive selling and
is imperative.
 Marketing Concept and the key
elements of market orientation
Marketing Concept

Customer Focus Coordinated Marketing Profitability

Mktg Intelligence Interdepartmental

Cognizance to Customer needs

Key Elements of Marketing Orientation:

Intelligence generation -> Intelligence
Dissemination-> Responsiveness to marketing intelligence
 A program to increase/develop the Marketing Orientation

• Understand Existing Orientations

• Identify the present level of marketing effectiveness

(Marketing effectiveness audit)

• Implementing a plan to improve marketing orientation.

(Ref. ‘Developing a Marketing Oriented Organization’ by

Adrian Payne)
Holistic Marketing
Marketing Mix and its elements
 Marketing Mix
• Nell Borden of HBS used the term ‘Marketing Mix’ to
describe the set of activities comprising the firm’s
marketing program. He initially specified 12 elements
which later regrouped into 4 marketing mix
elements:
Product
Place (Channels of distribution)
Price
Promotion (Communication strategy)
Later, for Services another three elements were added:
People / Process / Physical evidence.
 Marketing Mix Variables:
PRICE {capture value} PLACE {Deliver Value}
PRODUCT {create value} Pricing strategy & Distribution Channel
Design, Package, Wholesalers, Retailers,
Policy, Basic Price,
Agents
Warranty, Terms of credit, Physical Distribution
Product Line, Discount, Transport, Warehousing
Service Allowances Inventory

PROMOTION
{communicate value}
Focus on
Advertising, satisfying
Personal Selling, Customer
Direct Marketing, needs profitably
Sales Promotion
Publicity

PHYSICAL
PEOPLE PROCESS EVIDENCE
 What is a Product?
“A product is anything, tangible or intangible, which can be offered to a
market for attention, acquisition, use, or consumption that might satisfy
a need or want.” Thus, a product can be a physical entity (e.g.,
computer, shirt, or soap), some service (e.g., healthcare, tuition, or
bank), a retail store (e.g., music store, locality grocer, or supermarket), a
person (e.g., a singer, physician, or politician), an organization (e.g.,
business organization, trade organization, or not-for-profit
organization), a place (e.g., village, city, or country), or idea (e.g., social
issues, concepts, or population control). We use the word ‘product’
innumerably in everyday life.
 Product Mix and Product line

A PRODUCT LINE is a group of products that are closely related because

they perform similar functions, are sold to the same consumer groups,
are marketed through the same channels, or fall within given price
ranges.

A Product Mix or Product Assortment is the set of all products and items
that a particular seller offer to buyers.

Width : Number of product lines a company carries. (in the given fig. P&G is having 5 lines).

Length of a product line: Total no. of items in the product mix / Number of product lines
(in the given figure Length=25/5=5)

Depth: Number of variants each product is having in the product line.

 Product Life Cycle

Common Product
Life Curves

Sales

Profits

Loss
Introduction Growth Maturity Decline
Time

(d) Classical Life Cycle Pattern

 Place (Marketing Channels)
A marketing channel system is the particular set of
interdependent organizations involved in the process
of making a product or service available for use or
consumption.

• Roles of marketing channel in marketing strategy:

1. Links producers to buyers. 2. Performs sales,
advertising and promotion as required. 3. Influences
the firm's pricing strategy. 4. Affecting product
strategy through branding, policies, willingness to
stock and customizes profits, install, maintain, offer
credit, etc.
Figure: Different Levels of Marketing Channels

Distribution Intensity:

Exclusive Distribution: One outlet per market geography

Selective Distribution: Several outlets
Intensive Distribution: Many outlets
 Price
• A. Price—amount of money or value of other
items with utility needed to acquire a product.
• B. Utility—an attribute that has the potential
to satisfy wants.
• C. Barter—exchanging of goods/services for
other goods/services.
 Approaches to Pricing
• Skimming Pricing

• Penetration Pricing
 Promotion (Communication strategy)
• Marketing communications are the means by
which firms attempt to inform, persuade &
remind consumers-directly or indirectly-about
the products or brands they sell. Marketing
communications represent the ‘voice’ of the
brand and are one way to establish a dialogue
and build relationships with the consumers.
 Common Communication Platforms
• Advertising. Any paid form of nonpersonal presentation and promotion of
ideas, goods, or services by an identified sponsor.

• Sales promotion. Short-term incentives to encourage trial or purchase of a

product or service.

• Events and experiences. Company-sponsored activities and programs designed

to create brand-related interactions.

• Public relations and publicity. Programs promoting or protecting company or

product image.

• Direct marketing. Use of mail, telephone, fax, e-mail, or Internet to

communicate directly with or solicit response or dialogue from specific
customers and prospects.

• WOM: Word of mouth publicity

• Personal selling. Face-to-face interaction with prospective purchasers for the

purpose of making presentations, answering questions, and procuring orders.
Additional P’s for Services

People: Taking care of heterogeneity

Process: Taking care of perishability, heterogeneity, Inseparability

Physical Evidence : Tangiblize the intangible

 Interactions within the mix
• Consistency

• Integration

• Leverage (whereby each element is used to the best

advantage in support of the total mix); Sales Response
Curve
(Ref. ‘Rejuvenating the Marketing Mix’ by Benson P Shapiro)
Concept Applications
1. How the operation of a product oriented shoe manufacturer will be different
from a marketing oriented shoe manufacturer

2. Suggest how each of the following could go beyond an exchange situation

to establishing a relationship with a customer.

Automobile dealership

University

Appliance manufacturer

3. Suggest the marketing mix for:

Police Department in your City

Professor teaching a first year PG level course

Luxor hotel and Casino

 Concept Application
• A private college in a metropolitan area wishes to increase its evening-
school offerings of business-related certificate/degree courses such as
marketing, accounting, finance, and management.

• Who are the target market customers (students) for these courses?
• What actions involving the four marketing mix elements might be used
to reach the target market.
• What environmental factors (uncontrollable variables) must the college
consider in designing its marketing program?