Principles of Management II

Chapter Four: Marketing

Lecturer: Dr. Mazen Rohmi
 Introduction

 Today’s successful companies – whether large or

small, for-profit or non-profit, domestic or global –
share a strong focus and a heavy commitment to
marketing.
 Many people think of marketing only as selling and
advertising. They are only two of many marketing
functions and are often not the most important ones.
 The Concept of Marketing

 Today, marketing must be understood not in the old

sense of making a sale – telling and selling– but in the
new sense of satisfying customer needs.
 Selling occurs only after a product is produced. By
contrast, marketing starts long before a company has
a product.
 Marketing is the homework that managers undertake
to assess needs, measure their extent and intensity
and determine whether a profitable opportunity
exists.
 Marketing continues throughout the product’s life, trying
to find new customers and keep current customers by
improving product appeal and performance, learning from
product sales results and managing repeat performance.
 Peter Drucker, a leading management thinker, has put it
this way: The aim of marketing is to make selling
superfluous.
 The aim is to know and understand the customer so well
that the product or service fits . . . and sells itself.
 Marketing combines many activities – marketing
research, product development, distribution, pricing,
advertising, personal selling and others – designed to
sense, serve and satisfy consumer needs meeting the
organization's goals.
 Marketing seeks to attract new customers by
promising superior value, and to keep current
customers by delivering satisfaction.
 ?What is Marketing

 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.

 The father of Marketing Philip Kotler defines marketing as

"the process of building customer relations by creating value
for customers and capturing value in return".
 The Product/Service Levels

Basic product/service plus

extra or unrequested
Basic physical benefits to the consumer
product/service that
.delivers the benefits

Fundamental
benefit or solution
sought by
.customers
Marketing Philosophies/Orientations

 Marketing is described as carrying out tasks to achieve

desired exchanges with target markets.
 What philosophy should guide these marketing efforts?
What weight should be given to the interests of the
organization, customers and society? Very often these
interests conflict.
 Invariably, the organization's marketing philosophy
influences the way it approaches its buyers. There are five
alternative concepts under which organizations conduct
their marketing activities:
Marketing Philosophies/Orientations

1. the production concept,

2. the product concept,
3. the selling concept,
4. the marketing concept,
5. Societal marketing concept.
 The Production Concept .1

 The production concept holds that ‘consumers will

favor products that are available and highly
affordable, and that management should therefore
focus on improving production and distribution
efficiency’.

 This concept is one of the oldest philosophies that

guide sellers.
 The production concept is a useful philosophy in two types of
situation .
 The first occurs when the demand for a product exceeds the
supply. Here, management should look for ways to increase
production .
 The second situation occurs when the product’s cost is too
high and improved productivity is needed to bring it down.
 The product concept .2

 The product concept, holds that “consumers will favor

products that offer the most quality, performance and
innovative features, and that an organization should thus
devote energy to making continuous product
improvements”.
 The Selling Concept .3

 Many organizations follow the selling concept, which

holds that ―consumers will not buy enough of the
organization's products unless it undertakes a large-
scale selling and promotion effort.
 The concept is typically practiced with unsought
goods – those that buyers do not normally think of
buying.
 The selling concept is also practiced in the non-profit area.
 Most firms practise the selling concept when they have
overcapacity. Their aim is to sell what they make rather than
make what the market wants. Such marketing carries high
risks.
 The selling concept focuses on creating sales transactions in
the short term, rather than on building long-term, profitable
relationships with customers.
 The selling concept takes an inside-out perspective.
 The Marketing Concept .4

 The marketing concept holds that achieving organizational goals

depends on determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and efficiently
than competitors do.
 The marketing concept takes an outside-in perspective.
 It starts with a well-defined market, focuses on customer needs,
coordinates all the marketing activities affecting customers and
makes profits by creating long-term customer relationships based on
customer value and satisfaction.
 Under the marketing concept, customer focus and value are the
paths to sales and profits.
 EXAMPLES

 Many successful and well-known global companies

have adopted the marketing concept. IKEA, Marriott,
and Wal-Mart follow it faithfully. Toyota, the highly
successful Japanese car manufacturer, is also a prime
example of an organization that takes a customer-
and marketing-oriented view of its business.
The Difference between Selling and
Marketing Concept
The Societal Marketing Concept .5

 The societal marketing concept holds that the

organization should determine the needs, wants and
interests of target markets. It should then deliver the
desired satisfactions more effectively and efficiently
than competitors in a way that maintains or improves
both the consumer‘s and society‘s well-being.
 The societal marketing concept is the newest of the
five marketing management philosophies.
 An example: Fast Food

 Consider the fast-food industry. Most people see today‘s giant fast-
food chains as offering tasty and convenient food at reasonable
prices. Yet certain consumer and environmental groups have
voiced concerns.
 Critics point out that hamburgers, fried chicken, French fries and
most other foods sold by fast-food restaurants are high in fat and
salt. The products are wrapped in convenient packaging, but this
leads to waste and pollution.
 In satisfying consumer wants, the highly successful fast-food
chains may be harming consumer health and causing
environmental problems.
 Such concerns and conflicts led to the societal
marketing concept, the societal marketing concept calls
upon marketers to balance three considerations in
setting their marketing policies:
1. company profits,
2. consumer wants and
3. society’s interests.
Originally, most companies based their marketing
decisions largely on short-run company profit.
Developing an Integrated Marketing
Mix

 The marketing mix is the set of controllable tactical

marketing tools—product, price, place, and
promotion—that the firm blends to produce the
response it wants in the target market.
 The four Ps

 Product is the goods and services in combination that the

company offers to the target market.
 Price is the amount of money customers have to pay to
obtain the product.
 Place is the company activities that make the product
available to target customers.
 Promotion is the activities that communicate the merits
of the product and persuade target customers to buy it.
 The Promotion Mix

 The promotion mix is the specific blend of advertising,

public relations, personal selling, and direct-marketing
tools that the company uses to persuasively
communicate customer value and build customer
relationships.
 Major Promotion Tools

 1. Advertising is any paid form of non-personal

presentation and promotion of ideas, goods, or
services by an identified sponsor. For instance:
broadcast, print, Internet, outdoor.
 2. Sales promotion is the short-term incentives to
encourage the purchase or sale of a product or
service like discounts, coupons, displays,
demonstrations.
 3. Public relations involves building good relations
with the company‘s various publics by obtaining
favorable publicity, building up a good corporate
image, and handling or heading off unfavorable
rumors, stories, and events.
 For example, press releases, sponsorships, special
events, web pages, etc.
 4. Personal selling is the personal presentation by the firm‘s
sales force for the purpose of making sales and building
customer relationships.
 5. Direct marketing involves making direct connections with
carefully targeted individual consumers to both obtain an
immediate response and cultivate lasting customer
relationships—by using direct mail, telephone, direct-
response television, e-mail, and the Internet to
communicate directly with specific consumers.
 Product Life-Cycle Strategies

 Product life cycle (PLC) is the course that a product‘s

sales and profits take over its lifetime.
 Product development
 Introduction
 Growth
 Maturity
 Decline
 Product development (Zero Stage) begins when the
company finds and develops a new-product idea. During
product development, sales are zero, and the company‘s
investment costs mount.
 Introduction stage is when the new product is first
launched. Introduction stage is a period of slow sales
growth as the product is introduced in the market.
Profits are nonexistent in this stage because of the heavy
expenses of product introduction.
 Growth stage is when the new product satisfies the market.
Growth is a period of rapid market acceptance and increasing
profits.
 Maturity stage is a long-lasting stage of a product that has
gained consumer acceptance. Maturity is a period of
slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or
decline because of increased marketing outlays to defend the
product against competition.
 Decline stage : Sales may plunge to zero, or they may
drop to a low level where they continue for many
years. Sales decline for many reasons, including
technological advances, shifts in consumer tastes,
and increased competition.
 Marketing Research or Market
Marketing Research research
1 of 2
2 of 2
The gathering, processing, reporting, and interpreting •
of market information
Steps In the Marketing Research Process 
Identifying the informational need .1
?Why do we need to know this
Searching for secondary data .2
?Who has researched this topic already
Collecting primary data .3
?Who do we ask and what do we ask them
Interpreting the data .4
31
?Got the information, now what does it mean
31
Types of Buying Decision Behavior
 Potential Target Markets
Market Segmentation
The division of a market into several smaller groups
.with similar needs
A market segment is a group of consumers who
respond in a similar way to a given set of marketing
.efforts

• Focus Strategy
A type of competitive strategy in
which cost and differentiation-
based advantages are achieved
within narrow market segments. 33
Create value for targeted market

34
 Market positioning is the arranging for a product to
occupy a clear, distinctive, and desirable place relative
to competing products in the minds of the target
consumer.

 Marketers plan positions that distinguish their

products from competing brands and give them the
greatest advantage in their target markets.
 Identifying Customers

Identifying Customers consider the 4 factors:

• Market Identification-Current market and service
needs determined
• Current and Best Customers-to allocate resources
to segment the market
• Potential Customers-target by geographical or
industry wide
• Outside factors-identify changing trends
36
Types of Buying Decision Behavior
Types of Buying Decision Behavior

 Complex Buying Behavior : Occurs when consumers are

highly motivated in a purchase and perceive significant
differences among brands.
• Dissonance-reducing buying behavior (disagreement)
occurs when consumers are highly involved with an
expensive, infrequent, or risky purchase, but see little
difference among brands.
• Post-purchase dissonance occurs when the consumer
notices certain disadvantages of the product purchased or
hears favorable things about a product not purchased.
Types of Buying Decision Behavior

• Habitual buying behavior occurs when

consumers have low involvement and there is little
significant brand difference.
• Variety-seeking buying behavior occurs when
consumers have low involvement and there are
significant brand differences.
 Why Branding Pays Off?
21 of 2
Time, money and efforts spent on branding comes back when the
:process is done intelligently because of things that it create
Extensionability: Ability to expand a well-known brand –
Memorability: easier to remember the branded company than –
to cover a new category, product, service, or locations
.the non branded one
Greater company equity: A powerful brand means that –
Loyalty: With positive experience with a memorable brand, –
you can get more money from your company when you
they are more likely to repeat buying, and less likely to go for
decide to sell it
competing brands
Lower marketing expense: Once a brand has been –
Familiarity:
created, youFamiliarity create
get more liking and
payback forthis makes
every Batheven use –
younon-
customers to recommend a brand.afterwards
they know
Premium Image
Lower risk andand Premium
greater Price: Brand
confident out of ––
can take youPeople
for consumers:
becoming
tends to commodity
buy fromand price competition.
a well-known companyCustomers
over a are
no-
willing to pay more for a well knownname brand
one
 Elements of A Brand
Elements1 ofof3 A Brand
23 of 3

Otherrepresent
Pricing: Parts of Branding:
value weSome
offervitaltocomponents
our customersof • 
Benefits: the effect our product has on customers
:branding are •
?Distribution: how available Companyour – is 
offer
name
Positioning: how different we are from Logo –our •
Quality: this influence satisfaction 
Slogan –
competitors 
Presence: how prominent we are in the marketplace,
Letterhead and forms –
Signage –
Preference: the customers’ ? high
propensity or lowbuy
to profile
our •
Design of marketing materials –
Reputation: the market’s opinion to Website
your brand
brand
– 
Advertising –
Image: perceptions of your brand by buyers 
Customer Commitment: the ultimate result of–our
Staff uniform •
Your facilities and maintenance –
42

branding strategy, loyalty is built through brand42

 Social media as marketing tool
Why is social media so
Social? ?Media Content
What is Social
important for MediaIdeas
businesses
Social media are the various forms of user generated content
and the collection of websites and applications that enable •
News –toIsinteract
people there anything
and going
share on Mobile
internally
information online Is •
worth
It finds you customers and builds clientele
sharing? Upcoming events? New hires?
Social Networking
It gives businesses the abilitySite
to findGoing
Usage
?out whatSocial
people •
Announcements
areIndustry
saying about them (and
trends/news –What others)are in
ofthe their
adults industries
use internet
current 79% •
trends? •
News posts can be
Average age of adult social network site user has funny, Fastest
Half use at least
It shifted
1
introduces
social
shocking, growth
networking
from 33 toyour serious, in
site •
old. • •
brand
38 years
use
.entertaining.
! Over half ofItallmakes you
adult users are look of
now over smart
like
thean ofphones
ageexpert
35
It gives you feedback about your brand •
Client news – Great way to promote use Facebookis upcoming
social
92% networking
client •
events and It provides
campaigns. a test audience
It lets use MySpace
people (vs. focus
29%
know who groups)
you’re •
use LinkedIn 18%
Solidifies your reputation .working as a13%
with
use Twitter valuable
and for whomand •
Past achievements
of Facebook – what
users and 33% of Twitter userswereknowledgeable
engage some
with theof 52%your resource
greatest •
.platform daily, while only 7% of MySpace and 6% of LinkedIn users do the same
.accomplishments? Brag about yourself
43
Source: Pew Internet “Social networking sites and our lives” survey, 2011