MGT301

Principles of Marketing
Lecture-4
Summary
of
Lecture-3
 Information Buying

Risk Taking Selling

Marketing
Functions
Financing Transporting

Standardizing
and Grading
Storing
 Demarketing

 …Marketing to reduce demand temporarily or permanently;

the aim is not to destroy demand but only to reduce or shift it.
Customer Relationship
Management
 Loyal customers provide more  But the angry gossip of disloyal
and more credible referrals customers can devastate a firm!
Today’s Topics
Marketing in Historical perspective and
Evolution of Marketing
How has Marketing Changed Over Time?
How it Started
1.The Production Concept (Mass Production) (prior to 1920’s):
Mass produce @ lowest cost -Distribute @ affordable price
No options for consumer
2. The Product Concept (1920-1950’s):
Build a More Innovative Product
Build a Better Mousetrap
3. Selling Concept (1940’s-1980’s)
- Few product-- sell, sell, sell!
- Largest volume at any price
- Focus on one time transaction
Until the ‘90’s
“Transaction Marketing” – focus one time sale
Focus on product
4. Marketing Concept (1990’s and beyond)
-Idea: identify most profitable customers who value your
service/product the most and build relationships with those
individuals
- Customers become more demanding/empowered
- Able to produce based on customers needs:
- Technological advances allow for customer tracking databases
 Relationship Marketing (1990’s)

 Definition: Marketing is the process of establishing

and maintaining mutually beneficial exchange
relationships with customers and other
stakeholders

 KEEP CUSTOMERS FOR LIFE!!!

Marketing Philosophies
 PRODUCT SOCIETAL
CONCEPT MARKETING
CONCEPT

KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
PRODUCTION CONCEPT
CONCEPT
CONCEPT

SELLING
CONCEPT
 The Production Concept

..Holds that consumers will favor products that are available

and affordable.
Implies work towards mass production and low cost
 The Product Concept
…Assumes customers favor products that offer the most quality,
performance, and features.
Implies firm should strive to continually upgrade product and
product features.
 The Selling Concept

…The idea that customers will not buy enough of the

organization’s products unless the organization undertake a
large scale selling and promotion efforts.
..Business assumption that consumers will resist purchasing
nonessential goods and services with the attitude toward
marketing that only creative advertising and personal selling can
overcome consumers’ resistance and convince them to buy.
Inside-out perspective: Assumes people need to be sold on whatever it
is the firm has decided to offer. 1st: Decide what to produce; 2nd:
Figure out how to get people to buy what you have.
Implies lots of selling/promotional activities are needed to move
product
 After WWII

Shortages in goods ended.

Economy changed from a seller’s market to a buyer’s market.
Seller’s market: marketplace characterized by a shortage of goods
and/or services.
Buyer’s market: marketplace characterized by an abundance of
goods and/or services.
 The Marketing Concept

…Holds that achieving organizational goals depends upon

determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and
efficiently than do competitors.
 Marketing Concept Components

 Means of achieving goals

 determine needs and wants
– implies research and/or appropriate assumptions
 Target markets
– implies clear target groups: people whose needs/want you will try
to fill
 Satisfaction
 Competitors acknowledged
 Marketing Era

With a continually increasing buyer’s market, marketing would no

longer be regarded as a supplemental activity performed after
completion of the production process.
The marketer would play a lead role in product planning.
Marketing and selling would no longer be synonymous terms.
 Marketing Concept Vs. Selling Concept

Marketing Concept: Selling Concept:

Begin with customer needs
Develop 4 Ps in light of
customer needs
“Have what you can get rid
of”
Begin with what firm wants to
produce
Given products, persuade
customers to buy
“Get rid of what you have.”
Selling
A company makes a product and then uses various selling methods
to persuade customers to buy it.
Marketing
Company finds out what the customer wants and develops a
product to satisfy those wants while yielding a profit.
SOCIETAL MARKETING CONCEPT: ….in a way that
maintains or improves the consumer’s and the society’s well-
being.

Typical thinking in 1990

Marketer must act in a socially responsible manner.
External environment’s influence on firm’s marketing program.
 Society
(Human Welfare)

Societal
Marketing
Concept

Consumers Company
(Satisfaction) (Profits)
Relationship Era
 Relationship marketing: development and maintenance of long-term,
cost-effective exchange relationships with individual customers,
suppliers, employees, and other partners for mutual benefit.
 Strategic alliances: partnerships with vendors and retailers play
major roles in relationship marketing.4
Relationship Marketing
Effective relationship marketing relies heavily on information
technologies such as computer databases that record customers’
tastes, price preferences, and lifestyles along with the increase of
electronic communications. Some examples are frequent buyer
clubs/cards.)
 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.
 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.
Evolving Views of Marketing’s Role
 Finance
Production
Production Finance
Human
resources
Marketing Human
resources Marketing

a. Marketing as an b. Marketing as a more

equal function important function
 Production i on
ct

Fi
d u

na
ro
P

nc
e
Marketing Customer
re
Hu ur

ce M
ar

ur an
so

s
n
ma ces

ce
a ke

so m
n
Fi tin

re Hu
n

c. Marketing as the d. The customer as the

major function controlling factor
 Production

Marketing

Customer
re
Hu ur
so
ma ces

ce
a n
n

n
Fi

e. The customer as the controlling

function and marketing as the
integrative function
 e r e
i t h
t op
’ s s
t
Le
 Summary

How has Marketing Changed Over Time?

 PRODUCT SOCIETAL
CONCEPT MARKETING
CONCEPT

KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
PRODUCTION CONCEPT
CONCEPT
CONCEPT

SELLING
CONCEPT
 Society
(Human Welfare)

Societal
Marketing
Concept

Consumers Company
(Satisfaction) (Profits)
 Production

Marketing

Customer
re
Hu ur
so
ma ces

ce
a n
n

n
Fi

The customer as the controlling

function and marketing as the
integrative function
 Next….

 Marketing Challenges in the 21st century

 MGT301
Principles of Marketing
Lecture-4