Problem Solving

Introduction to
Marketing concepts

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What you’ll learn...
What is
marketing?

Marketing

What does it
involve?
What is the
marketing mix?

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About
Marketing

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What is marketing?
• Businesses need to sell
products if they are to
achieve their
objectives.

• Marketing is about
ensuring that
businesses can sell as
many products as
possible in order to
make profits. 18
What does it involve?
• Marketing is a very complex concept.
• It involves:
• Research
• Product design
• Setting prices
• Making sure the customer knows
about products
• Choosing how and where to sell
products 19
Why is it needed?

• Each year millions of new products are

launched:

Without careful
marketing these
products would fail

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“Marketing is the science and art of exploring,
creating and delivering value to satisfy the needs
and wants of a target market maintaining loyalty
at a profit.”

Professor Philip Kotler

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 Needs Eat, Dress, Move

Wants Cheeseburger, Tuxedo, Car

Marketer

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 This Is Demand

Wants Buying Power

“Demand” 23
First Task: Detect Needs

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 Marketing’s first task:
Discovering Consumer Needs

Organization’s
marketing focus
Discover consumer needs

Information about needs

Potential consumers: The market

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 What is a Market?
Potential consumers make up a
market, which is:
1. People
2. with the Desire and
3. with the Ability to Buy a
specific product.

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 Marketing’s Second Task:
Satisfying Consumer Needs
Organization’s marketing focus
Concepts
for Satisfy consumer needs
products Find the right combination of:
Discover consumer needs • Product
• Price
• Promotion
• Place

Information about needs Goods, services, ideas

Potential consumers: The market

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 The Target Market
Because the organization obviously can’t
satisfy all consumer needs, it must
concentrate its efforts on certain needs of
a specific group of potential consumers
This is the target market -- one or more
specific groups of potential consumers
toward which an organization directs its
marketing programme

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 Customer Development

Suspects

First-time Repeat
Prospects customers customers Clients Advocates Partners

Disqualified
prospects Inactive or
ex-customers

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 Marketing Vs Sales

Is there a
difference?

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The Marketing Concept

• Organizations must concentrate on

the customer and not the product or
the company
• Organizations should revolve round
the customer and not the other way
around
• The purpose of a business is to create
and keep a customer
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The Selling Concept

• Focuses on matching your product or

service features and benefits in a way that
suits the prospect sales
• process is any thing that you do to close
the sale and get signed agreement or
contract
• It is any thing that engages you with the
prospect or customer on a personal level
rather than at a distance

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 The Major Role of Marketing
and Selling

People DO NOT buy products

people buy

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Marketing
Management

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Building Customer
Relationships

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 Relationship Marketing
Relationship marketing is linking the organization
to its individual customers, employees,
suppliers, and other partners for their mutual
long-term benefits.

Mutual long-term benefits between the

organization and its customers require links to
other vital stakeholders-- including suppliers,
employees, and “partners” such as wholesalers
or retailers in a manufacturer’s channel of
distribution. 36
The Marketing Mix
The marketing mix is the combination of
variables that a business uses to carry out
its marketing strategy and meet customer
needs.
The marketing mix is often called the 4Ps:
• Product
• Price
• Place
• Promotion
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The Marketing Mix

• The tools available to a business to gain the

reaction it is seeking from its target market in
relation to its marketing objectives
• 7Ps – Price, Product, Promotion, Place, People,
Process, Physical Environment
• Traditional 4Ps extended to cope with today's
changing environment

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The Marketing Mix

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Product

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Product

• Product’ refers to the functions and features

of a good or service
• Should satisfy the needs of the customer
• May have a Unique Selling Proposition (USP)
• ‘Product’ also includes a range of factors such as
packaging, quality, warranties, after-sales
service and branding

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Product
• The firm must come up with a product
or service that people will want to
buy.

• It must fulfil some need

or want.

• It must be (or at least seem) unique.

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Product
• Methods used to
improve/differentiate
the product and increase
sales or target sales more
effectively to gain
a competitive advantage e.g.
– Extension strategies
– Specialised versions
– New editions
– Improvements – real or
otherwise!
– Changed packaging
– Technology, etc. Image copyright: www.freeimages.co.uk

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The Product Life Cycle

• The product lifecycle looks at the sales of

a product over time

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Stages in the Product Lifecycle
Development – high costs but no sales
Launch – high expenditure on promotion and
product development, low sales
Growth – sales increase and product should
break-even
Maturity – sales stabilise, less expenditure on
promotion needed, revenue & profit should be
high
Decline – sales decline, extension strategies can
be adopted or the product withdrawn 47
Extension Strategies

Extension strategies should maintain or

increase sales. They include:
• Modifying the product
• Reducing the price
• Adding a feature
• Promoting to a
different market
sector
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 Augmented
Product or service or brand Core Product Actual Product
Product

BMW Freedom to travel A motor car  

Hilton  Rooms Room service

Air Malta  Flight An airline journey

Excitement and  T-shirts – photos

Sliema Wanderers
leisure with players

MAPFRE Insurance policy Finance

Daikin  Cooling Warranty

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Price

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Price

The price of a product will depend on:

• The cost to make it
• The amount of profit desired
• Other objectives of the business
• The price competitors charge
• The price customers are willing to pay
– Is there a high demand?
– Is demand sensitive to changes in price?
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 Price
• The price must be one that
the customer thinks is good
value for money.
• This is not the same as
being cheap!
• Prices have a great
psychological effect on
• Pricing Strategy customers.
- International
– Comparative
– Cost plus 52
Price Leader/Taker

Price leader – businesses that dominate

the market can often dictate the price
charged for a product. Other businesses
follow this lead

Price taker – businesses have to charge

the market price. This is often the case
where there are many small firms
competing against each other 53
Pricing Strategies & Tactics

• Skimming
• Launching with a high price when there is little
competition, then reducing the price later.
Often used with technology.
• Penetration
• Low price charged initially to penetrate the
market and build brand loyalty; prrice is then
increased e.g. introductory offers on magazines.

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Pricing Strategies & Tactics

• Competitive
• A similar price is charged to that of competitors’
products.
• Loss leader
• Products may be sold at a price lower than the
cost to produce it. Often used by supermarkets
to encourage people into the store where it is
hoped they will buy other products.

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Pricing Strategies & Tactics

• Psychological
• A price is set which customers perceive as
lower than it is e.g. €39.99 instead of €40

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Price

• Pricing Strategy
• Importance of:
– knowing the market
– elasticity
– keeping an eye
on rivals

Image copyright: www.freeimages.co.uk

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Promotion

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Promotion

• Strategies
to make the
consumer aware of
the existence of a
product
or service
• NOT just advertising

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Promotion

The aims of promotion are to:

• Raise awareness
• Encourage sales
• Create or change a brand image
• Maintain market share
• Increase market share

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Promotion

Above-the-line promotion
This uses advertising media over which a
firm has no direct control e.g. television,
radio and newspapers
Below-the-line promotion
This uses promotional media which the firm
can control e.g. direct mail, sales
promotions and sponsorship
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The promotional message should

Grab Attention

Stimulate Interest

Create Desire

Promote Action

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Promotional Activities

• Advertising e.g. TV, billboards and

internet.
• Sales promotions e.g. Loyalty cards,
BOGOF, discounts & free gifts
• Sponsorship – a business pays to be
associated with another firm, event or
cause

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Promotional Activities

• Direct mailing – promotional material is

sent to potential customers by post/email
• Public relations – building the
relationship between the firm and the
public by enhancing its reputation

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Promotional Mix

Most businesses use a combination of

different promotional activities.
The chosen promotional mix will depend on:
• Cost
• Target market
• Product
• Competitors
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Place

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Place

• The means by which products and

services get from producer
to consumer and where they can be
accessed by the consumer
• The more places to buy the product and
the easier it is made to buy it, the better
for the business (and the consumer?)

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Place

• Products should be conveniently available

for customers to buy
• ‘Places’ include:
• Stores
• Mail order
• Telesales
• Internet - The use of e-commerce (promoting and
selling on the internet) has grown massively over recent years
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Jobber

• One that buys merchandise from

manufacturers and sells it to retailers

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People

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People

• People represent the business

• The image they present can be important
• First contact often human – what is the lasting image
they provide to the customer?
• Extent of training and knowledge of the product/service
concerned
• Do staff represent the desired culture
of the business?

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People

• People represent the business

– The image they present can be important
– First contact often human – what is the lasting image
they provide to the customer?
– Extent of training and knowledge
of the product/service concerned
– Mission statement – how relevant?
– Do staff represent the desired culture
of the business?

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People

• People represent the business

– The image they present can be important
– First contact often human – what is the lasting image
they provide to the customer?
– Extent of training and knowledge
of the product/service concerned
– Mission statement – how relevant?
– Do staff represent the desired culture
of the business?

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Process

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Process
• How do people consume services?
• What processes do they have to go through
to acquire the services?
• Where do they find the availability
of the service?
– Contact
– Reminders
– Registration
– Subscription
– Form filling
– Degree of technology
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Physical Environment

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Physical Environment
• The ambience, mood or physical presentation of the environment
• Packaging.
• Internet/web pages.
• Paperwork (such as invoices, tickets,…..).
• Brochures.
• Furnishings.
• Uniforms.
• Business cards.
• The building itself (such as prestigious offices or scenic
headquarters).
• Mailboxes and many others . . . . . .

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Physical Environment

• The ambience, mood or physical presentation of

the environment
– Smart/shabby?
– Trendy/retro/modern/old fashioned?
– Light/dark/bright/subdued?
– Romantic/chic/loud?
– Clean/dirty/unkempt/neat?
– Music?
– Smell?

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 Stages in Consumer Decision
Word-
Process
of- Mouth

Awareness
Advertising

Interest
Channel

Decision

Product /
Service
Action

Price
Satisfaction
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The Marketing Mix
• Blend of the mix depends upon:
• Marketing objectives
• Type of product
• Target market
• Market structure
• Rivals’ behaviour
• Global issues – culture/religion, etc.
• Marketing position
• Product portfolio
– Product lifecycle
– Boston Matrix

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Marketing Model
Target Market
Aware

Intention to Understand
Purchase
Believe

ts
Co
Above the Line Want

Below the Line Find

Point of Purchase Buy Revenue

Use
Experience
Value
Prefer

Behavior Loyal

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Marketing Management Philosophies

Production

Sales

Competing Market
Philosophies
Societal Marketing
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Marketing Management Philosophies

Philosophy Key Ideas

•
Production Focus on efficiency of internal operations

Focus on aggressive techniques for

Sales
overcoming customer resistance

Market Focus on satisfying customer needs and wants

Focus on satisfying customer needs and

Societal wants while enhancing individual and
societal well-being

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The Marketing Concept
Focus on
Customer Wants
and Needs

Integrate Organization’s Achieve Organization’s

Long Term Goals by
Activities to Satisfy Satisfying Customer
Customer Needs and Wants and Needs
Wants

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 Comparing Sales and Market
Orientations
Organization’s Firm’s For Primary Tools to
Focus Business Whom? Profit Goal? Achieve

Inward Selling goods Everybody Maximum Primarily

Sales and services sales promotion
Orientation volume

Outward Satisfying Specific Coordinated

groups Customer use of all
Market wants and
needs of people satisfaction marketing
Orientation activities

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Developing Competitive Advantage

Competitive
Advantage

Customer Customer
Value Satisfaction

Customer
Relationships

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Evolving Marketing Mix

• The marketing mix will evolve over time

• The product portfolio may grow as a
business becomes more established
• More expensive promotional activities may
be adopted as a firm’s revenue increases
• More outlets may be opened, or products
sold via the internet
• Price may change as demand changes
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 Value and Satisfaction

Expectation Performance Expectation Performance

8 10 10 8

If performance is lower than expectations, satisfaction is low.

If performance is higher than expectations, satisfaction is high.

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Why Do So Many Products Fail?

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