Chapter 1

Introduction to Marketing

Contents of the Chapter..
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Objectives of Study Definition Scope ± What do we market Functions of Marketing Tasks of Marketing Management Core Concepts of Marketing Marketing Orientations Concept of Marketing Myopia Customer Value Difference between Sales and Marketing Changing Economy New Marketing Challenges

Objectives of Study..
‡ Understand the new economy. ‡ Learn the tasks of marketing. ‡ Become familiar with the major concepts and tools of marketing. ‡ Understand the orientations exhibited by companies. ‡ Learn how companies and marketers are responding to new challenges.

Marketing Defined..
Kotler¶s Social Definition: ³Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.´ The AMA Managerial Definition: ³Marketing is a organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships that benefits organizations and its stakeholders.´ Marketing is µMeeting Human Needs Profitably¶ Marketing is the delivering customer satisfaction at a profit.

Politicians Country. non profit organizations Universities. Insurance Scuba Diving. Tourist Place Real Estates. Alcohol. Schools.What can be Marketed? Scope ‡ Goods ‡ Services ‡ Experiences ‡ Events ‡ Persons ‡ Places ‡ Properties ‡ Organizations ‡ Information ‡ Ideas Examples Toothpaste. Movies Drama. Child Labor . River Rafting. clothes Banking. Sports Miss Universe. Encyclopedias Harmful effects of Tobacco. World. Bonds and Stocks MNCs. Trade Shows.

Functions of Marketing« .

Tasks of Marketing Management« ‡ Developing Marketing Strategies and Plans ‡ Capturing Marketing Insights ‡ Connecting with Consumers ‡ Building Strong Brand ‡ Shaping the Marketing Offer ‡ Delivering Value ‡ Communicating Value ‡ Creating Long Term Goals .

Positioning and Segmentation ‡ Product Offerings and Brands ‡ Value. Customer Satisfaction and Customer Delight ‡ Marketing Channels ‡ Marketplace. Wants and Demand ‡ Exchange. Transaction and Transfer ‡ Goods ± Service Continuum ‡ Target Market. Market-space and Meta-markets ‡ Supply Chain ‡ Competition ‡ Marketing Environment ‡ Marketing Planning ‡ Consumer ‡ Relationship and Network .Core Concepts of Marketing« ‡ Needs.

‡ Desire ± Fulfilling demands with specific requirements. air. (Fast food) ‡ Demands are wants for specific products backed by an ability to pay. . water. Unstated. Secret Needs. and entertainment. Real. Delight.Core Concepts of Marketing« Needs. ‡ Needs become Wants when they are directed to specific objects that might satisfy the need. Wants and Demand ‡ Needs describe basic human requirements such as food. clothing. shelter. recreation. Needs are Stated. education.

Eg: Donations. Gifts. ‡ Transfer involves giving but not receiving anything tangible in return. a time of agreement. and a place of agreement. Subsidies .Core Concepts of Marketing« Exchange. agreed-upon conditions. Transaction and Transfer ‡ Exchange involves obtaining a desired product from someone by offering something in return. ‡ Transaction involves trade of at least two things of value. Eg: A sells Laptop to B in return of Money. Eg: Barter System.

All tangible products have intangible services and all intangible offers come with tangibles.Core Concepts of Marketing« Goods ± Service Continuum Goods services continuum is a scale where marketers can position their products and services to design the marketing offer. Scale has 4 categories: Pure Goods Goods Related Service Related Pure Service .

Core Concepts of Marketing« Advantages of Goods ± Service Continuum ‡ Concept is applicable for Individual and Organizational consumers. . ‡ Each location on the scale provides distinct marketing opportunity. ‡ Gives insight to Co to decide if to remain as a pure goods firm or shift to service orientation. ‡ The scale helps marketers to visualize difference and similarities between goods and services and plan the marketing strategies. ‡ A shift from pure goods to service helps co to build relations with clients and understand their expectations of the products better.

. ‡ The segment served by the firm is called the Target Market. ‡ Product is a tangible offering while Services is Intangible offering and do not result in ownership of anything. demographics or psychographics are used to identify segments. Product Offerings and Brands ‡ A Product is any offering that can satisfy a need or want. while a Brand is a specific offering from a known source. ‡ The market offering is customized to the needs of the target market. ‡ After choosing the target market product offer is positioned in the minds of target markets. Positioning and Segmentation ‡ Differences in Consumer needs.Core Concepts of Marketing« Target Market. behavior.

µValue for Money¶ ‡ Value is a combination of Quality. . create. Customer Satisfaction and Customer Delight Value reflects the perceived tangible and intangible benefits the customer gains from owning and using the product/ services compared to the cost of obtaining the product. deliver and Monitor CV. if performance meets expectations client is satisfied and when performance exceeds expectations client is delighted. communicate. ‡ If performance falls short of expectations client is dissatisfied. Service and Price (QSP) called as Customer Value Triad. Customer Satisfaction is the person¶s comparative judgment resulting from a product¶s perceived performance in relation to the buyer¶s expectation. Value = Benefit / Cost Benefit = Functional Benefit + Emotional Benefit Cost = Monetary Cost + Time Cost + Energy Cost + Psychic Cost Marketing = Identify.Core Concepts of Marketing« Value.

Raising benefits by more than the increase in costs. Lowering cost by less than the reduction in benefits. ‡ Value increases with Quality & Service and reduces with price. Reducing costs.Core Concepts of Marketing« Enhancing Value ‡ Marketers can enhance the value of an offering to the customer by: Raising benefits. . Raising benefits while lowering costs.

wholesalers. ‡ It includes distributors. 1. 3. insurance. Communication Channel: ‡ Deliver messages to and receive messages from target buyers. marketers use 3 kinds of channels. and store atmospherics. non-verbal communication like clothing. banks and transportation companies that facilitate transactions. ‡ Service Channels include warehouse. 2. newspapers etc. ‡ Includes traditional media like TV. retailers.Core Concepts of Marketing« Marketing Channels To reach Target Market. facial expressions. . Service Channel: ‡ Marketers use service channel to carry out transactions with potential buyers. Distribution Channel: ‡ Display or deliver the physical products or services to the buyer / user. radio.

Core Concepts of Marketing« Types of Markets: ‡ Consumer Markets ‡ Business Markets ‡ Global Markets ‡ Nonprofit and Governmental Markets .

rather than a single product ‡ These are markets of complementary products that are closely related in the minds of consumers. Eg: Car Manufacturer. Wedding Markets .Core Concepts of Marketing« Marketplace. Eg: Stores. Market-space and Meta-markets Market Place: ‡ Market place are the physical markets where one shops. Malls Market Space: ‡ Virtual marketing which involves shopping on the internet or teleshopping Eg: India Mart Meta-Markets: ‡ Meta Market is a web-based market centered around an event or an industry. but spread across different industries.

‡ Four levels of competition can be distinguished by the level of product substitutability: Brand competition Form competition Industry competition Generic competition . ‡ Supply chain represents the value delivery system and each company captures only a certain percentage of the total value generated by the supply chain.Core Concepts of Marketing« Supply Chain ‡ A supply chain stretches from raw materials to components to final products that are carried to final buyers. Competition ‡ Competition includes all actual and potential rival offerings and substitutes that the buyer might consider. ‡ Marketers have to constantly watch on the new substitutes that may replace its own business and try to mould its marketing plans accordingly.

banking and insurance companies. Political-legal and Socio-culture environments. Economic. transportation and telecommunication companies. ‡ Broad environment contains forces that can have a major impact on the factors of task environment. distributors.Core Concepts of Marketing« Marketing Environment ‡ Marketing Environment consists of Task Environment and Broad Environment. 2. Broad Environment include Demographic. Physical. suppliers. 1. dealers and Target customers. Technological. manufacturer representatives. Task Environment includes company. Distributors and dealers are agents. Suppliers include material and service suppliers like Market Research agencies. brokers. .

Core Concepts of Marketing« Marketing Planning: Marketing Planning process consists of ‡ Analyzing Marketing opportunities ‡ Selecting Target Markets ‡ Designing Marketing Strategies ‡ Developing Marketing Programs ‡ Managing the Marketing efforts. The marketing plan is developed to achieve the company¶s objectives. .

Core Concepts of Marketing« Who is a Consumer? Consumer is anyone who is in the market looking at a product / service for attention. demands and desires. use or consumption that satisfies a want or a need. . CUSTOMER has needs. wants arise within a framework or an ecosystem. These needs. Understanding both the needs and the ecosystem is the starting point of a long term relationship. wants. Understanding these needs is starting point of the entire marketing activity. acquisition.

Employees. Customers.Core Concepts of Marketing« Relationship and Network Relationship marketing aims to build long-term mutually satisfying relations with key parties. Retailers. Relationship marketing involves building of Customer Relationship management (CRM) and also Partner Relationship Management (PRM). Distributors. Suppliers. Ad Agencies. . which ultimately results in marketing network between the company and its supporting stakeholders. Marketing Network = Company.

Several competing orientations exist: ‡ Production Concept ‡ Product Concept ‡ Selling Concept ‡ Marketing Concept ‡ Holistic Marketing Concept .Marketing Orientations« The orientation or philosophy of the firm typically guides marketing efforts.

.Marketing Orientations« Production Concept ‡ Oldest Concept ‡ Believes that consumers will prefer products that are available and inexpensive. ‡ The management of Production concept focuses on achieving high production efficiency. low costs and mass distribution. ‡ Lower costs does not always attract customers and hence this concept fails when customers require more quality or variety. ‡ This concept runs well in developing countries which has inexpensive labor pool and where people prefer to buy products which are cheaper. ‡ Cos following this concept has production team as its core team while marketing dept is an appendage.

‡ Marketers think that the consumers will favor those products that offer most quality. ‡ Since marketers fail to understand customer needs this concept fails to great marketing success.Marketing Orientations« Product Concept ‡ This concept gives utmost importance to the product quality and features. performance and innovation. ‡ Cos invest lot of money in R n D and new product development. . ‡ Success of the business is aimed to be achieved through product attributes. ‡ Managers focus on making superior quality products and improve them over time.

‡ Hard core selling also involves bigger risks as if the customer feels he is pressed into buying he may bad mouth the co. ‡ The purpose of marketing is to sell more stuff to more people to make more profit. ‡ The products sold under selling concept are the ones which the consumers do not think of buying. .Marketing Orientations« Selling Concept: ‡ The concept believes that consumers will not buy the products unless the co undertakes a aggressive selling and promotion efforts.

‡ Excessive attention to production. it results into marketing myopia. . ‡ The Co should focus on the changing needs of the customer and design new products as the products turn obsolete very soon.Concept of Marketing Myopia« Marketing Myopia: The term was coined by Prof Theodore Levitt in 1960. ‡ When Co forgets that product is a mean to satisfy client needs. ‡ Marketing Myopia changed the way companies viewed the marketplace from a product orientation to a consumer based orientation. What is Myopia: ‡ Nearsightedness--not inherited. product or selling at the cost of customer needs will drive the firm towards this myopia. It can be prevented.

‡ The job of marketer is to find customer needs and design a suitable product to satisfy the need.Marketing Orientations« Marketing Concept: ‡ The philosophy shifted from the Product centered µMake n Sell¶ concept to µSense and Respond¶ Customer centric approach. . delivering and communicating superior customer value to the target market. ‡ Customers needs. ‡ Concept holds that the key to achieve organizational goals is to be more effective than competitors in creating. wants and satisfaction is of foremost importance to all departments of Organization and not just restricted to marketing. ‡ Cos that follow both Reactive and Proactive Marketing Orientation achieve more success.

.Marketing Orientations« ey Attributes of Marketing Concept: ‡ Unflinching Consumer Orientation ‡ Integrated management action with marketing as a function ‡ Emphasis on generating consumer satisfaction ‡ Emphasis on profit ‡ Attaining all Corporate goals through customer satisfaction.

Marketing Orientations« Holistic Marketing Concept: µEverything Matters in Marketing¶ 4 Dimensions of Holistic Marketing Concept are: ‡ Relationship Marketing ‡ Integrated Marketing ‡ Internal Marketing ‡ Social Responsible Marketing .

Marketing Orientations« Holistic Marketing Dimension: .

enduring relationships with all people or organizations that could directly or indirectly affect the success of firms marketing activities. Key Stakeholders / Marketing Network = Customers. Employees. Tanishq . ‡ RM involves in building strong ties with its 4 core constituents ± Customers. Ad agencies. Employees. Retailers.Marketing Orientations« Relationship Marketing: CRM and PRM ‡ The key goal of marketing is to develop deep rooted. Suppliers. Distributors. Investors. Shareholders. Marketing Partners and Members of Financial Community. The concept is ± µBuild a effective network of relationships with key stakeholders and profits will follow¶. Hotel Industry.

Marketing Orientations« Integrated Marketing ‡ Marketers activity is to design marketing tasks and assemble fully integrated marketing program to create. communicate and deliver value for consumers. ‡ Marketing activities are designed on the basis of Marketing Mix and each component of marketing mix delivers a customer benefit. 4Ps Product Price Place Promotion 4Cs Customer Solution Cost to Customer Convenience of buying Communication .

Marketing Orientations« 4 P¶s Elaborated .

. ‡ All marketing activities are coordinated to maximize their joint effect.Marketing Orientations« Two key themes of Integrated Marketing are: ‡Marketers opt for different marketing activities to communicate and deliver value.

Marketing Orientations« Internal Marketing ‡ Internal marketing aims at ensuring everyone in the organization enhances the right marketing principles. Public Relations . Finance. Manufacturing. 1. ‡ Customer orientation should be the goal of each department and employee. training and motivating able employees to serve customers well. Customer Service. Eg: Purchase. Advertising. 2. Product Management and Marketing research. Marketing approach must be embraced by all other depts. ‡ Internal Marketing should happen at 2 levels. Accounting. ‡ Internal marketing is a task of hiring. of the Co. Various marketing functions should work together ± Sales.

Marketing Orientations« Social Responsibility Marketing ‡ SRM includes Ethical. ‡ Organizations should realize that along with satisfying customer needs it should also focus on delivering social welfare. increase customer loyalty. increase sales and press coverage. Legal and Social context of marketing activities and programs. . ‡ SRM calls for marketers to build social and ethical considerations into marketing plans and practices. raise brand awareness. Environmental. see it as an opportunity to enhance their corporate reputation. ‡ SRM is often called as µCause Related Marketing¶ and Cos.

Customer Loyalty and Retention: ‡ ‡ Customer delight leads to emotional relationships and loyalty Customer Lifetime Value shows true worth of a customer 2.Capturing Customer Value« ey Concepts: 1. cross-sell and up-sell strategies. 3. but in a manner that looks to the future. Customer Equity: ‡ ‡ ‡ The combined customer lifetime values of all current and potential customers. Share of Customer: ‡ ‡ Share of customer¶s purchase in a product category. Achieved through offering greater variety. Measures a firm¶s performance. Choosing the ³best´ customers is key .

‡ Cost determines the price of product. Marketing ‡ Marketing starts with buyer and focuses constantly on the needs of buyer. ‡ Emphasis on innovation and providing value to client through new technology. ‡ Emphasis is on selling available products. ‡ Emphasizes on exchange aspect. ‡ Distribution function is designed keeping client's convenience in focus. ‡ Customer is the last link of business. ‡ Seller is the center of business Universe. ‡ Buyer determines the price and price determines cost. ‡ Emphasis is on integrated marketing. ‡ Emphasis is on understanding and fulfilling client needs. covering all P¶s ‡ Customer is the very purpose of Business. ‡ Buyer decides the marketing mix. ‡ Distribution function is a extension of production function. ‡ Buyer is the center of business Universe. ‡ Emphasizes on Value Satisfaction. ‡ No coordination among the other functions exists.Difference between Sales and Marketing« Selling ‡ Selling starts with seller and relates to needs of seller. ‡ Emphasis on staying with the existing technology and reducing cost. 1 . ‡ Seller determines the marketing mix.

‡ Globalization . ‡ Enhanced shopping convenience.The Changing Economy.Greater variety of goods and services. .. ‡ Increased information. Consumer benefits from the Globalization and Digital revolution include: ‡ Increased buying power. ‡ Greater opportunities to compare product information with others.

The Changing Economy. ‡ Enhanced employee and customer communication.. . Marketers benefits from the Globalization and Digital revolution include: ‡ New promotional medium. ‡ Ability to customize promotions. ‡ Access to richer research data.

..New Marketing Challenges.

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