15 intro to marketing

Introduction to Marketing

Marketing defined

• Marketing can be defined as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

The Marketing Process• The marketing process involves five steps. The first four steps

create value for customers. First, marketers need to understand the marketplace and customer needs and wants. Next, marketers design a customer-driven marketing strategy with the goal of getting, keeping and growing target customers. In the third step, marketers construct a marketing program that actually delivers superior value. All of these steps form the basis for the fourth step, building profitable customer relationships and creating customer delight. In the final step, the company reaps the rewards of strong customer relationships by capturing value from customers.

Marketing Basics – P ‘s

• Product—What are you selling? (It might be a product or a service.)

• Price—What is your pricing strategy?• Place or distribution—How are you

distributing your product to get it into the marketplace?

• Promotion—How are you telling consumers in your target group about your product?

What can be marketed?GOODS Examples include cars, refrigerators, televisions, machines, and other mainstays of a modern economy. SERVICES Services include the work of airlines, hotels, car rental firms, barbers and beauticians, maintenance and repair people, and accountants, bankers, lawyers, engineers, doctors, software programmers, and management consultants. Many market offerings mix goods and services, such as a fast-food meal. EVENTS Major trade shows, artistic performances, and company anniversaries. Global sporting events such as the Olympics and the World Cup are promoted aggressively to both companies and fans.

EXPERIENCES Experiences include climbing mountains, deep sea diving, sky walk etc.

PERSONS Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals all get help from celebrity marketers. Oprah Winfrey, David Beckham in the international and Shahid Afridi in the national context have done a masterful job of marketing themselves.

PLACES Cities, states, regions, and whole nations compete to attract tourists, residents, factories, and company headquarters. Examples include Malaysia (truly Asia), Dubai, Australia etc.

PROPERTIES Properties are intangible rights of ownership to either real property (real estate) or financial property (stocks and bonds). ORGANIZATIONS Organizations work to build a strong, favorable, and unique image in the minds of their target publics. Universities, museums, performing arts organizations, corporations, and nonprofits all use marketing to boost their public images and compete for audiences and funds.

INFORMATION The production, packaging, and distribution of information are major industries. Information is essentially what books, schools, and universities produce, market, and distribute at a price to parents, students, and communities.

IDEAS Every market offering includes a basic idea. “we sell hope”, “connecting people”, “what an idea”

Concepts

• Marketing myopia The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products

• Customer lifetime value The value of the entire stream of purchases that the customer would make over a lifetime of patronage.

• Customer equity The total combined customer lifetime values of all of the company’s customers.

Push StrategyA push promotional strategy involves taking the product directly to the customer via whatever means, ensuring the customer is aware of your brand at the point of purchase.

• "Taking the product to the customer"• Examples of push tactics• Trade show promotions to encourage retailer demand• Direct selling to customers in showrooms or face to face• Negotiation with retailers to stock your product• Efficient supply chain allowing retailers an efficient supply• Packaging design to encourage purchase• Point of sale displays

Pull Strategy

• Pull Strategy A pull strategy involves motivating customers to seek out your brand in an active process.

• "Getting the customer to come to you"• Examples of pull tactics• Advertising and mass media promotion• Word of mouth referrals• Customer relationship management• Sales promotions and discounts

The main objectives and important features/characteristics of pull marketing strategies designed to target the end users of edible oil are:

• (i) launching aggressive advertising and promotional campaigns to strengthen the brand loyalties of the existing customers and remind them that the use of the particular brand of edible oil is essential for preparation of delicious and nutritious meals which are enjoyed by a happy family

• (ii) persuading customers of other competitive brands of edible oil to change their loyalties and preferences in favour of the advertised brand of edible oil

• (iii) offering incentives in the form of gifts, special discounts, extra quantity at the same prices to increase sales to existing customers and attract new customers

• (iv) emphasizing points of purity and necessary vitamins of the advertised brand to differentiate it from other competing brands (v) encouraging the distributors of edible oil to stock up the particular brand.

CRM“CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.” • Provide better customer service• Make call centers more efficient• Help sales staff close deals faster• Simplify marketing and sales processes• Discover new customers Enable companies to provide excellent real-time customer service

by developing a relationship with each valued customer through the effective use of individual account information

• Based on customer attributes, companies can customize market offerings, services, programs, messages, and media

• Reduces the rate of customer defection• Increases the longevity of the customer relationship• Enhances the growth potential of each customer through “share of wallet,” cross-selling,

and up-selling• Makes low-profit customers more profitable or terminates them

The advantages which firms seek to achieve by developing ongoing relationship with a base of loyal customers are:

(i) achieving sustainable revenues and higher profitability from a base of loyal customers

(ii) serving costs associated with catering to existing customers are generally lower than identifying and serving new customers (iii) word of mouth positive information conveyed by satisfied customers can lead to generation of sales revenue from new customers (iv) strong customer preferences lock in retailers/dealers to ensure the availability of the products in their stores.

ETHICAL MARKETING AND ISSUES

• Ethical marketing is an honest and factual representation of a product, delivered in a framework of cultural and social values for the consumer. It promotes qualitative benefits to its customers, which other similar companies, products or services fail to recognize

• Marketing ethics is the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing.

ISSUES

• High Prices• High costs of distribution, high advertising and

promotion costs, and excessive markups contribute to high product prices

ISSUES

• Price fixing requires a conspiracy between two or more sellers; the purpose is to coordinate pricing for mutual benefit at the expense of buyers

ISSUES

• Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether expressed or implied. For the buyer, meanwhile, the practice results in a phenomenon similar to price gouging.

• Deceptive Practices• Sometimes consumers are made to believe that

they will get more value than they actually do. Deceptive pricing, promotion and packaging are practices charged with misleading consumers.

• High-pressure selling• High pressure selling persuades people to buy good

they had no thought of buying. It is often said that insurance, real estate, and used cars are sold, not bought. Salespeople entice purchase.

• Shoddy or unsafe products• Product quality or function is often criticized.

For example, McDonald’s fat containing products, Hershey’s chocolate, and industrial products like lawn mowers.

• Planned Obsolescence• Causing products to become obsolete before

they actually should need replacement. For example, toner cartridges.

Marketing Audit

• The marketing audit is a comprehensive, systematic, independent, and periodic examination of a company’s environment, objectives, strategies, and activities to determine problem areas and opportunities. The audit provides good input for a plan of action to improve the company’s marketing performance.

• The marketing audit covers all major marketing areas of a business, not just a few trouble spots. It assesses the marketing environment, marketing strategy, marketing organization, marketing systems, marketing mix, and marketing productivity and profitability. The audit is normally conducted by an objective and experienced outside party. The findings may come as a surprise – and sometimes as a shock – to management. Management then decides which actions make sense and how and when to implement them.

Consumerism

Consumerism is an organised movement of the consumers to strengthen their rights and powers by forming consumer groups and impressing upon the producers that consumer satisfaction is essential for the long-term profitability of the producers.

Consumer Rights• In the prevailing business environment, consumers have:

(i) the right to expect that the product would perform according to the claims made by the manufacturer (ii) the right to have information about the ingredients/composition of the products (iii) the right to be protected against unfair exploitation or intrusion of privacy by the manufacturer (iv) the right to expect that the product would be safe for the user (v) the right to good quality of life and protection of the environment for the existing and future generations of consumers.

Consumer Power• The increase in consumer power is attributable to the following factors: •• (i) Better means of communications: The consumers are able to make well-informed decisions based on the

quality, product attributes and prices comparisons of different products offered by the competing suppliers as they can access information from several different sources.

• • (ii) Greater knowledge among the consumers: The consumers are now more knowledgeable about their tastes and

preference and have therefore become more assertive regarding the quality standards in accordance with the specifications proclaimed by the manufacturers /service providers.

• • (iii) Greater flexibility to purchase goods at their convenience: The ability to make online purchases of their choice of

goods and services at their door steps have strengthened the consumers powers as they can purchase the goods and services from suppliers who more fully meet their requirements.

• • (iv) Effective consumer protection laws: Governments in several countries have promulgated laws to safeguard the

interests of the consumers and ensure that the products do not cause injuries or result in any harmful affects to the users of the products.

• • (v) Ready access to information: Consumer powers have increased considerably as they are now in a position to make

comparisons of goods easily at large departmental stores and shopping malls which carry wide ranges of different products.

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