Marketing Concepts - Chap 1

Marketing ConceptsMarketing Concepts

Dr.Sita MishraDr.Sita Mishra

Learning ObjectivesLearning Objectives

Understand the new economy.Understand the new economy. Learn the tasks of marketing.Learn the tasks of marketing. Become familiar with the major concepts Become familiar with the major concepts

and tools of marketing.and tools of marketing. Understand the orientations exhibited by Understand the orientations exhibited by

companies. companies. Learn how companies and marketers are Learn how companies and marketers are

responding to new challenges.responding to new challenges.

The New EconomyThe New Economy

– Increased buying power.Increased buying power.– Greater variety of goods and services.Greater variety of goods and services.– Increased information.Increased information.– Enhanced shopping convenience.Enhanced shopping convenience.– Greater opportunities to compare product Greater opportunities to compare product

information with others.information with others.

The New EconomyThe New Economy

Websites can provide companies with powerful Websites can provide companies with powerful new information and sales channels.new information and sales channels.

Companies can collect fuller and richer Companies can collect fuller and richer information about markets, customers, information about markets, customers, prospects and competitors.prospects and competitors.

Companies can facilitate and speed up Companies can facilitate and speed up communications among employees.communications among employees.

Companies can have 2-way communication Companies can have 2-way communication with customers and prospectswith customers and prospects

The New EconomyThe New Economy

Companies can send ads, coupons, samples, Companies can send ads, coupons, samples, information to targeted customers.information to targeted customers.

Companies can customize offerings and Companies can customize offerings and services to individual customers.services to individual customers.

The Internet can be used as a communication The Internet can be used as a communication channel for purchasing, training, and channel for purchasing, training, and recruiting.recruiting.

Companies can improve logistics and Companies can improve logistics and operations for cost savings while improving operations for cost savings while improving accuracy and service quality.accuracy and service quality.

What is MarketingWhat is Marketing

Simple Definition: Marketing is managing Simple Definition: Marketing is managing profitable customer relationships.profitable customer relationships.

Goals: Goals: Attract new customers by promising Attract new customers by promising

superior value. superior value. Keep and grow current customers by Keep and grow current customers by

delivering satisfaction.delivering satisfaction.

The AMA managerial definition:The AMA managerial definition:

““Marketing is the process of planning Marketing is the process of planning and executing the conception, pricing, and executing the conception, pricing, promotion, and distribution of ideas, promotion, and distribution of ideas, goods, and services to create goods, and services to create exchanges that satisfy individual and exchanges that satisfy individual and organizational objectives.”organizational objectives.”

Marketing DefinedMarketing Defined

Kotler’s social definition:Kotler’s social definition: ““Marketing is a societal process by Marketing is a societal process by

which individuals and groups obtain which individuals and groups obtain what they need and want through what they need and want through creating, offering, and freely creating, offering, and freely exchanging products and services of exchanging products and services of value with others.”value with others.”

Core Marketing ConceptsCore Marketing Concepts

Needs, wants, Needs, wants, demandsdemands

Target markets Target markets and market and market segmentationsegmentation

Marketers & Marketers & prospectsprospects

•Product offering and Product offering and brandbrand•Value and satisfactionValue and satisfaction•Exchange and transactions•Relationship and networks•MarketMarket

This is a NeedThis is a Need

NeedsNeeds - state of felt - state of felt deprivation deprivation including physical, including physical, social, and social, and individual needs.individual needs.

Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs

This is a WantThis is a Want

WantsWants – Needs – Needs become wants become wants when they are when they are directed to directed to specific objects specific objects that might satisfy that might satisfy the need.the need.

This is DemandThis is Demand

WantsWants Buying Power

“Demand”

Types of needsTypes of needs

Stated needsStated needs Real needsReal needs Unstated needsUnstated needs Delight needsDelight needs Secret needsSecret needs

Need / Want FulfillmentNeed / Want Fulfillment

Needs and Wants Fulfilled through a Needs and Wants Fulfilled through a Marketing Offer Marketing Offer ::

Some combination of products, services, Some combination of products, services, information, or experiences offered to a information, or experiences offered to a market to satisfy a need or want.market to satisfy a need or want.

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

PersonsPersons PlacesPlaces OrganizationsOrganizations

IdeasIdeasInformationInformation

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Does Not Result in the Ownership of Anything

ServicesActivity or Benefit Offered for Sale That is Essentially

Intangible and Does Not Result in the Ownership of Anything

What Satisfies Consumers’ Needs and Wants?What Satisfies Consumers’ Needs and Wants?

ExperiencesExperiences EventsEvents PropertiesProperties

Four Levels of CompetitionFour Levels of Competition

Brand competition

Industry competitionIndustry competition

Form competitionForm competition

Generic competitionGeneric competition

Core Marketing ConceptsCore Marketing Concepts

Target markets & segmentationTarget markets & segmentation

– Differences in needs, behavior, Differences in needs, behavior, demographics or psychographics are demographics or psychographics are used to identify used to identify segmentssegments..

– The segment served by the firm is The segment served by the firm is called the called the target market.target market.

– The market offering is customized to The market offering is customized to the needs of the target market.the needs of the target market.

Marketplace, Marketspace,MetamarketsMarketplace, Marketspace,Metamarkets

The Marketplace is physical, as when one The Marketplace is physical, as when one goes for shopping in a storegoes for shopping in a store..

Marketspace is digital, as when one goes Marketspace is digital, as when one goes shopping on the internetshopping on the internet..

Metamarket is described as a cluster of Metamarket is described as a cluster of complementary products and services that complementary products and services that are closely related in the minds of are closely related in the minds of consumers but are spread across a diverse consumers but are spread across a diverse set of industries.set of industries.

Exchange & TransactionsExchange & Transactions ExchangeExchange involves obtaining a desired product involves obtaining a desired product

from someone by offering something in return. from someone by offering something in return. Five conditions must be satisfied for exchange Five conditions must be satisfied for exchange to occur. It is value-creating process.to occur. It is value-creating process.

There must be at least two participants in the There must be at least two participants in the process. process.

Each party must offer something of value to Each party must offer something of value to the other.the other.

Both parties must want to deal with each other. Both parties must want to deal with each other. Both participants have the right to accept or to Both participants have the right to accept or to

reject the offer.reject the offer. Both groups must have the ability to Both groups must have the ability to

communicate and deliver on the mutual communicate and deliver on the mutual agreement.agreement.

TransactionTransaction

Transaction is a trade of values Transaction is a trade of values between two or more parties.between two or more parties.

It involves at least two things of It involves at least two things of value, agreed-upon conditions, a value, agreed-upon conditions, a time of agreement, and a place of time of agreement, and a place of agreement.agreement.

Relationship MarketingRelationship Marketing

Relationship marketingRelationship marketing aims to build aims to build long-term mutually satisfying relations long-term mutually satisfying relations with key parties, which ultimately with key parties, which ultimately results in results in marketing networkmarketing network between between the company and its supporting the company and its supporting stakeholders.stakeholders.

Relationship MarketingRelationship MarketingFour key constituents for marketing are:Four key constituents for marketing are: CustomerCustomer Marketing Partners ( channel, suppliers, Marketing Partners ( channel, suppliers,

distributors, dealers and agencies)distributors, dealers and agencies) EmployeeEmployee Members of financial community (shareholders, Members of financial community (shareholders,

investors)investors)The development of strong relationships requires The development of strong relationships requires

an understanding of the capabilities and an understanding of the capabilities and resources of different groups, as well as their resources of different groups, as well as their needs, goals and desires.needs, goals and desires.

Marketing MixMarketing Mix

7 P’s in Services Marketing7 P’s in Services Marketing3 additional P’s in services marketing3 additional P’s in services marketing People: Any person coming into contact with People: Any person coming into contact with

customers can have an impact on overall customers can have an impact on overall satisfaction. satisfaction.

Process: Process(es) involved in providing a Process: Process(es) involved in providing a service and the behaviour of people, which service and the behaviour of people, which can be crucial to customer satisfaction.can be crucial to customer satisfaction.

Physical evidencePhysical evidence

Matching Mix Concepts (A & S)Matching Mix Concepts (A & S)

4 A’s 4 A’s 4 S’s4 S’s

Acceptability SolutionAcceptability Solution

Affordable SenseAffordable Sense

Accessible SpreadAccessible Spread

Awareness SupportsAwareness Supports

PACS MatrixPACS Matrix

Product Acceptability Customer Sol SolutionProduct Acceptability Customer Sol Solution

Price Acceptable Cost SensePrice Acceptable Cost Sense

Place Access Convenience SpreadPlace Access Convenience Spread

Promo Awareness Communicate SupportPromo Awareness Communicate Support

SIVA approachSIVA approach Solution: How appropriate is the solution to the Solution: How appropriate is the solution to the

customers problem/needcustomers problem/need

Information: Does the customer know about the solution, Information: Does the customer know about the solution, and if so how, who from, do they know enough to let them and if so how, who from, do they know enough to let them make a buying decisionmake a buying decision

Value: Does the customer know the value of the Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?might they have to sacrifice, what will be their reward?

Access: Where can the customer find the solution. How Access: Where can the customer find the solution. How easily/locally/remotely can they buy it and take delivery.easily/locally/remotely can they buy it and take delivery.

This model was proposed by Chekitan Dev and Don SchultzThis model was proposed by Chekitan Dev and Don Schultz

Marketing ChannelsMarketing Channels

Marketing Channels-Marketing Channels-To reach Target To reach Target marketmarket

Communication Communication channels channels

Distribution Distribution channelschannels

Service channelsService channels

Deliver messages to and receive messages from target buyers.Includes traditional media, non-verbal communication, and store atmospherics.

Marketing ChannelsMarketing Channels

Marketing Marketing ChannelsChannels

Communication Communication channelschannels

Distribution Distribution channelschannels

Service channelsService channels

Display or deliver the physical products or services to the buyer / user.

Marketing ChannelsMarketing Channels

Marketing Marketing ChannelsChannels

Communication Communication channelschannels

Distribution Distribution channelschannels

Service channels Service channels

Carry out transactions with potential buyers by facilitating the transaction.

Marketing Management PhilosophiesMarketing Management Philosophies

Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Societal Marketing ConceptSocietal Marketing Concept

Production ConceptProduction Concept

Consumers will favour those products Consumers will favour those products that are widely available and low in cost.that are widely available and low in cost.

Therefore increase production and cut Therefore increase production and cut down costs.down costs.

And build profit through volume.And build profit through volume.

The Production ConceptThe Production Concept

A customer can have any colour he likes for his car so long as it's black’

Henry Ford

Product ConceptProduct Concept

Consumers will favour those products Consumers will favour those products that offer the most quality, performance, that offer the most quality, performance, or innovative features.or innovative features.

Therefore, improve quality, performance Therefore, improve quality, performance and features.and features.

This would lead to increased sales and This would lead to increased sales and profits.profits.

Marketing MyopiaMarketing Myopia

Management’s failure to recognize a company’s Management’s failure to recognize a company’s scope of business.scope of business.

Sellers pay more attention to the specific products Sellers pay more attention to the specific products they offer than to the benefits and experiences they offer than to the benefits and experiences produced by the products.produced by the products.

They focus on the “wants” and lose sight of the They focus on the “wants” and lose sight of the “needs.”“needs.”

The Selling ConceptThe Selling Concept

Consumers , if left alone , will not buy Consumers , if left alone , will not buy enough of company’s products.enough of company’s products.

Therefore, promote sales aggressively.Therefore, promote sales aggressively.

And,build profit through quick turnover.And,build profit through quick turnover.

The Marketing ConceptThe Marketing Concept

The key to achieving organizational goals The key to achieving organizational goals consist in determining the needs and wants consist in determining the needs and wants of target markets and delivering the desired of target markets and delivering the desired satisfactions more effectively and efficiently satisfactions more effectively and efficiently than competitors.than competitors.

And build profit through customer And build profit through customer satisfaction and loyalty.satisfaction and loyalty.

Marketing and Sales Concepts ContrastedMarketing and Sales Concepts Contrasted

The Societal Marketing ConceptThe Societal Marketing Concept

The societal marketing concept holds that the The societal marketing concept holds that the organization’s task is to determine the needs, organization’s task is to determine the needs, wants, and interests of target markets and to wants, and interests of target markets and to deliver the desired satisfactions more deliver the desired satisfactions more effectively and efficiently than competitors in a effectively and efficiently than competitors in a way that preserves or enhances the way that preserves or enhances the consumer’s and the society’s well being. consumer’s and the society’s well being. - It addresses conflicts between - It addresses conflicts between consumer’s and firm’s short run wants and consumer’s and firm’s short run wants and long term welfare.long term welfare.

Societal Marketing ConceptSocietal Marketing Concept

The Holistic Marketing ConceptThe Holistic Marketing Concept It is based on the development, design and It is based on the development, design and

implementation of marketing programmes, implementation of marketing programmes, processes and activities that recognises processes and activities that recognises their breadth and interdependencies. Four their breadth and interdependencies. Four components are:components are:

Relationship marketingRelationship marketing Integrated marketingIntegrated marketing Internal marketingInternal marketing Social responsibility marketingSocial responsibility marketing

Holistic Marketing

Integratedmarketing

Relationship Marketing

SocialResponsibility

Marketing

InternalMarketing

Marketing deptt

Senior

Mgt

Other Deptt Communications Products &

Services

Channels

Ethics

Environment

Community

Legal

Customers Partners

Channels

Marketing SystemMarketing System

Marketing SystemMarketing System

Marketing is concerned with the flow of Marketing is concerned with the flow of goods and services from the points of goods and services from the points of production to the points of consumption. production to the points of consumption. There is a systematic arrangement of There is a systematic arrangement of these functions of marketing to move the these functions of marketing to move the goods and services to the needy goods and services to the needy persons. persons.

This system is essential to the creation This system is essential to the creation of time, place and possession utilitiesof time, place and possession utilities..

Marketing SystemMarketing System

A dynamic marketing system must be willing to A dynamic marketing system must be willing to undertake the following specific activities :undertake the following specific activities : 1. Define market area. 1. Define market area. 2. Research consumer wants 2. Research consumer wants and needs. and needs.

3. Develop and redevelop product / service. 3. Develop and redevelop product / service. 4. Select, train, motivate and control human 4. Select, train, motivate and control human resources. resources.

5. Develop sales approach and advertising 5. Develop sales approach and advertising support. support.

WHAT IS MARKET ?WHAT IS MARKET ? A market consists of all the potential customers sharing A market consists of all the potential customers sharing

a particular need or want who might be willing and able a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.to engage in exchange to satisfy that need or want.

Potential Market (have sufficient level of interest in a Potential Market (have sufficient level of interest in a market offer)market offer)

Available Market (who have interest, income and access Available Market (who have interest, income and access to a particular offer)to a particular offer)

Target Market or Served Market (a co. can go for serving Target Market or Served Market (a co. can go for serving whole available market or can concentrate on certain whole available market or can concentrate on certain segments)segments)

Penetrated Market (set of buyers who are buying the Penetrated Market (set of buyers who are buying the co.’s product)co.’s product)

Marketer & ProspectMarketer & Prospect

– A marketer is someone seeking a A marketer is someone seeking a response (attention, a purchase, a response (attention, a purchase, a donation) from another party, called donation) from another party, called the prospect.the prospect.

– If two parties are seeking to sell If two parties are seeking to sell something to each other, we call both something to each other, we call both of them marketers. of them marketers.

STATE OF DEMAND AND STATE OF DEMAND AND MARKETING TASKMARKETING TASK

State of demandState of demand Negative DemandNegative Demand No DemandNo Demand Latent Demand Latent Demand Falling Demand Falling Demand Irregular DemandIrregular Demand Full DemandFull Demand Overfull DemandOverfull Demand Un-wholesome Un-wholesome

DemandDemand

Marketing task•Conversional Mktg. •Stimulational Mktg.•Developmental Mktg.•Remarketing•Synchro-marketing•Maintenance Mktg.•De-marketing•Counter-marketing

How Business and Marketing are Changing/ How Business and Marketing are Changing/

Marketing themes in the new economyMarketing themes in the new economy Changing TechnologyChanging Technology GlobalizationGlobalization Customer EmpowermentCustomer Empowerment CustomizationCustomization Customer relationship marketing Customer lifetime value Target marketing Integrated marketing communication Channels as partners Every employee a marketer

WHAT IS MARKETING WHAT IS MARKETING MANAGEMENT ?MANAGEMENT ?

Marketing Management is the analysis, Marketing Management is the analysis, planning, implementation and control of planning, implementation and control of programs designed to create, build and programs designed to create, build and maintain beneficial exchanges and maintain beneficial exchanges and relationships with target markets for the relationships with target markets for the purpose of achieving Organisational purpose of achieving Organisational objectives.objectives.

Shifts in Marketing ManagementShifts in Marketing Management From Marketing does the marketing toFrom Marketing does the marketing to

Everyone does the marketing Everyone does the marketing From organizing by product units toFrom organizing by product units to

organizing by customer segmentsorganizing by customer segments From making everything toFrom making everything to

buying more goods and services from outsidebuying more goods and services from outside From using many supplier toFrom using many supplier to

working with fewer suppliers in a partnershipworking with fewer suppliers in a partnership From relying on old market positions toFrom relying on old market positions to

uncovering new onesuncovering new ones From focusing on shareholders toFrom focusing on shareholders to

focusing on stakeholdersfocusing on stakeholders

Shifts in Marketing ManagementShifts in Marketing Management From emphasizing tangible assets toFrom emphasizing tangible assets to

emphasizing intangible assets emphasizing intangible assets From building brands through advertising toFrom building brands through advertising to

building brands through integrated building brands through integrated communicationcommunication

From offline to onlineFrom offline to online From mass market to target marketFrom mass market to target market From focusing on profitable transactions toFrom focusing on profitable transactions to

focusing on customer lifetime valuefocusing on customer lifetime value From focus on gaining market share toFrom focus on gaining market share to

focus on building customer sharefocus on building customer share From being local to being “Glocal”From being local to being “Glocal”

Other Concepts in MarketingOther Concepts in Marketing Green marketingGreen marketing Sustainable marketingSustainable marketing Neuro marketingNeuro marketing Ambush marketingAmbush marketing Viral marketingViral marketing Buzz or stealth marketingBuzz or stealth marketing Permission marketingPermission marketing Herd concept in marketingHerd concept in marketing Contextual marketing and so on…………Contextual marketing and so on…………