WHAT IS MARKETING????

14th August 2007

MARKETING is the processof planning and executing theconception pricingpromotion and distributionof ideas, goods and servicesto create exchanges that satisfyindividual and organizational goals

In even simpler wordsMarketingis meeting needs profitably

NeedsDemandWantsProductsExchangeTransactionsMarketsWhat is Marketing?(Cont.)CORE MARKETING CONCEPT CYCLE

Needs, Wants and DemandsNeeds the basic human requirements (food, clothing)Wants the desire to satisfy needs in specific ways that are culturally and socially influenced (chowmein, masala-dosa, rajma-chawal)Demand wants for specific products backed by the ability to pay

A Simple Marketing System

How does one satisfy the needs of ones customers???

How to satisfy the needs of ones customers?The conception, pricing, promotion and distribution implies that

A product must be developed (Product)assigned value (Price) and meaning (Promotion) and made available to interested consumers (Place)

The Four Ps of MarketingProduct PricePromotionPlaceThe Marketing Mixalso called the Marketing Tools because the 4Ps enable a marketer to offer value and satisfy customers

The 4Ps ComponentsProductVarietyQualityDesignFeaturesBrand nameServicesWarrantiesReturnsPriceList priceDiscountsPayment periodCredit termsPromotionSales promotionTrade promotionAdvertisingSales force PlaceChannelsCoverageLocationsInventoryLogisticsMarketing Mix

How has marketing evolved?Small scale production economies: Known customers customized product personalized service.Mass Production economy: Mass production mass impersonal marketing (TV) Mass consumption.Recent changes in the market:Intense competitionShort PLCChanging consumer expectations

Earlier Concepts were..The Production concept holds that consumers will prefer products that are widely available and inexpensiveThe Product concept holds that consumers will favor those products which offer the most quality, performance or innovative features The Selling concept holds that consumers if left alone will ordinarily not buy the companys products

Company Orientations Towards the CustomersProduction Concept Profits through better utilization of the production capacity Product Concept Profits through technical excellence of the productSelling Concept Profits through sales volumeMarketing Concept Profits through finding the right products for your customers (not right customers for your products)Holistic Concept profits through integration of the marketing activities relationship marketing, integrated marketing, internal marketing and social responsibility marketing

Holistic Marketing Dimensions

Fundamental Marketing Concepts

Market Segments, Target Markets, PositioningMarket Segment a group of customers who share a similar set of needs and wantsTarget Markets - signify only those segments which the firm wants to adopt as its markets Positioning - The act of designing the companys offer so that it occupies a distinct and valued place in the minds of the target customers

What is a Product?A particular bundle of benefits which satisfies particular needs and wants.

Anything that can be offered to a market to satisfy a want or need.

Products include tangible goods, intangibles, ideas.

ValueValue the ratio between what the customer gets and what he gives

ValueBenefitsCosts==Functional benefits + Emotional BenefitsMonetary Costs + Time Costs + Energy Costs + Psychic Costs

Components of the Market Offering

Customer SatisfactionSatisfaction is a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectations

What is a Brand?A BRAND is a name, term, sign, symbol, or design,or a combination of them, intended to identify the goods and servicesof one seller or group of sellers and to differentiate themfrom those of competitors

according to the American Marketing Association

A brand is an offering from a known source

Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholdersAs offered by the American Marketing Association

PROCESS THE MARKETING MarketingMarket-PlaceEnvironmentCompetitorsCustomersIdentifyUnderstandSatisfyRetainGrowwith the CustomerIdentifyUnderstandPre-emptBeatOutsmartYour CompetitionUnderstandInterpretMonitorInfluencePrepare yourselfto manage change

CUSTOMER ORIENTATION - 5 Ws & H

WHO CUSTOMER PROFILE: AGE, INCOME, EDUCATION, RECIDENCE ETC.WHAT NEED, PRODUCT QUALITY LEVEL, CUSTOMER PERSONALITY AND LIFESTYLE.WHEN TIMING AND OCCATION.WHERE PREFERENTIAL / CONVENIENT BUYING LOCATION.WHY BUYING MOTIVES AND BENEFITS.HOW INDEPENDENT BUYING DECISION, JOINT/GROUP BUYING DECISION - INFLUENCED AND THE INFLUENCE.

Plan your Ps to match with your Ws & H; as per the Market Situation & Marketing Objective.Remember- MOMENTUM IS IMPORTANT

Marketing Mix and the CustomerFour PsProductPricePlacePromotionFour CsCustomer solutionCustomer costConvenienceCommunication

What is the FUNDAMENTAL task of marketing?

CHANGE BEHAVIOR????

What is the marketing task?Manage the two processes:a. Acquire new customersb. Retain existing consumersWhich of the two options is easier?

In a growing market Acquisition of new customersIn mature markets Retention of customers

What image comes to mind when you hear the word MARKETING?Participants could be asked to speak out what they understand by marketing. Some people think of advertisements or brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk shows). Some people say, Thats what happens when a pushy salesman tries to sell me something I dont want. Other people say, Oh, thats simple TV commercials. The truth is, all of theseand many more thingsmake up the field of marketing.

The most important part of our definition is satisfy individual and organizational objectives. It tells us about the central aspect of marketing : satisfying the needs of both consumers and producers. The consumer is the ultimate user of a good or service can be individuals or organizations.We like to say that the consumer is king, but it is important not to lose sight of the fact that the seller also has needs to make profit and to remain in business. So products are sold to satisfy both consumers and marketers needs. When you strip away the big words, marketing is all about satisfying needs.Marketing has its origins in the fact that humans have needs and wants. Needs and wants create a state of discomfort in people, relieved through acquiring products to satisfy these needs and wants. For marketers to be successful, they must develop products that provide one or more benefits that are important to consumers.The challenge is to identify what benefits people look for, then develop a product that delivers those benefits while also convincing them that their product is better than a competitors product.The phrase to create exchanges in our definition of marketing identifies the heart of the marketing act. An exchange occurs when something is obtained for something else in return, which means that some transfer of value occurs between a buyer and a seller. The buyer receives an object, service, or idea that satisfies a need, and the seller receives something he or she feels is of equivalent value. Value is in the eyes of the beholder!!! Hence, the challenge to the marketer is to create an attractive value proposition. For an exchange to occur :At least two people must be willing to make a tradeBoth parties must agree on the value of the exchange and how it will be carried outEach party also must be free to accept or reject the others terms for the exchange

Ram Babu has a paan shop or more precisely a hole in the wall selling beetel leaves, tobacco products, and the like. He selected this location because it is alongside the gate of a large housing complex.

How is Ram Babu engaged in marketing? First, he selected a family of products he knows something about and believes that people living in the vicinity want. Second, he has arrived at a price for these products, based on the costs for his materials, his shop, and the value he puts on his time. He promotes his wares by displaying them prominently and with small signboards over his shop. If he is a little sophisticated, he might create promotional strategies like buy one get one free coupons, multiple-purchase discounts, etc.

If all this is to be done, it calls for a strategy so that the objective can be achievedbNeeds Marketers do not create needs, they identify them, they unearth latent needs. Type of needs :Stated needs (the customer wants an inexpensive car)Real needs (the customer wants a car whose operating cost, not its initial price, is low)Unstated needs (the customer expects good service from the dealer)Delight needs (the customer would like the dealer to include an onboard navigation system)Secret needs (the customer wants to be seen by friends as a savvy customer)We see therefore, that marketing includes the following elements :analysis of the market and development of suitable a product or servicepricing of the product or servicepromotion informing and persuading the marketdistribution making the product or service available to the market at a convenient place

Product, Price, Promotion and Place are called the [g1]4 Ps of marketing. The Marketer has to offer an attractive combination of the product itself, the price of the product, the place where it is made available, and the activities that introduce it to consumers so as to create a desired response among a set of predefined consumers. This combination of the 4 Ps is called the marketing mix.Kotler added two more Ps in the context of Mega marketing Politics and Public relations.Services marketing include three more Ps Physical evidence, People and ProcessesThe Production Concept : Assumes that consumers will prefer products that are widely available and inexpensive. Hence, managers of production-oriented businesses concentrate on achieving high production efficiency. (GD Birlas biography increase production to bring down costs)The Product Concept : Assumes that consumers will favor those products hat offer the most quality, performance or innovative features. Managers in such instances often get embroiled in improving their products rather than understanding consumer needs.The Selling Concept : Assumes that consumers, if left alone will not buy the companys offerings. Hence, the company has to aggressively promote its products and coax buyers to purchase their products. Generally applicable to unsought products like insurance. But companies often conned customers into buying by making tall claims to offload excess production. (Example of Woodcraft Products selling B grade plywood)Marketing Concept Instead of a product centered make and sell philosophy, the marketing concept shifts the focus to the customer, sense and respond philosophy. The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. Reactive market orientation understanding customers expressed needs. Proactive market orientation focus on customers latent needs (this approach also leads to high level innovation according Narver). Examples of Marketing Concept : Tanishq gold generating confidence in the product by guaranteeing purity installing karat meters in their outlets.Holistic Marketing Concept recognizes that the marketing programs and processes are interdependent and therefore endeavors for an integrated perspective. The four components of holistic marketing are relationship marketing, integrated marketing, internal marketing and social responsibility marketing.

The market for a product is the aggregate of consumers for it.However, the consumers are seldom a homogeneous lot. A marketer can rarely satisfy everyone in a market. Not everyone likes the same soft drink, hotel room, restaurant, automobile, and movie. Therefore, the marketer starts by dividing up the market.The consumers vary in :their wantstheir buying behaviortheir response to marketing stimuliHence, within the market we have different group of consumers whom we call SEGMENTS OF THE MARKET

The marketer then decides which segments present the greatest opportunity which are its target markets. For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefits. For example, Volvo develops its cars for buyers to whom automobile safety is a major concern. Volvo, therefore positions its car as the safest a customer can buy.Positioning - The distinct way we want our customers to view our productMost tangible products have intangibles attached (an Airconditioner has intangible benefits like financing, customer education, after sales service offered with purchase)The marketer can increase the value of the customer offering in several ways :Raise benefitsReduce costsRaise benefits and reduce costsRaise benefits by more than the raise in costsLower benefits by less than the reduction in costs

The customer who is choosing between two value offerings, V1 and V2, will examine the ration V1 : V2. He or she will favor V1 if the ration is larger than the one; he/she will favor V2 if the ratio is smaller that one; he/she will be indifferent if the ratio equals one.

Government agencies sell their products at lower prices than private sector. Several customers still opt for the private sector offerings, as in the case of Jet Airways vis a vis Indian. Why? Because of the other related costs involved in flying Indian (delays) and the emotional benefits offered by Jet Airways.

If the performance falls short of expectations, the customer is dissatisfied. If the performance matches the expectations, the customer is satisfied. If the performance exceeds expectations, the customer is highly satisfied or delighted.

The aim of every marketer is to delight his customers so that the customers are retained.

However, the link between customer satisfaction and customer loyalty is not proportional. Suppose a customer satisfaction is rated on a scale from one to five. At a very low level of customer satisfaction (level one), customers are likely to abandon the company and even bad mouth it. At levels two to four, customers are fairly satisfied but still find it easy to switch when a better offer comes along. At level five, the customer is very likely to repurchase and even spread good word of mouth about the company. High satisfaction or delight creates an emotional bond with the brand or company, not just a rational preference.