C1_Overview of Marketing

8/12/2019 C1_Overview of Marketing

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Chapter 1: Overview of Marketing

Tran Thu Trang, MSc.Faculty of Economics and International Business, [email protected]


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CONTENT

I. Terms & definitions:1. Definition of marketing2. Nature of marketing3. Basic terms in marketing: needs, wants, demands, product,exchange, transaction,...

II. Evolution of marketing1. From Traditional to modern marketing2. Five business concepts in marketing (marketingphilosophies)

III. Targets & functions of marketing1. Targets of marketing2. Functions of marketing

IV. Fundamental elements of marketing & marketing mix1. Fundamental elements of marketing (4Ps)

2. Marketing mix


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I. Terms & definitions1. Definition of Marketing

American Marketing Association - 1965:Marketing is an organizational function and a set of

processes for creating, communicating, and

delivering value to customers and for managingcustomer relationships in ways that benefit theorganization and its stakeholders.

Limitation?Narrow meaning of product (in fact, tangible &intangible product)Focus on organization objectives


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AMA definition of Marketing

Marketing is the process of planningand executing the conception,pricing, promotion, and distribution ofideas, goods, and services to createexchanges that will satisfy individualand organizationalobjectives


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Philip Kotlers d efinition:

Marketing is social and managerial process by whichindividuals and groups obtain what they need and wantthrough creating and exchanging products and valuewith others.

Limitat ion?

Emphas is :

ExchangeNeeds & wants research before production


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2. Nature of Marketing

Marketing is a process ...Marketing means carrying outmarket research in order todiscover needs ...Marketing helps companies tosatisfy customers needs...Marketing helps companies toobtain optimum profits ...


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3. Basic terms in marketing

3.1 Needs:a/ Definition:

P.Kotler: Needs are states of felt deprivation

Eg. Need for food, safety, affection Basic part of human beingNot created by marketersThe core idea of Marketing is satisfying humanneeds

b/ Classification: 2 types- Present needs and potential needs- Needs hierarchy of Maslow


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Present needs:are essential needs which were or arebeing satisfied. For consumers, theyare, in general, the most importantneeds and are ranked first.

Potential needs:needs have already appeared but havenot been satisfied yet.Needs are going to appear in the nearfuture.


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Maslows Hierarchy of Needs

Physiological needs

(food, clothing, shelter)

Safety needs (security, protection)

Social needs(sense of belonging, love)

Esteem needs(self-esteem, recognition)

Self-actualization

(self-development,self fulfilment)

1.

5.

4.

3.

2.


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* Conclusions of Maslows Hierarchy ofNeeds :

Human needs develop from low to high,from simple to complicatedWhen low hierarchy needs are satisfied,customers will have high hierarchy needsThe satisfied need level of everybody isdifferent from the others


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3.2. Wants

Wants: The form taken by a human need asshaped by culture and individual personality

Described in terms of specific objects that will satisfyneedsShaped by ones society Eg.

- Need for relaxing but want of seeing movies, readingbooks, listening to music

- A Vietnamese needs food but wants rice, fish, orange- An Italian needs food but spaghetti, tomato sauce,

bunch of grapes


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3.3. Demands

Demands: Human wants that arebacked by buying power

Specific things will be purchased by humanbeingPeople will demand products that provide themmost value and satisfaction

Choices of products depend on peoplesincome


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Selection ofspecific products

Income & Solvency

Feel ofdeprivation

Differentiate: needs, wants & demands

Wants

Demands

Human needs


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3.4 Product

Product is anything that is offered to themarket for sale or consumption

Commodities: Cars, shoes Services: Transportation, hotel, entertainment,...


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PRODUCTS & PRODUCTS BENEFITS

What do customers buy?

B en ef i ts ! !


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Examples:

T.VCamera/filmCosmeticsRestaurantKids toys

Entertainment/informationMemoryHopeRelationship, business

opportunity

Education, entertainment

Products Benefits


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CUSTOMER DELIVERED VALUE:

The differences between the values thatcustomers gain from owning and usinga product and the costs of obtaining theproduct

Kellogg


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Determinants of Customer Delivered Value

Product valueServices value

Personal value

Image value

Monetary cost

Time cost

Energy cost

Totalcustomer

value

Psychic cost

Totalcustomer

cost

Customerdelivered

value

Kellogg Northwestern University


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Where is the value of a product found?

In th e

customersmind!!


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Things to remember!

Customers buy benefits not productsValue of the product is in the customersheadCustomers are different with different needs,wants & tastes. Therefore, products valuesare different.

Use the customers language


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CUSTOMER SATISFACTION:

Customer satisfaction is the degree to whichthe products perceived performancematches the customers expectation

Customer expectations are based on theirpast experiences, opinions of friends, andmarketer and competitor information andpromises

Marketers set too low expectation fail toattract enough buyersMarketers set too high expectation buyerswill be disappointed


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Importance of Customer Satisfaction

Key influence on future buying behavior

Builds loyalty

Word of mouth (Satisfied customers buy again and tellothers about their good experiences)

Minimize complaint behaviors (Dissatisfied customersswitch to competitors and disparage the product toothers)


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CUSTOMER RELATIONSHIPS DELIGHTING CUSTOMER

1. Today, why should companies delighttheir customers?

2. How to delight them?


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Satisfaction versus Delight

A sat isf ied customer is still willing to listento what the competition has to offer.

A del ighted customer thinks you are thebest (only) thing out there.


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3.5 Exchange

Needs are satisfied by exchanging things.

Exchange is the act of obtaining an

object from someone by offeringsomething in exchange Marketing is based on product & valueexchange


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The Simple Exchange Process

The company sends: goods & services, and

communications to the marketThe company receives: dollars,

and inf ormation

Company(seller)

Market(buyer)

Dollars (sales)

Information

CommunicationsGoods & Services


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For an exchange to occur.

There are at least two parties.Each party has something that might be ofvalue to the other party.Each party is capable of communicationand delivery.Each party is free to reject the exchangeoffer.Each party believes it is appropriate ordesirable to deal with the other party.


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3.6 Transaction

A trade of values between two partiesTransaction is measurement unit ofexchangeOne exchange can be divided into manytransactions


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A) Exchange is a value-creating process because itnormally leaves both parties better off.

B) A transaction is a trade of values between two or moreparties and involves several dimensions:

1) At least two things of value.

2) Agreed upon conditions.

3) A time of agreement.

4) A place of agreement.

C) A transaction differs from a transfer. In a transfer, Agives X to B but does not receive anything tangible in return.

Exchange and Transactions


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1.Traditional marketing & modern marketing

Tradit io nal m arketing (early 20th cent . 50s)

Organization Advertising &

sellingProductsTarget:

Consumption

Mod ern m arketing (early 60s)

Customer

Needs

Satisfaction

Marketing-mix

Target: customerssatisfaction


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2. Five business concepts (orientations) inmarketing

Productionorientation

Productorientation

Sellingorientation

SocietalMarketing

Orientation

Time1930 1960 1980

Evolution of marketing orientation

Marketingorientation

Core ideas of the concepts?


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2.1 PRODUCTION ORIENTATION

Environment:Beginning of the industrial revolutionCompanies were able to reduce cost so that their products wereaffordable by many consumersOutput was limited and there was excess demand

Philosophy: Consumers will favor products that are availableand highly affordableFocus: Improving production and distributionefficiencyDisadvantage:

May have a risk of focusing too narrowly on their own operations & losingsight of the real objective: satisfying customers needs

Conditions:Demand for a product exceeds the supply (Demand > Supply)Products cost is too high and improved productivity is needed to bring itdown (Demand < Supply)


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2.2 PRODUCT ORIENTATION

Environment:More competition in the marketManufacturers believed that by focusing on certain productattributes to gain customer

Philosophy: Consumers will favor products that offerthe most quality, performance, and featuresFocus: Improving product attributes like quality,performance and innovative featuresDisadvantage:

Assume that all customers like certain attributes, e.g. features marketing myopia


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2.3 SELLING ORIENTATION

Environment:High competition in the marketManufacturers believed that consumers can be persuaded to buy more ifsold aggressively

Philosophy: Consumers will not buy enough of the organizations

products unless the organization undertakes a large-scaleselling and promotion effortsFocus: Aggressive selling teams and promotioneffortsDisadvantage:

May create negative image of the organization or the productFocus on creating sales transactions rather than on building long-term,profitable customer relationships

Conditions:Over capacitySuitable for unsought goods (eg.insurance)


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2.4 MARKETING ORIENTATION

Environment:Very high competitive marketMarketers believed that by analyzing the needs of the targetmarket, they still can supply product profitably

Philosophy: Achieving organizational goals dependson determining the needs and wants of targetmarkets and delivering the desired satisfactions more effectively and efficiently than competitors do.


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SELLING AND MARKETINGORIENTATION CONTRASTED

Factory

Starting point

Existing

products

Selling &

promoting

Profits through sales

volume

Focus Means Ends

The Selling Concept

The Marketing Concept

Market Customerneeds

Integratedmarketing

Profits through customersatisfaction

Source: Kotler & Armstrong, 2004


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2.5 SOCIETAL MARKETINGORIENTATION

Environment:General environment is more sensitive to the societys well -being e.g.green movement

Philosophy: Organization should determine the needs,wants and interest of target markets and deliver thedesired satisfactions more effectively and efficiently thando competitors in a way that maintains or improves theconsumers and societys well -being .Focus: Beside fufilling the customers needs at a profit, theorganization must contribute to the society , e.g.participate in charity programs, support the green movementDisadvantage:

Higher costConditions:

Conform to the rules and laws


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III. Targets & functions of Marketing

1. TargetsRevenues & profitsCompetitive advantagesBusiness safety

Which target is the most important?2. Functions of marketing:

focus on market research...

formulate marketing plans...implement marketing plans & coordinate thefirms marketing tools ... control, evaluate the results & take corrective

action...


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Products & Price

PRODUCTProduct is anything that is offered to consumers for use.It includes decisions about quality, features, design,packaging, product

PRICEPricing strategy deals with methods of setting justifiable andprofitable prices.It is one of the most difficult areas of marketing decisionmaking.Decisions about pricing include discount methods,adjustments to prices, payment terms


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Place & Promotion

PLACEensure that their products are available in the properquantities at the right time and place.Distribution decisions involve modes of transportation,warehousing, inventory control and selection of marketingchannels and distribution network

PROMOTIONPromotion is the communication link between sellers andbuyers.Organisations can use many different ways of sendingmessages about the products/services to their customers. The key methods used in promotion are advertising,personal selling, sales promotion, PR.


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Marketing fundamental elements

Robert Lauterborn suggests that thesellers 4Ps correspond to thecustomers 4Cs:

4Ps 4CsProduct Customer solutionPrice Customer cost

Place ConveniencePromotion Communication


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2. Marketing mix

Marketing mix is the set of tools used toassist the company in achieving itsmarketing objectives.


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MARKETING MIX

Marketing Mix

Targeted market

Place

DistributionchannelWholesalingRetailingStockTransportation

Promotion

AdvertisingSales PromotionPublic RelationsPersonal sellingDirect marketing

Product

QualityFeatures

DesignPackagingBrand nameGuarantee...

Price

Mix pricingDiscountPricechange..

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C1_Overview of Marketing

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