INTRODUCTION TO MARKETING

WHAT IS MARKETING?Simple definition:

Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably.” (CIM,2001)

Goals: 1. Attract new customers by promising superior

value. 2. Keep and grow current customers by delivering

satisfaction.

MARKETING DEFINED Marketing is the activity, set of

instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

OLD view of marketing:

Making a sale—“telling and

selling”

NEW view of marketing:

Satisfying customer needs

WHY IS MARKETING IMPORTANT?Shifting Business Paradigms

Sellers’ markets

Buyers’ markets

THE MARKETING PROCESSA simple model of the marketing process: Understand the marketplace and customer

needs and wants. Design a customer-driven marketing strategy. Construct an integrated marketing program

that delivers superior value. Build profitable relationships and create

customer delight. Capture value from customers to create

profits and customer quality.

NEEDS, WANTS, AND DEMANDSNeed: State of felt deprivation including physical,

social, and individual needs. Physical needs: Food, clothing, shelter, safety Social needs: Belonging, affection Individual needs: Learning, knowledge, self-

expressionWant: Form that a human need takes, as

shaped by culture and individual personality. Wants + Buying Power = Demand

NEED/ WANT FULFILLMENTNeeds & wants are fulfilled through a

Marketing Offering: Products:

Persons, places, organizations, information, ideas. Services:

Activity or benefit offered for sale that is essentially intangible and does not result in ownership.

Experiences:Consumers live the offering.

CUSTOMER VALUE AND SATISFACTION

Dependent on the product’s perceived performance relative to a buyer’s expectations.

Care must be taken when setting expectations: If performance is lower than expectations, satisfaction

is low. If performance is higher than expectations,

satisfaction is high.Customer satisfaction often leads to consumer loyalty.Some firms seek to DELIGHT customers by exceeding

expectations.

MARKETING MANAGEMENTThe art and science of choosing target

markets and building profitable relationships with them.

Requires that consumers and the marketplace be fully understood.

Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value.

MARKETING MANAGEMENTMarketing managers must consider the following,

to ensure a successful marketing strategy:1. What customers will we serve?

— What is our target market?2. How can we best serve these

customers? — What is our value proposition?

CHOOSING A VALUE PROPOSITIONThe set of benefits or values a company

promises to deliver to consumers to satisfy their needs.

Value propositions dictate how firms will differentiate and position their brands in the marketplace.

THE MARKETING CONCEPTThe marketing concept: A marketing management philosophy that

holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors.

CUSTOMER PERCEIVED VALUECustomer perceived value:

“Customer’s evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers.” (Armstrong & Kotler)

– Perceptions may be subjective – Consumers often do not objectively judge values and

costs.Customer value = perceived benefits – perceived

sacrifice.

THE MARKETING MIXThe set of controllable, tactical marketing tools

that the firm blends to produce the response it wants in the target market.

Product: Variety, features, brand name, quality, design, packaging, and services.

Price: List price, discounts, allowances, payment period, and credit terms.

Place: Distribution channels, coverage, logistics, locations, transportation, assortments, and inventory.

Promotion: Advertising, sales promotion, public relations, and personal selling.

CUSTOMER-DRIVEN MARKETING STRATEGY

Requires careful customer analysis.To be successful, firms must engage in: Market segmentation Market targeting Differentiation Positioning

MARKET SEGMENTATION AND TARGETING

Segmentation: The process of dividing a market into

distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs.

Targeting: Involves evaluating each market

segment’s attractiveness and selecting one or more segments to enter.

DIFFERENTIATION AND POSITIONINGDifferentiation: Creating superior customer value by

actually differentiating the market offering.

Positioning: Arranging for a product to occupy a

clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

MARKET SEGMENTATIONKey segmenting variables: Geographic Demographic Psychographic Behavioral

Different segments desire different benefits from products.

Best to use multivariable segmentation bases in order to identify smaller, better-defined target groups.

MARKET SEGMENTATIONWhy Segment?: Meet consumer needs more precisely Increase profits Segment leadership Retain customers Focus marketing

communications

EVALUATING MARKET SEGMENTSSegment size and growth: Analyze current segment sales, growth rates,

and expected profitability.Segment structural attractiveness: Consider competition, existence of substitute

products, and the power of buyers and suppliers.Company objectives and resources: Examine company skills and resources needed

to succeed in that segment. Offer superior value and gain advantages over

competitors.

MARKET TARGETINGMarket targeting involves: Evaluating marketing segments.

Segment size, segment structural attractiveness, and company objectives and resources are considered.

Selecting target market segments.Alternatives range from undifferentiated

marketing to micromarketing. Being socially responsible.

DIFFERENTIATION AND POSITIONINGA product’s position is: The way the product is defined by

consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products.

Perceptual positioning maps can help define a brand’s position relative to competitors.

DIFFERENTIATION AND POSITIONINGIdentifying possible value differences

and competitive advantages: Key to winning target customers is to

understand their needs better than competitors do and to deliver more value.

Competitive advantage: Extent to which a company can

position itself as providing superior value. Achieved via differentiation.