Marketing ManagementBM 4804

Warin ChotekorakulSession 1, 2003

Ch. 1 Defining marketing for the 21st century

The questions that we should be able to respond after completing the chapter: What is the new economy like? What are the tasks of marketing? What are the major concepts and tools of

marketing? What orientations do companies exhibit in

the marketplace? How are companies and marketers

responding to the new challenges?

What is the new economy like? What is the old economy?

Based on the “Industrial Revolution” and on managing “manufacturing” industries

Goal: efficiency Hierarchical management being used

New economy Based on the “Digital Revolution” and

the management of “information” Substantially differentiated,

customized, and personalized Less hierarchical management—Why?

What is the new economy like? (2)

What are the tasks of marketing?

3 stages that a company might pass: Entrepreneurial marketing Formulated marketing Intrepreneurial marketing

Question: Each of the three stages requires the same marketing tasks?Yes

Marketing is the task of creating, promoting, and delivering goods and services to consumers and businesses.

What are the tasks of marketing? (2)

Demand States and Marketing Tasks

Negative demand: occurs when the market dislikes the product Marketing Task: to analyze why the market

dislikes the product, and how to change the beliefs and attitudes

No demand: occurs when target market is unaware of the

product Marketing Task: to connect the benefits of the

product with the needs

Latent demand: A strong need that cannot be satisfied by

any existing product Marketing task: to measure the size of

the potential market and develop effective pdt

Declining demand: Decreasing demand for the product Marketing task: to reverse the declining

demand through creative remarketing

Demand States and Marketing Tasks 2

Irregular demand: Demand varies on a seasonal, daily basis Marketing task: to find ways to alter the

same pattern of demand called “Synchromarketing”

Full demand: Occurs when a company is satisfied with the

volume of business Marketing task: to maintain current demand

level facing the changing consumer preferences and increasing competition

Demand States and Marketing Tasks 3

Overfull demand: Occurs when demand level is higher than a

company can handle Marketing task: to find ways to reduce the

demand called “Demarketing” : General and Selective demarketing

Unwholesome demand: For unwholesome products e.g. handguns,

cigarettes, X-rated movies/websites Marketing task: to get people who like these

things to give them up

Demand States and Marketing Tasks 4

What are the major concepts and tools of marketing?

Definitions of Marketing: Social:Social: Marketing is a societal process

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

Managerial:Managerial: Marketing is the art of selling products

What are the major concepts and tools of marketing? (2)

Marketing Management: the ways to achieve desired responses from other parties

Definition of Marketing Management The art and science of choosing target

markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value

Core Marketing Concepts Segmentation and Target markets:

Segmentation or Market Segmentation isSegmentation or Market Segmentation is the process of dividing a market into groups whose valuations of products are similar within groups and who differ across those groups

Market Segment isMarket Segment is a group of actual or potential customers who can be expected to respond in a similar way to a product or service offer

Core Marketing Concepts (2)

Segmentation and Target markets (2): Market Targeting isMarket Targeting is the process of

selecting segments to serve and identifying customers in target segments by evaluating the attractiveness of segments

Target Market isTarget Market is is a market that the

company chooses to serve effectively and profitably

Marketplace, Marketspace, and Metamarket: MarketplaceMarketplace is physical (shopping in a store) MarketspaceMarketspace is digital (shopping on the net) MetamarketMetamarket is a group of complementary

pdts and services that are closely related in the minds of consumers but are spread across a diverse set of industries e.g. home ownership market

Core Marketing Concepts (3)

Marketers and ProspectsMarketers and Prospects Needs, Wants, and Demands:Needs, Wants, and Demands:

NeedsNeeds are the basic human requirements

WantsWants are specific objects that might satisfy the need

DemandsDemands are wants plusplus ability and WTP Censure: marketer cannot create needs,

but can influence wants.

Core Marketing Concepts (4)

Product, Offering, and Brand:Product, Offering, and Brand: Why does a customer buy a product

(car)?

Core Marketing Concepts (5)

If so, we can call them as Value Value Proposition.Proposition. What is the difference between

“product and offering”? Is offering a subset of product?

Brand enables a customer to know the offering comes from what company

Value, Cost, and Satisfaction:Value, Cost, and Satisfaction: How do consumers choose among the

many products that might satisfy a given need?

Core Marketing Concepts (6)

The guiding concept is valuevalue.

Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs. Value is the combination of Quality, Service, and Price (QSP) or Customer Value Triad

Core Marketing Concepts (7)

Value, Cost, and Satisfaction (2):Value, Cost, and Satisfaction (2): How to measure Value? Value = Benefits/Costs

Exchange and Transaction:Exchange and Transaction: Exchange is the act of obtaining a desired product from someone by offering something in return.

Exchange is the defining concept underlying marketing.

Core Marketing Concepts (8)

Exchange and Transaction (2):Exchange and Transaction (2): A transaction is a trade of values between two or more parties. Two types: Monetary VS Barter transactions

Transaction = Transfer/ Relationships and Networks:Relationships and Networks:

Relationship Marketing: aim to build up L-T, trusting, and “win-win” relationships with customers, distributors, dealers, and suppliers

RM brings down costs on transaction and time

Relationships and Networks (2):Relationships and Networks (2): The final outcome of RM is the building

of a unique company asset called a marketing network.marketing network.

Marketing Network consists of the company and its supporting stakeholdersstakeholders..

Core Marketing Concepts (9)

3 types of marketing channels: Communication channels:Communication channels: to deliver

and receive messages from target buyers Distribution Channels:Distribution Channels: to display, sell, or

deliver the physical products or services to buyer or user

Service channels:Service channels: to facilitate transactions

Core Marketing Concepts (10)

Channels

CommunicationChannels 1. Monologue

2. Dialogue

Service Channels Facilitating

Organizations such as banks,

Insurance companies

DistributionChannels 1. Warehouse

2. TransportationVehicle

3. TradeChannels

31. Wholesaler RRRRRRRR32

33. Distributor 34. Agent

Supply Chain: Supply Chain: Describes a longer channel stretching

from raw mat to components to final products that are carried to final buyers

Core Marketing Concepts (11)

Competition: Competition: Brand Competition

Industry competition

Form competition

Generic competition

Marketing Environment:Marketing Environment: Task (micro) environment (main

actors) Broad (macro) environment

Core Marketing Concepts (12)

Marketing Program/Plan:Marketing Program/Plan: To achieve the company’s objectives

Marketing mix:Marketing mix: set of marketing tools used to pursue marketing objectives in the target market

Marketing Program/Plan (2):Marketing Program/Plan (2): Robert introduced that the sellers’ 4

Ps correspond to the customers’ 4 CsFour PsFour Ps Four CsFour Cs

ProductProduct Customer solutionCustomer solution

PricePrice Customer costCustomer cost

PlacePlace ConvenienceConvenience

PromotionPromotionCommunicationCommunication

Core Marketing Concepts (13)

6 company directions The production concept The product concept The selling concept The marketing concept The customer concept The societal marketing concept

What orientations do companies exhibit in the marketplace?

The concept holds that consumers will favor favor those products that are widely widely available and inexpensive.available and inexpensive.

The assumption holds in 2 types of situations: Where the demand for a product exceeds demand for a product exceeds

supplysupply (in 3rd World countries) Where the product’s cost is high and has to

be brought down through increased productivity to expand the marketto expand the market

1. The Production concept1. The Production concept

2. The Product concept2. The Product concept The concept holds that consumers will

favor favor those products that offer the most the most quality, performance, or innovative quality, performance, or innovative features.features.

The companies get little or no customer little or no customer inputinput, and very often they will not examine competitors’ products.

Planned Obsolescence Strategy e.g. Lancer VS Lancer Cedia by Mitsubishi

The product concept leads to “marketing myopia”“marketing myopia” (Levitt, 1975) which means managers often view their market from a narrow, product-a narrow, product-oriented perspectiveoriented perspective, and this may result in missed opportunities.result in missed opportunities.

For example, railroad management.

2. The Product concept (2)2. The Product concept (2)

3. The Selling concept3. The Selling concept The concept holds that consumers, if

left alone, will ordinarily not buy not buy enoughenough of the organization’s products.

Thus,Thus, the company must undertake an aggressive sellingaggressive selling and promotion effort.

For companies with unsought productsunsought products, or when companies have overcapacity.overcapacity.

Inside-out approachInside-out approach

4. The Marketing concept4. The Marketing concept The concept holds that the job is not

to find the right customers for your product, but the right product for your customers (outside-in approach).

Satisfying needs of the customers

3 Types of marketing orientation: Reactive market orientation:

understanding and meeting customers’ expressed needs

Proactive marketing orientation: concentrating on customers’ latent needs

Total market orientation: combination of the above two

4. The Marketing concept 4. The Marketing concept (2)(2)

Points to study from Marketing Concept

5 Types of Needs: Stated needs: Real needs: Unstated needs: Delight needs: Secret needs:

A fast laptop

High performance, Accurate result

Good service

Mouse and mouse pad

Smart, savvy consumers

Points to study…(2) 3 types of marketing on basis of

countering to customer’s needs: Responsive Marketing Anticipative Marketing Creative Marketing

Integrated Marketing: all the company’s departments work together to serve the customer’s interests

External Marketing: marketing directed at people outside the company

Internal Marketing: marketing directed at employees of the company

Points to study…(3)

5. The customer concept Outside-in approach One-to-one marketing To capture a larger (market) share

of each customer’s expendituresQuestion: Is customer share the

same idea as market share?

6. The societal marketing concept

The concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.

e.g., the Body Shop

When to Review Marketing Plan

Sales decline Slow growth Changing buying pattern Increasing competition Increasing marketing expenditures

Company Responses and Adjustment

Re-engineering Outsourcing E-commerce Benchmarking Partner-supplier Alliances Market-centered Global and local Decentralized

Marketer Responses and Adjustments Relationship marketing Customer lifetime value Customer share Target marketing Individualization Customer database Integrated marketing communication Channel as partner Every employee a marketer Model-based decision

Takeaways from Ch.1 The old VS the new economies The marketing tasks (and for diff DD

states) Major marketing concepts and tools 6 Types of orientations Company and marketer responses in

the new economy