1Topic One - Marketing Introduction (1)

8/11/2019 1Topic One - Marketing Introduction (1)

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Non-text material Occasionally I will introduce material that comes

from: other texts my corporate experience

This material will generally be in deep red I will try to limit this but there will be

concepts/issues that are not covered by the textor done so superficially that I will need toincorporate extra comments

This material WILL be examinable


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Chapter objectives

1. Define marketing and the marketing process.2. Discuss the concepts of needs, wants and

demands and their relevance to customervalue and exchange relationships.

3. Define the elements of a customer-drivenmarketing strategy and express the basicideas of demand management.


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Chapter objectives

4. Outline the purpose of an integratedmarketing plan and program, and of buildingprofitable customer relationships .

5. Explore changes in the marketing landscape ,including the digital age and social media,rapid globalisation, the call for more ethicalbehaviour and social responsibility, thegrowth of not-for-profit marketing, thechanging world economy, and sustainabilityand green marketing.


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Marketing defined Marketing is a social and managerial process

by which individuals and organisations obtainwhat they need and want through creating andexchanging value with others (Kotler, Brown,Burton, Deans Armstrong).

Marketing is the activity, set of institutions,and processes for creating, communicating,

delivering , and exchanging offerings that havevalue for customers, clients, partners, andsociety at large (American MarketingAssociation, 2007).


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The marketing process


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Understanding the marketplace and customerneeds

Needs : States of felt deprivation Example: Physical (food, safety, clothing, shelter); social (belonging

and affection); individual (knowledge and self-expression). Wants : The form taken by human needs as they are shaped by

culture and individual personality Example: A hungry person in Australia might want a hamburger, chips

and a cola but a hungry person in the South Pacific might wantmangoes, coconuts and beans.

Demands : Human wants that are backed by buying power Consumers view products as bundles of benefits and choose products

that give them the best bundle for their money.


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Market offerings goods, services andexperiences

People satisfy their needs and wants through amarket offering , which means a combination

of goods, services, information andexperiences. A market offering may include services,

activities or benefits that are intangible . The importance of a market offering lies not so

much in the good or service itself as thebenefits it provides.Features v benefits


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Customer value and satisfaction

Customer value : The difference between the values the customer

gains from owning and using a product and thecosts of obtaining the product.

Customers often do not judge the offer valuesand costs accurately or objectively. They act

on perceived value .


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Delivering customer value profitably

Customer delivered value is the difference between the prospective customersevaluation of all benefits and the costs of anoffering compared with the perceived alternatives.

Total customer benefit is the bundle ofeconomic, functional and psychological

benefits customers expect from the offering. Total customer cost is the bundle of costscustomers expect to incur in evaluating,obtaining, using and disposing of the offering.


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Implications of customer value

Buyers are not always logical in their decisionmaking; sometimes, they give more weight topersonal benefits than economic costs andbenefits.


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Customer satisfaction

Customer satisfaction is the extent to which aproducts perceived performance matches abuyers expectations .

Firms should: Identify expectations Rank them in terms of importance Ascertain where it sits vis--vis competitors on

each expectation


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Q1: Marketing is _____.

A. advertising and sellingB. only used by large firmsC. about satisfying customer needsD. about making a profit quickly

Ans: about satisfying customer needs


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Exchanges and relationships

Exchange is the underlying theory ofmarketing and explains why we need to workin order to get the things we want.

Exchange the act of obtaining a desiredobject from someone by offering something inreturn.

Example:A hungry person might offer money in exchangefor food.


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Markets

Markets A market is the set of all actual and potential

buyers of a product. They share a particular need

or want that can be satisfied through exchange This represents the overall potential market . The actual size of a market depends on the

number of people who exhibit the need, have

resources and authority to engage in exchange andare willing to offer their resources for what theywant.


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Marketing

The concept of markets leads back to thedefinition of marketing given earlier:

Marketing is the activity, set of institutions, and

processes for creating, communicating, delivering,and exchanging offerings that have value forcustomers, clients, partners, and society at large(American Marketing Association, 2007).


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Figure 1.2 Elements of a modern marketingsystem


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Designing a marketing strategy

Marketing management is the art andscience of choosing target markets andbuilding profitable relationships with them.

The marketing manager must find, attract,

keep and grow target customers by creating,delivering and communicating superiorcustomer value .

Two important questions must be

answered:1. What customers will we serve whats our target market?2. How can we serve these customers best whats our value

proposition ?


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Selecting customers to serve

The company must decide who it will serve bydividing the market into segments ofcustomers and selecting which it will target .

By default a firm is also deciding who it doesntwant to serve (Just say no article)

When possible the key segmentation variableshould be some financial measure:

Customer profitability Customer lifetime value


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Demand management

Demand for products may fluctuate, somanagement needs to find ways to deal withdifferent demand levels. This may meanchanging or reducing demand.

Demarketing reduces demand temporarily orpermanently

Water consumption Demarketing has expanded definition see Just

say no article


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Managing demand (1)

Negative demand means that a major part ofthe market dislikes the product and may evenpay a price to avoid it grudge purchase such

as health insurance . No demand may occur if target consumers are

unaware of a need or they cannot articulateitnew farming methods .

Latent demand is when needs cannot besatisfied by any existing product safer neighbourhoods .


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Managing demand (2)

Declining demand happens to all organisationsand may be due to competitors offeringschurches .

Irregular demand may be due to seasonal,daily or even hourly variations causing eitheridle or overworked capacity lawn mowing .


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Managing demand (3)

Full demand means that the company issatisfied with their volume of business and areoperating at close to current capacity.

Overfull demand means that the demand ismore than the company can handle use ofnational parks (demarketing).

Unwholesome demand refers to demand forundesirable products or behaviourscigarettes & alcohol .


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Choosing a value proposition

The company must decide how to serve targetcustomers. This involves differentiating andpositioning itself in the marketplace. This

translates into the differential value that is thefirms value proposition . The value proposition differentiates one brand

from another.


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Example of a value proposition

CustomerSegment

AccountMgt Product Mgt Fee Reports Entertainment

A Mgr Negoitate Negoitate Customised $3,000 pamonthly

B Mgr Negoitate Negoitate Customised $1,000 pamonthly

1800 Std Std Std $0 paQuarterly

C 1800 Std Std Std $0 paQuarterly


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Q2: Customers judge product values andcosts_____.

A. accuratelyB. objectively

C. by past experienceD. by perceived value

Ans: by perceived value


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Preparing an integrated marketing plan andmarketing mix

The marketing plan summarises the marketsituation , defines the marketing strategyincluding target markets and valueproposition , lays out the detailed marketing

program and the resources to implement thestrategy control/metrics . The marketing program builds customer

relationships by transforming the marketingstrategy into action .

The marketing mix comprises the four Ps (4Ps)of marketing: product, price, place and

promotion.


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Building profitable customer relationships

The steps of understanding the marketplace,designing a marketing strategy, andconstructing marketing programs that use themarketing mix lead to building profitablecustomer relationships.

Well see in the segmentation section that not

all customers are worth having a relationshipwith the right customer see next slide


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Capturing value from customers

Value creation and relationship building leads to loyalcustomers who buy and continue to buy the companysbrands.

This leads to greater profits in the longer term. Perhaps a more salient definition of marketing is that for

value-based marketing the process that seeks tomaximise returns to shareholders by developing

relationships with valued customers and creating adifferential advantage Doyle (2008)


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Q3: Managing demand is about _____.

A. managing salesB. managing customersC. attracting new customersD. retaining existing customers

Ans: managing customers


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The marketing landscape

Information technology and electronicmarketing.

Rapid globalisation. The changing world economy. The call for ethical behaviour and social

responsibility. Marketing accountability. Growth of not-for-profit marketing.


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The marketing landscape

Implementation of a stronger marketorientation . Sustainability and going green. The rules of

green marketing :1.Know your customer2.Empower consumers3.Be transparent4.Reassure the buyer5.Consider your pricing

Companies must avoid green washingwhich is the act of misleading consumersregarding environmental practices or the

environmental benefits of the offer.


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Summary Marketing is a social and managerial process

by which individuals and organisations obtainwhat they need and want through creatingand exchanging value with others.

The four steps of the marketing process focuson creating value for customers, designing amarketing strategy , constructing an integratedmarketing plan and designing promotionprograms that communicate the valueproposition to target consumers .


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Summary

In the face of todays changing marketinglandscape, companies must take into accountthree additional factors:

Marketing technology Global opportunities, and Ethical and social responsibility.


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Do you agree?

Marketing is THE most important businessphilosophy because

Everyone is in marketing directly or indirectly Everyone has the responsibility to acquire,

retain and build relationships with the rightcustomers

NO CUSTOMERS = NO BUSINESS


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Class exercise

Form groups of 5/6 students Read the Office Depot case Generate answers for the questions on the 2 nd

sheet Present to class Debate and discuss

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1Topic One - Marketing Introduction (1)