Basic Concepts of Marketing Iba

7/27/2019 Basic Concepts of Marketing Iba

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Ch.Zia-ur-Rehman

E-mail

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mailto:[email protected]:[email protected]


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WHAT IS MARKETING ?

ANY INTERPERSONAL AND

INTERORGANISATIONAL

RELATIONSHIP INVOLVING ANEXCHANGE IS MARKETING .

WILLIAM J.STANTON

(Fundamentals of Marketing McGraw-Hill 13e)


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WHAT IS MARKETING ?The essence of Marketing is a transaction -an exchange- intended to satisfy human

needs and wants. There are three elementsin the marketing process :

(A) MARKETERS

(B)WHAT IS BEING MARKETED(C) TARGET MARKET


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WHAT IS MARKETING ?

Marketing is a social process by whichindividuals and groups obtain what they needand want through creating and exchangingproducts and value with others

PHILIP KOTLER

(Principles of Marketing Prentice Hall)

This definition includes following core concepts :

NEEDS ,WANTS and DEMANDS --- PRODUCTS------VALUE & SATISFACTION---EXCHANGE &TRANSACTION---MARKETS & MARKETERS


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DefinitionMarketing is a system of activities

designed toplan,

price, promote and distribute

something ofvalue, want satisfyinggoods and services

to the marketpresent andpotentialhousehold consumers or industrialusers.


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NEEDS,WANTS AND DEMANDS NEED : A state of felt deprivation of some basic

satisfaction ( Food, Clothing, Shelter,Belonging etc. )

WANTS : Wants are desires for specificsatisfiers of the deeper needs. Needs are fewand wants are many .

DEMANDS : are wants backed by ------Ability tobuy and Willingness to buy


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PRODUCTS / OFFERS / SATISFIERS / RESOURCES

Anything that can be offered tosomeone to satisfy a need or wantis a product. In marketing wordProduct is used for both goods andservices .

Product refers to physical objectServices refer to intangible object


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VALUE AND SATISFACTIONValue is the customers estimate of the

Products capacity to satisfy a set of goalsValue is the ratio between what the customer

gets and what he gives (V=B/C)

Customer gets Benefits & assume Costs WHEN :Customer Expectance=Performance

(satisfied)

Customer ExpectationPerformance of product

(Highly satisfied)


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EXCHANGE AND TRANSACTION Exchange is the act of obtaining a desired product

by offering something in return .

Exchange takes place when 5 conditions aresatisfied:

1. There should be two parties

2. Both must have something of value to the other

3. Both must be capable of communication &delivery

4. Each party is free to accept or reject the offer5. Each party believes that it is appropriate to dealwith the other party


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EXCHANGE AND TRANSACTIONExchange is aprocess rather than event.

It is a value creating process because it

normally leaves both parties better off.A transaction is a trade of values

between two or more parties ( A BARTER

TRANSACTION OR A MONETARYTRANSACTION ).


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WHAT IS MARKET ?

A market consists of all thepotential customers sharing a

particular need or wantWho might be willing and

Able to engage in exchange tosatisfy that need or want withmoney.


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WHAT IS MARKETING ?

Marketing is the management processwhich identifies, anticipates, andsupplies customer requirementsefficiently and profitably.

In other words, it is theprocess ofunderstanding, creating, anddelivering profitable value to targetedcustomers better than competitors.


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WHAT IS MARKETING ?

Its aim is to establish, maintain,enhance long term relationshipwith

customers at a profit so that theobjectives of the parties involved aremet.

In short marketing consists ofattracting, developing, and retainingprofitable customers.


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BUSINESS IS MARKETING

Marketing cannot be considered as aseparate function , it is thewhole

business, seen from the point of view ofits final results.................that is profit,through customer satisfaction.

PETER DRUCKER


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A SIMPLE MARKETING SYSTEM

Industry Market

Communication

Information/Feedback

Goods & Services

Money


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WHAT IS MARKETING MANAGEMENT ?

Marketing Management is the analysis,planning, implementation and control

of programs designed to create, buildand maintain beneficial exchanges andrelationships with target markets for thepurpose of achieving Organizationalobjectives.


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WHAT IS MARKETING MANAGEMENT ?

Marketing management is demandmanagement or it involves the task ofinfluencing the level, timing andcomposition of demand. At times theactual demand level may be below,equal to, or above the desired demand

level and the major task of marketingmanagement is to regulate the level ofdemand.


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STATE OF DEMAND AND MARKETING TASK

State of demand Negative Demand

No Demand

Latent Demand

Falling Demand Irregular Demand

Full Demand

Overfull Demand

Un-wholesomeDemand

Marketing task Conversional Mktg.

Stimulational Mktg.

Developmental

Mktg. Remarketing

Synchro-marketing

Maintenance Mktg.

Demarketing

Counter-marketing


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MARKETING TERMSMERKETING

SELLING

MERCHANDISING

DISTRIBUTION

PHYSICAL DISTRIBUTION


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Important definitions

Marketing is not any one activity, nor isit exactly the sum of several rather it is

the result of interaction of manyactivities.

As a philosophy, the marketing concept

is not useful if, it not translatedintoeffective action.


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MARKETING MIX


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Selling is one Part of Promotion

Advertising

Ingredientsof the

PromotionMix

Public Relations

Personal Selling

Sales Promotion


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EVOLUTION OF MARKETING MANAGEMENT

Marketing management has evolvedthrough following stages :

(1) Production Orientation Stage

(2) Sales Orientation Stage (3) Marketing Orientation Stage

(4) Social Responsibility & Human

Orientation Stage


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COMPANY ORIENTATION FOR MARKETING

ACTIVITIES

Marketing Management can be defined asthe effort to achieve desired EXCHANGEoutcomes with TARGET MARKETS.

Now the question arises :(1) What philosophy should guide themarketing activities?

(2) What weights should be given to theinterests of the organization, the customersand the society?


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MERCHANDIGING


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MARKETING CONCEPTS

There are FIVE competing conceptsunder which organizations conducttheir marketing activities:

The Production Concept

The Product Concept

The Selling Concept

The Marketing Concept

The Societal Marketing Concept


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Why is Marketing Important?

Marketings Role in Our Daily Lives

Popular Culture

Marketing and Myths Marketings Role in Society

Ethical Behavior is Good Business

Social and Ethical Criticisms of Marketing


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(1) THE PRODUCTION CONCEPT

Produce

SellConsumers

Company

Produce more & more

Practically sells itself


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THE PRODUCTION CONCEPT

Consumers will favour those productsthat are widely available and low in cost.

Therefore increase production and cutdown costs.

And build profit through volume.


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(2) THE PRODUCT CONCEPT

Produce

QualityProducts

SellConsumers

Practically sells itself,if

it gives most quality for

money

Buyers admire well-made products and canappraise product quality and performance.


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THE PRODUCT CONCEPT

Consumers will favour those productsthat offer the most quality, performance,

or innovative features.Therefore, improve quality, performance

and features.

This would lead to increased sales andprofits.


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(3) SELLING CONCEPT

Consumers have normal tendency to resist.

Produce

Sell it Consumers

Aggressive selling &

promotion efforts

Making sales becomes primary function andconsumer satisfaction secondary .


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THE SELLING CONCEPT

Consumers , if left alone , will not buyenough of companys products.

Therefore, promote sales aggressively.

Build profit through quick turnover.


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(4) MARKETING CONCEPT

LOVE THE CUSTOMER , NOT THE PRODUCT

ConsumersProduce it

Market it

Learn what theywant(MR)

Sell what they want(Satisfy

needs of customers)


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THE MARKETING CONCEPT

The key to achieving organizationalgoals consist in determining the needs

and wants of target markets anddelivering the desired satisfactionsmore effectively and efficiently thancompetitors.

And build profit through customersatisfaction and loyalty.


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(5) THE SOCIETAL MARKETING CONCEPT

It is Marketing Concept (+) Societys wellbeing.

Balancing of following three considerationswhile setting marketing policies :1. Customers want satisfaction2. Societys well being3. Companys profits


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.

A revised philosophy, calledthe societal marketing

concept, involves broadlydefining customer and

taking a long-term view of

customers satisfaction.

The Societal Marketing Concept


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THE SOCIETAL MARKETING CONCEPT

The organizations task is to determinethe

needs, wants, and interests of targetmarkets and:

Deliverthe desired satisfactions more

effectively and efficiently than Competitors Preserves or enhances the consumers and

the societys well being.

It addresses conflicts between consumers

and firms short run wants and long termwelfare.


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SELLING v/s MARKETING CONCEPT

Selling Concept

Starting point Focus Means Ends

Factory Products Selling and

Promoting

Profit through

Sales Volume

Marketing Concept

Target Market CustomerNeeds CoordinatedMarketing Profit throughCustomer

Satisfaction


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STRATEGIC CONCEPT OF MARKETING

Shifted the focus of Marketing fromProduct or customer to the CUSTOMER INTHE CONTEXT OF THE BROADER

EXTERNAL ENVIRONMENT .To succeed, marketers must know thecustomer in a context including thecompetition, Govt. Policy& regulation and

the broader economic, social and politicalmacro forces that shape the evolution ofmarket.


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STRATEGIC CONCEPT OF MARKETING Shifted the Marketing Objectives fromPROFIT TO STAKEHOLDER BENEFITS.

Stakeholders are individuals or groups who

have an interest in the activity of a company. They include-----The employees andmanagement, Customers, Society, Shareholders,Financiers/ Bankers, Government etc.


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STRATEGIC CONCEPT OF MARKETING Strategic Marketing Concept is Strategic

Management, which integrates marketing withthe other management functions. ( Major task

is Profit for Stakeholders benefits ).


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MARKETING SYSTEM

Marketing is concerned with the flow of goodsand services from the points of production tothe points of consumption. There is a

systematic arrangement of these functions ofmarketing to move the goods and services tothe needy persons. This system is essential tothe creation of time, place and possession

utilities.


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MARKETING SYSTEM

A dynamic marketing system must be willingto undertake the following specific activities

1. Define market area.2. Research consumer wants and needs.

3. Develop and redevelop product / service.4. Select, train, motivate and control

human resources.5. Develop sales approach and advertising

support.


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GOALS OF THE MARKETING SYSTEM

(1) MAXIMIZE CONSUMPTION

(2) MAXIMIZE CONSUMER SATISFACTION

(3) MAXIMIZE CHOICE

(4) MAXIMIZE LIFE QUALITY


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THREE BASIC PRINCIPLES OF MARKETING

The essence of marketing can besummarized in three great principles.

The first identifies the purpose and taskof marketing,

the second the competitive reality ofmarketing and

third the principal means for achievingthe first two.


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(1) . The Customer Value and Value

Equation :

V=B/P Where; V=Value

B= Perceived BenefitsP= Price

(Value is increased by increasing the numeratorand/or reducing the denominator)


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(2).Competitive or Differential Advantage :

The total offer must be more attractive thanthat of the competition in order to create a

competitive advantage.

(3).Focus or the Concentration of

Attention : The task of creating

Customer Value at a Competitive advantage.


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VALUE MAP

A

BCDE

Value Advantaged Area

Value

Disadvantaged Area

Customer Perceived Benefits

PerceivedPrice


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CUSTOMER AS THE CONTROLLING FUNCTION

Production Finance

Marketing Personnel

CUSTOMER


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MARKETING AS THE INTEGRATIVE FUNCTION

CUSTOMER

Production

Personnel Finance

Marketing


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THREE LEVELS OF MARKETING

Responsive Marketing

Anticipative Marketing

Need Shaping Marketing


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RESPONSIVE MARKETING

It is the form of marketing when some companydefines an existing clear need and prepare anaffordable solution.

(Recognizing that women wanted to spend lesstime for cooking and cleaning, led to theinvention of modern washing machine,microwave oven etc.)


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More About Ethics

Corporations are taking action to instillethical awareness in their employees by:

Avoiding unreasonable pressure onemployees to perform.

Communicating clearly what isexpected of employees.

Employing an Ethics Officer to advise

employees on ethical dilemmas. Rewarding only ethical performance.


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ANTICIPATIVE MARKETING

It is a form of marketing when a company

recognize an emergent or latent need, andcome out with an affordable solution. Evian,Perrier anticipated growing market for bottleddrinking water as the quality of water

deteriorated in many places.Anticipative marketing is more risky thanresponsive marketing; companies may comeinto market too early or too late, or may even

be totally wrong about thinking that such amarket would develop.(e.g. Dish washers inPakistan)


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NEED SHAPED MARKETING

The broadest level of marketing occurs when acompany introduces product that nobodyasked for and often could not even conceive of.

(e.g. Sony Walkman, Sony Compact Disc )

Late Akio Morita, founder and chairman ofSony, who introduced these and many othernew products, summarized his marketingphilosophy in these words: I dont serve

markets. I create them.


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MARKET- DRIVEN AND

MARKET- DRIVING COMPANY

Market-driving companies generate significantly new products, services

business formats and raise our sights and ourcivilization.

These companies are much more thancustomer-led.

They lead customer where they want to go,

but dont know yet.

MARKET DRIVEN AND


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MARKET- DRIVEN AND

MARKET- DRIVING COMPANY

Market-driven companies focus on researching current customers to identify

their problems,

gather new ideas,

develop products that result in incrementalimprovements, not radical innovations.

ECONOMY OF ABUNDANCE


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ECONOMY OF ABUNDANCE Abundance is the antithesis of scarcity.

Everyone has adequate health care, nutrition, education,

transportation, recreation, housing, self-expression, andpersonal security.

Does not mean that goods arefree. Abundance meansadequacy, not satiation. The level of adequacy is not

constant but is relative to theprogress made in thecommunity's joint stock of knowledge. In a Stone Agecommunity there is a lower level of adequacy than in aSpace Age community. The Space Age level of adequacy ishigher because such a higher standard is practical with a

larger joint stock of knowledge. Scarcity means that somemembers of the community suffer from inadequate healthcare, nutrition, education, transportation, recreation,housing, self-expression, or personal security.


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The paradox has forced countries to form

regional blocs
http://upload.wikimedia.org/wikipedia/en/4/43/ActiveBlocs.PNG


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Functions of Marketing

These functions define marketing as it isapplied in business operations

Distribution

Financing

Marketing-Information Management

Pricing

Product/Service Management

Promotion

Selling


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1. Distribution involves deciding where and to whomproducts need to be sold in order to reach the finalusers.

2. Financing is getting the money needed to pay for theoperation of a business.

3. Marketing-Information Management involves gettingthe necessary information to make sound businessdecisions.

4. Pricing dictates how much to charge for goods andservices.

5. Product/Service Management is obtaining, developing,maintaining, and improving a product.


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5. Promotion is communicating withpotential customers to inform,persuade, or remind them about a

company.

6. Selling is providing customers withgoods and services they want.


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When Did Marketing Begin?

Product Orientation

Selling Orientation

Customer Orientation

Most Efficient Production &DistributionSellers Market

Satisfies Customers Needsand Wants

Total Quality

New Era Orientation Benefits to Customers, PlusFirms Employees,

Shareholders, and Communities.

Marketing as a Sales FunctionBuyers Market

l f k


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Evolution of Marketingmarketing has evolved from a production, to

a selling, to a marketing stage

in the production-orientation stage,emphasis was on making a better physical

product in the sales-orientation stage, the emphasiswas on how to sell that product

a marketing-oriented organization placesemphasis on satisfying the wants and needsof customers

Stages in the Evolution of Marketing


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Some industr ies and organizat ions remain at the

produ ct ion-or ientation stage.

PRODUCTION ORIENTATION

PRODUCTION ORIENTATION SALES ORIENTATION

Other indu str ies and o rganizat ions have progressed only to the

sales-or ientat ion stage.

Many indus tr ies and organizations have progressed to th e

marketing -or ientat ion stage.

PRODUCTION

ORIENTATION

SALES

ORIENTATION

MARKETING

ORIENTATION

Late 1800s Early 1930s Mid-1950s 1900s

g g


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Objective is to produce long-termcustomer satisfaction and organizationalsuccess

The organizations planning and

operations are customer-orientedThe marketing activities of the

organization should be consistentlydesigned and delivered

All activities are intended to achieve thefirms organizational objectives

An Innovation Based on the


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An Innovation Based on theMarketing Orientation.

Relationship MarketingAn attempt to build personal, long-

term bonds with customers.

Relationship marketing has expandedto include all groups an organizationinteract with: suppliers, employees,

unions, government, and evencompetitors.

Drivers of


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Drivers of

Customer Satisfaction

getting the core product right is essentialmany services and systems support the

core

customers expect good technical

performance of the product or service they also expect to be treated well in face-

to-face interaction with employees

the company must also consider how itmakes the customer feel in many subtleways


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Marketing Management is The Marketing Concept in Action

MARKETING CONCEPT

Customer

orientation

Profitable Sales

Volume

Coordinatedmarketing

activities

+

+

+ CustomersatisfactionOrganizational

success


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Difference between Marketing and Selling

Marketing is theprocess ofdeterminingcustomer wants .

Then developing aproduct to satisfythat need and still

yield a satisfactory

profit. It is externally

focused.

Selling is producing aproduct .

Then trying to

persuade customersto purchase.

It is infect, trying toalter consumer

demand. It is internally

focused

Q lit i M k ti


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Quality in Marketing quality in what an organization offers is a

major contributor to value and customersatisfaction

if the customer is satisfied with the quality, heor she is likely to return to buy again

quality is very much defined by the customer;it alsovaries across individuals and over time

quality, as perceived by the customer, isinfluenced not only byphysicalproducts but

by service as well requires a commitment from all staffto

deliver the highest quality possible


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Another Innovation:

Mass Customization

An attempt to provide affordableproducts customized to come as

close as possible to meeting theneeds of individual customers.

This is made possible because of

advances in informationtechnology.


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Ethics in MarketingMarketing is intended to influence the

behavior of customers and others. The use of marketing tools can create awide variety of ethical challenges.

There is disagreement over whatconstitutes ethical or unethical behavior.

Ethics are standards of behaviorgenerally accepted by society.

Ethics vary from society to society.

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Basic Concepts of Marketing Iba