BMM4422Marketing Fundamentals

Week 1

THE NATURE OF MARKETING

Key Objectives

To Reflect on the following Questions:-

What is Marketing?

How Marketing has Developed?

How Marketing Relates to Business Performance?

The Scope of Marketing?

…so what is marketing all about?

Marketing plays a key role in the success of virtually all organisations!

The Marketing Concept

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The modern marketing concept requires

A focus on customer satisfaction

An integrated effort throughout the company and..

A belief that corporate or organisational goals can be achieved through customer satisfaction

The Marketing Concept

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Marketing conceptThe achievement of corporate

goals through meeting and exceeding customer needs

better than the competition

Customer orientation

Corporate activities are focused upon

providing customer satisfaction

Integrated effort

All staff accept the responsibility for

creating customer satisfaction

Goal achievementThe belief that

corporate goals can be achieved through

customer satisfaction

…so how does an organisation achieve customer satisfaction?

…by creating customer value!

How is customer value created?

Creating Customer Value

Product benefitsService benefitsRelational benefitsImage benefits

Monetary costsTime costsEnergy costsPsychological costs

Positive NegativeCustomer value

Perceivedsacrifice

Perceivedbenefits

 What is the key message that Innocent is trying to convey in this advert?

Innocent is highlighting a tangible benefit of its product to potential consumers i.e. healthy ingredients. Innocent outlines that the ingredients of their product contribute to customers' health requirements by providing 2 of their 5 a day. Innocent are conveying this tangible benefit in order to effectively position themselves within the healthy drinks sector.

L’Oreal ElvivePresents

favourable benefits

What are they?

The benefits might include intangible benefits such as feeling good, increased attractiveness and self confidence. Tangible benefits might be enhanced hairstyling, fresh fragrance, shiny hair.

Creating Customer Satisfaction

It is not enough to simply match performance and expectations.

Expectations need to be exceeded so that customers are delighted with the outcome to ensure commercial success

Creating Customer Satisfaction

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Delight

Neutral

Dissatisfaction

Absent FulfilledPresence of the characteristic

Cus

tom

er s

atis

fact

ion

‘Delighters’

‘More is better’

‘Must be’

The big problem for marketers is that they must constantly strive to offer more, finding new ways to delight consumers!

Innovative thinking and listening to customers are key ingredients to this.

So obviously marketers are always trying to delight their customers.

Let’s think about Customer Value for a minute!There are 4 forms of customer value

Price value-powerful motivator for consumers

Performance value- some consumers are more motivated by product performance

Emotional Value- here we are talking about perception

Relational value- a personal factor relating to levels of service; organisations are able to develop relationships with customers to increase lifetime value

The primary objective is to create a clearly

defined customer value proposition or

unique selling point so that

customers return time and time again.

What is the term that we use when a Company has a strong USP that has not been copied by another company?

Competitive advantage

Essentially, Marketing is about Delivering value to Customers at a Profit

Marketing has its origins in the Industrial Revolution, as production became cheaper, products more sophisticated and consumers more demanding.

Distribution needed to become more sophisticated and it became more important to inform customers about products.

Productionorientation

Salesorientation

Customerorientation

Market Versus Internally Driven BusinessesMarket driven businesses

Customer concern throughout business

Know customer choice criteria and match with marketing mix

Segment by customer differences Invest in market research and track

market changes Welcome change Try to understand competition Marketing spend regarded as an

investment Innovation rewarded Being fast Strive for competitive advantage

Internally orientated businesses

Convenience comes firstAssume price and product performance are the key to most salesSegment by productRely on anecdotes and received wisdomCherish the status quoIgnore competitionMarketing spend regarded as luxuryInnovation punishedStick with the sameWhy rush?Happy to be me-too

The Marketing Mix(also known as the Marketing Concept)

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Product

The Marketing Mix Price

Place

Promotion

An Effective Marketing Mix

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Effective marketing

mix

Matches customer needs

Creates a competitive advantage

Well balanced

Matches corporate resources

Effective marketing

mix

Place

PromotionPrice

Product

C

Each element is a controllable variable, which has to be managed to meet the needs of the defined target group. All elements are linked and

support each other.

Marketing Mix

Selectionof TargetMarket

All Four Ps Contribute to the Whole

Product

Place

Promotion

Price

Understanding the Target Market Leads to Good Strategies!Understanding the Target Market Leads to Good Strategies!

Product Decisions

Branding Quality Features

We must remember that Marketing is fundamentally about providing the correct bundle of benefits to the end user.

Benefits offered

Marketing Mix - Product

Examples of Channels of Distribution

AOL Nissan DelMonte

Procter &Gamble

Wholesaler

Wholesaler

Retailer

Consumer

Wholesaler

RetailerRetailer

The Place Element of the Marketing Mix

Pricing Strategies

Penetration

Skimming

Competition

Product Line

Bundle

Psychological

Pricing is the only mix which generates a turnover for the organisation. The remaining 3p’s are the variable cost for the organisation. It costs to produce and design a product. It costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must also reflect supply and demand relationship.

The Pricing Element of the Marketing Mix

Marketing and Business Performance:

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Does Marketing work?

Market Orientation

Improved business

performance

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The Scope of Marketing

Marketing activity is used in various fields such as not –for profit,Sport and music

Chapter SummaryThe marketing concept and market orientation is a business philosophy that puts the customer at the centre of things.Customer value is the difference between perceived benefits and perceived sacrifices involved in consuming a product or service.Customer value is delivered through the marketing mix.There is a strong relationship between the marketing philosophy and business performance.The scope of marketing is broad, involving business and non-business contexts.

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