Maketing Concepts n Process

7/30/2019 Maketing Concepts n Process

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The Marketing Concept

and ProcessLecture 1


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The Marketing Concept: What It Is and

What It Is Not

The marketing concept has suffered in twoways: First, it has been established as optimal

management philosophy when it is not necessarilyso in all instances, and

Second, we can see many examples ofpoormarketing practice that have been adopted in thename of the marketing concept.

.It is time that we relearn the marketing concept.


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What It Is Not

The marketing conceptCustomer focus, profits, andintegration of organizationalefforts.


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What It Is Not

Customer orientation

Satisfying its customers at a profit

Determining the needs and wants oftarget markets

Discovering the wants of a target

audience and then creating the goodsand services to satisfy them


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What It Is Not

Kotlers social definition:Marketing is a social andmanagerial process by whichindividuals and groups obtainwhat they need and want throughcreating and exchanging productsand value with others.


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Goods Services

Experiences Events

Persons

Places Properties

Organizations Information

Ideas

Many Things Can Be Marketed!


What It Is Not


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Needs, wants,and demands Marketing offers:

includingproducts,services andexperiences

Value andsatisfaction Exchange,

transactions andrelationships Markets

Core Marketing Concepts

What is Marketing?


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What It Is Not

The conditions under which themarketing concept offers theproper guidance to themarketer:


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What It Is Not

To the extent that the organizationrelies on exchange as the means ofobtaining compliance withorganizations needs, we describe thatorganization as engaging inmarketing.

Strive to understandexchange partners andtailor offerings for them through what iscalled the marketing mix (Borden 1964).


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What It Is Not

it is important to recognize thatundersome circumstances, the productionconcept or the sales concept would be amore appropriate managementphilosophy for the organization than themarketing concept.Can you give some examples?


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What It Is Not

.customers are not necessarily good

sources of information about

their needs a decade from now

sometimes customers have to learn

about new technologies, beliefs, andways of behaving


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The Marketing Myopia

In 1960, Theodore Levitt wrote"Marketing Myopia," a widely

quoted and frequently reprintedHarvard Business Reviewarticle.

Chapter eight in Theodore Levitt'sbook - The Marketing Imagination(New York: The Free Press, 1986).


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The Marketing Myopia What does the term marketing myopia

means?

What were the evidence and examplesused to illustrate the notion of marketingmyopia?

How is the self-deceiving cycle related tomarketing myopia?

Is this notion of marketing myopia stillvalid today, and explain?


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Marketing myopia was initiallydescribed as a firm's

shortsightedness or narrownesswhen attempting to define itsbusiness.

The key question what businessare you in?


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Levitt cites the railroads andHollywood as examples of"industries that have been and arenow endangering their futures byimproperly defining their purposes."Their problem, he says, is they were

"product-oriented instead ofcustomer-oriented.


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Warning of the dangers of beingproduct-oriented rather than customer-

oriented - creating the Ford Edsel,New Coke or smokeless cigarettes, as itwere, rather than products consumers

wanted.


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According to Levitt, "theorganization must learn to thinkof itself not as producing goodsor services but as buyingcustomers, as doing the thingsthat will make people want todo business with it."


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Since its publication, corporate

leaders have moved fromproduct-orientation towardmarket-orientation.


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Customer orientationhas also been

considered as a type of marketing myopia.


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Firms overemphasize thesatisfaction of customer wants andneeds and as a resultignorecompetition.


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Competitor orientation has beenproposed as a replacement for thecustomer orientation; with thisorientation, a firm's strategy isinfluenced by its competitors(Oxenfeldt and Moore, 1978).


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The marketing myopia described by Levitthas also evolved into a planning myopia


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Businesses need to take Levitt's idea toits ultimate end do not just sell a product, sell the solutionto a problem.


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The Marketing Myopia Oil companies have followed that strategy by

developing minimarts in service stations. Digital Equipment Corp. earned one-third of its $7

billion in revenue from computer maintenance

services. General Motors Acceptance Corp. financial

services accounted for $1 billion of theautomaker's $4 billion in 1985 revenues, and

Gerber Products is opening day care centers as well

as acquiring baby-related product companies. By recognizing customer needs, these companies

have used available corporate resources to enternonmanufacturing segments of the market.


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The marketing myopia tothe world market


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The Marketing Myopia Yves Doz, Jose Santos and Peter J.

Williamson draw on some examples ofcompanies that are major successes becausethey sought knowledge in other countries,

such asShiseido, the Japanese cosmetic company that

looked to France to become once again a leadingplayer.Little Scandinavian Nokia overtook Motorola in

the early days of the mobile wars simply bymonitoring the radar for emerging phenomena inmarkets around the world.


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Innovating using local knowledge,perfecting your product and serviceto meet the needs of customers in

your home market, andbenchmarking yourself againstdomestic competitors-each of thesehas become a high risk strategy.


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After all, cellular telephony had been invented inAmerica-at Bell Laboratories, and Motorola wasamong the first to massproduce mobile telephones.

So then, how did Nokia, a little-known upstart fromthe edge of the Arctic Circle leave Motorola behindand manage to become the global leader in mobiletelephony?

Nokia was the first to see the potential of a cellphoneas a fashion accessory from observations of itscustomers in Asia.


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The Marketing Myopia Nokia has the ability to plug into knowledge aboutnew technologies and emerging customer needs fromevery corner of the world. It understood the need for customised handsets from

its experience in Europe, where it first becameapparent that there were different segments of users.

Observing pilot users across Scandinavia, it wasamong the first to recognise that digital technology

could dramatically improve the functionality of mobilephones.

And in China, India and Africa, it saw that mobilephones could potentially become substitute for wire-line phones.


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While Nokia prospected the world for insightabout promising technologies, diversecustomer behavior and new ways to use

mobile phones, Motorola continued todevelop its products based on its knowledge ofthe customers and technologies in its U.S.backyard.


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The result: Motorola missed the shift to digital mobiletelephony and the growing strength of the EuropeanGSM standard. It didn't see the potential to turn thephone into a fashion icon; it was slow to take onboard the new ways mobiles were being used and torecognise that a broader, but more fragmented userbase would spell the end of "one-size-fits-all"products.

This myopic approach to competition, and the failureto engage fully with the rest of the world and capturethe potential of global markets and the innovativeideas in them, would cost Motorola dearly.


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The types ofmarketing myopia can be

classified along two dimensions:

1. the management's definition of the firm, and

2. the firm's business environment perspective.


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The second dimension concerns the firm'sbusiness environment perspective. In essence,these firms have an inward orientation toward

that industry. Firms with a single-industry perspective are

preoccupied with the actions and reactions ofimmediate competitors.


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In addition, they are considered to have inbredmanagement. Some managers have spent the greaterpart of their professional careers in one industry.

Inbred management is not necessarily undesirable, butit is potentially detrimental when it fosters thecontention that it can learn nothing from firms inother industries, and it keeps its firm perceptuallyinsulated from such other firms.

For example, managers of the cold breakfast cerealfirm may be concerned only with the actions andreactions of other cold cereal firms.


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Firms with a multi-industry perspective,on the other hand, have a broader viewof the market.

While they are concerned withimmediate competitors, they also realizethat firms in other industries can serve as

sources of innovative strategies as well asbeing potential competitors.


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Such management is said to be cross-bred, inthat managers may have experience in a broadrange of industries or they are willing to learn

from firms facing similar situations in otherindustries.

Firms with a multi-industry perspective areoutwardly oriented and not perceptually

insulted from other industries.


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The combination of the twodimensions produces a matrix

with four types of firms:


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1. classic myopia, with a product-definition/single-industry perspective,

2. competitive myopia, with acustomer-definition/single-industryperspective,

3. efficiency myopia, with a product-definition/multi-industry perspective,4. innovative myopia, with a customer-definition/multi-industry perspective.


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Marketing managers who wish toachieve the innovative firm orientationshould:1.take a generic view of their firm or industry,2.monitor other industries,3.engage in benchmarking to determine the

objectives for relevant areas of marketing,

4.recruit marketing people, and5.be flexible enough to apply unique solutions to

problems.


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Strong sales, noprofits Customer-driven toits core Each customersexperience is unique

Provides greatselection, goodvalue, discoveryand convenience A true onlinecommunity

Amazon.com

Discussion: Will Amazon.com Survive?

Case Study


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What is Marketing?

Marketing is managing profitablecustomer relationships

Attracting new customers Retaining and growing currentcustomers

Marketing is NOT synonymouswith sales or advertising


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Marketing Management

Marketing managementis the artand science of choosing targetmarkets and building profitablerelationships with them.

Creating, delivering andcommunicating superior customervalue is key.


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Customer Management:

Marketers select customers that canbe served well and profitably. Demand Management:

Marketers must deal with differentdemand states ranging from nodemand to too much demand.


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Productionconcept Product concept

Selling concept Marketing

conceptSocietal marketing concept

Management Orientations



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CRM

CRMCustomer relationshipmanagement. . .is the overall process of buildingand maintaining profitablecustomer relationships by

delivering superior customervalue and satisfaction.


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CRM

It costs 5 to 10 times MOREto attract a new customer than

it does to keep a currentcustomer satisfied.

Marketers must be concernedwith the lifetime value of thecustomer.


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CRM

Attracting,retaining and

growing customers

Building customerrelationships andcustomer equity

Customer value/satisfaction Perceptions are key

Meeting/exceedingexpectations creates

satisfaction Loyalty and retention

Benefits of loyalty

Loyalty increases assatisfaction levels increase

Delighting consumersshould be the goal

Growing share of customer Cross-selling

Key Concepts


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CRM

Customer equity The total combined

customer lifetime

values of allcustomers.

Measures a firmsperformance, but ina manner that looksto the future.

Key ConceptsAttracting,

retaining andgrowing customers



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CRM Customer relationship

levels and tools Target market typically

dictates type ofrelationship Basic relationships

Full relationships

Customer loyalty and

retention programsAdding financial benefits

Adding social benefits

Adding structural ties

Attracting,retaining and

growing customers


Key Concepts


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Marketing Challenges

Technological advances, rapidglobalization, and continuing social

and economic shifts are causingmarketplace changes.

Major marketing developments can

be grouped under the theme ofConnecting.


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Via technology With customers

With marketingpartners

With the world

Advances in computers,telecommunications,video-conferencing, etc.

are major forces. Databases allow for

customization ofproducts, messages andanalysis of needs.

The Internet Facilitates anytime,

anywhere connections Facilitates CRM Creates marketspaces

Connecting


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Selective relationshipmanagement is key. Customer profitability

analysis separateswinners from losers.

Growing share ofcustomer Cross-selling and up-

selling are helpful.

Direct sales to buyersare growing.

Connecting Via technology With customers


With the world


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Partner relationshipmanagement involves:

Connecting insidethe company

Connecting withoutside partners

Supply chainmanagement

Strategic alliances



With the world


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Globalization Competition

New opportunities

Greater concern forenvironmental andsocial responsibility

Increased marketingby nonprofit andpublic-sector entities Social marketing

campaigns



With the world

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Maketing Concepts n Process