What is Marketing?

The bridge that closes the gap

between customers and

producers

• Formal Definition:– “The process of planning and executing the conception

(product), pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”

AMA

• Real Definition:- “The delivery of customer satisfaction at a profit.”

- “Develop and maintain profitable relationships”

Reviewing the Inputs

Business ConsumerEnvironmental

Analytic Tools:

• Research• Situational Analysis

• SWOT

Marketing Objectives & Strategy:The goals and plans for how to achieve

Internal Strengths and Weaknesses-Corporate Structure, Assets

-Personnel-Sustainable competitive

advantages-Market share, position, performance

External Opportunities and Threats-Competitive-Economic

-Socio-Cultural-Legal Political

-Technical

The Group(s) being targeted-Segmentation

-Needs & Wants-Benefits

-Awareness-Behaviour

The Marketing Environment

Environmental Scanning: Process by which the marketing manager gathers and sorts information about the marketing environment.

The Internal

Environment

MarketingStrategy

Customers

Economic Conditions

Political-legalclimate

Socioculturalenvironment Competition

Technology

In a Market Orientation - The Environment is the key source of information gathering – it’s critical to making good decisions and creating successful marketing plans.

Naturalenvironment

The Economic EnvironmentFactors in a region or country that affect the production,

distribution, and consumption of its wealth.

The aggressiveness of a marketing strategy and tactics often depends on current buying intentions influenced by economic conditions.– More aggressive marketing may be required for periods of lessened buying interest to counteract cyclical periods of low demand. – A rising sales trend line depends on management‘s ability to foresee, correctly define, and reach new market opportunities (both cognitive and

intuitive skills).– Key elements are monetary resources, inflation, employment, and productive capacity.

Recession

Depression Recovery

Prosperity

Competitive Environment

The dynamic that occurs when a number of companies attempt to win over the event of ‘exchange’ with the same customer.

(provide comparisons by customers) Types of Competition: Direct (Interproduct),

Indirect (product substitute) Alternative Gratification

Technological EnvironmentThe applications of knowledge based on scientific

discoveries, inventions, and innovations.

The pros/cons of technology innovation:• Technology helps make innovation possible: new products, new categories, cost reductions through production efficiency, customer relationship improvements, new

distribution options.• Marketers need to keep alert of technological changes in their environment without being seduced by it. Innovation should be driven by customer needs.

Key drivers of technology innovation are sourced from the software/hardware, web-network and telecommunications industries:

The Sociocultural Environment

*Culture: The personality of a society. Culture is the accumulation of shared meanings, rituals, norms, and traditions among the members of an organized society.

The mosaic of societal and cultural* influences that are relevant to the organization’s business decisions.

• General readiness of society to accept a marketing idea (e.g. Internet)• Public trust and confidence in business as a whole.• Socially oriented objectives (CSR – corporate social responsibility)• Multicultural markets.• Gender• Constantly changing social values.

Marketing Defined

• Marketing: – Social and managerial process

– Individuals and groups obtain what they need– Creating and exchanging

– Products and values with others

• Needs:– Felt deprivation

• Wants:– Form of needs shaped by culture

and personality

• Demands:– Wants backed by buying power

Figure 1.1

Products, Services, and Experiences

• Marketing offer: – Address needs with a value proposition

– Set of benefits promised to customers to satisfy needs

– Can include:– Products

– Services

– Persons

– Places

– Organizations

– Information

– Ideas

Figure 1.1

Value and Satisfaction

• Value: – Benefits gained versus costs of obtaining product

• Satisfaction:– Degree of meeting consumer’s expectations– Expectations formed from:

• Previous experience

• Opinions of others

• Marketing information

• Competitive information and promises

– Satisfied customers buy again and tell others

– Dissatisfied customers switch and tell others

Figure 1.1

Exchange, Transactions, and Relationships

• Exchange:– Obtaining a desired object

– By offering something in return

• Transaction:– Two things of value

– Agreed-upon conditions

– Time/place of agreement

• Exchange relationships:– Want to build strong economic

and social connections

– Consistently delivering superior value

Figure 1.1

Marketing

•Interface between the enterprise & its marketsVoluntary exchange of valuesValue-creating processBundle of Benefits

The Marketing Functioninformation from customersdevelops & markets products & services to satisfy needsfeedback on satisfaction levels

Marketing is interactive finance & accounting & production for PRICE levelsHR for customer service policies

Customer Relationship Marketing

A Key Trend—Customer Relationship MarketingA Key Trend—Customer Relationship Marketing

• The development of long-term, mutually beneficial and cost-effective relationships with your customer.

• Emphasizes a market pull strategy: Determine what your target customer (TC) wants. Profile your target customer. Adapt or create a product or service to satisfy this want or

need.

• Emphasizes a one-to-one marketing strategy.

Marketing Management

• Market:– Set of actual or potential buyers

• Marketing management:– Choosing target markets

– Building profitable relationships with them

• Demarketing:– Reduce, not

destroy demand

– Temporarily or permanently

Figure 1.2

EXAMPLES of MARKETS

NEED market

PRODUCT market

DEMOGRAPHIC market

GEOGRAPHIC market

MARKET EXCHANGE RESOURCES

POLITICAL CANDIDATEoffers promise of good government to “voter market”

UNIVERSITYcultivates the “mass media market”

MUSEUMcultivates the “donor market”

Strategies for Growth

• Product-market expansion grid: Portfolio planning tool for identifying company growth

opportunities Uses products (new/existing) and markets (new/existing) Four strategies for growth

• Growth is necessary

• Marketing’s job to: Identify, Evaluate, and Select growth

opportunities

Figure 2.3

Strategies for Growth: Tim Horton’s

Marketing penetration: Opening more locations in existing markets, advertising Continuous improvement of facilities and operations

Market development: New demographic age groups, or geographical locations (U.S.A)

Product development: Expanding the product line to

attract lunch crowd (and steeped tea)

Diversification: Entering new markets with new

products Growth by acquisition or

development

Partnering: Gas bars

Figure 2.3

Steps in Market Segmentation, Targeting, and Positioning

• Market segmentation: dividing market into distinct groups with distinct needs, characteristics, or behaviours, who might require separate products or marketing mixes

• Target marketing: choosing which group(s) to appeal to

• Market positioning: creating a clear, distinctive, and desirable position in the target consumer’s mind, relative to competition

Figure 9.1

Bases for Market Segmentation

PotentialMarkets

Demographic SegmentationGenderAgeFamily life cycleRace/Ethnic groupEducationIncomeOccupationFamily sizeReligionHome ownership

Descriptive Behavioural

Geographic SegmentationCountryRegionUrban/Suburban/RuralPopulation densityCity sizeClimate

Psychographics SegmentationLifestylesPsychological variables:

PersonalitySelf-image

Benefit SegmentationExpected benefits from product

use

Usage RateHeavy usersBrand loyalty

3-8

Requirements for Effective Segmentation

– Uniqueness• Are there real differences

– Measurable:• Size, purchasing power, and profiles can be measured

– Accessible:• Are they open to being reached

• Segments can be effectively reached and served

– Substantial:• Will the segment exist for a reasonable period

• Large enough or profitable enough to serve

– Actionable:• Programs can be developed to attract and serve the

segments

Target Marketing Strategies

• Three factors used to evaluate segments:

– Segment size and growth

– Structural attractiveness

– Company objectives and resources

Figure 9.2

Target Marketing Strategies (continued)

• Target market:– A set of buyers sharing common needs or characteristics that the

company decides to serve

• Undifferentiated (mass) marketing: – Market coverage strategy that ignores market segment differences

and targets the whole market with one offer

• Differentiated (segmented) marketing:– Market coverage strategy that targets several market segments and

designs separate offers for eachFigure 9.2

Target Marketing Strategies (continued)

• Concentrated (niche) marketing:– Market coverage strategy in which a company pursues a large

share of one or a few sub markets

• Micro marketing:– The practice of tailoring products and marketing programs to the

needs/wants of specific individuals and local customer groups

– Includes: local marketing and individual marketing

Figure 9.2

TARGET MARKET(6 - O’s)

SELLER’S MIX(The P’s)

UNCONTROLLABLE FACTORS*Demographics *Globalization *Political * War

*Economy *Environmental * Research *Legal* Government * Technology *Terrorism

TARGET MARKET

1. OCCASIONS WHEN does the market buy ?

2. ORGANIZATION WHO is involved in buying ?

3. OCCUPANTS WHO is in the market ?

4. OBJECTS WHAT does the market buy ?

5. OBJECTIVES WHY does the market buy ?

6. OPERATIONS HOW does the market buy ?

The “WHO” of the 6 O’s

1. WHO is in the Market ? OCCUPANTSfor consumer markets = all individuals, groups, households who buy or acquire goods & services

Variables = age, personal tastes, education, mobility patterns, income

4. WHO is involved in the Buying? ORGANIZATION

initiatorinfluencer

deciderbuyer

user

The “WHAT” of the 6 O’s

WHAT does the Market buy? OBJECTS

(a.) Based on consumer shopping habitsConvenience goods

Shopping goodsSpecialty goods

(b.) Based on rate of consumption & tangibility Durable goods

Non-durable goodsServices

The “WHEN” of the 6 O’s

WHEN does the Market buy? OCCASSIONS

(a.) seasonal factors

(b.) time of year or week or day

(c.) economic conditions

(d.) rate of consumption

The “WHY” of the 6 O’s

WHY does the Market buy? OBJECTIVES

What needs are consumers seeking to satisfy?

physiological,

psychological,

spiritual,

social needs

The HOW of the 6 O’s

HOW does the Market buy? OPERATIONS Characteristics influencing consumer buying behaviour

•Buyer Characteristics

•Product Characteristics

•Seller Characteristics

•Situational Characteristics

The Power of Profiling

Three types of customers:

1. 1. Primary - Primary - The primary or target customer is most likely to buy your product or service and could be a heavy user.

2.2. SSecondary - econdary - The secondary customer has a possibility of buying your product or service but needs convincing.

3. 3. Invisible - Invisible - The invisible customer is the one you don’t

anticipate but has a need for your product or service. This customer appears after you open the doors.

Two Types of Customer Profiles

1. Business to Consumer (B2C) or End-User Profile

If your TC is the consumer or end-user, your customer profile will likely require demographics or psychographics.

2. Business-to-Business (B2B) Profile

Many small businesses offer their services or products, often on a contract basis, to other businesses.

These supply chain companies need a customer profile that is based on business or company-type information.

Demographics and Psychographics

Age Sex Family Status Age of Children Education Residence

DEMOGRAPHICS PSYCHOGRAPHICS

Where they eat Where they shop Sporting activities they engage in Entertainment activities they engage in How socially and physically active they are Whether they travel for business or fun

Demographics involves key

personal characteristics of a

group of people. These

characteristics include:

Psychographics is the process

of segmenting the population by

lifestyles and values. These may

include:

Media Sources Can Help

• Demographic and psychographic profiles are available from media sources: Magazines TV and radio stations Online

Media Sources Can Help• Analyze media sources aimed at different

target markets.• What does your target customer read, listen

to or watch?• Action Step 25 will help you get started.

Conduct primary and “new eyes” research. Interview magazine buyers.

Do some secondary research. Write to advertising departments. Ask for media kits and reader profiles.

Business to Business (B2B) Business-to-business or supply chain firms can be characterized as:

Businesses whose target customers are other companies.

Businesses who do not deal directly with the end-user or consumer.

Businesses whose major goal is to create partnerships, ventures, alliances, or associations with their target customers.

A target customer A target customer profileprofile would include: would include:

Company Profile—e.g. size of business, type of business End user Profile—e.g. end-user application, decision-makerIndustry Profile—e.g. trends, competing firms and barriers to entry.

CUSTOMERS - THE CENTRE OF BUSINESS

Marketing campaign generates leads

Qualified leads become prospects

Sales turns prospects into orders

Manufacturing, distribution & accountingprocess orders

Support resolves customer issues

Satisfied customers buy more

R&D product enhancementbased on feedback

New marketing campaign based on feedback

Plotting Your Future Checklist

Profile your target market in terms of primary, secondary, and invisible customers.

What do the results of your primary research questionnaire tell you about your target market?

What information have you developed about your target customer from your secondary research?

What characteristics are unique or clearly definable about your target customer?

What is the best way to reach your target market?