Transcript FY Mktg Fundamentals

What is Marketing
Dr. Vesselin Blagoev
1
A simple model of the mktg process
Understand the
marketplace and
customer needs
and wants
Construct an
Integrated
marketing program
that delivers
superior value
Design a
customer-driven
marketing
strategy
Build profitable
relationships and
create customer
delight
Capture value from customers
to create profits and
customer equity 2
Needs
Markets
Wants
Core
Marketing
Transactions Terms
Exchange
Demand
Products
3
Needs
Need
A sense that something necessary is
missing, a state of felt deprivation.
Basic physical needs for food, clothing,
warmth, and safety;

Social needs for belonging and
affection;

Individual needs for knowledge and
self-expression.

4
5
Wants
Wants
The manner in which individuals
seek to satisfy a need as consumer
decision making is influenced by
individual tastes and social factors
The form taken by human needs as
they are shaped by culture and
individual personality
6
Market offering
Some combination of
products, services,
information, or experiences
offered to a market to satisfy
a need or want (Kotler, 2008)
7
Marketing myopia
The mistake of paying more
attention to the specific
products a company offers
than to the benefits and
experiences produced by
these products (Armstrong and
Kotler, 2011, p.35)
8
Customer perceived value
The customer’s evaluation of
the difference between all
the benefits and all the costs
of a market offering relative
to those of competing offers
(Armstrong and Kotler, 2011, p.41)
9
Customer satisfaction
The extent to which a
product’s perceived
performance and value
matches a buyer’s
expectations
10
Customer equity
The total combined
customer lifetime values of
all the company’s
customers (Armstrong and Kotler,
2011, p.50)
11
Customer relationships
management
The overall process of
building and maintaining
profitable customer
relationships by delivering
superior customer value and
satisfaction (Armstrong and Kotler,
2011, p.41)
12
Demand and Supply
Demand
The ability and willingness of consumers
to purchase a product
Quantity demanded
Maximum quantity of a good that buyers
are willing and able to buy at a given
price (over a fixed period of time)
13
Demand
 The
Law of Diminishing
Demand:
If the price of a product is raised,
a smaller quantity will be demanded
and if the price of a product is lowered,
a greater quantity will be demanded
14
Demand Curve
Price
P1
P2
Quantity
Q1
Q2
15
Demand curve
Price
P1
P2
Quantity
Q1
Q2
16
Demand curve
 The
general demand relationships
are typical for all products
A
particular demand curve has
meaning only for a particular market
17
Elastic demand
Elastic demand means that
if prices are dropped,
the quantity demanded will
increase enough to increase
total revenue
 Inelastic
demand ?
18
Elastic demand
Price
Q=Units demanded
19
Inelastic demand
Price
Q=Units demanded
20
Demand curve
The whole demand curve is almost
never only elastic, or only inelastic.
The elasticity refers to the change
in total revenue between two
points on the curve – not along the
whole curve
21
Demand and Supply
Supply
The ability and willingness of producers
to provide wanted goods and services
Quantity supplied
Maximum quantity of a good that
sellers are willing and able to supply at
a given price (over a fixed period of
time)
22
Demand & Supply
Demand
Supply
Equilibrium point
23
Marketing functions
Marketing activities can be
categorized within several functions
Product /
Service
Distribution Mgmt Pricing
Financing
Mktg
Communications
MktgInformation
Selling
Mgmt
24
Marketing Education Resource Center (2000), Columbus, Ohio
The operational functions
of marketing
Advertising
Sales promotion
Public relations
Stockholding
Servicing
Risk-taking
Personal selling
The operational
functions
of marketing
Transporting
Market research
Financing
Buying
Forecasting
Publicity
Merchandising
Pricing
Branding
25
Product
A product is anything that can
be offered to a market for
attention, acquisition, use, or
consumption and might satisfy
a need or want (Armstrong and
Kotler, 2011, p.237)
26
Market
A group of potential buyers with common
needs or problems that can be met by
specific products or services
Consumer market
 Industrial market
 Reseller market
 Institutional market

Customer
Consumer (user)
27
Markets
Consumer
Individuals who
purchase to benefit
from consumption
and not for the main
purpose of making a
profit
Organizational
Buyers who purchase for
resale, direct use in
producing the goods or in
general daily use in a
business
28
Markets
 Open
markets
 Regulated markets
 Unregulated markets
 De-regulated markets
29
Open markets
Markets with all of the following
characteristics:
 Single
standardized product
 Many buyers
 Many sellers
 Buyers and sellers have equal
access to all available information
relevant to the market.
30
Open markets

The products are rarely homogeneous.
Apples vary by variety and packaging
making comparison by the buyer
difficult. It affects Condition 1.

The numbers of potential buyers and
the demand for products is constantly
changing. It affects Condition 2.
31
Open markets

The individual purchaser usually has a
limited choice of supplier. What about
Condition 3 ?

The buyers usually do not have as
much information about the market as
does the supplier. It affects Condition 4.
32
Regulated markets
The regulations governing an open
market are designed to ensure that it is
able to operate with none of the
participants having an unfair advantage
over the others.
Regulated markets recognize that
there is a lack of balance between the
parties and therefore this type of
market has rules that are intended to
ensure a degree of fair trading.
33
Unregulated and
Deregulated markets
Unregulated markets :
street market
The buyer is ‘on their own’. Caveat emptor!
De-regulated markets : Removal of
artificial monopoly restrictions in order to
encourage free competition and increase
customers’ choice.
telecommunications; e-commerce
34
Exchange is :
A marketing transaction,
in which the buyer gives
something of value to the
seller in return for goods or
services
35
A simple exchange process
Something of value
Goods, services, benefits
Supplier
Customer
Money, exchange goods
Something of value
36
10 exchanges
Pots
Fruits
Baskets
Meat
Knives
37
A market – 5 exchanges
Pots
Fruits
Meat
Central
Market
Middleman
Baskets
Knives
38
Exchanges Involving
Intermediaries
Producer
Wholesaler
Retailer
Consumer
39
Definition 1
Marketing is an organizational
function and a set of processes for
creating, communicating, and
delivering value to customers and
for managing customer relationships
in ways that benefit the organization
and its stakeholders (AMA,2005)
http://www.marketingpower.com/mg-dictionary-view1862.php
40
Definition 2
Marketing
is the process by
which the companies create
value for customers and build
strong customer relationships in
order to capture value from
customers in return
Armstrong and Kotler (2011)
41
Definition 3
Marketing
is the management
process responsible for
identifying, anticipating and
satisfying customers’
requirements profitably
British Chartered Institute of
Marketing, UK
42
Definitions 4 and 5
 Marketing
is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others (Kotler et al, 2005)
 Marketing
is the study of exchange
processes especially those associated
with the provision of goods and services
(Adcock et al, 2001)
43
Definitions 6 and 7
 Marketing
is the process of planning and
executing the various activities, which
are involved in selling goods, services,
or ideas and which lead to an exchange
between a seller and a buyer (Keegan et
al, 1992)
 Marketing
is a human activity directed at
satisfying needs and wants through
exchange processes (Kotler, 2001)
44
Definitions 8
Marketing is the management
process that seeks to maximise
returns to shareholders by
developing relationships with
valued customers and creating a
competitive advantage
(Doyle, 2004)
45
Three major goals
Satisfaction
of customer
needs
Attainment of a competitive
advantage over the rivals
Increasing the value of the
company for the shareholders
46
Selling vs. Marketing Concepts
47
Marketing mix
48
Influences on Decisions
of Companies
Uncontrollable market influences
Product
Price
Controllable
company
decisions
Place
Promotion
49
Marketing mix
Quality, Features, Options, Style,
Brand name, Packaging, Sizes, Warranties
Product
List price, Discounts,
Allowances, Payment
Price
Terms, Credit terms
Channels, Locations,
Inventory, Transport Place
Marketing
mix
Target
market
Promotion
Advertising, Personal selling, Sales
Promotion, PR
50
Elements of Marketing Mix – 4P
Product
Planning
Personal
Selling
Pricing
Advertising
PRODUCT
PRICE
Branding
Promotions
Channels of
Distribution
Packaging
PLACE
Physical
Handling
Fact Finding
& Analysis
PROMOTION
Display
Servicing
Borden 1964
McCarthy 1978
Source: Based on Borden, N. (1964) ‘The concept of the marketing mix’, Journal of Advertising Research, June, 2–
7; McCarthy, E.J. (1978) Basic Marketing: A Managerial Approach, 6th edn. Homewood, IL: Richard D. Irwin
51
Marketing Mix – 4P
New product development
Brand management
Features, Benefits
Packaging & After-sales
Channel management
Retail location
Retail image
Logistics
PRODUCT
PLACE
PRICE
PROMOTION
Costs, Profit,
Liquidity
Competitiveness
Value, Incentives
Marketing
communications mix,
Integrated
communications
52
5S of e-marketing objectives
Wider distribution, promotion and sales
Extent the
brand online
Sell
Sizzle
Save by using
the online
services
Save
Adding value by extra
benefits online
Serve
Speak
Asking quest,
dialog, use web
53
6C of Online Value Proposition
The Chartered Institute of Marketing
Content
Cost
reduction
Choice
Customisation
Community
Convenience
54
7P of Customer Service & Mktg Mix
Product
Price
Promotion
Place
Customer
Service
Physical
Evidence
People
Processes
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford:
Butterworth Heinemann
55
From ‘4Ps’ to ‘4Cs’
PRODUCT/
SERVICE
CUSTOMER
NEEDS/WANTS
PRICE
COST TO
CUSTOMER
PLACE
CONVENIENCE
PROMOTION
COMMUNICATION
Source: Based on Kotler, P., Armstrong, G., Saunders, J. and Wing, V. (1999) Principles of Marketing, 2nd
European Edition. New York: Prentice Hall
56
Value & Types of Utility
Form
Utility
Place
Value that comes
from satisfying
human needs
Time
Possession
57
Value & Types of Utility
 Form
Utility: results from changes in the
tangible parts of the product or service, i.e.
made of more durable material
 Time Utility: available when the customer
needs it
 Place Utility: Location, location, location
 Possession Utility: affordability or lack of
resources. Using credit options, payment in
installments
58
Customer value is formed by
Perceived benefits
Product
benefits
Service
benefits
Relational
benefits
Image
benefits
Perceived sacrifice
Monetary
costs
Time
costs
Energy
costs
Psychological costs
Other
costs59
Income and purchasing
power
Disposable income
Money that consumers have left after paying taxes
Purchasing power (PP)
The potential ability of consumers to buy goods and services
PP=Disposable income + Available credit
Discretionary income
Money that consumers have left after paying taxes and
making essential personal and household expenditures 60
Marketing Concept
Because the purpose of business
is to create and keep customers, it
has only two central functions –
marketing and innovation. The
basic function of marketing is to
attract and retain customers at a
profit
Peter Drucker
61
The Marketing Concept
The marketing concept, also referred to as
marketing orientation, can be expressed as:
The achievement of corporate
goals through meeting and
exceeding customer needs better
than the competition
62
Value-Based Marketing
Marketing is the management
process that seeks to maximize
returns to shareholders by
developing relationships with
valued customers and creating
a competitive advantage
(Doyle, 2009)
63
The Changing Role of Mktg
Past
Objective of Mktg Create customer
Marketing
strategy
Assumptions
value
Increase market
share
Future
Create shareholder
value
Develop and manage
marketing assets
Positive market
performance leads to
positive fin. results
Marketing strategies
need to be tested in
value terms
Contribution
Knowledge of buyers,
competitors, channels
Knowledge how to lever
mktg to increase
shareholder value
Focus of
marketing
Marketing orientation
General management
64
The Changing Role of Mktg
Concept of Assets
Past
Tangible
Rationale
Improves profits
Performance
measures
Future
Intangible
Increases
shareholder value
Market share,
Shareholder value:
customer
discounted cash
satisfaction, return flows
on sales and
investment
65
Marketing orientations
 Production
orientation
 Product orientation
 Sales (selling) orientation
 Classical marketing orientation
 Societal marketing orientation
 Relationship marketing
 Value-Based Marketing
66
Production orientation
Production
capabilities
Manufacture
product
Aggressive
sales effort
Customers
67
Product orientation
New product
development
Manufacture
product
Aggressive
sales efforts
Customers
Develop a better mousetrap and the
world will beat a path to your door
68
Sales orientation
Manufacture
product
Aggressive
advertising
Aggressive
sales effort
Customers
69
Marketing orientation
Customer
needs
Potential
Market
opportunities
Marketing
products and
services
Customers
70
Marketing orientation
Customer oriented
No
No
Competition
oriented
Yes
Product
orientation
Competitor
orientation
Yes
Customer
orientation
Marketing
orientation
71
Societal marketing concept
It is based on the understanding
that the customers’ needs must
be satisfied only if they
correspond to the long-term
interests of the society
72
Marketing orientations
Orientation Profit
driver
Time Characteristics
frame
Production Productio Until Improve production and
distribution to reduce costs
n methods 1960
Product
Quality of Until Quality is paramount.
Focus on product, not on
product
1970 needs
Effective selling and
promotion are the major
drivers to success
Selling
Selling
methods
19501970
Marketing
Needs &
Wants
1970+ Focus of satisfying the
needs and wants
73
Marketing orientations
Orientation
Profit
driver
Societal
marketing
Benefit to
society
Time Characteristics
frame
1990+ Same as marketing with the
proviso that no harm will
be done to society or nature
Relationship Building and 1980+ Best possible
retaining good
attention, customer
marketing
relations with
services and therefore
the customers
build customers’
loyalty
Value-Based Value of the 2000+ Do everything to
increase the value of
marketing
shares
74
the shares
Ethics and social responsibility
Ethics: Moral principles and values that
govern the actions and decisions of an
individual or group. They serve as
guidelines on how to act rightly and
justify when faced with moral dilemmas
Laws: Society’s values and standards that
are enforceable in the courts


Can make marketing decisions that are legal but unethical
Can make marketing decisions that are illegal but ethical
75
Consumer Bill of Rights (1962)
 Right
to safety
 Right to be informed
 Right to choose
 Right to be heard
76
Laws reduce confusion
 Socially
responsible packaging:
Federal Fair Packaging and Labeling Act
(USA, 1966) – the consumer goods must be
clearly labeled in easy to understand terms.
Do you know the main points of the law in
Bulgaria?
77
Consumerism
A social movement that
seeks to increase the rights
and powers of consumers
Nader R.(1966) Unsafe at any speed, Pocket
Books, NY
78
Ethical exchange relationships
Both buyer and seller should be better
off after a transaction
Ethical choices are based on personal
moral philosophy
 Moral idealism
 Utilitarianism
 “Justice” perspective
 Social responsibility
79
SOCIETAL MARKETING
LATE MARKETING
ERA
• Supply >> Demand
• Demand management
• Balance the interests
of the company
and the society
EARLY MARKETING
ERA
• Supply > Demand
• Stiff competition
BARTER ERA
• Self-supply
•Markets do not exist
PRODUCTION ERA
• Demand > Supply
• Producers run the
show
SELLING ERA
•Demand = Supply
•Weak competition
History of
Marketing
80
MARKETING
RELATIONSHIPS
SOCIETAL MARKETING
• Balance the interests
of the company
and the society
• Supply >> Demand
• Know thy customer
LATE MARKETING
ERA
• Supply >> Demand
• Demand management
EARLY MARKETING
SELLING ERA
•Demand = Supply
•Weak competition
ERA
• Supply > Demand
• Stiff competition
History of Marketing
81
Why the marketing is
important?
Marketing is the science of exchange

Exchange is the foundation of organization
activities
 Unless the organizations can encourage
exchange, their resource bases disappear
 Move to marketing in many sectors. Marketing
concepts can be used for Business, Services,
Financial services, Non-for-profit, Politics,
Schools, Public opinion
82
Marketing must be POISE
Hugh Davidson argues that successful marketing is
marked with POISE. It must be:
P
O
I
S
E
Profitable
Offensive (rather than defensive)
Integrated
Strategic (future-oriented)
Effective (it gets results)
83
Developments in Marketing
1950s 1960s
1970s
1980s 1990s
2000s
?
Relationship
marketing
Services
marketing
Non-profit
marketing
Industrial
marketing
Consumer
marketing
Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. London:
Butterworth Heinemann
84
Influences on RM
Nordic
School
Anglo-Australian
Approach
Relationship
Marketing
Consumer Gds
Network
Approach
Strategic Alliances
& Partnership
Research
(Egan, 2001)
85
RM Definitions
Database
Marketing
Business/Customer
Partnering
Customer Partnering
(Company Relationships)
Most generally
accepted definitions
of relationship
marketing
Catch-all Category
Breadth of relationship definition
Source: Based on Brodie, R.J., Coviello, N.E., Brookes, R.W. and Little, V. (1997) ‘Towards a paradigm shift in
marketing; an examination of current marketing practices’, Journal of Marketing Management, 13(5), 383–406
86
Relationship Marketing
Terms used either as substitute for or to describe
similar concepts to Relationship Marketing









direct marketing
customer relationship
management (CRM)
micromarketing
loyalty-based
marketing
wraparound
marketing
symbiotic marketing
relevance marketing
frequency marketing
dialogue marketing

database marketing
 data-driven marketing
 one-to-one marketing
 ‘segment-of-one’
marketing
 customer partnering
 individual marketing
 bonding
 integrated marketing
 interactive marketing
Source: Based on Vavra, T.G. (1992) Aftermarketing. Homewood, IL: Richard D. Irwin; Buttle, F.B. (1996)
Relationship Marketing Theory and Practice. London: Paul Chapman; Tapp, A. (1998) Principles of Direct and
Database Marketing. London: Financial Times Management/Pitman Publishing
87
RM Definitions

Christopher et al (1991):
RM is where



customer service
quality management
marketing
come together

Other definitions stress time frame and
commitment
88
RM Definitions
Grönroos (1994)
“identify and establish, maintain and
enhance and, when necessary,
terminate relationships with customers
and other stakeholders, at a profit so
that the objectives of all parties involved
are met; and this is done by mutual
exchange and fulfilment of promises”
Source: Grönroos, C. (1994) ‘From marketing mix to relationship marketing: towards a paradigm shift in marketing’,
Management Decisions, 32(2), 4–20
89
Relationship Marketing


Seeks to create new value for customers and share it
Recognises the key role that customers have both as
purchasers and in defining the value they wish to achieve.

Businesses are seen to design and align processes,
communication, technology and people to achieve
customer value.
 Represents continuous cooperative effort between
buyers and sellers.
 Recognises the value of customer’s purchasing
lifetimes (i.e. lifetime value)
 Seeks to build a chain of relationships within the
organisation (to create customer value) and between
the organisation and its main stakeholders including
suppliers, distr.channels, intermediaries,shareholders.
Source: Adapted from Gordon, I.H. (1998) Relationship Marketing. Etobicoke, Ontario: John Wiley & Sons
90
TM versus RM
TRANSACTIONS
 Single sale focus
 Discontinuous
customer contact
 Features orientation
 Short time scale
 Little service emphasis
 Low commitment
 Quality a production
issue
RELATIONSHIPS
 Retention focus
 Continuous customer
contact
 Benefits orientation
 Long time scale
 High service emphasis
 High commitment
 Quality everyone’s
concern
Source: Adapted from Payne, A., Christopher, M. and Peck, H. (eds) (1995) Relationship Marketing for
Competitive Advantage: Winning and Keeping Customers. Oxford: Butterworth Heinemann
91
Importance of
Customer Service
Importance of
Core Product
RELATIONSHIP MARKETING
TRADITIONAL MARKETING
TM/RM Continuum
TM/RM Continuum
92