Introduction to

Marketing
Introduction to Marketing
Marketing;
 “Satisfying
customer needs”
 “Meeting needs profitably”
 “Generating customer value at a profit”
 “Managing profitable customer relationships by
delivering superior value to customers”
What is Marketing?
 No single correct definition or approach
 Common subject matters:
 The ability to satisfy customers,
 The identification of favorable marketing opportunities,
 The need to create an edge over competitors,
 The capacity to make profits to enable a viable future for
the organization,
 The use of resources to maximize a business’ market
position,
 The aim to increase market share mainly in target
markets
 Marketing Process
Capture
value from
Create value for customers and customers
build customer relationships in return

Capture
Understand Design a Construct a Build value from
the customer- marketing profitable customers
marketplace driven program that relationships to create
and customer marketing delivers and create profits and
needs&wants strategy superior customer customer
value delight quality
Core Concepts of Marketing

Needs, wants,
and demands

Markets Products
and services

Exchange,
Value and
transactions,
satisfaction
and relationships
Core Concepts of Marketing
 Need
 Needs, wants, and  Basic human requirements
demands  State of felt deprivation
 Marketing offers:  Example: Need food
including products,  Wants
services and experiences  Needs directed to specific
objects
 Value and satisfaction  The form of needs as
 Exchange, transactions shaped by culture and the
and relationships individual
 Example: Want a Big Mac
 Markets  Demands
 Wants which are backed by
buying power
Core Concepts of Marketing

 Needs, wants, and  Marketing offering

demands  Combination of
 Marketing offers: products, services,
information or
including products, experiences that satisfy
services and experiences a need or want
 Value and satisfaction  Offer may include
services, activities,
 Exchange, transactions
people, places,
and relationships information or ideas
 Markets
Core Concepts of Marketing
Products
Anything that can be Offered to a Market to Satisfy a Need or Want

Experiences Persons Places

Organizations Information Ideas

Services
Activities or Benefits Offered for Sale That Are Essentially
Intangible and Don’t Result in the Ownership of Anything
Core Concepts of Marketing
 Value
 Needs, wants, and
 Customers form
demands expectations regarding
 Marketing offers: value
including products,  Marketers must deliver
services and experiences value to consumers

 Value and satisfaction  Satisfaction

 A satisfied customer will buy
 Exchange, transactions again and tell others about
and relationships their good experience
 Markets
 Core Concepts of Marketing

Value Gained From Owning a Product and

Costs of Obtaining the Product is
“Customer Value”

Product’s Perceived Performance in Delivering Value

Relative to Buyer’s Expectations is
“Customer Satisfaction”

Total Quality Management Involves Improving the Quality of

Products, Services, and Marketing Processes
Core Concepts of Marketing
 Exchange
 Needs, wants, and  The act of obtaining a
desired object from someone
demands by offering something in
 Marketing offers: return
including products,  Transaction
services and experiences  Trade of values between two
 Value and satisfaction or more parties
 One exchange is not the goal,
 Exchange, transactions relationships with several
and relationships exchanges are the goal
 Markets  Relationships are built through
delivering value and satisfaction
 Marketing network consists
of the company and all its
supporting stakeholders
Core Concepts of Marketing

 Needs, wants, and  Market

demands  Set of actual and
 Marketing offers: potential buyers of a
including products, product
services and experiences  Marketers seek buyers
that are profitable
 Value and satisfaction
 Exchange, transactions
and relationships
 Markets
Simple Marketing System
Communication

Products/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
Marketing defined as...

Process by which individuals and groups

obtain what they need and want through
creating and exchanging products and
value with others.

Simply put: Marketing the delivery of

customer satisfaction at a profit.
More Definitions of Marketing
 A social and managerial process by which
individuals and groups obtain what they need and
want through creating, offering and exchanging
products and services of value with others.

 The management process responsible for

identifying, anticipating and satisfying customer
requirements profitably.

 Marketing consists of individual and organizational

activities that facilitate and enhance satisfying
exchange relationships in a dynamic environment
through the creation, servicing, distribution, promotion
and pricing of goods, services and ideas
More Definitions of Marketing (cont.)

 From the societal perspective; some marketers

describe marketing as the creation and delivery of
a standart of living.

 From the managerial perspective; marketing

(management) is the process of planning and
executing the conception, pricing, promotion and
distribution of goods and services to create
exchanges that satisfy individual and
organizational goals.
Marketing Management
 Marketing management the art and science of
choosing target markets and building profitable
relationships with them.
 This definition must include answers to 2 questions:
 What customers will we serve?
 How can we serve these customers best?
 Getting, keeping, and growing customers through
creating, delivering, and communicating superior
customer value

 Marketing management involves managing

demand involves managing customer relationships
 Marketing Management
 Marketing management can be defined in
broader terms as “demand management”;
 Marketers aim to influence the level, timing and
composition of demand to meet organizational goals.

 Marketing management is concerned

 not only with finding and increasing demand,
 but also with changing or even reducing it : demarketing!
 Demarketing’s aim is to reduce the number of customers
or to shift their demand temporarily or permanently
 (e.g. move traffic away from a popular tourist attraction during peak
demand times)
Evolution of Marketing Thought

 How marketing has become

“marketing” as we understand it
and apply its practices today?
 Evolution of Marketing Thought
 Production Era (1850s-1920s)
 Industrial revolution; mass production
 Few products and little competition
 Sales Era (1920s-1950s)
 The focus was on personal selling and advertising
 Sales seen as the major means for increasing profits
 Mktg Era (1950s-present)
 Customer orientation replaced the “hard sell” of the sales-led era
 Determination of the needs and wants of customers before
introducing products or services
 Evolution of Marketing Thought
 Relationship Marketing Era: 1990s-
 Marketing era has recently shifted from being “transaction-
based” to focusing on “relationships”
 The argument traditional marketing practices focused on
attracting new customers rather than retaining existing
ones.
 It is equally important to hang on to existing customers so
that they become repeat buyers and long term loyal
customers
 “customer relationship management”!
Company Orientations Towards the
Marketplace
Consumers prefer products that are
Production Concept widely available and inexpensive

Consumers favor products that

Product Concept offer the most quality, performance,
or innovative features

Consumers will buy products only if

Selling Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing Concept markets & delivering value
better than competitors
Production Concept
 Consumers will favor those products that are
widely available and low in cost.
 Managers concentrate on achieving high
production efficiency and wide distribution.

 The assumption is valid at least in 2 situations :

 The demand for a product exceeds supply (suppliers will
concentrate on finding ways to increase production)
 The product’s cost is high and has to be decreased to
expand the market.
Product Concept
 Consumers will favor those products that offer
the most quality, performance or innovative
features.
 Managers in product-oriented organizations
concentrate on making superior products and
improving them over time.
 The assumption  the customers will admire
well-made products and can evaluate product
quality and performance
 This concept may lead to marketing myopia
Selling Concept
 Agressive selling and promotion
 Assumptions are;
 Consumers must be convinced of buying company
products
 Company is powerful in generating effective selling and
promotion to stimulate more buying
 This concept is mostly used by firms which have
overcapacity.
 The aim is “to sell what they make” rather than
“make what the market wants.”
 Short-term profits are more important (customer
dissatisfaction may occur)
Marketing Concept
 Key to achieving organizational goals consists
of being more effective than competitors in
creating, delivering and communicating
customer value to target markets.

 4 pillars of modern marketing :

1. Target market
2. Customer needs
3. Integrated marketing
4. Profitability through customer satisfaction
Marketing and Sales Concepts Contrasted
Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

Marketing Concept (cont.)
1) Target market homogenous group of customers
to whom the company wishes to appeal
2) Customer needs
 Consumers may not be fully conscious of their needs
 It may not be easy to articulate these needs
 They may use words that require some interpretation
 Customer-oriented thinking to define customer needs from
the customer’s point of view
 Sales revenue New customers + Repeat customers
 “Customer Retention” vs. “Customer Attraction”
 Customer satisfaction is a function of the product perceived
performance and buyer’s expectations
Marketing Concept (cont.)
3) Integrated Marketing
1. Various marketing functions must work together for
customer satisfaction (coordination of 4Ps; marketing
mix elements)
 Marketing Mix  controllable variables the company puts
together to satisfy its target market(s).
Product: Product variety, quality, design, features, brand name,
packaging, sizes, services, warranties, returns
Price: List price, discounts, allowances, payment period, credit
terms
Promotion: Sales promotion, advertising, sales force, public
relations, direct marketing
Place: Channels, coverage, assortments, locations, inventory,
transport
Marketing Concept - The 4 P’s
 Marketing Concept - The 4 P’s The 4 Cs

Marketing
Mix

Product Place

Convenience
Customer
Solution Price
Promotion

Customer
Cost Communication
Marketing Concept (cont.)

Integrated Marketing (cont.)

2. Marketing must be well coordinated with other
departments in the company;
all departments have to work together to satisfy
customers’ needs and wants

4) Profitability through customer satisfaction

 To achieve profits as a result of creating superior
customer value
Selling – Marketing...

“There will always be need for

some selling. But the aim of marketing
is to make selling superfluous. The aim
of marketing is to know and understand
the customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer
who is ready to buy.”
Peter Drucker
Modern Marketing Concept
Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
Modern Marketing Concept
Customer-Oriented Organization Chart

Customers

Front-line people

Middle management

Top
manage-
ment
Relationship Marketing Concept
 Customer Relationship Management  the overall
process of building and maintaining profitable
customer relationships by delivering superior
customer value and satisfaction.

 Itdeals with all aspects of acquiring, keeping and

growing customers
 Relationship building blocks “customer value” and
“customer satisfaction”
 “Customer retention” and “customer loyalty”
 The intention to gain a greater proportion of an
existing customer’s purchases over a long period
(increase “consumer lifetime value”!)
Relationship Marketing Concept
“Our slogan ‘5+Million More Smiling Customers’ is
not about reaching sales targets but about
whether we are able to provide greater
satisfaction to a greater number of customers...

The goal is to improve customer satisfaction which

translates to an increased number of ‘smiling
customers’.”

Tokuichi Uranishi
Executive Vice President,
Toyota Motor Corporation
 Connections With Customers –
Not All Customers are Equal
 Most marketers are targeting fewer, potentially
more profitable customers.
 Asking:
 What value does the customer bring to the
organization?
 Are they worth pursuing? – customer profitability analysis
 Focus has shifted to:
 keeping current customers, and
 building lasting relationships based on superior
satisfaction and value.
 It costs 5 to 10 times as much to attract a new customer as
it does to keep a current customer satisfied.
Customer Relationship Management
Capturing Value from Customers
Key Concepts
 Customer delight
 Customer Loyalty leads to emotional
and Retention relationships and
 Share of loyalty
Customer  Customer Lifetime
 Customer Equity Value (CLV) shows
true worth of a
customer
Customer Relationship Management
Capturing Value from Customers
Key Concepts
 Share of customer’s
 Customer Loyalty purchase in a product
and Retention category.
 Share of Customer  Achieved through
 Customer Equity offering greater
variety, cross-sell and
up-sell strategies.
Customer Relationship Management
Capturing Value from Customers
Key Concepts  The combined customer
lifetime values of all
 Customer Loyalty current and potential
and Retention customers.
 Measures a firm’s
 Share of
performance, but in a
Customer manner that looks to the
 Customer Equity future.
 Choosing the “best”
customers is key
Societal Marketing Concept
 Company’s negative effects on society
 Conflict between consumer wants and long-term
social welfare
 Marketing managers should be concerned with
social responsibility
 The societal marketing concept
 Company’s task is to determine needs and wants of
target markets & to satisfy them more effectively and
efficiently than competitors --in a way that preserves or
enhances the consumer’s and society’s well-being.
 Societal Marketing Concept
Society
(Human Welfare)

Societal
Marketing
Concept

Consumers Company
(Want Satisfaction) (Profits)
Marketing Landscape
Challenges  Growth of the Internet
 Advances in
 Digital age telecommunications,
 Globalization information,
transportation
 Ethics and social  Customer research and
responsibility tracking
 Product development
 Not-for-profit  Distribution
 New advertising tools
marketing  24/7 marketing through the
 Marketing Internet

relationships
Marketing Landscape
Challenges
 Geographical and
 Digital age cultural distances
 Globalization have shrunk
 Greater market coverage
 Ethics and social
 More options for
responsibility purchasing and
manufacturing
 Not-for-profit
 Increased competition
marketing from foreign competitors
 Marketing
relationships
Marketing Landscape
Challenges
 Marketers need to
 Digital age take great
 Globalization responsibility for the
 Ethics and social impact of their
responsibility actions
 Not-for-profit
marketing
 Marketing
relationships
Marketing Landscape
Challenges
 Many organizations
 Digital age are realizing the
 Globalization importance of
strategic marketing
 Ethics and social  Performing arts
responsibility  Government agencies
 Not-for-profit  Colleges, universities
marketing  Hospitals

 Marketing
relationships
Marketing Landscape
Challenges
 Profits through
 Digital age managing long-term
 Globalization customer equity
 Improve customer
 Ethics and social knowledge
responsibility  Target profitable
customers
 Not-for-profit  Keep profitable customers
marketing
 Marketing
relationships