1

Defining Marketing for

the

21st Century

Chapter Questions

Why is marketing important?

What is the scope of marketing?

What are some fundamental marketing concepts?

How has marketing management changed?

What are the tasks necessary for successful marketing management?

What Is Marketing?

Marketing deals with identifying and meeting humanand social needs

One of the shortest definition of marketing is –“meeting needs profitably”

Ex: Tata Sky - Installation free if you are shifting atnew home.

What Is Marketing?

The American Marketing Associationdefines-

Marketing is an organizational function and aset of processes for creating, communicating,and delivering Value to customers and formanaging customer relationships in ways thatbenefit the organization and Its stakeholders.

Value reflects the perceived tangible and intangiblebenefits and costs to customers.

Value can be seen primarily a combination of qsp

What Is Marketing Management?

The American Marketing Associationdefines-

Marketing management is the art and scienceof choosing target markets and getting, keeping,and growing customers through creating,delivering, and communicating superior customervalue.

Social Definition of Marketing

The American Marketing Associationdefines-

Marketing is a social process by whichindividuals and groups obtain what they needand want through creating, offering, and freelyexchanging products and services of valuewith others.

Exchange

It is the process of obtaining a desiredproduct from someone by offeringsomething in return.

For exchange to exist, five conditions must be satisfied:

1. There are at least two parties.

2. Each party has something that might be of value to the otherparty.

3. Each party is capable of communication and delivery.

4. Each party is free to accept or reject the exchange offer.

5. Each party believes it is appropriate or desirable to deal withother party.

Marketing

For a managerial definition, marketing has often beendescribed as “the art of Selling”, but people aresurprised when they hear that the most importantpart of marketing is not selling!

Peter Drucker says – The aim of marketing is toknow and understand the customer so well that theproduct or service fits him or her and sell itself.

Ex: Gillette Mach III razor

What Is Marketed?

Goods

Services

Events

Experiences

Places

Persons

Properties

Organizations

Information

Ideas

Figure 1.1 Structure of Flows in Modern Exchange Economy

Figure 1.2 A Simple Marketing System

Key Customer Markets

Consumer markets

Business markets

Global markets

Nonprofit/Government markets

Rural Markets in South Asia

Rural markets offer immense potential for market expansion and growth:

Consumption in rural markets predicted to grow at in the next two decades.

Size and growth rate for many products and product categories are very attractive.

48 percent of the rural population is below 20 years of age.

Core Concepts

Needs, wants, and demands

Target markets, positioning, segmentation

Offerings and brands

Value and satisfaction

Marketing channels

Supply chain

Competition

Marketing environment

Core ConceptsNeeds:

Needs are the basic requirements.

People need food, air, water, clothing, shelter to survive.

People also have strong needs for recreation, education, and entertainment.

Wants:

These needs become wants when they aredirected to some specific objects that mightsatisfy the need.

Core ConceptsEx:

To make presentations and prepare project reports Ineed laptop (Need).

To make presentations and prepare project reports Ineed laptop of Apple (want).

Understanding consumer needs and wants is notalways simple.

Some consumers have needs of which they are notfully conscious, or they cannot articulate these needs,or they use word require interpretations.

Core Concepts

Ex: Consider the consumer who says he wants an “inexpensivecar”. The marketer must probe further. We can distinguishamong five types of needs:

1. Stated Needs: The consumer wants an inexpensive car

2. Real Needs: The consumer wants a car whose operating cost islow, not initial price.

3. Unstated Needs: The consumer expects good service from dealer.

4. Delight Needs: The consumer would like the dealer to include anadditional accessories of car.

5. Secret Needs: The consumer wants to be by friend as a savvyconsumer.

“Make and Sell” is replaced by “Sense and Respond”

Core ConceptsSegmentation:

Segmentation is the process of dividing market into various homogeneous groups which are having similar needs and wants.

Targeting:

The marketer then decides which segments present the greatest opportunity-which are its target markets.

Positioning:

Positioning is the act of designing company’s offering and image to occupy a distinctive place in the minds the target market.

Core ConceptsOfferings

Companies addresses needs by putting a valuepropositions, set of benefits they offer to satisfy theirneeds in form of products or services orcombinations of both.

Brand:

A brand is an offering from known source.

A brand name carries many associations in the mindsof people. Those associations make up the brandimage. All companies strives to build brand strength –that is strong, favorable, and unique brand image.

Core ConceptsValue

Value reflects perceived tangible and intangible benefits and costs to customers.

Value can be seen primarily as a combination of quality, service, and price (qsp)

Satisfaction

Satisfaction reflects a person’s comparative judgments resulting from a product’s perceived performance in relation to his or her expectations.

Core ConceptsMarketing Channels

Marketing channels deliver and receive message fromtarget buyers, and include newspapers, magazines, radio,televisions, mail, telephones, billboards, posters, and theInternet.

Distribution Channels

The marketer uses this channel to display, sell or deliverthe physical product or service to the buyer or user.

Service Channel

It is used to carry out transaction with potential buyers. Itincludes warehouses, transportation companies, bank andinsurance firms that facilitate the transactions.

Core ConceptsSupply Chain

Supply chain describes a longer channel stretching fromraw materials to components to final products that arecarried to final buyers.

Competition

It includes all actual and potential rival offerings andsubstitutes that a buyer might consider.

Marketing Environment

Demographic Economic

Socio-cultural

NaturalTechnological

Political-legal

COMPANY ORIENTATIONS TOWARD THE MARKETPLACE

Production concept – products that are available and inexpensive

Product concept – quality, performance, or innovative features

Selling concept

Marketing concept – “Sense & Respond”

Societal marketing concept

Holistic marketing concept

COMPANY ORIENTATIONS TOWARD THE MARKETPLACE

Societal marketing concept

The Societal marketing concept holds that

the organization’s task is to determine the needs, wants, and interests

in a way that preserves or enhances the consumer’s and the society’s well being.

of target markets

and to deliver desired satisfactions more effectively and efficiently than competitors

The holistic marketing concept

It recognizes “Everything matters” withmarketing – and that a broad, integratedperspective is often necessary.

Figure 1.3 Holistic Marketing

1. Relationship Marketing

Customers

Employees

Marketing Partners

Financial Community

The ultimate outcome of relationship marketing is a unique company asset called a marketing network

2. Integrated Marketing

Integrated marketing occurs when themarketer devises marketing activities andassembles marketing programs to create,communicate, and deliver value for consumerssuch that –

“The whole is greater than the sum of its parts.”

2. Integrated Marketing

Key themes:

1. Many different marketing activities cancreate, communicate, and delivervalue, and

2. Marketers should design andimplement any one marketing activitywith all other activities in mind.

3. Internal Marketing

Marketing is no longer the responsibility of asingle department.

when engineering designs the right products,finance furnishes the right amount of funding,purchasing buys the right materials,production makes the right products in theright time horizon, and accounting measuresprofitability in the right ways.

3. Internal Marketing

Such interdepartmental harmony can only trulycombine, however, when management clearlycommunicates a vision of how the company’smarketing orientation and philosophy servecustomers.

Internal marketing is the task of hiring,training, and motivating able employees whowant to serve customers well.

4. Performance Marketing

Financial Accountability

Social Responsibility Marketing

4. Performance Marketing

Top marketers are increasingly going beyond salesrevenue to examine the marketing scorecard andinterpret what is happening to market share,customer loss rate, customer satisfaction, productquality, and other measures.

They are also considering the legal, ethical, social,and environmental effects of marketing activitiesand programs.

Figure 1.4 The Marketing Mix

The New Four Ps

Processes

People

Programs

Performance

Marketing Management Tasks

Develop market strategies and plans

Assess market opportunities and customer value

Choose value

Design value

Deliver value

Communicate value

Sustain growth and value

For Review

Why is marketing important?

What is the scope of marketing?

What are some fundamental marketing concepts?

How has marketing management changed?

What are the tasks necessary for successful marketing management?