Marketing 1

DHRUVA ...defining excellence

INTRODUCTION TO MARKETING

Prof. Kunal GauravDhruva College of

ManagementHyderabad


MARKETING - DEFINITION

• AMA's 2004 Definition - "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's 2007 Revised Definition - “Marketing is the activity, conducted by organizations and individuals, that operates through a set of institutions and processes for creating, communicating, delivering, and exchanging market offerings that have value for customers, clients, marketers, and society at large.”


MARKETING – SOCIAL DEFINITION

Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.


MARKETING MANAGEMENT

Marketing management is the art and science of

choosing target markets and getting, keeping, and growing customers through creating,

delivering, and communicating superior

customer value.


SCOPE: WHAT IS MARKETED?

GoodsGoods

ServicesServices

Events & ExperiencesEvents & Experiences

PersonsPersons

Places & PropertiesPlaces & Properties

OrganizationsOrganizations

InformationInformation

IdeasIdeas


NEED, WANT & DEMAND

• Needs describe basic human requirements such as food, air, water, clothing, and shelter. TYPES – Stated Need, Real Need, Unstated Need, Delight Need & Secret Need.

• These needs become wants when they are directed to specific objects that might satisfy the need.

• Demands are wants for specific products backed by an ability to pay, willingness to purchase & availability of products in the market.


MARKET DEMAND STATES

Nonexistent Latent

Declining Irregular

Full UnwholesomeOverfull

Negative


CONCEPT OF EXCHANGE

• There are several ways to obtain a desired product;– Self Production– Coercion– Begging/ Borrowing– Exchange (Core of Marketing)


CONCEPT OF EXCHANGE

Exchange, the core of marketing, involves obtaining a desired product from someone by offering something in return. For exchange potential 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 other

party.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 with

the other party.


SERVICE

A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. Examples – Financial service, Beauty service, Health service etc.


Categories of Service Mix1. Pure tangible good: The offering is a tangible good such as soap; no services

accompany the product.

2. Tangible good with accompanying services: The offering consists of a tangible good accompanied by one or more services. General Motors, for example, offers repairs, maintenance, warranty fulfillment, and other services along with its cars and trucks.

3. Hybrid: The offering consists of equal parts of goods and services. For example, people patronize restaurants for both food and service.

4. Major service with accompanying minor goods and services: The offering consists of a major service along with additional services or supporting goods. For example, airline passengers are buying transportation service, but they get food and drinks, as well.

5. Pure service: The offering consists primarily of a service; examples include baby-sitting and psychotherapy.


COMPANY ORIENTATIONS

Production

Selling Marketing

Product

Societal


EVOLUTION OF MARKETING

• The Production Concept, one of the oldest in business, holds that consumers prefer products that are widely available and inexpensive.

• The Product Concept holds that consumers favor those products that offer the most quality, performance, or innovative features.

• The Selling Concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort.


EVOLUTION OF MARKETING

• The Marketing Concept holds that the key to achieving organizational goals consists of the company being more effective than its competitors in creating, delivering, and communicating customer value to its chosen target markets.

• The Societal Marketing Concept, which holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.


Competition

• Gause’s Principle of Competitive Exclusion: No two species can co-exist that make their living in the identical way.

• Competition, a critical factor in marketing management, includes all of the actual and potential rival offerings and substitutes that a buyer might consider.

• Competition is a combat between individuals, groups, nations, animals, etc. for territory, a niche, or allocation of resources. It arises whenever two or more parties strive for a goal which cannot be shared.


LEVELS OF COMPETITION

1. Generic competition: A company sees its competitors as all companies that compete for the same consumer dollars. e.g.- BMW would see itself competing with companies that sell major consumer durables, FMCG, foreign vacations, and new homes.

2. Form competition: A company sees its competitors as all companies that manufacture products that supply the same service. e.g.-BMW would see itself competing against manufacturers of all vehicles, such as motorcycles, bicycles, and trucks.

3. Industry competition: A company sees its competitors as all companies that make the same product or class of products. e.g. – BMW, Hyundai Santro, Maruti Alto etc.

4. Brand competition: A company sees its competitors as other companies that offer similar products and services to the same customers at similar prices. e.g.- BMW and Mercedes Benz


What is MyopiaWhat is Myopia

•Nearsightedness--not inherited. It can be prevented.

•Short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers' needs and wants.


“There is no such thing as a growth industry, what we have is growth opportunities.”-Theodore Levitt


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Marketing Myopia: Four Myths

• Myth 1: An ever-expanding and more affluent population will ensure our growth.


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• Myth 1: An ever-expanding and more affluent population will ensure our growth.

• When markets are expanding, we often assume we don’t have to think imaginatively about our businesses, but instead seek to outdo rivals simply by improving what we are already doing.

• Consequence: increased efficiency making products rather than boosting the value those products deliver to customers.


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• Myth 2: there is no competitive substitute for our industry’s major product.


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• Myth 2: there is no competitive substitute for our industry’s major product.

• Believing that our products have no rivals makes our companies vulnerable to dramatic innovations –often by smaller newer companies that focus on customer needs rather than the products themselves


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• Myth 3: We can protect ourselves through mass production.


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• Myth 3: We can protect ourselves through mass production.

• While the declining unit costs that come with increased production are alluring, focusing on mass production emphasizes our company’s needs when we should be emphasizing our customers’.


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• Myth 4: Technical R&D will ensure our growth


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• Myth 4: Technical R&D will ensure our growth

• When R&D produces breakthrough products, it is critical to remain focused on customer needs…ideally, new products are both breakthrough and meet customer needs


Henry Ford

Brilliant Marketer Senseless Marketer

• Created a product customer’s needed

• Created a product customer’s could afford

• Created production system to fit market needs

• Refused to make cars in any other color but black


Levitt has also devised ways to overcome marketing myopia. Some of the recommendations are

• Be customer led, not product oriented. • Market orientation should permeate throughout

the organization. • Managers need to be proactive and visionary


Conclusion

• “Organizations must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it.”

Theodore Levitt


THANK YOU!

Marketing 1

Economy & Finance

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