MKT 501: INTRODUCTION TO

MARKETING

Topic 1: Introduction – Creating Customer Value and Satisfaction

Objectives

After this lecture you should be able to : Define marketing and discuss its core concepts Define marketing management and examine how

marketers manage demand and build profitable customer relationships

Compare the five marketing management philosophies

Analyze the major challenges facing marketers heading into the next century.

What is Marketing? Marketing is the delivery of customer satisfaction at

a profit Is to attract new customers by promising superior

value and to keep current customers by delivering satisfaction.

E.g.. Wal-Mart – ‘We sell for less –always’ Coca-Cola – “Always Coca-Cola" always thirst

quenching, always good with food, always cool, always part of your life)

Successful companies know that if they take care of there customers, market share and profits will follow.

What is Marketing? – cont’d Sound marketing is critical to the success of any organizations

large or small, for profit or non-profit, domestic or global. (Organizations such as colleges, hospitals, museums, and even churches).

Marketing is all around you – * the result is the abundance of products in your nearby shopping mall. * in the advertisement that fill your TV screen, magazines and the local newspaper. In everything you do , at home, at school, at work you're exposed

to marketing. Behind it all there is massive network of people and activities

competing for your attention and purchasing dollars.

Marketing - Definitions

Today’s marketing is more than the old slogan ‘telling and selling’ but in the new sense of satisfying customer needs.

If the marketer does a good job of understanding consumer needs; develops products that provide superior value, and prices, distributes, and promotes them effectively , these products will sell very easily

Selling and Advertising are only part of a larger ‘marketing mix’ (the 4 P’s).

Marketing – Definitions –cont’d

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.

Core Marketing Concepts

Needs, Wants andDemands

Markets

Exchange,Transactions andRelationships

Products and Services

Value, Satisfaction and Quality

Core MarketingConcepts

Needs, Wants and Demands

Needs- the most basic concept underlying marketing -human needs are state of felt deprivation

- Physical Needs - food, clothing,

warmth, safety

- Social Needs - for belonging and affection

- Individual needs – needs for knowledge,

self-expression, and recognition

Needs, Wants and Demands-cont’d

Want- The form taken by human need as shaped by culture and individual personality

People have almost unlimited wants but limited resources. Thus wanted to choose products that provide the most value and satisfaction for their money.

Needs, Wants and Demands-cont’d

Demands – Human demands that are backed by buying power

When backed by buying power, wants becomes demands

Consumers view products that give them the best bundle for their money.e.g

- Honda Civic- means basic transport, low price, and fuel economy. - Lexus –means comfort, luxury and status

Needs, Wants and Demands-cont’d

Marketing go to great lengths to understand each customers needs,wants and demands

- conduct consumer research about consumer likes and dislikes

- observe customers using their own and competing products - train salespeople to be on the lookout for unfulfilled

customer needs - top executives to mingle with customers Provides input for designing marketing strategies

Products and Services

People satisfy their needs and wants with products and services

Products –Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services,persons,places,organizations and ideas.

Services – Any activity or benefit that one party can offer to another that is essentially intangible and doesn’t result in the ownership of anything.

Value, Satisfaction and Quality

Consumers usually face a broad array of products and services that might satisfy a given need.

Consumers make buying choices based on their perceptions of the value that a product deliver

Customer Value –The difference between the values the customer gains from owning and using a product and the costs of obtaining the product e.g.

- FedEx - fast & reliable package delivery; customer receives some status & image values Customer cannot judge product value and costs accurately or

objectively, but acted on perceived value.

Value, Satisfaction and Quality-cont’d

Customer Satisfaction –The extent to which a product’s perceived performance matches a buyers expectations.

Satisfied customers make repeat purchases, and tell others.

Good marketer aim to delight customer by promising only what they can deliver, and then deliver more than they promise.

Value, Satisfaction and Quality-cont’d Total Quality Management – program designed to

constantly improve the quality of products,services,and marketing processes.

Quality can be defined as ‘freedom from, defects’ Another definition- The totality of features and

characteristics of a product or service that bear on its ability to satisfy customer needs. (by

Customer satisfaction is closely linked to quality Quality has direct impact on product performance

and hence on customer satisfaction. Quality begins with customer needs and ends with

customer satisfaction.

EXCHANGE, TRANSACTIONS AND RELATIONSHIPS

Marketing occurs when people decide to satisfy needs and wants through exchange.

Exchange is the act of obtaining a desired object from someone by offering something in return.

Exchange motivate customer to concentrate in making/developing products and trade them for needed items , thus

Exchange allows a society to produce much more than it would with any other system.

EXCHANGE, TRANSACTIONS AND RELATIONSHIPS – cont’d

Transaction – is marketing unit of measurement A trade between two parties that involves at least

two things of value, an agreed-upon conditions, and an agreed time and place. e.g.

- a transaction taken place between two parties: one party gives X to another party and gets Y in return.

- you pay Sears $350.00 for the television set - in barter transaction, you might trade your secondhand TV set with your neighbor old refrigerator.

EXCHANGE, TRANSACTIONS AND RELATIONSHIPS – cont’d

Relationship marketing – The process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders.

Customers need to build long-term relationships with valued customers, distributors, dealers, and suppliers.

Operating principle: Build a good network of relationships with key stakeholders, and profits will follow.

Market Market – the set of all actual and potential buyers of a product or

service. The size of the market – depend on: - number of people who exhibit the need, - have resources to engage in the exchange The government is another market that plays several roles: -buys goods from resources, producers, and intermediaries markets: it pays them; it taxes this markets

( including consumer markets); and it returns needed public services.

The goal of marketers is to understand the needs and wants of specific markets and select the markets that they can serve best thus create products and services that create value and satisfaction to that specific market, resulting in sales and profits for the company.

Marketing Marketing means – serving a market of end users in

the face of competitors Companies and competitors communicate and send

products directly or through marketing intermediaries.

All actors in the system are affected by major environmental forces e.g. demographic,economical,technological,political,legal,social,cultural & etc.

Each party in the system adds value for the next level.

Main Actors and Forces in a Modern Marketing System

Macro-Enviroment

Suppliers

Company (Marketer)

Competitors

MarketingIntermediaries

End -user Market

Marketing Management Marketing Management –is the analysis,

planning ,implementation and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.

Also it involves managing demand, which in turn involves managing customer relationships.e.g

- Golden gate bridge sometimes carries an unsafe level of traffic - Yosemite National Park is badly overcrowded in the summer Demarketing – Required to reduce demand temporarily or

permanently – aim is not to destroy demand, but only to reduce or shift it.

Marketing Management –cont’d

Building Profitable Customer Relationship – Traditional marketing theory and practice

have focused on attracting new customers and making the sale.

Today the emphasis is shifting –apart from designing strategies to attract new customers and create transactions with them, companies are now going all out to retain current customers and build lasting customer relationships.

Marketing Management Philosophies

Marketing management - is carrying out tasks to achieve desired exchanges with target markets whereas philosophies are elements that guide these marketing efforts.

There are five alternative concepts which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.

Marketing Management Philosophies –cont’d

The Production Concept - the philosophy that the consumers will favor products that are available and highly affordable: therefore, management should focus on improving production and distribution efficiency. This concept is on of the oldest philosophies that guides sellers.

The production concept is useful in two ways ;

- When the demand of a product exceeds the supply

- When the cost is to high, improved productivity is

needed to bring price down.

Marketing Management Philosophies –cont’d The Product Concept -the idea that consumers will

favor products that offer the most quality , performance and innovative features, the organization should devote energy to making continuous product improvements.

The Selling Concept –the philosophy that the consumers will not buy enough of the organization’s products unless the organization undertakes a large-scale selling and promotion effort.

The concept is typically practiced with unsought goods.

Most firms practiced selling concept when they have overcapacity – aim to sell what they make rather then what the market wants.

Marketing Management Philosophies –cont’d The focus is – creating sales transactions rather than on building

long –term, profitable relationships with customers. The Marketing Concept – The idea that achieving organizational

goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than do competitors.

- under the marketing concept , customers produce what the consumers want –thereby satisfy consumers and making profits - start with a well-defined market, focuses on customer needs, coordinates all the marketing activities, and make profits by creating long –term customer relationships.

Marketing Management Philosophies –cont’d

The Societal Marketing Concept –the idea that the organization should determine the needs, wants, and interest of target markets and deliver the desired satisfaction more effectively and efficiently than do competitors in a way that maintain or improves the consumers and society’s well-being

The societal marketing concept calls on marketers to balance three considerations in setting their marketing policies : company profits,consumer wants, and society’s interest. e.g

- The fast-food industry - tasty, convenient, reasonable price - yet high in fat and salt- also convenient packaging lead to waste and pollution.

It is the newest of the five marketing management philosophies

Marketing Management Philosophies –cont’d

The Societal marketing Concept

Societal MarketingConcept

Society(Human Welfare)

Company(Profits)

Consumers(Want Satisfaction)

Marketing Challenges into the Next Century _Overview

Marketing operates within a dynamic global environment, - require marketing managers to be objective be alert on their marketing practices.

Rapid changes can make yesterday’s winning strategies out of date. Peter Drucker stated , a company’s winning formula for the last decade will probably be its undoing in the next decade.

Marketing Challenges into the Next Century

The following are some of the marketing challenges as we head into the twenty first century?

- changing customer values and orientations

- economic stagnation

- environmental decline

- increased global competition

- economic, political and social problems These problems also provide marketing

opportunities

Marketing Challenges into the Next Century – cont’d

The following are some key trend and forces that are changing the marketing landscape and challenging marketing strategies :

- growth of non- profit marketing, - information technology boom, - rapid globalization, - the changing world economy, and the call for more socially responsible actions.

Marketing Challenges into the Next Century – cont’d Growth of Non-Profit Marketing - Marketing has become a major component in the

strategies of many non-profit organizations such as : colleges, hospitals, mesuems,symphonies,and even churches.e.g

- many private colleges, facing declining enrollments and rising costs, and using marketing to compete for students and funds by defining target markets and improve promotions to respond well to the students needs and wants.

- Government Agencies –U S Army uses Marketing Plan to attract recruits - Fiji – The cancer Society /Aids Foundation/Human Rights

Marketing Challenges into the Next Century – cont’d The Information Technology (IT) Boom – The explosive growth in computer, telecommunications, and

information technology ( IT) has had a major impact on the way companies bring value to their customers.

Technology boom has created exciting and effective ways : - tracking customers - create products & services tailored to meet customer needs - efficient distribution and delivery of products - fast and effective communication with customers. With only a few click of a mouse a marketer can tap into online

data services to learn anything from: - what car type you drive - what ice-cream flavors you prefer - the choice of brand names that are sued by different sports people

Marketing Challenges into the Next Century – cont’d

The Information Technology (IT) Boom –The Internet The most dramatic new technology surrounds the development

of the ‘information superhighway’ and its bedrock – The Internet Created in the 1960’s by the US Dept of Defense, initially to link

Govt. labs, contractors, and military installations. Today, the internet links computer users of all types around the

world. Companies are using internet to: - link employees in remote offices - distribute more sales information quickly - build closer relationships with suppliers and customers - sell and distribute products more efficiently and effectively.

Marketing Challenges into the Next Century – cont’d

Rapid Globalization Radical change to world economy experienced during the past two

decades with geographical and cultural distances shrunk due to : - fax machines / internet - global computer and telephone hookups - world television satellite broadcasts - other technical advances Have allowed the company to advance and expand geographical

market coverage, purchasing and manufacturing Today, almost every company , is touched in some way by global

competition. e.g. - Bill Blass – one of America’s top designer ,chose clothes woven from

Australia and with designs printed in Germany .He will design a dress and fax the drawing to a Hong Kong Agent who will place the order with a China factory. Finished dresses will be air freighted to New York , where they will be redistributed to Department and specialty stores around the country.

Marketing Challenges into the Next Century – cont’d

The Changing World Economy - A sluggish world economy has resulted in more difficult times for

both consumers and marketers. Markets, consist of people with needs and purchasing power and

in many parts of the the world the latter is always a problem Current economic conditions create both problems and

opportunities for marketers. Companies are developing new solutions to changing consumer

problems e.g: - Wal-Mart – rose to market leadership on two principles ‘more for

less’ and ‘satisfaction guaranteed’

Marketing Challenges into the Next Century – cont’d The Call for More Ethics and Social Responsibility - Corporate ethics has become a hot topic in almost every

business arena. Today's marketers must also take responsibility for the social

and environmental impact of their actions.e.g - Fast-food Industry – fast/ efficent/convinient - tasty / too salty / too rich - safe wrapping/packaging Lead to: unhealthy life-style, pollution and unclean environment With Ethics and Social Responsibility issues in place companies

are required to be responsible with a higher standard of environmental responsibility in their marketing and manufacturing activities.

THE END

Flea Market – Unsought Market