Week 1 – Introduction to Marketing Fundamentals

Learning Objectives:

1. Define & explain marketing

2. Understand the basic marketing concepts – needs, wants, demands, products, value, satisfaction, quality exchange, transaction, relationships & markets

3. Familiarise with various marketing management philosophies

4. Know about the evolution of marketing

5. Understand the marketing challenges of today

Marketing:

“Marketing is a social & managerial process by which individuals & groups obtain what they need and want through creating,

offering & exchanging products of value with others”. Micro marketing is how an individual organisation directs its marketing

activities and allocates its resources to benefits customers. Macro marketing is the study of the aggregate flow of a nations

G&S to benefit society.

[Business Context] ‘Marketing’ is process by which firms create value for customers & build strong customer relationships in

order to capture value from customers in return. Utilities refer to the customer value received by users of the product:

Place – accessibility to potential customers (convenience)

Time – product available when needed (convenience)

Possession – created when ownership is transferred to the buyer

Image – the emotional value that the customer attaches to a brand or product

Information – created by informing prospective buyers that a product exists

The Marketing Process Creating & Capturing Value:

1. Understand the marketplace, what are the customer’s needs, wants & demands?

2. Design a customer driven marketing strategy – meet customer needs

3. Construct an integrated marketing program that delivers superior value (perceive ‘sell to mind’) – convey information

4. Build profitable relationships & create customer satisfaction

5. Capture value from customers to create profits & customer equity (potential future revenue over a lifetime)

1. Understanding the Market Place & Customer Needs, Wants & Demands:

1.1 Needs, Wants & Demands Marketers use focus groups, customer clinics (qualitative), quantitative research (large scale),

feedback, interviews etc. To gain insight executive work on the front line at times e.g. Disney / Pizza Hut.

Needs –Not formed by society/marketers. Needed to live. A state of felt deprivation of some basic satisfaction.

Wants – Desires for specific satisfiers of the deeper needs. Constantly shaped & reshaped by social forces

Demands – Wants for specific products that are backed by the ability & willingness to buy

1.2 Market Offerings Combination of products, services, information or experiences offered to a market to satisfy a

need/want. Marketing Myopia is the mistake of paying more attention to (the company’s needs) specific products company

offers, than the benefits & experiences produced by the products (or the marketplaces needs/wants) i.e. it is important to see

themselves as providing a solution to a need, this ensures that focus is not only on existing wants b ut on underlying needs.

Looking beyond the attributes of the G&S they produce creating a brand experience is a powerful benefit (e.g. Happy – Coke)

1.3 Products, Value, Cost & Satisfaction Consumer’s Product Choice Set

Customers are value maximisers; their satisfaction is linked to value. Satisfaction leads to increased loyalty/positive word of

mouth creating repeat/new customers. Competitors will try to alter customer value perceptions

Product – anything that can be offered to satisfy a need or want

Value – perceived benefits gained from having or using the product LESS the cost of obtaining it

Satisfaction – the level of a person’s felt state, due to comparing a products perceived performance & expectation

o Strategy of over delivering (if product far exceeds all alternatives) or under promising = highly satisfied – w.o.m

1.4 Exchange, Transactions & Relationships

Exchange is a way to obtain desired G&S by offering something in return. Exchange creates value (CPC) as each party willingly

accepts .Repeat transactions, by delivering superior value, can create long term relationships & loyalty. Conditions required:

There must be 2 parties

Each must have something to offer

Each must be willing to deal & free to decide

Each must be able to communicate & deliver

1.5 Markets & Marketers:

The Market is all potential customers sharing a particular need/want who might be willing & able to engage in an exchange to

satisfy their need/want. Marketing aims to manage markets to actualise potential exchanges, whilst the Marketer is someone

who seeks a resource from someone else & is willing to offering something of value in exchange.

2. Design a Customer Driven Marketing Strategy

Marketing Management:

“The art & science of choosing target markets & building profitable relationships with them”. The aim is to find, attract, keep &

grow target customers by creating, delivering & communicating superior value . Marketing management also involves

managing demand (customers). Losing a customer = losing a lifetime stream of purchases. What customers will we serve

(segmentation & targeting) & how can we best serve targeted customers (differentiation & positioning)

The 5 Marketing Philosophies/Concepts:

1. Production – Widely available & low cost G&S, useful when D exceeds S, or when general product costs are high (cars)

2. Product – High quality, innovative, high performance, many features G&S. Still need to price, place effectively flaw.

3. Selling – emphasis on aggressive selling/promotion efforts. Consumers under buy w/o. Donate blood (unsought G/S).

Evolution of Marketing – Within (2)

4. Marketing – Organisational success depends on determining needs, wants & interests of target market & delivering

the desired satisfactions more effectively & efficient than competitors.

a. 4 Pillars – target market, customer needs, coordinated marketing & profitability

5. Societal Marketing – Organisational success depends on determine needs, wants & interests of target market. Than

deliver the desired satisfactions more effectively & efficient than competitors to enhance the consumers & society’s

well being. E.g. J&J would rather take a loss than ship a bad batch of product.

a. 3 Pillars – company profit, customer need/want satisfaction & public interest

*Customer driven strategies tend to work well when a clear need exists & when customers know what they want. Customer

driving strategies are effective when customers don’t know what they want/need as much as the firm does.

Concept Starting Point Focus Means End Selling Factory Existing Products Selling/Promoting Profits via Sales Volume

Marketing Market Customer Needs Integrated Marketing Profits via Customer Satisfaction

3. Preparing an Integrated Marketing Plan

To deliver on a value proposition a firm must:

Product (Differentiation)– Develop a need/want satisfying market offering (quality /design/sizes/features/packaging)

Price – How much to charge (strategies, methods, discounts, list prices)

Promotion – How to communicate to & persuade the target market to buy (advertising/personal selling/direct)

Place – How to distribute to make the product available to the target market (logistics, channel & demand chain mgmt)

People – Developing relationships via good service

Process – Possibly involve customers in the process of creating & enjoying experience (e.g. custom made)

Physical Evidence

4. Building Customer Relationships

Customer Relationship Management:

CRM is the process of building & maintaining profitable customer relationships by delivering superior value & profitable

satisfaction. CRM involves acquiring initial customers, keeping them (keep lifetime value stream) & obtaining new customers.

Customer Perceived Value Customers evaluation of the difference between perceived benefits & all costs of the

offering, relative to those competing offers

Customer Satisfaction The extent to which a products perceived performance compares to the buyer’s expectations

Relationship Level Targeting fewer, more profitable customers – selective relationship management

o Transactions, Repeated Transactions, Long Term Relationships, Buyer-Seller Partnerships, Strategic Alliances,

Network Organisations, Vertical Integration. Basic R/Ship – Low Margin, High Vol, Deep R/Ship – High Margin

Selective Relationship Management is when companies relate with more carefully selected customers in a deeper & more

interactive way to enhance profitability. Loyalty can grow from special offerings, or by becoming more interactive via direct

marketing. Customer Managed Relationships are relationships in which customers empowered by technologies/methods

interact (involve themselves) with firms to shape their relationships with brands. Partner Relationship Management is working

with partners both inside & outside the firm to deliver superior value to the customer. 6x cheaper to retain customer than to

attract a new one.

5. Capturing Value from Customers

Firms must create customer loyalty which causes a growing share of customer (share of purchases in a product category)

leading to higher customer equity (combined customer lifetime value) if the firm builds the right relationships with the right

customers (efficient, effective & higher long term profitability). If a firm loses a customer it loses the lifetime customer value

Marketing Challenges & Changes of Today:

Challenges –

o Uncertain Economy – Balance brand’s value proposition with current times while enhancing long term equity .

Mustn’t damage brand image & LT R/Ships. Current emphasis on value for money, practicality & durability

o Globalisation – Required to adapt to different environments, acquire a global view of competitors

o Technological Dependence – New range of communication & relationship building tools

o Sustainable Marketing – Consumerism/Environmentalism movements, must deliver value in a responsible way

Ethics, environmental issues

o Non Profit Marketing, Changing Landscape

New Goals – Maximise Quality of Life, Choice, Consumption & Satisfaction

Perceived Bad Aspects – Wasteful, Materialism, Deception, Planned Obsolescence, Invasion of Privacy

Week 2 – Company & Marketing Strategy

Learning Objectives:

1. Introduce you to the marketing process

2. Discuss strategic planning

3. Introduce marketing plans & explain how to develop them

Company Wide Strategic Planning: Defining Marketing’s Role

Strategic Planning is the process of developing & maintaining a strategic fit between the organisations goals & capabilities &

its changing market opportunities. Each firm must select a game plan that makes most sense to its specific situation,

opportunities, objectives & resources (e.g. P&G has advertising $$$’s) it is essential for long run survival & growth. Strategic

Planning guides Marketing Strategy & needs to be customer focused; it sets the stage for all planning within the firm.

Strategic Plan Adapting the firm to take advantage of opportunities in its constantly changing environment.

Annual/Long-Range Plans Deals with the firms current businesses & how to keep them going

Steps in Strategic Planning

1. COMPANY MISSION

What is our business? What should it be? Who is the customer? What do they value?

Mission Statement The organisations purpose – what it wants to accomplish in the larger environment

i. Market Orientated – Defined in terms of satisfying customer needs (can be perpetual) instead of

products/technologies that don’t last forever. E.g. “We Sell Drugs” Vs. “Bring the world healthcare

products that improve lives & deliver outstanding value to customers”

2. SET ORGANISATIONAL OR STRATEGIC BUSINESS UNIT (SBU) OBJECTIVES

Usually related to Sales, Profitability, Market Standing, ROI, Customer Satisfaction

Specific, Measurable, Achievable, Realistic, Timely

The firm & SBU’s have their own objectives, goals must be supported by marketing strategies at both levels

3. DESIGN BUSINESS PORTFOLIO BY EVALUATING INTERNAL & EXTERNAL ENVIRONMENTS & ANALYSING CURRENT BUSINESS PORTFOLIO

The Business Portfolio is the collection of businesses & products that make up the company. Both the corporation & its SBU’s

have missions & objectives. An SBU can be an industry or geographic division. The best business portfolio, best fits the firm’s

strengths & weaknesses with opportunities in the environment. Portfolio Analysis comprises of 2 steps:

Analyse current business portfolio (fund profitable SBU’s, divest weaker) – support core competencies

i. BCG Growth – Share Matrix analysis tool

Shape future business portfolio by developing strategies for growth & downsizing

Marketing Strategy How marketers

choose the target market, position their

market offerings, develop a marketing mix

& manage their marketing programs