Download lecture 2. what is marketing.

ICU: INTRODUCTION TO MARKETING
Vladimir V. Bulatov ([email protected])
LECTURE 2. WHAT IS MARKETING.
Reading: Ch. 1., addendums.
Back to the notion: what is marketing?
<discussion: what is “marketing”>
“Building Brands”:
"Marketing is a dialogue over time with specific groups of customers whose needs you understand in depth
and for whom you develop an offer with a different advantage over the offers of your competitors".
AMA (1938)
Marketing consists of those activities involved in the flow of goods and services from the point of production
to the point of consumption.
AMA (1985)
Marketing is the process of planning and executing the conception, pricing, promotion and distribution of
ideas, goods and services to create exchanges and satisfy individual and organizational objectives.
UK Chartered Institute of Marketing (1999)
Marketing is the management process, which identifies, anticipates and supplies customer requirements
efficiently and profitably.
Philip Kotler
Marketing is 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.
Marketing: is a process, directed onto realization of human or organizational objectives
through exchange processes.
Situational conditions, necessary for marketing:
1. Two (or more) parties with unsatisfied wants/needs present on the market.
<discussion: what a market is?>
Market (place): any environment where potential buyers are able to make valuable exchanges.
Market (customers): people/organizations with the desire and the ability to purchase a specified
product.
Sometimes the term “market” also addresses manufacturers.
2. Desire and ability to have these wants/needs satisfied.
<discussion: what are wants, needs, and demand>
Need – human deficiency of general physiological character (e.g. a need to drink);
Want – the need, that has taken a certain form, reflecting cultural and behavioral qualities of an
individual (I want a glass of Pepsi-Cola, 330 ml, 8 degrees plus;…)
Demand – the need that can be satisfied by an individual owing to available financial resources.
3. Both parties having something to exchange (both individuals and/or
organizations: any artifacts, ideas, know-how, or money).
4. Way of communication, necessary for transactions to occur.
(goods  $  goods; barter relationships).
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Intro to Marketing. Lecture 2
Environmental conditions, necessary for marketing:
1. Presence of unregulated competition.
 planned economy (“from top to bottom”) vs. market economy (“from bottom to top”)
– which also requires government intrusion in special cases (e.g. it is unwise to
have 5 telephone companies having 5 independent wire networks instead of one);
 antimonopoly legislation;
 presence of hard currency (which adequately reflects created value and is
recognized on international arena).
2. Balance of currency and goods (otherwise – inflation).
<Someone is to prepare a theoretical report on inflation, another one – on factual data>
3. Presence of developed infrastructure.
(functional structures that make market system self-sufficient and self-developing)
 production and distribution systems;
 financial and informational infrastructures.
FIVE Historical approaches of business orientations.
1. Production (improvement of production process to minimize costs and price).
(Henry Ford and his T-model auto. H. Ford: ”You may purchase my car, painted into whatever color,
unless it is black”).
2. Product (quality improvement).
(“We made a better mousetrap”).
3. Selling.
(e.g. Herbalife. Btw, how this strategy affects Co.’s image?)
4. Marketing approach (used by almost any contemporary organization: research the
characteristics of demand, develop proper products, convince customers in its
necessity, sell it (price may vary depending on company’s aims).
5. Socio-ethical marketing approach.
(Wrigley’s chewing gums: “keep your country tidy;” catalysts in car exhaust systems, ISO 14000 quality
standards, etc.)
(E.g. thrown away used batteries will allocate a portion of its contamination cost on
society. S.-e. aspects of marketing evaluate not only single transactions b/w customer
and manufacturer, but the whole system of relationships, created by a business).
When did marketing begin?
First Era Classical School (1900-1950). Major influence of economics and sociology.
Second Era Managerial Marketing (1950-1975). Established marketing departments
within managerial or business schools. Attention on individual behavior but continued
reliance on social sciences.
Third Era Behavioral Marketing School (1965-present). Use of psychology in an effort
to gain even greater insight into individual consumer behavior.
Fourth Era Adaptive/Strategic Marketing School (1980-present). A return to a more
economic “strategic” focus.
Historical factors, that influenced on the appearance of marketing.
Consumers (societies with highly educated populations and open democratic societies
have more marketing behavior).
Market structures (oligopoly is the optimal market structure; pure competition and
monopoly are not conductive to marketing behavior).
Productivity and wealth (societies must overcome the conditions of scarcity; 1930s US
experienced “oversupply” of goods).
<Discussion: disciplines, from which marketing imports methodologies>
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Intro to Marketing. Lecture 2
Case Brief. The New Coca-Cola Fiasco.
In mid 1980-s Coca-Cola launched a new tasting Coke. It was brought to market after
extensive consumer research showing that consumers liked the taste more than the old
Coke. Nevertheless, New Coke was a major failure forcing the company to re-release old
coke under the name Coca-Cola Classic.
(The “New Coke” fiasco is an example of why firms need to understand the whole
environment in which they operate).
MARKET TYPES (classification).
Criteria, used to show differences.
1. Objects of interaction: a. goods and services; b. workforce; c. stock; d. financial market.
2. Geographical scope: a. local; b. national; c. transnational/regional; d. world market.
3. Character of purchase (!!!): industrial/organizational markets;
(final) consumer markets.
4. Demand/supply type: seller’s or buyer’s markets.
5. Regulation: regulated or free (unregulated) markets.
PRODUCT TYPES (classification).
(Final) consumer goods:
Source of differentiation: price, products’ physical characteristics, usage conditions:
1. Frequently purchased products.
- basic goods (tobacco, soap, newspapers);
- impulse purchase goods (Maggi soup);
- emergency/extraordinary goods (iodine, drugs, etc.).
2. Goods of preliminary evaluation (usual expensive goods, like furniture).
3. Exclusive goods (e.g. very expensive cars, yachts, charter trips, etc).
4. Goods of passive demand (encyclopedias, tomb stones).
Source of differentiation: sensitivity to consumer’s income:
1. Normal good: consumption stays at the same level or rises proportionally to the
consumer’s income.
2. Superior good: consumption of a product increases faster than consumer’s income.
3. Inferior good: consumption decreases while consumer’s income increases.
Industrial goods:
1. Raw materials and hardware components (from which the final product is created).
2. Capital estate (includes real estate and production equipment).
3. Auxiliaries.
4. Business services.
FOR THE NEXT CLASS, PREPARE THE CASE:
“NEW COKE VS. COCA-COLA”
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Intro to Marketing. Lecture 2