Download Principles of Marketing (Mkt571)

Topic One: Marketing: Creating & Capturing
Customer Value
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Understand the marketing concept as a management
philosophy (or ‘The way we do things in our organisation’).
Recognise the central importance of an external focus
looking towards building a viable organisation by
satisfying customers’ needs and wants in a competitively
sustainable way.
Compare and contrast common managerial philosophies:
production orientation, product orientation, selling
orientation, financial orientation, social orientation,
marketing orientation, and societal marketing orientation.
Reflect upon the evolutionary development of
contemporary marketing thought and practice
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How many of this class have consumed
something today
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How many of you have purchased something
today
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How many have seen or heard an
advertisement
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How many of you have engaged in word-ofmouth advertising about products or services…
often without realising this has happened?
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Marketing has been going on for centuries, it is a
fundamental practice of humans:
◦ It is part of daily life
◦ It happens all over the world
◦ We can learn to make better consumer decisions from
studying marketing
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Marketing can have a positive impact on a
countries economy
◦ Overall marketing is approximately 50% of retails
expenses
◦ Healthy marketing systems support economic advances
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Marketing management is essential to long term
organisational success!
Build a better mousetrap? And the world will beat
a path to your door, or does it???
◦ 80-90% of new products fail
◦ Same rate for new businesses
They need managing!
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Marketing is all about people (consumers) and it
is fun
………(Well I thing more fun than maths and
physics!)
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Marketing communications are not always honest and
they can sometimes play on emotions and fears. They
can also cause harm by people buying things they do
not need.
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Youth can be targeted by companies selling adult
products (like alcohol)
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Some advertisements are crude
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Advertising can be annoying especially telemarketers, spam and informercials
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Advertising can be boring
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Fashion advertising can promote unobtainable body
types.
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Can push people to buy things they do not
need
Sometimes tells us that buying things makes
us happy
Sometimes can take advantage of consumer
lack of knowledge (let the buyer beware)
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Usually tries to be successful by satisfying
customer needs and desires
Often delivers the customers what they want,
when they want it, at a price they are willing
to pay.
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A management philosophy based on the idea that,
in a competitive environment, the odds of
achieving strong organisational performance will
be improved by having… “an absolute dedication
to understanding and satisfying the needs of
customers in well-defined target markets.”
(Kotler et al 2003 p.4)
The goal of Marketing is to facilitate exchange
i.e. the transfer of products, services or ideas
with a return form of payment.
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Simple Definition: Marketing is
managing profitable customer
relationships.
Goals:
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Attract new customers by
promising superior value.
2.
Keep and grow current customers
by delivering satisfaction.
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Marketing needs a marketplace….a market. A
market is a collection of buyers and sellers of
a particular product, service, idea
Marketing needs a medium of exchange e.g.
money, goods in kind, time in lieu etc
To be really successful marketing needs
management and coordination
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The set of actual
and potential
buyers of a
product.
These people
share a need or
want that can be
satisfied through
exchange
relationships.
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A private individual or household with needs
and wants to satisfy.
In other words a buyer just like you or your
family.
Marketers often use the term ‘B2C’ to express
the idea of a Business marketing to
Consumers.
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An organisation (such as a business) with
needs and wants to satisfy.
Note: the terms customer and consumer are
often used interchangeably
Marketers often use the term B2B to express
the idea of a Business marketing to another
Business
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Market demand is based upon central needs
that provide the motivation to acquire
products and services.
Needs can be fundamental and physical and
also individual.
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Needs - state of
felt deprivation
including
physical, social,
and individual
needs.
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Wants are needs translated into a product or
service offering that is appropriate to the
consumer e.g. a microwave meal, an NMIT
business course, a music CD, and new car etc
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Wants - form
that a human
need takes, as
shaped by
culture and
individual
personality.
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Needs and Wants
Fulfilled through a
Marketing Offer :
◦ Some combination of
products, services,
information, or
experiences offered
to a market to satisfy
a need or want.
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Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Persons
Places
Information
Organizations
Ideas
Services
Activity or Benefit Offered for Sale That is Essentially
Intangible and Does Not Result in the Ownership of Anything
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Market demand reflects the fact that just
because someone WANTS a product it does
not necessarily follow that there is an actual
opportunity to obtain it.
Demand can exist only if that person can
afford to buy it (available funds) and has
access to the product (it is in stock, legal to
own)
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Wants
Buying Power
“Demand”
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Sellers pay more
attention to the
specific products they
offer than to the
benefits and
experiences produced
by the products.
They focus on the
“wants” and lose sight
of the “needs.”
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When a consumer interacts with a marketing
firm, an exchange relationship exists.
The consumer aims to get a product that
satisfies a NEED and WANT to go away happy
and satisfied
The firm wants to sell this product and to go
away happy and satisfied that it has made a
profit on the transaction or exchange.
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Marketing is all about two parties exchanging
value (the consumer gives up money to get
satisfaction; the firm gives up a product to
get a profit).
There is no ‘residual discontent’ – the
consumer does not feel cheated and ripped
off and the firm is not in despair that it has
not made a profit on the transaction.
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Marketing is not about achieving one-shot
deals and transaction. It is about building
long-term, value-for-value RELATIONSHIPS
with good customers.
A loyal customer is a stream of future earnings
for the marketing business and who is going to
refer the business to friends, family and
associates.
“Marketing is about selling products that don’t
come back to customers that do!”
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Societal Marketing Concept
Marketing Concept
Selling Concept
Product Concept
Production Concept
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The Marketing Concept (completed)
Company and Marketing Strategy
Analysing the Marketing Environment
Managing Marketing Information
Customer Driven Strategy
Segmentation, Targeting & Positioning
Products, Services & Brands
Pricing policy
Placement policy
Advertising & Public Relations
Sale Promotion & Personal Selling
Consumer & Business Buyer Behaviour
Direct & Digital Marketing
Ethics & Marketing Compliance
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#1
#2
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
cultivate
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Dependent on the
product’s
perceived
performance
relative to a
buyer’s
expectations.
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Expectation
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Performance
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Expectation
Performance
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If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
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Customer’s
evaluation of the
difference between
all the benefits and
all the costs of a
marketing offer
relative to those of
competing offers.
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Basic
Relationship
Continuum
Full
Partnership
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Social
Benefits
Financial
Benefits
Structural
Ties
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The process of
building and
maintaining
profitable customer
relationships by
delivering superior
customer value and
satisfaction.
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Customer Lifetime Value
◦ The entire stream of
purchases that the
customer would make over
a lifetime of patronage.
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Share of Customer
◦ The share a company
gets of the customers
purchasing in their
product categories.
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Target Markets and Segmentation
Needs, Wants, and Demands
Product or Offering
Value and Satisfaction
Exchange and Transactions
Relationships and Networks
Marketing Channels
Supply Chain
Competition
Marketing Environment
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