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Download Lesson-1-2 - Jahanzaib Yousaf
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Lesson -1 The Core Concepts of Marketing CONSUMER: An individual who derives direct utility of the product. Who is involved in buying of a product for personal and non-business consumption. Also termed as “Ultimate user”. Consumer has s budget, and he or she tends to derive maximum utility within that budget. CUSTOMER: An individual who actually makes a decision in selecting a certain product. He or she may and may not directly consume the product. But he or she takes a buying decision. A housewife for example buys cooking oil for her household- she is a customer. The entire family is a consumer. Two kinds of customers: Internal and External. *Internal are those, who work in the organization. *External are those who are individuals, business people and groups outside. CUSTOMER NEED: Needs can be described as human requirements. Need is there and its natural. We need food to satisfy our hunger, water to quench out thirst. Of course need can be more than just food, water and shelter. We need recreation, education, entertainment and lots of other things to sustain our living. Need can be classified as: CUSTOMER WANTS: Need becomes Want, when they are directed towards a specific object. When hungry we need food; but we want say a burger. Want can vary from place to place and from people to people. A man in USA can want a burger to eat when hungry whereas a man in Pakistan needs a ‘Nan”. Want can be different at different income levels and in various times. CUSTOMER DEMAND: Want becomes a demand when backed up by an individual’s ability to pay for it. A hungry person can want a burger, but does he have money to demand a burger. Or is there a burger available to him? CUSTOMER COST: Anything a customer has to incur in order to obtain a product or service. The concept of customer cost is very broad as it has many forms: Money cost, Time cost, Psychic cost, energy cost. CUSTOMER VALUE: customer value is the amount of benefit that a customer will get from a service or product relative to its cost. Difference between what a customer gets from a product, and what he or she has to give in order to get it. Customer Value = Benefit /Cost. CUSTOMER SATISFACTION: The feeling of pleasure and disappointment resulting after the use of a product or service. Marketers are interested to measure the degree of satisfaction of a customer after using a product or service. MARKET: consist of a group of current and future customer having common needs and willing to satisfy their needs. E.g. children are a good market for many products such as, food items, education, Toys and garments. TARGET MARKET: A particular group of customers which a company plans to serve or do business for. E.g. BMW normally makes cars for the elite and high rollers and customer with a sense of style and desire for exclusiveness. Similarly BATA has many different products targeted toward different customers such as, School shoes, athletic shoes, formal shoes, comforters, casual wears and kid shoes etc. PRODUCT: Anything that can be offered to satisfy customer needs, or a bundle of benefits offered to customers to fulfill needs. It may be a tangible good (TV or mobile) or an intangible service (Healthcare, Internet service). Products are classified in to: Ideas, People, Places, Information, Events, Organizations or Properties. DEFINITION OF MARKETING: 1. “Total system of business activities designed to plan, price, place and promote want satisfying goods and services to target markets for profits”. 2. “A social and managerial process through which individuals and groups obtain what they need or want through offering and exchanging goods or services of equal value”. 3. “Marketing is the process of identifying customer needs and making efforts to satisfy those needs”. 4. “Marketing is the process through which Organizations identify customer problems and provide solutions to the problems”. MARKETING MIX: Consist of 4Ps: Product: Anything having the potential to satisfy human needs. Price: The amount of money which a customer is willing to pay in order to fulfill a need. Placement: The process of making products available for the customers at the right place at the right time and with the right cost. Promotion: The process through which a business communicates with its customers to bring awareness for its products. Lesson -2 MARKETING ORIENTATION There are five competing concepts of philosophies to conduct marketing activities. a) The Production Concept b) The Product Concept c) The selling Concept d) The Marketing Concept e) The Societal Concept A) THE PRODUCTION CONCEPT: This philosophy approach is that consumers will prefer products that are widely available and are with low price. Managers of this concept concentrate on achieving high production efficiency, lower costs and mass distribution. They assume that consumers are only interested in product availability and low prices. Production concept does work for some products, but not for all kinds of products. B) THE PRODUCT CONCEPT: This concept is that consumers will favor that product, which offers most quality performance and innovative features. The managers of this concept focus their attention towards making products more superior and keep improving it. They assume that consumers admire and prefer wellmade products and appraise quality and performance. Automobile industry is one good example. C) THE SELLING CONCEPT: This concept emphasizes on aggressive selling and high promotional back up. Selling, concept is practical on what we call as ‘unsought goods’ such as insurance, encyclopedia etc. At most times, the selling concept is practical by managers having uniqueness and overcapacity. Their aim is to sell what they can make rather that what the market needs. The customer still may not fully like the product and have what we calls ‘bad-mouth’. Bad mouth is when a customer talks not in favors of the product. D) THE MARKETING CONCEPT: This concept holds that the key to organizational goals consists of company being more effective than competitors in creating, delivering and communicating consumer value to the chosen target. Marketing concept becomes clear in the following statements: ‘Find wants and fill them’. ‘You are the boss (Customer)’. ‘Have it in your way’. E) THE SOCIETICAL CONCEPT: This concept further elaborates the marketing approach to include consumer and society overall well being. Promoting business practices which are not only positive for the customers but also benefits the society at large. Environmental deterioration, resource shortage, explosive population growth, poverty, hunger etc are just a few things in our society now. Marketing aims at delivering satisfaction more effectively and efficiently. What is the difference between Selling and Marketing? Selling focuses on the needs of the sellers which is profits that are achieved through selling in big volumes; whereas marketing considers needs of the buyers and developing long term relationship. Marketing focuses on creating customer value and customer retention. Selling concept is: Factory Marketing concept is: Target Market Product Need Selling and Promotion Integrated Marketing Profit from volume Consumers Satisfaction