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Principles of Marketing
The digital revolution has placed a whole new set of
capabilities in the hands of consumers and businesses.
Now the marketers are to consider what customers have
today that they didn’t have yesterday:
• A substantial increase in buying power.
• A greater variety of available goods and services
• A great amount of information about practically anything
• A greater ease in interacting and placing and receiving
orders
• An ability to compare notes on products and services
Principles of Marketing
Companies have a new set of capabilities also:
• Wide geographical reach to inform and promote their
businesses and products
• Companies can collect fuller and richer information about
markets, customers, prospects and competitors.
• Companies can facilitate and speed up internal
communication among their employees
• Two-way communications with customers and prospects,
and more efficient transactions
• Companies are now able to send ads, coupons, samples
and information to customers
• Companies can customize offerings and services to
individual customers
Principles of Marketing
• Companies can improve purchasing, recruiting, training
and internal and external communications.
• Companies can substantially improve logistics and
operations for cost savings while improving accuracy and
service quality
Industrial age was characterized by mass production and
mass consumption, stores overstuffed with inventory,
ads everywhere and rampant discounting,
The information age promises to lead to more accurate
levels of production, more targeted communications,
and more relevant pricing.
Principles of Marketing
So, the principle of marketing
can be phrased as “meeting the
needs profitably”
What is Marketing?
- A set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholder.
- It is the art and science of choosing target
markets and building profitable
relationships with them.
Ten types of entities can be
marketed by the marketers
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Goods
Services
Experience
Properties
Information
•Places
•Events
•Persons
•Organizations
•Ideas
Marketing tasks based on demand states
Negative demand like vaccination, dental works, gall bladder
operation, etc. Marketing task is to analyze the dislikes
and may modify product i.e. redesign, lower price and
more positive promotion to change beliefs and attitudes.
No demand target consumers may be unaware of or
uninterested in the products like foreign language course,
new farming method etc. Marketing task is to connect the
benefits of the products with peoples natural needs and
interests.
Latent demand consumers share a strong need that can not
be satisfied by any existing products. e.g. more fuelefficient cars, safe neighborhood, side-effect free anticancer agents. Marketing task is to measure the size of
potential market & develop goods & services to meet the
demand.
Marketing tasks based on demand states
Declining demand every organization, sooner or later, faces
declining demand for one or more of its products. e.g.
Paracetamol+caffeine when marketized, paracetamol
found declinind demand. Marketing task is to motivate
consumers the benefit of the previous one or redesign the
product so that it become acceptable again.
Irregular demand that is seasonal demand. e.g. museums
are under visited on weekdays and over crowded on
weekends. Marketing task is to alter the pattern of
demand through flexible pricing, promotion and other
incentives.
Full demand organizations face full demand when they are
pleased with their volume of business. Marketing task is
to maintain this demand, improve its quality and
continually measure consumer satisfaction
Marketing tasks based on demand states
Overfull demand some organization faces this type of
demand. e.g. Disney theater. Marketing task is to
demarketize, like raising price and reducing promotion and
services.
Unwholesome demand cigarettes, alcohol, hard drugs, etc.
Marketing task is to get people who wants to give it up and
help them such a way like fear messages, price hike and
reduced availability.
Importance of customer
satisfaction
• It is important to consistently deliver product and
service that create values for customers.
• Brand equity and customer loyalty are built in this
way.
• This can be explained in terms of theory of
uncertainty.
Customer-Driven Marketing
Strategy
Selecting customers to serve
• the company must first decide who it will serve, i.e.
market segmentation is done and then selecting which
market it will go after.
• Targeting to serve all the customers means not serve any
customers well.
• Marketing management is customer management and
demand management.
Choosing a value proposition
• A company’s value proposition is the set of benefits or
values it promises to deliver to satisfy their needs.
• Such value propositions differentiate one brand from
another.
What is Marketing?
Customer-Driven Marketing
Strategy cont….
Marketing management orientation there are five
alternative concepts under which organizations design and carry out
their marketing strategies. They are:
• Production concept:
- oldest orientation model lead to marketing myopia
- consumers will favor products that are available and highly
affordable
- it loses the sight of real objective, i.e. customer satisfaction
• Product concept:
-product quality, performance, and innovative features
- it also can lead to marketing myopia
Customer-Driven Marketing
Strategy cont….
• Selling concept:
- it is typically practiced with unsought goods such as
insurance, blood donation etc.
- carries high risk, as it focuses on creating sales
transaction rather long term customer relationship
• Marketing concept:
- instead of “make and sell” philosophy it is a
customer centered “sense and respond” philosophy
- the job is not to find the right customers for the
product but to find right products for the customers
Customer-Driven Marketing
Strategy cont….
• Social marketing concept:
-it tells that marketing strategy should deliver value to
customers in a way that maintains or improves both the
consumer’s and society’s well being.
The Marketing Mix
• The conventional view of the marketing mix consisted of four components:
Product marketing efficiency depends on the best quality products.
Price if the price is reasonable then marketing becomes easier. There are three
types of price:
Penetration Pricing – charging a low price, possibly not quite
covering costs, to gain a position in the market. This is quite popular with
new businesses trying to get a ‘toehold’.
Creaming – the opposite to penetration pricing, this involves
charging a deliberately high price to persuade people that the product is of
high quality. Luxury car makers often use this strategy
Cost plus Pricing – this is the most common form of pricing. Costs are
totalled and a margin is added on for profit to make the total price.
Place a place having available transport and good communication facilities
Promotion Customers have to be made aware of the product. The two main
considerations are target market and cost. A new business will not be able to
afford to advertise on national television, for instance and would not wish to
because its market will be local to start with. Leaflets, billboards,
advertisements in local newspapers, Yellow Pages and ‘word of mouth’ would
be more appropriate.
The Marketing Mix
• Generally acknowledged that this is too
narrow today; now includes service,
processes, technology.
• Marketers today are focused on virtually all
aspects of the firm’s operations that have
the potential to affect the relationship with
customers.
Marketers and Markets
• Marketers are focused on stimulating exchanges
with customers who make up markets – B2C or
B2B.
• The market is comprised of people who play a
series of roles: decision makers, consumers,
purchasers, and influencers.
• It is essential that marketers have a detailed
understanding of consumers, their needs and
wants.
• Much happens before and after the sale to affect
customer satisfaction
Customer-Relationship Thinking
• The customer-relationship view of
marketing requires some new thinking:
• It is very much a long-term strategy
• Requires that management take the
customer’s view
• The value proposition must be defined very
broadly
• Different measures of success are needed
The New View of Marketing
• The marketing emphasis today is on
keeping existing customers as well as
getting new ones
• Four principles guide marketing:
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retention: keeping them coming back
referrals: encourage them to recommend us
relationships: build an emotional connection
recovery: solve problems as they arise
The Purpose of a Business
Is to Create and Retain the
Right Customer
Core Marketing Concepts
Needs, wants,
and demands
Markets
Exchange,
transactions,
and relationships
Products
Value,
satisfaction,
and quality
Need, Wants, Demands
• Need. A human need is a state of felt deprivation.
Examples include the need for food, clothing,
warmth and safety.
• Wants. Wants are how people communicate their
needs. A hungry person may want a hamburger,
noodles, or cheese and bread.
• Demands. When backed by buying power, wants
become demands.
Product
A product is anything that can be offered to satisfy a
need or a want.
Value, Satisfaction, and Quality
• Customer value is the difference between the
benefits that the customer gains from owning
and/or using a product and the costs of obtaining
the product.
• Customer satisfaction depends on a product’s
perceived performance in delivering value relative
to a buyer’s expectations.
• Quality begins with customer needs and ends with
customer satisfaction.
Why Satisfaction May Not Lead To
Customer Loyalty
• Some customers never return to an area – but
they can still recommend
• Some customers shop for the best price differentiate your product
• Some customers like to have different purchase
experiences – like to stay or dine at different
places
Why Managers Should Be Concerned
About Customer Loyalty
• Customer loyalty leads to increased profit
• Customer loyalty leads to increased
partnership
• Lower marketing and sales costs
Exchange, Transactions, and
Relationships
• Exchange is the act of obtaining a desired object
from someone by offering something in return.
• A transaction is marketing’s unit of measurement
and consists of a trade of values between two
parties.
• Relationship marketing builds relationships with
valued customers, distributors, dealers, and
suppliers by promising and consistently delivering
high-quality products, good service, and fair
prices.
Markets
A market is a set of actual and potential buyers
who might transact with a seller.
Marketing and Sales Concepts
Contrasted
Starting
Point
Focus
Factory
Existing
Products
Means
Ends
Profits
through
Volume
Selling
and
Promoting
The Selling Concept
Market
Customer
Needs
Integrated
Marketing
Profits
through
Satisfaction
The Marketing Concept