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CHAPTER 1 Marketing: An Introduction • WHAT’S SO HOT ABOUT MARKETING IN THE Emilio T. Yap- owns Manila Bulletin, chairman of the Manila Hotel and Chairman Emeritus of Philtrust Bank WHAT MARKETING IS NOT • MARKETING IS NOT SELLING • “MARKETING NOT EQUALS TO ADVERTISING” • ADVERTISINGTO INFORM, TO PERSUADE AND TO REMIND. • MARKETING- PRODUCT PLANNING, PRICING, DISTRIBUTION, CUSTOMER, SERVICE AND PROMOTION. “BAD MARKETING” HAVE YOU PERSONALLY ENCOUNTERED SOME OF THEM? • COMPANY TO CUSTOMERS – “WE CAN’T DO IT,IT’S COMPANY POLICY.” • COMPANY TO SALES FORCE – “JUST PUSH THIS ITEM BECAUSE WE ARE OVERSTOCKED”. • SALES MANAGER TO SALES FORCE – “YOU CAN SELL A LOT BY MANIPULATING CUSTOMERS; JUST TELL THEM THEY HAVE BEEN CHOSEN AS A WINNER IN A LUCKY DRAW. ANYWAY THEY WON’T REALLY KNOW!” • SAGO SUPPLIER TO FRANCHISE APPLICANT- “IT’S ALL RIGHT TO HAVE LONG LINES OF WAITING. IT WILL SEEM AS THOUGH WE ARE DOING SO WELL.” • TELEPHONE OPERATOR TO CUSTOMER - “IT’S LUNCH BREAK. PLEASE CALL BACK.” • CAMERA TECHNICIAN TO CLIENT – “OF COURSE WE CAN’T REPAIR IT. YOU JUST HAVE TO COME BACK IN TO TWO OR THREE WEEKS! GIVE US A CALL FIRST, OKAY?” • BOSS TO MANUFACTURING CREW – “PLEASE CLEAN THE REPOSSESSED VACUUM CLEANER UNITS THOROUGHLY. WE MAY BE ABLE TO PASS IT ION AS BRAND NEW UNITS. ISN’T THAT OUR ADVANTAGE AS A MANUFACTURER?” • MANUFACTURER TO EXPORT MANAGER – “NEVER MIND IF THEY LOSE MARKET SHARES BECAUSE WE ARE NOW HAVE A BIGGER PRICE GAP VERSUS NEW COMPETITION. WE WILL NOW REVIEW PRICES ONLY WHEN OUR DISTRIBUTOR’S VOLUME HAD ALL GONE DOWN. THAT’S OUR CUE THAT THEY ARE REALLY AFFECTED!” • POLITICIAN TO PEOPLE – “I DON’T CARE WHAT YOU FEEL NOW ABOUT WHAT I DO, BUT I HAVE BEEN ELECTED WITH A FIXED TERM, SO YOU CAN’T REPLACE ME!” • DRY CLEANER TO CUSTOMER – “SORI PO, NA DISTROY KO ANG BARONG NYO, PASENSYA NA PO . SIR, WAG NYO NAMAN PO AKO ISUMBONG , PASENSYA NA LANG PO! ANYWAY MAY IBA PA NAMAN PA SIGURO KAYO!” MARKETING: THE STRATEGIC 3CS CONCEPT EXHIBIT 1-1: TWO INTERACTING COMPONENTS OF MARKETING COMPANY MARKET EXHIBIT 1-2: TWO INTERACTING COMPONENTS OF A MARKET COMPANY COMPETITION EXHIBIT 1-3: THE STRATEGIC 3CS OF MARKETING CUSTOMERS COMPANY COMPETITION EXHIBIT 1-4: KEY OBJECTIVES OF THE 3CS OF MARKETING 3CS KEY OBJECTIVES 1. CUSTOMER TO SATISFY THE NEEDS, WANTS AND EXPECTATIONS OF TARGET CUSTOMERS. 2. COMPETITION TO OUTPERFORM COMPETITION 3. COMPANY TO ENSURE CORPORATE HEALTH AND PROFIT EXHIBIT 1-5: INPUT AND OUTPUT OF MARKETING SALES CUSTOMERS COMPANY COMPETITION PROFIT MARKET SHARES KEY RESULT AREAS A. SALES -RESULT FROM SATISFYING CUSTOMERS NEEDS AND WANTS. NOTHING CAN BE MORE CONVINCING TO CUSTOMERS THAN THE FACT THAT MANY OTHER CUSTOMERS ALSO WANTS THE SAME PRODUCTS AND SERVICES. 4 U’S OF MARKETING 1.NEW USERS - WHO USES THE PRODUCT OR SERVICE? OR SERVICE USE? 2. EXTENDED USERS - WHO CAN STILL USE THE PRODUCT OR SERVICE? 3. NEW USAGE - FOR WHAT PURPOSE IS THE PRODUCT OR SERVICE USED? 4. MORE USAGE - WHEN AND IN WHAT OCCASIONS IS THE PRODUCT FOR? B. MARKET SHARES -IS THE RATIO OF YOUR BRAND’S SALES VERSUS THE TOTAL SALES IN YOUR MARKET. IT IS ACTUALLY THE CONSUMERS WHO ULTIMATELY DECIDE THE COMPETITIVE FRAME. E. PROFIT - AN INDISPENSABLE COMPONENT FOR AFFIRM TO CONTINUOUSLY SATISFY IT’S CUSTOMERS. - ONE CANNOT JUSTIFY ANY PROFIT FROM BUSINESS IT THE CONSEQUENCES IS THE DESTRUCTION OF LIVES. a NEED is a costumer's desire for a product's or service's specific benefit LOYALTY VALUE SAFETY APPERANCE QUALITY a costumer WANTS is the desire for products or services that are not necessary, but which consumers wish for. EXAMPLES: Customer expectation will be influenced by his or her perception of the product or service DESIGNED TO GUIDE THE FOLLOWING BASED ON THE NEEDS OF THEIR TARGET MARKET . • REMOVAL OF TRADITIONAL AND SOMETIMES THREATENING IQ ENTRANCE TEST AND REPLACED THEM. • THE USUAL WRITTEN EXAMS ______ • PROFESSORS MADE THEMSELVES AVAILABLE AS RESOURCE CONSULTANT TO THE STUDENTS. • STUDENTS WERE STRONGLY ENCOURAGED TO INTERACT AMONG THEMSELVES. FEATURES, ADVANTAGES AND BENEFITS • FEATURES ARE SIMPLE PRODUCT ATTRIBUTES OFFERED BY A COMPANY. THEY ARE PROOF OF A BENEFIT. ADVERTISING AGENCIES CALL THESE “REASONS WHY” • ADVANTAGES ARE WHAT THESE FEATURES CAN DO • BENEFITS ARE ADVANTAGES THAT MEET THE EXPLICIT NEEDS AND WANTS OF THE CUSTOMERS. THEY ARE THE FAVORABLE RESULTS THAT CUSTOMERS WILL GET WHEN THEY USE THE PRODUCT OR SERVICE. BENEFITS ANSWER THE QUESTION: “WHAT’S IN IT FOR ME?” TO ADD STANDARDS FOR JUDGING MARKETING EFFECTIVENESS, THE FOLLOWING ARE THE RECOMMENDED: “ BETTER THAN BEFORE “ MUST BE THE NORM OF THE COMPANY IN EVALUATING SALES VIS-À-VIS THE INDUSTRY GROWTH RATE. THIS IS ESPECIALLY TRUE SINCE ALL FIRMS NEED TO SELL MORE THAN BEFORE TO IMPROVE BOTH PROFITABILITY AND MARKET SHARE , GIVE INCREASING EXPENSES AND COMPETITION. THE KEY IS BOTH CUSTOMER BONDING AND CONTINUOUS MARKET PENETRATION BETTER THAN OTHERS MUST BE DEMANDED BY THE COMPANY IN IMPROVING MARKET SHARE PERFORMANCE WHICH REFLECTS HOW THEY FARE AGAINST COMPETITION AND SUBSTITUTES. THE KEY IS IN THE FORMULATION OF SOURCES OF COMPETITIVE ADVANTAGE. BETTER THAN EXPECTED Must be practiced in evaluating profit performance , especially when a corporate budgets is prepared. The key is maximizing revenues while avoiding non-strategic expenses that do not contribute to business building . Better than before Sales Company customers competition profit Market share Better than expected Better than other “SIMPLY SELLING A PRODUCT TO CUSTOMERS IS NOT MARKETING. THERE MUST BE CUSTOMER SATISFACTION AND CONSISTENT REPEAT PURCHASES.” . PURCHASE % BUYING % REPEAT PURCHASE % TRIAL TIME ALL CUSTOMER NEEDS AND WANTS WITHOUT DUE CONSIDER. ACTION TO COST WILL RESULT IN LOSING OPERATION. • 100% CUSTOMER SATISFACTION THAT WILL RESULT TO THE FIRM LOSING MONEY IS SIMPLY NOT A SUSTAINABLE IDEA , SO COMPANIES MAY WANT TO FOCUS ON SPECIFIC ATTRIBUTES THAT WILL DRIVE CUSTOMERS TO KEEP PATRONIZING THEIR PRODUCT AND THOSE THAT THE COMPANY CAN DELIVER BETTER THAN COMPETITION. • A COMPANY MUST BALANCE THE NEEDS FOR MARKET SHARE AND THEIR PROFIT EQUATION BY CHALLENGE CONVENTIONAL WISDOM. • MARKETERS MUST SUPPORT STRONG PROFITABLE BRANDS AND PRODUCT AND MUST ALSO MAKE THE HARD DECISIONS TO ABANDON WEAK BRANDS AND PRODUCT THAT HAVE NO LONG-TERM POTENTIAL. • IS THE PROCESS OF CONTINUOUSLY AND PROFITABLY SATISFYING THE TARGET CUSTOMER’S NEED , WANTS AND EXPECTATION SUPERIORS TO COMPETITION MARKETING TRIANGLE : CUSTOMER 1 2 COMPANY 3 COMPETITION 3 LEVELS 1. STRATEGIC MARKETING MANAGEMENT 2. MARKETING STRATEGY 3. MARKETING TACTICS FOCUS Vision and mission, industry and competition Analysis , key factor for success . Strengths and weakness Analysis Marketing segmentation , target positioning Product , placement (distribution) , promotions , pricing TARGET MARKET : IS THE FAIRLY HOMOGENEOUS GROUP OF PEOPLE OR ORGANIZATION TO WHOM A COMPANY WISHES TO APPEAL MARKETING MIX: IS THE SET OF CONTROLLABLE AND INTERRELATED VARIABLE , COMPOSE A PRODUCT , PLACEMENT , PRICE AND PROMOTION THAT THE COMPANY ASSEMBLE TO SATISFY A TARGET GROUP BETTER THAN COMPETITION. . CUSTOMERS COMPETITION COMPANY •Market –emerging opportunities •Competition’s strategy and tactics •Company’s strengths and weakness •Industry- impending threats •Competitor’s strength and weakness •Industry structure and firm’s competitive position •Competitors strategy •Personal values and reference of key owners and exclusives •Societal expectation COMPANY’S RELATIVE STRENGTHS ARE CRITICAL TO STRATEGY FORMULATION COMPANY’S STRENGHT COMPETITOR’S WEAKNESS CUSTOMER’S NEEDS AND WANTS MANAGEMENT FUNCTIONS • MANAGEMENT MARKETING PRODUCTION FINANCE PERSONNEL MARKETING AS CENTER OF THE MANAGEMENT FUNCTION . MARKETING FINANCE Marketing and Production Exhibit 1-13: Gross profit equation Sales - Cost of Sales xxx,xxx xxx,xxx = Gross Profit xxx,xxx Exhibit 1-14: Marketing link to production Sales Cost of Sales Marketing Production Exhibit 1-15: Wealth conversion principle CASH INVENTORY RECEIVABLES MARKET ORIENTATION - is the marketing concept in action, reflected in a firm’s values, beliefs, activities and milestones for consistent work behaviors. EXHIBIT 1-16: FOUR MAJOR TYPES OF MARKET ORIENTATION SALES MARKET-DRIVEN CUSTOMERDRIVEN MARKET-DRIVING