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MGT301
Principles of Marketing
Lecture-4
Summary
of
Lecture-3
Information
Buying
Risk Taking
Selling
Marketing
Functions
Financing
Standardizing
and Grading
Transporting
Storing
Demarketing

…Marketing to reduce demand temporarily or
permanently; the aim is not to destroy demand but only
to reduce or shift it.
Customer Relationship
Management

Loyal customers provide more But the angry gossip of
and more credible referrals
disloyal customers can
devastate a firm!
Today’s Topics
Marketing in Historical perspective and
Evolution of Marketing
How has Marketing Changed Over Time?
How it Started
1.The Production Concept (Mass Production) (prior to 1920’s):
Mass produce @ lowest cost -Distribute @ affordable price
No options for consumer
2. The Product Concept (1920-1950’s):
Build a More Innovative Product
Build a Better Mousetrap
3. Selling Concept (1940’s-1980’s)
- Few product-- sell, sell, sell!
- Largest volume at any price
- Focus on one time transaction
Until the ‘90’s
“Transaction Marketing” – focus one time sale
Focus on product
4. Marketing Concept (1990’s and beyond)
-Idea: identify most profitable customers who value your
service/product the most and build relationships with those
individuals
- Customers become more demanding/empowered
- Able to produce based on customers needs:
- Technological advances allow for customer tracking
databases



Relationship Marketing (1990’s)
Definition: Marketing is the process of establishing
and maintaining mutually beneficial exchange
relationships with customers and other
stakeholders
KEEP CUSTOMERS FOR LIFE!!!
Marketing Philosophies
PRODUCT
CONCEPT
SOCIETAL
MARKETING
CONCEPT
KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
CONCEPT
CONCEPT
PRODUCTION
CONCEPT
SELLING
CONCEPT
The Production Concept
..Holds that consumers will favor products that are
available and affordable.
Implies work towards mass production and low cost
The Product Concept
…Assumes customers favor products that offer the most
quality, performance, and features.
Implies firm should strive to continually upgrade product
and product features.
The Selling Concept
…The idea that customers will not buy enough of the
organization’s products unless the organization
undertake a large scale selling and promotion efforts.
..Business assumption that consumers will resist purchasing
nonessential goods and services with the attitude toward
marketing that only creative advertising and personal
selling can overcome consumers’ resistance and convince
them to buy.
Inside-out perspective: Assumes people need to be sold on
whatever it is the firm has decided to offer. 1st: Decide what
to produce; 2nd: Figure out how to get people to buy what you
have.
Implies lots of selling/promotional activities are needed to
move product
After WWII
Shortages in goods ended.
Economy changed from a seller’s market to a buyer’s market.
Seller’s market: marketplace characterized by a shortage of
goods and/or services.
Buyer’s market: marketplace characterized by an abundance
of goods and/or services.
The Marketing Concept
…Holds that achieving organizational goals depends upon
determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and
efficiently than do competitors.
Marketing Concept Components





Means of achieving goals
determine needs and wants
– implies research and/or appropriate assumptions
Target markets
– implies clear target groups: people whose needs/want you
will try to fill
Satisfaction
Competitors acknowledged
Marketing Era
With a continually increasing buyer’s market, marketing would
no longer be regarded as a supplemental activity performed
after completion of the production process.
The marketer would play a lead role in product planning.
Marketing and selling would no longer be synonymous terms.
Marketing Concept Vs. Selling
Concept
Marketing Concept:
Selling Concept:
Begin with customer needs
Begin with what firm wants to
produce
Develop 4 Ps in light of
customer needs
Given products, persuade
customers to buy
“Have what you can get rid
of”
“Get rid of what you have.”
Selling
A company makes a product and then uses various selling
methods to persuade customers to buy it.
Marketing
Company finds out what the customer wants and develops a
product to satisfy those wants while yielding a profit.
SOCIETAL MARKETING CONCEPT: ….in a way that
maintains or improves the consumer’s and the society’s
well-being.
Typical thinking in 1990
Marketer must act in a socially responsible manner.
External environment’s influence on firm’s marketing
program.
Society
(Human Welfare)
Societal
Marketing
Concept
Consumers
(Satisfaction)
Company
(Profits)
Relationship Era


Relationship marketing: development and maintenance of
long-term, cost-effective exchange relationships with individual
customers, suppliers, employees, and other partners for
mutual benefit.
Strategic alliances: partnerships with vendors and retailers
play major roles in relationship marketing.4
Relationship Marketing
Effective relationship marketing relies heavily on information
technologies such as computer databases that record
customers’ tastes, price preferences, and lifestyles along with
the increase of electronic communications. Some examples
are frequent buyer clubs/cards.)
Marketing Management
 Marketing management is “the art and science of choosing
target markets and building profitable relationships with
them.”
 Creating, delivering and communicating superior
customer value is key.
Marketing Management
Customer Management:
– Marketers select customers that can be served well and
profitably.
Demand Management:
– Marketers must deal with different demand states ranging
from no demand to too much demand.
Evolving Views of Marketing’s Role
Finance
Production
Marketing
Finance
Human
resources
a. Marketing as an
equal function
Production
Human
resources
Marketing
b. Marketing as a more
important function
Production
Marketing
c. Marketing as the
major function
Customer
d. The customer as the
controlling factor
Production
Marketing
Customer
e. The customer as the controlling
function and marketing as the
integrative function
Summary
How has Marketing Changed Over Time?
PRODUCT
CONCEPT
SOCIETAL
MARKETING
CONCEPT
KEY
MARKETING
PHILOSOPHIES
MARKETING
MARKETING
CONCEPT
CONCEPT
PRODUCTION
CONCEPT
SELLING
CONCEPT
Society
(Human Welfare)
Societal
Marketing
Concept
Consumers
(Satisfaction)
Company
(Profits)
Production
Marketing
Customer
The customer as the controlling
function and marketing as the
integrative function
Next….

Marketing Challenges in the 21st century
MGT301
Principles of Marketing
Lecture-4