INTRODUCTION TO MARKETING
Chapter 1
Introduction contd.
Marketing came into existence with the first barter exchange (e.g. the barter trade in ancient Egypt, Songhai and Ghana empires in Africa etc.) when someone realized that exchanges add value for both parties. This was the first real step forward in economic development. Marketing has evolved (like other practices such as architecture, medicine, engineering) over the centuries to where it is today (Michael Baker).
Introduction contd.
According to Peter Drucker, the first test of any business is not the maximization of profit but the achievement of sufficient profit to cover the risks of economic activity and thus avoid loss. Customers are the foundation of a business and their purpose of existence. In other words, customers are the mainstay of the business.
Introduction contd.
As Peter Drucker puts it: There is only one valid definition of business purpose: to create a customer. It is the customer who determines what business is What the business thinks it produces is not of first importance, especially not to the future of the business and to its success in the market place. The customer determines what a business is, what it produces and whether it will prosper (Drucker).
Definition
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Source: The American Marketing Association (AMA) (see [Link]).
Definition
Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably. Source: The Chartered Institute of Marketing (CIM) (UK) (see [Link])
Recent formal Definition of Marketing
Marketing is an organizational function and 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 stakeholders. Source: American Marketing Association, 2004
Role of Marketing
Organizational Resources Effective match Specification of Target Market
Customer Satisfaction
Organizational
Aims/objectives
What is a Market ?
According to Kotler (2004), a market consist of all the potential customers sharing a particular need or want who might be willing and able (i.e., propensity to) to engage in exchange to satisfy that need or want.
Source: Kotler, P. (2004), Marketing Management, Prentice-Hall, Englewood Cliff, NJ.
Market Types
Consumer Markets. Industrial/Business to Business Markets. Reseller (Retailers, Distributors) Markets. Publics (Government agencies/departments/institutions). International/global Markets.
Scope Of The Marketing
Goods Services Events Experiences Personalities Place Organizations Properties Information Ideas and concepts
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Core Concepts of Marketing
Based on : Needs, Wants, Desires / demand Products, Utility, Value & Satisfaction Exchange, Transactions & Relationships Markets, Marketing & Marketers.
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Core Concepts of Marketing
Needs, wants demands
Products
Utility, Value & Satisfaction
Markets
Marketing & Marketers
Xchange, Transaction Relationships
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Core Concepts of Marketing
Need food ( is a must ) Want Pizza, Burger, French fry's ( translation of a need as per our experience ) Demand Burger ( translation of a want as per our willingness and ability to buy ) Desire Have a Burger in a five star hotel
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In order to understand Marketing let us begin with the
Marketing Triangle
Customers
Company
Competition
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Who is a Customer ??
CUSTOMER IS . . . . .
Anyone who is in the market looking at a product / service for attention, acquisition, use or consumption that satisfies a want or a need
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Customer
CUSTOMER has needs, wants, demands and desires Understanding these needs is starting point of the entire marketing These needs, wants arise within a framework. Understanding both the needs and the framework is the starting point of a long term relationship
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How Do Consumers Choose Among Products & Services?
Value - the value or benefits the customers gain from using the product versus the cost of obtaining the product.
Satisfaction - Based on a comparison of performance and expectations.
Performance > Expectations => Satisfaction
Performance < Expectations => Dissatisfaction
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Customers - Problem Solution
As a priority , we must bring to our customers WHAT THEY NEED
We must be in a position to UNDERSTAND their problems
Or in a new situation to give them a chance to AVOID the problems
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Customer looks for Value
Value Benefit Cost
= Benefit / Cost = Functional Benefit + Emotional Benefit = Monetary Cost + Time Cost + Energy Cost + Psychic Cost
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Simple Marketing System
Communication
Goods/services
(a collection of sellers)
Money
Industry
(a collection of Buyers)
Market
Information
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Concept Of Marketing
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There are five alternative concepts under which organizations conduct their marketing activities: Production concept Product concept Selling concept Marketing concept Societal marketing concepts
Production Concept
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The philosophy that consumers will favour products that are available and highly affordable and that management should therefore focus on improving production and distribution efficiency.
Product Concept
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The philosophy that consumers will favour products that offer the most quality, performance, and innovative features.
Selling Concept
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The idea that consumers will not buy enough of the organizations products unless the organization undertakes a large scale selling and promotion effort.
Marketing Concept
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The marketing management philosophy that holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.
Societal Marketing Concept
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The idea that the organization should determine the needs, wants, and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumers and societys well being.
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Three Considerations Underlying The Societal Marketing
Society
(Human welfare)
Societal marketing concept Consumers
(Want satisfaction)
Company
(Profits)
The selling and Marketing Concepts Contrasted
Starting point
Focus
Means
Ends
Factory Existing products
Selling Profits through and sales volume promoting
The selling concept
Market Customer Integrated needs marketing
Profits through customer satisfaction
The marketing concept
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