Chapter 1 Defining Marketing for the 21st Century

What is the first thing (word, picture, thought) that comes to your mind when you listen to the word Marketing? Is Marketing and is Sales Sales a same part or of Different? Marketing

If Different then, or is Marketing a part of a Sales?

There will always be a need for some selling. But the aim of marketing is to make selling extra. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available. Selling is a tip of ice-berg. By Peter Drucker

Company Orientations towards the Market Place 1) Production Concept: this is the one of the oldest concept. It holds that customers will prefer products that are widely available & inexpensive. Managers of production orientation are concerned with high production efficiency, low cost, & mass distribution. 2) Product Concept: this concept holds that consumer will favour those products that offer the most quality, performance, or innovative features. Managers in these organization focus on making superior products & improving them over time. 3) Selling Concept: this concept holds that consumers & businesses, if left alone, will ordinarily not buy enough of the organizations products. The organization must, therefore, undertake an aggressive selling promotion effort. The selling concept is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopaedias & funeral pots. 4) Marketing Concept: this concept avails that to find the right products for the customer 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. Marketing Management: Marketing management is the art and science of choosing target markets And getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. What is marketed? 1) Goods 2) Services 3) Events 4) Experiences 5) Persons 6) Places 7) Properties 8) Organization 9) Information 10) Ideas

Marketing & Demand: Just as production and logistic professionals are responsible for supply management, marketers are responsible for demand management. They have to stimulate demand for their companys product/service. Demand States: 1) Negative Demand (Dislike): Consumer dislikes the product & may even pay a piece to avoid it. 2) Non-existent Demand (unaware or uninterested): consumer may be unaware or uninterested to buy the product. 3) Latent Demand: consumer may share a strong need that cannot be satisfied by an existing product. 4) Declining Demand: Consumer begin to buy the product less frequently or not at all. 5) Irregular Demand: Consumer purchase vary on seasonal, monthly, weekly, daily or even hourly basis 6) Full Demand: consumers are adequately buying all products put into the market place. 7) Overfull demand: more consumers would like to buy the product that can be satisfied. 8) Unwholesome demand: consumer may be attracted to products that have undesirable social consequences. Structure of Flows in a Modern Exchange Economy

Explanation of the terms & diagram: Traditionally, a market was a physical place where buyer & sellers gathered to buy & sell goods. Economist describe a market as a collection of buyers & sellers who transact over a particular product or product class (housing market or grain market)

Modern Market explanation: There are 5 basic markets as you can see from the diagram. Manufacturer goes to the resource market of raw material, labour &money, buy resources & turn them into goods & services, & then sell to intermediaries, who sell them to customer. Then consumer sells their labour & receives money with which they pay for goods & services. Then the Govt. collects tax revenues to buy goods from resource, manufacturer & intermediaries market & uses these goods & services to provide public services. A simple marketing system:

Explanation of the diagram: The figure shows the relationship between the industry & the market. Sellers & buyers are connected through four flows. The sellers send goods & services & communications (ads, direct mail) to the market; in return they receive money & information (attitudes, sales data). The inner loop shows an exchange of money for goods & services; and the outer loops shows an exchange of information. Key Consumer Markets: 1) Consumer Market 2) Business Market 3) Global Market 4) Non Profit & Governmental Market Explanation of Each Term: 1) Consumer Market: in this market companies are selling mass consumer goods & services such as soft drinks, cosmetics, air travel & athletic shoes & equipment spend a great deal of time trying to establish a superior brand image. Mostly brands strength depends on developing a superior product & packaging, ensuring its availability, backing it with engaging communications & reliable service. 2) Business Market: Companies sells business goods & services to the well trained & well professional buyers who are skilled in evaluating competitive offering. Business buyers buy goods in order to make or resell a product to others at a profit. 3) Global Market: companies selling goods & services in the global marketplace face additional decision & challenges. They must decide which countries to enter, how to enter each country, how to adapt their product & service features to each country, how to price their products in different countries, & how to adopt their communication to fit their countries.

4) Non-profit & Governmental Markets: companies selling their goods to non-profit organizations such as churches, universities, charitable organizations, or government agencies need to price carefully because these organizations have limited purchase power. Marketing in Practice: Functions of CMOs Strengthening the brands Measuring marketing effectiveness Driving new product development based on customer needs Gathering meaningful customer insights Utilizing new marketing technology
Core Marketing Concepts: 01. Needs, Wants & Demand: Need is the basic human requirement. People need food, air, water clothing & shelter to survive. People also have strong needs for recreation, education & entertainment. These need become wants when they are directed to specific objects that might satisfy the need. Demands are wants for specific products backed by an ability to buy. 02. Target Market, Positioning, & Segmentation:

Target markets are groups of individuals that are separated by distinguishable and noticeable aspects. Target markets can be separated by the following aspects: Geographic segmentations, addresses (their location climate region) Demographic / socioeconomic segmentation (gender, age, income, occupation, education, household size, and stage in the family life cycle) Psychographic segmentation (similar attitudes, values, and lifestyles) Behavioural segmentation (occasions, degree of loyalty) Product-related segmentation (relationship to a product) Positioning: Positioning is the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. Segmentation: Segmentation is the process of splitting (segmenting) the entire market (everyone) into smaller groups that share similar traits. 03. Offerings& Brands: companies addresses needs by putting forth a value proposition, a set of benefits they offer to customers to satisfy their needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information & experiences. A brand is an offering from a known source. A brand name such as McDonalds carries many associations in the mind of people: hamburgers, fun, childrens, fast food, convenience & golden arches. 04. Value & Satisfaction: Value reflects the perceived tangible& intangible benefits & cost to customers. Value can be seen as primarily a combination of quality, service & price, called the customer value tried. Value increases with quality & service decreases with price, although other factors can also play an important role. Satisfaction reflects a persons comparative judgements resulting from a products perceived performance in relation to his or her experience. 05. Marketing Channels: To reach a target market, the marketer uses three kinds of marketing channels: Communication channels: which deliver & receives messages from target buyers, & include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, audio

traps & the internet, beyond this the communication are also conveyed by facial expressions & clothing, the look of retail stores & many other media. Distribution channels: the marketer uses the distribution channel to display, sell, or deliver the physical product or services to the user. They include distributors, wholesalers, retailers, and agents. Service Channels: the marketer uses service channels to carry out transactions with potential buyers. Service channels include warehouses, transportation companies, bank, & insurance companies that facilitate transactions. 06. Supply Chain: A supply chain is a system of organizations, people, technology, activities, information, and resources involved in moving a product or service from supplier to customer. It describes a longer channel stretching from raw materials to components to final products that are carried to final buyers. 07. Competition: it includes all the actual & potential rival offerings & substitute that a buyer might consider. 08. Marketing Environment: Competition represent only one force in the environment in which the marketer operator. The marketing environment consists of the task environment & the broad environment. Task Environment: it includes the immediate actors involved in producing, distributing, & promoting the offerings. The main actors are the company, suppliers, distributors, dealers, & the target customers. While in the supplier group are material suppliers & service suppliers such as marketing research agencies, advertising agencies, banking & insurance companies, transportation & telecommunication companies. Broad Environment: it consists of six components: demographic environment, economic environment, physical environment, technological environment, political-legal environment, & the social environment. 09. Marketing Planning: the marketing planning process consists of analysing marketing opportunities; selecting target markets, designing marketing strategies; developing marketing programs; & managing the marketing effort. How Marketing & Business are changing: 1. Information technology 2. Globalization 3. Deregulation 4. Privatisation 5. Customer empowerment 6. Customization 7. Heightened competition 8. Industry convergence 9. Retail transformation 10. Disintermediation Explanation of each above points: 1. Information technology: the digital revolution has created an information age. The industry age was characterized by mass production & mass consumption, stores stuffed with inventory, ads everywhere, & rampant discounting. The information Age promises to lead to more accurate levels of production, more targeted communications, & more relevant pricing.

2. Globalization: technology advances in transportation, shipping, communication have made it easier for companies to market in other countries & easier for consumers to buy products & services from marketers in other countries. 3. Deregulation: Many countries have deregulated industries to create greater competition & growth opportunities. E.g.: In U.S., the long distance telephone companies can now compete in local markets & local phone companies can now offer long distance. 4. Privatization: Many countries have converted public companies to private ownership & management to increase their efficiency, such as British Airways & British Telecom in the United Kingdom. 5. Customer Empowerment: customer increasingly expects higher quality & service & some customization. They are more & more time-starved & want more convenience. They perceive fewer real product differences & show less brand loyalty. 6. Customization: the company is able to produce individually differentiated goods whether ordered in person, on the phone, or online. By going online, companies essentially enable consumers to design their own goods. The company also has the capacity to interact with each customer personally, to personalize messages, services, & relationship. 7. Heightened Competition: Brand manufacturers are facing intense competition from domestic & foreign brands, which is resulting in rising promotion costs & shrinking profit margins. 8. Industry Convergence: Industry convergence is generally defined as the converging/merging of two or more separate and distinct industries 9. Retail Transformation: small retailers are succumbing to the growing power of giant killers & category killers. Store based retailers are facing growing competition from catalogue houses; direct mail firms; newspapers; magazine, & TV direct to customer ads; home shopping TV; & e-commerce on internet. 10. Disintermediation: disintermediation is the removal of intermediaries in a supply chain. E.g.: ebay, yahoo, amazon, yepme shopping, snapdeal.com, flipkart.com New Customer Capabilities: A substantial increase in buying power A greater variety of available goods and services A great amount of information about practically anything Greater ease in interacting and placing and receiving orders An ability to compare notes on products and services An amplified voice to influence public opinion Holistic Marketing The concept of holistic market is based on the development, designed, & implementation of marketing programs, processes, & activities that recognizes their breadth & interdependencies. It is an approach to marketing that attempts to recognize & reconcile the scope & complexities of marketing activities. Holistic Marketing is a term used to describe a strategy that enables you to look at your marketing efforts as a 'whole', which in turn helps you develop an overall or 'holistic marketing' plan.

Most small businesses look at their marketing and select marketing formats to action that they are comfortable with, and therefore, omit to undertake or incorporate marketing actions that are less comfortable for them. What is holistic marketing? If you are in the business of selling bread do you market the benefits of the whole loaf or the benefits of the slice? If you market a slice, what affect does that have on the whole loaf? Do your clients and customers want a loaf or a slice or two? How do you know who your clients are? How do you know what your clients want? Where will you locate your ideal clients and customers? What goodness will your loaf bring to your clients? What else can you make from the same ingredients to benefit your clients and customers? How do you know that your clients and customers would benefit from other products? With many common reasons why start-up businesses fail in their first year - you'll want to make sure you don't repeat those same mistakes! Holistic Market Dimensions: Graph is nor coming 1) Relationship Marketing: it has an aim of building mutually satisfying long-term relationships with key parties- customers, suppliers, distributors, & other marketing partners in order to earn & retain their business. It involves cultivating the right kind of relationships with the right constituent groups. The outcome of relationship marketing is the building of a unique company asset called a marketing network. A marketing network consists of the company & its stakeholders with whom it has built mutually profitable business relationships. 2) Integrated Marketing: Strategy aimed at unifying different marketing methods such as mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and reinforce the market impact of each method, and to employ the market data generated by these efforts in product development, pricing, distribution, customer service, etc. Integrated marketing strategies take advantage of a combination of communication tools and media to spread a message. By combining various tools, marketers are able to ensure that their audience is reached and can leverage the various tools in ways that are most effective. Integrated marketing draws upon the power of traditional advertising and public relations efforts, as well as the use of new, online communication tools that include social media. E.g.: Blurring Lines between Advertising And PR The lines between the common marketing communication practices of advertising and PR are becoming increasingly blurred as more companies use a combination of approaches--or integrated marketing--to get their messages across to their target audiences. It makes sense to leverage all of the communication tools, says Lin Grensing-Pophal, author of "Marketing with the End in Mind." And, as traditional media--newspaper, television and radio--have received increasing competition rom other low-cost options for communicating with consumers, including media relations and online communication efforts, marketers understand a variety of options available to them.

3) Internal Marketing: internal market ensures that everyone in the organization embraces appropriate marketing principle, especially senior management. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. 4) Social Responsibility Marketing: Socially responsible marketing is a marketing philosophy that states a company should take into consideration what is in the best interest of society in the present and long term. The Four Ps The term marketing mix was coined in the early 1950s by Neil Borden in his American Marketing Association presidential address. This is one of the preliminary knowledge every marketer must have and is considered to be the basics of every marketing theory, which emerged henceforth. Many business degree programs such as devry online degrees include this within their curriculum. The basic major marketing management decisions can be classified in one of the following four categories, namely Product, Price, Place (distribution) and Promotion.

Product: It is the tangible object or an intangible service that is getting marketed through the program. Tangible products may be items like consumer goods (Toothpaste, Soaps, and Shampoos) or consumer durables (Watches, IPods). Intangible products are service based like the tourism industry and information technology based services or codes-based products like cell phone load and credits. Product design which leads to the product attributes is the most important factor. However packaging also needs to be taken into consideration while deciding this factor. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the

product approaches market saturation. To retain its competitiveness in the market, continuous product extensions though innovation and thus differentiation is required and is one of the strategies to differentiate a product from its competitors. Price: The price is the simply amount a customer pays for the product. If the price outweigh the perceived benefits for an individual, the perceived value of the offering will be low and it will be unlikely to be adopted, but if the benefits are perceived as greater than their costs, chances of trial and adoption of the product is much greater. Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. This may include any physical store (supermarket, departmental stores) as well as virtual stores (e-markets and e-malls) on the Internet. This is crucial as this provides the place utility to the consumer, which often becomes a deciding factor for the purchase of many products across multiple product categories. Promotion: This represents all of the communications that a marketer may use in the marketplace to increase awareness about the product and its benefits to the target segment. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together (e.g. in film promotion). Sales staff often plays a major role in promotion of a product.