I UNDERSTANDING MODERN MARKETING

The Marketing Concept Marketing Mix Model Broadening Scope of Marketing Marketings Role in the Organization Creating Customer Value and Satisfaction Relationship Marketing

The underlying philosophy of modern marketing management (since the 1960s) is the outward focus on customers as the Center of the Universe

The Marketing Concept

Captured in terms such as:

Customer orientation Customer focused Customer driven Customer centric Customer satisfaction Market driven Exceed customer expectations

Marketing Concept
Key Characteristics

Focus on customers Profits = f (customer satisfaction) Supply adjusts to will of demand Assumes intense competitive environment Long-term time horizon Normative not descriptive model

Selling and Marketing Concepts Contrasted

Starting point
Factory

Focus
Existing products

Means
Selling and promotion

Ends
Profits through sales volume

(a) The selling concept

Target market Customer needs Integrated marketing Profits through customer satisfaction

(b) The marketing concept

Problems in Implementing the Marketing Concept

Inertia, entrenchment (old ways die hard) Projection of own beliefs and values Confusion of MC with superficial PR Learning about customer needs difficult to operationalize Information lost in organizational maze Calls for integrated organization to support marketing effort

Requires continuous monitoring

Conclusion
Marketing concept is more relevant than ever as we enter the 2nd decade of the 21st century

Operational Model for Implementing the Philosophy of the Marketing Concept is the:

The Marketing Mix Consists of Four Basic Strategic Variables (the four Ps)

Product Strategy Price Strategy Promotional Strategy Place Strategy (Channels of Distribution)

The role of marketing management is to mix or blend these four strategic variables in such a way as to meet the needs of...

THE TARGET MARKET

Product

Price Promotion

Place

Target Market

This process does not take place in a vacuum

Main Categories of Environmental Variables

Economic Competitive Technological

Environment (Exogenous Variables)

Socio-Cultural-Demographic
Legal-Political-Government

Illustrative Representation of the Marketing Mix

Product
Internal Controllable Variables (endogenous) Promotion Place Price

Environment
Economic Competitive Socio-CulturalDemographic Legal-PoliticalGovt Technology

Target Market

Environment

The Marketing Mix Model Portrays Marketing Management as:

Target Market

Economic Competitive Socio-CulturalDemographic Legal-PoliticalGovernment Technology Price

Internal Controllable Variables (endogenous)

Place

Based on the marketing concept Having a supply side and demand side Supply adapting to demand Highly interactive An open system Requiring human direction Highly dynamic process An extremely challenging managerial task Universally applicable to virtually any organization Global in scope

Promotion

Product

Marketings Broadened Scope

Manufacturers Retailers Accounting Law

Organizations

Non-profits Universities Government People (political candidates) Countries

Marketing as a Strategic Component of the Organization

Marketing is elevated to a level of strategic position in the organization

Marketing-Management Inextricably Tied to Decisions Involving:

Future direction of the organization Markets to be served Creation of competitive advantage Long term organizational performance

Therefore Strategic Marketing Management Consists of at Least Six Major Areas

1) 2) 3) 4) 5) 6)

Defining the organizations business Specifying the purpose of the organization Identifying opportunities Formulating product/market strategies Budgeting: financial, production, human resources Monitoring, evaluating, and adapting

Defining the Organizations Business

Type of customers (markets) to be served Needs of those customers Means by which organization will meet the needs Competitive advantage (attainment and sustained)

Specifying the Purpose of the Organization

Aspirations of the organization and what it wishes to achieve ie., objectives and goals
Production Finance Marketing

Output and efficiency measures, e.g. output per Man hour

ROI ROS Profit Cash Flow

Sales Volume Margin Market Share Customer Satisfaction

External (environmental) opportunities matched with internal (organizational) capabilities

Identifying Organizational Opportunities

What do we do best? (distinctive competency) What must we do? (success requirements) What might we do? (environmental opportunity)

Formulating Product/Market Strategies

O EXISTING f f Market e EXISTING Penetration r i n New Offering g NEW Development s

MARKETS
NEW Market Development

Diversification

Budgeting, Financial, Production, and Human Resources

Financial implications and allocations relevant to the marketing plan

Revenue, expense, and profit projections Cost allocations made

Monitoring, Evaluating and Adapting Marketing Strategy

Marketing audit --comprehensive, systematic, independent, and periodic examination of the organizations marketing objectives and strategies to identify problems and opportunities as well as to recommend ways of improving marketing performance

Customer Value and Satisfaction

Input Customer Costs = = CV Output Customer Benefits

Note: Costs defined broadly Benefits (customers viewpoint)

Customer Satisfaction

Customers perception of perceived

performance of offering relative to experience

Perceived performance below expectations = dissatisfied customer
Perceived performance meets expectations = satisfied customer Perceived performance exceeds expectations = delighted customer

Relationship Marketing

The development and maintenance of long-term, cost effective relationships with customers in order to retain their preference

Relationship Marketing Compared to Transaction (Traditional) Marketing

Factor
Time orientation Organizational goal Customer service priority Customer contact Customer commitment Seller-customer interaction Source of quality

Transaction Marketing
Short-term Make sale Relatively low Low to moderate Low Conflict manipulation Mainly from production

Relationship Marketing
Long-term______________ Retain customers________ Very high______________ Frequent_______________ High__________________ Cooperation; trust________ Company wide _______

Tools for Implementing Relationship Marketing

Affinity programs Frequent-buyer/user programs Database marketing Partnerships (strategic alliances Co-marketing and co-branding EDI (electronic data interchange) VMI (vender-managed inventory) QR (quick response) Life-time value of customer analysis Social Networks