What is Marketing?

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What is Marketing?

• Process by which individuals and groups obtain
  what they need and want through creating and
  exchanging products and value with others.
• Simply put Marketing is the delivery of customer
  satisfaction at a profit.

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The Steps in the Marketing Process (Fig. 1.1)
2. Design Customer Driven Strategy
1. Understand Customer Needs Wants
3. Deliver Superior Value
4. Build Profitable Relationships Customer
Delight
5. Capture Value Create Profits
Customer Satisfaction
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Step 1 Identify Consumers Needs, Wants and
Demands

• Needs - state of felt deprivation for basic items
  such as food and clothing and complex needs such
  as for belonging. i.e. I am hungry.
• Wants - form that a human need takes as shaped by
  culture and individual personality. i.e. I want
  a hamburger, French fries, and a soft drink.
• Demands - human wants backed by buying power.
  i.e. I have money to buy this meal.

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Step 2. Designing a Customer-Driven Marketing
Strategy

• Selecting the right target markets
• Choosing a Value Proposition
• Choosing a Management Orientation

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Marketing Management Philosophies

• Consumers favor products that are
• available and highly affordable.
• Improve production and distribution.
• Consumers favor products that offer
• the most quality, performance, and
• innovative features.
• Consumers will buy products only if
• the company promotes/ sells these
• products.
• Focuses on needs/ wants of target
• markets delivering satisfaction
• better than competitors.
• Focuses on needs/ wants of target
• markets delivering superior value.

Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
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The Marketing Concept

• Emphasis is on offering products that satisfy
  customers wants and/or needs
• Customer drives production
• Management is profit-oriented
• Planning is long-run
• Company focuses on buyers

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3. Prepare a Marketing Plan Programs

• Successfully execute the 4Ps
• Product
• Price
• Promotion
• Place
• Create a sustainable business

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4. Build Relationships

• Execute Strong CRM
• Customer Relationship Management
• Customer Value Difference between
• value and cost
• Customer Satisfaction Perceived performance
  matches expectations

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5. Capturing Value from Customers

• Create Customer Loyalty and Retention
• Increase Share of Customers Purchases
• Build Customer Equity Lifetime Value
• Build the Right Relationships with the Right
  Customers

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What is a Market?

• A market is all of the customers who have a
  common need or want for a product or service and
  have the money to pay for those products they
  need or want.

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Market Segmentation
Through Market Segmentation, Companies Divide
Large, Heterogeneous Markets into Smaller
Segments that Can be Reached More Efficiently
And Effectively With Products and Services That
Match Their Unique Needs.
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Market SegmentationGeographic Segmentation
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Market SegmentationDemographic Segmentation

• Dividing the market into groups based on
  variables such as
• Age
• Gender
• Family size or life cycle
• Income
• Occupation
• Education
• Religion
• Race
• Generation
• Nationality

Most Popular Bases Easiest to Measure
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Market SegmentationPsychographic Segmentation
Divides Buyers Into Different Groups Based on
Social Class
Lifestyle
Personality
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Market SegmentationBehavioral Segmentation

• Dividing the market into groups based on
  variables such as
• Occasions
• Benefits
• User status
• Usage rate
• Loyalty status
• Readiness stage
• Attitude toward product

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Developing the Marketing Mix
Price Amount of money that consumers have to pay
to Obtain the product
Product Goods-and-service combination that a
company offers a target market
Target Customers Intended Positioning
Activities that persuade target customers to
buy the product Promotion
Company activities that make the product
available Place

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ProductGoods-and-servicecombination that a
company offers atarget market
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Definitions

• Product
• Anything offered to a market for attention,
  acquisition, use, or consumption that might
  satisfy a need or want.
• Service
• A form of product that consists of activities,
  benefits or satisfactions offered for sale that
  are essentially intangible and do not result in
  the ownership of anything.

Goal 4 Discuss how companies position their
products
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Levels of Product and ServicesFigure 8.1
8 - 19
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Choosing a Product Positioning Strategy

• Products Position - the way the product is
  defined by consumers on important attributes -
  the place the product occupies in consumers
  minds relative to competing products.
• Marketers must
• Plan positions to give their products the
  greatest advantage in selected target markets,
• Design marketing mixes to create these planned
  positions.

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What is a Brand?

• A name, term, sign, symbol, or design that
  identifies the product
• Branding can add value to a product
• Branding helps buyers
• Identify products
• Determine quality
• Branding helps sellers
• Convey product quality
• Provide legal protection
• Segment markets

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Major Stages in New-Product Development (Fig. 9.1)
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New Product Development Process Step 1. Idea
Generation
Idea Generation is the Systematic Search for New
Product Ideas Where Quantity of Ideas is Most
Important and Obtained From Employees and
Distributors
Suppliers
Customers
Competitors
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New Product Development Process Step 2. Idea
Screening

• Process to spot good ideas and drop poor ones as
  soon as possible.
• So, Quality NOT Quantity is most important.
• Many companies have criteria for rating and
  screening ideas based on such areas as
• Market Size
• Number of Competitors Competitive Offerings
• Product Price
• Development Time Costs
• Manufacturing Costs
• Rate of Return

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New Product Development Process Step 3. Concept
Development
1. Develop New Product Ideas into Alternative
Detailed Product Concepts
2. Concept Testing - Test the New Product
Concepts with Groups of Target Customers
3. Choose the One That Has the Strongest Appeal
to Target Customers
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New Product Development Process Step 4. Marketing
Strategy
Part One Describes Overall Target
Market Planned Product Positioning Sales Profit
Goals Market Share
Part Two Describes First-Year Products Planned
Price Distribution Marketing Budget
Part Three Describes Long-Term Sales Profit
Goals Marketing Mix Strategy
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Step 5. Business AnalysisStep 6. Product
Development
Business Analysis Review of Product Sales,
Costs, and Profits Projections to See if They
Meet Company Objectives
If No, Eliminate Product Concept
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New Product Development Process Step 7. Test
Marketing
Standard Test Market Full marketing campaign in
a small number of representative cities.
Controlled Test Market A few stores that have
agreed to carry new products for a fee.
Simulated Test Market Test in a simulated
shopping environment to a sample of consumers.
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New Product Development Process Step 8.
Commercialization
Commercialization is the Introduction of the New
Product into the Marketplace.
When is the Right Time to Introduce Product?
Where to Launch a New Product?
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Stages in the Adoption Process for a New Product
Awareness Consumer is aware of product, but
lacks information.
Interest Consumer seeks Information about new
product.
Evaluation Consumer considers trying new product.
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Adopter Categories (Fig. 5.7)
Early Majority
Late Majority
Early Adopters
Innovators
Percentage of Adopters
Laggards
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13.5
Time of Adoption
2.5
Late
Early
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Product Life Cycle (Fig. 9.2)
Sales and Profits Over the Products Life From
Inception to Demise
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Introduction Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
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Growth Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
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Maturity Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits, then lower profits
Maximize profits while defending market share
Marketing Objectives
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
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Decline Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
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PriceAmount of moneythat consumers have to
pay to obtain the product
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Two Definitions of Price

• Manufacturer
• The amount of money a company charges for a
  product or service that will cover costs and make
  a profit
• Consumer
• the sum of the values that consumers are willing
  to pay for the benefits of having or using the
  product or service.

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Promotion Activities that persuade target
customers to buythe product
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Marketing Communications Mix

• The specific mix of support a company uses to
  pursue its marketing objectives.
• Direct activities personal selling and direct
  marketing
• Indirect activities advertising, sales
  promotion, internet and public relations

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Tools of the MixFigure 14.1
14 - 41
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Elements in the Communication ProcessFigure 14.2
14 - 42
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PlaceCompany activitiesthat make the product
available
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Different Distribution Strategies

• Intensive distribution
• Offer the product in as many outlets as possible
  (e.g. all convenience stores)
• Selective
• Select the best outlets to offer the product
  (e.g. only select stores in large malls)
• Exclusive distribution
• Product is only offered to a very few preferred
  outlets (e.g. only at Macys)

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What are Marketing Intermediaries?

• A set of interdependent organizations
  (intermediaries) involved in the process of
  making a product or service available for use or
  consumption by the consumer or business user.
• Intermediaries facilitate the movement of the
  product from point of manufacture (e.g. trucks)
  to point of consumption (e.g. a retail store).

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Buyer Decision Process (Fig. 5.6)
Purchase Decision
Postpurchase Behavior
Evaluation of Alternatives
Information Search
Need Recognition
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Buyer Decision ProcessStep 1. Need Recognition

Desired State
Actual State
Buyer Recognizes a Problem or a
Need.
Needs Arising From Internal Stimuli
Hunger External Stimuli- Friends
State Where the Buyers Needs are Fulfilled and
the Buyer is Satisfied.
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The Buyer Decision ProcessStep 2. Information
Search
Personal Sources
Commercial Sources

Public Sources

• Family, friends, neighbors
• Most effective source of
• information

• Advertising, salespeople
• Receives most information from
• these sources

Experiential Sources

• Mass Media
• Consumer-rating groups

• Handling the product
• Examining the product
• Using the product

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The Buyer Decision ProcessStep 3. Evaluation of
Alternatives
Consumer May Use Careful Calculations Logical
Thinking
Consumers May Buy on Impulse and Rely on
Intuition
Consumers May Make Buying Decisions on Their Own.
Consumers May Make Buying Decisions Only After
Consulting Others.
Marketers Must Study Buyers to Find Out How They
Evaluate Brand Alternatives
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The Buyer Decision ProcessStep 4. Purchase
Decision

• Purchase Intention
• Desire to buy the most preferred brand

• Purchase Decision

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The Buyer Decision ProcessStep 5. Postpurchase
Behavior
Satisfied Customer!

• Consumers
• Expectations of Products Performance.
• Products Perceived
• Performance.

Dissatisfied Customer
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Major Forces in the Companys Macroenvironment
(Fig. 3.4)
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The Companys Macroenvironment

• Demographic - studies populations in terms of
  size, density, location, age, gender, race,
  occupation and other statistics.
• Economic - factors that affect consumer
  purchasing power and spending patterns.
• Natural - natural resources needed as inputs by
  marketers or that are affected by marketing
  activities.

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The CompanysMacroenvironment

• Technological - forces that create new
  technologies, creating new product and market
  opportunities.
• Political - laws, agencies and pressure groups
  that influence and limit organizations and
  individuals in a given society.
• Cultural - institutions and other forces that
  affect a societys basic values, perceptions,
  preferences, and behaviors.

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Companys Internal Environment (Fig. 3.1)
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The Companys Microenvironment

• Companys Internal Environment- functional areas
  inside a company that have an impact on the
  marketing departments plans.
• Suppliers - provide the resources needed to
  produce goods and services and are an important
  link in the value delivery system.
• Marketing Intermediaries - help the company to
  promote, sell, and distribute its goods to final
  buyers. i.e. resellers.

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The Companys Microenvironment

• Customers - five types of markets that purchase a
  companys goods and services.
• Competitors - those who serve a target market
  with similar products and services against whom a
  company must gain strategic advantage.
• Publics - any group that perceives itself having
  an interest in a companys ability to achieve its
  objectives.

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Developing Growth Strategies in the Age of
Connectedness
Product/ Market Expansion Grid
Existing Products
New Products
1. Market Penetration
3. Product Development
Existing Markets
4. Diversification
2. Market Development
New Markets
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Product/ Market Expansion Grid

• Market Penetration making more sales to current
  customers without changing its products.
• How? Add new stores in current market areas,
  improve advertising, prices, service or store
  design.

• Market Development develop new
• markets for its current products.
• How? Identify new demographic or
  geographic markets.

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Product/ Market Expansion Grid

• Product Development offering modified or new
  products to current markets.
• How? New styles, flavors, colors, or modified
  products.
• Diversification new products for new markets.
• How? Start up or buy new businesses.