Marketing

Lesson 9 Introduction to Marketing



Session Objectives

When you have completed this session you will be able to;

– Explain key marketing terms

– Trace the evolution of marketing through to the Societal Marketing Concept

– Describe the role of marketing in non-business environments

Marketing

Process of planning and executing the conception, pricing, promotion and distribution

of ideas, goods, services, organizations, and events to create and maintain

relationships that satisfy individual and organizational objectives.

Marketing Defined

“Marketing is a social and managerial process by which individuals and groups obtain

what they need and want through creating and exchanging products and values with

others” (Kotler and Armstrong)



Self Assessment

You will need to understand the terms

– Needs

– Wants and Demands

– Products

– Value

– Satisfaction

– Quality

– Exchange

– Transactions and Relationships

– Markets

Common Terms

o Needs

o Physical, social, individual

o Wants and Demands

o Wants are needs shaped by culture

o Demands are wants backed by buying power

o Products

o Anything that can be offered to the market to satisfy a need or want

o Value

o The customers assessment of the ability of the product to satisfy their needs

o Satisfaction

o The extent to which a products perceived performance matches a buyers

expectation

o Quality

o Begins with customer needs and ends with customer satisfaction

o Exchange

o The act of obtaining a desired object by offering something in return

o Transactions and Relationships

o A transaction consists of a trade of values between two parties

o Relationship marketing involves the process of maintaining and enhancing

strong value laden relationships with customers.

o Markets

o The set of all actual and potential buyers of a product or service



Marketing

– It assumes that it will proceed in accordance with ethical practices.

– Identifies the 4 marketing variables - product, price, promotion, and distribution.

– States that the public, the customer, and the client determine the marketing

program.

– Emphasizes creating and maintaining relationships.

– Finally applies for both non-profit organizations and profit-oriented businesses.



Peter F. Drucker Said:

If we want to know what a business is, we have to start with its purpose. And its

purpose must lie outside the business itself. In fact, it must lie in society since a

business enterprise is an organ of society. There is one valid definition of business

purpose: to create a customer.



How Does an Organization Create a Customer?

Identifying customer needs

Designing goods and services that meet those needs

Communicating information about those goods and services to prospective buyers

Making the goods or services available at times and places that meet customers’

needs

Pricing goods and services to reflect costs, competition, and customers’ ability to buy

Providing for the necessary service and follow-up to ensure customer satisfaction

after the purchase



Exchange Process

Activity in which two or more parties give something of value to each other to satisfy

perceived needs.

– Can be tangible or intangible.

– Is more complex the more complex the economy gets.

– The is no point to production without marketing.



Transaction-based Vs. Relationship Marketing

Transaction-based marketing: the traditional view of marketing as a simple exchange

process. (Marketing people just needed to attract customers).

Relationship marketing: development and maintenance of long-term, cost-effective

exchange relationships with individual customers, suppliers, employees, and other

partners for mutual benefit. If companies can take steps to improve customer service

internally, they will have profitable success externally.

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.)

No matter what, it costs more to get a new customer than to retain one!

One study of 100 service firms showed that a 5% reduction in customer defection

rates improved profits anywhere from 25% to 85%.







Five Eras in the History of Marketing



Approximate Time

Era Prevailing Attitude

Period*







Production Prior to 1920s “Pile them high and sell them cheap”





Product Prior to 1950s “Innovation is the key to survival”



“Creative advertising and selling will

Sales Prior to 1970s overcome consumers’ resistance and

convince them to buy.”

“The consumer is king! Find a need

Marketing Since 1970s

and fill it.”

“Long-term survival only possible

Societal Began in 1980s through social responsibility and

ethics”





Henry Ford’s Mass-production Line (Production Era)

“They (customers) can have any color they want, as long as it’s black.”

Sales Orientation

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. (However,

marketing positions still remained as subordinate positions)

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.

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: company wide consumer orientation with the objective of

achieving long-run success.

Consumer orientation: business philosophy incorporating the marketing concept that

emphasizes first determining unmet consumer needs and then designing a system for

satisfying them.

Marketing concept: part of the marketing process in to convert needs to wants.

– You may need new jeans but, how can a marketer make you want a specific brand.

– To do this, marketers must promote product benefits rather than features to show

the added value that customers will receive from this product.



Societal Marketing

“An organisation 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 improves the customer’s and society’s well being.”



Marketing Challenges into the Next Century

Growth of Nonprofit Marketing

The Information Technology Boom

Rapid Globalisation

The Changing World Economy

The Call for More Ethics and Social Responsibility

The New Marketing Landscape

Extending the Traditional Boundaries or Marketing

Today, both profit-oriented and not-for-profit organizations recognize universal needs for

marketing and it’s importance to their success.



Characteristics of Not-for-profit Marketing

Public (army, post office) and private (Irish cancer society) sectors

Characteristics:

– Marketing to several publics (e.g., Clients and sponsors) vs. One public

(customers)

– Customer or service user wields less control over the organization’s destiny (often

have a monopoly)

– Lack of bottom line (profitability measure of performance)

– Lack of a clear organizational structure



Today’s Global Marketplace

The interdependence of the world’s economies is a reality

The global economy is currently expanding at an annual rate of about 4%

Standards of living around the world are rising - therefore, generating huge new

markets

– 6 billion international customers total

– China and India

Multidomestic Versus Global

The multidomestic strategy allows each subsidiary abroad to operate relatively

independently of subsidiaries around the world. (This is because for some products

and marketing strategies, may need significant changes before going abroad)

– Some companies have had huge failures because they failed to see this

(EuroDisney)

– Anyone going into international marketing must spend a tremendous time studying

local consumer behavior

Multidomestic Versus Global

The global strategy markets the same products the same way worldwide

– This strategy is profitable because of sheer numbers

– Pringles has been successful worldwide without changing a thing

Ethics and Social Responsibility: Doing Well By Doing Good

What are “ethics”? What does “social responsibility” mean?

– Are they the same for everyone?

– For example, if you had heard about the problem that Gerber had, would that make

you stop purchasing the products?

Ethics and Social Responsibility: Doing Well By Doing Good

Many companies have been in the media lately for breaching ethical standards

However, some companies have been advertising their good ethical standards and

social responsibility and have produced benefits like improved customer relationships,

increased employee loyalty, marketplace success, and improved financial

performance, (see figure 1.14)



Summary

Marketing Defined

Key terms introduced and explained

The Evolution of Marketing described

New Challenges for marketing discussed

Lesson 10

An Overview of Marketing Management



Objectives

When you have completed this lesson you should be able to;

– Describe how companies recognise and exploit marketing opportunities

– Explain what is meant by the terms segmentation, targeting and product positioning

– Identify the key elements of the marketing mix

– Explain how companies plan, implement and control marketing activities.

Marketing Management Defined

Marketing Management is the analysis, planning, implementation and control of

programmes designed to create, build and maintain beneficial exchanges with target

buyers for the purpose of achieving organisational objectives.

The Marketing Process

The process of

– Analysing market opportunities

– Selecting target markets

– Developing the marketing mix

– Managing the marketing effort

S.T.P.

The concepts of segmentation, targeting and positioning are introduced at this stage

but are discussed in much greater detail in a later chapter 7



The STP Process

Segmentation is the process of classifying customers into groups which share some

common characteristic

Targeting involves the process of evaluating each segments attractiveness and

selecting one or more segments to enter

Positioning is arranging for a product to occupy a clear, distinctive and desirable place

relative to competing products in the mind of the consumer



Target Market

Group of people toward whom a firm markets its goods, services, or ideas with a

strategy designed to satisfy their specific needs and preferences.

Any marketing strategy must include a detailed (specific) description of this.

Marketing Mix (the 4 P’s)

Blending the four strategy elements of marketing decision making--product, price,

distribution (place), and promotion--to satisfy chosen consumer segments.

Product strategy: element of marketing decision making involved in developing the

right good or service for the firm’s customers, including package design, branding,

trademarks, warranties, product life cycles, and new-product development.



Marketing Mix (the 4 P’s)

Pricing strategy: element of marketing decision making dealing with methods of

setting profitable and justifiable prices. (Competition is a major issue).

Distribution strategy: element of marketing decision making concerned with activities

and marketing institutions that get the right good or service to the firm’s customers.

– Distribution decisions include modes of transportation, warehousing, inventory

control;, Order processing, and selection of marketing channels.



Marketing Mix (the 4 P’s)

Promotional strategy: promotion is the communication link between buyers and

sellers.

– Element of marketing decision making that involves appropriate blending of

personal selling, advertising, and sales promotion to communicate with and seek to

persuade potential customers.

Managing the Marketing Effort

Analysis

– Before developing products or services you must analyse

• Markets, marketing environment, company strengths and weaknesses

Planning

– Objectives, action plans, budgets and controls

Implementation

Control

– Monitoring procedures

Summary of Lesson 10

Marketing management defined

The STP process was mentioned

The marketing mix was introduced

An overview was given of managing the marketing effort

Lesson 11 The Marketing Environment



Objectives

When you have completed this lesson you should be able to;

– Describe the microenvironment and how it affects the company

– Outline the macroenvironmental forces which affect threats and opportunities

– Identify major environmental factors affecting Irish businesses

– Suggest how business may respond to environmental change







The Marketing Environment

Macroenvironment







Economic Political

Microenvironment / Legal



Suppliers Customers



Publics Company





Distributors Competitors



Social Natural







Technological









The Marketing Environment

Macro

– Sociocultural

– Technology

– Economic

– Politics and Law

– Natural

Micro

– Company

– Suppliers

– Customers

– Distributors

– Publics





The Company’s Micro Environment

The Company

– Cross divisional considerations

Suppliers

– Availability of supplies, price, terms

Customer

Competitors

Distributors / Intermediaries

– Method of getting the product or service to the customer

Publics

– Financial, local, media, employees, shareholders

The Company’s Macro-environment

Sociocultural environment

– Demographics

• Study of human population

– Culture

• Society’s basic values and behaviour

– Attitudes

• How attitudes and opinions are formed

– Current issues



The Company’s Macro-environment

Technological Environment

– New product and market opportunities

– Changes in

• Product design

• Quality control

• Production of advertising

• Management and analysis of customer information

The Company’s Macro-environment

Economic environment

– Impact of continuing prosperity or of a recession

Political / Legal environment

– Laws concerning

• Competition, customers, society

• Regional, national or local regulations

Natural environment

– Natural resources as inputs or affected by marketing activity

– Scarcity of raw materials

– Disposal of waste

– Sites for industrial complexes

The Marketing Environment

Competitive

Social-cultural

Technological

Economic

Political legal

The Marketing Environment

Changing legislation

– The deregulation of telecommunications during the 1990’s increased competition,

e.g. Esat vs Eircom

– Airline deregulation

International business environment

– New markets - Mexico, India, Argentina, and china (77% of the world’s population

lives in developing countries and the economies of the developing world’s are

growing at 6% annually)

– Each market is going to have very different cultural diversity and ethical concerns

Quality and customer satisfaction: mass media have educated all markets about the

best brands, products, and services and improved technology has made top quality

products available around the world

The technological revolution.

– Application to business of knowledge based on scientific discoveries, inventions,

and innovations.

– Businesses can communicate with employees, suppliers and customers instantly.

– 35% of Irish households have a personal computer.

The technological revolution.

– Interactive marketing: buyer-seller communications in which the customer controls

the amount and type of information received from a marketer through such

channels as the internet, CD-ROM disks, interactive telephone numbers, and

virtual reality kiosks.

The technological revolution.

– Internet: an all-purpose global network composed of some 48,000 different

networks around the globe that, within limits, lets anyone with access to a personal

computer send and receive images and data anywhere.

• Grows at a rate of 10% per week.

• Businesses enter the net at a rate of 500 to 1,000 per day.

The technological revolution.

– World wide web (WWW or web): browser technology allows point and click access

to anywhere on the www, which is - an interlinked collection of graphically rich

information sources within the larger internet.

• How are companies making money now on the internet?

– Virtual storefront: form of interactive media that allows customers to view and order

merchandise.



Strategic Alliance

Partnership between organizations that creates competitive advantages.

– Relationship marketing doesn’t apply just to individual customers and employees.

It also includes business-to-business relationships with the company’s suppliers

and distributors and other types of corporate partnerships.

– Includes sharing R&D costs.

– Co-marketing and licensing arrangement also very popular (McDonald’s using

Disney characters).

Analysing and Responding to Environmental Forces

Passive Response

– An individual takes the view that an organisation cannot influence any part of their

marketing environment

Proactive Response

– Other companies take an environmental management perspective whereby they

take aggressive actions to affect the forces in their marketing environment



Summary

The macro environment consists of the larger social forces that affect all

microenvironments and are generally outside the control of the company.

The microenvironment consists of the forces close to the company that affect its

ability to serve its customers.