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					Module-1 Introduction to Marketing
Lesson # 2 Fundamental Marketing Concepts

Core Marketing Concepts: Needs, Wants and Demands
• Needs are the basic human requirements. People need air, food, water, clothing and shelter to survive. • They also have strong needs for recreation, education and entertainment.

Core Marketing Concepts:
Needs, Wants and Demands
• These needs become wants when directed to specific objects that might satisfy the need. • An American may need food, but may want a hamburger, French fries and a soft drink. • An Indian also may need food, but may want idly, dosa, wada, chappatis, rice, curry and curd.

Core Marketing Concepts: Needs, Wants and Demands
• Demands are wants (desire) for specific products backed by an ability and willingness to pay. • Even if some have the ability, they are not willing to part with their money and buy it.

“Marketers create needs” or “Marketers get people to buy things they don‟t want” Discuss.

Points for answering the question
• Marketers do not create needs; Needs pre-exist marketers. • Marketers along with other societal factors, influence wants. • Marketers might promote the idea such as „Mercedes is a status symbol‟, but they do not create the need for social status.

Understanding Customer Needs
• This is not that simple. • Some customers have needs of which they are not fully conscious, or they cannot articulate their needs. • For example, a customer may ask for a powerful lawn mover, a fast „lathe‟, an attractive „bathing suit‟ or a „restful hotel‟?

Five Types of Needs:

Stated needs (customer wants an
inexpensive car).

Real needs (customer wants a car
whose operating cost is low) service from the dealer).

• •

Unstated needs (expecting good
Delight needs (customer would like the
dealer to include an on-board navigation system).

Secret needs (the customer wants to
be seen as a savvy consumer).

Target Markets, Positioning and Segmentation.
• Not everyone likes the same cereals, hotel room, restaurant, automobile, college or movie. Therefore, marketers start by dividing the market into segments.
• They identify and profile distinct groups of buyers who might prefer or require varying product and service mixes by examining demographic, psychographic and behavioural differences among buyers.

Positioning:After identifying the segments, he chooses those segments (target segments) which present the greatest opportunity . For each segment, the firm develops an offering that it positions in the minds of the target buyers as delivering some central benefits.
Example: Volvo develops its cars for buyers to whom safety is a major concern and positions its car as the safest a customer can buy. Scorpio (a sports utility vehicle – SUV) launched by Mahindra & Mahindra in 2002, is designed for people who prefer a sturdy vehicle offering luxury and comfort. Scorpio thus is positioned as a vehicle that offers the luxury of a car and the thrill of a SUV. In ads it is referred as a car – though designed as a SUV.

Offerings & Brands
• Value proposition is a set of benefits that companies offer customers to satisfy their needs.

• This intangible proposition is made physical by an offering. This offering can be a combination of products, services, information and experiences.
• The offering is successful if it delivers value and satisfaction to the target buyer.

Offerings & Brands
• A brand is an offering from a known source. • A brand name (McDonald‟s) carries many associations in people‟s minds (hamburgers, fun, children, fast-food convenience and golden arches) that make up the brand image. • All companies strive to build a strong favorable and unique brand

Value and Satisfaction
• Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. It is a combination of (customer value triad - qsp) quality, service and price.

• Generally, Value increases with quality and service and decreases with price – although other factors can also play an important role in our perception of value.
• Value being a central marketing concept, we can think of marketing as identification, communication, delivery and monitoring of customer value.

Value and Satisfaction
• Satisfaction represents a person‟s judgment of a product‟s perceived performance (or outcome) with regard to expectation. • The customer • is disappointed if the performance falls short of expectations; • is satisfied if it matches the expectations and • is delighted if it exceeds expectations.

Marketing Channels:
Three channels are used by marketers
communication channels,

distribution cannels and
service channels.

Marketers have to properly design their channels by choosing a proper mix of communication, distribution and service channels for their offerings.

Communication Channels
• Communication channels deliver and receive messages from target buyers. They include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, audiotapes, and the internet.
• Firms also communicate by the look of their retail stores, appearance of their websites. • Marketers are increasingly adding dialogue channels – e-mail, blogs and toll-free numbers to the familiar ones such as ads.

Distribution Channels
• Disribution channels are used to display, sell or deliver the physical product or service to the buyer or user.
• They include distributors, wholesalers, retailers and agents.

Service Channels
• Service channels are used to carry out transactions with potential buyers.
• Service channels include warehouses, transportation companies, banks and insurance companies that facilitate transactions.

Supply Chain
• The supply chain is a longer channel stretching from raw materials to components to final products that are carried to final buyers.
• Example:The supply chain for women‟s purses starts with hides and moves through tanning, cutting, manufacturing, and the marketing channels to bring products to customers.

• Each company normally can cover only a certain percentage of the total value generated by the supply chain‟s value delivery system. • When a company acquires competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value.

Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. Eg. Steel for cars – from Tata or SAIL, or imports – or substitute some parts with aluminum or engineered plastics

Marketing Environment

Task Environment Broad Environment

Marketing Environment
• The task environment includes the actors engaged in producing, distributing, and promoting the offering. These are the company, suppliers, distributors, dealers and the target customers. • In supplier group are material suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies and telecommunication companies. • Distributors and dealers include, agents, brokers, manufacturer‟s representatives, and others who facilitate finding and selling to customers.

Marketing Environment
• The broad environment consists of six components: • demographic, economic, physical, technological, politicolegal and social-cultural environments.
• Marketers must pay close attention to trends and developments in these environments and make timely adjustments to their marketing strategies.