What is Marketing

1
What is Marketing

• Dr. Vesselin Blagoev

2
A simple model of the mktg process
Understand the marketplace andcustomer needs
and wants
Design a customer-driven marketing strategy
Construct an Integratedmarketing programthat
delivers superior value
Build profitablerelationships andcreate
customerdelight
Capture value from customers to create profits
andcustomer equity
3
Needs
Markets
Wants
Core Marketing Terms
Transactions
Demand
Exchange
Products
4
Needs

• Need
• A sense that something necessary is missing, a
  state of felt deprivation.
• Basic physical needs for food, clothing, warmth,
  and safety
• Social needs for belonging and affection
• Individual needs for knowledge and
  self-expression.

5
(No Transcript)
6
Wants

• Wants
• The manner in which individuals seek to satisfy
  a need as consumer decision making is influenced
  by individual tastes and social factors
• The form taken by human needs as they are shaped
  by culture and individual personality

7
Market offering

• Some combination of products, services,
  information, or experiences offered to a market
  to satisfy a need or want (Kotler, 2008)

8
Marketing myopia

• The mistake of paying more attention to the
  specific products a company offers than to the
  benefits and experiences produced by these
  products (Armstrong and Kotler, 2011, p.35)

9
Customer perceived value

• The customers evaluation of the difference
  between all the benefits and all the costs of a
  market offering relative to those of competing
  offers (Armstrong and Kotler, 2011, p.41)

10
Customer satisfaction

• The extent to which a products perceived
  performance and value matches a buyers
  expectations

11
Customer equity

• The total combined customer lifetime values of
  all the companys customers (Armstrong and
  Kotler, 2011, p.50)

12
Customer relationships management

• The overall process of building and maintaining
  profitable customer relationships by delivering
  superior customer value and satisfaction
  (Armstrong and Kotler, 2011, p.41)

13
Demand and Supply

• Demand
• The ability and willingness of consumers to
  purchase a product
• Quantity demanded
• Maximum quantity of a good that buyers are
  willing and able to buy at a given price (over a
  fixed period of time)

14
Demand

• The Law of Diminishing Demand
• If the price of a product is raised,
• a smaller quantity will be demanded
• and if the price of a product is lowered,
• a greater quantity will be demanded

15
Demand Curve
Price
P1
P2
Quantity
Q1
Q2
16
Demand curve
Price
P1
P2
Quantity
Q1
Q2
17
Demand curve

• The general demand relationships are typical for
  all products
• A particular demand curve has meaning only for a
  particular market

18
Elastic demand

• Elastic demand means that
• if prices are dropped,
• the quantity demanded will increase enough to
  increase total revenue
• Inelastic demand ?

19
Elastic demand
Price
QUnits demanded
20
Inelastic demand
Price
QUnits demanded
21
Demand curve

• The whole demand curve is almost never only
  elastic, or only inelastic.
• The elasticity refers to the change in total
  revenue between two points on the curve not
  along the whole curve

22
Demand and Supply

• Supply
• The ability and willingness of producers to
  provide wanted goods and services
• Quantity supplied
• Maximum quantity of a good that sellers are
  willing and able to supply at a given price (over
  a fixed period of time)

23
Demand Supply
Demand
Supply
Equilibrium point
24
Marketing functions

• Marketing activities can be categorized within
  several functions

Product / Service Mgmt
Pricing
Distribution
Mktg Communications
Financing
Mktg- Information Mgmt
Selling
Marketing Education Resource Center (2000),
Columbus, Ohio
25
The operational functions of marketing
Advertising
Sales promotion
Public relations
Stockholding
Personal selling
The operational functions of marketing
Servicing
Financing
Risk-taking
Buying
Transporting
Forecasting
Market research
Pricing
Publicity
Merchandising
Branding
26
Product

• A product is anything that can be offered to a
  market for attention, acquisition, use, or
  consumption and might satisfy a need or want
  (Armstrong and Kotler, 2011, p.237)

27
Market

• A group of potential buyers with common needs or
  problems that can be met by specific products or
  services
• Consumer market
• Industrial market
• Reseller market
• Institutional market
• Customer
• Consumer (user)

28
Markets
Consumer
Organizational
Individuals who purchase to benefit from
consumption and not for the main purpose of
making a profit
Buyers who purchase for resale, direct use in
producing the goods or in general daily use in a
business
29
Markets

• Open markets
• Regulated markets
• Unregulated markets
• De-regulated markets

30
Open markets

• Markets with all of the following
  characteristics
• Single standardized product
• Many buyers
• Many sellers
• Buyers and sellers have equal access to all
  available information relevant to the market.

31
Open markets

• The products are rarely homogeneous. Apples vary
  by variety and packaging making comparison by the
  buyer difficult. It affects Condition 1.
• The numbers of potential buyers and the demand
  for products is constantly changing. It affects
  Condition 2.

32
Open markets

• The individual purchaser usually has a limited
  choice of supplier. What about Condition 3 ?
• The buyers usually do not have as much
  information about the market as does the
  supplier. It affects Condition 4.

33
Regulated markets

• The regulations governing an open market are
  designed to ensure that it is able to operate
  with none of the participants having an unfair
  advantage over the others.
• Regulated markets recognize that there is a
  lack of balance between the parties and therefore
  this type of market has rules that are intended
  to ensure a degree of fair trading.

34
Unregulated and Deregulated markets

• Unregulated markets
• street market
• The buyer is on their own. Caveat emptor!
• De-regulated markets Removal of artificial
  monopoly restrictions in order to encourage free
  competition and increase customers choice.
• telecommunications e-commerce

35
Exchange is

• A marketing transaction, in which the
  buyer gives something of value to the seller in
  return for goods or services

36
A simple exchange process
Something of value
Goods, services, benefits
Supplier
Customer
Money, exchange goods
Something of value
37
10 exchanges
Pots
Fruits
Meat
Baskets
Knives
38
A market 5 exchanges
Pots
Central Market Middleman
Fruits
Meat
Baskets
Knives
39
Exchanges Involving Intermediaries
Retailer
Consumer
Producer
Wholesaler
40
Definition 1

• 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 (AMA,2005)
• http//www.marketingpower.com/mg-dictionary-view1
  862.php

41
Definition 2

• Marketing is the process by which the companies
  create value for customers and build strong
  customer relationships in order to capture value
  from customers in return
• Armstrong and Kotler (2011)

42
Definition 3

• Marketing is the management process responsible
  for identifying, anticipating and satisfying
  customers requirements profitably
• British Chartered Institute of Marketing,
  UK

43
Definitions 4 and 5

• Marketing is a social and managerial process by
  which individuals and groups obtain what they
  need and want through creating and exchanging
  products and value with others (Kotler et al,
  2005)
• Marketing is the study of exchange processes
  especially those associated with the provision of
  goods and services (Adcock et al, 2001)

44
Definitions 6 and 7

• Marketing is the process of planning and
  executing the various activities, which are
  involved in selling goods, services, or ideas and
  which lead to an exchange between a seller and a
  buyer (Keegan et al, 1992)
• Marketing is a human activity directed at
  satisfying needs and wants through exchange
  processes (Kotler, 2001)

45
Definitions 8

• Marketing is the management process that seeks
  to maximise returns to shareholders by developing
  relationships with valued customers and creating
  a competitive advantage
• (Doyle, 2004)

46
Three major goals

• Satisfaction of customer needs
• Attainment of a competitive advantage over the
  rivals
• Increasing the value of the company for the
  shareholders

47
Selling vs. Marketing Concepts
48
Marketing mix
49
Influences on Decisions of Companies
Uncontrollable market influences
Controllable company decisions
Product
Place
Price
Promotion
50
Marketing mix
Quality, Features, Options, Style, Brand name,
Packaging, Sizes, Warranties
Product
List price, Discounts, Allowances, Payment
Terms, Credit terms
Marketing mix
Price
Target market
Channels, Locations, Inventory, Transport
Place
Promotion
Advertising, Personal selling, Sales Promotion,
PR
51
Elements of Marketing Mix 4P
Source Based on Borden, N. (1964) The concept
of the marketing mix, Journal of Advertising
Research, June, 27 McCarthy, E.J. (1978) Basic
Marketing A Managerial Approach, 6th edn.
Homewood, IL Richard D. Irwin
52
Marketing Mix 4P
New product development Brand management Features,
Benefits Packaging After-sales
Channel management Retail location Retail
image Logistics
Marketing communications mix, Integrated communica
tions
Costs, Profit, Liquidity Competitiveness Value,
Incentives
53
5S of e-marketing objectives
Wider distribution, promotion and sales
Sell
Adding value by extra benefits online
Extent the brand online
Sizzle
Serve
Save by using the online services
Save
Speak
Asking quest, dialog, use web
54
6C of Online Value PropositionThe Chartered
Institute of Marketing
Content
Custo- misation
Cost reduction
Community
Choice
Convenience
55
7P of Customer Service Mktg Mix
Source Adapted from Christopher, M., Payne, A.
and Ballantyne, D. (1991) Relationship Marketing.
Oxford Butterworth Heinemann
56
From 4Ps to 4Cs
Source Based on Kotler, P., Armstrong, G.,
Saunders, J. and Wing, V. (1999) Principles of
Marketing, 2nd European Edition. New York
Prentice Hall
57
Value Types of Utility
Place
Form
Utility Value that comes from satisfying human
needs
Possession
Time
58
Value Types of Utility

• Form Utility results from changes in the
  tangible parts of the product or service, i.e.
  made of more durable material
• Time Utility available when the customer needs
  it
• Place Utility Location, location, location
• Possession Utility affordability or lack of
  resources. Using credit options, payment in
  installments

59
Customer value is formed by
Perceived benefits
Product benefits
Relational benefits
Service benefits
Image benefits
Perceived sacrifice
Monetary costs
Time costs
Energy costs
Psycholo- gical costs
Other costs
60
Income and purchasing power

• Disposable income
• Money that consumers have left after paying taxes
• Purchasing power (PP)
• The potential ability of consumers to buy goods
  and services
• PPDisposable income Available credit
• Discretionary income
• Money that consumers have left after paying taxes
  and making essential personal and household
  expenditures

61
Marketing Concept

• Because the purpose of business is to create and
  keep customers, it has only two central functions
  marketing and innovation. The basic function of
  marketing is to attract and retain customers at a
  profit
• Peter Drucker

62
The Marketing Concept

• The marketing concept, also referred to as
  marketing orientation, can be expressed as
• The achievement of corporate goals through
  meeting and exceeding customer needs better than
  the competition

63
Value-Based Marketing

• Marketing is the management process that seeks
  to maximize returns to shareholders by developing
  relationships with valued customers and creating
  a competitive advantage

(Doyle, 2009)
64
The Changing Role of Mktg
Past Future
Objective of Mktg Create customer value Create shareholder value
Marketing strategy Increase market share Develop and manage marketing assets
Assumptions Positive market performance leads to positive fin. results Marketing strategies need to be tested in value terms
Contribution Knowledge of buyers, competitors, channels Knowledge how to lever mktg to increase shareholder value
Focus of marketing Marketing orientation General management
65
The Changing Role of Mktg
Past Future
Concept of Assets Tangible Intangible
Rationale Improves profits Increases shareholder value
Performance measures Market share, customer satisfaction, return on sales and investment Shareholder value discounted cash flows
66
Marketing orientations

• Production orientation
• Product orientation
• Sales (selling) orientation
• Classical marketing orientation
• Societal marketing orientation
• Relationship marketing
• Value-Based Marketing

67
Production orientation
Production capabilities
Manufacture product
Aggressive sales effort
Customers
68
Product orientation
New product development
Manufacture product
Aggressive sales efforts
Customers
Develop a better mousetrap and the world will
beat a path to your door
69
Sales orientation
Manufacture product
Aggressive sales effort
Customers
Aggressive advertising
70
Marketing orientation
Customer needs
Potential Market opportunities
Marketing products and services
Customers
71
Marketing orientation
Customer oriented
No
Yes
No
Product orientation
Customer orientation
Competition oriented
Marketing orientation
Competitor orientation
Yes
72
Societal marketing concept
It is based on the understanding that the
customers needs must be satisfied only if they
correspond to the long-term interests of the
society
73
Marketing orientations
Orientation Profit driver Time frame Characteristics
Production Production methods Until 1960 Improve production and distribution to reduce costs
Product Quality of product Until 1970 Quality is paramount. Focus on product, not on needs
Selling Selling methods 1950- 1970 Effective selling and promotion are the major drivers to success
Marketing Needs Wants 1970 Focus of satisfying the needs and wants
74
Marketing orientations
Orientation Profit driver Time frame Characteristics
Societal marketing Benefit to society 1990 Same as marketing with the proviso that no harm will be done to society or nature
Relationship marketing Building and retaining good relations with the customers 1980 Best possible attention, customer services and therefore build customers loyalty
Value-Based marketing Value of the shares 2000 Do everything to increase the value of the shares
75
Ethics and social responsibility

• Ethics Moral principles and values that govern
  the actions and decisions of an individual or
  group. They serve as guidelines on how to act
  rightly and justify when faced with moral
  dilemmas
• Laws Societys values and standards that are
  enforceable in the courts
• Can make marketing decisions that are legal but
  unethical
• Can make marketing decisions that are illegal but
  ethical

76
Consumer Bill of Rights (1962)

• Right to safety
• Right to be informed
• Right to choose
• Right to be heard

77
Laws reduce confusion

• Socially responsible packaging
• Federal Fair Packaging and Labeling Act (USA,
  1966) the consumer goods must be clearly
  labeled in easy to understand terms.
• Do you know the main points of the law in
  Bulgaria?

78
Consumerism

• A social movement that seeks to increase the
  rights and powers of consumers
• Nader R.(1966) Unsafe at any speed, Pocket
  Books, NY

79
Ethical exchange relationships

• Both buyer and seller should be better off after
  a transaction
• Ethical choices are based on personal moral
  philosophy
• Moral idealism
• Utilitarianism
• Justice perspective
• Social responsibility

80

• SOCIETAL MARKETING
• Balance the interests
• of the company
• and the society

• LATE MARKETING
• ERA
• Supply gtgt Demand
• Demand management

• EARLY MARKETING
• ERA
• Supply gt Demand
• Stiff competition

• SELLING ERA
• Demand Supply
• Weak competition

• PRODUCTION ERA
• Demand gt Supply
• Producers run the
• show

• BARTER ERA
• Self-supply
• Markets do not exist

History of Marketing
81

• MARKETING
• RELATIONSHIPS
• Supply gtgt Demand
• Know thy customer

• SOCIETAL MARKETING
• Balance the interests
• of the company
• and the society

• LATE MARKETING
• ERA
• Supply gtgt Demand
• Demand management

• EARLY MARKETING
• ERA
• Supply gt Demand
• Stiff competition

• SELLING ERA
• Demand Supply
• Weak competition

History of Marketing
82
Why the marketing is important?

• Marketing is the science of exchange
• Exchange is the foundation of organization
  activities
• Unless the organizations can encourage exchange,
  their resource bases disappear
• Move to marketing in many sectors. Marketing
  concepts can be used for Business, Services,
  Financial services, Non-for-profit, Politics,
  Schools, Public opinion

83
Marketing must be POISE

• Hugh Davidson argues that successful marketing is
  marked with POISE. It must be
• P Profitable
• O Offensive (rather than defensive)
• I Integrated
• S Strategic (future-oriented)
• E Effective (it gets results)

84
Developments in Marketing
Source Adapted from Christopher, M., Payne, A.
and Ballantyne, D. (1991) Relationship Marketing.
London Butterworth Heinemann
85
Influences on RM
(Egan, 2001)
86
RM Definitions
Source Based on Brodie, R.J., Coviello, N.E.,
Brookes, R.W. and Little, V. (1997) Towards a
paradigm shift in marketing an examination of
current marketing practices, Journal of
Marketing Management, 13(5), 383406
87
Relationship Marketing
Terms used either as substitute for or to
describe similar concepts to Relationship
Marketing

• direct marketing
• customer relationship management (CRM)
• micromarketing
• loyalty-based marketing
• wraparound marketing
• symbiotic marketing
• relevance marketing
• frequency marketing
• dialogue marketing

• database marketing
• data-driven marketing
• one-to-one marketing
• segment-of-one marketing
• customer partnering
• individual marketing
• bonding
• integrated marketing
• interactive marketing

Source Based on Vavra, T.G. (1992)
Aftermarketing. Homewood, IL Richard D. Irwin
Buttle, F.B. (1996) Relationship Marketing Theory
and Practice. London Paul Chapman Tapp, A.
(1998) Principles of Direct and Database
Marketing. London Financial Times
Management/Pitman Publishing
88
RM Definitions

• Christopher et al (1991)
• RM is where
• customer service
• quality management
• marketing
• come together
• Other definitions stress time frame and commitment

89
RM Definitions
Grönroos (1994)
identify and establish, maintain and enhance
and, when necessary, terminate relationships with
customers and other stakeholders, at a profit so
that the objectives of all parties involved are
met and this is done by mutual exchange and
fulfilment of promises
Source Grönroos, C. (1994) From marketing mix
to relationship marketing towards a paradigm
shift in marketing, Management Decisions, 32(2),
420
90
Relationship Marketing

• Seeks to create new value for customers and share
  it
• Recognises the key role that customers have both
  as purchasers and in defining the value they wish
  to achieve.
• Businesses are seen to design and align
  processes, communication, technology and people
  to achieve customer value.
• Represents continuous cooperative effort between
  buyers and sellers.
• Recognises the value of customers purchasing
  lifetimes (i.e. lifetime value)
• Seeks to build a chain of relationships within
  the organisation (to create customer value) and
  between the organisation and its main
  stakeholders including suppliers, distr.channels,
  intermediaries,shareholders.

Source Adapted from Gordon, I.H. (1998)
Relationship Marketing. Etobicoke, Ontario John
Wiley Sons
91
TM versus RM

• RELATIONSHIPS
• Retention focus
• Continuous customer contact
• Benefits orientation
• Long time scale
• High service emphasis
• High commitment
• Quality everyones concern

• TRANSACTIONS
• Single sale focus
• Discontinuous customer contact
• Features orientation
• Short time scale
• Little service emphasis
• Low commitment
• Quality a production issue

Source Adapted from Payne, A., Christopher, M.
and Peck, H. (eds) (1995) Relationship Marketing
for Competitive Advantage Winning and Keeping
Customers. Oxford Butterworth Heinemann
92
TM/RM Continuum
Importance of Customer Service
RELATIONSHIP MARKETING
TRADITIONAL MARKETING
Importance of Core Product
TM/RM Continuum