Introduction to Marketing

What is Marketing?

• The term "marketing" has various meanings for different people.
• Marketing involves activities, institutions, and processes.
• It focuses on creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
• Marketing has two facets:
  • A philosophy, attitude, perspective, or management orientation that stresses customer satisfaction.
  • An organizational function and a set of processes to implement this philosophy.
• Focuses on delivering value and benefits to customers.
• Uses communication, distribution, and pricing strategies to provide goods, services, ideas, values, and benefits that customers and stakeholders desire, when and where they desire them.
• Builds long-term, mutually rewarding relationships that benefit all parties concerned.
• Requires an understanding that organizations have many connected stakeholders including employees, suppliers, stockholders, and distributors.
• Marketing is an exchange where people give up something to receive something else they would rather have.
• For an exchange to occur, five conditions must exist:
  • There must be at least two parties.
  • Each party has something of value to the other party.
  • Each party is capable of communication and delivery.
  • Each party is free to accept or reject the exchange offer.
  • Each party believes it is appropriate or desirable to deal with the other party.

Marketing Management Philosophies

• The following philosophies influence marketing processes:
  • Production orientation.
  • Sales orientation.
  • Market orientation.
  • Societal marketing orientation.

Production Orientation

• Philosophy centered on internal capabilities rather than marketplace desires and needs.

Sales Orientation

• The belief that people will buy more goods and services if aggressive sales techniques are used, leading to high sales and profits.
• A lack of understanding of the needs and wants in the marketplace is the fundamental problem.

Market Orientation

• Marketing concept: The social and economic authorization for why an organization exists, customer satisfaction while meeting organizational objectives.
• Focuses on customer wants and needs so that the organization can distinguish its products from competitors' offerings.
• Integrates all organizational activities, including production, to satisfy customer wants.
• Achieves long-term goals by satisfying customer wants and needs legally and responsibly.
• Assumes that a sale does not depend on an aggressive sales force but rather on a customer's decision to purchase a product, synonymous with the marketing concept.
• Market-oriented firms get information about customers, competitors, and markets.
• They examine the information from a total business perspective.
• Then they determine how to deliver superior customer value, and then implement actions to provide value to customers.
• Understanding the competitive arena and competitors' strengths and weaknesses constitutes a critical component.

Societal Marketing Orientation

• A concept suggests the organization exists not only to satisfy customer wants and needs and to meet organizational objectives but also to preserve or enhance individuals' and society's long-term best interests.
• The wide-spread use of social media and the Internet has accelerated the shift in power from manufacturers and retailers to consumers and business users.

Sales and Market Orientations

• Sales and market orientations can be compared in terms of:
  • The organization’s focus.
  • The firm’s business.
  • Those to whom the product is directed.
  • The firm’s primary goal.

The Organization's Focus

• Historically, competitive advantage arose from technology, innovation, economies of scale, meaning internally focused, sales-oriented efforts succeeded.
• Today, many successful firms gain an external, market-oriented focus.

Elements of Customer Value

• Customer value is the relationship between benefits and sacrifice.
• Customers value quality goods and services, sold at prices they are willing to pay.
• Customer satisfaction: customer’s evaluation of a good or service in terms of whether it has met their needs and expectations.
• Relationship marketing: a strategy that focuses on keeping and improve relationships with current customers.
• Successful relationship marketing strategies depend on:
  • Customer-oriented personnel.
  • Effective training programs.
  • Employees with the authority to make decisions and solve problems.
  • Teamwork.

The Firm's Business

• Sales-oriented firms defines its business in goods and services terms.
• A market-oriented firm defines its business by the benefits its customers seek.
• People expect to receive benefits for their money, time, and energy.

Product’s Target Audience

• A sales-oriented organization targets its products at “everybody” or “the average customer”.
• Products directed at the average user are based upon the fallacy that relatively few average users exist.
• Instead a Market-oriented organization aims at specific groups of people.
• Market-oriented firms also recognize that different customer groups want different features or benefits.

Primary Goal

• A sales-oriented organization seeks to achieve profitability through sales volume and tries to convince potential customers to buy, even if there is a mismatch between product and need.
• Whereas Market-oriented organizations make profit by:
• Creating customer value.
• Providing customer satisfaction.
• Building long-term relationships with customers.

Why Study Marketing?

• There are many important reasons to study marketing, as marketing:
  • Plays an important role in society.
  • Is important to businesses.
  • Offers outstanding career opportunities.
  • Affects your life every day.

Strategic Planning

• Strategic planning is the managerial process of creating and maintaining a fit between the organization's objectives and resources and the evolving market opportunities.
• The goal of strategic planning is long-run profitability and growth.

Ansoff's Strategic Opportunity Matrix

• Ansoff's strategic opportunity matrix matches products with markets.
• Market penetration: Increase market share among existing customers.
• Market development: Attract new customers to existing products.
• Product development: Create new products for present markets.
• Diversification: Increase sales by introducing new products into new markets.

The Marketing Plan

• Planning is the process of anticipating future events and determining strategies to achieve organizational objectives in the future.
• Marketing planning involves designing activities relating to marketing objectives and the changing marketing environment.
• The marketing plan is a written guidebook of marketing activities for the marketing manager.
• Elements of the marketing plan include:
  • Business mission statement.
  • Situation or SWOT analysis.
  • Objectives.
  • Marketing strategy.
  • Target market strategy
  • The marketing mix (product, promotion, place, and price) and
  • Implementation, evaluation, and control.
• The mission statement is the firm’s business statement based on benefits sought by existing/potential customers with analysis of existing and anticipated environmental conditions.
• Marketing myopia is defining a business in terms of goods and services rather than in terms of benefits customers seek.

SWOT Analysis

• SWOT analysis involves identifying internal strengths (S) and weaknesses (W) and examining external opportunities (O) and threats (T).
• Environmental scanning: collecting/interpreting information about external forces, events, and relationships that may affect the organization’s future.

Competitive Advantage

• Competitive advantage: A set of unique company/product features perceived by target market as superior.
• Three types of competitive advantage:
  • Cost.
  • Product/service differentiation.
  • Niche.
• Cost competitive advantage: Being the low-cost competitor while maintaining satisfactory profit margins.
• Product/service differentiation competitive advantage: Providing something unique and valuable beyond a lower price.
• Niche competitive advantage: Targeting and effectively serving a small market segment.
• The key to having a competitive advantage is the ability to sustain that advantage:
• Sustainable competitive advantage: an advantage that cannot be copied by the competition.
• The sources of tomorrow's competitive advantages are the skills and assets of the organization.
  • Assets include patents, copyrights, locations, and equipment that are superior to those of the competition.
  • Skills are functions, such as customer service and promotion, that the firm performs better than its competitors.

Marketing Objectives

• A statement of what is to be accomplished through marketing activities.
• Carefully specified objectives:
  • Communicate marketing management philosophies and provide direction for lower level managers so that marketing efforts are integrated and pointed in a consistent direction.
  • Serve as motivators by creating something for employees to strive for.
  • When objectives are attainable and challenging, they motivate those charged with achieving the objectives.
  • Form a basis for control meaning plan effectiveness can be measured.
• Effective marketing objectives should be realistic, measurable, time-specific, and compared to a benchmark.

Target Market Strategy

• Marketing strategy refers to the activities of selecting/describing target markets and developing/maintaining a marketing mix that produces mutually satisfying exchanges.
• Marketing segment is individuals/organizations sharing characteristics and relatively similar product needs.
• Target market strategy identifies target market segments.
• Begins with Market opportunity analysis (MOA) which analyzes, describes, and estimates market segment size and sales potential with key competitor assessments.

The Marketing Mix (Four P's)

• The marketing mix consists of the four P's: product, place (distribution), promotion, and pricing, which are blend of strategies for a target market designed to produce mutually satisfying exchanges.
• Heart of the marketing is the product offering/strategy, which includes physical unit/its attributes such as package, warranty, service, brand, image, and value.
• Place strategies concern product availability to customers.
• Physical distribution involves all business activities concerned with storing and transporting raw materials or finished products.
• Promotion is informing, educating, persuading, to bring about mutually satisfying market exchanges by reminding the benefits customers of the benefits of a product or service.
• Price is what a buyer must give up for a product, which is often the most flexible aspect of the four P's.

Following Up on the Marketing Plan

• Implentation involves converting a marketing plan into action assignments in a way that accomplices the marketing plan's objectives by delegation of authority and responsibility, time allocations, and allocating resources.
• Evaluation: assessing the extent that the marketing objectives that was achieved during the specified period.
• Four common plan failure reasons include:
  • Unrealistic objectives.
  • Inappropriate marketing strategies.
  • Poor implementation.
  • New environmental considerations.
• Control assists evaluating results in light of the plan’s objectives to correct actions, reaching goals within budget.