Marketing Fundamentals

Fundamentals of Marketing

• Book chapters for this section include:
  • Marketing Management, Prentice Hall, Chapter 1 (pp. 3-16)
  • The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands, Kogan Page Publishers, Chapters 3 (pp. 61-75)

What Marketing is Not: Advertising and Selling

• It's incorrect to think marketing equates solely to advertising and selling.
• Advertising management factors into elements of marketing, however advertising represents only a small and also the most expensive component.
• Peter Drucker argued the aim of marketing should be to make advertising unnecessary by deeply understanding customers.
• An ideal marketing strategy involves understanding the customer so well that a product fits their needs selling itself without heavy advertising.
• Marketing starts with understanding customer needs and wants, forming the basis for efficient sales.

"Magic Formula"

• Marketing is not a quick fix for a poorly made service or product.
• Marketing does not rely on universal success formulas or mathematical rules.
• It provides guiding principles for building a unique value proposition through a blend of science and art, tailored by management.

Business Function

• Marketing exists as more than a business function
• It should be considered a business philosophy
• Marketing-oriented companies prioritize clients first, exemplified by Amazon's customer-centric approach.

What is Marketing?

• Marketing is a societal and managerial process where needs and wants are satisfied through value exchange (Kotler, 1980).
• The main components include marketing as a logical sequence of activities and a process.
• The normal format for marketing includes: marketing analysis, marketing strategy, and marketing mix.
• The practical implementation of the marketing mix involves decisions about product, price, promotion, and place (the 4 Ps), as touchpoints for interacting with the brand.
• Marketing is a societal process focused on managing the brand's relationship with the market using the 4 Ps to connect with customers.
• Furthermore, it should be viewed as managerial due to its management and planning components.
• Marketing exchanges should be mutually satisfying between the final customer and the company for profitability.

Alternative Definitions of Marketing

• Marketing involves creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchanges in a dynamic environment (Pride and Ferrell, 1995).
• An aspect of marketing is creating customer satisfaction and loyalty by managing competitors in the surrounding environment.
• Additional elements include organizational function and processes to create, communicate, and deliver customer values while managing relationships for the organization's benefit (Kerin et al., 2007).

The Essence of Marketing

• It aims to create favorable conditions for an exchange where each party benefits.
• Marketing seeks to satisfy interests while creating value for all parties involved.

A Brief History of Marketing

• There are three main ages in business philosophy with the goal of placing customer first:
  • Product orientation
  • Selling orientation
  • Marketing orientation

Product Orientation

• During the 19th century, Henry Ford innovated affordable car production with the Model T.
• The competitive edge was quality balance and low prices rather than advertising.
• Product orientation centers around competitive edge through product specificity and price minimization.
• The beginning of competition sparked marketing and advertising’s rise.

Selling Oreintation

• Selling orientation involves similar products needing customer persuasion through advertising and promotions.
• Focus shifts to creating market pressure via advertising to persuade sales, aiming to differentiate products successfully.
• Production and selling share an "inside out approach" of pushing products using low prices or advertising.

Marketing Orientation

• It represents a shift to an "outside in" business philosophy.
• Focus is driven to satisfy consumer needs in design and production using customer value and satisfaction
• Ethics is a limit to this business, respect of society is key

Basic Marketing Concepts: Needs, Wants, and Desires

• Needs are the basic requirements, often depicted in Maslow's pyramid.
• As needs become directed towards specific satisfaction objectives, they turn to wants and desires molded by society.
• Marketers affect wants rather than fabricating the needs themselves.
• Maslow's hierarchy progresses from necessities to belongingness, esteem, and self-actualization.
• Needs constitute a foundation for needs-based segmentation.
• Luxury goods fulfill self-actualization, esteem, and belonging needs.
• Marketing generates wants by offering ways for the customer with their needs such as coke, water, whatever beverage

Exchange Beyond Goods and Money

Marketplace Dynamics

• Marketing strives towards establishing conditions conducive for value/info exchange
• Exchanges include both seller and buyer of goods/services
• Brand management adds values through associations
• Real understanding of fundamental customer exchange is key
• Fidelity cards (CRM) provides a way to give additional info about said customer

Market and Target Definitions

• Markets enable seller/buyer management and relationship
• Considers market not as physical
• Market definition = customer group plus similar needs
• Consumer, business, and governmental markets are most relevant.
• A market segment shares similar characteristics causing parallel service needs
• Marketers first divide market into segments and then target segments

The Marketing Environment

• It encompasses all internal and external factors influencing customer relationship success
• It Consists of macro and competitive factors environment
• PEST affects entire business regardless of sectors

PEST Analysis

• Political, Economic, Social, and Technological aspects
• Some use PESTL adding Legislation
• Competitive (or micro) analyze and consider company/ customer affect
• There must be suppliers, clients (business/customers) and internal analysis within it
• SWOT of the current environment is useful to show force categorization for a general and marketing plan

Marketing Mix

• Product, Pricing, Promotion Strategies
• Manager helps control 4 P's
• Pricing aims for strategic value
• Promotions utilize advertising and personal relations
• Distribution selects high integration control channels

Luxury Market AntiLaws

• Luxury brand shift from hunt to customer attractant
• Mass marketing firsts, lux brand pulls instead
• Raise price to increase interest in demand reversed way
• Made In Italty implies high worth, must add value
• Ads not for product, but experiences