chapter1.docx

**What is Marketing?** ***The American Marketing Association (AMA) offers the following formal definition: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at...

**What is Marketing?** ***The American Marketing Association (AMA) offers the following formal definition: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.*** Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is ***"meeting needs profitably."*** ALSO ***Managing profitable customer relationships*** ***Satisfying Customer needs with a profit*** ***All About Needs*** ***The twofold goal of marketing is:*** - ***Attract new customers by promising superior value.*** - ***Keep and grow current customers by delivering satisfaction.*** ***Job of marketer is costumer attraction & costumer retention*** ***Marketing Management as the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.*** Complex Marketing Environment (Superior, Substitute, Inferior). **The Macro Environment consists of 6 different forces.** **DESTEP** model, also called **DEPEST** model Demographic Economic Political Ecological Socio-Cultural Technological ***What is Marketed?*** - - - - - - - - - - - ***Tradition*** +-----------------------------------+-----------------------------------+ | 1. Product | 5. People | | | | | 2. Price | 6. Process | | | | | 3. Place | 7. Physical Evidence | | | | | 4. Promotion | 8. Productivity & Quality | | | | | - Packing | | +-----------------------------------+-----------------------------------+ ***difference between 4Ps & 4CS 4Ps represent the seller\'s view 4Cs represent the buyer\'s view*** **Promotion Mix Tools:** - - - - - - - - ***Personal selling more expensive than Advertising*** ***Different in advertising & sales promotion in sales promotion is for buy now*** ***Main object for Sponsorship is Exposure*** ***\'PR\' Public Relation / Publicity The focus is on the company\'s image*** **Service Characteristics** 1. Intangibility 2. Perishability Some services have short life span such as Air Tickets. 3. Variability Variation 4. Inseparability You can't separate the service from its service provider ***Judgment on service is subjective*** **Awareness Levels** 1. Negative Awareness 2. No Aware 3. Aware 4. Preferred 5. Loyal 6. Adhoc **Product Life Cycle (PLC)** Product development \"awareness\" **introduction growth maturity decline** **STP (Segmentation, Targeting, and Positioning)** **Segmentation** **(Breakdown the market into segments)** **Targeting** **(Select 1 or more segment according opportunities)** **Positioning** (\"**positions in the minds\" How do you want your customer to perceive you)** **perception & Promise** **Product Positioning To-Do List:** - Conduct a market segmentation. - Define your target market. - Identify the product attributes. - Data collection from the target market (customers and potential customers) on the identified product attributes. - Determine the product\'s share of heart and mind (of the total potential mindshare). Being \'first\' in the market usually is a significant benefit in mindshare. - Place your product in the right \'space\' (e.g. luxury market; economy market; high value, low volume; health; snack; etc.). - If position is a graph, determine what your product\'s ideal position on that graph might be (e.g. nutritious, high cost snack). - Determine what you need to do to reach that position in the minds of your market. - Does your positioning strategy focus on, and align with, your product differentiation strategy? - Is your product or service unique, better, economical, profitable (for the market), or - Does it have other distinctive criteria that will differentiate it from the many other products and services available? ***Positioning = Perception.*** ***Captive Products: An example, the printer is cheap while its color cartage is expensive.*** ***Homo: People who looks like each other.*** ***Hetero: People who don't looks like each other.*** **Measure of Market Segment:** - Measurable. - Substantial. - Accessible. - Differentiable. - Actionable. ***MVC most valuables costumer*** **Demand States** 1. Ex: negative attitude toward meat products by vegetarians 2. For example, family planning is a non-existent demand for rural people. They are unaware or uninterested in family planning. Or they know this but are not interested to use. Insurance is another example. Insurance is both negative demand and non-existent demand. **Recycling garbage** (e.g., plastic and metal containers) can be linked to the importance of cleaning up the environment. **Donating old newspapers** to the Boy Scouts instead of throwing them out in the garbage can be linked to the importance of helping this organization to raise money. 3. Ex: ***Creating a cancer-curing drug or a safe cigarette, parking solutions.*** 4.  For example, people in the past used Walkman for listening to songs. Then after introducing the iPod, people move to the iPod. And after introducing headphones, people love it most. Now, Walkman is facing declining demand. 5.  For example, an umbrella. We use an umbrella only in the rainy season but all over the year umbrella faces irregular demand. 6. A cigarette is the best example of it. 7. For example, medicines are always have full demand. Whatever the doctor suggests, customers buy this. But if pharmaceutical companies reduce or discount the price of medicine, customers aren't ready to pay for this. 8. For example: at the time of Eid, the price of train and bus tickets increased because of artificial stock created by the sellers. **\ ** **Key Customer Markets \"Type of market\"** - Consumer markets B2C - Business markets B2B - Global markets G2B - Nonprofit/Government markets ***G2B They face different requirements for buying and disposing of property; cultural, language, legal and political differences; and currency fluctuations.*** **Marketing Steps** **In the marketing process, companies work to understand consumers, create customer value, and build strong customer relationships. The steps are:** *In the final step, companies harvest the rewards of capturing value from consumers in the form of sales, profits, & long-term customer equity.* **Needs, Wants, and Demands** **Needs** Are states of felt deprivation. They include physical, social, and individual needs. **These needs are not created by marketers**; they are a basic part of the human makeup. **Wants** Are the form needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac. When backed by buying power, wants become **Demands**. The best marketing companies go to great lengths to learn and understand their customers' needs, wants, and demands. *(Southwest Airlines top management)* **Types of** **Needs** 1. **Stated needs** (A customer wants an inexpensive car.) 2. **Real needs** (The customer wants a car whose operating cost, not initial price, is low.) 3. **Unstated needs** (The customer expects good service from the dealer.) 4. **Delight needs** (The customer would like the dealer to include an onboard GPS navigation system.) 5. **Secret needs** (The customer wants friends to see him or her as a savvy consumer.) **Value** The key to building lasting customer relationships is to create: *superior customer value* and satisfaction. **Customer Value:** the customer's evaluation of the difference between *all the benefits and all the costs* of a market offering relative to those of competing offers. Customers often do not judge values and costs "accurately" or "objectively." **Customer Satisfaction** Customer satisfaction depends on the product's perceived performance relative to a buyer's expectations. If the product's performance falls short of expectations, the customer is ***dissatisfied***. If performance matches expectations, the customer is ***satisfied***. If performance exceeds expectations, the customer is highly satisfied or ***delighted***. ***Central marketing concept**, is primarily a combination of **quality**, **service**, & **price** (**QSP**),* called the **customer value harmony**. Value perceptions **increase** with QUALITY AND SEREVICES but **decrease** with PRICE. **QSCV** Quality, Service, Cleanliness & Value *(McDonald\'s restaurants)* ***Promise what you can deliver, then deliver more than your promise*** **Marketing Channels** - Communication - Distribution - Service ***Bottom of the Pyramid (BOP)*** What is the concept of bottom of the pyramid? **Bottom of the pyramid** (BOP), also called **base of the pyramid**, **term** in economics that refers to the poorest two- thirds of the economic human **pyramid**, a group of more than four billion people living in abject poverty. What is bottom of pyramid in marketing? \'**Bottom** of the **pyramid**\' is the term used to describe people living in absolute poverty who, despite economic limitations, can be \'resilient entrepreneurs\' and co-creators of new **market** opportunities that result in win-win situations for companies and consumers. What is bottom of pyramid opportunities? As the term suggests, the "**bottom** of the **pyramid**" is used to describe the large group of consumers living at the **bottom** of the global economic or wealth **pyramid**. What is BOP consumer? Abstract. The \'Bottom of the Pyramid\' (**BOP**) is a concept popularized by C. K. Prahalad. It is an action-oriented mod el that helps companies to operate successfully in currently underdeveloped and underserved markets at the **BOP**. This also opens opportunities for reduction of poverty. ***six pocket syndrome \"spoiled\"*** **Advertising Objectives** - **Informative Advertising** - **Persuasive Advertising** - **Reminder Advertising** **Advertising Objectives** Informative, Reminder, Comparative **Advertising** has **three** primary **objectives**: to **inform**, to **persuade**, and to **remind**. - **Informative Advertising** creates awareness of brands, products, services, and ideas. It announces new products and programs and can educate people about the attributes and benefits of new or established products. - **Persuasive Advertising** tries to convince customers that a company's services or products are the best, and it works to alter perceptions and enhance the image of a company or product. Its goal is to influence consumers to take action and switch brands, try a new product, or remain loyal to a current brand. - **Reminder Advertising** reminds people about the need for a product or service, or the features and benefits it will provide when they purchase promptly. **Marketing Environment** **The task environment** The task environment includes the actors engaged in producing, distributing, and promoting the offering. Company Dealers Customers Competitors Distributers Suppliers ***Those forces are very close to the company that can affect and be affect by*** ***Task environment = Internal environment = Micro*** ***environment =*** ***controllable environment*** **The broad environment** Marketers must pay close attention to the trends and developments in these and adjust their marketing strategies as needed. PESTEL Demographic Economic Social-cultural Natural Technological Political-legal ***The broad environment = External environment = macro environment = uncontrollable environment*** ***In task environment we act in the board environment we react*** **Retaliation** is an act of revenge. the act of hurting someone or doing something harmful to someone because they have done or said something harmful to you **Marketing Management Orientations:** 1. **Production Concept:** [Consumers] will favor **products that are available and affordable**, [Management] should **focus on improving production and distribution efficiency**. ***Availability & affordability*** 2. **Product Concept:** [Consumers] will favor **products that offer the most in quality, performance, and innovative features**, Under this concept, marketing strategy **focuses on making *Continuous product improvements***. ***Marketing myopia occurs when a company becomes so focused on their own products that they lose sight of underlying customer needs.*** 3. **Selling Concept**: [Consumers] will not buy enough without a **large scale selling and promotion effort.** The concept is typically practiced with unsought goods and services---those that buyers do not normally think of buying, such as insurance or blood donations, encyclopedia. **These industries must be good at tracking down prospects and selling them on product benefits.** ***Make and sell*** 4. **Marketing Concept:** Under the marketing concept, [customer] **focus & value are the paths to sales & profits**. Instead of a product centered "make and sell" philosophy, the marketing concept is a customer -- centered "Sense and respond" philosophy. *The job is not to find the right customers for your product BUT to find the right products for your customers.* **Customer-driven marketing is about understanding customer needs and creating products and services that meet both existing and hidden needs.** ***Sense and respond Sensing the customer\'s need and response with product*** fig01\_03.jpg 5. **Societal Marketing Concept**: The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. The societal marketing concept holds that marketing strategy should **deliver value to customers in a way that maintains or improves both the consumer's and the society's well-being.** Fast food restaurants 6. **Holistic Marketing** Holistic marketing concept is based on development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing recognizes that ***\"everything matters\"*** with marketing. **Internal marketing** is the task of hiring, training, and motivating able employees who want to serve customers well. ** Integrated Marketing** Integrated marketing creates a seamless experience for the consumer to interact with the brand by integrating various communication channels (sales promotion, public relations, advertising, direct marketing, [digital marketing](https://www.simplilearn.com/the-scope-of-digital-marketing-article), etc). This ensures that the communication is in sync and projects a strong and focused brand image. **Performance marketing** - Financial Accountability - Social Responsibility Marketing. **Non-financial** requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Top marketers are increasingly going beyond sales revenue to examine the marketing scorecard *(How well is your marketing working for you?)* and interpret what is happening to: 1. Market share, 2. Customer loss rate, 3. Customer satisfaction, 4. Product quality, and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities and programs. ***Eclipsing: When Celebrities Overshadow the Brand*** **Relationship Levels** **Basic Relationships**: are often used by a company with many **low-margin** customers. For example, Procter & Gamble does not phone or call on all of its Tide consumers to get to know them personally. Instead, P&G creates relationships through **brand-building advertising**, sales promotions, and its Web site. **Full Partnerships:** are used in markets with few customers and **high margins**, sellers want to create full partnerships with key customers. For example, P&G customer teams work closely with Wal-Mart, Carrefour, Safeway, and other large retailers. **[Partner Relationship Management]** Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers. (Coca Cola/ MacDonald\'s). **Partners Inside the Company:** Today, firms are linking all departments in the cause of creating customer value. Rather than assigning only sales and marketing people to customers, they are forming cross- functional customer teams. **Marketing Partners Outside the Firm:** Marketing channels consist of *distributors, retailers,* and others who connect the company to its buyers. The **supply chain** describes a longer channel, stretching from raw materials to components to final products that are carried to final buyers. Through supply chain management, many companies today are strengthening their connections with partners all along the supply chain. CRM Customer relationship management *\"brand-building advertising\"* **Holistic marketers address 3 key management questions:** 1. ### Value exploration - How a company identifies new value opportunities? 2. ### Value creation - How a company efficiently creates more promising new value offerings? 3. ### Value delivery - How a company uses its capabilities and infrastructure to deliver the new value offerings more efficiently? To ensure they select and execute the right activities, marketers must give priority to strategic planning in three key areas: 1. Managing a company's businesses as an investment portfolio, 2. Assessing each business's strength by considering the market's growth rate and the company's 3. Establishing a strategy. The company must develop a game plan for achieving each business's **The Ten Deadly Sins of Marketing** **The Ten Commandments of marketing** **Marketing Budget** **Types of Corporate Social Initiatives** **Corporate Social Responsibility \"CSR\"** 1\. Corporate community involvement 2\. Corporate social marketing 3\. Cause-related marketing 4\. Corporate philanthropy 5\. Socially responsible business practices 6\. Cause marketing **Marketing Management Tasks**  Develop market strategies and plans  Capture marketing insights  Connect with customers  Build strong brands  Shape market offerings  Deliver value  Communicate value  Create long-term growth