Introduction To Marketing - Session 1 PDF

Introduction to Marketing - Session 1 What is Marketing? Prof. Dr. Katja H. Brunk, European University Viadrina The lecture is based on the textbook “Solomon et al., Marketing: Real People, Real Decis...

Introduction to Marketing - Session 1 What is Marketing? Prof. Dr. Katja H. Brunk, European University Viadrina The lecture is based on the textbook “Solomon et al., Marketing: Real People, Real Decisions © Pearson Education Limited. The slides include material from the textbook. 9th of December 1-1 2024  Objectives Understand… o What marketing is and how it provides value to people in the marketing process o Different disciplinary perspectives on marketing o The evolution of marketing o Core marketing concepts of needs, wants and demand o Different types of value and how it is created from the perspectives of customers, producers and society o The basics of marketing planning and the marketing mix tools used in the marketing process o Marketing’s role in firm o Who marketers are and where they work 1-2  Consumer Society o Consumer society: a society in which the buying and selling of goods and services is the most important social and economic activity o Consumption at the core of our social activities o Companies offering the tools for consumption in the form of products and services o Consumption as main driver of economic growth o Consumer confidence index o Role of consumer as facilitator  Marketing Definition 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. American Marketing Association (AMA) 2013 Basic idea: delivering value to everyone who is affected by a transaction What can be marketed? o Consumer goods and services o Business-to-business goods and services o Not-for-profit organisations o Ideas, places and people ---> What is marketed has implications for how it is marketed.  Disciplinary underpinnings and theoretical perspectives o Economics o Psychology o Sociology o Cultural studies 1-5  Economics perspective o Marketing traditionally seen as branch of applied economics o Economic view > Homo economicus o the individual is an unswervingly rational agent o can effortlessly solve even the most difficult optimization problems o Some other key assumptions: o People know what they want, their priorities and what they are willing to pay o Meeting of supply and demand o Everything is quantifiable and calculable o Consumers have stable preferences 1-6 1-7  Psychological perspective Recall economics view: o Individuals as rational economic agents trying to maximize their welfare o Preferences are stable Psychological view: There is no such thing as stable preferences! o Preferences constructed according to choice task or environment o Passive view: individuals are irrational, uninvolved, extremely easy to influence o Emotional view: individuals are driven by strong emotions and feelings o Cognitive view: individuals think, try to solve problems, search for information and develop decision strategies 1-8  Examples of heuristic biases Bias Description Marketing example Affect heuristic Hastily judging objects/people Overly trusting a friendly seller; by an immediate feeling of exaggerating the performance quality goodness or badness of a product due to its external appeal (freshly painted car) Availability Salient memories override Rejecting all Sony products because heuristic normative reasoning of an early bad experience with one Sony product Confirmation The tendency to seek out Tendency to take into account product bias opinions and facts that reviews that laud an item you want to support one‘s own beliefs purchase while ignoring negative and hypotheses reviews False consensus Inclination to assume that Assuming that others will be satisfied effect one‘s beliefs are more widely with the same brands and service held than they actually are providers you prefer 1-9 Source: Baker and Saren, Marketing Theory (3rd), p. 148  Examples of psychological constructs used in marketing o Learning (Brand recall, loyalty) o Motivation (Consumer needs, choice conflicts) o Perception (Product packaging, advertising content) o Decision making (Brand selection, consumer involvement, post-purchase evaluation) o Attitudes (Customer satisfaction, trust, ad influence) o Personality (Consumer segmentation, materialism, addictions) 1-10  Sociological perspective o Marketing as a basic social activity o Sociological view: Individuals do not operate in vacuum but are embedded and influenced by their surrounding social context. o Market exchange: multiple individuals involved in the exchange o Acting person (people who buy) and acting group (where individual is inserted) o Examples of typical sociological concepts applied throughout marketing: o Social roles and norms o Groups, family, community, relationships o Status, social class, gender o Power and conflict 1-11  Cultural perspective o Culture is a lens through which individuals see the world (McCracken 1986) o Culture is the accumulation of shared meanings, rituals, norms and traditions among the members of an organization or society. It is: o Learned: Understanding how this learning process occurs has profound marketing implications o Shared: Members of same group share views and relative importance of values o Dynamic: Changes over time o Examples of elements of culture relevant for Marketing: o Aesthetics: ideas/perceptions that a culture upholds in terms of beauty and good taste o Material life: technologies used to produce, distribute, and consume goods/services o Language, social interaction and education 1-12 How Marketing evolved: “old” perspectives a p p rox. 1930 Until - Shortage of production Production Orientation - Intensive demand o Focuses on the most efficient ways to produce o Works best in a seller’s market when demand is greater than supply o Firms with this focus view market as a homogeneous group that will be satisfied with the basic function of a product o Price How Marketing evolved: “old” perspectives a p p rox. 1930 Until - Shortage of production Production Orientation - Intensive demand 64 - Production exceeds demand 1920-19 Selling Orientation - Need to motivate consumers - Advertising, branding o Company-centred approach o Move products rather than meet customer needs and wants o When availability exceeds demand in buyers market o Hard selling o More successful for one-time sales vs. building repeat business How Marketing evolved: “old” perspectives a p p rox. 1930 Until - Shortage of production Production Orientation - Intensive demand 64 - Production exceeds demand 1920-19 Selling Orientation - Need to motivate consumers - Advertising, branding 98 1954-19 - Market research Consumer Orientation - Concentrate on consumer needs Don Draper and what women need o Customer-centred approach: find out what customers want and need o Different consumers have different needs > tailoring to different groups o Market research o Introduction of total quality management (TQM) to assist marketing delivering good-quality products consistently  How Marketing evolved: “new” era a p p rox. 1930 Until - Shortage of production Production Orientation - Intensive demand 64 - Production exceeds demand 1920-19 Selling Orientation - Need to motivate consumers - Advertising, branding 98 1954-19 - Market research Consumer Orientation - Concentrate on consumer needs w 1988-no - Customer relationship management Social Marketing Orientation - Social marketing - Triple bottom line o Build long-term bonds with customers, acknowledge role of business in society o Customer relationship management (CRM) - systematically tracking preferences and behaviours over time to tailor a value proposition.  How Marketing evolved: “new” era (ctd) o Make money and act ethically o Profit earned considering any benefits or harm caused to others o The social marketing concept maintains that new era marketers must satisfy customers’ needs in ways that are not only profitable for the firm but also beneficial to society. o Benefits to Customers, Firm’s Employees, Shareholders, and Communities o Triple bottom line o Economic value (e.g., ROI), Social value, Environmental value o Accreditations 1-17 Accreditations: Example 15 min break 1-19  Business function of marketing o The strategic business function that creates value by stimulating, facilitating and fulfilling customer demand. o building brands o nurturing innovation o developing relationships o creating good customer service o communicating benefits o Through customer-centric operation marketing can bring positive ROI and satisfy shareholders and stakeholders 1-20  Marketing is about meeting needs Stakeholders ultimate user of goods or services Buyers Consumers Sellers Individuals Organisations Citizens Companies Community Governments Investors Charities 1-21  What is a need? o A need is the difference between a consumer’s actual state and some ideal or desired state. o Related to physical or psychological functions o Can be recognized or latent Example: Squatty Potty 1-22  Hierarchy of Needs Self fulfillment needs Psychological Needs Basic needs Abraham Maslow (1943) – A Theory of Human Motivation  Needs, wants and demand o A need is the difference between a consumer’s actual state and some ideal or desired state. o Related to physical or psychological functions. o Can be recognized or latent o A want is a desire for a particular product to satisfy a need in specific ways. o Depends on an individual’s history, learning experiences and cultural environment o Benefit occurs when a product satisfies a need or a want. o Demand results when desire coupled with buying power to satisfy a want. o Different types, e.g. irregular, latent, full, declining 1-24  Meeting needs: Marketplaces o Market = all consumers with a common need that can be satisfied by a specific product and who have resources, willingness and authority to purchase. o Marketplaces are the host locations for exchanges. o Previously: buying and selling face-to-face o Today: less to no face-to-face contact or personal interaction o Shopping centres and supermarkets (self-service, self check-out) o E-commerce (Amazon etc.), auction sites (Ebay etc.), sharing platforms (coachsurfing, AirBnB, carsharing) o Marketplace entirely outside the physical world (virtual reality communities, online gaming etc.) o Mail order catalogue o Television shopping 1-25  Marketing creates utility, value and exchange o Utility - all the benefits consumers receive from using a product o Value – perceived benefits minus perceived sacrifice to obtain utility o An exchange occurs when something is obtained for something else in return o The buyer receives an object, service or idea that satisfies a need and the seller receives something perceived to be of equivalent value. 1-26  ‘Something of value’ to whom? From the From the seller’s From society’s customer’s perspective perspective perspective 1-27 From the customer’s perspective Which of these has the highest value? RECALL: Value is the perceived benefits minus the perceived costs (time, money or emotion) From the customer’s perspective If you had 1000 Euros to spend today, what would you purchase? From the customer’s TYPES OF VALUE GENERATED perspective Hedonic Utilitarian Linking The perceived benefit The benefit of The benefit of being of experiencing functionality socially connected pleasure, derived from to others. happiness, and using a product other emotions. or service. Reputational Epistemic Identitarian The benefit of being The benefit of The benefit of well regarded by accessing new contributing to others. knowledge from one’s self- an object or expression. experience.  From the seller’s perspective Calculating value of a customer o Profitability! o Companies that calculate lifetime value of a customer look at how much profit they expect to make from a particular customer. o Calculate and decide which customers worth keeping o One-time purchase versus repeat purchase o More expensive to attract new customers than to retain o Loyalty reward schemes o Co-creation activities o Goal: satisfy customer repeatedly to build long-term relationship 1-31 From the seller’s perspective Providing value to stakeholders by creating a competitive advantage Identify the distinctive competency Turn the distinctive competency into a differential benefit 1-32 From the seller’s perspective Adding value through the Value Chain Value chain: a series of activities involved in designing, producing, marketing, delivering and supporting any product. o Inbound logistics o Operations o Outbound logistics o Marketing and sales o Service Each link in the chain has potential to add/remove value for consumers 1-33  From society’s perspective Impact on society Recall o How do marketing transactions add or subtract value from society? o Pressure to succeed in marketplace vs. ethics o Ethical considerations: think of consequences! 1-34  From society’s perspective Ethical considerations o The dark side of marketing and consumer behavior: o Company: exploitation, taking advantage of vulnerable consumer groups, foster addictive consumption, environmental damage, violation of privacy, market exclusion o Consumer: violation of copyrights, theft and shoplifting 1-35  Marketing as a Process: Marketing Planning o Marketing is a process o How marketers make business decisions + plan actions > Marketing Planning o Tools marketers use to execute > Marketing mix o Marketing planning: analyse marketing environment o understand firm’s strength and weaknesses o opportunities and threats the firm might encounter in marketplace o Marketing plan: describes the marketing environment, outlines the marketing objectives and strategy and identifies who is responsible for carrying out each part of the strategy. o Which products to market to which consumers? o Mass vs. targeted vs. niche market? What segments? Market position? 1-36  Marketeter’s Tools: Marketing Mix Design Availability: Packaging Time and location Features n cy Distribution channels n de Associated services e d ep er In t All activities to: Inform Increase/decrease consumers interest Motivate to buy Signal quality, Communications exclusivity Personal selling Branding Sponsorships Services: 4 Ps > 7 Ps! + People + Process + Physical evidence 1-37  Marketing’s role in the firm Cross-function 3 key roles Source: www.douggarnett.com o Cross-function: marketing decisions affect - and are affected by – firm’s other operations: o Finance and Accounting: pricing, profitability of products > marketing budgets o Manufacturing: products produced in time and in right quality and quantity o R&D: create products that meet needs 1-38 Solomon et al., Marketing: Real People, Real Decisions © Pearson Education Limited  The who and where of marketing o Marketers come from many different backgrounds. o Business o Design > Fashion marketers o Communications > PR, Advertising o Language > Ad copy writers o Computer science > E marketers o Sociology, Anthropology, Business Psychology, Statistics > Research o They work in a variety of businesses. o Consumer goods o Services o Charities and not-for-profit o Business to business o Commodities o Own company/self employed 1-39  Fields of marketing o Advertising o Marketing models and systems o Brand management analysis o B-2-B marketing o Marketing research o Direct response o New product planning o Distribution channel management o Retail management o International marketing o Sales and sales management o Services marketing o Social media 1-40  dver t did? tty Potty a k the Squa do you thin So, how 1-41  Questions? o Warm-up exercise due before 7am on Monday! o If haven’t done so yet: join Perusall o Read the course outline