Chapter 1: What is Marketing? PDF

Chapter 1 What is marketing ? What is marketing?  According to Kotler marketing fits to be implemented in non-for-profit as well as for profit institutions. Marketing can offer four benefits for institutions: 1- greater success in achieving the institution's mission. 2- improved satisfact...

Chapter 1 What is marketing ? What is marketing?  According to Kotler marketing fits to be implemented in non-for-profit as well as for profit institutions. Marketing can offer four benefits for institutions: 1- greater success in achieving the institution's mission. 2- improved satisfaction of the institution's publics and markets. 3- improve attraction of marketing resources. 4- improved efficiency in marketing activities. In modern business world the objective of marketing is more than making profit. Marketing is the art and science of solving business problems. Marketing is responsible for the welfare of the society. Marketing is ubiquitous can be applied to both profit and non-for-profit organization. Marketing is applied to industrial and service organizations. Marketing practised in our daily lives. The aims of marketing Intelligence application of modern marketing polices. To develop polices and their implementation for good result. To suggest solutions by studying the problem relating to marketing. To find sources for further information concerning the market problems. Marketing is critical to the success of every organization The social and the managerial definition for marketing social definition: Managerial definition Marketing is a societal process by Marketing has been described as which individuals and groups obtain the art selling products. Peter what they need and want through Drucker as a leading management creating, offering, and exchanging theorist says that the aim of products and services of value marketing is to make selling freely with others. superfluous. The aim of the marketing is to know and understand the customer so well that the product or service fits him and sells itself. Later definition recognized that marketing is not selling , it includes selling in only one of its activities. The American marketing Association definition: The American marketing Association offers this managerial definition: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Marketing management as the art and science of applying core marketing concepts to choose target markets and get, keep and grow customers through creating, delivering and communicating superior customer value. A marketer can rarely satisfy everyone in a market , so marketers start with market segmentation. They identify and profile distinct groups of buyers who might prefer or require varying products and marketing mixes. 2- Market segments Market segments can be identified by examining demographic , psychographic and behavioural difference among buyers The firm decides which segments present the greatest opportunity – those whose needs the firm can meet in a superior fashion. For example: Volvo develops its cars for the target market of buyers for whom automobile safety is a major concern, Chinese cars sold in the Egyptian market are positioned as economic operating cars. Marketers view the sellers as the industry and the buyers as the market. The sellers send goods and services and communications(ads, direct mail, e mail messages ) to the market , in return the receive money and information (attitudes, sales data)  Traditionally , market was a physical place where buyers and sellers gathered to exchange goods. Now it is more like a marketplace due to the technological pace that created internet , smart mobiles, mobile application, social media,…. Industry( a Market (a collection collection of sellers) of buyers) Figure 1 The inner loop in figure 1 shows market (a collection of buyers) industry (a collection of sellers). It shows the heart of exchange process that includes money, information, goods/services, communication marketing tasks an exchange of money for goods and services, the outer loop shows an exchange of information. A global industry is one in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions. The difference between marketplace and marketspace: Market place :is physical as when one goes shopping in a store. Market space: is digital as when one goes shopping on the internet.  E commerce business transactions conducted online has many advantages for both consumers and business, including convenience , saving, personalization, and information, and it also bringing pressure from consumers for lower prices and is threatening intermediaries such as travel agent, stockbrokers, insurance agents. To succeed in the online marketplace ,marketers need more efforts to brand and redefine themselves to be recognized. To succeed in creating and exchanging value to and with customers , marketers need to scan, know, and take insights to the needs, wants and demand of the target market.  The successful marketer will try to understand the target markets need , wants and demands. Needs describe basic human requirements such as air,water, clothing and shelter.people also have strong needs for recreation, eduction, and entertainment. These needs become wants when they are directed to specific objects that might satisfy the need.an American needs food but wants a hamburger and soft drink. Demands are wants for specific products backed by an ability to pay.  Many people want to buy a Mercedes , only a few are able and willing to buy one. Companies must measure not only how many people want their product, but also how many would be willing and able to buy it (pay for it). However, marketers do not create needs :needs pre-exist marketers , marketers along with other societal influences , influence wants, marketers might promote the idea that a Mercedes would satisfy a persons need for social status , they do not however create the need for social status. 3- key customers markets: Consumer markets :companies selling mass consumer goods and services such as juices , cosmetics, athletic shoes and air travel establish a strong brand image by developing a superior product or service , ensuring its availability and backing it with engaging communication and reliable performance. Business markets : companies selling business goods and services often face well- informed professional buyers skilled at evaluating competitive offerings. Advertising and websites can play a role , but the sales force the price and the seller reputation may play a greater one.  Global markets: companies in the global marketplace navigate cultural , language , legal and political differences while deciding which countries to enter , how to enter each (as exporter, licenser, contract manufacturer, or solo manufacturer) how to adopt product and service features to each country , how to set prices , how to communicate in different cultures. Nonprofit and governmental markets: companies selling to nonprofit organizations with limited purchasing power such as churches, universitas, charitable organizations, and government agencies need to price carefully. Much government purchasing requires bids; buyers often focus on practical solutions and favor the lowest bid, other things equal. A marketer : is someone who seeks a response – attention , a purchase , a vote a donation from another party called the prospect. If two parties are seeking to sell something to each other , we call them both marketers Marketers are skilled at simulating demand for their products , but that’s a limited view of what they do , they also seek to influence the level , timing and composition of demand to meet the organization objectives. Eight demand states are possible: 1- negative demand- consumers dislike the product and may even pay to avoid it. 2- non-existent demand- consumers may be unaware or uninterested in the product. 3- latent demand- consumers may share a strong need that cannot be satisfied by an existing product. In each case , marketers must identify the underlying cause(s) of the demand state and determine a plan of action to shift demand to a more desired state. 4- declining demand- consumers begin to buy the product less frequently or not at all. 5- irregular demand- consumers purchases vary on a seasonal , monthly, weekly, daily, or even hourly basis. 6- full demand- consumers are adequately buying all products put into the marketplace. 7- over full demand- more consumers would like to buy the product than can be satisfied. 8- unwholesome demand- consumers may be attracted to products that have undesirable social consequences. 1- 5 marketing mix McCarthy classified various marketing activities into marketing mix tools , which he called the four ps of marketing : product, price, place, promotion. Marketing mix are the tools marketers use to satisfy the needs and wants of their customers , they are tools by which marketers create and deliver value to their customers. Marketing mix extends beyond product to include other ps. Each P plays a role in creation and delivery of value to their customers Figure 2 Product: is the tool by which marketers create value to customers , it simply answers what is the added value to customers is paying for. Price : is the amount customer sacrifice to obtain the added value. place is the way marketers use to deliver the value to customers by closing time, place and possessions gaps. Promotion :is the communication tools markers use to communicate the value of products to their customers.  People : employees are critical to marketing success , marketing will only be as good as the people inside the organization, it also reflects the fact that marketers must view consumers as people to understand their lives more broadly and not just as shoppers who consume products and services. Processes : include all the creativity , discipline, and structure brought to marketing management. Physical evidence is the tangible elements , and the tool customers use as clue to ensure the credibility of marketers or service supplier, such as budlings a university, cleanliness in hotels, decorations in a restaurant, menu in a restaurants. 1-6 the need for branding market offerings: Market offering vary ,market offering extend from physical goods to ideas. Physical goods constitute the bulk of most countries production and marketing efforts, such as canned , bagged, frozen foods, televisions, machines….. Services : are promises , intangible activities , services include the work of airlines , hotels , doctors , many markets offerings mix goods and services , such as fast-food meal. Properties are intangible rights of ownership to either real property (real estate) or financial property (stocks and bonds).they are bought and sold, and these exchanges require marketing,  Some universities have created chief marketing officer positions to better manage their school identify and image via everything from admission brochures and twitter feeds to brand strategy. Due to competitions among offerings , branding is no longer optimal , it is mandatory for marketers. A brand is an offering from a known source , a brand name such as Mcdonalds, all companies strive to build a strong favorable brand image. Brand's definitions: The classical definition , the brand is linked to the identification of a product and the differentiation from its competitors , using a certain name, logo, design, or other visual signs and symbols The (AMA) defined the brand in 1960 as :a name , term , sign, symbol, or design, or a combination of them which is intended to identify the goods or services of one seller or a group of sellers and to differentiate them from those of competitors. Brands have financial value because they created assets in the minds and hearts of customers, distributors , opinion leaders,….  The new classic definition of a brand ( a set of mental associations, held by the consumer , which add to the perceived value of a product or service, these associations should be unique(exclusivity), strong (saliency) and positive (desirable),brand power to influence buyers relies on representations and relationships. Value and satisfaction The product or offering will be successful if it delivers value and satisfaction to the target buyers The buyer choses between different offerings based on that which delivers the most value. Value is defined as a ratio between the customer gets and what he gives , the customer gets benefits and assumes cost as shown in this equation Value = benefits – costs= functional benefits+ emotional benefits- (costs: monetary costs+ time costs + energy costs+ psychic costs) According to this equitation , the marketer can increase the value by the customer by: 1- raising benefits 2- reducing costs 3- raising benefits and reducing costs. 4- raising benefits by more than the raise in costs. 5- lowering benefits by less than the reduction in costs.  Exchange and transaction Exchange , the core of marketing , involves obtaining a desired product from someone by offering something in return For exchange potential to exist , five conditions must be satisfied :1- there are at least 2 parties. 2- each party has something that might be of value to the other party. 3- each party is capable of communication and delivery. 4- each party is free to accept or reject the exchange offer. 5- each party believes it is appropriate or desirable to deal with the other party  In marketing , exchange is a process rather than an event , two parties are engaged in exchange if they are negotiating –trying to arrive at mutually agreeable terms , when an agreement is reached , a transaction takes place , a transaction involves at least two things of value , agreed-upon conditions , a time of agreement, and a place of agreement and a place of agreement. Customer satisfaction: depends on the products perceived performance relative to buyer's expectations , if perceptions are larger than expectations , then the customer is satisfied , however , if expectations are bigger than perceptions then the customer is dissatisfied.  Customer loyalty and retention : losing a customer means losing more than a single sale , it means losing the entire stream of purchases that the customer would make over a lifetime of patronage , which is known as customer lifetime value Customer loyalty on the online platforms can be defined as customer engagement. Customer equity: the total customer lifetime values of all the company's customers, the more loyal the firm profitable customers, the higher its customer equity , customer equity may be a better measure of a firm's performance than current sales or market share. 1-7 the evaluation of marketing philosophies Production Product The selling Marketing social concept concept concept concept concept  The production concept is one of the oldest concepts in business, it holds that consumers prefer products that are widely available and inexpensive , mangers of production- oriented business concentrate on achieving high production efficiency, low costs, and mass distribution. The product concept: the product concept proposes that consumers Favor products offering the most quality , performance , or innovative features, however a new or improved product will not necessarily be successful unless its priced, distributed, advertised, and sold properly.  The selling concept : holds that consumers and business, if left alone won't buy enough of the organization s products, firms with overcapacity aim to sell what they make , rather make what the market wants, companies that work with selling philosophy takes an inside –out perspective, it starts with the factory , focuses on the company's existing products , and calls for heavy selling and promotion to obtain profitable sales. The marketing concept: Emerged in the mid 1950 a s a customer cantered , scene and respond philosophy , the job is to find not the right customers for your product , but the right products for your customer , takes an outside perspective, it starts with a well- defined target market focuses on their needs , and integrates all the marketing activities that affect customers , in turn it yields profits by creating lasting relationships with the right customers based on customer value and satisfaction. The social marketing concept: emerged in the early 1970 , promising a more socially responsible and ethical model for marketing , it has emerged due to the criticism directed to marketing as an activity , that it encourages overconsumption and affects the resources of the planet negatively. Features and challenges of modern marketing Consumer orientation: modern marketing recognizes that the customer is supreme. Modern marketing begins with the customers, marketing is now concerned with consumer satisfaction and not profit or sales values alone. Having satisfying customers is the main aim of modern marketing It is now believed that profit can be earned only by serving the consumer's needs. Competition has grown from national to international , competition is the order of the day,  Profit is possible only through the consumers satisfaction , to satisfy a consumer, his needs are to be known, for this purpose, it has become necessary to know what the consumer needs, this is possible only when information is collected from the consumers, through market research information about current consumer needs can be known. The task of marketing starts with the consumer and ends with the consumer. Modern marketing begins before production, earlier there were less competition and such sales were easily made, but now this stage has changed, it is necessary to find out the needs and desires of consumers through market research , the information from the market or the consumer will decide the future of the product, thus product planning and development is undertaken before the actual production takes place, the pricing , distribution,….. Are secondary.  At present competitions has increased because of many manufactures produce similar goods in large quantities , the ability of marketer depends on the ability to find a consumer and satisfy him, people may choose one among the many similar products, they decide what product to purchase and what product not to purchase. Marketing organizations face many challenges in today's competitive global economy To succeed in this challenges environment , marketers need the following: Centralized ,robust customer knowledge and insight To align their effort with the rest of the enterprise , and especially with the sales organization. Operate efficiently based on proven , repeatable best practices. Measure marketings impact on company revenues and act intelligently to improve effectiveness.