Introduction to Marketing PDF

Introduction to Marketing Why Marketing?  Survival of an organization depends on the performance of its marketing  There must be a top-line for a bottom line to exist  Other functional areas does not matter if there is no sufficient demand for its products/services First function of man...

Introduction to Marketing Why Marketing?  Survival of an organization depends on the performance of its marketing  There must be a top-line for a bottom line to exist  Other functional areas does not matter if there is no sufficient demand for its products/services First function of management is economic performance Customer and Business Drucker on customers  ‘ there is only one valid definition of business: to create a customer’  Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation  Customer is the foundation of a business and keeps its existence. He alone gives employment On Customers  A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider of our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do so - Mahatma Gandhi What is Marketing  Not ‘telling and selling’  Satisfying customer needs  The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.  The aim of marketing is to make selling superfluous The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself - Drucker What Is Marketing? Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Market: Is the set of actual and potential buyers of a product or service Industry: Sellers Market: customers What Is Marketed? Goods Persons Services Properties Events Organizations Information Experiences Ideas Places A marketer is someone who seeks a response— attention, a purchase, a vote, a donation—from another party, called the prospect  Marketing: what is offered for sale is determined by the buyer but not by the seller Product becomes consequence of marketing Beginning and End  An industry begins with the customer and her or his needs, not with a patent, a raw material, or a selling skill.  Given the customer’s needs, the industry develops backwards  Industry is a customer-satisfying process, not a goods producing process  “….corporation must be viewed as a customer-creating and customer-satisfying organism. Management must think of itself not as producing products but as providing customer-creating value satisfactions” (Levitt)  A Simple Model of Marketing Process Constr Unders uct an Captur tand Design integra Build e value the a ted profita from market custom market ble custom place er- ing relatio ers to and driven progra nships create custom market m that and profits er ing deliver create and needs strateg s custom custom and y superi er er wants or delight equity value Needs, wants and demand Needs  Basic human requirements. Physical need (food, clothing, safety), social need (affection, belonging) Marketers do not create needs; but, influence wants Wants Needs become want when they are directed to specific objects to satisfy that need The form human needs take as shaped by culture and individual personality Wants are shaped by one’s society and are described in terms of objects that will satisfy needs. Demands Human wants that are backed by buying power Demands are wants for specific products backed by an ability to pay Market Offering Some combination of products, services, information or experiences offered to a market to satisfy a need or want Design a customer-driven marketing strategy  What customers will we serve (What is our target market)?  Select the customers who can be served well and profitably  How can we serve these customers best (what is our value proposition)?  How to differentiate and position in market place  ‘theultimate driving machine’ – BMW  ‘touching is believing’ – Apple’s iPhone Value proposition:  A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. Satisfaction The extent to which a product’s perceived performance matches a buyer’s expectations Delight Satisfaction Disappointment  Preparing an Integrated Marketing Program and plan  Consists of marketing mix, set of tools the firm uses to implement its marketing strategy  Marketing mix is classified into four broad categories Product Price Place Promotion  Building Customer Relationships  Customer relationship management is the process of building and maintaining profitable customer relationships by delivering superior value and satisfaction.  Building blocks of customer relationships: Customer Value and Satisfaction  Customer perceived value: customer’s evaluation of the difference between all the benefits and all the costs of an offer relative to those of competing offers  Customer Satisfaction: The extent to which a product’s perceived performance matches a buyer’s expectations.  Capturing Value from Customers  Current and future sales, market share and profits  Outcomes of creating customer value: customer loyalty and retention, share of market and share of customer, and customer equity Customer lifetime value: The value of the entire stream of purchases that the customer would make over a lifetime of patronage Customer equity: The total combined customer lifetime values of all the company’s current and potential customers Philosophy / concepts guiding marketing strategy  The production concept  The product concept  The selling concept  The marketing concept  Holistic marketing concept The Production Concept  The production concept holds that consumers will prefer products that are widely available and inexpensive.  Focus on high production efficiency, low costs and mass distribution.  Eg: Haier, Legend (Lenovo group owner) The Product Concept  The product concept holds that consumers favor products offering the most quality, performance, or innovative features  ‘better-mousetrap’ fallacy The Selling Concept  The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products  Therefore, the organization must undertake aggressive selling and promotion effort Unsought goods Overcapacity Sell what they make rather than what the market wants The Marketing Concept The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to your chosen target markets  Customer centric, sense-and-respond philosophy  Not to find the right customer for your product, but the right products for your customers  Selling focuses on the needs of the seller; marketing on the needs of the buyer.  Selling is preoccupied with seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer Holistic Marketing Relationship Marketing CUSTOMERS EMPLOYEES MARKETING PARTNERS FINANCIAL COMMUNITY Integrated Marketing  Integrated marketing occurs when marketers devise marketing activities and programs that create, communicate, and deliver value such that “the whole is greater than the sum of its parts.” Internal Marketing  The task of hiring, training, and motivating able employees who want to serve customers well  Marketing succeeds when all divisions work together to achieve customer goals Performance Marketing Triple Bottom Line (3Ps – Profits, people, planet) Marketing Mix Components (4 Ps) Analyzing the Marketing Environment Rahul Bajaj: “…..only Bajaj Auto's products had a 10-year waiting period. We faced competition, but I focused on three things: cost, quality and volumes. Others failed to do so and they could not compete with us on quality or price” (Marketing Myopia) “…Retrospectively, we should have seen the switch within the two- wheeler market from scooters to motorcycles in 1999-2000” Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers The Company’s Macroenvironment Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Increasing population, urbanization Change in income levels Change in family structure – nuclear, aging, change in role of women etc  Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns Income, credit availability, interest rates, employment and unemployment Economic recession Covid Pay commission Change of income and its impact on spending patterns  Natural Environment Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Increasing importance due to climate change and sustainability Fuel-efficient vehicles Alternate sources of energy Ban on vehicles of 10/15 years and its impact Recycled products  Technological Environment Most dramatic force in changing the marketplace Creates new products and opportunities New technologies replace older technology Floppy disks, discs Cameras STD Booths Telephones /landline  Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society To protect consumers, firms and society Laws / policies relating to Trade, fiscal and taxation policies Competition Advertising Packaging and labelling Product safety Cultural Environment Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors McDonald’s menu in India Impact of festive seasons on non-veg consumption etc Consumer Behavior  If you wanted to go on a trek with friends, how would you go about planning the trip?  What if your family wants to get a new television or a refrigerator or a car?  A candy? A packet of potato chips?  Gift for your best friend on campus?  Who buys our product?  Who makes the decision to buy the product?  Who influences the decision to buy the product?  How is the purchase decision made? Who assumes what role?  Where do they go or look to buy the product? Online or offline?  What does the customer buy? What needs must be satisfied? What wants fulfilled?  Why do customers buy a particular brand? What benefits do they seek?  When do they buy? Any seasonality? Any day/week/month?  How is our product perceived?  How do personal, demographic or economic factors influence the purchase decision?  Consumer behavior The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants Influenced by cultural, social, and personal factors  Marketers should try to fully understand the customer’s buying decision process- experiences in learning, choosing, using and disposing of a product The Buying Decision Process  The consumer typically passes through five stages Problem recognition Information search Evaluation of alternatives Purchase decision Post-purchase behavior  Problem recognition The buyer recognizes a problem/need triggered by internal/external stimuli Information search Levels of engagement in the search Heightened attention Active information search  Personal sources  Commercial sources  Public sources  Experiential sources The influence of these sources varies with the product category and buyer’s characteristics Sets Involved In Decision Making  Evaluation of alternatives Expectancy-value model of attitude formation: Consumers evaluate products by combining their brand beliefs according to importance  Competitive strategies: Redesign the product: real repositioning Alter beliefs about the brand: psychological repositioning Alter beliefs about competitor’s brand: competitive depositioning Alter the importance weights Call attention to neglected attributes  Purchase Decision Decisions on: Dealer Time Quantity Payment method Intervening factors Perceived risks  Perceived risk Functional Physical Social Financial Psychological Time  Post-purchase behavior Supply beliefs and evaluations that reinforce the consumer's choice Postpurchase satisfaction Postpurchase actions – buy again, exit or voice option Postpurchase product use and disposal  How do you choose your significant other? Segmentation and Targeting Example 3  Segmentation Market segmentation is the process of dividing large heterogeneous group of customers into homogenous subgroups or segments of customers with similar needs and preferences A market segment consists of a group of customers who share a similar set of needs and wants  STP SEGMEN TARGETI POSITIO TATION NG NING Group Assess the Define customers attractivene value based on ss of each proposition similar segment for target needs segments Select Profile each segment/s Develop an segment to target action plan  Benefits to the organizations Identification of unfulfilled needs and underserved customer segments Results in better products Benefits of Segmentat and services ion More targeted promotions and customize products Increased customer satisfaction – Sustainable profit growth  Benefits to the customer Customized products offer convenience, time saving Benefits of and enrich customer Segmentat experience ion Tailored products and services Relevant offers Personalized experiences Bases for Segmentation  Nation, region, city, urban / rural, climate Region: South, North, East, West Geograph ical City: Class-I, class-II, metros, Segmenta cities with population of 0.5 M to 1 tion M etc Rural and semi-urban: Villages with population of