Defining Marketing

Marketing is a societal process by

which individuals and groups obtain
what they need and want through
creating, offering, and freely
exchanging products and services of
value with others.
- Philip Kotler (p. 7)
Core Concepts of Marketing
Target Markets & Segmentation
Needs, Wants, and Demands
Product or Offering
Value and Satisfaction
Exchange and Transactions
Relationships and Networks
Marketing Channels
Supply Chain
Competition
Marketing Environment
 Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
 Structure of Flows
Resources Resources
Money Resource Money
markets
Services,
money Taxes,
goods
Services, Taxes
money
Manufacturer Government Consumer
markets markets markets
Taxes,
goods Services
Services, Taxes,
money goods
Money Money
Intermediary
Goods, services markets Goods, services
 The Four Ps
The Four Cs

Marketing
Mix

Place
Product

Conven-
Customer
Solution Price Promotion ience

Customer Communication
Cost
Company Orientations Towards
the Marketplace
Consumers prefer products that are
Production Concept widely available and inexpensive

Consumers favor products that

Product Concept offer the most quality, performance,
or innovative features

Consumers will buy products only if

Selling Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing Concept markets & delivering value
better than competitors
 Customer Delivered Value
Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
Customer-Oriented
Organization Chart
Customers

Front-line people

Middle management

Top
manage-
ment
 Evolving Views of Marketing’s
Role

Finance
Production
Production Finance
Human
resources
Marketing Human
resources Marketing

a. Marketing as an b. Marketing as a more

equal function important function
Evolving Views of Marketing’s
Role
Production

Marketing Customer

c. Marketing as the d. The customer as the

major function controlling factor
Evolving Views of Marketing’s
Role
Production

Marketing

Customer

e. The customer as the controlling

function and marketing as the
integrative function
 Review
• Course Organization
• Tasks of Marketing
• Major Concepts & Tools of Marketing
• Marketplace Orientations
• Marketing’s Responses to New
Challenges
 Objectives
• Define value & satisfaction - understand
how to deliver them
• The nature of high-performance
businesses
• How to attract & retain customers
• Improving customer profitability
• Total quality management
 Determinants of Customer
Delivered Value
Image value

Personnel value Total

customer
Services value value
Product value Customer
delivered
Monetary cost value

Time cost Total

customer
Energy cost cost
Psychic cost
Satisfaction is a person’s
feelings of pleasure or
disappointment resulting
from comparing a product’s
perceived performance (or
outcome) in relation to his or
her expectations.
 High Performance Business

Set strategies to
satisfy key .. Stake-
holders

By improving Processes
critical business...

and
Resources Organization
aligning...
 The Generic Value Chain

Firm infrastructure
Activities
Support

Human resource management

Technology Development

Procurement

Market-
Out- Serv-
Inbound Opera- ing
bound ice
Logistics tions and
Logistics
sales

Primary Activities
 Levi Strauss’
Value-Delivery Network

Order Order Order Order

Du Pont Milliken Levi’s Sears Customer
(Fibers) (Fabric) (Apparel) (Retail)

Delivery Delivery Delivery Delivery

Competition is between networks, not companies.

The winner is the company with the better network.
 Satisfied Customers:
• Are loyal longer
• Buy more (new products & upgrades)
• Spread favorable word-of-mouth
• Are more brand loyal (less price sensitive)
• Offer feedback
• Reduce transaction costs
 Levels of Relationship
Marketing
High Medium Low
margin margin margin
Many Basic or
customers/ Accountable Reactive reactive
distributors

Medium
number of Proactive Accountable Reactive
customers/
distributors

Few
customers/ Partnership Proactive Accountable
distributors
 Customer Development

Suspects

First-time Repeat
Prospects customers customers
Clients Advocates Partners

Disqualified
prospects Inactive or
ex-customers
 People stop buying from people for five primary reasons:

• 4% aren't there any more.

• 5% change to another supplier on the
recommendation of a friend or business
associate.
• 9% change to the competition because there
is a true, competitive advantage, an honest
benefit offered over your product or service.
• 14% change because they are unhappy with
the results of the service or product you are
providing.
• 68% change because of lack of caring
expressed by some one person inside your
company!
 Customer/Product
Profitability Analysis
Customers
C1 C2 C3

P
+ + +
Highly
P1 profitable
r

+
product
o P2 Profitable

- -
d product

u
P3 Losing

-
c product

t
s
P4
+High
Mixed-bag
product

Mixed-bag Losing
profit
customer customer
customer
The Profit Triangle

Profit

Competitive advantage
 Objectives
• Corporate and division strategic planing
• Business unit planning
• The marketing process
• Product level planning
• The marketing plan
Strategic-Planning, Implementation,
and Control Process

Planning Implementation Control

Corporate Measuring
planning Organizing results
Division
planning Diagnosing
results
Business Implementing
planning
Taking
Product corrective
planning action
Good Mission Statements:

Limited number of goals

Stress major policies & values

Define competitive scopes