Chapter 1A

MARKETS AND MARKETING

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- Exchanged
o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

exchanging own bred animals for food and clothes in the primitive (ancient) world

- Bartering
o one person offering to exchange his spare food for someone elses spare clothes, or his own spare beef for anothers spare vegetables

- Specialization o
one person might not produce any food himself, but might get food from other people in exchange for curing their sick animals

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- Money
o o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

people avoid exchanging goods directly for other goods or services by inventing money for a trade to take place, both parties had to want what the other party had. The demands of growing business and trade caused a money system to be developed

- Market o
o there were lots of different farmers and lots of vets during primitive world there were several markets: a beef market, a mutton market and a market for veterinary services

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- Production
o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

became concentrated in big factories, towns grew bigger

- Trade o
o o increased as people became more likely to buy goods rather than to produce themselves producers and markets to which they sold became geographically separated businessmen started to think more about their customers

- Production Orientation

they would concentrate on making things efficiently, and assume that someone would buy whatever they made
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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

- Mass production techniques
o o increased the number and types of goods on the market increased productivity reduced unit costs

- Demand o
o with new cheaper products on offer, many business problems centered on production and selling rather than marketing It was more important to produce enough of a product to satisfy strong demand than to think about customer needs market for manufactured goods

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- Competition o
o o o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

great Britain dominated world trade until the First World War where countries emerged to compete the US, Japan and Germany took much of Britains share in the market for manufactured goods presently, UK businesses have to compete effectively marketing enables them to identify customer needs and to find products that satisfy those needs

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- Competition
o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing

production no longer the main problem not excess supply rather than excess demand which is the problem. Focus has switched from how to produce enough (supply factory) to how to increase demand (demand factory) marketing techniques have been developed as a result of this switch in orientation

- Marketing Techniques
o o Mass marketing techniques were applied to selling fast-moving consumer goods Marketing techniques have grown in importance as competition and consumer choice have increased.

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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.2 Marketing defined

Definition 1

Marketing is the management of exchange relationships

o o o all relationships between the organization and the outside world, especially when they relate to customers, need to be managed organization will be judged by customers, suppliers, competitors and others according to their personal experience e.g. manner of telephone operator or tone of a receptionists voice contacts are vital in creating a positive image for the organization with customers and the public

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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.2 Marketing defined

Definition 2

Marketing is the management process which identifies, anticipates and supplies customer requirements efficiently and profitably
o o definition is that of the Chartered Institute of Marketing emphasizes the wide scope of marketing, ranging from initial identification of customer needs by means of research, right through to eventual profitable satisfaction of those needs

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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.2 Marketing defined

Definition 3

Marketing is concerned with meeting business objectives by providing customer satisfactions

o o o stresses the importance of the customer and more particularly, customer satisfaction when people buy products or services they do not simply want the products, they also want the benefits from using the products or services products and services help to solve a customer's problems. It is the solution to these problems that customers are buying

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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.2 Marketing defined

Definition 4

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
o o definition provided by American Marketing Association expands on the previous one and considers what is involved in marketing to satisfy both the customer and the company
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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.2 Marketing defined

These definitions serve to demonstrate useful distinctions between marketing as a thing that is done and marketing as an approach to how something is achieved.
There must be a systematic method and there must be a purpose: o the main purpose is the mutual satisfaction of both supplier and customer o the method is the process of shaping and managing the marketing mix in a way which takes into consideration the needs of the customer and the goals of the organization at one and the same time

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1. Marketing Orientation
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.3 The Marketing Concept
- Consumer wants
o o o Based on what consumer wants Would people mind paying extra? How to satisfy the consumer while still making a profit?

or

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Marketing Orientation

- Customer satisfaction
o o

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.4 Customer Orientation

without customers, you dont have a business satisfying customers needs at a profit should be the central drive of any company

- Sales orientation
o o focuses on the needs of the seller Preoccupied with sellers need to convert his product into cash

The marketing concept suggests that companies should focus their operations on their customers needs rather than be driven solely by the organizations technical competence to produce a particular range of products or services or by a belief in the sales force

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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.5 Implications for businesses

When a company understands consumers, it can design products to appeal to them

Therefore, a company needs to: o an understanding of the market, based on research and not on unsupported hunches (guesses) o a spirit of innovation: the company must be willing to change as customers requirements change skilled direction and administration of its marketing activities

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Marketing Orientation

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1.6 The history of production and marketing orientations
Definition:

Production orientation describes a company which makes what it thinks the customer will buy It may make good products but will buy. not take the trouble to find out whether there is a market for them.

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Marketing Orientation

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Organizations realized that in the face of strong competition they had to get closer to their markets and to their customers.
A market orientated organization will have: a commitment to meeting the needs of customers more successfully than the competition a structure and process of operation which are designed to achieve this aim o all activities must be coordinated around the needs of the customer when making decisions about what to produce and subsequently, how and where the product or service is to be made available.

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Marketing Orientation

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Marketing concept has three elements:

Customer orientation Coordination of market led activities Profit orientation

1.7 The different orientations in modern practice - Production orientated companies
o believe that consumers will buy products that are widely available and cheap o managers concentrate on achieving high production efficiency and wide distribution

- Sales orientated companies

o make products which are not carefully tailored to consumers needs, but will then use aggressive advertising and selling methods

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Marketing Orientation

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- Market orientated companies
o only commit itself to meeting the needs of the customer o will set up right structures and processes o Establish customer service departments, often in highly competitive and low profit margin businesses such as retailing Advantages of Marketing Orientated Companies: o Product tailored to the needs of the customer o Research and development enables the market-led company to keep ahead of the competition o Opportunities arise out of a continuous research thrust o Knowing your customer enables you to communicate more efficiently, with cost effective marketing communications

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Marketing Orientation

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Advantages of Marketing Orientated Companies: (contd.) o Produce what you can sell rather than sell what you produce o Leads to long-term relationships with high customer satisfaction Disadvantages of Marketing Orientated Companies: o Extensive market research needed into customer needs/wants o Expensive and time consuming time delay for product to market o Me-too products that can undercut because there are no costs of research and development o Irrational consumer behavior no amount of research will alter the fickle nature of the average customer o Dynamic nature of market place todays products become tomorrows throwaways o Too narrow a focus

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o o o

Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Advantages of Sales Orientated Companies: Product manufactured relatively inexpensively with minimum time delay to market Flexibility within production capabilities which ensures swift response to supply demand imbalance Suits small and medium sized business units that are not particularly well financed minimizes cash flow problems

Disadvantages of Sales Orientated Companies: o o o o Sell what you produce as opposed to produce what will sell no product innovation Needs extensive sales promotion effort to sell product No opportunity for long-term profitable growth concentration on short-term transactional approach Little emphasis on customer satisfaction means limited loyalty and word of mouth marketing
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Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.8 Marketing and the business system

- Distribution system o system for getting goods to customers o involves lorries, wholesalers and retailers and mail order o also includes warehouses and the system for agreeing to supply customers

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Marketing Orientation

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Features of distribution system:
It may be long or short o e.g. of short chain is an airline buying a new aircraft from manufacturer o e.g. of long chain is pocket calculators made in the Far East and sold to Britain, involving the maker, an export agent, a shipping company, a wholesaler and retailers It may be owned by the producer (branches) o owned by producers - e.g. manufacturer of plywood with its own furniture shops o owned by independent - e.g. book wholesalers and bookshops which are not owned by publishers

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Marketing Orientation

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Features of distribution system: Final customers o the customers at the end of the system o they may also be producer of other goods e.g. customers of the car headlamp bulbs are mostly car manufacturers)

- Information system
o o gets information from customers perhaps by conducting interviews or questionnaire sends information to customers by advertising, catalogues and other forms of publicity. The main goal is to get across the special features of a product, which make it a better buy than its rivals this message is called the products unique selling proposition or USP. proposition,

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The flow of influence

Marketing Orientation

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Pest factors o Political and legal factors e.g. consumer boycotts of countries with oppressive regimes (government) and laws on employment, advertising, product safety and the granting of credit to customers o Economic influences such as income levels, employment levels, the rate of inflation and the rate of economic growth Social influences such as fashion and peer group pressure Technological influences such as the growth of computer-aided manufacturing and the availability of CD-ROM to consumers

o o

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Definition

Marketing Issues

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2.1 Differentiation and product positioning

Product differentiation occurs when specific products or brands each have a specific combination of costs and benefits which a particular set of potential customers seek. This allows the product to be positioned in the market for specific customers
o In marketing, product differentiation (also known simply as differentiation is the process of distinguishing the differences of a product or offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors products as well as one's own product offerings.

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Definitions

Marketing Issues

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2.2 Contact and distribution

Contact is ensuring that the customers know about a product or service. Distribution is ensuring that products or services are made accessible and available to consumers or buyers.

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2.
Definitions

Marketing Issues

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2.3 Marketing in business

Marketing is the performance of business activities that direct the flow of goods and services from organizations to their customers. Marketing involves the business understanding the needs and wants of customers and adapting the operations to deliver the right goods and services more efficiently and effectively than its competitors.

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2.
Definitions

Marketing Issues

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 2.4 Needs and profit

Marketing is concerned with the matching of an organizations capabilities with consumers wants Marketing is the process of determining consumer demand for a product, motivating its sale and distributing it into ultimate consumption at a profit.

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