Marketing Introduction

Introduction to Marketing
Ali Hasan Awan
Marketing
What is Marketing ? What is Brand? Save this definition to compare it to other definitions of marketing we cover later on.
Understanding Marketing
The word marketing means very different things to different people in different industries. For example, a coal producer in Khewra just needs to understand what price the local buyer will be paying for the product and s/he can then plan to market (or just sell) the coal produced to the local buyer. Second, think about how much different the above situation is from another case in which marketing must be done. Lets say that you are a product-marketing engineer at Honda Atlas and your Product Marketing Manager has informed you that you will be responsible for marketing a new product that has been conceptualized by engineers in the Research and Development (R&D) Department. Finally, assume a good friend of yours who has invented a new way for people to wash their car. She has asked you to market her product for her.
In all three of these situations, the product has already been conceptualized and produced. It wont help the individual marketer at all to consider how the market will react to the product.
Answer: In situation one, the coal miner must just extract the coal from the ground and deliver it to a local coal broker for sale. In situation two, the product manager at Honda must first figure out what the new product will be good for and who might want to buy it. Finally, in situation three, your friend has already invented the product; it just remains for you to figure out who the people are who wash their own car and how to reach them.
In all three situations, the marketer is faced with coming up with a way to sell what has already been produced. This definition of marketing, unfortunately, is how most people would define marketing, that is, Marketing is how an organization or individual sells its product or service. Thus in this definition, marketing is relegated to finding and exploiting a market of buyers for the product or service
History
In some ways marketing is as old as civilization itself. You may have seen films based in ancient Greece or Rome with images of bustling market stalls and traders actively engaged in persuasive communications. Of course these traders would not have called their activities marketing and their activities may seem far removed from someone ordering airline tickets via a website. The concept of marketing that we now see has more to do with developments during the industrial revolution of the 18th and 19th centuries.
Industrial Revolution
1750 to 1850
The First Industrial Nation
Why did the Industrial Revolution begin In England?

Natural resources such as coal, iron ore, and developed farmlands(in abundance) New technologies such as the steam engine and textile machines Population growth due to previous agricultural boom Business class risked their capital to start new ventures.
Technological Advancements
James Watts Steam Engine

Scottish inventor and mechanical engineer Improved upon Newcomen steam engine by using condenser Key power source of the Industrial Revolution
Advancements in Science and Medicine
The Transportation Revolution
Any color-so long as its black.
Henry Ford-American Industrialist Used the assembly line technique of mass production Revolutionized transportation
Impacts of the Industrial Revolution
Marketing Orientation Stages

Product Orientation Production Orientation Sales Orientation Marketing Orientation
Product Orientation
An approach to business that centers its activities on continually improving and refining its products, assuming that customers simply want the best possible quality for their money.
The product orientation was arguably the first orientation popular in business It centred on what the company could produce. The obvious example is Henry Ford stating that customers could have any colour model T as long as it was black.
Production Orientation
An approach to business that centres its activities on producing goods more efficiently and cost effectively, assuming that price is the only factor important to customers.
As mass production technologies and techniques became common around the late 1800's up to about the mid 1920's. The focus was on making items more and more efficiently in the belief that the cheapest producer would gain market share. Assumptions. Firstly that all markets operate on a lowest cost wins methodology, which considering the success of luxury products in many markets is clearly not the case. Secondly it assumes that all customers are the same and delivers the same product to each one with the aim of achieving economies of scale. In many ways governments are a fine example of this orientation, with sectors such as health and education operating largely on a one size fits all methodology.
Sales Orientation
An approach to business that centres its activities on selling whatever it can produce, assuming that customers are inherently reluctant to purchase.
From about the mid 1920's to the early 1960's when we seen an increase in competition like never seen before. Around this time most firms had realized that their ability to produce goods was higher than the buyers consumption. Make use of pricing, promotion and distribution skills, the sales orientation gives little thought to what the customer actually wants. A popular example of a sales orientation is in life insurance where overt selling is a common tactic.
Marketing Orientation
an approach to business that centres its activities on satisfying the needs and wants of its customers.
A marketing orientation is typically found when an entire company practices a customer-focused approach to their activities. So all departments act with the customer in mind, not purely the marketing department. All departments must learn to collect and share knowledge about the customer every time they come into contact with the customer. Amazon.com are an excellent example of a company with a marketing orientation
What Is Marketing?
Simple definition:
Marketing is the management process responsible for identifying, anticipating, and satisfying customer requirements profitably. (CIM,2001)
Goals:
1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction.
Marketing Defined
Marketing is the activity, set of instructions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
OLD view of marketing:

Making a sale telling and selling
NEW view of marketing:

Satisfying customer needs
Why is Marketing Important?

Shifting Business Paradigms
Buyers markets
Sellers markets
The Marketing Process

A simple model of the marketing process: Understand the marketplace and customer needs and wants. Design a customer-driven marketing strategy. Construct an integrated marketing program that delivers superior value. Build profitable relationships and create customer delight. Capture value from customers to create profits and customer quality.
Needs, Wants, and Demands

Need: State of felt deprivation including physical, social,
and individual needs. Physical needs: Food, clothing, shelter, safety Social needs: Belonging, affection Individual needs: Learning, knowledge, self-expression
Want: Form that a human need takes, as shaped by culture and individual personality.
Wants + Buying Power = Demand
Need/ Want Fulfillment

Needs & wants are fulfilled through a Marketing Offering: Products:
Any thing tangible i.e. car, pen, i-pod.
Services:
Activity or benefit offered for sale that is essentially intangible and does not result in ownership.
Experiences:
Consumers live the offering.
Customer Value and Satisfaction

Dependent on the products perceived performance relative to a buyers expectations. Care must be taken when setting expectations:
If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. Customer satisfaction often leads to consumer loyalty. Some firms seek to DELIGHT customers by exceeding expectations.
Marketing Management
The art and science of choosing target markets and building profitable relationships with them. Requires that consumers and the marketplace be fully understood. Aim is to find, attract, keep, and grow customers by creating, delivering, and communicating superior value.
Marketing Management
Marketing managers must consider the following, to ensure a successful marketing strategy: 1. What customers will we serve?
What is our target market?
2. How can we best serve these customers?

What is our value proposition?
Choosing a Value Proposition

The set of benefits or values a company promises to deliver to consumers to satisfy their needs. Value propositions dictate how firms will differentiate and position their brands in the marketplace.
The Marketing Concept

The marketing concept: A marketing management philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors.
Customer Perceived Value

Customer perceived value: Customers evaluation of the difference between all of the benefits and all of the costs of a marketing offer relative to those of competing offers. (Armstrong & Kotler) Perceptions may be subjective Consumers often do not objectively judge values and costs.
Customer value = perceived benefits perceived sacrifice.
Steps in Developing Marketing Strategy

Selecting a Target Market Marketing Mix for International Markets Marketing Research Market Segmentation How Market Segmentation Works Segmenting Consumer Markets Determining What Customers Want Steps in Consumer Behavior Process Relationship Marketing Tools for Nurturing Customer Relationships One-to-One Marketing
The Marketing Mix

The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. Product: Variety, features, brand name, quality, design, packaging, and services. Price: List price, discounts, allowances, payment period, and credit terms. Place: Distribution channels, coverage, logistics, locations, transportation, assortments, and inventory. Promotion: Advertising, sales promotion, public relations, and personal selling.
Why is marketing planning necessary?

Systematic futuristic thinking by management better co-ordination of company efforts development of better performance standards for control sharpening of objectives and policies better prepare for sudden new developments managers have a vivid sense of participation
Criticisms of marketing planning

Formal plans can be quickly overtaken by events Elements of the plan my be kept secret for no reason gulf between senior managers and implementing managers the plan needs a sub-scheme of actions
Acts as a roadmap assist in management control and monitoring the implementation of strategy informs new participants in the plan of their role and function to obtain resources for implementation to stimulate thinking and make better use of resources
Objectives of the marketing plan
Assignment of responsibilities, tasks and timing Awareness of problems, opportunities and threats Essential marketing information may have been missing if implementation is not carefully controlled by managers, the plan is worthless!
The contents and structure of the marketing plan

The executive summary table of contents situational analysis and target market marketing objectives marketing strategies marketing tactics schedules and budgets financial data and control
Cautionary notes for effective planning

Dont blindly rely on mathematical and statistical calculations. Use your judgement as well Dont ever assume that past trends can be exploited into the future forever If drawing conclusions from statistical data, make sure the sample size is sufficiently large
Behavioural planning problems

Planning recalcitrance: resistance and non-cooperation by managers in planning fear of uncertainty in planning: a lack of comfort in planning activities political interests in planning activities:resource bargaining, padding of requirements, and avoidance of consensus planning avoidance: compliance rather than commitment to planning
Standard Planning Framework

Analysis - where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we ensure arrival? Control - are we on the right track?
Marketing Information Systems

Marketing Research
What is Marketing Research? Process Terminology Techniques
MKIS - Marketing Information Systems

What is MKIS Components of an electronic MKIS
Marketing Research
the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services American Marketing Association
The Marketing Research Process

Set objectives Define research Problem Assess the value of the research Construct a research proposal Specify data collection method Specify techniques of measurement Select the sample Data collection Analysis of results Present in a final report
Terminology of Marketing Research

Primary data - collected firsthand Secondary data - already exists, desk research Quantitative research - statistical basis Qualitative research - subjective and personal Sampling - studying part of a population to learn about the whole
Marketing Research Techniques

Interviews
face-to-face telephone postal questionnaire
Attitude measurement
cognitive component (know/believe about an act/object) affective component (feel about an act/object) conative component (behave towards an object or act)
Likert scale
strongly agree agree neither agree nor disagree disagree strongly disagree
Semantic differential scales differences between words e.g. practical v impractical Projective techniques
sentence completion psychodrama (yourself as a product) friendly martian (what someone else might do)
Group discussion and focus group Postal research questionnaires Diary panels - sources of continuous data Telephone research Observation
home audit direct observation
In-store testing
What is MKIS?
MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions American Marketing Association
The components of a computerised MKIS
Data Bank
Statistical Bank
MKIS
Display unit
Marketing Manager
Model Bank
The components of a computerised MKIS

Data bank - raw data e.g historical sales data, secondary data Statistical bank - programmes to carry-out sales forecasts, spending projections A model bank - stores marketing models e.g Ansoffs matrix, Boston Matrix Display unit VisualDisplayUnit and keyboard
Marketing Strategy
Customer-Driven Marketing Strategy

Requires careful customer analysis. To be successful, firms must engage in: Market segmentation Market targeting Differentiation Positioning
Market Segmentation and Targeting

Segmentation: The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products of marketing programs. Targeting: Involves evaluating each market segments attractiveness and selecting one or more segments to enter.
Differentiation and Positioning

Differentiation: Creating superior customer value by actually differentiating the market offering. Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
Market Segmentation
Key segmenting variables: Geographic- where people live Demographic- gender, race, age, job status,
location
Psychographic-social class, lifestyle, or

personality characteristics
Behavioral-
consumer knowledge, attitudes, uses, or responses to a product
Different segments desire different benefits from products. Best to use multivariable segmentation bases in order to identify smaller, better-defined target groups.
Market Segmentation
Why Segment?: Meet consumer needs more precisely Increase profits Segment leadership Retain customers Focus marketing communications
Evaluating Market Segments

Segment size and growth:
Analyze current segment sales, growth rates, and expected profitability.
Segment structural attractiveness:

Consider competition, existence of substitute products, and the power of buyers and suppliers.
Company objectives and resources:

Examine company skills and resources needed to succeed in that segment. Offer superior value and gain advantages over competitors.
Market Targeting
Market targeting involves: Evaluating marketing segments.
Segment size, segment structural attractiveness, and company objectives and resources are considered.
Selecting target market segments.

Alternatives range from undifferentiated marketing to micromarketing.
Being socially responsible.

A products position is: The way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing products. Perceptual positioning maps can help define a brands position relative to competitors.

Identifying possible value differences and competitive advantages: Key to winning target customers is to understand their needs better than competitors do and to deliver more value. Competitive advantage: Extent to which a company can position itself as providing superior value. Achieved via differentiation.
The Marketing Environment and Competitor Analysis

SWOT analysis PEST analysis Five forces analysis
SWOT analysis
Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)
PEST analysis
Political factors Economic factors Socio-cultural factors Technological factors
Political/legal
Monopolies related legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation
Economic Factors
Inflation Employment Disposable income Business cycles Energy availability and cost
Sociocultural factors
Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education
Technological
New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology
Potential entrants Threat of entrants
Five forces analysis
Suppliers
Bargaining power
COMPETITIVE RIVALRY
Buyers Bargaining power
Threat of substitutes
Substitutes
Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.
Buyer Behaviour
Dominant Family Purchase - Cozenza 1985 Demographic Factors The Consumer Buying Process Maslows hierarchy of needs Socioeconomic classification scheme Types of buyer behaviour The Buying Decision Process Organisational Buyer Behaviour
Dominant Family Purchase - Cozenza 1985

PRODUCT Womens casual clothing Vacations Mens casual clothing Life insurance Homeowners insurance Household appliances DOMINANT DECISION MAKER Wife Syncratic (both) Husband Husband Husband Wife TYPICAL DECISION Price, style Whether to go, where Type, price, style Company, coverage Company, coverage Style, brand, price
Demographic Factors
Age Stage in family life cycle Occupation Economic circumstances Lifestyle social influence variables
family background reference groups roles and status
The Consumer Buying Process

Marketing Inputs
Product Price Promotion Place
Purchase Decisions
Consumer
Product Choice Location Choice Brand Choice Other Choices
Psychological Inputs Culture Attitude
Learning
Perception Based on Cohen (1991)
Maslows Hierarchy of Needs
Socioeconomic classification scheme

Class name A B C1 Social status Upper middle Middle Lower middle Occupation of head of household Higher managerial, administrative or professional Intermediate managerial, administrative or professional Supervisors or clerical, junior managerial, administrative or professional Skilled manual workers Semiskilled and unskilled workers Pensioners, widows, casual or lower-grade workers % of population 3 14
27 25 19 12
C2 D E
Skilled working Working Those at lowest levels of life
Types of buyer behaviour

Complex buyer behaviour e.g. Intel Pentium Processor Dissonance-reducing behaviour (brand reduces after-sales discomfort) Habitual buying behaviour e.g. salt - little difference variety seeking behaviour - significant brand differences e.g soap powder
The Buying Decision Process

Recognition of the need e.g a new PC Choice of involvement level (time and effort justified) e.g. two week ends Identification of alternatives e.g. Dell, PC World Evaluation of alternatives I.e. price, customer service, software support, printer/scanner package Decision - choice made e.g Epsom Action e.g buy Epsom model from Comet Post-purchase behaviour I.e. use, breakdowns, etc
Organisational Buyer Behaviour

The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers Kotler and Armstrong 1989
Characteristics of organisational buyer behaviour

Organisation purpose - Goodyear Tyres Derived demand - follows cars and lorries Concentrated purchasing - stockholdings of rubber Direct dealings - large purchaser of basic rubber - no intermediaries Specialist activities - learns about the product Multiple purchase influences - DMU - Decision making unit
Marketing Strategy

Selecting a Target Market Marketing Mix for International Markets Marketing Research Market Segmentation How Market Segmentation Works Segmenting Consumer Markets Determining What Customers Want Steps in Consumer Behavior Process Relationship Marketing Tools for Nurturing Customer Relationships One-to-One Marketing
Developing a Marketing Strategy

1.
2.
Study and analyze potential target markets and choose among them.
Create a marketing mix to satisfy the chosen market.
Developing a Marketing Strategy

Target Market and Marketing mix with in the Marketing Environment
Selecting a Target Market

Target market - group of people toward whom an organization markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences. Product strategy involves the nature of the product and its package design, brand names, trademarks, and product image.
Distribution strategy ensures that customers receive their purchases in the proper quantities at the right times and locations.
Promotional strategy blends advertising, personal selling, sales promotion, and public relations to achieve its goals of informing, persuading, and influencing purchase decisions. Pricing strategy is setting profitable and justifiable prices for the firms product offerings, sometimes subject to government scrutiny.
Marketing Mix for International Markets

Standardization - offering the same marketing mix in every market.
Adaptation - developing a unique marketing mix to fit each markets local competitive conditions, consumer preferences, and government regulations.
Mass customization - firms mass produce goods and services and add unique features to individual or small groups of orders.
Marketing Research
Marketing research the process of collecting and evaluating information to support marketing decision making. AC Nielson Consumer Research Secondary data: Previously published data from trade associations, advertising agencies, marketing research firms, and other sources. Primary data: Data collected through observation, surveys, and other forms of observational study. Data mining - computer searches of customer data to detect patterns and relationships.
Market Segmentation
Market segmentation the process of dividing a total market into several relatively homogeneous groups.
Criteria for market segmentation
How Market Segmentation Works

Methods of segmenting consumer and business markets
Segmenting Consumer Markets

Geographic Segmentation Divides market into homogeneous groups on the basis of their locations. Demographic Segmentation Divides market on the basis of various demographic or socioeconomic characteristics: gender, income, age, occupation, household size, stage in the family life cycle, education, and ethnic group. Psychographic Segmentation Divides consumer market into groups with similar psychological characteristics, values, and lifestyles. Product-Related Segmentation Divides market based on buyers relationship to the good or service.
Segmenting Business Markets

Geographic segmentation targets geographically concentrated industries. Demographic, or customer-based, segmentation a good or service intended for a specific organizational market (i.e. healthcare).
End-use segmentation - focuses on the precise way a B2B purchaser will use a product.
Determining What Customers Want

Consumer behavior - actions of ultimate consumers directly involved in obtaining, consuming, and disposing of products and the decision processes that precede and follow these actions. Personal factors: needs and motives, perceptions, attitudes, selfconcept.
Interpersonal factors: cultural, social, and family influences.

Business buying behavior - often includes a variety of influences from multiple decision makers.
Steps in Consumer Behavior Process
Relationship Marketing
Relationship marketing - developing and maintaining long-term, cost-effective exchange relationships with partners. Consumers enter into relationships only if there is some benefit to them.
Thank you.

Marketing Introduction

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Introduction to Marketing

The First Industrial Nation

Why did the Industrial Revolution begin In England?

James Watts Steam Engine

Advancements in Science and Medicine

The Transportation Revolution

Any color-so long as its black.

Impacts of the Industrial Revolution

Marketing Orientation Stages

OLD view of marketing:

NEW view of marketing:

Why is Marketing Important?

The Marketing Process

Needs, Wants, and Demands

Wants + Buying Power = Demand

Need/ Want Fulfillment

Customer Value and Satisfaction

2. How can we best serve these customers?

Choosing a Value Proposition

The Marketing Concept

Customer Perceived Value

Steps in Developing Marketing Strategy

Steps in Developing Marketing Strategy

The Marketing Mix

Why is marketing planning necessary?

Criticisms of marketing planning

Objectives of the marketing plan

The contents and structure of the marketing plan

Cautionary notes for effective planning

Behavioural planning problems

Standard Planning Framework

Marketing Information Systems

MKIS - Marketing Information Systems

The Marketing Research Process

Terminology of Marketing Research

Marketing Research Techniques

The components of a computerised MKIS

The components of a computerised MKIS

Customer-Driven Marketing Strategy

Market Segmentation and Targeting

Differentiation and Positioning

Psychographic-social class, lifestyle, or

consumer knowledge, attitudes, uses, or responses to a product

Evaluating Market Segments

Segment structural attractiveness:

Company objectives and resources:

Selecting target market segments.

Being socially responsible.

Differentiation and Positioning

Differentiation and Positioning

The Marketing Environment and Competitor Analysis

Five forces analysis

Buyers Bargaining power

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Dominant Family Purchase - Cozenza 1985

The Consumer Buying Process

Product Price Promotion Place

Product Choice Location Choice Brand Choice Other Choices

Psychological Inputs Culture Attitude

Maslows Hierarchy of Needs

Socioeconomic classification scheme

Skilled working Working Those at lowest levels of life

Types of buyer behaviour