CHAPTER 1 FUNDAMENTALS OF MARKETING

LEARNING OBJECTIVES
Nature of marketing Difference among Production Concept, Selling Concept, Product Concept and marketing Concept Service concept Experience concept Efficiency versus Effectiveness Market-driven versus internally driven businesses Nature of customer centric organizations Segmentation, Targeting, Positioning Marketing mix Relationship between marketing orientation and business performance

UNDERSTANDING MARKETING
Marketing: The process of finding customer needs and serving those needs profitably Profit from customer satisfaction Provide desired value to customers Retain customers to enhance profitability Is a central business function

Every employee is a marketer Marketing should champion cause of customer

Customer needs central to company Customer satisfaction companys ultimate goal

Meet customer needs better than competition

MARKETING CONCEPT

Communicate customer needs to other departments

Inward looking orientation

Profits by Low prices, High sales volume

PRODUCTION CONCEPT

Focus on reducing cost of production

Achieve Economies of scale

Sell what is made Aggressive persuasion and heavy promotional expenditure Marketing makes selling redundant

SELLING CONCEPT

Focus on continuous product improvement

MARKETING MYOPIA

Keep track of peripheral developments

Product merely means of satisfying customer need

SERVICE CONCEPT
Customers buy services, not products Sell services, not title to products Unwillingness of marketer and customer to experiment Automobiles, carpeting, furnishing, and for most consumer durable items

Air conditioner provides cool ambience

EXPERIENCE CONCEPT
Create an experience
Eliminate contradictions, around the product or distractions from the theme Increases memorability Memorabilia as physical Reaffirm with cues at reminder of experience every customer interaction point Engage more senses an experience engages to Build experience increase memorability around a well defined and effectiveness theme Experiences are Introduce cues to inherently personal for a affirm the nature of customer experience

EFFICIENCY VS EFFECTIVENESS
Ineffective Effective

Inefficient

Goes out of business quickly

Survives

Efficient

Dies slowly

Does well, Thrives

MARKET FOCUSED BUSINESS

INTERNALLY DRIVEN BUSINESS

PROFILE OF CUSTOMER-CENTRIC BUSINESS

Shared values and beliefs
Clarity in communication

Understanding and responding to customers

Seek competitive advantage

Gather market intelligence

Organization structure reflects marketing orientation

Intelligence disseminated throughout company

Responsive

PRODUCT

PROMOTION

MARKETING MIX

PRICE

PLACE

EFFECTIVE MARKETING MIX

 Club together similar customers in a group Different Marketing Mix for each segment Cannot serve all market segments

Segments that a company chooses to serve Can serve one or more segments

Creating a distinct offer and communicating it to customers Homogeneous market, stronger positioning Continuous process

P r o f i t a b i l i t y Low

Commodity businesses

P r o f i t a b i l i t y High

NonCommodity businesses

Low Market orientation

High

Market orientation