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 the stakeholders. Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others. Marketing is managing profitable customer relationships. Goals: 1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction.

Importance of Marketing
Financial success often depends on marketing ability due to sufficient demand for products and services so the companies can make a profit Newly empowered customers and new competitors make the companies rethink their business models : Change or Die

Simple Marketing System

Communication

Industr y (a collection of sellers)

Goods/ser vices Money

Market (a collection of Buyers)

Infor mation

Scope of Marketing
o o o o o Goods Services Events Experiences Persons o o o o o Places Properties Organizations Information Ideas

Marketing people are involved in 10 types of entities: 1) 2) 3) 4) 5) 6) Goods like eggs, steel, cars . Services like airlines, hotels, barbers. Experiences like Walt Disney worlds magic kingdom, at planet Hollywood. Events like Olympics, trade shows, sports events. Persons like celebrity marketing by making major film star as brand ambassador etc. Places like cities, states, nations to attract tourists, factories, company headquarters, and new residents, like we use TAJ or say Neonatal. 7) Properties like real estate owners market properties or agent markets securities

8) Organizations thru Corporate identity ads like by using tag line Lets make things better, or like Richard Branson (virgin) or Phil knight of Nike are some identity 9) Information likes encyclopedias, CDs and visits the Internet for information. 10) Ideas like the buyer of a drill are really buying a hole. Church should market itself as a place of worship or a community center.

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Marketing managers face a host of decisions, from major ones such as what product to make, what features, how many sales persons to hire etc. These questions vary according to marketplaces. Consider following four markets 1) Consumer market: mass consumer goods and services such as soft drinks, toothpaste, air travel. 2) Business Markets: Companies selling business goods and services face well trained and well informed professional buyers. They buy goods for their utility or to make or resell a product to others. 3) Global markets: goods and services for global marketplace. They have to decide which country to enter, how to enter, has to have a fit the cultural practices etc. 4) Nonprofit and Governmental Markets: goods to nonprofit organizations like churches, universities, governmental agencies need to be priced carefully. They have to follow long government procedures to get this market.

Core Marketing Concepts

Target Markets and Segmentation o o Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Marketers can rarely satisfy everyone in the market. So they start with market segmentation. Identify and profile different groups of buyers.

Markets: A market is defined as a set of actual and potential buyers of a product or service. Sellers constitute an industry Consumers and customers constitute a market.

o o o o o

Need markets (the diet seeking market) Product markets (the shoe market) Demographic markets (the youth market) Geographic market (the French market) Other markets like voter markets, donor markets and labor markets.

Marketers and prospects: Marketer is someone seeking response in the form of attention, purchase, vote and donation.

Needs, Wants and Demand: Needs describe basic human requirements.

Types of Needs
Physical: Food, clothing, shelter, safety Social: Belonging, affection Individual: Learning, knowledge, self-expression Needs become wants when they are directed to specific objects that might satisfy the need. Need for food --- > Want for a Hamburger Demands are wants for specific products backed by willingness and ability to pay. Wants + Buying Power = DEMAND Product or offering: A product is any offering that can satisfy a need or want. Major typed of basic offerings: Goods, services, experiences, events, persons, places, properties, organizations, information and ideas. A brand is an offering from a known source. Value and satisfaction: Value is what customer gets and what he gives. Customer gets benefits and assumes costs. Benefits include functional and emotional benefits. Costs include monetary costs, time costs, energy costs and psychic cost. Benefits (functional and emotional benefits) Value = --------------- = -----------------------------------------------------------------------------------Costs (include monetary costs, time costs, energy costs and psychic cost) Value of customer offering can be increased by: Raise benefits Reduce costs Raise benefits AND reduce costs Raise benefits by MORE THAN the raise in costs Lower benefits by LESS THAN the decrease in costs If performance is lower than expectations, satisfaction is low. Exchange and transactions: Exchange is one of the four ways in which a person can obtain a product. Exchange is core concept of marketing. Exchange involves obtaining a desired product from someone by offering something in return. For exchange potential to exist five conditions must be satisfied: At least two parties Each party has something that might be of some value to the other party. Each party is capable of communication and delivery Each party is free to accept or reject offer Each party believes that it is appropriate or desirable to deal with the other party.

Marketing Channels:
To reach a target market marketer uses three different kinds of marketing channels. Communication channel: The marketer uses communication channels to deliver and receive messages from target buyers. These consist of dialogue channels (e mail, toll free numbers).

Distribution channels: To display and deliver the physical product or service to the buyer or user. They
include warehouses, transportation vehicles and various trade channels such as distributors, wholesalers, retailers etc. Selling channels: They include not only the distributors and retailers but also the banks and insurance companies that facilitate transactions.

Competition:
Competition includes all the actual and potential rival offerings and substitutes that a buyer might consider.

Four levels of competition:

Brand competition: Similar products or services to the same customers at similar prices. Industry competition: All companies making the same product or the class of product. Form competition: All companies manufacturing the products that supply the same service. Generic competition: All companies that compete for the same consumer dollars.

Example: Company Volkswagen

Brand competition: Honda, Toyota and other medium price automobiles Industry competition: All automobile manufacturers Form competition: Automobiles + Motorcycles + Bicycles + Trucks Generic competition: Consumer durables + Foreign Vacations + New Homes

Marketing Mix
Marketers use numerous tools to elicit desired responses from their target markets. These tools constitute a marketing mix.

Note that the four Ps represent the sellers view of the marketing tools available for influencing the buyer. From a buyers point of view, each marketing tool is designed to deliver a customer benefit. Robert Lauterborn suggested that the sellers four Ps correspond to the customers four Cs.

MARKETING STRATEGIES: INTRODUCTION STAGE

Sales growth tends to be slow at this stage because it takes time to roll a new product and fill dealer pipelines. The key reasons are: Delays in the production capacity Technical problems Delays in obtaining adequate distribution through retail outlets Customer reluctance to change established behaviors Product complexity Fewer buyers Profits are negative or low in the introduction stage because of low sales and heavy distribution and promotion expenses because much money is needed to attract distributors

Marketing Mix Modifications

Product managers may also try to stimulate sales by modifying other marketing mix elements. Prices: Would price cut attract new buyers? If so, should list price be lowered, or should price be lowered through price specials, volume or early purchase discounts, freight cost absorption or easier credit term. Distribution: can the company obtain more product support and display in existing outlets? Can more outlets be penetrated? Can the company introduce the product into new distribution channels? Advertising: Should advertising expenditure be increased? Should message or copy be changed? Should the media mix be changed? Should the timing, frequency or size of ads be changed? Sales Promotion: should the company setup sales promotion-trade deals, cents-off coupons, rebates, warranties, gifts and contests? Personal selling: should the number or quality of salespeople be increased? Should the basis for sales force specialization be changed? Should sales territories be revised? Should sales force incentives be revised? Can sales call planning be improved. Services: can the company speed up delivery? Can it extend

Marketing strategies: Decline stage

Sales decline for a number of reason like technological advances, consumer tastes, increasing domestic or foreign competition. All lead to overcapacity, increased price reduction and profit erosion. As sales and profit decline, some firms withdraw from the market, others reduce number of products in the market or withdraw from weaker market segments or cut down on product promotion.

Channel Levels
Consumers marketing 1. Zero level channel: door to door sales, home parties, mail order, tele marketing, TV selling, Internet selling, and manufacturer owned stores. 2. One level channel: one intermediary, such as retailer.

3. Two level channel: wholesalers and retailers. 4. Three level channel: wholesalers, jobbers and retailers.

Analyzing customer needs

In designing the marketing channel, the marketer must understand the service output level desired by the target customer. Lot size The no of units the channel permits a typical customer to purchase on a occasion Waiting time The average time customers of that channel wait for receipt of goods Spatial convenience The degree to which the marketing channels makes it easy for customers to purchase the product Product variety The assortment breadth provided by the marketing channel Service backup The add-on services provided by the channel.

Control
The process of monitoring activities to ensure that they are being accomplished as planned and of correcting any significant deviations. The purpose of control To ensure that activities are completed in ways that lead to accomplishment of organizational goals. Designing Control Systems Market Control Emphasizes the use of external market mechanisms to establish the standards used in the control system. External measures: price competition and relative market share Bureaucratic Control Emphasizes organizational authority and relies on rules, regulations, procedures, and policies. Clan Control Regulates behavior by shared values, norms, traditions, rituals, and beliefs of the firms culture.

Why is control important?

Planning Controls let managers know whether their goals and plans are on target and what future actions to take. Empowering employees Control systems provide managers with information and feedback on employee performance. Protecting the workplace Controls enhance physical security and help minimize workplace disruptions

The process of control

1. Measuring actual performance. a. Personal observation, statistical reports, oral reports, and written reports b. Management by walking around (MBWA) i. A phrase used to describe when a manager is out in the work area interacting with employees 2. Comparing actual performance against a standard. a. Comparison to objective measures: budgets, standards, goals b. Range of variation i. The acceptable parameters of variance between actual performance and the standard 3. Taking action to correct deviations or inadequate standards. a. Immediate corrective action i. Correcting a problem at once to get performance back on track b. Basic corrective action i. Determining how and why performance has deviated and then correcting the source of deviation c. Revising the standard i. Adjusting the performance standard to reflect current and predicted future performance capabilities

Measuring: how and what we measure

Sources of information 1. Personal observation 2. Statistical reports Control criteria Employees Satisfaction Turnover Absenteeism 3. Oral reports 4. Written reports

Budgets Costs Output Sale

Comparing
Determining the degree of variation between actual performance and the standard. Significance of variation is determined by: o o The acceptable range of variation from the standard (forecast or budget). The size (large or small) and direction (over or under) of the variation from the standard (forecast or budget).