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1 What is Marketing Dr. Vesselin Blagoev. 2 Design a customer-driven marketing strategy Understand the marketplace and customer needs and wants Construct.

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Presentation on theme: "1 What is Marketing Dr. Vesselin Blagoev. 2 Design a customer-driven marketing strategy Understand the marketplace and customer needs and wants Construct."— Presentation transcript:

1 1 What is Marketing Dr. Vesselin Blagoev

2 2 Design a customer-driven marketing strategy Understand the marketplace and customer needs and wants Construct an Integrated marketing program that delivers superior value A simple model of the mktg process Build profitable relationships and create customer delight Capture value from customers to create profits and customer equity

3 3 Needs MarketsWants TransactionsDemand ExchangeProducts Core Marketing Terms

4 4 Needs Need A sense that something necessary is missing, a state of felt deprivation. Basic physical needs for food, clothing, warmth, and safety; Social needs for belonging and affection; Individual needs for knowledge and self-expression.

5 5

6 6 Wants Wants The manner in which individuals seek to satisfy a need as consumer decision making is influenced by individual tastes and social factors The form taken by human needs as they are shaped by culture and individual personality

7 7 Market offering Some combination of products, services, information, or experiences offered to a market to satisfy a need or want (Kotler, 2008)

8 8 Marketing myopia The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products (Armstrong and Kotler, 2011, p.35)

9 9 Customer perceived value The customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers (Armstrong and Kotler, 2011, p.41)

10 10 Customer satisfaction The extent to which a product’s perceived performance and value matches a buyer’s expectations

11 11 Customer equity The total combined customer lifetime values of all the company’s customers (Armstrong and Kotler, 2011, p.50)

12 12 Customer relationships management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction (Armstrong and Kotler, 2011, p.41)

13 13 Demand and Supply Demand The ability and willingness of consumers to purchase a product Quantity demanded Maximum quantity of a good that buyers are willing and able to buy at a given price (over a fixed period of time)

14 14 Demand The Law of Diminishing Demand: If the price of a product is raised, a smaller quantity will be demanded and if the price of a product is lowered, a greater quantity will be demanded

15 15 Demand Curve Quantity Price P1P1 P2P2 Q1Q1 Q2Q2

16 16 Demand curve P1P1 P2P2 Q1Q1 Q2Q2 Price Quantity

17 17 Demand curve The general demand relationships are typical for all products A particular demand curve has meaning only for a particular market

18 18 Elastic demand Elastic demand means that if prices are dropped, the quantity demanded will increase enough to increase total revenue Inelastic demand ?

19 19 Elastic demand Price Q=Units demanded

20 20 Inelastic demand Price Q=Units demanded

21 21 Demand curve The whole demand curve is almost never only elastic, or only inelastic. The elasticity refers to the change in total revenue between two points on the curve – not along the whole curve

22 22 Demand and Supply Supply The ability and willingness of producers to provide wanted goods and services Quantity supplied Maximum quantity of a good that sellers are willing and able to supply at a given price (over a fixed period of time)

23 23 Demand & Supply Demand Supply Equilibrium point

24 24 Marketing functions Product / Service Mgmt Pricing Mktg Communications Selling Financing Marketing activities can be categorized within several functions Distribution Mktg- Information Mgmt Marketing Education Resource Center (2000), Columbus, Ohio

25 25 The operational functions of marketing The operational functions of marketing Advertising Sales promotionPublic relations StockholdingPersonal selling Servicing Risk-taking Financing Buying Transporting Market research Forecasting Pricing MerchandisingBranding Publicity

26 26 Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption and might satisfy a need or want (Armstrong and Kotler, 2011, p.237)

27 27 Market A group of potential buyers with common needs or problems that can be met by specific products or services Consumer market Industrial market Reseller market Institutional market Customer Consumer (user)

28 28Markets ConsumerOrganizational Individuals who purchase to benefit from consumption and not for the main purpose of making a profit Buyers who purchase for resale, direct use in producing the goods or in general daily use in a business

29 29 Markets Open markets Regulated markets Unregulated markets De-regulated markets

30 30 Open markets Markets with all of the following characteristics: Single standardized product Many buyers Many sellers Buyers and sellers have equal access to all available information relevant to the market.

31 31 Open markets The products are rarely homogeneous. Apples vary by variety and packaging making comparison by the buyer difficult. It affects Condition 1. The numbers of potential buyers and the demand for products is constantly changing. It affects Condition 2.

32 32 Open markets The individual purchaser usually has a limited choice of supplier. What about Condition 3 ? The buyers usually do not have as much information about the market as does the supplier. It affects Condition 4.

33 33 Regulated markets The regulations governing an open market are designed to ensure that it is able to operate with none of the participants having an unfair advantage over the others. Regulated markets recognize that there is a lack of balance between the parties and therefore this type of market has rules that are intended to ensure a degree of fair trading.

34 34 Unregulated and Deregulated markets Unregulated markets : street market The buyer is ‘on their own’. Caveat emptor! De-regulated markets : Removal of artificial monopoly restrictions in order to encourage free competition and increase customers’ choice. telecommunications; e-commerce

35 35 Exchange is : A marketing transaction, in which the buyer gives something of value to the seller in return for goods or services

36 36 A simple exchange process Supplier Customer Something of value Goods, services, benefits Something of value Money, exchange goods

37 37 10 exchanges Pots FruitsMeat BasketsKnives

38 38 A market – 5 exchanges Pots FruitsMeat BasketsKnives Central Market Middleman

39 39 Exchanges Involving Intermediaries Producer Wholesaler Retailer Consumer

40 40 Definition 1 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 its stakeholders (AMA,2005)

41 41 Definition 2 Marketing is the process by which the companies create value for customers and build strong customer relationships in order to capture value from customers in return Armstrong and Kotler (2011)

42 42 Definition 3 Marketing is the management process responsible for identifying, anticipating and satisfying customers’ requirements profitably British Chartered Institute of Marketing, UK

43 43 Definitions 4 and 5 Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others (Kotler et al, 2005) Marketing is the study of exchange processes especially those associated with the provision of goods and services (Adcock et al, 2001)

44 44 Definitions 6 and 7 Marketing is the process of planning and executing the various activities, which are involved in selling goods, services, or ideas and which lead to an exchange between a seller and a buyer (Keegan et al, 1992) Marketing is a human activity directed at satisfying needs and wants through exchange processes (Kotler, 2001)

45 45 Definitions 8 Marketing is the management process that seeks to maximise returns to shareholders by developing relationships with valued customers and creating a competitive advantage (Doyle, 2004)

46 46 Three major goals Satisfaction of customer needs Attainment of a competitive advantage over the rivals Increasing the value of the company for the shareholders

47 47 Selling vs. Marketing Concepts

48 48 Marketing mix

49 49 Influences on Decisions of Companies Uncontrollable market influences Controllable company decisions Product Price Place Promotion

50 50 Marketing mix Target market Marketing mix Product Promotion Price Place Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties List price, Discounts, Allowances, Payment Terms, Credit terms Channels, Locations, Inventory, Transport Advertising, Personal selling, Sales Promotion, PR

51 51 PROMOTION PLACE PRICE Fact Finding & Analysis Physical Handling Servicing Display Packaging Promotions Advertising Personal Selling Channels of Distribution Branding Pricing Product Planning PRODUCT Borden 1964McCarthy 1978 Source: Based on Borden, N. (1964) ‘The concept of the marketing mix’, Journal of Advertising Research, June, 2– 7; McCarthy, E.J. (1978) Basic Marketing: A Managerial Approach, 6th edn. Homewood, IL: Richard D. Irwin Elements of Marketing Mix – 4P

52 52 PROMOTION PLACE PRICE PRODUCT New product development Brand management Features, Benefits Packaging & After-sales Channel management Retail location Retail image Logistics Costs, Profit, Liquidity Competitiveness Value, Incentives Marketing communications mix, Integrated communications Marketing Mix – 4P

53 53 5S of e-marketing objectives Sizzle SaveSpeak Serve Sell Wider distribution, promotion and sales Adding value by extra benefits online Asking quest, dialog, use web Save by using the online services Extent the brand online

54 54 6C of Online Value Proposition The Chartered Institute of Marketing Cost reduction Choice Convenience Community Content Custo- misation

55 55 Customer Service Price Promotion Physical Evidence Processes People Place Product Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth Heinemann 7P of Customer Service & Mktg Mix

56 56 COMMUNICATION CONVENIENCE COST TO CUSTOMER NEEDS/WANTS PROMOTION PLACE PRICE PRODUCT/ SERVICE Source: Based on Kotler, P., Armstrong, G., Saunders, J. and Wing, V. (1999) Principles of Marketing, 2nd European Edition. New York: Prentice Hall From ‘4Ps’ to ‘4Cs’

57 57 Value & Types of Utility Utility Value that comes from satisfying human needs Form Time Place Possession

58 58 Form Utility : results from changes in the tangible parts of the product or service, i.e. made of more durable material Time Utility : available when the customer needs it Place Utility : Location, location, location Possession Utility : affordability or lack of resources. Using credit options, payment in installments Value & Types of Utility

59 59 Customer value is formed by Product benefits Service benefits Image benefits Relational benefits Monetary costs Time costs Energy costs Psycholo- gical costs Other costs Perceived benefits Perceived sacrifice

60 60 Income and purchasing power Disposable income Money that consumers have left after paying taxes Purchasing power (PP) The potential ability of consumers to buy goods and services PP=Disposable income + Available credit Discretionary income Money that consumers have left after paying taxes and making essential personal and household expenditures

61 61 Marketing Concept Because the purpose of business is to create and keep customers, it has only two central functions – marketing and innovation. The basic function of marketing is to attract and retain customers at a profit Peter Drucker

62 62 The Marketing Concept The marketing concept, also referred to as marketing orientation, can be expressed as: The achievement of corporate goals through meeting and exceeding customer needs better than the competition

63 63 Value-Based Marketing Marketing is the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage (Doyle, 2009)

64 64 The Changing Role of Mktg PastFuture Objective of Mktg Create customer value Create shareholder value Marketing strategy Increase market share Develop and manage marketing assets Assumptions Positive market performance leads to positive fin. results Marketing strategies need to be tested in value terms Contribution Knowledge of buyers, competitors, channels Knowledge how to lever mktg to increase shareholder value Focus of marketing Marketing orientationGeneral management

65 65 The Changing Role of Mktg PastFuture Concept of AssetsTangibleIntangible RationaleImproves profitsIncreases shareholder value Performance measures Market share, customer satisfaction, return on sales and investment Shareholder value: discounted cash flows

66 66 Marketing orientations Production orientation Product orientation Sales (selling) orientation Classical marketing orientation Societal marketing orientation Relationship marketing Value-Based Marketing

67 67 Production orientation Production capabilities Manufacture product Aggressive sales effort Customers

68 68 Product orientation New product development Manufacture product Aggressive sales efforts Customers Develop a better mousetrap and the world will beat a path to your door

69 69 Sales orientation Manufacture product Aggressive sales effort Customers Aggressive advertising

70 70 Marketing orientation Customer needs Potential Market opportunities Marketing products and services Customers

71 71 Marketing orientation Product orientation Customer orientation Competitor orientation Marketing orientation Customer oriented Competition oriented NoYes No Yes

72 72 Societal marketing concept It is based on the understanding that the customers’ needs must be satisfied only if they correspond to the long-term interests of the society

73 73 Marketing orientations OrientationProfit driver Time frame Characteristics ProductionProductio n methods Until 1960 Improve production and distribution to reduce costs ProductQuality of product Until 1970 Quality is paramount. Focus on product, not on needs SellingSelling methods Effective selling and promotion are the major drivers to success MarketingNeeds & Wants Focus of satisfying the needs and wants

74 74 Marketing orientations OrientationProfit driver Time frame Characteristics Societal marketing Benefit to society Same as marketing with the proviso that no harm will be done to society or nature Relationship marketing Building and retaining good relations with the customers Best possible attention, customer services and therefore build customers’ loyalty Value-Based marketing Value of the shares Do everything to increase the value of the shares

75 75 Ethics and social responsibility Ethics : Moral principles and values that govern the actions and decisions of an individual or group. They serve as guidelines on how to act rightly and justify when faced with moral dilemmas Laws : Society’s values and standards that are enforceable in the courts Can make marketing decisions that are legal but unethical Can make marketing decisions that are illegal but ethical

76 76 Consumer Bill of Rights (1962) Right to safety Right to be informed Right to choose Right to be heard

77 77 Laws reduce confusion Socially responsible packaging: Federal Fair Packaging and Labeling Act (USA, 1966) – the consumer goods must be clearly labeled in easy to understand terms. Do you know the main points of the law in Bulgaria?

78 78 Consumerism A social movement that seeks to increase the rights and powers of consumers Nader R.(1966) Unsafe at any speed, Pocket Books, NY

79 79 Ethical exchange relationships Both buyer and seller should be better off after a transaction Ethical choices are based on personal moral philosophy Moral idealism Utilitarianism “Justice” perspective Social responsibility

80 80 LATE MARKETING ERA Supply >> Demand Demand management SOCIETAL MARKETING Balance the interests of the company and the society EARLY MARKETING ERA Supply > Demand Stiff competition SELLING ERA Demand = Supply Weak competition PRODUCTION ERA Demand > Supply Producers run the show BARTER ERA Self-supply Markets do not exist History of Marketing

81 81 LATE MARKETING ERA Supply >> Demand Demand management SOCIETAL MARKETING Balance the interests of the company and the society EARLY MARKETING ERA Supply > Demand Stiff competition SELLING ERA Demand = Supply Weak competition History of Marketing MARKETING RELATIONSHIPS Supply >> Demand Know thy customer

82 82 Why the marketing is important? Marketing is the science of exchange Exchange is the foundation of organization activities Unless the organizations can encourage exchange, their resource bases disappear Move to marketing in many sectors. Marketing concepts can be used for Business, Services, Financial services, Non-for-profit, Politics, Schools, Public opinion

83 83 Marketing must be POISE Hugh Davidson argues that successful marketing is marked with POISE. It must be: P Profitable O Offensive (rather than defensive) I Integrated S Strategic (future-oriented) E Effective (it gets results)

84 s1960s1970s1980s1990s2000s Consumer marketing Industrial marketing Non-profit marketing Services marketing Relationship marketing ? Source: Adapted from Christopher, M., Payne, A. and Ballantyne, D. (1991) Relationship Marketing. London: Butterworth Heinemann Developments in Marketing

85 85 Consumer Gds Relationship Marketing Services Marketing Industrial (B2B) Marketing Nordic School Network Approach Anglo-Australian Approach Strategic Alliances & Partnership Research (Egan, 2001) Influences on RM

86 86 Source: Based on Brodie, R.J., Coviello, N.E., Brookes, R.W. and Little, V. (1997) ‘Towards a paradigm shift in marketing; an examination of current marketing practices’, Journal of Marketing Management, 13(5), 383–406 RM Definitions Database Marketing Business/Customer Partnering Customer Partnering (Company Relationships) Catch-all Category Breadth of relationship definition Most generally accepted definitions of relationship marketing

87 87 Relationship Marketing direct marketing customer relationship management (CRM) micromarketing loyalty-based marketing wraparound marketing symbiotic marketing relevance marketing frequency marketing dialogue marketing database marketing data-driven marketing one-to-one marketing ‘segment-of-one’ marketing customer partnering individual marketing bonding integrated marketing interactive marketing Terms used either as substitute for or to describe similar concepts to Relationship Marketing Source: Based on Vavra, T.G. (1992) Aftermarketing. Homewood, IL: Richard D. Irwin; Buttle, F.B. (1996) Relationship Marketing Theory and Practice. London: Paul Chapman; Tapp, A. (1998) Principles of Direct and Database Marketing. London: Financial Times Management/Pitman Publishing

88 88 RM Definitions Christopher et al (1991): RM is where customer service quality management marketing come together Other definitions stress time frame and commitment

89 89 Grönroos (1994) “identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises” Source: Grönroos, C. (1994) ‘From marketing mix to relationship marketing: towards a paradigm shift in marketing’, Management Decisions, 32(2), 4–20 RM Definitions

90 90 Source: Adapted from Gordon, I.H. (1998) Relationship Marketing. Etobicoke, Ontario: John Wiley & Sons Relationship Marketing Seeks to create new value for customers and share it Recognises the key role that customers have both as purchasers and in defining the value they wish to achieve. Businesses are seen to design and align processes, communication, technology and people to achieve customer value. Represents continuous cooperative effort between buyers and sellers. Recognises the value of customer’s purchasing lifetimes (i.e. lifetime value) Seeks to build a chain of relationships within the organisation (to create customer value) and between the organisation and its main stakeholders including suppliers, distr.channels, intermediaries,shareholders.

91 91 TM versus RM TRANSACTIONS Single sale focus Discontinuous customer contact Features orientation Short time scale Little service emphasis Low commitment Quality a production issue RELATIONSHIPS Retention focus Continuous customer contact Benefits orientation Long time scale High service emphasis High commitment Quality everyone’s concern Source: Adapted from Payne, A., Christopher, M. and Peck, H. (eds) (1995) Relationship Marketing for Competitive Advantage: Winning and Keeping Customers. Oxford: Butterworth Heinemann

92 92 RELATIONSHIP MARKETING TRADITIONAL MARKETING TM/RM Continuum Importance of Core Product Importance of Customer Service TM/RM Continuum


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