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MARKETING: SCOPE AND CORE CONCEPTS Samir K Mahajan.

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1 MARKETING: SCOPE AND CORE CONCEPTS Samir K Mahajan

2 NEEDS, WANTS, AND DEMAND Needs are the basic human requirements. People need food, air, water, clothing, and shelter to survive. People also have strong needs for recreation, education, and entertainment. These needs become wants when they are directed to specific objects that might satisfy the need. An individual needs food but may want a hamburger, fish-fries, a mango, a pizza, rice and a soft drink. Wants are shaped by one's society. Demands are wants for specific products backed by an ability to pay and willingness to pay. Many people want a Mercedes; only a few are willing and able to buy one. Companies must measure not only how many people want their product but also how many would actually be willing and able to buy it. The marketer must try to understand the target market's needs, wants, and demands. Samir K Mahajan

3 OFFERINGS AND BRANDS Companies address needs by putting forth a value proposition – a set of benefits they offer to customers to satisfy their needs. The intangible value proposition is made physical by an offering, which can be a product, a combination of products, services, information, and experiences. A brand is an offering from a known source. Brand is the "name, term, design, symbol, or any other feature that identifies one seller's product distinct from those of other sellers." Brands are used in business, marketing, and advertising. A brand name such as KFC carries many associations in the minds of people: chicken fries, cold drinks, burger, fun, children, convenience. These associations make up the brand image. All companies strive to build brand strength—that is, a strong, favourable, and unique brand image. Samir K Mahajan

4 What is Marketing? Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. For example when eBay recognized that people were unable to locate some of the items they desired the most, it created an online auction clearinghouse. It defines, measures and quantifies the size of the identified market, and the profit potential. It pinpoints which segments the company is capable of serving the best, and thus it designs and promotes the appropriate products and services. (Philip Kotler) Marketing includes diverse disciplines like sales, public relations, pricing, packaging, distribution, promotions and so on. Marketing’s key processes are: (1) opportunity identification, (2) new product development, (3) customer attraction, (4) customer retention and loyalty building, and (5) order fulfilment. A company that handles all of these processes well will normally enjoy success. But when a company fails at any one of these processes, it will not survive. Samir K Mahajan

5 What is the mission of marketing? According to Philip Kotler, at least three different answers have been given to the question of mission of marketing. o The earliest answer was that the mission of marketing is to sell any and all of the company’s products to anyone and everyone. o A second, more sophisticated answer, is that the mission of marketing is to create products that satisfy the unmet needs of target markets. o A third, more philosophical answer, is that the mission of marketing is to raise the material standard of living throughout the world and the quality of life. Marketing’s role is to sense the unfulfilled needs of people and create new and attractive solutions. The modern kitchen and its equipment provide a fine example of liberating women from tedious housework so that they have time to develop their higher capacities. What is Marketing Management? Marketing management is a business discipline which focuses on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Samir K Mahajan

6 SOME DEFINITIONS OF MARKETING  Marketing is the process of discovering and translating consumer needs and wants into products and services, creating demand for these products and services, and then in turn expanding this demand. —H.L. Hansen.  Marketing is the business process by which products are matched with markets and through which transfer of ownership are affected. —Edward W. Cundiff  According to the American Marketing Association (AMA) Board of Directors, Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.  Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” — Philip Kotler Samir K Mahajan

7 SCOPE OF MARKETING OR WHAT ARE MARKETED Marketing is a dynamic business process. Due to change of time, the scope of marketing has been changed. Marketing people are involved in marketing 10 types of entities: goods, services, experiences, events, persons, places, properties, organizations, information, and ideas which forms the scope of marketing. o Goods: Good is defined as something tangible that can be offered to market to satisfy a need or want. Exchange of physical goods result in ownership. Goods constitute the bulk of most countries’ production and marketing effort. The total marketing programs are centred with goods. In a developing country like India fast moving consumer goods (shampoo, bread, ketchup, cigarettes, newspapers etc.) and consumer durables (television, gas appliances, fans etc.) are produced and consumed in large quantities every year. o Services: Service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Services include the work of professionals lawyers, doctors, teachers etc, hotels, airlines, banks, insurance companies, transportation corporations etc. Production of service may or may not be tied to a physical product. Many market offerings consists of a variable mix of goods and services. At the pure, service end would be a doctor listening to a patient or watching movie in a cinema hall; and at a more tangible level in fast food centre, the consumers consume both a good and a service. As economies advance, the share of service in gross domestic product increases. Samir K Mahajan

8 SCOPE OF MARKETING contd. o Experiences: By mixing several services and goods, one can create, stage and market experiences. For example, water parks, zoos, museums etc. provide the experiences which are not the part of routine life. There is a market for different experiences such as climbing Mount Everest or Kanchanjunga, travelling in Palace on Wheels, rope ways, river rafting, a trip to Moon, travelling in Trans Siberian Railways across five time zones etc. o Events: Marketers promote time–based, theme-based or special events such company anniversaries, sports events (FIFA world cup, IPL, as Olympics, ), artistic performances (KK live concert), trade shows (Book Fair, Automobile fair), award ceremonies (Film fare awards, Screen awards), beauty contests (Miss World, Miss Universe, Miss India, Miss Chandigarh), Other notable example is organising of Ardh Kumbh and Maha Kumbh at Hardwar, Ujjain, Nasik etc. during different years. o Persons: Celebrity marketing has become a major business. Film stars, singers, cricketers, footballer celebrity cook are has an agent, personal manger and ties with public relation agency, and getting help from celebrity marketers. In the 18 th parliamentary election, BJP’s election strategy centres around Narendra Damodar Modi, that’ s power of personality. o Places: Cities, states, regions and whole nations compete actively to attract tourists, factories, company headquarters skilled labour and new residents. India and China are competing actively to attract foreign companies to make their production hub. Cities like Bangalore, Hyderabad and Gurgaon are promoted as centre for development of software. Bangalore is regarded as software capital of India. Kerala, Himachal Pradesh, Uttranchal Pradesh and Rajasthan are aggressively promoting themselves to attract local as well as foreign tourists. Due to its cost effectiveness and competitive ability of Indian doctors coupled with ancient therapies, India is fast emerging as country that can provide excellent medical treatment at minimum costs. Samir K Mahajan

9 SCOPE OF MARKETING contd o Properties: Properties whether real property (real estate) or financial property (share and debt. instruments) are bought and sold, and this requires marketing effort. Property dealers in Ahmedabad work for property owners as well as property seekers to sell or buy plots, residential or commercial real estate. In India some builders like Ansal, Sahara Group, both build and market their residential and commercial real estates. Brokers and sub-brokers buy and sell securities on behalf of individual and institutional buyers. o Organizations: Organizations actively work to build a strong, favourable image in the mind of their publics. Companies spend money on corporate identity ads. Companies can gain immensely by associating themselves with social causes. Bill Universities, museums, and performing art organisations use marketing to boost their images, and to compete for images. o Information: Information can be produced and marketed as a product. This is essentially what schools, colleges and universities produce and distribute at a price to parents, students and communities. Encyclopaedias and most non- fiction books market information. Magazines such as Fitness and Muscle provide information about staying healthy ; Business India, Business Today and Business World provide information about business activities that are taking place in various organizations There are number of magazines which are focussed an automobiles, architecture and interior designing, computers, audio system, television programmes etc. which cater to the information needs of the customers. o Idea: Every market offering includes a basic idea. Charles Revson of Revlon observed: "In the factory, we make cosmetics; in the store we sell hope. Film makers, marketing executives and advertising agencies continuously look for a creative spark or an idea that can immortalise them and their work. Idea here means the social cause or an issue that can change the life of many. Social marketers are busy promoting ideas such as ‘Say no to drugs’, ‘save water’, ‘exercise daily’. Samir K Mahajan

10 MARKETERS S AND PROSPECTS A marketer is someone who seeks a response (an attention, a purchase, a vote, a donation) from another party, called the prospect. If two parties are seeking to sell something to each other, we call them both marketers. Just as production and logistics professionals are responsible for supply management, marketers are responsible for demand management. Marketing managers seek to influence the level, timing, and composition of demand to meet the organization's objectives. Eight demand states are possible to which the marketer has to deal with 1.Negative demand- Consumers dislike the product and may even pay a price to avoid it. For example – Dental work where people don’t want problems with their teeth and use preventive measures to avoid the same. 2. Non existent demand - Consumers may be unaware or uninterested in the product. The best example for the same can be education courses where there is very low demand or no demand at all. 3. Latent demand - Consumers may share a strong need that cannot be satisfied by an existing product. The best example of latent demand are smart phones. People nowadays want more and more features in the smartphone. They might settle for a normal phone, but then later on they get the it to buy a smart phone. Samir K Mahajan

11 MARKETERS S AND PROSPECTS contd. 4. Declining demand - Declining demand is when demand for a product is declining. For example, when CD players were introduced and IPOD came in the market, the demand for walkman went down. 5. Irregular demand - Irregular demand can be demand which is not consistent. The best example of irregular demand is seasonal products like umbrellas, air conditioners. 6. Full demand - In an ideal environment, a company should always have full demand. Full demand means that the demand is meeting the supply potential of the company. 7. Overfull demand - Overfull demands happen when the companies manufacturing capacity is limited but the demand is more than the supply. This can be observed in the cement industry occasionally. 8. Unwholesome demand - Consumers may be attracted to products that have undesirable social consequences. Best example of unwholesome demand are cigarettes, alcohol, pirated movies, guns etc. In each case, marketers must identify the underlying cause(s) of the demand state and then determine a plan for action to shift the demand to a more desired state. Samir K Mahajan

12 Exchange and Transactions EXCHANGE : Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. Exchange is only one of the four ways that people can obtain a desired object. o The first way is self-production. People can relieve hunger through hunting, fishing, or fruit gathering. They need not interact with anyone else. In this case, there is no market and no marketing. o The second way is coercion. Hungry people can snatch or steal food from others. No benefit is offered to the others except that of not being harmed. o The third way is begging. Hungry people can approach others and beg for food. They have nothing tangible to offer except gratitude. o The fourth way is exchange. Hungry people can approach others and offer a resource in exchange, such as money, another good, or a service. Marketing arises from this last approach to acquiring products. Samir K Mahajan

13 Exchange and Transactions contd. TRANSACTIONS: Transactions are the basic units of exchange. A transaction consists of a trade of values between two parties. These trade values may be monetary or non-monetary. Example: Pujara sells a TV to Harsh and Harsh pay Rs. 2000. This is a classic monetary transaction. There can be a barter transaction which involves trading goods or services for other goods or services. Say, villagers exchanging vegetables or a domestic-help provided foods for the whole day’s service or a teacher given medical examination by a physician in return for tuition given to the later's daughter. A transaction differs from a transfer. In a transfer, A gives X to B but does not receive anything tangible in return. Gifts, subsidies, and charitable contributions are all transfers. Samir K Mahajan

14 MARKETS: STRUCTURE OF FLOWS IN A MODERN EXCHANGE ECONOMY Traditionally, a "market" is a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (e.g., the housing market or grain market). Modern economies abound in such markets. Five basic markets and their connecting flows are shown as flows:

15 Markets contd. STRUCTURE OF FLOWS IN A MODERN EXCHANGE ECONOMY contd. Manufacturers go to resource markets (raw material markets, labor markets, money markets), buy resources and turn them into goods and services, and then sell finished products to intermediaries, who sell them to consumers. Consumers sell their labour and receive money with which they pay for goods and services. The government collects tax revenues to buy goods from resource, manufacturer, and intermediary markets and uses these goods and services to provide public services. Each nation's economy and the global economy consist of complex interacting sets of markets linked through exchange processes. Samir K Mahajan

16 RELATIONSHIP BETWEEN INDUSTRY AND MARKET Marketers often use the term market to mean various groupings of customers. They view the buyers as constituting the market and the sellers as constituting the industry. They talk about need markets (the diet-seeking market), product markets (the shoe market), demographic markets (the youth market), and geographic markets (the Gujarat market); or they extend the concept to cover other markets, such as voter markets, labour markets, and donor markets. Industry refers to group of firms selling a product. Following figure shows the relationship between the industry and the market. Sellers and buyers are connected by four flows. The sellers send goods and services and communications (ads, direct mail) to the market; in return they receive money and information (attitudes, sales data). The inner loop shows an exchange of money for goods and services; the outer loop shows an exchange of information. Samir K Mahajan

17 KEY CUSTOMER MARKETS Consumer Markets: Companies selling mass consumer goods and services such as soft drinks, cosmetics, air travel, and athletic shoes and equipment to individuals and households spend a great deal of time trying to establish a superior brand image. Much of a brand's strength depends on developing a superior product and packaging, ensuring its availability, and backing it with engaging communications and reliable service. Business Markets: Business buyers (say wholesalers, retails, manufacturer) buy goods in order to make or resell a product to others at a profit. Companies selling business goods and services often face well-trained and well-informed professional buyers who are skilled in evaluating competitive offerings Global Markets: Companies selling goods and services in the global marketplace face additional decisions and challenges. They must decide which countries to enter; how to enter into the industry; how to adapt their product and service features to each country; how to price their products in different countries; and how to adapt their communications to fit different cultures. These decisions must be made in the face of different requirements for buying, negotiating, owning, and disposing of property; different culture, language, and legal and political systems; and a currency that might fluctuate in value. Governmental and Non-profit Markets: Companies selling their goods to non-profit organizations such as universities, charitable organizations, or government agencies need to price carefully because these organizations have limited purchasing power. Lower prices affect the features and quality that the seller can build into the offering. Much government purchasing calls for bids, with the lowest bid being favoured, in the absence of extenuating factors. Samir K Mahajan

18 MARKETPLACE, MARKET-SPACE AND META-MARKET The marketplace is physical, as when a buyer shop in a store; market-space is digital, as when a buyer shop on the Internet. A Meta-market brings all buyers and sellers in one platform for one purpose only. It describes a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. For example. the automobile meta-market consists of automobile manufacturers, new car and used car dealers, financing companies, insurance companies, mechanics, spare parts dealers, service shops, auto magazines, adds on cars, classified auto ads in newspapers, and auto sites on the Internet. Samir K Mahajan

19 TARGET MARKET Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Marketer can rarely satisfy everyone in a market. Not everyone likes the same cereal, hotel room, restaurant, automobile, college, or movie. Therefore, marketers start by dividing up the market into segments. A target market can be separated from the market as a whole by segments such as: geography, buying power and demographics, as well as by psychographics, and identify and profile distinct groups of buyers who might prefer or require varying product and services mixes. The marketer then decides which segments present the greatest opportunity—which are its target markets. The beauty of target marketing is that it makes the promotion, pricing and distribution of company’s products and/or services easier and more cost- effective. It provides a focus to all of your marketing Samir K Mahajan

20 PRODUCT POSITIONING Product Positioning is a marketing strategy that aims to occupy a distinct position, relative to competing brands in the mind of the customer. For each chosen target market, the firm develops a market offering which is positioned in the minds of the target buyers such as delivering some central benefit(s). For example, Volvo develops its cars for buyers to whom automobile safety is a major concern. Volvo, therefore, positions its car as the safest a customer can buy. Companies apply this strategy either by emphasizing the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level etc.) through advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility. Samir K Mahajan

21 COMPETITION Competition: Competition includes all the actual and potential rival offerings and substitutes that a buyer might consider. Suppose an automobile company is planning to buy steel for its cars. There are several possible levels of competitors. The car manufacturer can buy steel from SAIL or other integrated steel mills in TATA Steel or abroad (e.g., from Japan or Korea);; or buy aluminium for certain parts of the car to lighten the car's weight ; or buy engineered plastics for bumpers instead of steel. Clearly, TATA STEEL would be thinking too narrowly of competition if it thought steel companies only. In fact, TATA STEEL is more likely to be hurt in the long run by substitute products than by its immediate steel company rivals. It must also consider whether to make substitute materials or stick only to those applications where steel offers superior performance. Samir K Mahajan

22 VALUE AND SATISFACTION Customer Value is the difference between the values the customer gains from owning and using a product and the costs of obtaining the product. e.g. For buying McDonald's food, customer will think about food content, effort etc and the values against the money, and compare McDonald's with BurgerKing and Subway and select the one that gives them the greatest delivered value. Customer Satisfaction is the extent to which a product's perceived performance matches a buyer's expectations. Customer might be dissatisfied or satisfied. If the product's performance falls short of expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the buyer is satisfied or delighted. Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. e.g. A customer of McDonald's expects quality food within short period of time after placing their order. If they get their food in hand within their expected time then they become satisfied. Otherwise, dissatisfied. Samir K Mahajan

23 MARKETING MIX The marketing mix is a business tool used in marketing and by marketers for creating and delivering customer value in the target market. It is often associated with four elements ( four P’s) such as product, promotion, place (distribution) and pricing which constitute the marketing mix of the firm. Samir K Mahajan

24 MARKETING MIX contd. Product: Product means the goods-and-services combination the company offers to the target market. The marketer creates the product that will meet the identified needs of the consumer. Price: Price is the amount the consumer must exchange to receive the offering. The marketers tackles the price mechanism and consummates the marketing task by arriving at a price that is acceptable to the consumer. Promotion: Promotion includes all of the activities marketers undertake to inform consumers about their products and to encourage potential customers to buy these products. Marketers communicate the benefits of the offer to the consumer by carrying out various promotional activities such as personal selling, advertising and sales promotion. Place: Place includes company activities that make the product available to target consumers. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. These are the elements with which the marketer accomplishes his value delivering task. It can also be seen that in each of these elements, there are several sub-elements. For example, packaging is one of the sub-elements of product and warehousing is one of the sub-elements of distribution. Samir K Mahajan

25 MARKETING MIX contd. Example: Marketing Mix of Samsung  Product: Samsung has a vast product portfolio and its presence is in several different product categories. Overall, Samsung is present in the following product categories. 1) Tablets 2) Mobile phones – Smart phones, normal phones 3) Televisions – LEDs, LCDs. Plasma TV, SMART TV, HDTV etc 4) Cameras and Camcorders 5) Refrigerators 6) Air conditioners 7) Washing machine 8) Microwave ovens 9) IT – Laptops, printers and accessories The brand image driver for Samsung are the Samsung Smartphone’s such as the Samsung note series or the Samsung galaxy series. The benefit of Samsung in terms of its product is that there is a trust on all Samsung products because of the way these product have performed in the last few years. Problems with the products has been negligible. And with its Smart phones, Samsung has achieved a status symbol for its customers. At the same time, Samsung is known for its service and people know that Samsung gives a very fast service for any of its product. Thus in the marketing mix of Samsung, the product portfolio is one of the strongest point for Samsung. Samir K Mahajan

26 MARKETING MIX contd. Example: Marketing Mix of Samsung contd.  Price : Because of its presence in different product categories, Samsung uses various pricing strategies. We can divide the pricing strategies and match it with the products that it is used for. o Skimming price – Samsung’s smart phones are one of the best in the market and are the market leader in terms of the features and USP’s that they provide. Thus Samsung uses Skimming price for these products wherein it tries to get a high value in the start before competitors catch up. Once the model is old or any competitor has launched a similar product, Samsung immediately drops the price. o Competitive pricing : For products other than smart phones, Samsung uses competitive pricing. Televisions, air conditioners, refrigerators and other products have competition in the form of Panasonic or LG. Samsung is known to be a great brand but it is not greater than LG for home appliances. In fact LG beats Samsung where home appliances are concerned. Similarly in Washing machines – Whirlpool, and in Cameras – Cannon, are the brands which are to be beaten. Thus in various categories, Samsung keeps competitive pricing so as to beat the competitor. Samsung as a brand hardly uses penetrative pricing because it doesn’t enter late in the market. In fact, it is present in most consumer durable segments in the market. Samir K Mahajan

27 MARKETING MIX contd. Example: Marketing Mix of Samsung contd. Place : Samsung is present through various channels in the market. It works on the channel marketing concept wherein there are three segments. Sales and service dealers, Modern retail and Distributors. The sales and service dealers handle key accounts for Samsung and are involved in corporate sales. These dealers may also open exclusive Samsung showrooms. The Modern retail segment includes large retailers like Croma, Hypercity, Vijay sales, Vivek’s and any others who are present in the modern electronic retail chain. Samsung being such a branded product, the retailers are bound to keep Samsung as an alternative for their customers. As far distribution network in several cities is concerned, Samsung has a single distributor through whom they distribute throughout a territory. For example in Mumbai, Samsung has SSK distributors who are distributors for all Samsung products. This distributor has a huge investment in Samsung. Both the distributor and the company go hand in hand for the sale of Samsung’s products. Thus all material of Samsung will be sold to a single distributor who in turn will sell it forward to retailers. Promotions: Samsung uses multiple forms of promotions. Samsung as a company believes in pulling the customer to themselves through advertising but at the same time uses strong tactics to push the product to the customer through sales promotions. On one hand, Samsung uses various marketing vehicles across the year covering festive season as well as non- festive time. On the other, it gives many offers and discounts to its trade partners to motivate them to sell Samsung above competition. Samir K Mahajan

28 MARKETING MIX STRATEGY Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers. The company prepares an offering mix of products, services, and prices, and utilizes a communications mix to reach the trade channels and the target customers. The firm can change its price and advertising expenditures in the short run. It can develop new products and modify its distribution channels only in the long run. Samir K Mahajan

29 MARKETING MIX STRATEGY contd. The four Ps represent the sellers' view of the marketing tools available for influencing buyers. From a buyer's 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 Four Ps Product Price Place Promotion Four Cs Customers Solution Customers Cost Convenience Communication Winning companies will be those that can meet customer needs economically and conveniently and with effective communication. Samir K Mahajan

30 MARKETING MIX IN SERVICE MARKETING OR ONLINE BUSINESS In service marketing, however, the four Ps are expanded to the seven P's to address the different nature of services. The 7 P’s of the marketing mix include People, Product, Price, Promotion, Place, Process, and Physical Evidence. People : The employees that execute the service, chiefly concerning the manner and skill in which they do so. Process: The processes and systems within the organization that affect the execution of its service, such as job queuing or query handling. Physical evidence: The evidence which shows that a service was performed, such as the delivery packaging for the item or delivery by a courier service. This reminds or reassures the consumer that the service took place, positively or negatively. Elements of Marketing Mix in Service Marketing 0r Online Business

31 COMPANY ORIENTATIONS TOWARD THE MARKETPLACE Or APPROACHES TO MARKETING The company orientation towards marketplace deals with the concepts which a company may apply while targeting a market. There are basically five different orientations which a company takes towards the marketplace. Very often these interests conflict. The competing concepts under which organizations have conducted marketing activities include: production concept, product concept, selling concept, marketing concept, and holistic marketing concept.  The Production Concept :The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries such as China where the largest PC manufacturer and domestic appliances giant Haier take advantage of the country's huge inexpensive labour pool to dominate the market. It is also used when a company wants to expand the market.  The Product Concept :The product concept holds that consumers will favour those products that offer the most quality, performance, or innovative features. Managers in these organizations focus on making superior products and improving them over time. However, these managers are sometimes caught up in a love affair with their products. A new or improved product will not necessarily be successful unless the product is priced, distributed, advertised, and sold properly. Samir K Mahajan

32 COMPANY ORIENTATIONS TOWARD THE MARKETPLACE contd.  The Selling Concept : Selling concept focuses primarily on the selling and promotion of a particular product, and not determining new consumer desires as such. The idea is to selling an already existing product using promotion techniques to attain the highest sales possible. The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the firm's products. The organization must, therefore, undertake an aggressive selling and promotion effort. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. The selling concept is also practiced aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopaedias. However, marketing based on hard selling carries high risks.  The Marketing Concept: The ‘marketing Concept ' is perhaps the most common orientation used in contemporary marketing in which marketing plans centres around supplying products to suit new consumer tastes. The job is not to find the right customers for the products, but the right products for the customers. The marketing concept focuses on the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. The marketing concept rest on four (4) pillars: o Target market which is the starting point o Focus on customer needs and wants o The means being integrated marketing o The ends being profitability through customer satisfaction Samir K Mahajan

33  The Holistic Marketing: Holistic marketing recognizes that "everything matters" with marketing— and that a broad, integrated perspective is often necessary with respect to product development, design, and implementation of marketing programs, and processes. Four components of holistic marketing are relationship marketing, integrated marketing, internal marketing, and social responsibility marketing. COMPANY ORIENTATIONS TOWARD THE MARKETPLACE contd. Samir K Mahajan

34 o Relationship Marketing: Relationship marketing aims at building mutually satisfying and long term relationship with key parties such as customers, supplies, distributors and other marketing partners in order to earn and retain their business. Since competition today is between marketing networks, and not companies, relationship marketing builds strong economic, technical, and social ties among the stakeholders. Relationship marketing focuses on customer retention and customer satisfaction rather than being focused solely on selling a product or service. e.g. The American Airline maintains a comprehensive frequent flyer program that rewards customer loyalty with the promise of free flights, upgrades, and discounts. o Integrated Marketing: When all the company's department work together to serve the customer’s interests, the result is integrated marketing. The marketer's task is to devise marketing activities and assemble fully integrated marketing programs to create, communicate, and deliver value for consumers. One traditional depiction of marketing activities is in terms of the marketing mix, which has been defined as the set of marketing tools the firm uses to pursue its marketing objectives. That is, marketing activities is devised in terms of the marketing mix i.e. the 4Ps. The seller’s 4Ps (product, price, place, promotion) correspond to the buyers 4Cs (customer solution, customer costs, convenience, communication). COMPANY ORIENTATIONS TOWARD THE MARKETPLACE contd. Samir K Mahajan

35 o Internal Marketing: With an internal marketing strategy, employees are treated as “internal customers” who must be convinced of a company's vision and worth just as aggressively as “external customers.” It requires the task of hiring, training and motivating able employees who want to serve the customers well. Any time a customer interacts with an employee, it affects their overall satisfaction. Everyone from a sales clerk to an over-the-phone tech support specialist helps to shape that customer's experience. Therefore, customer satisfaction is deeply dependent on the performance of a company's staff. For example, Apple has a unique organizational culture that emphasizes innovation, creativity, and expertise. In order to promote this culture, they are highly selective when they recruit employees and extremely thorough when they train them.. The employees are experts in the products they sell and are willing to answer an endless number of questions. They are smart, accessible, and knowledgeable, accurately represent the the image of the company. o Social Responsibility Marketing : Social responsibility marketing involves a focus on the long run interests of consumers and the society. This concept holds that the organization’s task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more than competitors such that it also serves or enhances the consumer and the society’s well-being. This concept calls on marketers to build social and ethical considerations into their marketing practices. COMPANY ORIENTATIONS TOWARD THE MARKETPLACE contd. Samir K Mahajan

36 CHANGING TRENDS IN BUSINESS AND MARKETING “The marketplace isn't what it used to be." It is radically different as a result of major, sometimes interlinking societal forces that have created new behaviours, new opportunities, and new challenges: Changing technology : The digital revolution has created an Information Age. The Industrial Age was characterized by mass production and mass consumption, stores stuffed with inventory, ads everywhere, and rampant discounting. The Information Age promises to lead to more accurate levels of production, more targeted communications, and more relevant pricing. Moreover, much of today's business is carried on over electronic networks: intranet, extranets, and the Internet. Globalization: Globalisation has opened new opportunities to business. The developing countries like India have opened their doors to the multinationals. Technological advances in transportation, shipping, and communication have made it easier for companies to market in other countries and easier for consumers to buy products and services from marketers in other countries. Deregulation: Many countries have deregulated industries to create greater competition and growth opportunities. Deregulation and delicencing have created enormous opportunities for private sector industrial economy in India. More and more areas of industrial activities are thrown open to private enterprises. The companies can grow as much as it can in the environment of free-market economy. Samir K Mahajan

37 CHANGING TRENDS IN BUSINESS AND MARKETING contd. Privatization: Many countries including India stresses on private ownership and management instead of public sector enterprises to increase their efficiency. The government is putting more thrust on private sector initiative in seeking rapid economic growth. Number of areas of industrial reserved for public sector has been drastically reduced. Private ownership in public sector companies has been allowed through disinvestment. Industry convergence: Industry boundaries are blurring at an incredible rate as companies are recognizing that new opportunities lie at the intersection of two or more industries. Companies like Samsung, LG that were dealing in consumer electronics (such as TVs) and household appliances (such as washing machines) now markets smart phones. Mahindra which is more known for manufacturing tractors and vehicles for long distance now markets two wheelers such as: scooters. There has been convergence of the computing and consumer electronics industries as the giants of the computer world such as Dell, Hewlett-Packard released a stream of entertainment devices—from MPS players to plasma TVs and camcorders. Customer empowerment: Customers increasingly expect higher quality and service and some customization. They are more and more time-starved and want more convenience. They perceive fewer real product differences and show less brand loyalty. They can obtain extensive product information from the Internet and other sources, which permits them to shop more intelligently. They are showing greater price sensitivity in their search for value. Customization: The company is able to produce individually differentiated goods whether ordered in person, on the phone, or online. By going online, companies essentially enable consumers to design their own goods. The company also has the capacity to interact with each customer personally, to personalize messages, services, and the relationship. Samir K Mahajan

38 CHANGING TRENDS IN BUSINESS AND MARKETING contd. Heightened competition: Brand manufacturers are facing intense competition from domestic and foreign brands, which is resulting in rising promotion costs and shrinking profit margins. They are being further challenged by powerful retailers who are putting out their own store brands in competition with national brands. Retail transformation: Small retailers are succumbing to the growing power of giant retailers and "category killers." Store- based retailers are facing growing competition from catalogue house, direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and e-commerce on the Internet. Disintermediation: The amazing success of early online dot-coms such as Amazon, Yahoo, eBay, Flipkart, and dozens of others who created disintermediation in the delivery of products and services, put tremendous pressure on many established manufacturers and retailers. In response to disintermediation, many traditional companies are adding online services to their existing offerings. Samir K Mahajan

39 TRENDS & SHIFTS IN MARKETING MANAGEMENT 0r TRANSFORMATION IN THE MIND-SET OF MARKETERS A number of important trends and forces are evoking a new set of beliefs and practices on the part of business firms. Marketers are fundamentally rethinking their philosophies, concepts, and tools. There are 14 major shifts in marketing management that smart companies have been making in the twenty-first century. Successful companies will be those who can adequately respond to changes in their marketplace and marketspace.  From marketing does the marketing, to everyone does the marketing :Companies generally establish a marketing department to be responsible for creating and delivering customer value. Companies now know that marketing is not done only by marketing, sales, and customer support personnel; every employee has an impact on the customer and must see the customer as the source of the company's prosperity. Consequently, companies are beginning to emphasize interdepartmental teamwork to manage key processes.  From organizing by product units, to organizing by customer segments :Some companies are now switching from being solely product-centered with product managers and product divisions to manage them to being more customer- segment-centered. In late 1999, Royal Bank of Canada reorganized itself around customer segments, not products or territories. By studying these segments carefully, Royal Bank developed a number of new profit-generating products and services. As a result, revenues increased by $1 billion over the next three years and the stock price rose 100 percent in the midst of a stagnant bear market. Samir K Mahajan

40 TRENDS & SHIFTS IN MARKETING MANAGEMENT contd.  From making everything, to buying more goods and services from outside: More companies are choosing to own brands rather than physical assets. Companies are also increasingly subcontracting activities to outsourcing firms. Their maxim: Outsource those activities that others can do more cheaply and better, but retain core activities.  From using many suppliers, to working with fewer suppliers in a partnership: Companies are deepening partnering arrangements with key suppliers and distributors. Such companies have shifted from thinking of intermediaries as customers to treating them as partners in delivering value to final customers.  From relying on old market positions, to uncovering new ones: In highly competitive marketplaces, companies must always be moving forward with marketing programs, innovating products and services, and staying in touch with customer needs. Companies must always be seeking new advantages rather than just relying on their past strengths.  From emphasizing tangible assets, to emphasizing intangible assets :Companies are recognizing that much of their market value comes from intangible assets, particularly their brands, customer base, employees, distributor and supplier relations, and intellectual capital. Samir K Mahajan

41 TRENDS & SHIFTS IN MARKETING MANAGEMENT contd.  From building brands through advertising, to building brands through performance and integrated communications: Marketers are moving from an overreliance on one communication tool such as advertising or sales force to blending several tools to deliver a consistent brand image to customers at every brand contact.  From attracting customers through stores and salespeople, to making products available online :Consumers can access pictures of products, read the features, shop among online vendors for the best prices and terms, and click to order and pay. Business-to-business purchasing is growing fast on the Internet. Personal selling can increasingly be conducted electronically, with buyer and seller seeing each other on their computer screens in real time.  From focusing on the financial scorecard, to focusing on the marketing scorecard: Top management is going beyond sales revenue alone to examine the marketing scorecard to interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. They know that changes in marketing indicators predict changes in financial results.  From focusing on shareholders, to focusing on stakeholders: Top management respects the importance of creating co-prosperity among all business partners and customers. These managers develop policies and strategies to balance the returns to all the key stakeholders. Samir K Mahajan

42 Reference : Philip Kotler and Internet


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