1. Lesson 3: Marketing Concepts
Problem Solving 1 1

2. What is the marketing mix?
What you’ll learn...
Marketing
What is marketing?
What does it involve?
What is the marketing mix? 2

3. About Marketing 3 3

4. Marketing in the 21 century
WHY 4 4

5. What is marketing? Marketing…
is not ADVERTISING
is not SELLING
is not PROMOTION
“The aim of marketing is to make selling unnecessary.” Peter Drucker (1973) 5 5

6. What is marketing?
Businesses need to sell products if they are to achieve their objectives.
Marketing is about ensuring that businesses can sell as many products as possible in order to make profits. 6

7. What does it involve? Marketing is a very complex concept.
It involves:
Research
Product design
Setting prices
Making sure the customer knows about products
Choosing how and where to sell products 7

8. Without careful marketing these products would fail
Why is it needed?
Each year millions of new products are launched:
Without careful marketing these products would fail 8

9. “Marketing is the science and art of exploring, creating and delivering value to satisfy the needs and wants of a target market maintaining loyalty at a profit.”
Professor Philip Kotler 9

10. Cheeseburger, Tuxedo, Car
Needs
Eat, Dress, Move
Wants
Cheeseburger, Tuxedo, Car
Marketer 10

11. This Is Demand
Wants
Buying Power
“Demand” 11 11

12. First Task: Detect Needs12

13. Organization’s marketing focus
Marketing’s first task: discovering consumer needs
Organization’s
marketing focus
Discover consumer needs
Information about needs
Potential consumers: The market 13

14. What is a Market? Potential consumers make up a market, which is:
1. People
2. with the Desire and
3. with the Ability to Buy a specific product. 14

15. Organization’s marketing focus
Marketing’s Second Task: Satisfying Consumer Needs
Organization’s marketing focus
Concepts
for
products
Satisfy consumer needs
Find the right combination of:
Product
Price
Promotion
Place
Discover consumer needs
Information about needs
Goods, services, ideas
Potential consumers: The market 15

16. The Target Market
Because the organization obviously can’t satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers
This is the target market -- one or more specific groups of potential consumers toward which an organization directs its marketing programme 16

17. Customer Development Suspects Prospects Clients Advocates Partners
First-time
customers
Repeat
customers
Clients
Advocates
Partners
Disqualified
prospects
Inactive or
ex-customers 17

18. Marketing Management 18 18

19. The Marketing Mix
The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs.
The marketing mix is often called the 4Ps:
Product
Price
Place
Promotion 19

20. The Marketing Mix
The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives
7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment
Traditional 4Ps extended to cope with today's changing environment 20 20

21. The Marketing Mix 21 21

22. Product 22 22

23. Product
Product’ refers to the functions and features of a good or service
Should satisfy the needs of the customer
May have a Unique Selling Proposition (USP)
‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding 23

24. Product
The firm must come up with a product or service that people will want to buy.
It must fulfil some need
or want.
It must be (or at least seem) unique. 24

25. Product
Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g.
Extension strategies
Specialised versions
New editions
Improvements – real or otherwise!
Changed packaging
Technology, etc.
Image copyright: 25 25

26. The Product Life Cycle
The product lifecycle looks at the sales of a product over time 26

27. Stages in the Product Lifecycle
Development – high costs but no sales
Launch – high expenditure on promotion and product development, low sales
Growth – sales increase and product should break-even
Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high
Decline – sales decline, extension strategies can be adopted or the product withdrawn 27

28. Extension Strategies
Extension strategies should maintain or increase sales. They include:
Modifying the product
Reducing the price
Adding a feature
Promoting to a
different market
sector 28

29. Excitement and leisure T-shirts – photos with players
Product or service or brand
Core Product
Actual Product
Augmented Product
BMW
Freedom to travel
A motor car
Sheraton
 Rooms
Room service
Egypt Air
 Flight
An airline journey
Zamalek Football Club
Excitement and leisure
 T-shirts – photos with players
ALICO
Insurance policy
Finance
UNIONAIR
 Cooling
Warranty 29 29

30. Price 30 30

31. Price The price of a product will depend on: The cost to make it
The amount of profit desired
Other objectives of the business
The price competitors charge
The price customers are willing to pay
Is there a high demand?
Is demand sensitive to changes in price? 31

32. Price
The price must be one that the customer thinks is good value for money.
This is not the same as
being cheap!
Prices have a great psychological effect on customers.
Pricing Strategy
- International
Comparative
Cost plus 32 32

33. Price Leader/Taker
Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead
Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other 33

34. Pricing Strategies & Tactics
Skimming
Launching with a high price when there is little competition, then reducing the price later. Often used with technology.
Penetration
Low price charged initially to penetrate the market and build brand loyalty; prrice is then increased e.g. introductory offers on magazines. 34

35. Pricing Strategies & Tactics
Competitive
A similar price is charged to that of competitors’ products.
Loss leader
Products may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products. 35

36. Pricing Strategies & Tactics
Psychological
A price is set which customers perceive as lower than it is e.g. €39.99 instead of €40 36

37. Promotion 37 37

38. Promotion
Strategies to make the consumer aware of the existence of a product or service
NOT just advertising 38 38

39. Promotion The aims of promotion are to: Raise awareness
Encourage sales
Create or change a brand image
Maintain market share
Increase market share 39

40. 40 40

41. Promotion Above-the-line promotion
This uses advertising media over which a firm has no direct control e.g. television, radio and newspapers
Below-the-line promotion
This uses promotional media which the firm can control e.g. direct mail, sales promotions and sponsorship 41

42. The promotional message should
Grab Attention
Stimulate Interest
Create Desire
Promote Action 42 42

43. Promotional Activities
Advertising e.g. TV, billboards and internet.
Sales promotions e.g. Loyalty cards, BOGOF, discounts & free gifts
Sponsorship – a business pays to be associated with another firm, event or cause 43

44. Promotional Activities
Direct mailing – promotional material is sent to potential customers by post/
Public relations – building the relationship between the firm and the public by enhancing its reputation 44

45. Promotional Mix
Most businesses use a combination of different promotional activities.
The chosen promotional mix will depend on:
Cost
Target market
Product
Competitors 45

46. Place 46 46

47. Place
The means by which products and services get from producer to consumer and where they can be accessed by the consumer
The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) 47 47

48. Place Products should be conveniently available for customers to buy
‘Places’ include:
Stores
Mail order
Telesales
Internet - The use of e-commerce (promoting and selling on the internet) has grown massively over recent years 48

49. 49 49

50. Jobber
One that buys merchandise from manufacturers and sells it to retailers 50

51. People 51 51

52. People People represent the business
The image they present can be important
First contact often human – what is the lasting image they provide to the customer?
Extent of training and knowledge of the product/service concerned
Do staff represent the desired culture of the business? 52 52

53. People People represent the business
The image they present can be important
First contact often human – what is the lasting image they provide to the customer?
Extent of training and knowledge of the product/service concerned
Mission statement – how relevant?
Do staff represent the desired culture of the business? 53 53

54. People People represent the business
The image they present can be important
First contact often human – what is the lasting image they provide to the customer?
Extent of training and knowledge of the product/service concerned
Mission statement – how relevant?
Do staff represent the desired culture of the business? 54 54

55. Process 55 55

56. Process How do people consume services?
What processes do they have to go through to acquire the services?
Where do they find the availability of the service?
Contact
Reminders
Registration
Subscription
Form filling
Degree of technology 56 56

57. Physical Environment 57 57

58. Physical Environment
The ambience, mood or physical presentation of the environment
Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets,…..).
Brochures.
Furnishings.
Uniforms.
Business cards.
The building itself (such as prestigious offices or scenic headquarters).
Mailboxes and many others 58 58

59. 59 59

60. Physical Environment
The ambience, mood or physical presentation of the environment
Smart/shabby?
Trendy/retro/modern/old fashioned?
Light/dark/bright/subdued?
Romantic/chic/loud?
Clean/dirty/unkempt/neat?
Music?
Smell? 60 60

61. Stages in Consumer Decision Process
Word-
of- Mouth
Awareness
Advertising
Interest
Channel
Decision
Product /
Service
Action
Price
Satisfaction 61

62. The Marketing Mix Blend of the mix depends upon: Marketing objectives
Type of product
Target market
Market structure
Rivals’ behaviour
Global issues – culture/religion, etc.
Marketing position
Product portfolio
Product lifecycle
Boston Matrix 62 62

63. Marketing Model Target Market Aware Understand Believe Want Find Buy
Intention to Purchase
Understand
Believe
Cost
Want
Above the Line
Find
Below the Line
Point of Purchase
Buy
Revenue
Use
Experience
Value
Prefe r
Loyal
Behavior 63

64. Marketing Management Philosophies
Competing
Philosophies
Production
Sales
Market
Societal Marketing 64 64

65. Marketing Management Philosophies
Philosophy
Key Ideas
Production
Sales
Market
Societal
Focus on efficiency of internal operations
Focus on satisfying customer needs and wants
Focus on satisfying customer needs and wants while enhancing individual and societal well-being
Focus on aggressive techniques for
overcoming customer resistance 65 65

66. Focus on Customer Wants and Needs
The Marketing Concept
Focus on Customer Wants and Needs
Achieve Organization’s Long Term Goals by Satisfying Customer Wants and Needs
Integrate Organization’s Activities to Satisfy Customer Needs and Wants 66 66

67. Selling goods and services
Comparing Sales and Market Orientations
Organization’s
Focus
Firm’s
Business
For
Whom?
Primary
Profit Goal?
Tools to Achieve
Inward
Selling goods and services
Everybody
Maximum sales volume
Primarily promotion
Sales Orientation
Market Orientation
Outward
Coordinated use of all marketing activities
Customer satisfaction
Specific groups of people
Satisfying wants and needs 67 67

68. Competitive Advantage Customer Satisfaction Customer Relationships
Developing Competitive Advantage
Competitive Advantage
Create
Maintain
Customer Value
Customer Satisfaction
Build
Customer Relationships 68 68

69. Evolving Marketing Mix
The marketing mix will evolve over time
The product portfolio may grow as a business becomes more established
More expensive promotional activities may be adopted as a firm’s revenue increases
More outlets may be opened, or products sold via the internet
Price may change as demand changes 69

70. Value and Satisfaction
Expectation
Performance 10 8
Expectation
Performance 8 10
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high. 70 70

71. Why Do So Many Products Fail?
market size may have been overestimated
actual product may not have been designed real well
competitors fight back harder than expected
priced too high
advertised poorly
Many new products fail due to many factors...the market may not have been researched properly and overestimated in size.
The design of the product may not be the best
The opposition or competition may be fierce competitors...more so than originally anticipated
Your product may be priced too highly or poorly advertised and marketed utilizing the wrong medium to reach your target audience.
Many times the corporate powers to be are not 110% behind a new product, thereby sentencing it to death even though it has an excellent potential and market.
R&D may be too high
Market positioning may be improper
corporate politics despite poor marketing research findings
costs of product development are higher than expected
incorrectly positioned in the market 71 71

72. Marketing Mix Concept
Existing Product
Proposed Product
Product Name
Packaging
Price
Promotion (means)
Place (Target Area)
People (Target Customer)
Process (Materials)