1. 1 Defining Marketing for the 21st Century
MARKETING MANAGEMENT 1
Defining Marketing
for the
21st Century

2. MARKETING MANAGEMENT
In this chapter we will address the following questions:
What is the new economy like?
What are the tasks of marketing?
What are the major concepts and tools of marketing?
What orientations do companies exhibit in the marketplace?
How are companies responding to the new challenges?

3. Old Economy VS New Economy
The old economy is based on the Industrial Revolution and on managing manufacturing industries
WHILE …
The new economy is based on the Digital Revolution and the management of information.

4. The New Economy placed the following capabilities in the hands of consumer:
Substantial increase in buying power
Greater variety of available goods and services
Great amount of information about practically anything
Greater ease in interacting and placing and receiving orders
An ability to compare notes on products and services

5. AND placed the following capabilities in the hands of companies:
Operate powerful new information and sales channels
Collect richer information about markets, customers, prospects, and competitors
Speed up internal communication among employees
Have two-way communications with customers and prospects
Send promotional tools easily and quickly
Able to customize offerings
Improve purchasing, recruiting, training and internal and external communication.
Maintain cost saving while improving accuracy and service quality.

6. Marketing and Exchange
What is marketing?
The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives

7. Selling is only the tip of the iceberg
“There will always be need for
some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available.”
Peter Drucker

8. What is Exchanged in Marketing?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas

9. 4 Types of Markets Consumer Market: (consumption)
Business Markets: (saving/resell)
Global Markets: (different offering mix)
Nonprofit and Governmental Market: (bids)

10. Marketing Concepts and Tools
Market: a collection of buyers and sellers
Marketplace: a physical market (store)
Marketspace: a digital market (Internet: e.g.,
Metamarket: markets involving closely-related products and services (e.g.,
Marketer and Prospect: A marketer is someone seeking a response from another party, called the prospect.

11. A Simple Marketing System

12. Structure of Flows in a Modern Exchange Economy

13. Marketing Concepts and Tools
Needs: the basic human requirements
Wants: specific objects that might satisfy the need
Demand: wants for specific products backed by an ability to pay.
Examples:
An American needs food but wants a hamburger, French fries and soft drink.
Many people want a Mercedes, only a few are able and willing to buy one.

14. Does Marketers Create or
Marketing Debate
Does Marketers Create or
Satisfy Needs?

15. Marketing Concepts and Tools
Product: a value proposition
Offering: intangible value proposition (a combination of products, services, information and experiences (Volvo)
Brand: is an offering from a know source
Examples:
McDonald
Lexus

16. Only the best is good enough for Lexus customers

17. Marketing Concepts and Tools
Value is a ratio between what customer gets and what he gives
Value = Benefits/Costs
How to increase value?
Raise benefits
Reduce costs
Raise benefits and reduce costs
Raise benefits by more than the raise of costs
Lower benefits by less than the reduction of costs

18. Marketing Concepts and Tools
Exchange: a process of obtaining a product/service from someone by offering something
For exchange to occur, there must be:
Two parties
Each with something of value to the other
Capable of communication and delivery
Free to accept/reject the offer
Agreement to terms
Example: Caterpillar

19. Marketing Concepts and Tools
Transaction: a trade of values between two or more parties.
Does Transaction differs from
Transfer

20. Marketing Concepts and Tools
Relationship: building mutually satisfying long-term relations with key parties (customers, suppliers, distributor) in order to earn and retain their business.
Network: building mutually profitable business relationships between the company and its supporting stakeholders.

21. Marketing Concepts and Tools
Marketing channels: a way/mean to reach target market.
Three kinds of marketing channels:
Communication channels
Distribution channels
Service channels

22. Marketing Concepts and Tools
Supply Chain: longer channel stretching from raw materials to components to final products that are carried to final buyers.
Competition: all actual and potential rival offerings and substitutes that a buyer might consider.

23. Marketing Concepts and Tools
Four (4) levels of competition:
Brand competition: A company sees its competitors as other companies offering similar products and services to the same customers at similar prices.
Industry competition: A company sees its competitors as all companies making the same product or class of products.
Form competition: A company sees its competitors as all companies manufacturing products that supply the same services.
Generic competition: A company sees its competitors as all companies that compete for the same consumer dollars. (Example: Volkswagen)

24. Marketing Concepts and Tools
Marketing Environment: actors that impact the company’s offerings (task & broad environment).
Marketing Program: a numerous decisions on the mix of marketing tools to use.
Marketing Mix: a set of marketing tools the firm uses to pursue its marketing objectives in the target market.

25. The Four Ps

26. The Four Ps The Four Cs Marketing Mix Place Product Price Promotion
Conven-
ience
Customer
Solution
Communication

27. Marketing-Mix Strategy

28. Marketing Management Marketing Management (Kotler):
is the analysis, planning, implementation, and control of marketing programs designed to create, build, and maintain mutually beneficial exchanges and relationships with target markets for the purpose of achieving organizational objectives.

29. Company Orientations to the Marketplace (Marketing Management Philosophies)
Production concept: assumes consumers favor those products that are widely available and affordable. (Focus: wide distribution; high volume).
2. Product concept: assumes consumers will favor those products that offer the most quality, performance, and features. (Focus: Superior product)

30. Company Orientations to the Marketplace, cont.
Selling concept: assumes that consumers will either buy or not enough of the organizations’ products unless the organization makes a substantial effort to stimulate the customer’s interest in the product. (Focus: needs of the seller)

31. The purpose of marketing is to sell more stuff to
more people more often
for more money in order
to make more profit
Coca-Cola’s former
Vice president

32. Company Orientations to the Marketplace, cont.
4. Marketing concept: holds that the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. (Focus: different needs of buyers)

33. Marketing and Selling Concepts Contrasted
Factory
Products
Selling
and
Promoting
e.g., Profits
through
Volume
(a) The Selling Concept
Starting
Point
Focus
Means
Example Ends
Market
Customer
Needs
Integrated
Marketing
e.g., Profits
through
Satisfaction
(b) The Marketing Concept

34. Theodore Levitt’s “Marketing Myopia,” cont.
What is the difference between marketing and selling?
“The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert the product into cash; marketing with the idea of satisfying the need of the customer ….”

35. Marketing Concept Four Pillar
1. Target Market: tailored marketing programs
2. Customer Needs:
Giving customer what they need is not enough; companies must help customers learn what they want.
Stated, Real, Unstated, Delight & Secret Needs. (Inexpensive car example)
Responsive, Anticipated & Creative Marketer.
Market-driving firm VS Market-driven firm.
Make and sell VS Sense and respond Philosophy.
Why it’s important to satisfy target customers? (Customer retention)

36. Marketing Concept Four Pillar
3. Integrated Marketing: all company’s departments work together to serve the customer’s interests.
a. External marketing:
directed at people outside the company.
b. Internal marketing:
the task of hiring, training, and motivating able employees who want to serve customers well.
Which one is more important?
4. Profitability

37. Traditional Organization Chart
Top
Management
Middle Management
Front-line people
Customers

38. Modern Customer-Oriented Organization Chart
Customers
Front-line people
Customers
Middle management
Customers
Top
manage-
ment

39. What makes companies adopt marketing concept?
Sales decline
Slow growth
Changing buying patterns
Increasing competition
Increasing marketing expenditures

40. Company Orientations to the Marketplace, cont.
5. The customer concept:
Customer is the lifeblood of any company
Customer is the King

41. The Customer Concept

42. Company Orientations to the Marketplace, cont.
6. The societal marketing concept: to determine the needs, wants, and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.

43. Societal Marketing Concept

44. How are companies responding to the new challenges?
Reengineering
Outsourcing
E-Commerce
Benchmarking
Alliances
Partner-Suppliers
Market-central
Global and local
Decentralization