Core Marketing Concepts
Marketers and Prospects :A marketer is someone who is
seeking a response (attention, a purchase, a vote, a donation)
from another party, called the prospect.
If two parties are seeking to sell something to each other,
both are marketers.
Needs, Wants, and Demands:
Needs describe basic human requirements such as food, air,
water, clothing, and shelter. 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 American needs food but wants a hamburger, French
fries, and a soft drink. A person in Mauritius needs food but
wants a mango, rice, lentils, and beans.
Clearly, wants are shaped by one’s society
Demands are wants for specific products backed by an ability
to pay.
Many people want a Mercedes; only a few are able and
willing to buy one
Product or Offering
People satisfy their needs and wants with products.
A product is any offering that can satisfy a need or want,
such as one of the 10 basic offerings of goods, services,
experiences, events, persons, places, properties,
organizations, information, and ideas
brand is an offering from a known source. A brand name such
as McDonald’s carries many associations in the minds of
people: hamburgers, fun, children, fast food, golden arches.
These associations make up the brand image. All companies
strive to build a strong, favourable brand image
Value and Satisfaction
In terms of marketing, the product or offering will be
successful if it delivers value and satisfaction to the target
buyer.
The buyer chooses between different offerings on the basis of
which is perceived to deliver the most value.
We define value as a ratio between what the customer gets
and what he gives
The customer gets benefits and assumes costs, as shown in
this equation
Value = Benefit / Cost
Based on this equation, the marketer can increase the value of
the customer offering by (1) raising benefits, (2) reducing
costs, (3) raising benefits and reducing costs, (4) raising
benefits by more than the raise in costs, or (5) lowering
benefits by less than the reduction in costs
Exchange and Transactions
Exchange, the core of marketing, involves obtaining a desired
product from someone by offering something in return.
For exchange potential to exist, five conditions must be
satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to the
other party.
3. Each party is capable of communication and delivery
4. Each party is free to accept or reject the exchange offer.
5. Each party believes it is appropriate or desirable to deal
with the other party
Relationships and Networks
Transaction marketing is part of a larger idea called
relationship marketing.
Relationship marketing aims to build long-term mutually
satisfying relations with key parties—customers, suppliers,
distributors—in order to earn and retain their long-term
preference and business.
Effective marketers accomplish this by promising and
delivering high-quality products and services at fair prices to
the other parties over time.
Relationship marketing builds strong economic, technical,
and social ties among the parties.
It cuts down on transaction costs and time.
In the most successful cases, transactions move from being
negotiated each time to being a matter of routine
A marketing network consists of the company and its
supporting stakeholders (customers, employees, suppliers,
distributors, university scientists, and others) with whom it
has built mutually profitable business relationships.
Increasingly, competition is not between companies but
rather between marketing networks, with the profits going to
the company that has the better network
Marketing Channels
The marketer uses distribution channels to display or deliver
the physical product or service(s) to the buyer or user.
There are physical distribution channels and service
distribution channels, which include warehouses,
transportation vehicles, and various trade channels such as
distributors, wholesalers, and retailers.
The marketer also uses selling channels to effect transactions
with potential buyers.
Selling channels include not only the distributors and
retailers but also the banks and insurance companies that
facilitate transactions.
Marketers clearly face a design problem in choosing the best
mix of communication, distribution, and selling channels for
their offerings
Competition
Competition: a critical factor in marketing management,
includes all of the actual and potential rival offerings and
substitutes that a buyer might consider
Four levels of competition, based on
degree of product substitutability:
Brand competition: A company sees its competitors as other
companies that offer similar products and services to the
same customers at similar prices
Industry competition: A company sees its competitors as all
companies that make the same product or class of products
Form competition: A company sees its competitors as all
companies that manufacture products that supply the same
service
Generic competition: A company sees its competitors as all
companies that compete for the same consumer dollars.
COMPANY ORIENTATIONS TOWARD THE
MARKETPLACE
In fact, there are five competing concepts under which
organizations conduct marketing activities:
production concept, product concept, selling concept,
marketing concept, and societal marketing concept.
The Production Concept
The production concept, one of the oldest in business, holds
that consumers 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, where
consumers are more interested in obtaining the product than
in its features
The Product Concept
Other businesses are guided by the product concept, which
holds that consumers 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, assuming that buyers can appraise
quality and performance.
Product-oriented companies often design their products with
little or no customer input, trusting that their engineers can
design exceptional products
The Selling Concept
The selling concept, another common business orientation,
holds that consumers and businesses, if left alone, will
ordinarily not buy enough of the organization’s products. The
organization must, therefore, undertake an aggressive selling
and promotion effort.
This concept assumes that consumers must be coaxed into
buying, so the company has a battery of selling and
promotion tools to stimulate buying. The selling concept is
practiced most aggressively with unsought goods—goods
that buyers normally do not think of buying, such as
insurance and funeral plots
The Marketing Concept
The marketing concept, based on central tenets crystallized
in the mid-1950s, challenges the three business orientations
The marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than its competitors in creating, delivering, and
communicating customer value to its chosen target markets.
“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 his product into cash; marketing with the
idea of satisfying the needs of the customer by means of the
product and the whole cluster of things associated with
creating, delivering and finally consuming it.
The marketing concept rests on four pillars: target market,
customer needs, integrated marketing, and profitability.
The Societal Marketing Concept
Societal marketing concept, which holds that the
organization’s task is to determine the needs, wants, and
interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors
in a way that preserves or enhances the consumer’s and the
society’s well-being.
HOW BUSINESS AND MARKETING ARE
CHANGING
It is changing radically as a result of major forces such as
technological advances, globalization, and deregulation.
These forces have created new behaviours and challenges
Customers increasingly expect higher quality and service and
some customization. They perceive fewer real product
differences and show less brand loyalty
Brand manufacturers are facing intense competition from
domestic and foreign brands, which is resulting in rising
promotion costs and shrinking profit margins
Store-based retailers are suffering from an oversaturation of
retailing. Small retailers are succumbing to the growing
power of giant retailers and “category killers.” Store-based
retailers are facing growing competition from direct-mail
firms; newspaper, magazine, and TV direct-to-customer ads;
home shopping TV; and the Internet.
Entrepreneurial retailers are building entertainment into
stores with coffee bars, lectures, demonstrations, and
performances, marketing an “experience” rather than a
product assortment.
Distinction between Selling and
Marketing
SELLING MARKETING
1 Emphasis is on the product. Emphasis is on the customer wants
Company first makes the
Company first determines customer wants and
2 product and then figures out how
then figures out to make it
to sell it.
Management is sales volume
3 Management is profit oriented
oriented
4 Profit through Sales Volume Profits through Customer Satisfaction
Planning is short-run-oriented, Planning is long-run oriented regarding new
5 regarding today products and products, tomorrow’s markets, and future
markets growth.
6 Let the buyer be aware Let the seller be aware
7 Product first then customer Customer first then the product
Marketing Myopia
The Myopic cultures, Levitt postulated, would pave the way
for a business to fall, due to the short-sighted mindset and
illusion that a firm is in a so-called 'growth industry'.
This belief leads to complacency and a loss of sight of what
customers want. It is said that these people focus more on
the original product and refuse to adapt directly to the needs
and wants of the consumer.
Thank You
