What is Marketing? Fundamentals of Marketing Management Process by which individuals and groups obtain what they need and want through Dr. P.V. (Sundar) Balakrishnan creating and exchanging products and value with others.
Managing World-Class Organizations Simply put: Marketing is the delivery of customer satisfaction at a profit.
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The Marketing Objective Activities in the Marketing Process ...
Identify needs of customers that company can “Satisfy the needs of a group of customers better satisfy than the competition.” Design a Product (“bundle of benefits”) that Distinguish from Selling or Advertising: satisfies those needs - better than existing – merely a subset of marketing actions used to products. satisfy consumer needs. Promote / communicate these benefits in order Marketing focuses on the use of all the firm’s to motivate purchase controllable influences to satisfy the customer. Price at the right level so that consumers are willing & able to buy the product and the firm’s profit goals are met Make the product available at the right Place so that exchange is facilitated Balakrishnan S #3 Balakrishnan S #4
Broad Objective of Marketing Core Marketing Concepts
To grow the business by adapting it to changes in the Needs, wants, environment : and demands by monitoring changes in customer needs Markets Products changes in competition and services changes in the company’s own skills / resources looking for opportunities & threats that arise from Exchange, these changes Value, initiate tactical actions that “fit” the co’s offering transactions, satisfaction, and relationships to these opportunities / threats. and quality
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z Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. Products Anything that can be Offered to a Market to Satisfy a Need or Want – i.e. I am hungry. z Wants - form that a human need takes as shaped by culture and individual personality. Experiences Persons Places – i.e. I want a burger, fries, and a soft drink. z Demands - human wants backed by buying Organizations Information Ideas power. – i.e. I have money to buy this meal. Services Activities or Benefits Offered for Sale That Are Essentially Intangible and Don’t Result in the Ownership of Anything Balakrishnan S #7 Balakrishnan S #8
Products How Do Consumers Choose Among Products and Services? DMP z A bundle of Attributes that provide Consumers with certain Benefits. Value Gained From Owning a Product and z Also called Costs of Obtaining the Product is – Resource; Marketing Offer; Customer Solution Customer Value z Ex: Drill Bits. – Benefits provided? Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is z Sellers who focus on the Specific product rather Customer Satisfaction than the Benefits provided suffer from “Marketing Myopia”. Total Quality Management Involves Improving the Quality of Products, Services, and Marketing Processes
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How Do Consumers Obtain Products and What is a Market? Services?
People Who
Exhibit Need Market – Transactions: Factors Actual
EthicalBuyers who
Exchanges: Unit of Measurement Situational Buyers Fundamental Concept share a Unexpected Resources to particular need or want that Relationships Exchange Building a Marketing can be satisfied Attitudesthrough Relationship Marketing: Network Consisting of How does Saturn build lasting relationships with customers? The Company and All of Potential exchangeOthers or Buyers Its Supporting Willingness to Stakeholders relationships. Exchange Click or Press Space Bar to Return
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Suppliers Marketing Demand Profitable Management Management Customer Company Competitors Relationships (Marketer) Implementing Finding and
Environment programs increasing Attracting new to create demand, also customers and Marketing exchanges changing or retaining and Intermediaries with target reducing building demand such Environment buyers relationships to achieve as in with current organizational Demarketing customers End User goals Market
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Marketing Management Philosophies Societal Marketing Concept
Society •Consumers favor products that are (Human Welfare) Production Concept available and highly affordable. •Improve production and distribution.
•Consumers favor products that offer Product Concept the most quality, performance, and innovative features. Selling Concept •Consumers will buy products only if Societal the company promotes/ sells these Marketing products. Concept Marketing Concept •Focuses on needs/ wants of target markets & delivering satisfaction better than competitors. Consumers Company Societal Marketing Concept •Focuses on needs/ wants of target (Want Satisfaction) (Profits) Balakrishnan markets & delivering superior value.S #15 Balakrishnan S #16
Basic Marketing Concept Marketing vs. Sales Concepts
• Achieving the SATISFACTION of the Customers’ Needs Starting Focus Means Ends Point
Selling Profits Existing Factory and through While Products Promoting Volume The Selling Concept • Achieving the OBJECTIVES of the Organization
Profits Customer Integrated Market through Needs Marketing Satisfaction
The Marketing Concept Balakrishnan S #17 Balakrishnan S #18 Evolution of Marketing The Marketing Concept To achieve organizational (& Societal) goals Marketing as Organizational Philosophy by determining the needs and wants of customers and delivering the desired benefits more effectively and efficiently than Production Selling Marketing competitors. Philosophy Philosophy Philosophy z “There is only one valid definition of business purpose: to create a customer.” -Peter Drucker z “Everything starts with the customer.” - Lou Gerstner, CEO of IBM “Creating shareholder wealth is not the Marketing purpose of the business. It is the reward for Concept creating customer value.” - Michael Tracy and Fred Wiersema in CFO magazine This is going on today at Internet Time!
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Connecting With Customers Market Orientation
z Market Segmentation: determining distinct groups An organization that has a market of buyers (segments) with different needs, orientation focuses its efforts on characteristics, or behavior. continuously collecting information about customers’ needs and competitors capabilities, sharing this information across z Market Targeting: evaluating each segment’s departments, and using the information to attractiveness and selecting one or more segments create customer value. to enter.
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Developing the Marketing Mix Marketing Framework
Product Price “Goods-and-service” Amount of money combination that a that consumers company offers a have to pay to target market Obtain the product
Target Customers Activities that Inform, persuade target Intended customers to buy Positioning the product Company activities Promotion that make the product available
Source: Robert Dolan, HBS Note Balakrishnan Place S #23 Balakrishnan S #24 Recasting the 6C - 4P Framework in Value The new view – 6 Cs Framework Terms CONTEXT Creating
Customers Value Communicating Value Competitors COMPANY Complementors •Customer • Product Delivering Value • Company •Price Collaborators • Competitor • Collaborators • Place Capturing Customer value your product more if the Value complementor’s product is present (e.g., • Complementors Complementor • Context • Promotion hot dog producer and mustard producer!) Sustaining Value Competitor Customer value your product less if the competitor’s product is present Balakrishnan S #25 Balakrishnan S #26
Consumer Benefits
Relationship Marketing Create value for consumers and benefit producers through the four utilities: • Form utility–having a product or service in the form you The hallmark of developing and maintaining want it by to make it more appealing to buyers. effective customer relationships is today • Time utility–having a product or serviced when you want it. called relationship marketing, linking the • Place utility–having a product or service where you want it. organization to its individual customers, employees, suppliers, and other partners • Possession utility–helping buyers to take possession of a for their long term benefit. product or service.
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Connections With Customers
Customer Relationship Management (CRM)
z Most marketers are targeting fewer, potentially more profitable customers. Customer relationship management is the process of identifying prospective buyers, z Asking: – What value does the customer understanding them intimately, and bring to the organization? developing long-term perceptions of the – Are they worth pursuing? organization and its offering so that buyers z Focus has shifted to: – keeping current customers, will choose them in the marketplace. and – building lasting relationships based on superior satisfaction and value.
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z The Value Delivery Sequence Two Views of the Value-Delivery Process Learn About & Create Products & Track Customers Services Tailored to With Databases Meet Customer Needs Connecting Technologies in Computers, Telecommunications, Information, & Transportation Help To: Communicate With Distribute Products
What aspects of the Internet Customers in Groups make it a good More Efficiently & forum for Or One-on-One marketing? Effectively How do Web companies compete with brick and mortar companies? S #31 S #32 Balakrishnan Click or press spacebar to return Balakrishnan
The New Marketing Paradigm
Old view New view z Marketing as a Function z Marketing as a Business Philosophy z Separate Function z Integrated with other functions z Product Management z Market and Account management z Feature Positioning for mass z Benefit positioning for segmented market markets z Domestic Focus z Global focus z Consumers z Value creation for all Stakeholders z Short-term sales, share objectivez Long-term profit and satisfaction z Transactions z Long-term relationship partnerships z Limited use of IT z Expanded use of IT strategies z “Self-sufficiency” bias z Co-marketing and strategic alliances z Price discounts z Value-based pricing z Product quality z Quality provider z Media and sales “power”; z Message effectiveness efficiency
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