Chapter-1 Defining Marketing for 21 Century - class notes

Marketing Definition:
American Management Association: Marketing (management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals.

Kotler: We see marketing management as the art and science of choosing target markets getting, keeping and growing customers through creating, delivering and communicating superior customer value.

Exchange and Transaction : Exchange is a process of negotiation / agreement of obtaining a desired product by offering something in return eg. money and in barter system it could be something else. When exchange agreement is completed transaction takes place. Transaction is
a value creating process as both the parties are better off.

Marketing involves marketing of 10 types of entities:

  • Goods like eggs, steel, cars.
  • Services like airlines, hotels, barbers
  • Experiences like Walt Disney world’s magic kingdom, at planet Hollywood. We can say that "services + " items are experiential marketing.
  • Events like Olympics, trade shows, sports events
  • Persons: celebrity marketing is a business. Each celebrity has to make herself / himself sellable. Celebrities market themselves to become brand ambassador. Eg. Madonna and Amitabh bacchan
  • Places like cities, states, nations to attract tourists, factories, company headquarters, and new residents, like we use Bangalore for outsourcing Brazil for tourism.
  • Properties like real state owners market properties.
  • Organizations thru’ Corporate identity ads like by using tag line ‘Lets make things better’, “We also make steel”.
  • Information like thru encyclopedias, CDs and visit the internet for information. This is information marketing usually done by educational institute.
  • Ideas like don’t drink and drive, NGO and Govt marketing also popularly known as social marketing.

Eight different states of demand:

·Negative demand: if a major part of market dislikes the product and may even pay a price to avoid it – vaccinations, gall bladder operations etc. Marketing task is to analyse why the market dislikes the product and whether a marketing program can change beliefs and attitudes.

·No Demand: Target consumers may be unaware of or uninterested in the product. Ex. College students may not be interested in foreign language courses. Marketing should look for ways to benefit others with their product and of course thus sell their product

·Latent demand: Market feels strong needs for some products like harmless cigarettes. Marketer needs to measure size of this market and develop such goods

·Declining demand: Market for product declines. Then marketer need to know the causes and rectify

·Irregular demand: Demand of many products and services are seasonal. Marketer needs to devise ways called synchro-marketing like flexible pricing, promotions and other incentives

·Full demand: sometimes full demand is there. Marketing task is to maintain current level of demand in face of changing consumer preferences and increasing competition.

·Overfull demand: sometimes demand is higher than what organization can handle. Then marketing task, called de-marketing is required. like thru raising prices and reducing promotion and service. Selective marketing is reducing demand from some parts, say not so profitable, of the market

  • Unwholesome demand: Unwholesome products will attract organized efforts to discourage consumption. Like unselling campaigns against cigarettes, alcohol, handguns. Marketing can use fear messages like “it is harmful tohealth”.


Types of markets


·Consumer market: mass consumer goods and services such as soft drinks, toothpaste, air travel etc. Normally B 2 C market

·Business Markets: Companies selling business goods and services face weel trained and well informed professional buyers. They buy goods for their utility or to to make or resell a product to others. Normally B 2 B markets

·Global markets: goods and services for global marketplace . They have to decide which country to enter , how to enter, has to have a fit the cultural practices etc.

·Nonprofit and Governmental Markets: goods to nonprofit organizations like churches, universities, governmental agencies need to be priced carefully. They have to follow long government procedures like tender to get this market. The normal process includes technical bid , price bid and
selection of lowest price.


Changes in market places

  • More Information : With internet , social networking sites, its more esy to take opinion and information on products.
  • Deregulation of market: Developing countries like India has seen deregulation of market . It has opened doors for new products and competition. Better information and transportation facility has globalize the market.
  • Disintermediation : Coming up of internet marketing has started giving stiff competition to established businesses eg. Amazon.

For more details you may visit to http://industrialeducation.blogspot.com/2011/06/changing-markets-challenge-and.html

The Production Concept: The production concept is the oldest concept in business. The production concept holds that consumers will prefer products that are widely available and inexpensive.

Managers of production-oriented business concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than its features. It is also used when a company wants to expand the market.

Some service organizations also operate on the production concept. Many medical and dental
practices are organized on assembly-line principles, as are some government agencies (such as unemployment offices and license bureaus). Although this management orientation ca handle many cases per hour, it is open to charges of impersonal and poor quality service.

The Product Concept:The product concept holds that consumers will favor 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. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. Such was the case when WebTV was launched during Christmas 1996 to disappointing results.

The Selling Concept:The selling concept is another common business orientation. The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organizations products. The organization must, therefore, undertake an aggressive selling and promotion effort.

This concept one assumes that consumers typically show buying inertia or resistance and must
be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying.

The selling concept is practiced in the non-profit area by fund-raisers, college admission offices, and political parties. A political party vigorously sells its candidates to voters. The candidates’ flaws are concealed from the public because the aim is to make a sale and not worry about post purchase satisfaction. After the election, the new official wants and a lot of selling to
get the public to accept policies the politician or party wants.

THE MARKETING CONCEPT

The marketing concept is a business philosophy that challenges the three business orientations
we just discussed.

The marketing concept holds that the key to achieving its organizational goals consists of the
company being more effective than competitors in creating, delivering, and communicating customer values to its chosen target markets.

The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market,focuses on customer needs, coordinates all the activities that will affect customers, and produces profits by satisfying customers.

Target market: Companies do best when they select their target markets carefully and prepare tailored marketing programs.

Customer needs:A company can define its target market but fail to correctly understand the customers’ needs.

Understanding customer needs and wants is not always simple. Some customers have needs of
which they are not fully conscious. Or they cannot articulate these needs. Or they use words that require some interpretation.

We can distinguish among five types of needs:

1. Stated needs

2. Real needs

3. Unstated needs

4. Delight needs

5. Secret needs

Responding only to the stated need may shortchange the customer. Consider a woman who enters a hardware store and asks for a sealant to seal glass windowpanes. This customer is stating a solution and not a need. The salesperson may suggest that tape would provide a better solution. The salesperson met the customers need, not her stated solution.

HOLISTIC MARKETING CONCEPT

1. Relationship Marketing: Relationship marketing is building long term customer relationship to increase customer loyalty. It involves collecting information and need of customer and actively looking for solutions for them. It is one- to one marketing and is not always possible to undertake by every firms . Firms those are involved in B2B marketing actively adapt to relationship marketing to build marketing network.

Marketing network not only involves customers but also includes partners like distributors, wholesalers and agents. Marketing network is a asset of company because it creates customer lifetime value.