WHAT IS MARKETING?

• “The aim of marketing is to make selling

unnecessary.” -
Peter Drucker

Obtain
need & want
individuals Organizations
Creating &
exchanging
value
 Implications of marketing
• Who are our existing / potential customers?
• What are their current / future needs?
• How can we satisfy these needs?
• Can we offer a product/ service that the customer
would value?
• Can we communicate with our customers?
• Can we deliver a competitive product of service?
• Why should customers buy from us?
 Nature of Marketing
• It is a process
• Marketing is about discover needs.
• It helps companies to satisfy customers’
needs.
• And it helps companies to maximize profits.
 Needs
the basic human requirement,
it is not created by marketers
Maslow’s Hierarchy of Needs
 Wants
specific objects that might
satisfy the need
 Demands
wants for specific products backed
by ability to pay
 Values
reflect the sum of the perceived tangible and
intangible benefits and cost to customers.
It’s a combination of quality, service and
price (QSP)
 • Customers buy benefits not
products

Attention
• Different Customers have
different needs, wants &
tastes. So products values are
different.
 Satisfaction

Reflects a person’s judgements of outcome

(perceived performance) related to his
expectations.
Marketing’s Value to
Consumers, Firms, and
Society
Marketing—What’s It All About?

More than Selling and Advertising

All Those
More than Selling and Advertising
Bicycles!
Things a Firm Should Do in Producing a Bike

Analyze Needs

Predict Wants
Estimate Demand

Predict When

Determine Where

Estimate Price

Decide Promotion
Estimate Competition

Provide Service
Production vs. Marketing

Marketing
Makes sure right goods &
services are produced

Production
• Making Goods
• Performing Services

Creates Customer Satisfaction

 Exhibit 1-1
Types of Utility and How They Are Provided

Provided by production with Provided by marketing

guidance of marketing
Time
Form

Utility
Value that comes Place
from satisfying
human needs

Task
Possession
What Is Marketing?

Micro Macro

• Set of activities • Social process

OR
• Performed by • Matches supply
organizations with demand
Micro-Marketing

Profit and More than

Nonprofit Persuasion

Focus of Begins with

Your Text Key Needs
Characteristics

Builds Doesn’t Go
Relationships It Alone
Involves
Exchanges
Macro-Marketing

Emphasis on Every Economy

Whole System Needs It

Key
Characteristics

Matches
Producers and
Consumers
Can Mass Production Satisfy a Society’s
Consumption Needs?

Economies of Scale Lower Cost

Cost
$

Output
Marketing Bridges the Gap!

Producers Marketing Consumers

Functions
The Universal Functions of Marketing

Buying Selling

Market
Information Transporting
Marketing
Functions
Risk Taking Storing

Standardization
Financing
& Grading
Who Performs Marketing Functions?

Producers Wholesalers Other

Specialists

Transport
Firms Retailers
Ad Agencies
ISP's

Product
Testing Research
Firms Firms Consumers
How Decisions Are Made in an Economic System

Planned Economic Market-Directed

System System

• Government • Adjusts itself

planners decide • Price is value
• Can work well if: OR measure

• Simple • Freedom of choice

economy • Government’s role
• Adverse limited
Conditions
Marketing’s Role Has Changed Over Time

Focus:
Simple Trade Era
Sell Surplus

Focus:
Production Era
Increase Supply

Focus:
Sales Era
Beat Competition

Marketing Department Focus:

Era Coordinate and Control

Focus: Long-Run
Marketing Company Era
Customer Satisfaction
The Marketing Concept

Customer Total Company

Satisfaction Effort

The
Marketing
Concept

Profit
 An organization aims all of its
efforts at satisfying its
Marketing customers—at a profit.
Concept
 production orientation

 marketing orientation
The Marketing Concept and Customer Value

Take Customer’s
Point of View

Customer May
Not Dwell On
Value

Costs Benefits Where Does

Competition Fit?

Customer Value
Builds
Relationships
Customer value

the difference between the benefits a

customer sees from a market offering and
the costs of obtaining those benefits.
Satisfying Customers with Superior Customer Value to Build
Profitable Relationships
Putting It All Together

Superior
Customer Value
Total Company
Customer
Effort to Satisfy
Acquisition
Customers

Profitable
Customer
Relationships with
Satisfaction
Customers

Customer
Retention
 The Marketing Concept Applies in
Nonprofit Organizations

Support and
Newcomers to
“Satisfied
Marketing
Customers”

Characteristics
of Nonprofit
Marketing Organizations The Bottom
Concept
Line
Provides Focus
May Not Be
Organized for
Marketing
Marketing Strategy
Planning
The Management Job in Marketing

Whole-Company
Marketing Strategic
Management
Planning Planning

Control Marketing Plan(s) Implement Marketing

and Program Plan(s) and Program
Selecting a Market-Oriented Strategy Is Target Marketing

Production-oriented manager sees Marketing-oriented manager

everyone as basically similar and sees everyone as different and
practices “mass marketing” practices “target marketing”
Developing Marketing Mixes for Target Markets

Product Place

Price Promotion
Strategy Decision Areas Organized by 4Ps
The Product Element of the Marketing Mix

+
The Place Element of the Marketing Mix

Examples of Channels of Distribution

Del Procter &

AOL Nissan Monte Gamble

Wholesaler Wholesaler

Wholesaler

Retailer Retailer Retailer

Consumer
The Promotion Element of the Marketing Mix

Personal
Advertising
Selling

Telling and
Selling
the Customer

Sales
Publicity
Promotion
The Price Element of the Marketing Mix

Price of Other Pricing

Objectives Price
Products In
Flexibility
the Line
Competition Price Changes
and Over the Life
Substitutes Price Cycle
Setting Discounts
Price
and
Sensitivity
Allowances

Cost and Geographic

Legal
Demand Pricing Terms
Environment
 All Four Ps Contribute to the Whole

Product

Place Selection
of Target
Promotion Market

Price

Understanding the Target Market Leads to Good Strategies!

The Marketing Plan Guides
Implementation and Control

Target
Market
+ Marketing
= Strategy
Marketing Marketing
Mix + =
Time- Plan
A Firm’s
Related + Marketing
=
Details Other Program
Marketing
Plans
 CUSTOMER EQUITY

• The expected earnings stream (profitability) of a firm’s

current and prospective customers over some period of
time.

• Customer equity focuses on the revenues and

costs of acquiring, retaining, and enhancing customers.
 Creative Strategy Planning Needed for Survival

Death-wish Best-practices
marketing marketing

(Below (Above
average) average)
68%
(Well below (Average (Well above
average) Marketing average)
Program)
2% 14% 14% 2%
Failure Poor Fair Good Exceptional
What Are Attractive Opportunities?

Breakthrough
Opportunities

Avoid Hit-or-Miss Competitive

Marketing Advantage
Marketing Strategy Planning Process Highlights Opportunities

External Market Environment

 Types of Opportunities to Pursue

Present products New products

Present Market Product

markets penetration development

New Market Diversification

markets development
International Opportunities Should Be Considered

Smaller
World

Competitive
Early Start
Advantage

Better
Trends?