Chapter 1 and Part-2: Defining Marketing for New Realities
Part-1: Some Key Terminology
Market: Market is not a place, rather market is the collection of actual and potential buyers of a
product or service or company’s market offerings. There are four main types of markets. They
are:
Consumer Markets: The customer buys market offerings for their personal consumption. Companies
dealing with consumer markets spend a great deal of time to establish a strong brand image, develop a
superior product and packaging, ensure its availability, and back it with engaging communications and
reliable service.
Business Markets: The customer buys market offerings for selling them to other customers before or after
modification. Companies selling business goods and services often face well-informed professional
buyers. Business buyers buy goods to make or resell a product to others at a profit. Advertising can play a
role, but the sales force, the price, and the company’s reputation may play a greater one.
Global Markets: Companies in the global marketplace must decide which countries to enter; how to enter
each; how to adapt product and service features to each country; how to price products in different
countries; and how to design communications for different cultures.
Nonprofit and Governmental Markets: Companies selling to nonprofit organizations with limited
purchasing power such as mosques, universities, charitable organizations, and government agencies need
to price carefully. Lower selling prices affect the features and quality. Higher price drive away the
customers.
Marketplaces, Marketspaces, And Meta-markets: The marketplace is physical, such as a store
you shop in. Example: Dhaka New Market. Marketspace is digital, as when you shop on the Internet.
Example: Amazon.com. Meta-market is a cluster of complementary products and services closely related
in the minds of consumers but spread across a diverse set of industries.
Example: The automobile meta-market consists of automobile manufacturers, new and used car dealers,
financing companies, insurance companies, mechanics, spare parts dealers, service shops, auto
magazines, classified auto ads in newspapers, and auto sites on the Internet.
Value Proposition and Market offerings: Value proposition is the cluster of benefits that company
promises to deliver to its customers. Example: value proposition of Grammarly and I phone
Value proposition is intangible. The tangible form of value proposition is market offerings. Market
offerings is the combination of products, services, information, and experiences offered to customers.
Value proposition is never a product, it is an idea about different benefits or functions, or attributes,
whereas the real version of value proposition is market offerings. The value proposition is the full
positioning of a brand: the full mix of benefits on which it is positioned.
How to write a value proposition: Writing good value proposition depends on comparing your market
offerings to that of your competitors and promising benefits accordingly in relation to the price that you
will charge. There are multiple possible value propositions, of which five can be “winning” (green ones):
More for More: “More-for-more” positioning involves providing the most upscale product or service and
charging a higher price to cover the higher costs. Four Seasons hotels, Rolex watches, Mercedes
automobiles, SubZero appliances—each claims superior quality, craftsmanship, durability, performance,
or style and charges a price to match. Not only is the market offering high in quality, but it also gives
prestige to the buyer. It symbolizes status and a loftier lifestyle.
When Apple premiered its iPhone, it offered higher-quality features than a traditional cell phone with a
hefty price tag to match. Yet “more-for more” brands can be vulnerable. They often invite imitators;
luxury goods that sell well during good times may be at risk during economic downturns.
More for the Same: Companies can attack a competitor’s more-for-more positioning by introducing a
brand offering comparable quality at a lower price. For example, Toyota introduced its Lexus line with a
“more-for-the-same” value proposition versus Mercedes and BMW. Its first headline read: “Perhaps the
first time in history that trading a $72,000 car for a $36,000 car could be considered trading up.” Many
Mercedes owners switched to Lexus, and the Lexus repurchase rate has been 60 percent, twice the
industry average.
The Same for Less: Offering “the same for less” can be a powerful value proposition— everyone likes a
good deal. Discount stores such as Walmart and “category killers” such as Best Buy, PetSmart, David’s
Bridal, and DSW Shoes use this positioning. They don’t claim to offer different or better products.
Instead, they offer many of the same brands as department stores and specialty stores but at deep
discounts based on superior purchasing power and lower-cost operations. For example, AMD makes less
expensive versions of Intel’s market-leading microprocessor chips.
Less for Much Less: A market almost always exists for products that offer less and therefore cost less.
Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers
will gladly settle for less-than-optimal performance or give up some of the bells and whistles in exchange
for a lower price. For example, many travelers seeking lodgings prefer not to pay for what they consider
unnecessary extras, such as a pool, an attached restaurant, or mints on the pillow. Hotel chains such as
Ramada Limited, Holiday Inn Express, and Motel 6 suspend some of these amenities and charge less
accordingly.
Southwest Airlines, the nation’s most consistently profitable air carrier, also practices less-for-much-less
value propositions. From the start, Southwest Airlines has positioned itself firmly as the no-frills, low-
price airline. Southwest’s passengers have learned to fly without the amenities. For example, the airline
provides no meals—just pretzels. It offers no first-class section, only three-across seating in all of its
planes. And there’s no such thing as a reserved seat on a Southwest flight.
More for Less: Of course, the winning value proposition would be to offer “more for less.” Many
companies claim to do this. And, in the short run, some companies can actually achieve such lofty
positions. For example, when it first opened for business, Home Depot had arguably the best product
selection, the best service, and the lowest prices compared to local hardware stores and other home
improvement chains. Yet in the long run, companies will find it very difficult to sustain such best-of-both
positioning.
Value and satisfaction: Value proposition and value are not the same thing. Whereas, value proposition
is the cluster of promised benefits, the value is the ratio between benefits and costs. If the ratio is greater
than 1 then, the customer is having value. That means, value = benefits/ cost.
Now, the benefits can be of two types: functional benefits (example- the mobile battery will give you back
up of two days, the call voice will be noise free, the software will be user friendly etc), emotional benefits
(you will look savvy to your friends, you are feeling happy with the products or other feelings)
Similarly, the cost can be of four different types: monetary cost (actual amount of money that is going out
of your pockets), time cost (how much time you have spent for the product- searching or by other means),
energy cost (physical hassle or journey for the time, energy spent), psychic cost (psychological pain that
you have undergone through). You have to express all the kinds of benefits and costs in terms of money.
Then you will have to calculate the ratio. If ratio is greater than one, then customer is having value or
getting value. If less than one, then customer is not getting value.
There are 3 ways to improve value for customers: 1. Increasing the benefits, while the cost remains the
same; 2. Decreasing the cost, while the benefits remain the same; 3. Increasing the benefits and
decreasing the cost at the same time.
Satisfaction is the feeling of contentment. Satisfaction means that the product is performing as per your
expectations. That means satisfaction: product’ performance = customer expectations. Dissatisfaction:
product’s performance< customer expectations. Delighted: product’s performance> customer
expectations.
Satisfaction cannot alone ensure customer loyalty: it is indeed true that satisfaction increases the
possibility of being loyal, that does not mean satisfaction alone can ensure customer loyalty. A customer
may be dissatisfied with a product but may be loyal to it. For example- we are not satisfied with washa,
polli biddut, and titas gas. But we do not have an alternative. Hence, we are loyal to it. This type of
loyalty is called behavioral loyalty. Another type of loyalty maybe we always talk positively about an
item, but we never buy it. It is called attitudinal loyalty. True loyalty is actually the combination of these
two. That means we will purchase the product and we will talk positively about it. Another thing is Don
Peppers and Martha rogers have said that loyalty = satisfaction+trust+commitment. So, just being
satisfied is not enough to be loyal. We also need to ensure trust and commitment from our customers.
Only then they will be loyal.
Part-2: Company Orientation Toward The Marketplace: Marketing Management Philosophies.
These philosophies essentially answer the questions why customers should try your products or should
purchase your market offerings. There are five marketing management orientation or philosophy. They
are
The Production Concept: The production concept is the oldest concept in business. It 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. Example: the largest PC manufacturer, Legend
(principal owner of Lenovo Group) use this concept. Marketers also use the production concept when
they want to expand the market.
The Product Concept: The product concept proposes that consumers favor products offering the most
quality, performance, or innovative features. Hence the company should focus on continuous product
improvement and innovation. However, managers are sometimes caught in a love affair with their
products. A new or improved product will not necessarily be successful unless it’s priced, distributed,
advertised, and sold properly. Example: Samsung S-23.
The Selling Concept: The selling concept holds that consumers and businesses, if left alone, won’t buy
enough of the organization’s products unless the company undertakes aggressive marketing and
promotions strategies. Buyers normally do not think of buying this kind of product and they are little
aware about it. It is practiced most aggressively with unsought goods—goods buyers don’t normally think
of buying such as insurance and dictionary—and when firms with overcapacity aim to sell what they
make, rather than make what the market wants. Marketing based on hard selling is risky. It assumes
customers coaxed into buying a product not only won’t return or bad-mouth it or complain to consumer
organizations but might even buy it again.
The Marketing Concept: The marketing concept is a sense-and-respond philosophy. It believes that
achieving organizational goals depends on knowing the needs and wants of the target markets and
delivering the desired satisfactions better than competitors do. The job is to find not the right customers
for your products, but the right products for your customers. Dell doesn’t prepare a perfect computer for
its target market. Rather, it provides product platforms on which each person customizes the features he
or she desires in the computer. The marketing concept holds that the key to achieving organizational goals
is being more effective than competitors in creating, delivering, and communicating superior customer
value to your target markets.
The Holistic Marketing Concept: Marketing concepts do not take into consideration society and other
stakeholders. Holistic marketing takes them into consideration. The holistic marketing concept is based
on the development, design, and implementation of marketing programs, processes, and activities that
recognize their breadth and interdependencies. Holistic marketing acknowledges that everything matters
in marketing—and that a broad, integrated perspective is often necessary. There are four pillars of holistic
marketing concepts:
Relationship Marketing: Relationship marketing aims to build mutually satisfying long-term relationships
with key constituents to earn and retain their business.44 Four key constituents for relationship marketing
are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and
members of the financial community (shareholders, investors, analysts).
Integrated Marketing: Integrated marketing occurs when the marketer devises marketing activities and
assembles marketing programs to create, communicate, and deliver value for consumers such that “the
whole is greater than the sum of its parts.” Two key themes are that (1) many different marketing
activities can create, communicate, and deliver value and (2) marketers should design and implement any
one marketing activity with all other activities in mind.
Internal Marketing: Internal marketing is the task of hiring, training, and motivating able employees who
want to serve customers well. It ensures that everyone in the organization embraces appropriate marketing
principles, especially senior management. Smart marketers recognize that marketing activities within the
company can be as important—or even more important— than those directed outside the company. It
makes no sense to promise excellent service before the company’s staff is ready to provide it.
Performance Marketing: Performance marketing requires understanding the financial and nonfinancial
returns to business and society from marketing activities and programs. Top marketers are increasingly
going beyond sales revenue to examine the marketing scorecard and interpret what is happening to market
share, customer loss rate, customer satisfaction, product quality, and other measures. They are also
considering the legal, ethical, social, and environmental effects of marketing activities and programs.
Part-3: Marketing Mix: Origin and Their Relationships
The origins of the 4 Ps can be traced to the late 1940s. The first known mention of a mix has been
attributed to a Professor of Marketing at Harvard University, James Culliton. In 1948, Culliton published
an article entitled, The Management of Marketing Costs in which Culliton describes marketers as "mixers
of ingredients". Years later, Culliton's colleague, Professor Neil Borden, published a retrospective article
detailing the early history of the marketing mix in which he claims that he was inspired by Culliton's idea
of "mixers", and credits himself with popularising the concept of the "marketing mix" According to
Borden's account, he used the term, "marketing mix" consistently from the late 1940s. For instance, he is
known to have used the term "marketing mix" in his presidential address given to the American
Marketing Association (AMA) in 1953. The 4 Ps (product, price, place, and promotion), in its modern
form, was first proposed in 1960 by E. Jerome McCarthy. In 1981, Booms and Bitner proposed a model
of 7 Ps, comprising the original 4 Ps extended by process, people and physical evidence, as being more
applicable for services marketing. Robert F. Lauterborn proposed a 4 Cs classification in 1990. These four
Cs are: consumer wants and needs, cost, convenience, communication. Koichi Shimizu, a professor at
Josai University proposed a 4 Cs classification of marketing mix in 1973. Then in 1979, it was expanded
to the 7Cs Compass Model. These four Cs are corporation, commodity, cost, communication and channel.
Anyone that first formally started learning about marketing is familiar with the 4 P’s. Edmund Jerome
McCarthy introduced the Marketing Mix which we now know as the 4 P’s. Professor Philip Kotler
popularized the 4 P’s even more in his 1967 book called The Principles of Marketing, which is now in its
16th edition. Here are the famous 4 P's:
Product - item that satisfies what a consumer demands.
Price - amount a customer pays for the product.
Place - distribution of the product.
Promotion - methods of communication that a marketer may use to provide information to different
parties about the product.
But now marketing is going through a paradigm shift, and some are calling for these to be reinvented and
change part of the mainstream thought process mix. Jagdish Sheth (read the marketing memo for
details), Professor of Marketing in the Goizueta Business School at Emory University, wrote in 2011 a
book titled “The 4 A's of Marketing: Creating Value for Customer, Company and Society.” Robert F.
Lauterborn, Professor of Advertising in the School of Journalism and Mass Communication at University
of North Carolina wrote in 1990 about the 4 C’s of Marketing. Brian Fetherstonhaugh, Chairman and
CEO, OgilvyOne Worldwide wrote in 2009 about the 4 E’s of Marketing.
Here is my breakdown of the A's, C's, E's and P's:
Acceptability--->Consumer--->Experience--->Product
Affordability--->Costs--->Everyplace--->Place
Accessibility--->Convenience--->Exchange--->Price
Awareness--->Communication--->Evangelism--->Promotion
The 4 A’s: Acceptability, Affordability, Accessibility and Awareness. According to Professor Sheth, “the
4A framework derives from a customer-value perspective based on the four distinct roles that customers
play in the market: seekers, selectors, payers and users.”
The 4 C’s: Consumer, Costs, Convenience, and Communication. According to Professor Lauterborn, you
have to start studying Consumer wants and needs, understanding their Cost to satisfy that want or need,
thinking about Convenience to buy and communication that creates a dialogue.
The 4 E’s: Experience, Everyplace, Exchange, and Evangelism. According to Fetherstonhaugh, you have
to stop thinking just about your product and start thinking about the full Experience, intercept consumers
on their turf and on their terms, and that could be anyplace or Everyplace, offer your consumers
something valuable in Exchange for their attention, their engagement and their permission, all to inspire
your customers in becoming Evangelists for your brand.
All of these mixes have one thing in common: Creating "Value" by looking at marketing through
the lens of the Customer. The 4 P's for me stand as the foundation of any effective marketing campaign.
Realizing we do have to speak the in the language of the customer I think the 4 A's C's and E's are a great
way for the modern marketer to get started in a world where demand for inbound/content marketing is
increasing to provide a valuable customer experience.
