Introduction to Marketing

1. Introduction to Marketing

2. What is Marketing? There are many different definitions of marketing. Consider some of the following alternative definitions: • “The all-embracing function that links the business with customer needs and wants in order to get the right product to the right place at the right time” • “The achievement of corporate goals through meeting and exceeding customer needs better than the competition” • “The management process that identifies, anticipates and supplies customer requirements efficiently and profitably” • “Marketing may be defined as a set of human activities directed at facilitating and consummating exchanges” • Which definition is right? In short, they all are. They all try to embody the essence of marketing: • Marketing is about meeting the needs and wants of customers; • Marketing is a business-wide function – it is not something that operates alone from other business activities; • Marketing is about understanding customers and finding ways to provide products or services which customers demand

3. What is Marketing? • To help put things into context, you may find it helpful to often refer to the following diagram which summarises the key elements of marketing and their relationships:

4. The Marketing Concept Marketing concept and orientation • It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This important perspective is commonly known as the marketing concept. • The marketing concept is about matching a company's capabilities with customer wants. This matching process takes place in what is called the marketing environment. • Businesses do not undertake marketing activities alone. They face threats from competitors, and changes in the political, economic, social and technological environment. All these factors have to be taken into account as a business tries to match its capabilities with the needs and wants of its target customers. • An organisation that adopts the marketing concept accepts the needs of potential customers as the basis for its operations. Success is dependent on satisfying customer needs.

5. Customer needs and wants What are customer needs and wants? • A need is a basic requirement that an individual wishes to satisfy. • People have basic needs for food, shelter, affection, esteem and self-development. Many of these needs are created from human biology and the nature of social relationships. Customer needs are, therefore, very broad. • Whilst customer needs are broad, customer wants are usually quite narrow. • A want is a desire for a specific product or service to satisfy the underlying need. • Consider this example: • Consumers need to eat when they are hungry.What they want to eat and in what kind of environment will vary enormously. For some, eating at McDonalds satisfies the need to meet hunger. For others a microwaved ready-meal meets the need. Some consumers are never satisfied unless their food comes served with a bottle of fine Chardonnay.

6. Customer needs and wants • Consumer wants are shaped by social and cultural forces, the media and marketing activities of businesses. • This leads onto another important concept - that of customer demand: • Consumer demand is a want for a specific product supported by an ability and willingness to pay for it. • For example, many consumers around the globe want a Mercedes. But relatively few are able and willing to buy one. • Businesses therefore have not only to make products that consumers want, but they also have to make them affordable to a sufficient number to create profitable demand. • Businesses do not create customer needs or the social status in which customer needs are influenced. It is not McDonalds that makes people hungry. However, businesses do try to influence demand by designing products and services that are • Attractive• Work well• Are affordable• Are available • Businesses also try to communicate the relevant features of their products through advertising and other marketing promotion.

7. Setting marketing objectives Objectives set out what the business is trying to achieve. • Objectives can be set at two levels: • (1) Corporate level • These are objectives that concern the business or organisation as a whole • Examples of “corporate objectives might include:• We aim for a return on investment of at least 15%• We aim to achieve an operating profit of over £10 million on sales of at least £100 million• We aim to increase earnings per share by at least 10% every year for the foreseeable future • (2) Functional level • e.g. specific objectives for marketing activities • Examples of functional marketing objectives” might include:• We aim to build customer database of at least 250,000 households within the next 12 months• We aim to achieve a market share of 10%• We aim to achieve 75% customer awareness of our brand in our target markets • Both corporate and functional objectives need to conform to the commonly used SMART criteria.

8. SMART Objectives • The SMART criteria (an important concept which you should try to remember and apply in exams) are summarised below: • Specific - the objective should state exactly what is to be achieved. • Measurable - an objective should be capable of measurement – so that it is possible to determine whether (or how far) it has been achieved • Achievable - the objective should be realistic given the circumstances in which it is set and the resources available to the business. • Relevant - objectives should be relevant to the people responsible for achieving them • Time related - objectives should be set with a time-frame in mind. These deadlines also need to be realistic.