What is Marketing?.

1. What is Marketing?. • A social and Managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others. (Philip Kotler) • The process of planning and executing the conception, pricing, promotion, distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. (AMA)

2. Marketing as a set of activities? • Promotion • Customer service • Market Research • Selling • Distribution • Branding

3. What is customer satisfaction? • Customer satisfaction is the extent to which a product or service meet customer’s expectations. The primary goal of every organization is to meet or exceed customer’s expectations.

4. What are the benefits of customer satisfaction? • Improve profits • Increase revenue • Increase customer referrals • Increase customer Loyalty or customer retention • Reduce marketing costs

5. Key Marketing Concepts • Needs, Wants, Demand • Products (goods, services, and ideas) • Value, Costs • Exchange, Transaction, Markets

6. Needs, Wants & Demand • A need is a state of felt deprivation. For example, a need is created when one feels thirsty, lonely, threatened etc • Wants are needs based on who we are. • Demand consists of human wants backed by purchasing power.

7. Products & Services • A product is anything that can be offered to satisfy a need or want. • A product can be either tangible or intangible or both. Service is an intangible product.

8. Value & Costs • Value is the ratio of benefits to the sacrifice necessary to obtain those benefits. • The sacrifice include costs in terms of money, time, image, and energy etc. Costs also include forgone opportunities.

9. Exchange, Transaction, Markets • Exchange is the act of obtaining something by offering something in return. • A transaction occurs when two or more parties enter into an exchange agreement (i.e. the parties agree on terms of exchange) • A Market consists of people & organizations with needs and wants, who have the means to pay & the willingness to buy.

10. Conditions of exchange: • There must be at least two parties( a buyer & a seller) • Each party must have something of value to offer. • Each party must be capable of communicating with the other party and of delivering the goods. • Each party must be free to accept or reject the other’s offer. • Each party must want to deal with the other party.

11. Marketing Orientations • Production Orientation • Product Orientation • Sales Orientation • Marketing Orientation • Societal Marketing Orientation • Relationship Marketing

12. Production Orientation • Less emphasis is put on customer needs & wants. • Hence, leading to Marketing myopia. • The assumption holds where demand exceeds supply and where costs are high and needs to be decreased to expand the market. • Assumes that consumers prefer products that are widely available and affordable. • Focuses on improving production and distribution processes to make them more efficient.

13. Product Orientation • Assumes that consumers favor products that offer the most in terms of quality, performance or innovative features. E.g. manufacturers of mobile phones, TV sets, radio, cars etc. • Ignores customer needs & focuses on producing the best product. • Also leads to marketing myopia

14. Sales Orientation • Assumes that consumers will not ordinarily buy enough of the firm’s products unless the firm engaged in aggressive selling tactics. • Focuses more on selling what the firm has rather than what the consumers really need or want. • Also leads to marketing myopia • Assumption holds when supply exceeds demand. • Political parties use selling concept.

15. Marketing Orientation • Assumes that the key to achieving organizational goals is to know the needs and wants of target consumers and deliver desired goods and services better than competitors. • Focuses on satisfying the needs and wants of target market • Use long-term planning approach

16. Societal Marketing Orientation • Organizations must determine the needs and wants of target consumers and deliver desired satisfactions in ways that also enhances society’s well- being. • Calls marketers to build social and ethical considerations into their marketing practices. • Call for balance between profits, customer wants satisfaction and public interests.

17. The Marketing Environment • Comprise of the actors and forces outside marketing that affect marketing manager’s decisions. • The marketing environment is constantly changing and presents both opportunities & threats to the organization’s marketing efforts.

18. Micro-environment • Marketing intermediaries • Customers • Competitors • Publics. • Forces close to the firm that affect its ability to serve its customers including • the company • Suppliers

19. Macro-environment • The effects of the macro-environment on marketing decisions are uncontrollable. • Broader societal factors that affect marketing decisions: Demographic ; Economic; Natural, Technological; Political & Cultural Forces

20. Consumer Behavior. • The study of how consumers select, buy, use, and dispose of goods, services, or experiences to satisfy their needs and wants. • The process through which consumers select, buy, use, and dispose of goods, services, or experiences to satisfy their needs and wants.

21. Development of consumer behavior as a field of study • Psychology- the study of behavior & mental processes of people. • Sociology – the study of the behavior of people is a social setting. • Anthropology – the study of people in relation to their culture • Economics – the study of people as rational beings

22. Why do we have to study consumer behavior? • To gain insights into our own consumption patterns as consumers. • To gain insights into why consumers act the way they do and to influence that behavior to achieve organizational goals. • To help us make informed decisions as public policy makers. • To help us effectively represent consumer interests and rights.

23. Consumer Buying Decision Process. • Need recognition • Information search • Evaluation of Alternatives • Purchase Decision • Post Purchase Behavior

24. Factors Influencing Consumer Behavior • Personal Factors: lifestyle (AIOs), Occupation, Education, Income, Economic situation, Age, sex,. • Psychological Factors: Perception, Learning, Motivation, attitudes, Personality, Self-concept. • Social Factors: Family, Reference Groups, Social Class, Culture • Cultural factors- norms, values , belief systems

25. Organizational buyer behavior • The decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. (Kotler, 1997p 204)

26. Organization Vs Consumer Markets • Organisations • Buy to use in producing other products or for resale to final consumers • Purchase decision by group • Individuals or households • Buy for personal use • Individual or group purchase decision

27. Buying situations • Straight rebuy – routine purchases. • Modified rebuy- the buyer wants to modify product specifications, prices, delivery requirements or other items. • New task- Buying for the first time.

28. Key players in organizational buying process • Gatekeepers • Initiators • Users • Influencers • Deciders • Approvers • Buyers

29. Organizational Buying Process • Problem Recognition • General Need Description • Product Specification • Supplier Search • Proposal Solicitation • Supplier Selection • Order Routine Specification • Performance Review

30. Factors Influencing Organizational Purchasing • Environmental factors e.g. Economic, political and technological factors. • Organizational factors. E.g. Buying policies and or procedures • Interpersonal factors e.g. Authority, status, interests of those certain people. • Individual factors . E.g. personality, attitudes towards risk, education etc.

31. Marketing Segmentation • Division of a market into distinct groups of consumers with common characteristics and who might requires separate products or marketing mixes.

32. Rational for Market Segmentation • Consumers differ in one or more ways. • Different consumers require different marketing tools. • Organizational resources are limited.

33. Common Bases for segmenting consumer mkts • Socio-cultural factors:-culture, religion, social class • Use-related characteristics:- Usage rate (heavy, medium, light users); awareness; loyalty • Use-situation:- time; occasion objective • Benefits sought:- convenience • Combination of the above • Geographic factors:- country, location • Demographic factors:- age, gender, education, family size, occupation • Psychographic characteristics;-lifestyle(, personality (independent, impulsive, self confident)

34. Requirements for effective segmentation • Measurable:-size, purchasing power etc • Accessible:-Can be reached easily • Substantial’:- Large enough to make profits. • Differentiable:-respond differently to different marketing programs • Actionable:-Effective marketing programs can be developed to serve the segments

35. Market Targeting • The process of evaluating and selecting market segments. • Three factors used in evaluation: • Segment size & growth • Segment structural attractiveness • Co. objectives & resources

36. Undifferentiated Targeting • Saves production and marketing costs through economies of scale. • Also known as mass marketing, ignores market segments and goes for the whole market with one product and one marketing program. • The firm relies on mass distribution & mass advertising • Coca cola & Ford cars

37. Concentrated targeting • Involves high risks due to changes in consumer tastes or competition. • Focus on one market segment or niche • Firm develops strong knowledge of the market • Attains a strong market position

38. Multi segment targeting • GM produced a car for every purse, purpose, and personality. Toyota etc • Creates more total sales than undifferentiated targeting • High costs • Also known as differentiated targeting. • Operates in Different market segments are selected. • Different marketing program for each segment.

39. Micro Marketing • Tailoring products and marketing programs to the needs of specific individuals or location. • Local marketing- focus on local consumer groups. • Individual marketing-focus on individual needs

40. Choosing a targeting strategy • Depends on: • Company resources • Product variability • Market variability • Competitor’s marketing strategies

41. Positioning • Defined by Ries and Trout(1986) in the book “Positioning: The Battle for your mind” as: the place a firm, product or brand occupies in consumer’s minds relative competing offerings. • Kotler(2000) defined positioning as the act of designing the company’s offering and image to occupy a distinct place in the target market’s mind.

42. Differentiation • The processes of identifying something unique/different about the firm or its products. • Differentiation variables for : • Products :- features, reliability, style , durability, serviceability etc • Services: - Delivery, installation, • Personnel:- Competence, courtesy • Channel:- Coverage, expertise • Image:- Symbol, events,

43. Differentiating criteria • Preemptive –cannot be easily copied • Communicable- easy to see or explain • Affordable – afforded by buyers • Profitable- co. can make profit • Distinctive-distinctively offered. • Superior –the difference is superior.

44. Marketing Mix or 4Ps • Marketing mix: tools used to develop marketing strategies. These are: Product, Price, place (Distribution) and promotion. • The organisation must come up with a blend of the marketing mix elements that can help it achieve its objectives more efficiently and effectively than competitors.

45. Product • A product is anything that can be offered to satisfy a need or want including goods and services.

46. Product levels • A product can be conceptualized as: • Core Benefit;- A core benefit is the fundamental benefit that the consumer is really buying • Basic product :-Transformation of a core benefit into a product with basic features. • Expected product:-A set of attributes/features and conditions that buyer expects to find in a product in a given situation. • Augmented product:- A product that not only meets the customers’ expectations but exceeds them • Potential product:- A product viewed in terms of its future potentials

47. Product Classifications • Consumer products:-purchased by final users for personal use.. • Industrial products:- used to manufacture other goods or services. • Product line :–a group of closely related product items • Product mix- All products that an organization sells. • Brand:- A name, term, symbol, design or combination thereof that identifies a seller’s products.

48. Types of consumer products • Convenience product –an inexpensive item that merits little shopping effort. • Shopping products-usually more expensive that requires more shopping effort. • Specialty products- unique products, with significant shopping effort. • Unsought products-unknown to the potential buyer or buyer does not actively seek.

49. Steps in New Product Development • Idea generation • Idea screening • Concept development & testing • Business analysis • Development stage • Test marketing • Commercialization

50. Concept development & testing • Product concept is a detailed version of the product idea stated in meaningful consumer terms. E.g. A low cost car used to run errands & visiting friends around town. • Concept testing entails presenting the concept (picture, drawing, miniature) to target consumers to gauge their reaction.