The New Economy

Increased buying power. Greater variety of goods and services. Increased information.

Enhanced shopping convenience.

Greater opportunities to compare product information with others.

The New Economy

- Websites can provide companies with powerful new information and sales channels. - Companies can collect fuller and richer information about markets, customers,prospects and competitors. - Companies can facilitate and speed up communications among employees.

- Companies can have 2-way communication with customers and prospects

The New Economy

-Companies can send ads, coupons, samples, information to targeted customers. -Companies can customize offerings and services to individual customers. -The Internet can be used as a communication channel for purchasing, training, and recruiting. - Companies can improve logistics and operations for cost savings while improving accuracy and service quality.

Three things that all companies need to deal with

Global forces will continue to affect everyones business and personal life. Technology will continue to advance and amaze us. There will be a continuing push toward deregulation of the economic sector.

Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is meeting needs profitably.

e.g. IKEA, which notices that people want good furniture at a substantially lower price and creates knock-down furniture. Britannia, which notices that people are moving towards a healthy lifestyle and launches Nutrichoice.

Some of the benefits of good marketing are:

It promotes the company, increases its visibility and exposure and lets people know about the companys products and services.
Differentiates Products/Services of the company by positioning it in a unique way. Helps the company to acquire new business and retain old customers. Generates income for the company and helps build networks with other professionals--to further enhance company growth.

COMPANY ORIENTATION TOWARDS THE MARKET-PLACE

Production Concept
Consumers will favour those products that are widely available and low in cost.

Therefore increase production and cut down costs.

And build profit through volume.

Product Concept
Consumers will favour those products that offer the most quality, performance or innovative features

Therefore, improve quality, performance and features

This would lead to increased sales and profits

The Selling Concept

Consumers , if left alone , will not buy enough of companys products. Therefore, promote sales aggressively. And,build profit through quick turnover.

The Marketing Concept

The key to achieving organizational goals consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. And build profit through customer satisfaction and loyalty.

The different concepts based on which the marketing philosophies are based are:
Production concept the focus is on achieving high production efficiency, low costs and distribution so that the products are inexpensive and widely available to the customers. Product concept the focus is on the product quality, performance and innovative features. Selling concept the focus is on aggressive selling and promotion in order to sell more and make profit. Marketing concept the focus is on being more effective than the competitor in creating, delivering and communicating value to the customer in chosen target markets. Holistic marketing concept- The holistic concept adopts a broad integrated perspective to marketing and its components are relationship marketing, integrated marketing, internal marketing and performance marketing.

Relationship Marketing
Marketing Partners Customers

Members of Financial Community Employees

Outcome: Marketing Network

Goals of Relationship Marketing

Partner Relationship Management

It costs 5 times more to Acquire a new customer than to Retain the old.

When all of the companys departments work together to serve the customers interests,the result is integrated marketing. The objective is to design fully integrated marketing programmes to create, communicate and deliver value for customers.

Integrated Marketing Communication : A management concept that is designed to make all aspects of marketing communication such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than permitting each to work in isolation.

Integrated Marketing - key themes

1. Many different marketing activities communicate and deliver value.

2. When coordinated, marketing activities maximize their joint efforts.

INTERNAL MARKETING
1. Various marketing functions sales force, advertising, customer service,product management, marketing researchmust work together. All of these functions must be coordinated from the customers point of view.

2. Marketing must be embraced by the other departments.

Performance Marketing
Understanding the returns to business from marketing activities & addresses concerns and their effects on legal, ethical, social and environmental effects.

FINANCIAL ACCOUNTABILITY

SOCIAL RESPONSIBILITY MARKETING

Profitability

Brand Building
Growing Customer Base

The organizations task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in away that preserves or enhances the consumers and the societys well-being.

SOCIAL RESPONSIBILITY MARKETING

C A U S E
R E L A

Cause-related Marketingactivity by which a company with an image, product, or service to market builds a relationship or partnership with a cause, or a number of causes, for mutual benefit. They see it as affording an opportunity for companies to enhance: their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase press coverage. They believe that customers will increasingly look for demonstrations of good corporate citizenship

Societal Marketing Concept

T E D

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest.

Marketings first task: discovering consumer needs

Marketings second task: satisfying consumer needs

The AMA managerial definition:

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Kotlers social definition:

Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

An organizations marketing department relates to many people, groups, and forces

Vs
MARKETING SELLING

MARKETING vs. SELLING

The aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. (Peter Drucker) Examples: Sonys Walkman, Nintendos superior video game Marketing includes selling but should be preceded by needs assessment, marketing research, product development, pricing and distribution. Marketing based on hard selling carries high risk. Dissatisfied customers.

Scope of Marketing
10 Things that can be marketed!!

???

Physical goods constitute the bulk of most countries production and marketing effort. In developing nations, goodsparticularly food, commodities, clothing, and housingare the mainstay of the economy

As economies advance, a growing proportion of their activities are focused on the production of services. The U.S. economy today consists of a 7030 services-to-goods mix.

TREKKING

AMUSEMENT PARK

MOUNTAINEERING

BUNJEE JUMPING

IN-FLIGHT EXPERIENCE

BUSINESS CLASS EXPERIENCE

Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and new residents. Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies.

Properties are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds).

Organizations actively work to build a strong, favorable image in the mind of their public

The production, packaging, and distribution of information is one of societys major industries. Among the marketers of information are schools and universities; publishers of encyclopedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites.

Every market offering has a basic idea at its core. In essence, products and services are platforms for delivering some idea or benefit to satisfy a core need.

Three stages through which marketing practice might pass:

1. Entrepreneurial marketing: Most companies are started by individuals who visualize an opportunity and knock on every door to gain attention. 2. Formulated marketing: As small companies achieve success, they inevitably move toward more formulated marketing adopting some of the tools used in professionally run marketing companies.

3. Intrepreneurial marketing: Many large companies get stuck in formulated marketing, pouring over the latest ratings, scanning research reports, trying to fine-tune dealer relations and advertising messages. These companies lack the creativity and passion to think out of the box.

Market: the set of all actual or potential buyers of a product or service.

Target Markets and Segmentation Marketers and Prospects Needs, Wants, and Demands Product or Offering Value and Satisfaction Exchange and Transactions Relationships and Networks Marketing Channels Supply Chain Competition Marketing Environment Marketing Mix

Target markets & segmentation

Differences in needs, behaviour, demographics or psychographics are used to identify segments The segment served by the firm is called the target market The market offering is customized to the needs of the target market

Market Segmentation: Divide Market into segments Of customers

Target Market: Select the segment to cultivate

Target Market

Traditionally, a market was a physical place where buyers and sellers gathered to exchange goods. Now marketers view the sellers as the industry and the buyers as the market. The sellers send goods and services and communications (ads, direct mail, e-mail messages) to the market; in return they receive money and information (attitudes, sales data).

A global industry is one in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions.

Global firmsboth large and smallplan, operate, and coordinate their activities and exchanges on a worldwide basis.

Marketplace and a Marketspace

The marketplace is physical, as when one goes shopping in a store; marketspace is digital, as when one goes shopping on the Internet.

The Metamarket, a concept proposed by Mohan Sawhney, describes a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. The automobile metamarket 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.

Metamediaries can serve various metamarkets, such as the home ownership market, the parenting and baby care market, and the wedding market.

Marketers and Prospects

A marketer is someone who is seeking a response (attention, a purchase, a vote, a donation) from another party, called the prospect. If two parties are seeking to sell something to each other, both are marketers.

Eight demand states are possible.

NEGATIVE DEMAND consumer dislike the product. NONEXISTENT DEMAND consumer may be uninterested in the product. LATENT DEMAND consumer may share a strong need that cannot be satisfied by an existing product. DECLINING DEMAND consumer buy a product less frequently.

Eight demand states are possible.

IRREGULAR DEMAND consumer purchases vary on seasonal, monthly, etc.
FULL DEMAND consumer are adequately buying all products. OVERFULL DEMAND more consumers would like to buy the product. UNWHOLESOME DEMAND consumer may be attracted to products that have undesiderable social consequences

Needs, Wants and Demands

Needs describe basic human requirements such as food, air, water, clothing, and shelter. People also have strong needs for recreation, education, and entertainment. These needs become wants when they are directed to specific objects that might satisfy the need.

Wants are shaped by ones society

An American needs food but wants a hamburger, French fries, and a soft drink. A person in Mauritius needs food but wants a mango, rice, lentils, and beans. wants are shaped by ones society. Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are able and willing to buy one. Companies must measure not only how many people want their product, but also how many would actually be willing and able to buy it. Marketers do not create needs: Needs pre-exist marketers. Marketers influence wants. Marketers might promote the idea that a Mercedes would satisfy a persons need for social status. They do not, however, create the need for social status.

Needs - state of felt deprivation including physical, social, and individual needs.

PHYSICAL NEED: HUNGER

SOCIAL NEED: COMPANY

Maslows Hierarchy of Needs

Wants Needs become wants when they are directed to specific objects that might satisfy the need.

HUNGER: CAKES COMPANY: POOLSIDE PARTY

Product or Offering People satisfy their needs and wants with products.

A product is any offering that can satisfy a need or want, such as one of the 10 basic offerings of goods, services, experiences,events, persons, places, properties, organizations, information, and ideas.
A brand is an offering from a known source. A brand name such as McDonalds carries many associations in the minds of people: hamburgers, fun, children, fast food, golden arches. These associations make up the brand image. All companies strive to build a strong, favorable brand image.

Value and Satisfaction

The buyer chooses between different offerings on the basis of which is perceived to deliver the most value. Value is defined as a ratio between what the customer gets and what he gives. The customer gets benefits and assumes costs, as shown in this equation:

The marketer can increase the value of the customer offering by:

(1) raising benefits, (2) reducing costs, (3) raising benefits and reducing costs, (4) raising benefits by more than the raise in costs, or (5) lowering benefits by less than the reduction in costs. A customer choosing between two value offerings, V1 and V2, will examine the ratio V1/V2:
She will favor V1 if the ratio is larger than one; She will favor V2 if the ratio is smaller than one; and She will be indifferent if the ratio equals one.

Value and Satisfaction

10

10

Satisfaction is high

Satisfaction is low

Performance

Expectation

Performance

Expectation

Exchange and Transactions

Exchange, the core of marketing, involves obtaining a desired product from someone by offering something in return. For exchange potential to exist, five conditions must be satisfied: 1. There are at least two parties. 2. Each party has something that might be of value to the other party. 3. Each party is capable of communication and delivery. 4. Each party is free to accept or reject the exchange offer. 5. Each party believes it is appropriate or desirable to deal with the other party.

EXCHANGE

Producers/ Sellers

Buyers Firms Customers

Types of Exchanges

B2B B2C C2C C2B

Exchange is a value-creating process because it normally leaves both parties better off. Exchange is a process rather than an event. Two parties are engaged in exchange if they are negotiatingtrying to arrive at mutually agreeable terms. When an agreement is reached, we say that a transaction takes place. A transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement. Usually a legal system exists to support and enforce compliance among transactors. However, transactions do not require money as one of the traded values. A barter transaction, for example, involves trading goods or services for other goods or services. Transaction differs from a transfer. In a transfer, A gives a gift, a subsidy, or a charitable contribution to B but receives nothing tangible in return.

Relationships and Networks

Transaction marketing is part of a larger idea called relationship marketing. Relationship marketing aims to build long-term mutually satisfying relations with key parties customers, suppliers, distributorsin order to earn and retain their long-term preference and business. Relationship marketing builds strong economic, technical, and social ties among the parties. It cuts down on transaction costs and time. A marketing network consists of the company and its supporting stakeholders (customers, employees, suppliers, distributors, university scientists,and others) with whom it has built mutually profitable business relationships.

Increasingly, competition is not between companies but rather between marketing networks, with the profits going to the company that has the better network.

Marketing Channels To reach a target market, the marketer uses three kinds of marketing channels: Communication channels deliver messages to and receive messages from target buyers. They include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, audiotapes, and the Internet. Beyond these, communications are conveyed by facial expressions and clothing, the look of retail stores, and many other media. Marketers are increasingly adding dialogue channels (e-mail and toll-free numbers)to counterbalance the more normal monologue channels (such as ads). The marketer uses distribution channels to display or deliver the physical product or service(s) to the buyer or user. There are physical distribution channels and service distribution channels, which include warehouses, transportation vehicles, and various trade channels such as distributors, wholesalers, and retailers. The marketer also uses selling channels to effect transactions with potential buyers. Selling channels include not only the distributors and retailers but also the banks and insurance companies that facilitate transactions.

Supply Chain
Whereas marketing channels connect the marketer to the target buyers, the supply chain describes a longer channel stretching from raw materials to components to final products that are carried to final buyers. For example, the supply chain for womens purses starts with hides, tanning operations, cutting operations, manufacturing, and the marketing channels that bring products to customers. This supply chain represents a value delivery system. Each company captures only a certain percentage of the total value generated by the supply chain. When a company acquires competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value.

Competition
Competition, a critical factor in marketing management, includes all of the actual and potential rival offerings and substitutes that a buyer might consider. Degree of product substitutability: 1. Brand competition: A company sees its competitors as other companies that offer similar products and services to the same customers at similar prices. Volkswagen might see its major competitors as Toyota, Honda, and other manufacturers of medium price automobiles, rather than Mercedes or Hyundai. Industry competition: A company sees its competitors as all companies that make the same product or class of products. Thus, Volkswagen would be competing against all other car manufacturers. Form competition: A company sees its competitors as all companies that manufacture products that supply the same service. Volkswagen would see itself competing against manufacturers of all vehicles, such as motorcycles, bicycles, and trucks. Generic competition: A company sees its competitors as all companies that compete for the same consumer dollars. Volkswagen would see itself competing with companies that sell major consumer durables, foreign vacations, and new homes.

2.

3.

4.

Four Levels of Competition

Generic Form Industry

Brand

Marketing Environment
The task environment includes the immediate actors involved in producing, distributing, and promoting the offering, including the company, suppliers, distributors, dealers, and the target customers. The broad environment consists of six components: demographic environment, economic environment, natural environment, technological environment, political-legal environment, and social-cultural environment. These environments contain forces that can have a major impact on the actors in the task environment.

Marketing Mix
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.

The Four P Components of the Marketing Mix

Marketing Environment

&

Marketing Mix

Robert Lauterborn suggested that the sellers four Ps correspond to the customers four Cs:

Four Ps Product Price Place Promotion

Four Cs Customer solution Customer cost Convenience Communication

How business and marketing are changing

Changing technology (e.g. internet) Globalization (e.g. chinese products) Deregulation (e.g. Airlines industry) Privatization (e.g. British Airways & British Telecom) Customer empowerment (e.g. associations, laws, green number) Customization (e.g. Made to measure)

How business and marketing are changing

HEIGHTENED COMPETITION domestic and foreign brands / powerful retailers INDUSTRY CONVERGENCE mergers RETAIL TRANSFORMATION giant retailers and category killers DISINTERMEDIATION Amazon, eBay, ETrade, etc.

PACS Matrix

Product Price Place Promo

Acceptability Affordable Access Awareness

Customer Sol Cost Convenience Communicate

Solution Sense Spread Support

 Customer value: the difference between the values the customer gains from owning and using a product and the cost of obtaining the product. Customer satisfaction: the extent to which a products perceived performance matches buyers expectation.
today customer delight is the mantra of marketing

 Customer delight: if the products performance matches or exceeds expectations, the buyer is satisfied or delighted. Marketing myopia: Focusing on existing wants and losing sight of underlying customer needs. Forgetting that physical product is only a tool to solve a consumer problem.

 Demarketing:
Marketing to reduce demand temporarily or permanently. The aim is not to destroy demand, but only to reduce or shift it.