INTRODUCTION

TO
MARKETING
 Chapter Objectives
1. Explain the concept of marketing
2. Explain the purpose of market segmentation.
3. Describe the importance of selecting a target market.
4. Explain why it is important for a start-up to establish a
unique position in its target market.
5. Describe the importance of the ability to position a
company’s products on benefits rather than features.
6. Illustrate the two major ways in which a company
builds a brand.
 Chapter Objectives

6. Identify the four components of the marketing mix.

7. Explain the difference between a core product and
an actual product.
8. Contrast cost-based pricing and value-based
pricing.
9. Explain the differences between advertising and
public relations.
10. Weigh the advantages and disadvantages of selling
direct versus selling through intermediaries.
 What is a market?
“A market consists of all the potential customers sharing a
particular need or want who might be willing and able to
engage in exchange to satisfy that need or want” (Philip
Kotler).

Marketing:Typically seen as the task of creating,

promoting, and delivering goods and services to consumers
and businesses.
 What is a market?
Simple definition:
Marketing is the management process responsible for
identifying, anticipating, and satisfying customer
requirements profitably.” (CIM,2001)
Goals:
1. Attract new customers by promising superior value.
2. Keep and grow current customers by delivering
satisfaction.
‘The ensuring the right product/service, in the right place,
at the right time, and at the right price’- Adcock et al
 Orientations towards marketing

Marketing is the activity, set of instructions, and processes for

creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.

OLD view of NEW view of marketing:

marketing: Satisfying
Making a sale—“telling and customer needs
selling”
Orientations towards marketing

• Production concept (before 1930):

demand > supply

• Selling concept (1930-1950):

supply > demand

• Marketing concept (post-1960s):

analyze consumer needs before producing and selling,
market orientation, competition…
Marketing Concept versus Selling Concept

Starting Point Focus Means Ends

The Marketing Concept

Customer Integrated Profits from
Market
needs marketing satisfied customers

The Selling Concept

Sell and Profits through

Factory Product
Promote it sales volume
Marketing Management

• What is marketing management?

« Marketing management 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
goals » (Philip Kotler)

• Marketing management has the task of influencing the level,

timing, and composition of demand in a way that will help the
organization achieve its objectives.
Selecting a Target Market and Establishing
a Position in the Market
 Important questions that all start-ups must ask and address in
order to succeed:
◦ Who are our customers and how will we appeal to them?
◦ A well-managed start-up approaches this query by following
a three-step process:
 Segmenting the market.
 Selecting a target market.
 Establishing a unique position in the target market.
 Selecting a Target Market and
Establishing a Position in the Market

The Process of Selecting a Target Market and Positioning Strategy

Segmenting the Market
 Market Segmentation
◦ The first step in selecting a target market is to study a firm’s
industry and determine the different potential target markets
in that industry.
 This process is called market segmentation.
 Markets can be segmented in a number of different ways,
including product type, price point, and customers served.
 For example, the computer industry can be segmented in the
following ways:
 Product type (handheld computers, laptops, Personal
Computers, Minicomputers, and Mainframes).
 Customers served (individuals, business, educational
institutions, and government).
Selecting a Target Market
 Target Market
◦ Once a firm has segmented the market, the next step is to
select a target market. The market must be sufficiently
attractive and the firm must have the capabilities to serve it.
◦ Typically, a firm does not target an entire segment of a
market because many market segments are too large to
target successfully.
 Instead, most firms target a niche within a segment.
 For example, one segment of the computer industry is
handheld computers. Within this segment, there are
several smaller niche markets that represent a narrower
group of customers with similar needs.
Establishing a Unique Position
 Positioning
◦ After selecting a target market, the firm’s next step is to
establish a “position” within the market that differentiates
it from its competitors.
 In a sense, a “position” is the part of a market or of a
segment of the market the firm is claiming as its own.
◦ A firm establishes a unique position in its customers’ minds
by consistently drawing attention to two or three of its
product’s attributes that define the essence of what the
product is and what separates it from its competitors.
Establishing a Unique Position
 Positioning (continued)
◦ Firms often develop a “tagline” to reinforce the position
they have staked out in their market, or a phrase that is used
consistently in a company’s literature and thus becomes
associated with the company.
◦ An example is Nike’s familiar tagline, “Just do it.”
 The beauty of this simple three-word expression is that it
applies equally to a 21-year-old athlete and a 65-year-old
mall walker.
Taglines
Match the Company to Its Tagline
Selling Benefits Rather Than Features
 Selling Benefits Rather Than Features
◦ Many entrepreneurs make the mistake of
positioning their company’s products or services
on features rather than benefits.
◦ A positioning or marketing strategy that focuses
on the features of a product, such as its technical
merits, is usually much less effective than a
campaign focusing on what the merits of the
product can do.
◦ Consider the example on the following slide;
Selling Benefits Rather Than Features
Two different approaches to promoting a cell phone

Approach Illustration

“Our cell phones are equipped with sufficient memory

Selling Features to store 450 phone numbers.”

“Our cell phones lets you store up to 450 phone

Selling Benefits numbers, giving you the phone numbers of your family
and your friends at your fingertips.”

While features are nice, they typically don’t entice someone

to buy a product. The first statement tells a prospect how
Conclusion many phone numbers the cell phone will hold, but doesn’t
tell the prospect why that’s important. The second
statement tells a prospect why having sufficient memory to
store 450 phone number is important, and how buying the
product will enhance his or her life.
Establishing a Brand
 Establishing a Brand
◦ A brand is the set of attributes—positive or negative—
that people associate with a company.
 These attributes can be positive, such as trustworthy,
dependable, durable or easy to deal with.
 Or they can be negative, such as fake, unreliable, or
difficult to deal with.
◦ The customer loyalty a company creates through its
brand is one of its most valuable assets.
 Brand Management
◦ Some companies monitor the integrity of their brands
through a program called “brand management.”
Establishing a Brand
Different Ways of Thinking About the Meaning of a Brand
Establishing a Brand
 Establishing a Brand
◦ How does a firm establish a brand?
 On a philosophical level, a firm must have meaning in its
customer’s lives. It must create value—something for which
customers are willing to pay.
 On a more practical level, brands are built through a number
of techniques, including advertising, public relations,
sponsorships, support of social causes, and good
performance.
 A firm’s name, logo, Website design, and even its letterhead
are part of its brand.
 It’s important for start-ups to have a polished image
immediately so that they have credibility when they approach
potential customers. Do it right the first time
Establishing a Brand
 Power of a Strong Brand
◦ Ultimately, a strong brand can be a very powerful
asset for a firm. It serves as another marketing tool.
 Cobranding
◦ One technique that companies use to strengthen their
brands is to enter into cobranding arrangements with
other firms.
◦ Cobranding refers to a relationship between two or
more firms where the firm’s brands promote each
another.
The Four Ps of Marketing for New
Ventures

Product Price

Marketing Mix

Place
Promotion
(or distribution)
Product
 Product
◦ A firm’s product, in the context of the marketing mix, is the good
or service it offers to its target market.
◦ The initial rollout is one of the most critical times in the
marketing of a new product.
 All new firms face the challenge that they are unknown and
that it takes a leap of faith for their first customers to buy their
products.
 Some start-ups meet this challenge by using reference accounts.
 A reference account is an early user of a firm’s product or
service who is willing to give a testimonial regarding his or
her experience with the product or service.
Core Product vs. Actual Product
 Core Product vs. Actual Product
◦ As a firm prepares to sell its product, an important
distinction should be made between the core product and the
actual product.
◦ The core product is the product itself, such as a CD that
contains an antivirus program.
◦ The actual product, which is what the customer buys, is
contained in the core product and may have up to about five
attributes:
 A quality level, features, design, a brand name, and
packaging.
Price
 Price
◦ Price is the amount of money consumers pay to buy a product.
 It is the only element of the marketing mix that produces
revenue; all other elements represent cost.
◦ The price a company charges for its products sends an
important message to its target market.
 For example, Robert & Sons positions its medicated glasses
as innovative, state-of-the-art products that are both high
quality and visually appealing.
 This position in the market suggests a premium price that
Robert & Sons charges.
◦ Most entrepreneurs use one of two methods to set the price for
their products, as shown on the next slide.
Approaches to Pricing
Two Approaches to Pricing
Approach
to Pricing Description
In cost-based pricing, the list price is determined by adding a
Cost-Based mark-up percentage to a product’s cost. The advantage of this
Pricing method is that it is straightforward, and it is relatively easy to
justify the price of a good or service. The disadvantage is that it
is not always easy to estimate what the cost of a product will be.

In value-based pricing, the list price is determined by estimating

what consumers are willing to pay for a product and then
Value-Based backing up a bit to provide a cushion. What a consumer is willing
Pricing to pay is determined by his or her perceived value of the product
and by the number of choices available in the marketplace. Most
experts recommend value-based pricing because it hinges on the
consumer’s perception of what a product or service is worth.
Promotion
 Promotion
◦ Refers to the activities the firm undertakes to communicate
the merits of its product or service to its target market.
 There are several common activities that entrepreneurs use to

promote their products and services.

 Advertising

◦ Advertising is making people aware of a product or service in

hopes of persuading them to buy it.
Promotion
 Advertising (continued)
◦ Advertising’s major goals are to do the following:
 Raise customer awareness of a product.
 Explain a product’s comparative benefits.
 Create associations between a product and a certain lifestyle.
 Educate prospective buyers on the uses of the product/service.
◦ Advertising has some major weaknesses, including the following:
 The possibility that a high percentage of the people who see the ad
will not be interested.
 Low credibility.
 Message clutter (too much information).
 Relatively costly compared to other forms of promotions.
 The perception that advertising is intrusive.
Putting Together an Advertisement
Steps Involved in Putting Together an
Advertisement
 Digital Advertisement- Google
AdWords
 AdWords
◦ Allows advertisers to buy keywords on the
Google Home Page.
◦ Triggers text-based ads to the side (and
sometimes above) search results when the
keyword is used.
◦ The program includes local, national, and
international distribution.
◦ Advertisers pay a certain amount per click.
◦ Advertisers benefit because they are able to place
their ads in front of people who are already
searching for information about their product.
 Digital Advertisement- Google
AdSense
 AdSense
◦ Allows advertisers to buy ads that will be shown
on other Websites instead of Google’s Home Page.
◦ Google selects sites of interest to the advertiser’s
customers.
◦ Advertisers are charged on a pay-per-click or a
per-thousand impression basis.
◦ Advertisers benefit because the content of the ad
is often relevant to the Website.
◦ Website owners benefit by using the service to
monetize their Website.
Public Relations
 Public Relations
◦ One of the most cost-effective ways to increase the
awareness of the products of a company is through public
relations.
◦ Public relations refers to efforts to establish and maintain
a company’s image with the public.
◦ The major difference between public relations and
advertising is that public relations is not paid for—directly.
 The cost of public relations to a firm is the effort it makes to
network with journalists and other people to try to interest
them in saying or writing good things about the company and
its products.
Public Relations Techniques
Public Relations Techniques

Press release Media coverage

Articles in industry
Blogging
press and periodicals

Monthly newsletter News conference

Civic, social, and community

Involvement (CSRs)
Place (or Distribution)
 Place
◦ Place or distribution, encompasses all the activities that
move a firm’s product from its place of origin
(production floor) to the consumer.
◦ The first choice a firm has to make regarding
distribution is whether to sell its products directly to
consumers or through intermediaries (such as
wholesalers and retailers).
◦ Within most industries, both choices (wholesalers and
retailers) are available. The decision typically depends
on how a firm believes its target market wants to buy its
product.
Visual Depiction of Selling Direct
Versus Selling Through Intermediaries
Selling Direct Versus Selling Through
Intermediaries
Approaches to Distribution

Selling direct versus selling through intermediaries

Approach to
Distribution Description
Many firms sell direct to customers. Being able to control the process
of moving their products from their place of origin to the end user
Selling instead of relying on third parties is a major advantage of selling
Direct direct. The disadvantage of selling direct is that a firm has more of its
capital tied up because it must own or rent retail outlets and must field
a sales force.
Firms who sell through intermediaries pass off their products to
Selling wholesalers who place them in retail outlets to be sold. An
Through advantage of this approach is that the firm does not need to own as
Intermediaries much of the distribution channel. The disadvantage of selling
through intermediaries is that a firm loses control of its product
and pricing.