Revisiting Core Marketing Concepts - The Building Blocks of Marketing Strategy

REVISITING CORE
MARKETING CONCEPTS –
THE BUILDING BLOCKS

OF MARKETING
STRATEGY
NEEDS, WANTS, & DEMANDS
 Needs
♣ Necessities
♣ Need is a state of felt deprivation
♣ Basic & common for all human beings
♣ Physical needs, safety needs, social needs, individual
needs
 Wants
♣ Preferences
♣ Human needs shaped by culture & personality
♣ Needs are generic, wants vary
 Demand
♣ A Want backed by Purchasing Power
MARKET OFFERINGS
 Combinations of products, services, information,

& / or experiences offered to a market to satisfy
needs & wants
♣ Goods
♣ Goods along with services
♣ Services
♣ Information
♣ Ideas
♣ Experiences
EXCHANGES & RELATIONSHIPS
 Exchange
♣ A transaction where both parties agree to give the
other party something of value
♣ Conditions
 Involvement of more than one party
 Willing parties
 Each party having something to offer
 Parties must communicate
EXCHANGES & RELATIONSHIPS
 Relationships
♣ Goes beyond attracting the customer
♣ Goes beyond transactions
♣ Through marketing activities, marketers wish to

develop relationships with customers
 Consistently deliver value & satisfaction
♣ Value & satisfaction are building blocks of developing

& retaining customer relationships
MARKETS
 A set of all actual & potential buyers for a market

offering
 Actual & potential buyers for a market offering

have common needs or wants that can be satisfied
through the exchange relationship
MARKETING
Marketing is a social & managerial process by

which individuals & organizations obtain what
they need & want through creating &
exchanging value with others
Marketing is the set of activities undertaken to

facilitate and generate an exchange process
that satisfies human or organizational needs
and wants
MARKETING
 According to the AMA
Marketing is the total system of business

activities designed to plan, price, promote
and distribute want-satisfying products to
target markets in order to achieve
organizational objectives
 Both parties have to gain – customers & the

organization
 Organization wants long-term profitability

MARKETING
 Hence Marketing is the management of markets to

bring about profitable customer relationships
Marketing is profitably managing customer

relationships
COMPANY ORIENTATIONS
TOWARDS THE MARKETPLACE
COMPANY ORIENTATIONS TOWARDS
THE MARKETPLACE
 We often confuse Marketing with Selling
 As a function, Selling is part of Marketing
 In broad terms
♣ Focus of Marketing is the customer
♣ Focus of Selling is the product

PRESENT-DAY COMPANY
ORIENTATIONS TOWARD THE
MARKETPLACE
Production Selling /
Concept Sales
Product Concept
Concept
Marketing
Concept
COMPANY ORIENTATIONS TOWARD
THE MARKETPLACE
 Production Concept
♣ Producing, & producing at a low cost, is important
To keep production costs low, standardization is important –
Mass Production
Variety is not desirable as it raises production cost
♣ Production managers love standardization, oppose product

assortment
♣ Their aim is production efficiency
♣ Myopic short-term view

THE MARKETPLACE
♣ Fail to see the bigger, more long-term picture
If consumers are satisfied, they will buy more of the
company’s product
More products sold = more production
More production = economies of scale
Economies of scale = production efficiency
♣ If we can make it, people will buy it
♣ People will buy what we make

THE MARKETPLACE
♣ May lead to Marketing Myopia - the mistake of
paying more attention to products than to benefits &
experiences these products bring to customers
THE MARKETPLACE
 Product Concept
♣ People will buy products that have quality, performance, &
innovation
♣ Differs from Production Concept

Production-oriented managers do not favor much product-related
innovation
Product innovation means increase in production cost
♣ Product-oriented managers focus on bringing continuous

product improvement
♣ May also lead to Marketing Myopia

THE MARKETPLACE
 Selling Concept
♣ Focuses on selling & sales targets
♣ Too much focus on selling

False claims, deception
Sales targets become more important than customer
satisfaction & customer retention
♣ Sales approach focuses not on customer, but on

product – make, then sell
Did you check if this is what the consumer wants?
THE MARKETPLACE
 Selling Concept
♣ Does not recognize that if companies determine
what consumers want before going into production
They will make what sells
Rather than putting effort & money into selling what
has been made
THE MARKETPLACE
 Selling Concept
♣ This approach believes that people will buy products
only if products are aggressively sold / promoted
♣ Does work for some products

Customers do not think of buying unless exposed to
advertising & aggressive selling
Insurance
♣ But as a company approach, the Selling Concept

makes marketers / sales managers myopic, short-term,
& deceptive
THE MARKETPLACE
 Marketing Concept
♣ Achieving organizational objectives depends on
determining needs & wants of target markets
 Determining needs & wants of target markets
 Responding to those needs & wants
 Delivering satisfaction better than competition
♣ Make a product that sells

THE MARKETPLACE
 Most Pakistani companies have a production, at
best a sales orientation towards the marketplace
♣ They believe the customers are there to buy their
products
 Most common in monopolistic industries

 Telecom was monopolistic when only PTCL was there
 Power sector is still monopolistic

THE MARKETPLACE
 Change has come due to multinationals in Pakistan
♣ Consumer orientation
♣ Need recognition
♣ Research and analysis
 Handout # 1 – 15 Points Marketing Managers Must

Remember to Ensure They Are Adhering to the
Marketing Concept
THE MARKETPLACE
 Service sector companies follow the Marketing Concept as
well
♣ Banking
 Round-the-clock banking
 Internet banking
 ATMs
♣ Cellular service providers

 Value added services
 Bill payment options
♣ Airline, tourism, hotel industries

 Superior services
THE MARKETPLACE
 Handout # 2 – Adopters of The Marketing
Concept Versus Production- or Sales-Oriented
Managers
THE MARKETING CONCEPT & NOT-FOR-
PROFIT ORGANIZATIONS
 Equally important for non-profit sector
 Colleges, hospitals, societies, religious

organizations
 Face competition for support from donors
 Examples
♣ Handout # 3 – SHAUKAT KHANUM MEMORIAL
CANCER HOSPITAL & RESEARCH CENTER
(SKMC&RC)
THE MARKETING CONCEPT & NOT-FOR-
PROFIT ORGANIZATIONS
 Examples
♣ WORLD WIDE FUND FOR NATURE (WWF) – formerly
known as the WORLD WILDLIFE FUND
 Conservation & restoration of the environment
 Works in > 90 countries
 Has > 5 million supporters worldwide
 Supports 1300 environment conservation &

restoration projects worldwide
HOLISTIC MARKETING
CONCEPT
HOLISTIC MARKETING
 Handout # 4 – Marketing Right and Wrong
The Holistic Marketing Concept recognizes the

importance of a broad, integrated perspective
towards Marketing – everything matters!! It
recognizes that the development, design, and
implementation of marketing programs,
processes, and activities are all
interdependent
HOLISTIC MARKETING
 4 broad concepts
♣ Relationship Marketing
♣ Integrated Marketing
♣ Internal Marketing
♣ Performance Marketing
Marketing Senior Other Products &
Department Management departments Communications Services Channels
Prices
INTERNAL INTEGRATED
MARKETING MARKETING
HOLISTIC
MARKETING
PERFORMANCE RELATIONSHIP
MARKETING MARKETING
Community
Sales
revenue
Legal
Environment Ethics Brand & Customers Channels Partners
Customer
Equity
HOLISTIC MARKETING
CONCEPT
RELATIONSHIP MARKETING
Aims to build long-term and mutually satisfying

relationships with key constituents
 Constituents
♣ Customers
♣ Marketing partners – suppliers, distributors
♣ Employees
♣ Members of financial community

 Investors
 Lenders
 Shareholders
 Outcome of Relationship Marketing is a

Marketing Network
♣ A company asset
♣ Consists of company & its stakeholders
 Customers
 Employees
 Suppliers
 Distributors
 Advertising agencies
 Supporting Academia
 Investors
 Others with whom company builds profitable business
relations
 The 1st constituent – the Customer – Customer

Relationship Marketing
 Companies today customize their marketing offers

to suit the wants of different target markets
♣ Based on information about past transactions,
demographics, media & distribution preferences
Customer Relationship Marketing (CRM) aims to

build long-term and mutually satisfying
relationships with customers
Customer Relationship Management (CRM) is the

overall process of building and maintaining
profitable customer relationships by
delivering superior customer value &
satisfaction
 Keys to building long-term relationship with

customers
♣ Value: consistently creating & delivering superior
customer value
♣ Customer satisfaction
CUSTOMER RELATIONSHIP MARKETING
 Value – customer must perceive the product /

brand to give value as compared to the rest
♣ In a market with several brands, the consumer
chooses the brand that he thinks gives him the most
value
♣ Value is perceived in terms of

 What benefits the brand gives the consumers
 How much better they are than the benefits offered by

competitors
 Walking shoes – comfort, durability
 Electronic appliances – performance consistency,
reliability, safety
 Value
♣ Value is also perceived in terms of
 How much more, in quantity, a brand gives him as
compared to the competing brand
♣ Customer Perceived Value (CPV)
The customer’s evaluation of the difference

between all the benefits and all the costs of
a marketing offer relative to those of
competing offers
 Consumers’ evaluation of brand value is based on

perception rather than on objectivity
 Customer Satisfaction
The extent to which a product’s perceived

performance matches a buyer’s expectations
♣ Product performance < customer expectations

DISSATISFACTION
♣ Product performance = customer expectations

SATISFACTION
♣ Product performance > customer expectations

DELIGHT
♣ Aim is to delight the customer
♣ Examples of companies striving to create high levels

of customer satisfaction
 Frequency Marketing Programs – programs
designed to generate brand loyalty & cultivate a long-
lasting relationship with customers
 Rewards ongoing purchase
 Airlines: frequent flyer programs
 Hotels: frequent guests
♣ Examples of companies striving to create high levels
of customer satisfaction
 Club Marketing Programs – special privileges are
given to customers; member communities are created
 MOBILINK’S CLUB INDIGO – dedicated Corporate
Account Managers, exclusive event invitations
♣ Delighted customers become Brand Loyal

Customers
♣ Consumer Loyalty is the ultimate aim of marketers

♣ Loyal customers
 Patronize the company permanently
 Become brand ambassadors
 Spread positive WOM
♣ Consumer-Generated Marketing
Includes marketing messages, ads, & other brand

exchanges created by consumers themselves – both
invited & uninvited
♣ Consumer-Generated Marketing
 Consumers share information about brands via blogs,
social networks, audio, video, & web sites
 “DIET COKE & MENTOS” – Video Links 1 & 2
 Companies want consumers to play active role in

shaping brand messages & ads
 Companies like COCA-COLA take consumer-generated

content from YouTube & make it a part of their
advertisements
 Customer Relationship Management (CRM)

♣ Deals with all aspects of acquiring, retaining, &
growing customers
♣ Marketers work hard to retain their customers
♣ Research shows it costs 5 times as much to get a new

customer than to retain an existing one
♣ Retention of customers as well as profitability

Organizational objectives have to be met
♣ Marketing aims to generate Customer Value

profitably
PARTNER RELATIONSHIP MARKETING
 Build long-term profitable relationships with

marketing partners
 Partner Relationship Marketing (PRM) will be

discussed later
HOLISTIC MARKETING
CONCEPT
INTEGRATED MARKETING
 Marketers’ job is to
♣ Create value
♣ Communicate value
♣ Deliver value
 Marketing activities are divided into 4 P’s –

identified by McCarthy
♣ Product
♣ Price
♣ Place
♣ Promotion
 Known as the Marketing Mix

 Product – defines the characteristics of the goods /

services that will satisfy the customers’ needs
♣ Product variety ♣ Quality
♣ Design ♣ Features
♣ Brand name ♣ Packaging
♣ Sizes ♣ Services
♣ Warranties ♣ Returns
 Price – amount a company charges for the goods /

services
♣ List price ♣ Discounts
♣ Allowances ♣ Payment methods
♣ Payment periods
 Place – the route or channel of distribution. Includes all the firms /
individuals that participate in the process of getting the market
offerings from the producer to the consumer
♣ Channels ♣ Coverage
♣ Assortments ♣ Locations
♣ Inventory ♣ Transport
♣ Logistics
 Promotion – the means of communicating with

the target market
♣ Advertising ♣ Sales Promotion
♣ PR & Publicity ♣ Personal Selling
♣ Direct Marketing
 Some people believe Marketing has 7 P’s

♣ People
♣ Process
♣ Physical Evidence
 Marketers
♣ Customize their offerings for groups of target
customers
♣ Inform customers about offerings
♣ Set prices that will give value to customers
♣ Choose places where the offerings will be available
 The 4 C’s of Marketing

♣ 4 P’s is the company’s view of marketing tools
available for influencing customers
♣ Look at it from customer’s point of view

Each marketing tool is designed to give some benefit
to customer
♣ The 4 C’s model is based on the 4 P’s model – but

looks at marketing tools from the customer’s angle
 Different definitions of the 4 C’s
♣ Customer Solution ♣ Customer

♣ Customer Cost ♣ Cost
♣ Convenience ♣ Communication
♣ Communication Source ♣ Competition
♣ Product = Customer Solution

♣ Price = Customer Cost
♣ Place = Convenience
♣ Promotion = Communication
 Some experts add a 5th C - Customer

 The concept of SIVA

♣Product = Customer Solution
How can I solve my problem?
♣Promotion = Information
Where can I learn more about it?
♣Price = Value
What is my total sacrifice to get this solution?
♣Place = Access
Where can I find it?
 Marketing has to create, communicate, & deliver

value
 Integrated Marketing has 2 underlying themes

♣ Many different marketing activities communicate &
deliver value
♣ When coordinated, marketing activities maximize

their joint effect / impact
 When the 4 P’s are coordinated, they complement
each other
 Their combined impact is what creates,
communicates, and delivers value in the best way
possible
HOLISTIC MARKETING
CONCEPT
INTERNAL MARKETING
INTERNAL MARKETING
 Often, departments in an organization work in

isolation – divergent goals
♣ Production managers focus on production efficiency
♣ Marketing managers desire product variety, innovation
♣ Finance managers want maximum ROI
♣ HR managers are concerned with HR budgets, head
counts
 Holistic Marketing opposes isolated thinking – it

demands Internal Marketing
♣ Departments work in coordination
♣ Customer satisfaction becomes the driving force for
everyone
INTERNAL MARKETING
 Coordination
♣ No room for isolated goals
♣ Synergy can only be created if all sub-systems of a
System work together – the Systems Theory
 Views an organization as a System
 Each department or functional area as a component /
sub-system
 All components of a System are linked together, & to
the environment
 All components have to work in coordination
 The whole is greater than the sum of the parts =
Synergy
INTERNAL MARKETING
 Everyone “thinks customer”

♣ Customer satisfaction should be the goal of every
department
♣ Marketing is no longer only the job of the Marketing
department
♣ This thinking has to start from top management
 Integrated goals
 All departmental goals guided by customer value &
satisfaction
 No isolated goals – no clash of interests
 The company then becomes a Marketing Company
INTERNAL MARKETING
 Internal Marketing requires

♣ Vertical alignment with top management
♣ Horizontal alignment with other departments
♣ Handout # 5 – A Marketing Company

HOLISTIC MARKETING
CONCEPT
PERFORMANCE MARKETING
PERFORMANCE MARKETING
 Holistic Marketing recognizes

♣ Not only financial returns to company from
marketing activities
♣ But also importance of broader legal, ethical, social,
& environmental effects
 In addition to financial accountability, marketers

have to justify impacts of their activities on society
& environment
 Concept of Societal Marketing

SOCIETAL MARKETING
 Societal Marketing has happened in response to

two major forces
♣ Consumerism
♣ Environmentalism
CONSUMERISM
 Industrialization gave rise to several workforce-
related problems & thus criticism
♣ Low minimum wages
♣ Unsafe / unhealthy working conditions
♣ Child labor
 Criticism also included marketing & production

activities
♣ Automobile manufacturers (environment)
♣ Oil exploration & marketing (health &
environment)
♣ Sugar mills (waste disposal issues)
♣ Cigarette industry (health)
♣ Plastic industry (health & environment)
CONSUMERISM
 Criticism also included marketing & production
activities
♣ Planned Obsolescence – firms deliberately make
products that do not last long
 Burden on natural resources
 Financial burden on consumer
 Examples: disposable razors, disposable lighters
 Proponents of Planned Obsolescence argue that
it gives consumers flexibility, convenience, &
savings
CONSUMERISM
 Criticism affected company image & ultimately
sales
 Today’s public is conscious & aware – rebels

against firms that
♣ Make unsafe, polluting, or hazardous products
♣ Purposefully mislead consumers
♣ Offer restricted choice of alternatives

CONSUMERISM
 The force of the Consumer - Consumerism
The set of activities undertaken by individuals,

independent organizations, government
agencies and business organizations
designed to protect the consumer from
unethical marketing practices and
conditions
CONSUMERISM
 Purpose of Consumerism is to ensure consumer
rights in the process of exchange
♣ The right to be informed
♣ The right to be told the truth
♣ The right to be given sufficient number of

alternatives
♣ The right to be assured of safety in the process of

consumption
CONSUMERISM
 Three types of organizations make up the
consumer movement
♣ Consumer action groups
 Concerned with increasing consumer awareness
 Making them more informed
 Giving them the option to act better
CONSUMERISM
consumer movement
♣ Government agencies – protecting consumer rights
through laws & legislation – Handout #6
 Deceptive advertising – Federal Trade
Commission (FTC)
 Advertising to children – Federal Communications

Commission (FCC)
 Product safety standards to protect consumers from

risk or injury – Consumer Product Safety
Commission (CPSC)
 Warning labels on hazardous products / packaging

CONSUMERISM
consumer movement
♣ Government agencies
 Ingredients / nutritional information on food
products – Food & Drug Administration (FDA)
 Monopolistic practices - FTC
 Environmental protection – EPA

CONSUMERISM
consumer movement
♣ Business organizations – reactive or proactive
 Reactive companies change practices to conform to
the law & imposed regulation
 Proactive approach: self-regulation as a matter of

ethics
 Most companies act proactively only because they

know this will become regulation soon enough, due
to Consumerism
ENVIRONMENTALISM
 Strives to ensure that company operations do not
harm the environment
Environmentalism is an organized movement of

concerned citizens, businesses, and
government agencies to protect and improve
people’s current and future living
environment
 Environmentalists want companies to care for the

environment while going about their business
 Today companies follow a policy of

Environmental Sustainability
ENVIRONMENTALISM
Environmental Sustainability is a management

approach that involves developing
strategies that both sustain the
environment & produce profits for the
company
 Policies of Environmental Sustainability &

Social Sustainability make business sense
THE SOCIETAL MARKETING CONCEPT
 In response to Consumerism &
Environmentalism, companies have adopted
the Societal Marketing Concept
Society
Human Welfare
THE SOCIETAL
MARKETING
CONCEPT
Consumers Company
Want Satisfaction Profits / Revenue
 Who all are included in Society??
♣ Consumers
 Buyers and / or users of company’s products
♣ Community
 Everyone affected by company’s operations
 Everyone that is affected, is a customer, & the

company is responsible to them
 Several products / industries that negatively
affect environment & human health
♣ Cigarette manufacturing companies
♣ Waste disposal of several production processes
♣ Manufacturing of paper products

 Two important concepts
♣ Companies must think of everyone affected by
them as their customers – suppliers, distributors,
creditors, community members, etc.
♣ Companies must focus on long-term interests

rather than short-term interests of customers
 Levels of Social Responsibility
Total Corporate Social
Responsibility
Discretionary
responsibility
Ethical
responsibility
Legal responsibility
Economic responsibility
♣ Economic Responsibility
 Company should sell products at profit for company
owners
 Organizations should not undertake economically

unfeasible social actions
 Profit Maximizing View – Maximizing profits is a

company’s only social responsibility
 Non-economic activities take funds away from
company owners & stockholders
 Also distract managers from their primary duty
 This concept is not acceptable to society any more

♣ Legal Responsibility
 Company should stay within the boundaries of the
law
 Economic activities must be undertaken lawfully
♣ Ethical Responsibility
 Managers often have to choose between alternatives
 None of them are illegal
 But not all of them are ethical
 “What is right?” in contrast to “what is legal?”

♣ Discretionary Responsibility
 Voluntary
 Company’s own discretion
 Companies may want to make social contributions

over & above what is required by law & what is ethical
 Donations to hospitals
 Building schools for the orphans
 Such behavior is demanded by society today –

Corporate Social Responsibility (CSR) is a must
for companies to win goodwill
 Examples
♣ TOYOTA investing on “clean cars”
♣ Recycled packaging material – MARKS & SPENCER
♣ Recycling products or product components –

KODAK recycles disposable cameras
♣ HP and CANON refilling printer cartridges
♣ PAKISTAN TOBACCO COMPANY undertaking tree

plantation
 Examples
♣ PROCTER & GAMBLE & UNILEVER opening schools,
providing safe drinking water
♣ JOHNSON & JOHNSON shifting from plastic bottles

to safe non-polycarbonate containers
 Handout # 7 – Socially Responsible Marketing

Practices Toward Various Sections of Society
 Why the Societal Marketing Concept makes

business sense
♣ Until 1960s, natural resources were seen as
abundant
 Companies realize that resources are depleting
 According to BUSINESS WEEK
“Out of the world’s natural resources that are

being used annually, 70% are being used by
25% of the people in industrialized nations”
♣ Serving people beyond the definition of actual

consumers does bring monetary & intangible
benefits to companies
 Methods of institutionalizing social responsibility

♣ Advocacy
♣ Philanthropy
♣ Cause-Related Marketing
 Advocacy
When an organization adopts a cause to

support and throws its financial, material,
and managerial resources behind the cause
♣ Support of an organization to cultural activities,

like a cultural festival
♣ Support of an organization to an activity – like

“The World Handwashing Day”
 Philanthropy
The donation of money, time, goods, or services

to charitable, humanitarian, or educational
institutions
♣ Corporate sector engages in corporate

philanthropy
♣ Donations to schools, hospitals, NGOs

 Cause-Related Marketing (CRM) or Cause

Marketing
An activity in which the company contributes a

specified amount to a designated cause
when customers buy the company’s
products
CRM refers to the cooperative efforts of a “for-

profit” business and a non-profit
organization for mutual benefit
 Cause Marketing
♣ Philanthropy – a donation
♣ Cause Related Marketing – a marketing

relationship, not just a donation
♣ Customers today would rather do business with a

company that stands for a good cause
♣ Boosts image and ultimately sales
♣ Customers also feel good about their purchases

 Cause Marketing
♣ Part of Corporate Social Marketing
Corporate Social Marketing (CSM) refers to

marketing efforts that have at least one non-
economic objective related to social welfare
& use the resources of the company & / or of
its partners
 Cause Marketing
♣ “Khwabon Se Aagey” campaign by PROCTER &
GAMBLE in partnership with PAKISTAN MEDICAL
ASSOCIATION
 Aimed to save lives of new-born babies
 Provided life-saving equipment to hospitals across
Pakistan
 Ran from Dec 2007 – Mar 2008
 Portion of P&G sales proceeds was donated to
provide life-saving equipment
 Training programs for doctors & hospital staff
 Cause Marketing
♣ A successful CRM program can
 Improve social welfare
 Create a differentiated positioning for the brand /

company
 Build a favorable public image
 Enhance company image with govt. & decision-

making, grant-giving agencies
 Boost employee morale
 Drive sales in the long run – improve market value

ETHICS IN MARKETING
ETHICS
 Ethical behavior = honest & proper conduct
 Human behavior falls into 3 categories

♣ The Law: behavior required by law
♣ Free Will: The domain where human beings act

according to their will
♣ Ethics: If something is not illegal, it does not

become right
 There is a 3rd dimension governing behavior
 Has certain standards about good & bad conduct
based on shared values
ETHICS
Ethics is the code of moral principles and values
that governs the behaviors of a person or
group with respect to what is right or wrong
Managerial Ethics is the practice of decision

making in an organization in the context of
rules of conduct or moral standards
Ethical Behavior refers to individual conduct

that is considered “right” or “wrong” in the
context of a governing moral code
ETHICS
 Ethical behavior conforms to the law
 Also conforms to a broader set of moral principles

expected by all or some segments of society
 Managers are often faced with Ethical Dilemmas
An Ethical Dilemma is an issue that has two

conflicting but arguably valid sides
ETHICS
 Ethical Dilemmas
♣ Should tobacco companies be allowed to advertise,
or at all be in business?
♣ Companies can do business more effectively if they

collect information about customers / clients
 Companies have the right to conduct business
 Consumers have the right to privacy
 If companies pursue consumers for information,
consumers’ privacy might be invaded
 Whose rights are more important?
ETHICS
♣ Is it right for companies to get information about
competitors?
♣ Salesmen must sell the products they are given to

sell
 Should they tell customers about any harmful
effects or defects?
 Or should they aim to just sell?
ETHICS
♣ Drugs / products whose sale is disallowed in one
country
 Should they be sold in other countries where there
is no law against their use?
♣ Every individual has the right to keep himself & his

family safe
 Should individuals be allowed to keep weapons with
them?
ETHICS
 Unethical behavior allegations on Marketing
♣ Misleading advertising
♣ Products wear out quickly – Planned

Obsolescence
♣ Materialism – Marketing encourages people to be

materialistic, even compulsive
♣ Advertising forms unrealistic expectations
♣ Encourages managers to be unethical

ETHICS
♣ Lures in customers – manipulative techniques
♣ Pollution of environment
♣ Depletion of natural resources

ETHICS
♣ Promotes Injurious Consumption
Consumption behavior that is harmful for

individuals & those around them in the long
run
 Some consumers are impulse buyers by nature -

marketers offer credit terms & lure in impulse
buyers
 Excessive advertising encourages spending on items

not needed
ETHICS
♣ Promotes Injurious Consumption
 Unhealthy foods & drinks are marketed as trendy,
fun, cool consumables
 Cigarettes & alcohol
 Gambling – Las Vegas is the city of gambling
“Every year 10 million Americans suffer financial

losses from their addiction to gambling… There are
currently 10 million alcoholics & 80 million
cigarette smokers in the US… Every year 25,000
people die as a result of alcohol related traffic
accidents… All of these behaviors result from
consumption gone wrong”
CODE OF ETHICS
 Companies strive to instill ethical conduct among
employees - create an organizational culture that
values ethics
 Approaches
♣ Commitment from the top management
♣ Standards & Codes of Ethics
Ethical Standards are the guidelines of moral

conduct in a given profession or group
Code of Ethics – a formal statement of the

organization’s values, ethical principles, &
specific ethical rules
CODE OF ETHICS
 Approaches
♣ Standards & Codes of Ethics
 Handout 8 – Code of Ethics of TOYOTA
♣ Training
 During orientation of new employees
 In-depth training on ethical decision-making for
senior executives
♣ Ombudsmanship
An informal review process that provides an

indirect, non-threatening means of obtaining a
response from senior management about an
ethical conflict
CODE OF ETHICS
 Approaches
♣ Ombudsmanship
An Ethical Ombudsman is an official of the

organization given the responsibility to act as
the corporate conscience. He hears and
investigates ethics complaints and points out
potential ethical failures by top management
 Trusted intermediary between organization & some

constituency
 Appointed by the organization or constituency
 May investigate complaints, recommend solutions, point

out potential ethical dilemmas
CODE OF ETHICS
 Approaches
♣ Ethics committees & ethical audits
Ethics Committees are standing committees of

the board of directors assigned the job of
overseeing the ethical aspects of the
company’s policies & practices
SOCIAL MARKETING
SOCIAL MARKETING
Term used for marketing efforts employed to
further a cause
The application of marketing tools & techniques

to achieve specific behavioral goals for a
social good
 Applied to promote products good for society

♣ Convincing people to wear seatbelts while traveling
♣ Follow speed limits
 Applied to discourage use of products bad for

society
♣ Asking people not to smoke in public areas
SOCIAL MARKETING
 Societal Marketing
♣ A commercial company earns profits while showing
concern for society & environment
♣ Looks after long-term interests of consumers
 Cause Marketing
♣ A commercial company supports a good, social cause
 Social Marketing
♣ Marketing of a good cause by NGOs, the Govt,
societies, associations, etc.
♣ Primary aim is social good as opposed to commercial
marketing whose aim is mainly financial
SOCIAL MARKETING
 Is described as having two parents
♣ A social parent: social sciences & social policy
♣ A commercial parent: commercial & public sector
marketing approaches
 Was born as a discipline in the 1970s

♣ Philip Kotler & Gerald Zaltman* realized that
marketing principles used to sell products to
consumers can be used to sell ideas, attitudes &
behaviors
* Zaltman: a professor of Business Administration at the

HARVARD BUSINESS SCHOOL
SOCIAL MARKETING
 Defined by Kotler & Alan R. Andreasen *
Social Marketing differs from other areas of

marketing only with respect to the
objectives of the marketer & his
organization. Social Marketing seeks to
influence social behaviors not to benefit the
marketer, but to benefit the target audience
& the general society
* Professor of Marketing at the MCDONOUGH SCHOOL OF

BUSINESS of GEORGETOWN UNIVERSITY and Executive
Director of the SOCIAL MARKETING INSTITUTE
SOCIAL MARKETING
 Used extensively in international health programs
♣ Drug abuse
♣ Heart diseases
♣ AIDS
 Pakistan – MINISTRY OF HEALTH campaigns

♣ Expanded Program on Immunization (EPI)
♣ National Aids Control Program
♣ National Tuberculosis Control Program
♣ National Program for Prevention & Control of
Hepatitis
♣ National Program for Family Planning & Primary
Health Care
SOCIAL MARKETING
 In-depth research & constant re-evaluation of
every aspect of the program form the cornerstone
of a Social Marketing program
♣ Drug abuse
♣ Heart diseases
♣ AIDS
 The P’s of Social Marketing

♣ Product ♣ Publics
♣ Price ♣ Partnership
♣ Place ♣ Policy
♣ Promotion ♣ Purse Strings
SOCIAL MARKETING
 Product
♣ Range of products exist – from tangible to intangible
 Tangible products – drugs, vaccines
 Services – medical examination
 Practices – Oral Rehydration Therapy (ORT),
eating a heart-healthy diet
 Ideas – environmental protection
♣ People must perceive they have a genuine problem,

& the product offering is a good solution
♣ Role of research
 Discover consumer perceptions of the problem
 Determine how important it is to them to find a
solution
SOCIAL MARKETING
 Price: refers to what the consumer must do in
order to obtain the product
♣ Cost may be monetary
♣ Or might require the consumer to

 Give time & effort
 Risk embarrassment or disapproval from different
quarters
♣ If costs outweigh benefits, CPV of the offering will

be low; it will not be adopted
SOCIAL MARKETING
 Price
♣ In setting price of a tangible product, social
marketers have to consider various issues
 If priced too low, consumers may perceive the
product as being of poor quality
 If priced too high, many will not be able to afford it
♣ These considerations must be balanced
♣ Nominal price is usually charged to

 Increase perceptions of quality
 Confer a sense of dignity to the transaction
SOCIAL MARKETING
 Price
 Determine consumer perceptions of cost & benefits
 Use information to position the offering
SOCIAL MARKETING
 Place
♣ Less clear for an intangible product
♣ Deciding where customers have to be reached with

information & training
 Doctors’ offices
 Shopping malls
 Mass media vehicles
 In-home demonstrations
 Determine activities & habits of target audience
 Determine their level of satisfaction with existing
distribution system
SOCIAL MARKETING
 Promotion
♣ Integrated use of advertising, PR, promotions,
media advocacy, personal selling, & entertainment
vehicles
♣ Focus is on creating & sustaining demand for the

product
♣ Methods of promotion include

 Public service announcements  Media events
 Paid ads  Editorials
 Coupons  In-store displays
SOCIAL MARKETING
 Promotion
 Determine most effective & efficient vehicles to
reach target audience & to increase demand
 Publics
♣ Social Marketing programs have to address
different audiences
♣ External publics
 Target audience
 Secondary audiences
 Policy makers
 Gatekeepers
SOCIAL MARKETING
 Publics
♣ Internal publics
 People involved with approval or implementation of
the program
 Partnerships
♣ Organizations in the community have to team up
to make a Social Marketing program effective
 Figure out which organizations have similar goals as
the firm carrying out the program – not necessarily
the same goals
 Identify how they can work together
SOCIAL MARKETING
 Policy
♣ Individual behavior can easily be motivated
through such programs
♣ But such programs need support from their

environment in order to be sustainable
♣ Policy change is often needed

SOCIAL MARKETING
 Purse Strings
♣ Funds from government & foundations are needed
♣ Where to get the money to create the program?
 Example: a Marketing Mix strategy for a cancer

screening campaign for older men & women
♣ Product: could be
 Getting annual tests & checkups
 Following a self-examination routine
 Following a dietary routine
SOCIAL MARKETING
♣ Price of engaging in these could include
 Monetary costs of tests
 Potential discomfort, inconvenience, or
embarrassment
 Time
 Finding out one has the disease
♣ Place where these services are offered could include

 A mobile van
 Hospitals
 Clinics
 Worksites
SOCIAL MARKETING
♣ Promotion could be done through
 Public service announcements
 Billboards
 Mass mailings
 Media events
 Community outreach
♣ Publics that need to be addressed

 Target audience – low income men & women aged 50
yrs & above
 Influencers – spouses, physicians
 Policy makers
 Company BOD & office staff
SOCIAL MARKETING
♣ Partnerships could be established with
 Local / national groups of people of that age-group
 Corporate sponsors
 Medical organizations
 Media outlets
♣ Policy could focus on

 Increasing access to testing & examination by
offering them at lower costs
 Requiring insurance coverage of tests
 Increasing federal funding for cancer research
SOCIAL MARKETING
♣ Purse Strings: funding could come from
 Government grants: local health dept, cancer
institutes
 Grants from foundations
 Grants from cancer societies
♣ Policy could focus on

 Increasing access to testing & examination by
offering them at lower costs
 Requiring insurance coverage of tests
 Increasing federal funding for cancer research
MACRO & MICRO MARKETING
MACRO MARKETING
 A company and its products are part of a much bigger
Macro-Marketing System
 An economy needs thousands of products, services &

companies to satisfy people
♣ Food products
♣ Housing/construction
♣ Home appliances
♣ Automobiles
♣ Electronics
♣ Insurance
♣ Banking
♣ Airline
♣ Defense products, and so on
MACRO MARKETING
 Macro-Marketing System is part of an overall
Economic System
An Economic System is one in which goods and

services are produced & distributed for
consumption of people, in order to satisfy the
needs of the society
 Types of Economic Systems

♣ Planned Economies
♣ Market-Driven Economies
MACRO MARKETING
 Planned Economic Systems
♣ The Government decides:
 What will be produced, & in what quantity
 Who will distribute it, & where
♣ Govt sets production quotas for industries
♣ Govt sets prices of products
♣ Its most extensive form is called a Command Economy,

or Centrally Planned Economy, or Command &
Control Economy
 The state controls all major sectors of the economy
 Makes decisions about their use
 Makes decisions about income distribution
MACRO MARKETING
♣ Consist of:
 State-owned enterprises
 Private enterprises directed by the state
 Or both
♣ According to some experts

 An economy in which the means of production are totally
publicly owned is a Command Economy
 An economy which also has private enterprises & he govt

regulates production, distribution, prices, etc. is a Planned
Economy
 So a Command Economy is a Planned Economy, but not

necessarily the reverse
MACRO MARKETING
♣ Other experts argue that both terms mean the same
thing
♣ A Planned Economic System usually works during war,

drought, floods, political instability
 Does not work long-term
♣ Planned Economic Systems of the past

 Soviet Union – for a time it was the 2nd largest economy in
the world
 China
 India – prior to economic reforms of 1991
 Afghanistan – under Soviet occupation & under Taliban
 Iraq – under Saddam Hussein (1979-2003)
MACRO MARKETING
♣ Today, planned economies exist in
 Cuba
 Libya
 Saudi Arabia
 Iran
 North Korea
 Burma
♣ Handout # 9 – The Communist Economy of the

Soviet Union
MACRO MARKETING
 Market-Driven or Free Economic Systems
Economic decisions & pricing of goods & services

are guided solely by the aggregate
interactions of a country’s citizens &
businesses, & there is little government
intervention or central planning
♣ Work on the assumption that market forces like

supply / demand are best determinants of what
should sell
MACRO MARKETING
 Market-Driven or Free Economic Systems
♣ Private owners of Factors of Production make
decisions about production, pricing, distribution, &
investment
Factors of Production are the inputs / resources

used to produce goods & services
♣ Factors of Production include:

 Raw material
 Land
 Labor
 Capital
MACRO MARKETING
 Market-Driven or Free Economic System
♣ Forces of supply & demand determine
 Goods & services to be produced
 Quantity to be produced
♣ Customers have freedom of choice
♣ Downside
 Many harmful products are produced
MACRO MARKETING
 Mix of Controlled & Market-Driven Economic
Systems
♣ Most economies are a mix of the two
♣ Or less extensive forms of planned economy using

Indicative Planning
 Government uses influence, subsidies, grants, & taxes
 But does not compel
♣ Role of Government
 Facilitate free market practices
 Check monopolistic practices
 Encourage foreign investment
 Lay down regulation to protect consumers as well as
producers
MACRO MARKETING
 Mix of Controlled & Market-Driven Economic
Systems
♣ Role of Government
 Examples:
 Setting standards of low emissions for automobile
manufacturers
 Regulation for cigarette manufacturers
ADVANTAGES OF MACRO MARKETING
 Essential for the operation of an Economic System
 Important for economic development

♣ Greater realization & better implementation of the
Marketing Concept leads to more economic
development, e.g.
 Better availability of newer products
 Imported products
 Better services
♣ Standard of living is enhanced

ADVANTAGES OF MACRO MARKETING
 Gives consumers in a given market the freedom of choice
 Encourages healthy competition – more choices – better

prices – better quality
 Encourages new ideas & innovation
 Establishes a macro-system
♣ Mass production - economies of scale
♣ Mass communication
♣ Mass transportation
♣ Cross-country & cross-continental networks
♣ International trade is enhanced - globalization
ADVANTAGES OF MICRO-MARKETING
 Revenues & profits from companies
♣ Marketing is the only activity generating revenue
directly
 Links producers with consumers

♣ Gets products to consumers at the right time, right
place, right price
 Applicable to all types of companies

 How Marketing relates to Production – Marketing &
Production together create Utility
The want-satisfying power of a product
 Types of Utility
♣ Form Utility: Created when a tangible product is produced
 Something of value is created from raw materials
♣ Task Utility: Created when an individual or organization

performs a task of value to another individual or
organization
♣ Information Utility: Created when the customer is

informed about the product
♣ Image Utility: Created when the customer forms an
image or perception of the product / brand in his mind
 Type of Information Utility
♣ Time Utility: Created when the customer gets a

product when he needs it
 Or when he gets it with minimum loss of time
♣ Place Utility: Created when the customer gets the

product where he needs it
♣ Possession Utility: Created when the customer

possesses the product
♣ Ownership Utility: Created when the customer owns the
product
♣ Which comes first??

 Possession Utility may be created before Ownership Utility
 Car financing
 Ownership Utility may be created before Possession Utility

 Making full advance payment for a product before getting
possession
 Possession Utility may be created but no Ownership Utility

 Renting a car
 Advantages to a person
♣ Information & awareness
♣ Choices
♣ More responsible consumers
♣ Career options
THE OVERALL PROCESS –
PUTTING THE PIECES
TOGETHER
THE OVERALL PROCESS
Marketing is the process by which companies

create value for customers and build strong
customer relationships in order to capture
value from customers in return
Understand the Design a customer- Construct an
marketplace & driven marketing integrated marketing
customer needs & strategy program that
wants delivers superior
value
Build profitable Capture value from

relationships & customers to create
create customer profits & customer
delight equity
THE OVERALL PROCESS
 Handout # 10 – An Expanded View of the
Marketing Process
Market
MarketSegmentation
Segmentation&&Targeting
Targeting
Market
Market
Analysis • Identify target segment(s)
Analysis • Identify target segment(s)
• Decide on target market approach(es)
• Decide on target market approach(es)
Product Developing Marketing Mix

ProductPositioning
Positioning Developing Marketing Mix
• Key product differentiation • Product features Preparing the
• Key product differentiation • Product features Preparing the
• Price level Marketing
variables
variables • Price level
 Promotional appeal MarketingPlan
Plan
• Position relative to competition  Promotional appeal
• Position relative to competition  Place (distribution)
 Place (distribution)
Take Marketing Mix

to the Consumers
SITUTATIONAL
INFLUENCES
Consumer Decision Process

Consumer Decision Process
• Problem recognition
• Problem recognition
• Information search
INTERNAL • Information search EXTERNAL
 Alternative evaluation
INFLUENCES  Alternative evaluation INFLUENCES
 Outlet selection & Purchase
 Outlet selection & Purchase
 Post-purchase processes
 Post-purchase processes
Outcomes
Outcomes
Individual Firm
Individual Firm
Society
Society

Revisiting Core Marketing Concepts - The Building Blocks of Marketing Strategy

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Revisiting Core Marketing Concepts - The Building Blocks of Marketing Strategy

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REVISITING CORE

THE BUILDING BLOCKS

 Combinations of products, services, information,

♣ Goes beyond transactions

♣ Through marketing activities, marketers wish to

♣ Value & satisfaction are building blocks of developing

 A set of all actual & potential buyers for a market

 Actual & potential buyers for a market offering

Marketing is a social & managerial process by

Marketing is the set of activities undertaken to

 According to the AMA

Marketing is the total system of business

 Both parties have to gain – customers & the

 Organization wants long-term profitability

 Hence Marketing is the management of markets to

Marketing is profitably managing customer

 As a function, Selling is part of Marketing

♣ Focus of Selling is the product

♣ Production managers love standardization, oppose product

♣ Their aim is production efficiency

♣ Myopic short-term view

♣ If we can make it, people will buy it

♣ People will buy what we make

♣ Differs from Production Concept

♣ Product-oriented managers focus on bringing continuous

♣ May also lead to Marketing Myopia

♣ Too much focus on selling

♣ Sales approach focuses not on customer, but on

♣ Does work for some products

♣ But as a company approach, the Selling Concept

 Responding to those needs & wants

 Delivering satisfaction better than competition

♣ Make a product that sells

 Most common in monopolistic industries

 Power sector is still monopolistic

 Handout # 1 – 15 Points Marketing Managers Must

♣ Cellular service providers

♣ Airline, tourism, hotel industries

 Colleges, hospitals, societies, religious

 Face competition for support from donors

 Works in > 90 countries

 Has > 5 million supporters worldwide

 Supports 1300 environment conservation &

 Handout # 4 – Marketing Right and Wrong

The Holistic Marketing Concept recognizes the

Aims to build long-term and mutually satisfying

♣ Marketing partners – suppliers, distributors

♣ Members of financial community

 Outcome of Relationship Marketing is a

 The 1st constituent – the Customer – Customer

 Companies today customize their marketing offers

Customer Relationship Marketing (CRM) aims to

Customer Relationship Management (CRM) is the

 Keys to building long-term relationship with

 Value – customer must perceive the product /

♣ Value is perceived in terms of

 How much better they are than the benefits offered by

♣ Customer Perceived Value (CPV)

The customer’s evaluation of the difference

 Consumers’ evaluation of brand value is based on

The extent to which a product’s perceived

♣ Product performance < customer expectations