Introduction to Marketing

Why Marketing?
 Survival of an organization depends on the
performance of its marketing
 There must be a top-line for a bottom line to exist
 Other functional areas does not matter if there is no
sufficient demand for its products/services

First function of management is economic performance

Customer and Business
Drucker on customers

 ‘ there is only one valid definition of business: to create

a customer’

 Because the purpose of business is to create a customer,

the business enterprise has two–and only two–basic
functions: marketing and innovation

 Customer is the foundation of a business and keeps its

existence. He alone gives employment
On Customers

 A customer is the most important visitor on our

premises. He is not dependent on us. We are
dependent on him. He is not an interruption of our
work. He is the purpose of it. He is not an outsider of
our business. He is part of it. We are not doing him a
favor by serving him. He is doing us a favor by giving
us the opportunity to do so -
Mahatma Gandhi
What is Marketing
 Not ‘telling and selling’
 Satisfying customer needs

 The process by which companies create value for

customers and build strong customer relationships in
order to capture value from customers in return.

 The aim of marketing is to make selling superfluous

The aim of marketing is to know and understand the

customer so well the product or service fits him and sells
itself - Drucker
What Is Marketing?

Marketing is an organizational function and a set of

processes for creating, communicating, and delivering
value to customers and for managing customer
relationships in ways that benefit the organization and its
stakeholders.

Market:
Is the set of actual and potential buyers of a product or
service

Industry: Sellers
Market: customers
What Is Marketed?

• Goods • Persons
• Services • Properties
• Events • Organizations
• • Information

Experiences • Ideas
• Places
A marketer is someone who seeks a response—
attention, a purchase, a vote, a donation—from
another party, called the prospect
 Marketing: what is offered for sale is determined by
the buyer but not by the seller
 Product becomes consequence of marketing
Beginning and End
 An industry begins with the customer and her or his
needs, not with a patent, a raw material, or a selling skill.
 Given the customer’s needs, the industry develops
backwards
 Industry is a customer-satisfying process, not a goods
producing process

 “….corporation must be viewed as a customer-creating

and customer-satisfying organism. Management must
think of itself not as producing products but as providing
customer-creating value satisfactions” (Levitt)
 A Simple Model of Marketing Process

Construct
Understand an Capture
Build
the Design a integrated value from
profitable
marketplace customer- marketing customers
relationships
and driven program to create
and create
customer marketing that profits and
customer
needs and strategy delivers customer
delight
wants superior equity
value
Needs, wants and demand
Needs
 Basic human requirements.

 Physical need (food, clothing, safety), social need (affection,

belonging)
 Marketers do not create needs; but, influence wants
Wants
Needs become want when they are directed to specific
objects to satisfy that need
The form human needs take as shaped by culture and
individual personality
Wants are shaped by one’s society and are described in
terms of objects that will satisfy needs.
Demands
Human wants that are backed by buying power

Demands are wants for specific products backed by

an ability to pay
Market Offering

• Some combination of products, services, information or

experiences offered to a market to satisfy a need or want
Design a customer-driven marketing strategy

 What customers will we serve (What is our target

market)?
 Select the customers who can be served well and
profitably

 How can we serve these customers best (what is our

value proposition)?
 How to differentiate and position in market place

 ‘theultimate driving machine’ – BMW

 ‘touching is believing’ – Apple’s iPhone
Value proposition:
 A brand’s value proposition is the set of benefits or
values it promises to deliver to consumers to satisfy
their needs.
Satisfaction
The extent to which a product’s perceived performance
matches a buyer’s expectations

• Delight
• Satisfaction
• Disappointment
 Preparing an Integrated Marketing Program
and plan

 Consists of marketing mix, set of tools the firm uses

to implement its marketing strategy
 Marketing mix is classified into four broad categories
 Product
 Price
 Place
 Promotion
 Building Customer Relationships
 Customer relationship management is the process of
building and maintaining profitable customer relationships
by delivering superior value and satisfaction.
 Building blocks of customer relationships: Customer
Value and Satisfaction

 Customer perceived value: customer’s evaluation of the

difference between all the benefits and all the costs of an
offer relative to those of competing offers
 Customer Satisfaction: The extent to which a product’s
perceived performance matches a buyer’s expectations.
Partner Relationship Management:
working closely with partners in other departments
and outside the company to jointly bring greater
value to customers.

Marketing is far more important to be left only to

the marketing department – David Packard
 Capturing Value from Customers
 Current and future sales, market share and profits
 Outcomes of creating customer value: customer
loyalty and retention, share of market and share of
customer, and customer equity

Customer lifetime value:

The value of the entire stream of purchases that the
customer would make over a lifetime of patronage
Customer equity:
The total combined customer lifetime values of all the
company’s current and potential customers
Philosophy / concepts guiding marketing
strategy
 The production concept
 The product concept
 The selling concept
 The marketing concept
 Holistic marketing concept
The Production Concept
 The production concept holds that consumers will
prefer products that are widely available and
inexpensive.
 Focus on high production efficiency, low costs and
mass distribution.

The Product Concept

 The product concept holds that consumers favor
products offering the most quality, performance, or
innovative features
 ‘better-mousetrap’ fallacy
The Selling Concept
 The selling concept holds that consumers and
businesses, if left alone, will ordinarily not buy
enough of the organization’s products
 Therefore, the organization must undertake
aggressive selling and promotion effort
 Unsought goods
 Overcapacity
 Sell what they make rather than what the market wants
The Marketing Concept
The marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than competitors in creating, delivering, and
communicating superior customer value to your chosen
target markets
 Customer centric, sense-and-respond philosophy
 Not to find the right customer for your product, but the
right products for your customers
 Selling focuses on the needs of the seller; marketing
on the needs of the buyer.
 Selling is preoccupied with seller’s need to convert
his product into cash; marketing with the idea of
satisfying the needs of the customer
Holistic Marketing
Relationship Marketing

CUSTOMERS

EMPLOYEES

MARKETING
PARTNERS

FINANCIAL
COMMUNITY
Integrated Marketing
 Integrated marketing occurs when marketers devise
marketing activities and programs that create,
communicate, and deliver value such that “the whole is
greater than the sum of its parts.”
Internal Marketing
 The task of hiring, training, and motivating able
employees who want to serve customers well
 Marketing succeeds when all divisions work together
to achieve customer goals
Performance Marketing

Financial

Organization

Environmenta
Social l

Triple Bottom Line (3Ps – Profits, people,

planet)
Marketing Mix Components (4 Ps)