Chapter 1Chapter 1

Defining Marketing for Defining Marketing for the Twenty-First the Twenty-First

CenturyCentury

ObjectivesObjectives

Understand the new economy.

Learn the tasks of marketing.

Become familiar with the major concepts and tools of marketing.

Understand the orientations exhibited by companies.

ObjectivesObjectives

Learn how companies and marketers are responding to new challenges.

The New EconomyThe New Economy

Consumer benefits from the digital revolution include:

– Increased buying power.– Greater variety of goods and services.– Increased information.– Enhanced shopping convenience.– Greater opportunities to compare product

information with others.

The New EconomyThe New Economy

Firm benefits from the digital revolution include:

– New promotional medium.

– Access to richer research data.

– Enhanced employee and customer communication.

– Ability to customize promotions.

Marketing TasksMarketing Tasks

Marketing practices may pass through two stages:

– Entrepreneurial marketing

– Formulated marketing

As marketing becomes more formulated, creativity is inhibited.

What Can Be Marketed?What Can Be Marketed?

Goods

Services

Experiences

Events

Persons

Places

Properties

Organizations

Information

Ideas

Marketing DefinedMarketing Defined

Kotler’s 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.”

Marketing DefinedMarketing Defined

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.”

Core Marketing ConceptsCore Marketing Concepts

Target markets and market segmentation

Marketplace, market-space, metamarkets

Marketers & prospects

Needs, wants, demands

Product offering and brand

Value and satisfaction

Exchange and transactions

Relationship and networks

Marketing channels

Supply chain

Competition

Marketing environment

Marketing program

Core Marketing ConceptsCore Marketing Concepts

Target markets & segmentation

– Differences in needs, behavior, 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.

Core Marketing ConceptsCore Marketing Concepts

Shopping can take place in a:

– Marketplace (physical entity, Lowe’s)– Marketspace (virtual entity, Amazon)

Metamarkets refer to complementary goods and services that are related in the minds of consumers.

Marketers seek responses from prospects.

Core Marketing ConceptsCore Marketing Concepts

Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education, and entertainment.

Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food)

Demands are wants for specific products backed by an ability to pay.

Core Marketing ConceptsCore Marketing Concepts

A Product is any offering that can satisfy a need or want, while a brand is a specific offering from a known source.

When offerings deliver value and satisfaction to the buyer, they are successful.

Enhancing ValueEnhancing Value

Marketers can enhance the value of an offering to the customer by:

– Raising benefits.– Reducing costs.– Raising benefits while lowering costs.– Raising benefits by more than the

increase in costs.– Lowering benefits by less than the

reduction in costs.

Core Marketing ConceptsCore Marketing Concepts

Exchange involves obtaining a desired product from someone by offering something in return. Five conditions must be satisfied for exchange to occur.

Transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

Core Marketing ConceptsCore Marketing Concepts

Relationship marketing aims to build long-term mutually satisfying relations with key parties, which ultimately results in marketing network between the company and its supporting stakeholders.

Core Marketing ConceptsCore Marketing Concepts

Marketing Channels

Communication channels

Distribution channels

Service channels

Deliver messages to and receive messages from target buyers.

Includes traditional media, non-verbal communication, and store atmospherics.

Core Marketing ConceptsCore Marketing Concepts

Marketing Channels

Communication channels

Distribution channels

Service channels

Display or deliver the physical products or services to the buyer / user.

Core Marketing ConceptsCore Marketing Concepts

Marketing Channels

Communication channels

Distribution channels

Service channels

Carry out transactions with potential buyers by facilitating the transaction.

Core Marketing ConceptsCore Marketing Concepts

A supply chain stretches from raw materials to components to final products that are carried to final buyers.

Each company captures only a certain percentage of the total value generated by the supply chain.

Core Marketing ConceptsCore Marketing Concepts

The following forces in the broad environment have a major impact on the task environment:– Demographics– Economics– Natural environment– Technological environment– Political-legal environment– Social-cultural environment

Core Marketing ConceptsCore Marketing Concepts

The marketing program is developed to achieve the company’s objectives. Marketing mix decisions include: – Product: provides customer solution.– Price: represents the customer’s cost.– Place: customer convenience is key.– Promotion: communicates with customer.

Company OrientationsCompany Orientations

The orientation or philosophy of the firm typically guides marketing efforts. Several competing orientations exist:

– Production concept-consumers favor products that are widely available and inexpensive.

– Product concept-consumers favor those products that offer the most quality, performance and innovative features.

– Selling concept-holds that consumers will not buy enough of products unless the firm undertakes a large scale selling and promotion effort. (for unsought goods.)

– Marketing concept-instead of product centered “make and-sell” shift to a customer centered, “sense and-respond” philosophy. Instead of “hunting” marketing is “gardening”. organisational goals depends on knowing the needs and wants of target markets. Customer value and focus are the paths to sale and profits.

– Societal marketing concept-understanding broader concerns and the ethical, environmental, legal and social context of marketing activities and programs clearly extending beyond the company and the consumers to society as a whole.

To accompany A Framework for Marketing Management, 2nd Edition Slide 27 in Chapter 1©2003 Prentice Hall, Inc.

Marketing and sales concepts contrastedMarketing and sales concepts contrasted

FactoryExistingProducts

Sellingand

Promoting

ProfitsthroughVolume

MarketCustomer

NeedsIntegratedMarketing

Profitsthrough

Satisfaction

The Selling ConceptThe Selling Concept

The Marketing ConceptThe Marketing Concept

Starting Point Focus Means Ends

To accompany A Framework for Marketing Management, 2nd Edition Slide 28 in Chapter 1©2003 Prentice Hall, Inc.

Modern Marketing SystemModern Marketing SystemModern Marketing SystemModern Marketing System

SuppliersSuppliers

End UserMarket

End UserMarket

MarketingIntermediaries

MarketingIntermediaries

CompetitorsCompetitors Company(Marketer)

Company(Marketer)

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En

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