MBA 610 – Marketing Management Dr. Tarek Mady 1

Chapter 1

Defining Marketing for the 21st Century

The JMSB MBAMBA 610 – Marketing

ManagementWinter 2015

Dr. Tarek Mady

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Agree? Disagree? Unsure?

1. Marketing is simply another word for Advertising.2. Marketing tasks are fairly simple, particularly compared to complex and

serious roles/functions like finance and engineering.3. People who are successful in marketing are really creative and outgoing –

but are not that good with numbers and statistics.4. Marketing is all about making people buy products they don’t really

want.5. People in marketing roles tend to have little interaction with staff from

other departments (functions) within a firm.6. Many key marketing decisions within a firm are so important that the

CEO (or the senior executive team) often undertakes them (rather than the marketing department).

7. The main goal of marketing is to maximize the number of customers, all other goals are not as important.

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Why are we here?

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Ralph Waldo Emerson

“If a man makes a better

mousetrap,the world will beat a path to

his door.”

Is that true?

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Market Awareness If nobody knows you exist and have built a

mousetrap, no one will know that there is a path worth beating!

Actual Need If people do not have a mouse problem, they do

not need a mousetrap! Perceived Need

People who have mice, but are not aware of their existence, will not be interested in your mousetrap.

People who think mice are, "the cutest little things," are not good prospects either.

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Definition of “Better” Prospects will buy your product only if they agree

it is better.

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Definition of “Better” It’s “better” if I don’t have to buy cheese!

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Definition of “Better” It’s “better” if I don’t get hurt setting it up!

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Definition of “Better” It’s “better” if I catch the mouse, not

necessarily kill it!

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

Definition of “Better” It’s “better” if my friends

envy me for my mousetrap . . . . For that prospect, a better

mousetrap comes in designer hues (Burberry or Louis Vuitton Mousetrap?)

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The Mousetrap Fallacy“If a man makes a better mousetrap, the world will beat a path to his door”

The Effort of Beating the Path Even if customers have real

needs, perceive their existence, and recognize your product as better, they still may not beat a path to your door. The effort customers will expend to

buy your product depends on their perception of its value.

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So what does this all mean?

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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.

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The simple Marketing (exchange) system

Supplier ConsumerMarketing – Exchange transaction

s

Goods /Services

Money / Patronage

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What is Marketing?(AMA Definition)

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Meeting needs profitably

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Marketing is embedded in all aspects of business . . .

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Exchange Economy

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What is Marketing Management?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

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Marketers often have to deal with several “Demand States”

• Consumers dislike the product and may even pay to avoid it.Negative demand

• Consumers may be unaware of or uninterested in the product.Nonexistent demand

• Consumers may share a strong need that cannot be satisfied by an existing product.Latent demand

• Consumers begin to buy the product less frequently or not at all.Declining demand

• Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis.Irregular demand

• Consumers are adequately buying all products put into the marketplace.Full demand

• More consumers would like to buy the product than can be satisfied.Overfull demand

• Consumers may be attracted to products that have undesirable social consequences.Unwholesome demand

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Some terms you will hear over and over during the semester . . .

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Needs, wants and demands

Needs: State of felt deprivation including physical, social, and

individual needs.

Wants: Form that a human need takes, as shaped by culture and

individual personality.

Wants + Buying Power = Demand

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Marketing’s first task: discovering consumer needsOur Job . . .

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Marketing’s second task: satisfying consumer needs

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In theory, it’s easy

The problem is there are so many other factors, not to mention competitors trying

to “out-market” you…..

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The uncontrollable, environmental factors

Social Factors Economic Factors Technological Factors Competitive Factors Regulatory Factors

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Major Forces

Network information technology Globalization Deregulation Privatization Heightened competition Industry convergence Retail transformation Disintermediation Consumer buying power Consumer information Consumer participation Consumer resistance

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What do customers really need (want)?

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Value

the unique combination of benefits received by target buyers that includes : Quality Price Convenience On-time delivery After-sale service

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Value

Value is a trade-off between all the benefits an offering provides and all the costs incurred in obtaining and using the offering

Customer-perceived value, not supplier- perceived value Value may be time or situation dependent

Value = Perceived Benefits Perceived Costs

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So should giving value be a one time thing?

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What Is a Market?

The set of actual and potential buyers of a product or offering.

These people share a need or want that can be satisfied through exchange relationships.

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Does that mean everyone ?

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Target Markets, Positioning & Segmentation

Marketers start by dividing the market into segments. By examining demographic,

psychographic, and behavioural differences among buyers, marketers identify and profile distinct groups of buyers who might prefer or require varying product and service mixes.

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The Target Market

Because the organization obviously can’t satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers.

This is the target market -- one or more specific groups of potential consumers toward which an organization directs its marketing program.

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Positioning

… is the act of designing an organization’s offering and image so that it occupies a distinct and valued place in the target customer’s mind relative to competitive offerings.

Often associated with branding . . .

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Marketing itself is changing . . .

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New Company Capabilities

Marketers can use the Internet as a powerful information and sales channel.

Marketers can collect fuller and richer information about markets, customers, prospects, and competitors.

Marketers can tap into social media to amplify their brand message.

Marketers can facilitate and speed external communication among customers.

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New Company Capabilities

Marketers can send ads, coupons, samples, and information to customers who have requested them or given the company permission to send them.

Marketers can reach consumers on the move with mobile marketing.

Companies can make and sell individually differentiated goods.

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But not all companies adopt marketing thoughts . . .

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Company Orientations

Production

Product

Selling

Marketing

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An emerging concept . . . .

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Holistic Marketing Dimensions

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A few final words about the “4 Ps”

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The Four P Components of the Marketing Mix

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Marketing Management tasks typically go well beyond the “4Ps”

Develop market strategies and plans Capture marketing insights Connect with customers Build strong brands Shape market offerings Deliver value Communicate value Create long-term growth

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Alternative ways to view what we offer and what we need to focus on . . .

Typical Marketing

Mix (Four Ps)

ProductPlace

PromotionPrice

Customer Oriented

Marketing Mix (Four Cs)

Customer SolutionConvenience

CommunicationCost

Modern Marketing

Management (Four Ps)

PeopleProcessesPrograms

Performance