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Principles of Marketing
Instructor: Khaled BekhetMaastricht School of Management
Marketing Program-Session 1
Today’s Agenda Review Syllabus Overview of the Marketing Concepts and
creating customer value.
1st Session Course Description“An introduction to the basic concepts underlying
marketing, marketing definition, needs, wants, demands, product, Exchange, Market, creating customer value, customer satisfaction, Production Concept Vs Product Concept Vs Selling concept Vs Marketing concept.. And Societal Marketing Concept
Next Session we’ll discuss: Marketing Mix, Market segmentation, target market selection Consumer and industrial buyer behavior …”
Review Syllabus
Course Objectives
Review Syllabus
Understand basic concepts in Marketing Your ability to analyze Marketing problems.
Learn how to develop a
marketing plan.
COURSE STRUCTURECOURSE STRUCTURE
Readings
Lectures
Assignments
Project
Exam
Recommended Text Books Principles of Marketing by Phil ip Kotler
and Gary Armstrong, 2005, (11th Edition) Prentice –Hall Inc.
Fundamentals of Marketing by Stanton, Etzel and Walker, 2005, (8th Edition) McGraw Hill Inc.
Marketing by Joel R. Evans and Barry Berman, 2004, (9th Edition) Atomic Dog Publishing
Question : Is marketing good or evil?
If you think marketers have an image problem
What People Think of Marketers
Marketers are faddish, irresponsable, … don’t think like business people …
McKinsey & Company, CEO/CMO Survey, 2005
Too many marketers have become so specialized that they don’t think in terms of the company’s big picture.
Philip Kotler
Marketers are frivolous and difficult to approach
Australian Society of Certified Public Accountants
What is Marketing, anyway?
AdvertisingAdvertising
SalesSales
PromotionsPromotions
Public Public relationsrelations
SponsorshipsSponsorships
PricingPricing
Retail ingRetail ing
Direct mailDirect mail
CataloguesCatalogues
BillboardsBil lboards
E-E-
commercecommerce
Shopping Shopping
channelschannels
PackagingPackaging
DeliveryDelivery
ServiceService
Research
Research
Coupons
Coupons
Marketing Everywhere!Understanding marketing helps you when: You buy a new pair of shoes, or go to the
grocery store. You open a new bank account. You apply for a job. You watch television.
In Fact People Buy 3 Things
….. Essential needs (Food, Shelter, ..), Solutions, Things to feel good.
What is Marketing?
What is Marketing?
MarketingMarketing is the total system of business activities designed to plan, price, promote, and distribute want-satisfying products, services, and ideas to target markets in order to achieve organizational objectives- AMA
Simple: The delivery of CS at profit.
This is your 1st homework :)
In your own words…
What’s marketing ?
Key Words in the Definition
total system: not an ad hoc approach business activities: but not just for
businesses plan, price, promote, distribute: the
application of the marketing mix need-satisfying: meeting customers’ needs products, services, ideas: not just
products target markets: not a broad-brush
approach objectives: the customer’s as well as the
firm’s
Why StudyWhy StudyMarketing?Marketing?
Contributions to Individual Organizations
Critical to the successof the firm.
CostsAbout 50% of total
Product/service costsare marketing costs.
CareersAbout 25 to 33% of the
work force holdmarketing positions.
Contributions to SocietyMarketing decisions
affect the lives of individual consumers and
society as a whole.
Basic Concepts Underlying Marketing
NeedsWants Demands Products ExchangeMarkets
Needs The most basic concept underlying
marketing is that of human needs.
The needs are built in human nature itself. It is not invented by marketers.
When the needs are not satisfied, a person will try to reduce it or look for an alternative that will satisfy it.
Wants Human wants are desires for specific
satisfaction of deeper needs.
Human needs may be few, but their wants are numerous.
Wants are continually shaped and re-shaped by social forces and institutions such as families, Mosque, church, schools and business corporations.
Wants Marketers do not create needs, but
influence wants.
They suggest and inform consumers about certain products.
Marketers persuade them to purchase, stressing the benefits of such products.
Demands People have almost unlimited wants but
limited resources. They want to choose products that provide
the most value and satisfaction for their money.
When backed by purchasing power, wants become demand.
That is, demand is “want for specific products that backed up by an ability”.
Demands Many desire a car such as Mercedes Benz,
Toyota, BMW, Honda etc. but only a few are really willing and able to buy one.
It is therefore important for marketing executives to measure not only how many people want their company’s products, but also measure how many of them would actually be willing and able to buy them.
Products People normally satisfy their wants and needs
with products offered in the market.
A product can be defined as anything that can be offered to someone to satisfy a need or want.
A product can be an object, service, activity, person, place, organization or idea.
People do not buy physical objects for their own
sake. For example why women buy lip stick and why would you buy a toothpaste?????????.
But, It is not Just Products There could be a good, a service, or an idea.
Exchange Marketing takes place when people decide
to satisfy needs and wants through exchange.
Exchange is therefore the act of getting a desired object from someone by giving something in return.
Figure 1-1: The Give and Get of Marketing
MarketsA market is defined as a set of all actual and potential buyers of a product and service. These buyers share particular needs or wants that can be satisfied through exchange.
Simple Marketing System
Producer/Seller Consumer
Communication
Product/Service
Money
Feedback
Who is the Focus? Customers
The purchasers of organizations’ products; the focal point of all marketing activities. The Target Market
Starbucks focuses on its target market to meet their needs
Discussion Questions
Is customer satisfaction enough?Is customer delight necessary?
Do not feel scary, It is not Homework, We will discuss about that in class ..NOW !!!!
It’s All About Satisfaction customer satisfaction, leads to long-term
profitability and success. Whenever things of value are being
exchanged, marketing principles apply: consider exactly what is being exchanged (it’s “give” and “get”)
Marketing today is the role of all company’s operations and departments which influence satisfaction
Marketing principles apply in all organizations
…and Creating Value Successful marketing involves meeting or
exceeding customer expectations When expectations are exceeded,
customer satisfaction or delight results
Marketing is very much about adding value through a broadly-defined value proposition
The value proposition comprises everything the company offers its customers – must be defined very broadly
Value may is not only about price
8
Creating Customer Value
Product benefitsService benefitsRelational benefitsImage benefits
Monetary costsTime costsEnergy costsPsychological
costs
Customer value
Perceived benefits
Perceived sacrifice
Positive Negative
Value = benefits – costs – risk As perceived ‘Solution to Financial & Unfulfilled by consumers my problem’ Opportunity Promises Costs
A value proposition
Creating Value Proposition Value proposition contains aspects of CS. Many aspects contribute to customer
satisfaction: The emotional connection with customers Interaction with the firm and it employees The technical performance of the firm Support services and systems The core product or service offered
Ability to add value and to differentiate as a firm focuses more on the top levels
The Production Concept Consumers will favor those products that
are widely available and low in cost.
Therefore increase production and cut down costs.
And build profit through volume.
The Product Concept
Consumers will favor those products that offer the most quality, performance, or innovative features.
Therefore, improve quality, performance and features.
This would lead to increased sales and profits.
The Selling Concept
Consumers , if left alone , will not buy enough of company’s products.
Therefore, promote sales aggressively.
And, build profit through quick turnover.
The Marketing Concept The key to achieving organizational goals
consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. As per Kotler et all, 1996
And build profit through customer satisfaction And loyalty And Innovation.
(Quote of P. Drucker-7Sources of Innovation )
Marketing and Sales Concepts Contrasted
Evolution of the Societal Marketing Concept The Production Concept –Existing -Scales The Product Concept- Features The Selling Concept-Aggressive Promo The Marketing Concept-Integrated Societal Marketing Concept- New
Deliver value to customers in a way that improves customers’ and society’s long term well being.
Marketing Myopia – Fit or Feature?
Management’s failure to recognize a company’s scope of business.
Sellers pay more attention to the specific products they offer than to the benefits and experiences produced by the products.
They focus on the “wants” and lose sight of the “needs.”
Need a drill?
Need a cloth?
Your 2nd Homework and Last
Can you Think of some Can you Think of some marketing myopias that marketing myopias that might crossed into your might crossed into your life? This is your 2life? This is your 2ndnd and and last homework today?last homework today?
People buy holes, not drills!
Fashion, status, reference groups approval, and warmth, but not coats!
The Marketing Myopia
The New View of Marketing 4R The modern marketing concept emphasis
today is on keeping existing customers as well as getting new ones
Four principles guide marketing- 4R: retention: keeping them coming back referrals: encourage them to
recommend us relationships: build an emotional
connection recovery: solve problems as they arise
Next ClassMarketing Mix and Market segmentation, Target
Markets selection, Consumer and industrial buyer behavior
Discussion Session: 2 Case Studies
Next Class Debate:What is the Marketing Mix?, What are the Market
coverage different strategies?, What are Steps in Segmentation, Targeting, and Positioning? How would you segment consumer and Industrial Markets
THANK YOU
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