CONCEPTS IN MARKETING

OVERVIEW OF CONTEMPORARY MARKETING

Prof: P.C.MehraProfessor of Marketing

International Management Institute

What is marketing ?

Nothing but organized common sense !!

EVOLUTION OF MARKETING

Science of Marketing as old as mankind Barter of goods Concept of exchange Industrial revolution resulted in spurt in production Post war era resulted in manifold increase in

availability Emerged concepts of today’s marketing

MARKETING IN THE LAST 50 YEARS

Era of the 50’s Production driven

What is made will be sold

60’s to mid 80’s

Sales driven Somehow sell

Mid 80’s to late 90’s

Customer Orientation

Make what will satisfy customer needs & wants

Now Customization Focus on the Individual as a customer

The New Economy

Substantial increase in buying power A greater variety of goods and services A greater amount of information about

practically anything A greater ease in interacting and placing

and receiving orders An ability to compare notes on products

and services

The New Economy

Websites can provide companies with powerful new information and sales channels.

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

Companies can facilitate and speed up communications among employees.

Companies can have 2-way communication with customers and prospects

The New Economy

Companies can send ads, coupons, samples, information to targeted customers.

Companies can customize offerings and services to individual customers.

The Internet can be used as a communication channel for purchasing, training, and recruiting.

Companies can improve logistics and operations for cost savings while improving accuracy and service quality.

Adapting Marketing to the New Economy

How Business Practices are Changing From organizing by product units to organizing by

customer segments Shift focus from profitable transactions to customer

lifetime value Shift focus from financial scorecard to also focusing

on the marketing scorecard Shift focus from shareholders to stakeholders

Adapting Marketing to the New Economy

Everyone does the marketing Build brands through performance, not just

advertising Customer retention rather than customer

acquisition From none, to in-depth customer satisfaction

measurement From over-promise, under-deliver to under-

promise, over-deliver

Adapting Marketing to the New Economy

How Marketing Practices are Changing: Customer Relationship Marketing Reduce rate of customer defection Increase longevity of customer relationship Enhance growth potential

through cross-selling and up-selling Make low profit customers more profitable

or terminate them

Defining marketing

Peter Drucker…. the only valid purpose of business is the creation of a customer.

Peter Doyle…. Selling is making people want what you’ve got, while marketing is selling people what they want.

Theodore Levitt….People buy solutions to problems, not products, and successful marketers are problem solvers.

MARKETING

“ 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.”

-Philip Kotler

MARKETING

“Marketing is getting the right goods & services to the right people at the right time, at the right place, at the right price with the right communications & promotions”

-- American Marketing Association

The Scope of Marketing

Places Properties Organizations Information Ideas

Goods Services Experiences Events Persons

Marketing of any or all of the following:

IMPLICATIONS OF MARKETING

Understanding consumer buying behaviour Designing products to satisfy customer needs Understanding the customers price sensitivity /

threshold level Understanding & planning for competition Identifying the relevant customer group(s) Creating visibility & availability Constantly remaining in touch with the market

Production ConceptProduction Concept

Product ConceptProduct Concept

Selling ConceptSelling Concept

Marketing ConceptMarketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that offer the most quality, performance,

or innovative features

Consumers will buy products only ifthe company aggressively

promotes/sells these products

Focuses on needs/ wants of target markets & delivering value

better than competitors

Company orientations towards the market place

PRODUCTION CONCEPT

The production Concept holds that consumers will prefer products that are widely available and inexpensive

Usually applicable in situations where demand outstrips supply

Concentration on high production and low costs as also mass distribution

PRODUCT CONCEPT

The Product Concept holds that consumers will favour those products that offer the most quality, performance or innovative features.

Indicates an obsession with the product Believes a good product will sell automatically Referred to as Marketing Myopia

SELLING CONCEPT

The Selling Concept holds that consumers & businesses, if left alone, will ordinarily not buy enough of the organization's products. The organisation, must therefore, undertake aggressive selling and promotion.

Companies aim to sell what they make rather than make what they sell

Usually adopted by companies having excess capacity or unsought products.

THE MARKETING CONCEPT

The Marketing Concept holds that the key to achieving organisational goals depends on determining the needs & wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

The Marketing Concept thus focuses on the customer - begins with the customer ( determining needs & wants) and ends with the customer (ensuring customer satisfaction)

SOCIETAL MARKETING CONCEPT The Societal Marketing Concept holds that organisational task is

to determine needs, wants and interests of the target markets and to deliver the desired satisfaction more effectively & efficiently than competitors in a way that preserves or enhances the consumer’s & society’s well being.

Society(Human welfare)

Company(Profits)

Consumers(want satisfaction)

MARKETING PHILOSOPHIES : a comparative analysis

Concept Focus Means End

Production Production Wide distribution

Profit through low cost, high volume

Product Product Quality Profit through superior product

Selling Product Selling & promotion

Profit through volumes

Marketing Customer needs

Integrated marketing

Profit through customer satisfaction

Product vs Market orientationMarketing is a function which adds value to a business

Product

Orientation

Marketing Orientation

AVON We sell cosmetics We sell hope

XEROX We sell copiers We help improve office productivity

COLUMBIA PICTURES

We make movies We market entertainment

Marketing Myopia--Theodore Levitt

There is no such thing as a growth industry. Companies are organized & operated to create & capitalize on growth opportunities. Companies must respond to market requirements & must think of themselves as creators and satisfiers of customers rather than a producer of goods and services. The firm must adopt a broad and dynamic view of market opportunity.

Selling & Marketinga comparative analysis

Theodore Levitt in his classic article Marketing Myopia says: Selling focuses on the needs of the seller while marketing

focuses on the needs of the buyer Selling is pre-occupied with the seller’s need to convert his

product into cash, while marketing is satisfying the needs of the customer by delivering value through a product

In selling costs determine price, whereas in marketing customer determines price

Selling has a short term orientation towards today’s products & markets, while marketing has a long term orientation with focus on emerging trends & opportunities besides new products & markets.

“ The aim of Marketing is to make Selling superfluous” ….Peter Drucker

Contrasts between the Selling concept and the Marketing concept

Customers

Front-line people

Middle Management

TopManagement

Traditional Organization Chart

Customers

Front-line people

Middle management

Topmanage-

ment

Customers

Custom

ers

Customer-Oriented Organization Chart

Product or Offering Product or Offering

Value and Satisfaction Value and Satisfaction

Needs, Wants, and DemandsNeeds, Wants, and Demands

Exchange & TransactionsRelationships & Networks Exchange & TransactionsRelationships & Networks

Target Markets & Segmentation Target Markets & Segmentation

Marketing Channels Marketing Channels

Supply Chain Supply Chain

Competition Competition

Marketing Environment Marketing Environment

Core Concepts of Marketing

The customer as the controlling

function and marketing as the integrative function

Customer

Marketing

Production

Humanresources Finance

Evolving views of Marketing’s role

Some core Marketing concepts

Target market…..implying market focus Customer needs….implying customer orientation Profitability…implying profit through customer

satisfaction Integrated marketing….the entire organization

THINKS customer first*

* “ Marketing is far too important to be left only to the Marketing department”…..David Packard, Hewlett-Packard

Assignment

Think of your own organization from which you come from, and answer the following:

Was your organization marketing oriented…illustrate ? Did it need to be ? If it was marketing oriented, how customer focused was it…

illustrate ? What was the effect of its marketing orientation….illustrate? If it was not, in retrospect, how could it have changed its

orientation and to what effect?