Chapter (1)

Defining Marketing for the 21st Century:

Formally or informally, people and organizations engage in a
vast number
of activities we could call marketing. Good marketing has become increasingly vital
for success

The Importance of Marketing:

o It is worth mentioning that one of the key factors in Barack Obama’s victory in
the 2008 U.S Presidential Election was a well designed and well executed
marketing program
o Good marketing does not come accidently; but a result of careful planning and
execution.
o Marketing becomes both an art and science.
o Finance, operations, accounting, and other business functions won’t really
matter without sufficient demand for products and services so the firm can
make a profit. That’s why; Financial Success often depends on the marketing
ability
o Marketing has helped introduce and gain acceptance of new products that have
eased or enriched people’s lives
o Successful marketing builds demand for products and services, which, in turn,
creates jobs.
o CEOs recognize the role of marketing in building strong brands and a loyal
customer base. That’s why; many now have a chief marketing officer (CMO) to
put marketing on a more equal footing with other C-level executives such as the
chief financial officer (CFO) or chief information officer (CIO).
o Making the right marketing decisions isn’t always easy
o Marketers must decide what features to design into a new product or service
(Product), what prices to set (Price), where to sell products or offer services
(Place), and how much to spend on advertising, sales, the Internet, or mobile
marketing (Promotion)
o What happened in Domino’s pizza is an example of the importance of the
marketing in a modern era and the power of social media
o Good marketers are always seeking new ways to satisfy customers and beat
competition

The Scope of Marketing:

o What is Marketing?

1. Is all about identifying and meeting human and social needs.

2. Meeting Needs Profitably
3. Formal Definition: Is a set of processes for creating, communicate ,
delivering and exchanging offerings that have value between customers and
 the company to satisfy their needs and wants. In which; we have mutual
satisfaction and without hurting the others needs and wants (satisfying the
society at large)
4. Marketing Management: is the art and science of choosing target markets,
and getting, keeping and growing customers through creating,
communicating and delivering superior customer value.
 Note: Segmentation, Targeting, Positioning
5. Managers sometimes think of marketing as “the art of selling products,” but
many people are surprised when they hear that selling is not the most
important part of marketing! Selling is only the tip of the marketing iceberg
6. The aim of marketing is to know and understand the customer so well that
the product or service fits him and sells itself.
 Examples: Nintendo, Wii game, Toyota Prius

o What is Marketed?

Marketers market 10 main types of entities: goods, services, events,

experiences, persons, places, properties, organizations, information, and ideas

o Who Markets?

 A marketer is someone who seeks a response—attention, a purchase,

a vote, a donation—from another party, called the prospect.
 If two parties are seeking to sell something to each other, we call them
both marketers.
 Marketers are responsible for Demand Management; by identifying the
demand state of the customer and the underlying cause(s) of it and then try
to change it (shift Demand) to a more desired state that meet the
organization’s objectives
 Types of Demand:

1. Negative demand: Consumers dislike the product and may even pay to avoid it.
2. Nonexistent demand: Consumers may be unaware of or uninterested in the
product.
3. Latent demand: Consumers may share a strong need that cannot be satisfied by
an existing product.
4. Declining demand: Consumers begin to buy the product less frequently or not
at all.
5. Irregular demand: Consumer purchases vary on a seasonal, monthly, weekly,
daily, or even hourly basis.
6. Full demand: Consumers are adequately buying all products put into the
marketplace.
7. Overfull demand: More consumers would like to buy the product than can be
satisfied.
8. Unwholesome demand: Consumers may be attracted to products that have
undesirable social … Example: Cigarettes

o What is the market?

 Traditionally, a “market” was a physical place where buyers and sellers gathered to
buy and sell goods
 Five basic markets and their connecting flows are shown in the following page:
(Structure of flows in a modern exchange economy)

 Marketers use the term (Market) to cover various groupings of customers.

 They view sellers as the Industry and buyers as the Market
 The following figure shows the relationship between the Market and the Industry
(Simple marketing system)

 Key Customer Markets:

1. Consumer Markets
o Companies selling mass consumer goods and services such as juices &
Cosmetics
o Spend a great deal of time establishing a strong brand image by developing
a superior product and packaging, ensuring its availability, and backing it
with communications and reliable service.

2. Business Markets
o Companies selling business goods and services often face well-informed
professional buyers skilled at evaluating competitive offerings.
 o Business buyers buy goods to make or resell a product to others at a profit.
Business marketers must demonstrate how their products will help achieve
higher revenue or lower costs.
o Advertising can play a role, but the sales force, the price, and the
company’s reputation may play a greater one.

3. Global Markets:
o Companies in the global marketplace must decide which countries to enter
how to enter each; how to adapt product and service features to each
country; how to price products in different countries; and how to design
communications for different cultures.
o Although all these things should be taken into consideration. Yet, the payoff
can be huge.

4. Nonprofit and Governmental Markets:

o Companies selling to nonprofit organizations with limited purchasing
power such as churches, universities, charitable organizations, and
government agencies need to price carefully.
o Lower selling prices affect the features and quality the seller can build into
the offering.

 Marketplace: is physical such as a store you shop in

 Marketspace: is digital as when you shop on the internet
 Metamarket: cluster of complementary products and services closely
related in the minds of consumers, but spread across a diverse of industries
o Example: The automobile metamarket consists of automobile
manufacturers, new and used car dealers, financing companies,
insurance companies, mechanics, spare parts dealers , auto
magazines, auto sites on the internet

Core Concepts in Marketing:

1. Needs, Wants and Demands:

o Needs are the basic human requirements such as for air, food , water, clothing
and Shelter.
o Needs become wants when they are directed to specific objects that might
satisfy the need.
o Demands are wants for specific products backed by an ability to pay

Marketers do not create needs: Needs preexist marketers. Marketers just influence
wants or help consumers know what they want

o Type of Needs:
 Stated needs (The customer wants an inexpensive car)
 Real needs (The customer wants a car whose operating cost is low)
 Unstated needs (The customer expect a good service from the dealer)
  Delight needs (The customer would like the dealer to include a GPS navigation
system)
 Secret needs (The customer wants friends to see him or her as a savvy
consumer)

Responding to the stated needs only may shortchange the customer

2. Segmentation, Target Markets, Positioning:
o Marketers start by dividing the market into segments by examining demographic,
psychographic and behavioral differences among buyers.
o After identifying market segments, marketers decide which are the target markets
that present the greatest opportunities.
o Develop market offerings that it positions in the minds of the target buyers as
delivering some central benefits. Example: Volvo – Means Safety

3. Offerings and Brands:

o Value Proposition (‫ )اقتراح قيمة‬a set of benefits that satisfy the customer needs
o Intangible Value Proposition is made Tangible through the Offering which is the
product or service or a combination of products, services, information and
experiences
o When the offering is coming from a known source it becomes a Brand
o All companies strive to build a brand image

4. Value and Satisfaction:

o Value: Benefits provided by the product or service compared to costs.
o Value is a central marketing concept; it is a combination of quality, price, and service
(Customer Value Triad)
o Satisfaction reflects a person’s judgment of a product’s perceived performance in
relationship to expectations. If the performance falls short of expectations, the
customer is disappointed. If it matches expectations, the customer is satisfied. If it
exceeds them, the customer is delighted

5. Marketing Channels
The marketers use 3 kinds of marketing channels:
 Communication channels – deliver and receive messages from target buyers
including newspapers, magazines, radio, TV, Internet..etc.
 Distribution Channel – To display , sell or deliver the physical product or service
to the buyer or user. Can be direct like mail or indirect like distributors,
wholesalers, retailers (intermediaries)
 Service channels – To carry out transactions with potential buyers including
banks, transportation companies, insurance companies, warehouses etc.

6. Supply Chain
Is a longer channel stretching from raw materials to components to finished products
carried to final buyers.

7. Competition
 It includes all the actual and potential rival offerings and substitutes a buyer might
consider.

8. Marketing environment
Consists of:
o Task Environment – Anything related to the product; includes the people engaged in
producing, distributing, promoting and offering. (Company, suppliers, dealers and
target customers)
o Broad Environment – consists of six components: Demographic, Economic, Social-
cultural, Natural, technological & Political- legal environment.

New Marketing Realities:

o Major Societal Forces (For Reading)

Today, major, and sometimes interlinking, societal forces have created new
marketing behaviors, opportunities, and challenges. Here are 12 key ones.
1. Information Technology
2. Globalization
3. Deregulation (To create greater competition and growth
opportunities)
4. Privatization (Converting public companies to private companies to
increase their efficiency)
5. Heightened Competition
6. Industry Convergence (Example: Manufacturing different
entertainment devices by the same company such as Samsung
from MP3 to Smart TVs)
7. Retail Transformation (Catalogs, direct mail firms, home shopping
tv)
8. Disintermediation (Pushed traditional companies to take part in the
online marketing and became “Brick and Click”)
9. Consumer buying power
10. Consumer Information
11. Consumer Participation
12. Consumer resistance (Customers become more price and quality
sensitive in their search for value)

o New Company Capabilities (For Reading)

These major societal forces create complex challenges for marketers, but
they have also generated a new set of capabilities to help companies cope
and respond

 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
 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
  Companies can improve purchasing, recruiting, training, and
internal and external communications.
 Companies can improve their cost efficiency by skillful use of the
internet

o Marketing in Practice:

Market Planning Process: consists of analyzing the marketing opportunities,

selecting target markets, designing marketing strategies, developing marketing
programs and managing the marketing effort

o Marketing in the Organization:

 Although an effective CMO is crucial, increasingly marketing is not

done only by the marketing department
 Marketing should appear in the store layouts, package designs,
shipping etc.
 To create a strong marketing organization, marketers must think like
executives in other departments, and executives in other departments
must think more like marketers
 Companies now know that every employee has an impact on the
customer. That’s why; they train them on how to properly deal with
customers

Company Orientation Toward the Marketplace:

 Earlier Marketing Concepts:

1. The Production Concept

o Is one of the oldest concepts in business. It holds that consumers prefer
products that are widely available and inexpensive.
o This orientation makes sense in developing countries such as china.

2. The product concept

o Proposes that consumers favor the product offering the most quality,
performance or innovation features.

3. The Selling concept

o Holds that consumers and businesses, if left alone, won’t buy enough of the
organization’s products.
o This concept is used for products that buyers don’t normally think of buying
such as insurance and cemetery plots
o This concept is also used when firms are with overcapacity and aim to sell all
what they have
4. The Marketing concept
o Emerged in the mid 50s as a customer-centered.
 o The job is to find not the right customers for your products, but the right
products for your customers.
o Selling focuses on the need of the seller; Marketing focuses on the need of the
buyer.
o The marketing concept holds that the key to achieving organizational goals is
being more effective than the competitors in creating, communicating and
delivering super value to the target markets

 Holistic Marketing Concept:

 Holistic Marketing is based on the development, design, and implementation of

marketing programs, processes, and activities that recognize their depth and
interdependencies.
 Holistic Marketing acknowledges that everything matters in marketing

 Holistic Marketing four broad Components: (Refer to Figure in the previous page)

1. Relationship Marketing:
 Building mutually satisfying Long term relationships with people and
organizations that directly or indirectly affect the success of the firm’s marketing
activities.
 Four key components for relationship marketing are
1- Customers
2- Employees
3- Marketing partners (channels , suppliers, dealers, agencies..etc)
4- Members of financial community (Shareholders, investors, analysts)
 The ultimate outcome of relationship marketing is a unique company asset
called (Marketing Network)
 And by Building an effective network of relationships with key stakeholders, and
profits will follow.
 Relationship marketing also emphasizes the Customer Retention; because
attracting a new customer may cost five times as much as retaining an existing
one
 Relationship marketing also takes into consideration the Customer Lifetime value

2. Integrated Marketing:
 Based on the concept of (Synergy)
  Occurs when the marketing activities and programs that the marketer prepares
to create, communicate and deliver value to the customers give greater impact
as a whole than the sum of its parts
 Integration works on two key themes:
1. Many Different marketing activities can create, communicate and deliver
value
2. Marketers when designing and implementing any marketing activity
should keep in mind all the other activities
 Integration should be in:
1. Communications (Integrated Communication Strategy) … By choosing
communication options that reinforce and complement each other
(Billboards, Posters, Internet)
2. Channels (Integrated Channels Strategy) … Marketers must weigh the
trade off between having too many channels (might lead to conflict
among the channel members) and too few (might lead to overlooking
market opportunities

3. Internal Marketing:
 Occurs when hiring, training, and motivating employees who want to serve
customers well
 It makes no sense to promise excellent service before the company’s staff is
ready to provide it.
 Company’s vision, mission and strategic planning succeed when all departments
work together to achieve customer goals
 Internal Marketing requires vertical alignment with senior management and
horizontal alignment with other departments, so everyone understands,
appreciates and supports the marketing effort

4. Performance Marketing:
 Requires understanding the financial and non financial returns to business and
society from marketing activities and programs.
 Financial Accountability: Marketers are increasingly asked to justify their
investments in financial and profitability terms, as well as in terms of building
the brand and growing the customer base.
 Social Responsibility Marketing: Marketers must consider the ethical,
environmental, legal, and social context of their role and activities.

Updating the Four Ps (Marketing Mix):

The new four Ps: (Linked with the Holistic Marketing Concept)

 People reflects, in part, Holistic Internal Marketing and the fact that employees are
critical to marketing success. In addition to Holistic Relationship Marketing with
customers
 Processes reflects all the creativity, discipline, and structure to marketing management.
(Holistic Integrated Marketing)
 Programs reflects all firm’s consumer-directed activities. It encompasses the old four Ps
as well as a range of other marketing activities (Holistic Integrated Marketing)
 Performance defines same as in (Holistic Performance Marketing); looking at the
financial and nonfinancial returns to business and society from marketing activities
Marketing Management Tasks:

1. Developing Marketing Strategies and Plans

Developing concrete marketing plans that specify the marketing strategy and tactics
going forward.
2. Capturing Marketing Insight
Through Marketing Information System that closely monitors the marketing
environment in its two dimensions (Macro & Micro)
Through Marketing Research System
3. Connecting with customers
Creating Value and developing strong, profitable, long-term relationships with
customers.
4. Building Strong Brands
Understanding the strengths and weaknesses of the brand as customers see it
Pay attention to competitors
5. Shaping the market offerings (Product & Price)
 Includes product quality , design, features, and packaging
Integrated marketing
Competitive price
6. Delivering Value (Place)
Properly deliver the value to the target market.
7. Communicating Value (Promotion)
Properly communicate the value to the target market.
8. Creating Successful Long-Term Growth
Initiate new-product development, testing, launching as a part of its long-term view
Strategy should take into account changing global opportunities and challenges.