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Overview of Marketing

Topic 1

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Topic Outline
Definition of marketing Basic concepts of Marketing Evolution of marketing Holistic marketing concept Marketing process

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What is Marketing?
Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return.

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What is Marketing?
A simple definition of marketing is about managing profitable customer relationship. 2 important things to look at: - Managing existing customers and - Acquiring new customers

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Basic concepts of marketing

Core Marketing Concepts

Needs, wants & demands Market offerings: Product & Services Value & satisfaction Exchange, transactions & relationships Markets

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Customer needs, wants and demands

Needs
Wants Demands

States of felt deprivation Physical food, clothing, warmth, safety Social belonging and affection Individual knowledge and self-expression Eg: I am thirsty

Form of human needs that are shaped by culture and individual personality. Eg: A hungry person needs food, but what do you want for food? Capati, Spaghetti, Rice or vegetarian food?

Wants that is backed by buying power. Eg: Im hungry, I have money to but Pizza today. Yesterday, during lunch time, I can only buy a RM1 nasi lemak.

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Market offerings
Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs. The co.s forget that a product is only a tool to solve a consumer problem.

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Market offerings
Products - anything that can be offered to a market for
attention, acquisition, use or consumption and that might satisfy a need or want.

Services - activities or benefits offered for sale that are


essentially intangible and dont result in the ownership of anything.
Other examples: Persons, places, organizations, information and ideas.

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Customer Value & Satisfaction


Customer Value - benefit that the customer gains from
owning and using a product compared to the cost of obtaining the product. A customer buys from the firm that offers the highest customer-perceived value.
Customer Delivered Value = Total Customer Value - Total Customer Cost

Customer Satisfaction - depends on the products


perceived performance in delivering value relative to a buyers expectations.
Product Performance vs Customer Satisfaction.
Products performance > buyers expectation = Satisfied Products performance < buyers expectation = Dissatisfied

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Exchange, Transaction & Relationship


How do Consumers Obtain Products and Services?

Exchanges - act of obtaining a desired object from


someone by offering something in return. One way of obtaining a desires object.

Transactions - trade of values between parties. It is


marketings unit of measurement. One party gives X to another party and gets Y in return.

Relationships - creating, maintaining, and enhancing


long-term relationships with consumers, distributors, dealers, and suppliers. Through relationship building, marketers would gain:
Increase Customer loyalty, increase customer lifetime value, increase in share of customer.
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Customer Lifetime Value (CLV)


Business must look at customer life time value to measure the customer satisfaction If the store owner failed to keep the customer in long run, he/she might turn away and shift to the competitor. The lost is calculated not based on a one time transaction but throughout the life time value of the customer. For example, Mr. A will spend RM 200 per month for the next 10 years. Calculation = RM200 X 10 years X 12 months

= RM24,000 of Loss
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Who does the company serve?


Market a set of actual and potential buyers of a product who share a particular need and want that can be satisfied through exchange relationships .
Consumer market customers who purchase for their own consumption Industrial market customers who purchase product for further processing or for reselling to other businesses or consumers.

The scenario: Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them, and store and deliver them.
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Evolution of Marketing
Production concept (1869 1920s) Product concept (1869 1920s) Selling concept (1920s -1950s) Marketing concept (1950s 1980s) Societal marketing concept (1980s)

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Evolution of Marketing
Production Concept
Consumers favor products that are available and highly affordable. The co.s should focus on improving production and distribution. Consumers favor products that offer the most quality, performance, and innovative features. The co.s should focus on making continuous product improvements. Consumers will not buy enough unless the firm undertakes large-scale selling and promotion efforts. Focuses on knowing the needs and wants of target markets and delivering satisfactions better than competitors.

Product Concept Selling Concept


Marketing Concept Societal Mktg. Concept

Focuses on the needs and wants of target markets and on maintaining or improving customer and societal well-being
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Marketing and Selling Concepts Contrasted


Starting Point
The selling concept

Focus

Means Selling and promoting

Ends Profits through sales volume

Factory

Existing products

The marketing concept

Market

Customer needs

Integrated marketing

Profits through customer satisfaction

Societal Marketing Concept Late 20th Century Still emerging Recognizes potential conflict

(Long-term consumer & societal welfare)


Maintain & improve long-term well-being Social responsibility
Be ethical/ Do good: customer-oriented, environment, innovative (real, valued) product improvements sense-of-highermission, give back Stop doing bad f

Society

Societal Marketing Concept


(Profits)

(Short-term want satisfaction)

Consumers

Company

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Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers wants, the companys requirements, consumers longterm interests, and societys long-run interests
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Holistic Marketing Concept


Relatively new marketing concept. Can be seen as the development, design, and implementation of marketing programmes, processes, and activities that recognizes the breath and interdependencies of their efforts. Four components of holistic marketing are:

Relationship marketing build mutually satisfying long-term relationship with


key parties; customers, suppliers, distributors, etc

Integrated marketing using a communication mix of sales, promotion,


advertising, sales force, public relations, direct mail, telemarketing, and interactive marketing to reach the trade channels and target customers

Internal marketing ensuring everyone in the organization embraces


appropriate marketing principles.

Socially responsible marketing incorporating social responsibility marketing


& understanding broader concerns, and the ethical, environmental, legal, and social context of marketing activities.
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Marketing Process
Offer value to market

Understanding Environment

Analysis of market, their needs and wants Analysis of other environment factors affecting marketing Develop and maintain marketing information

Develop Marketoriented Marketing Strategy Choose market to serve Develop positioning strategy for the chosen market

Develop Marketing Mix (4 Ps) Strategy Product strategy Price strategy Distribution (Place) strategy Promotion strategy

Develop relationship with customers and partners Continuously delight chosen customers Build good relationship with marketing partners

Gain value from customers

Create satisfied customers Capture customer lifetime value Increase share of market and share of customer

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The End

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