What is Marketing…??

 Selling?
 Advertising?
 Promotions?
 Making products available in stores?
 Maintaining inventories?

 All of the above, plus much more!

Marketing = ?
Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, services to create exchanges that satisfy individual
and organizational goals
 American Marketing Association
 Marketing = ?
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.
 Simple Marketing System
Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) of Buyers)
Money

Information
 Who makes a market?
Manufacturer (producer)

MARKET

Retailer (customer) Consumer

What is a “Market”?
A market is:

Place
People
Demand

6
 Types of Markets
Marketplace is physical (Brick and Mortar)
and
Market space is virtual (Click companies)

Examples !!!!!!!!!!!!!!
Evolution/History of Mktg
1. Exchange concept -
2. Production concept
3. Product concept
4. Sales concept
5. Marketing concept
6. Societal marketing concept
 Marketing = ?
 Marketing is the sum of all activities that take you to a sales outlet. After that
sales takes over.
 Marketing is all about creating a pull, sales is all about push.
 Marketing starts with consumer needs and ends with consumer satisfaction.
 Marketing is the most essential function of any business. It is most visible
and dynamic function.
 Marketing is responsible for generating and meeting the Demand in the
market.
 Marketing creates and sustains competitive capability of an organisation.
 Marketing is all about managing the four P’s (also called as marketing mix)
 product
 price
 place
 promotion
The Marketing Mix (4Ps of Mktg)
 The 4 Ps & 4Cs
Marketing Convenience
Mix

Place
Product

Customer
Solution Price Promotion

Customer Communication
Cost
Some more Ps !!!!!
What does marketer plan in the Ps?
Pricing is the only mix which generates a turnover for the organisation.
Price must support the other elements of the mix which are costs to the
company . Pricing is difficult and must reflect supply and demand
relationship.
Also called as marketing channels…..
 Place/ Distribution

Direct Distribution Indirect Distribution

Manufacturer

Manufacturer

Retailer

Consumer
Consumer
 Typical Marketing Channels for
Consumer Products

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 Promotion
A successful product or service means nothing unless the benefit
of such a service can be communicated clearly to the target
market. An organisations promotional mix can consist of:

Advertising

Public
Relations

Sales
Promotional Mix Promotion

Personal
Selling

Direct
Mail

Internet/
E-commerce
Blend of the mix depends upon:

 Marketing objectives
 Type of product
 Target market
 Market structure
 Rivals’ behaviour
 Global issues – culture/religion, etc.
 Marketing position
 Product portfolio
 Product lifecycle
 Boston Matrix
 Difference Between - Sales &
Marketing ?

 Sales
trying to get the customer to want what the
company produces – push approach
 Marketing
trying to get the company produce
what the customer wants – pull approach
Scope of mktg –
What do we market?
 Goods
 Services
 Events
 Experiences
 Personalities
 Place
 Organizations
 Properties
 Information
 Ideas and concepts
 Core Concepts of Marketing

Needs, wants Utility, Value &

Products
demands Satisfaction

Marketing & Exchange, Transaction

Markets
Marketers Relationships
Core Concepts of Marketing- example !

 Need – food ( is a must )

 Want – Pizza, Burger, French fry's ( translation of a need as
per our experience )
 Demand – Burger ( translation of a want as per our
willingness and ability to buy )
 Desire – Have a Burger in a five star hotel
 Marketing Triangle

Customers

Company Competition
Who is a Customer ??
CUSTOMER IS . . . . .

Anyone who is in the market looking at a product /

service for attention, acquisition, use or consumption
that satisfies a want or a need
Customer –
 CUSTOMER has needs, wants, demands and
desires
 Understanding these needs is starting point of the
entire marketing
 These needs, wants …… arise within a
framework or an ecosystem
 Understanding both the needs and the ecosystem
is the starting point of a long term relationship
 How Do Consumers Choose
Among Products & Services?
 Value - the value or benefits the customers gain from using the
product versus the cost of obtaining the product.
 Satisfaction - Based on a comparison of performance and
expectations.
 Performance = Expectations => Satisfaction
 Performance > Expectations => Delight
 Performance < Expectations => Dissatisfaction
 Customer looks for Value
Value = Benefit / Cost
Benefit = Functional Benefit + Emotional
Benefit
Cost = Monetary Cost + Time Cost +
Energy Cost + Psychic Cost
The Give and Get of Marketing
 Business exist 
Create customer value =

Sustainability
The Marketing Process
Business Mission
Statement

Objectives

Situation or
SWOT Analysis

Marketing Strategy
Target Market Strategy

Marketing Mix
Product Place/Distribution

Promotion Price

Implementation
Evaluation, Control
SWOT analysis
 SWOT analysis is a tool for auditing an
organization and its environment.
 It is the first stage of planning and helps
marketers to focus on key issues. SWOT stands
for strengths, weaknesses, opportunities, and
threats.
 Strengths and weaknesses are internal factors.
Opportunities and threats are external factors.
SWOT analysis
strength could be:
 marketing expertise.
 A new, innovative product
or service.
 Location of business.
 Quality processes and
procedures.
 Any other aspect of biz that
adds value to product or
service.
weakness could be:
 Lack of marketing
expertise.
 Undifferentiated products
or services (i.e. in relation
to competitors).
 Location of business.
 Poor quality goods or
services.
 Damaged reputation.
 SWOT
Opportunity could be: Threat could be:
 A developing market such as  A new competitor in home

the Internet. market.

 Mergers, joint ventures or  Price wars with

strategic alliances. competitors.

 Moving into new market  A competitor has a new,

segments that offer improved innovative product or

profits. service.
 A new international market.  Competitors have superior

 A market vacated by an access to channels of

distribution.
ineffective competitor.
 Taxation is introduced on
product or service.
Example - Starbucks SWOT Analysis.

 Strengths - Starbucks Corporation is a very profitable

organization, earning in excess of $600 million in 2004.

 Weaknesses - Starbucks has a reputation for new product

development and creativity.

 Opportunities - New products and services that can be

retailed in their cafes, such as Fair Trade products.

 Threats - Starbucks are exposed to rises in the cost of

coffee and dairy products
Example - Nike SWOT Analysis.
 Strengths - Nike is a very competitive organization, Nike is strong at
research and development, Nike is a global brand, Nike has no
factories.

 Weaknesses - The organization does have a diversified range of

sports products.

 Opportunities - Product development offers Nike many

opportunities, develop products such as sport wear, sunglasses
and jewellery - high value items strong global brand recognition.

 Threats - Nike is exposed to the international nature of trade, The

market for sports shoes and garments is very competitive. Easily
copied.
 Business Strategic-Planning
Process
External environment
(Opportunity &
Threat analysis)

Business Mission Goal Formulation

Internal Environment

Strength/ Weakness analysis)

Strategy Formulation
Environmental Analysis

Competitor Internal Analysis

Customer
Supplier Technology Know-How
Regulatory Manufacturing Know-How
Social/ Political Marketing Know-How
Distribution Know-How
Logistics
Opportunities & Threats
Strength & Weaknesses

Identify opportunity Identity Core Competencies

Fit internal Competencies with external opportunities

Firm Strategies
 Marketing
Environment
Why a product like radio declined
and now once again emerging as
an entertainment medium ?
What Were the Drivers of This
Change ?
 Technology ?
 Government policy ?
 Other media substitutes ?
Why Market Leaders
Suffered ?
 HMT vs. Titan
 HLL vs. Nirma
 Bajaj vs. Honda
 Dot.com boom, then bust and now resurgence
 Market leadership today cannot be taken for granted.
New and more efficient companies are able to upstage
leaders in a much shorter period.
What Changed in Marketing…
Old Economy
 Organize by product units
 Focus on profitable transactions
 Look primarily at financial
scorecard
 Focus on shareholders
 Marketing does the marketing
 Build brands through advertising
 Focus on customer acquisition
 No customer satisfaction
measurement
 Over-promise, under-deliver
New Economy
 Organize by customer segments
 Focus on customer lifetime value
 Look also at marketing scorecard
 Focus on stakeholders
 Everyone does the marketing
 Build brands through performance
 Focus on customer retention
 Measure customer satisfaction and
retention rate
 Under-promise, over-deliver
 Case study
McDONALD’S – Facing New Challenges
Challenges Marketing Initiatives
 Faces shifting consumer  Focus on core competency
lifestyles and preferences of consistent products and
for healthier foods. reliable service.
 Low ratings of food and  Offers upscale alternatives
service quality. including McCafe and
 Atmosphere not upscale. Bistro Gourmet.
 Image is perceived as  Eliminates “supersize,”
being uncultured, uncool, offers healthier food
and unclassy by younger options, and introduces Go
target markets. Active! Adult Happy Meal.
Marketing Environment
 Consists of actors and forces outside the
organization that affect management’s ability to
build and maintain relationships with target
customers.
 Studying the environment allows marketers to take
advantage of opportunities as well as to combat threats.
 Marketing intelligence and research are used to collect
information about the environment.
Marketing Environment
Micro environment: Macro environment:
 Company’s Internal  larger societal
Environment or forces.
forces that affect its  beyond the
ability to serve its
customers. control of the
 Normally in control
organization.
of the company
MICRO ENVIRONMENT

March 12, 2000 Private & Confidential 52

Actors in the micro environment
include:

 The company itself

 Suppliers
 Marketing intermediaries
 Customers
 Competitors
 Publics
 The Microenvironment
 Suppliers:
 Provide resources needed to produce goods and
services.
 Important link in the “value delivery system.”
 Most marketers treat suppliers like partners.
 The Microenvironment
 Marketing intermediaries:
 Help the company to promote, sell, and distribute
its goods to final buyers
 Resellers
 Physical distribution firms
 Marketing services agencies
 Financial intermediaries
 The Microenvironment
 Customers:
 Five types of markets that purchase a company’s
goods and services.
 Consumer
 Business
 Reseller
 Government
 International
 The Microenvironment

 Competitors:
 Those who serve a target market with products
and services that are viewed by consumers as
being reasonable substitutes.
 Company must gain strategic advantage against
these organizations.
 The Microenvironment
 Publics:
 Any group that has an interest in or impact on an
organization's ability to achieve its objectives.
 Financial public
 Media public
 Government public
 Citizen-action public
 Local public
 General public
 Internal public
MACRO ENVIRONMENT

March 12, 2000 Private & Confidential 59

Forces in the macro evironment can be
categorized as:
 Demographic
 Economic
 Natural
 Technological
 Political
 Cultural
 Demographic Environment
 Demographics:
The study of human populations in terms of size,
density, location, age, gender, race, occupation,
and other statistics.
 Marketers track changing age and family structures,
geographic population shifts, educational characteristics,
and population diversity.
 Demographic Environment
 The changing age structure of the U.S.
population is the single most important
demographic trend.
 Baby boomers, Generation X, and Generation Y
are the key groups.
 Demographic Environment
 Baby Boomers:
 78 million born between 1946 and 1964.
 Equal 28% of population.
 Earn more than 50% of all personal income.
 Almost 25% belong to racial or ethnic minority.
 Spend a lot on anti-aging products and services.
 Are likely to postpone retirement.
 Demographic Environment
 Generation X:
 45 million born between 1965 and 1976.
 Defined by shared experiences:
 Increasing divorce rates.
 More of their mothers employed.
 First generation of latchkey kids.
 Cynical of frivolous marketing pitches.
 Care about the environment.
 Prize experience, not acquisition.
 Demographic Environment
 Generation Y:
 72 million born between 1977 and 1994.
 Have large amount of disposable income.
 Comfortable with computer technology.
 Tend to be impatient and “Now-Oriented.”
 Many product lines targeted at those who are
part of Generation Y:
 Teen and young adult games
 Clothes, furniture, food
Economic Environment
 Consists of factors that affect consumer
purchasing power and spending patterns.

 Changes in Income  Income Distribution

 1980s – consumption  Upper class
frenzy  Middle class
 1990s – “squeezed  Working class
consumer”  Underclass
 2000s – value
marketing
Natural Environment
 Involves natural resources that are needed as
inputs by marketers or that are affected by
marketing activities.
 Factors include:
 Shortages of raw materials.
 Increased pollution.
 Increased government intervention.
 Environmentally sustainable strategies.
 Technological Environment

 Most dramatic force shaping our destiny.

 Changes rapidly.
 Creates new markets and opportunities.
 Challenge is to make practical, affordable
products.
 Safety regulations result in higher research costs
and longer time between conceptualization and
introduction of product.
Political Environment
 Includes laws, government agencies, and
pressure groups that influence or limit various
organizations and individuals in a given society.
 Areas of concern:
 Increasing legislation.
 Changing government agency enforcement.
 Increased emphasis on ethics and socially responsible
behavior.
Cultural Environment
 The institutions and other forces that affect a
society’s basic values, perceptions, preference,
and behaviors.
 Core beliefs and values are passed on from parents to
children and are reinforced by schools, churches,
business, and government.
 Secondary beliefs and values are more open to change.
 Marketers may be able to change secondary beliefs, but
NOT core beliefs.
Cultural Environment
 Society’s major cultural views are
expressed in people’s views of:
 Themselves
 Others
 Organizations
 Society
 Nature
 The universe
Socio cultural issues!
 What is the dominant religion?
 What are attitudes to foreign products and services?
 Does language impact upon the diffusion of products onto
markets?
 How much time do consumers have for leisure?
 What are the roles of men and women within society?
 How long are the population living? Are the older generations
wealthy?
 Do the population have a strong/weak opinion on green
issues?
 Beliefs in a society
Questions for discussion
 Describe the environmental forces that affect the
company’s ability to serve its customers.

 Explain how changes in the demographic and economic

environments affect marketing decisions.

 Identify the major trends in the firm’s natural and

technological environments.

 Explain the key changes in the political and cultural

environments.

 Discuss how companies can react to the marketing

environment.
Challenges of marketing in the 21st
century
 Outsourcing
 Alliances
 E-commerce
 increasing global competition/Globalization
 Technological innovations
 Fast changing consumer preferences
 Decentralization
Challenges of marketing in the 21st
century
 need for integrated marketing
 Customization
 Need to build customer database
 Customer retention
 Brand building through performance