mgt301 principles of marketing lecture-4. summary of lecture-3

MGT301MGT301Principles of Principles of MarketingMarketing

Lecture-4Lecture-4

SummarySummaryof of

Lecture-3Lecture-3

Information Buying

Risk Taking Selling

Financing Transporting

Standardizingand Grading Storing

MarketingFunctions

DemarketingDemarketing

……Marketing to reduce demand temporarily or Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand permanently; the aim is not to destroy demand but only to reduce or shift it.but only to reduce or shift it.

Customer Relationship Customer Relationship Management Management

Loyal customers provide Loyal customers provide more and more credible more and more credible referralsreferrals

But the angry gossip of But the angry gossip of disloyal customers can disloyal customers can devastate a firm!devastate a firm!

Today’s TopicsToday’s Topics

Marketing in Historical Marketing in Historical perspective and perspective and

Evolution of MarketingEvolution of Marketing

How has Marketing Changed Over How has Marketing Changed Over Time?Time?

How it StartedHow it Started

1.The Production Concept (Mass Production) (prior 1.The Production Concept (Mass Production) (prior to 1920’s):to 1920’s):

Mass produce @ lowest cost -Distribute @ affordable Mass produce @ lowest cost -Distribute @ affordable priceprice

No options for consumer No options for consumer

2. 2. The Product Concept (1920-1950’s):The Product Concept (1920-1950’s):

Build a More Innovative ProductBuild a More Innovative Product

Build a Better MousetrapBuild a Better Mousetrap

3. 3. Selling Concept (1940’s-1980’s)Selling Concept (1940’s-1980’s)

- Few product-- sell, sell, sell!- Few product-- sell, sell, sell!

- Largest volume at any price - Largest volume at any price

- Focus on one time transaction- Focus on one time transaction

Until the ‘90’sUntil the ‘90’s

“ “Transaction Marketing” – focus one time saleTransaction Marketing” – focus one time sale

Focus on productFocus on product

4. 4. Marketing Concept (1990’s and beyond)Marketing Concept (1990’s and beyond)

-Idea: identify most profitable customers who value your -Idea: identify most profitable customers who value your service/product the most and build relationships with service/product the most and build relationships with those individualsthose individuals

- Customers become more demanding/empowered- Customers become more demanding/empowered

- Able to produce based on customers needs:- Able to produce based on customers needs:

- Technological advances allow for customer tracking - Technological advances allow for customer tracking databasesdatabases

Relationship Marketing (1990’s)Relationship Marketing (1990’s)

Definition: Marketing is the process of establishing Definition: Marketing is the process of establishing and maintaining mutually beneficial exchange and maintaining mutually beneficial exchange relationships with customers and other relationships with customers and other stakeholdersstakeholders

KEEP CUSTOMERS FORKEEP CUSTOMERS FOR LIFE!!!LIFE!!!

Marketing PhilosophiesMarketing Philosophies

SOCIETALMARKETINGCONCEPT

PRODUCTION CONCEPT

PRODUCTCONCEPT

MARKETINGCONCEPT

MARKETINGCONCEPT

KEYMARKETING

PHILOSOPHIES

SELLINGCONCEPT

The Production ConceptThe Production Concept

..Holds that consumers will favor products that are ..Holds that consumers will favor products that are available and affordable.available and affordable.

Implies work towards mass production and low Implies work towards mass production and low costcost

The Product ConceptThe Product Concept

……Assumes customers favor products that offer the Assumes customers favor products that offer the most quality, performance, and features.most quality, performance, and features.

Implies firm should strive to continually upgrade Implies firm should strive to continually upgrade product and product features.product and product features.

……The idea that customers will not buy enough of The idea that customers will not buy enough of the organization’s products unless the the organization’s products unless the organization undertake a large scale selling and organization undertake a large scale selling and promotion efforts.promotion efforts.

The Selling ConceptThe Selling Concept

..Business assumption that consumers will resist ..Business assumption that consumers will resist purchasing nonessential goods and services with purchasing nonessential goods and services with the attitude toward marketing that only creative the attitude toward marketing that only creative advertising and personal selling can overcome advertising and personal selling can overcome consumers’ resistance and convince them to buy. consumers’ resistance and convince them to buy.

Inside-out perspective: Assumes people need to be sold Inside-out perspective: Assumes people need to be sold on whatever it is the firm has decided to offer. 1st: on whatever it is the firm has decided to offer. 1st: Decide what to produce; 2nd: Figure out how to get Decide what to produce; 2nd: Figure out how to get people to buy what you have.people to buy what you have.

Implies lots of selling/promotional activities are Implies lots of selling/promotional activities are needed to move productneeded to move product

After WWIIAfter WWII

Shortages in goods ended.Shortages in goods ended.

Economy changed from a seller’s market to a buyer’s Economy changed from a seller’s market to a buyer’s market.market.

Seller’s market: marketplace characterized by a Seller’s market: marketplace characterized by a shortage of goods and/or services.shortage of goods and/or services.

Buyer’s market: marketplace characterized by an Buyer’s market: marketplace characterized by an abundance of goods and/or services.abundance of goods and/or services.

The Marketing ConceptThe Marketing Concept

……Holds that achieving organizational goals depends Holds that achieving organizational goals depends upon determining the needs and wants of target upon determining the needs and wants of target markets and delivering the desired satisfactions markets and delivering the desired satisfactions more effectively and efficiently than do more effectively and efficiently than do competitors.competitors.

Marketing Concept ComponentsMarketing Concept Components

Means of achieving goalsMeans of achieving goals determine needs and wantsdetermine needs and wants

– implies research and/or appropriate assumptionsimplies research and/or appropriate assumptions Target marketsTarget markets

– implies clear target groups: people whose implies clear target groups: people whose needs/want you will try to fillneeds/want you will try to fill

Satisfaction Satisfaction Competitors acknowledgedCompetitors acknowledged

Marketing EraMarketing Era

With a continually increasing buyer’s market, With a continually increasing buyer’s market, marketing would no longer be regarded as a marketing would no longer be regarded as a supplemental activity performed after completion of supplemental activity performed after completion of the production process. the production process.

The marketer would play a lead role in product The marketer would play a lead role in product planning. planning.

Marketing and selling would no longer be synonymous Marketing and selling would no longer be synonymous terms.terms.

Marketing Concept Vs. Selling Marketing Concept Vs. Selling ConceptConcept

Marketing Concept:Marketing Concept:

Begin with customer Begin with customer needsneeds

Develop 4 Ps in light of Develop 4 Ps in light of customer needscustomer needs

““Have what you can get Have what you can get rid of”rid of”

Selling Concept:Selling Concept:

Begin with what firm Begin with what firm wants to producewants to produce

Given products, persuade Given products, persuade customers to buycustomers to buy

““Get rid of what you Get rid of what you have.” have.”

SellingSelling

A company makes a product and then uses various A company makes a product and then uses various selling methods to persuade customers to buy it.selling methods to persuade customers to buy it.

MarketingMarketing

Company finds out what the customer wants and Company finds out what the customer wants and develops a product to satisfy those wants while develops a product to satisfy those wants while yielding a profit.yielding a profit.

SOCIETAL MARKETING CONCEPTSOCIETAL MARKETING CONCEPT: ….in a way that : ….in a way that maintains or improves the consumer’s and the maintains or improves the consumer’s and the society’s well-being. society’s well-being.

Typical thinking in 1990Typical thinking in 1990

Marketer must act in a socially responsible Marketer must act in a socially responsible manner.manner.

External environment’s influence on firm’s External environment’s influence on firm’s marketing program.marketing program.

Society(Human Welfare)

Society(Human Welfare)

Consumers(Satisfaction)

Consumers(Satisfaction)

Company(Profits)

Company(Profits)

SocietalMarketingConcept

SocietalMarketingConcept

Relationship EraRelationship Era

Relationship marketing: development and Relationship marketing: development and maintenance of long-term, cost-effective exchange maintenance of long-term, cost-effective exchange relationships with individual customers, suppliers, relationships with individual customers, suppliers, employees, and other partners for mutual benefit.employees, and other partners for mutual benefit.

Strategic alliances: partnerships with vendors and Strategic alliances: partnerships with vendors and retailers play major roles in relationship marketing.4retailers play major roles in relationship marketing.4

Relationship MarketingRelationship Marketing

Effective relationship marketing relies heavily on Effective relationship marketing relies heavily on information technologies such as computer databases information technologies such as computer databases that record customers’ tastes, price preferences, and that record customers’ tastes, price preferences, and lifestyles along with the increase of electronic lifestyles along with the increase of electronic communications. Some examples are frequent buyer communications. Some examples are frequent buyer clubs/cards.)clubs/cards.)

Marketing ManagementMarketing Management

Marketing management is “the art and science of Marketing management is “the art and science of choosing target markets and building profitable choosing target markets and building profitable relationships with them.”relationships with them.” Creating, delivering and communicating superior Creating, delivering and communicating superior

customer value is key.customer value is key.

Marketing ManagementMarketing Management

Customer ManagementCustomer Management::– Marketers select customers that can be served well Marketers select customers that can be served well

and profitably.and profitably.

Demand Management:Demand Management:– Marketers must deal with different demand states Marketers must deal with different demand states

ranging from no demand to too much demand.ranging from no demand to too much demand.

Evolving Views of Marketing’s Evolving Views of Marketing’s RoleRole

a. Marketing as ana. Marketing as anequal functionequal function

b. b. Marketing as a moreMarketing as a moreimportant functionimportant function

FinanceProduction

Marketing Humanresources

Finance

Humanresources

Marketing

Production

c. Marketing as thec. Marketing as themajor functionmajor function

d. d. The customer as theThe customer as thecontrolling factorcontrolling factor

Marketing

Finance

Hum

an

resources

Production

Customer

Human

reso

urces

FinanceProductio

n

Marketing

e. e. The customer as the controllingThe customer as the controllingfunction and marketing as thefunction and marketing as the

integrative functionintegrative function

Customer

Marketing

Production

Hum

an

resources

Finance

Let’s stop it

here

Let’s stop it

here

SummarySummary

How has Marketing Changed Over How has Marketing Changed Over Time?Time?

SOCIETALMARKETINGCONCEPT

PRODUCTION CONCEPT

PRODUCTCONCEPT

MARKETINGCONCEPT

MARKETINGCONCEPT

KEYMARKETING

PHILOSOPHIES

SELLINGCONCEPT

Society(Human Welfare)

Society(Human Welfare)

Consumers(Satisfaction)

Consumers(Satisfaction)

Company(Profits)

Company(Profits)

SocietalMarketingConcept

SocietalMarketingConcept

The customer as the controllingThe customer as the controllingfunction and marketing as thefunction and marketing as the

integrative functionintegrative function

Customer

Marketing

Production

Hum

an

resources

Finance

Next….Next….

Marketing Challenges in the 21st centuryMarketing Challenges in the 21st century

MGT301MGT301Principles of Principles of MarketingMarketing

Lecture-4Lecture-4