Marketing Defined • Kotler’s social definition: “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.”
Marketing Defined • The AMA managerial definition: “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”
Need Is a state of deprivation of some basic satisfaction. People require food, clothing, shelter, safety, belongingness and esteem. Not created by society or marketers. Exists in the very texture of human biology and the human condition.
Wants Desire for specific satisfiers of needs, An Indian eats Parathas, Bread, Chapatis, Idli, Dosa, Puri. An American eats hamburgers and coke Needs are few, wants are many. Human wants are continually shaped and reshaped by social forces and instructions.
Demand • Wants for specific products that are backed by an ability and willingness to buy them. • Wants become demand when supported by purchasing power. • Everybody aspires Mercedes. Few can buy this.
Marketers do not create needs. • Needs preexist marketers. • Marketers, along with other societal influences, influence wants. • Consumers buy those products which offer the highest value per rupee.
Products Satisfy needs and wants by offering solutions. Offers you goods, services and ideas eg: Fastfood Joint is supplying goods (hamburgers), services (purchasing,) and ideas (saves me time)
Value, Cost and Satisfaction How to choose between different products that satisfy a given need Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs. Cost will influence his purchase decision. A consumer chooses the product that produces the most value per rupee. Value is the function of total perceived benefits and costs.
Value Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs)
Core Marketing Concepts • Marketers can enhance the value of an offering to the customer by: • Raising benefits. • Reducing costs. • Raising benefits while lowering costs. • Raising benefits by more than the increase in costs. • Lowering benefits by less than the reduction in costs.
Exchange and Transactions • People obtain products in four ways • Self production: people hunt to relieve hunger. • Coercion – Theft • Begging – hungry people beg for food. Nothing to offer except gratitude. • Exchange – Hungry people offer a resource in return for food, such as money, goods or services.
Marketing emerges when people decide to satisfy needs and wants through exchange. The parties tend to reach an agreement. When an agreement reaches, we say a transaction takes place. It may not necessarily be monetary but could be even barter.
Exchange Process HCL Want list Good price for computers Ontime / immediate payment Good word of mouth HCL (Manufacturere of PC’s. Customer (retail) Customer Want list Payment facility on installments After sales service Ontime delivery Good quality durable Fair price
Relationship and Network • So far transactional marketing • Building a long term relationship and a win-win situation is Relationship Marketing • CitiBank for its credit cards. • Airtel with its high revenue customers • Transactional marketing is part of Relationship marketing.
Company has marketing network consisting of employees, suppliers, distributors, retailers, advertising agencies. Profitable relationship is important between the various stakeholders. Conflicts of interests amongst stakeholders A company with a better network is the winner.
Marketing Management Is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. If you to have to get a job you are aspiring for, the general saying is “You have to Market yourself for the job”
Evolution of Marketing • 1. Barter stage • In the pre-industrial revolution area. People bartered for things not produced by them. • No elaborate distribution systems. • 2. Stage of Money economy • No changes except money system replaced the barter system. • Pricing became the mechanism of exchange process. • 3. Stage of Industrial Revolution • Introduced new systems of manufacturing. Sweeping changes. • Mass production became the order of the day. • Provided disposable incomes and generated new ideas.
4. Stage of competition Mass production and distribution by the industrial revolution led the stage of competition. Focus on how to make the products as customer’s first preferred choice. 5. Emergence of Marketing In 50’s and 60’s, rapid industrialisation. More manufacturers leading to competition. Right type of product, availability, attending to customers complaint.
Marketing Concepts • 1. The production concept • Oldest concept • Holds view that consumers will favour those products that are widely available and low in cost. • Demand for product exceeds supply, as in many developing countries. E.g. Bajaj in 50’s, 60’s and 70’s • Production cost is high and is to be decreased to expand the market. • Thrust of production drives marketing • Fails as customers are motivated by variety of considerations.
2. Product Concept • Achieves success not by high volume of production, but product excellence. • Achieve high quality for success. Bring new products. • Often design with no customer input, and therefore, fail • Depend on Design Production Finance Marketing and Sales. • Marketing involved in the last stages of the process. • Fails, as customer needs are not taken into consideration.
3. Selling Concept • Holds view that aggressive selling helps in customer buying more. • Focus on professionally selling and hardsell. • People are surprised that most important part of marketing is • not selling. • Assumption of anything can be sold is incorrect. • Fails, as customer needs are not addressed to.
4. Marketing Concept • Achieving organization goals consists of being more effective than competitors. • Example • Domino’s home-delivery concept. • PVR Anupam redefined the concept of movie – viewing. • Nestle Maggi – Introduced the concept of Noodles in Indian households. • Marketing concept has four main characteristics also called the PILLARS OF MARKETING.
Target market • No company can operate in every market and satisfy every need. • Nestle Maggie: ‘Children’ versus ‘Adult’ • Cadbury’s Chocolates: ‘Children’ versus ‘Adult’ • Lexus cars: ‘Toyota’ versus ‘Lexus’
b. Customer Needs • Exclusive outlets for Arrow shirts, Titan watches. • Failure of Soya drinks • Launch of Sony Walkman
c. Integrated Marketing • Coordination between various functions of Marketing. • Coordination between various functional departments. • Concept of internal and external Marketing • Internal marketing precedes external marketing.
CUSTOMER EXTERNAL MARKETING INTERACTIVE MARKETING EMPLOYEE COMPANY INTERNAL MARKETING
d. Profitability Achieving organisational goals including profits. For non- profit, attracting funds for survival is a must. Profit making companies Hindustan Lever, Nestle, Colgate, infosys. Non-profit making organization CRY, Helpage India, Unicef They are proactive rather reactive.