What is Marketing Dr. Vesselin Blagoev
A simple model of the mktg process Understand the marketplace andcustomer needs and wants Design a customer-driven marketing strategy Construct an Integratedmarketing programthat delivers superior value Build profitablerelationships andcreate customerdelight Capture value from customers to create profits andcustomer equity
Needs Markets Wants Core Marketing Terms Transactions Demand Exchange Products
Needs Need A sense that something necessary is missing, a state of felt deprivation. • Basicphysical needs for food, clothing, warmth, and safety; • Social needs for belonging and affection; • Individual needs for knowledge and self-expression.
Wants Wants The manner in which individuals seek to satisfy a need as consumer decision making is influenced by individual tastes and social factors The form taken by human needs as they are shaped by culture and individual personality
Market offering Some combination of products, services, information, or experiences offered to a market to satisfy a need or want (Kotler, 2008)
Marketing myopia The mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products(Armstrong and Kotler, 2011, p.35)
Customer perceived value The customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers(Armstrong and Kotler, 2011, p.41)
Customer satisfaction The extent to which a product’s perceived performance and value matches a buyer’s expectations
Customer equity The total combined customer lifetime values of all the company’s customers (Armstrong and Kotler, 2011, p.50)
Customer relationships management The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction(Armstrong and Kotler, 2011, p.41)
Demand and Supply Demand The ability and willingness of consumers to purchase a product Quantity demanded Maximum quantity of a good that buyers are willing and able to buy at a given price (over a fixed period of time)
Demand • The Law of Diminishing Demand: If the price of a product is raised, a smaller quantity will be demanded and if the price of a product is lowered, a greater quantity will be demanded
Demand Curve Price P1 P2 Quantity Q1 Q2
Demand curve Price P1 P2 Quantity Q1 Q2
Demand curve • The general demand relationships are typical for all products • A particular demand curve has meaning only for a particular market
Elastic demand Elastic demand means that if prices are dropped, the quantity demanded will increase enough to increase total revenue • Inelastic demand ?
Elastic demand Price Q=Units demanded
Inelastic demand Price Q=Units demanded
Demand curve The whole demand curve is almost never only elastic, or only inelastic. The elasticity refers to the change in total revenue between two points on the curve – not along the whole curve
Demand and Supply Supply The ability and willingness of producers to provide wanted goods and services Quantity supplied Maximum quantity of a good that sellers are willing and able to supply at a given price (over a fixed period of time)
Demand & Supply Demand Supply Equilibrium point
Marketing functions Marketing activities can be categorized within several functions Product / Service Mgmt Pricing Distribution Mktg Communications Financing Mktg- Information Mgmt Selling Marketing Education Resource Center (2000), Columbus, Ohio
The operational functions of marketing Advertising Sales promotion Public relations Stockholding Personal selling The operational functions of marketing Servicing Financing Risk-taking Buying Transporting Forecasting Market research Publicity Pricing Merchandising Branding
Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption and might satisfy a need or want (Armstrong and Kotler, 2011, p.237)
Market A group of potential buyers with common needs or problems that can be met by specific products or services • Consumer market • Industrial market • Reseller market • Institutional market Customer Consumer (user)
Markets Consumer Organizational Individuals who purchase to benefit from consumption and not for the main purpose of making a profit Buyers who purchase for resale, direct use in producing the goods or in general daily use in a business
Markets • Open markets • Regulated markets • Unregulated markets • De-regulated markets
Open markets Markets with all of the following characteristics: • Single standardized product • Many buyers • Many sellers • Buyers and sellers have equal access to all available information relevant to the market.
Open markets • The products are rarely homogeneous. Apples vary by variety and packaging making comparison by the buyer difficult. It affects Condition 1. • The numbers of potential buyers and the demand for products is constantly changing. It affects Condition 2.
Open markets • The individual purchaser usually has a limited choice of supplier. What about Condition 3 ? • The buyers usually do not have as much information about the market as does the supplier. It affects Condition 4.
Regulated markets The regulations governing an open market are designed to ensure that it is able to operate with none of the participants having an unfair advantage over the others. Regulated markets recognize that there is a lack of balance between the parties and therefore this type of market has rules that are intended to ensure a degree of fair trading.
Unregulated and Deregulated markets Unregulated markets : street market The buyer is ‘on their own’. Caveat emptor! De-regulated markets : Removal of artificial monopoly restrictions in order to encourage free competition and increase customers’ choice. telecommunications; e-commerce
Exchange is : A marketing transaction, in which the buyer gives something of value to the seller in return for goods or services
A simple exchange process Something of value Goods, services, benefits Supplier Customer Money, exchange goods Something of value
10 exchanges Pots Fruits Meat Baskets Knives
A market – 5 exchanges Pots Central Market Middleman Fruits Meat Baskets Knives
Exchanges Involving Intermediaries Retailer Consumer Producer Wholesaler
Definition 1 Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders(AMA,2005) http://www.marketingpower.com/mg-dictionary-view1862.php
Definition 2 • Marketing is the process by which the companies create value for customers and build strong customer relationships in order to capture value from customers in return Armstrong and Kotler (2011)
Definition 3 • Marketing is the management process responsible for identifying, anticipating and satisfying customers’ requirements profitably British Chartered Institute of Marketing, UK
Definitions 4 and 5 • Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others (Kotler et al, 2005) • Marketing is the study of exchange processes especially those associated with the provision of goods and services (Adcock et al, 2001)
Definitions 6 and 7 • Marketing is the process of planning and executing the various activities, which are involved in selling goods, services, or ideas and which lead to an exchange between a seller and a buyer (Keegan et al, 1992) • Marketing is a human activity directed at satisfying needs and wants through exchange processes (Kotler, 2001)
Definitions 8 Marketing is the management process that seeks to maximise returns to shareholders by developing relationships with valued customers and creating a competitive advantage (Doyle, 2004)
Three major goals • Satisfaction of customer needs • Attainment of a competitive advantage over the rivals • Increasing the value of the company for the shareholders
Influences on Decisions of Companies Uncontrollable marketinfluences Controllable company decisions Product Place Price Promotion
Marketing mix Quality, Features, Options, Style, Brand name, Packaging, Sizes, Warranties Product List price, Discounts, Allowances, Payment Terms, Credit terms Marketing mix Price Target market Channels, Locations, Inventory, Transport Place Promotion Advertising, Personal selling, Sales Promotion, PR