1. Defining Marketing For The New Realities
Good marketing is no accident. It is both an art and a science, and it results from careful planning and execution using state of the art tools and techniques.
The Value Of Marketing
⸭ Finance, operations, accounting, and other business functions won't really matter without sufficient demand for products and services so the firm can make a profit. In other words, there must be a top line for there to be a bottom line. Thus, financial success often depends on marketing ability. Marketing's values extends to society as a whole. It has helped introduce new or enhanced products that ease or enrich people's lives. Successful marketing builds demand for products and services, which, in turn, creates jobs. By contributing to the bottom line, successful marketing also allows firms to more fully engage in socially responsible activities.
⸭ CEOs recognize that marketing builds strong brands and a loyal customer base, intangible assets that contribute heavily to the value of a firm.
⸭ In an internet fueled environment where consumers, competition, technology, and economic forces change rapidly and consequences quickly multiply, marketers must choose features, prices, and markets and decide how much to spend on advertising, sales, and online and mobile marketing.
⸭ Firms must constantly move forward. At greatest risk are those that fail to carefully monitor their customers and competitors, continously improve their value offerings and marketing strategies, or satisfy their employees, stockholders, suppliers and channel partners in the process.
⸭ Winning marketing strategy
♚ Strategy and planning
1. Market research 2. Competitor analysis 3. Voice of customers
♚ Digital Marketing
1. Search engine marketing
organic search engine optimization, Google adwords
2. Social media
Facebook, YouTube, Instagram
3. E-mail
4. Website
Unique selling proposition, Product/ service listing, Contact information and form, Engaging content- photos & videos, User-friendly experience
♚ Traditional marketing
1. Print
Postcards, flyers & Brochures, Business cards, Labels & signage
2. Promotional products
Pens, Hats, T-Shirts
The Scope of Marketing
⸭ Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is "Meeting needs profitability".
⸭ Marketing is the activity, set of institutions, and processes of creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
⸭ Marketing management as the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
⸭ "There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. - Peter Drucker (famed management theorist) -
⸭ Marketers market 10 main types of entities: Goods, Sevices, Events, Experiences, Persons, Places, Properties, organizations, Information, and Ideas.
⸭ Marketers and Prospects A marketer is someone who seeks a response (attention, a purchase, a vote, a donation) from another party, called the prospect.
⸭ Markets traditionally, a 'market' was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (such as the housing market or the grain market).
Marketers view sellers as the industry and use the term market to describe customer groups. Sellers and buyers are connected by four flows; Sellers send goods and services and communications such as ads and direct mail to the market; in return they recieve money and information such as customer attitudes and sales data.
⸭ 5 basic markets and their connecting flows are;
Manufacturers go to resource markets (raw material market, labour market, money market), buy resources and turn them into goods and services, and sell finished products to intermediaries, who sell them to consumers.
Consumers sell their labour and recieve money with which they pay for goods and services.
The government collect tax revenues to buy goods from resouce, manufacturer, and intermediary markets and uses these goods and services to provide public services.
Each nation's economy, and the global economy, consists of interacting sets of markets linked through exchange processes.
⸭ Key customer markets;
- Consumer markets
- Business markets
- Global markets
- Nonprofit and governmental markets
Core Marketing Concepts
1. Needs, Wants and demands
- Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humen also have strong needs for recreation, education, and entertainment. These needs become 'wants' when directed to specific objects that might satisfy the need. A U.S. consumer needs food but may want a Chicago style "deep dish" pizza. A person in Afghanistan needs food but may want rice, lamb, and carrots. Our wants are shaped by our society. Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few can buy one. Companies must measure not only how many people want their product, but also how many are willing and able to buy it.
- "Marketers get people to buy things they don't want". Marketers don't create needs: needs pre-exist marketers.
- We can distinguish 5 types of needs:
1. Stated needs (The customer wants an inexpensive car)
2. Real needs (The customer wants a car whose operating cost, not initial price, is low)
3. Unstated needs (The customer expects good service from the dealer)
4. Delight needs (The customer would like the dealer to include an onboard GPS system)
5. Secret needs (The customer wants friends to see him or her as a savvy consumer)
- Responding only to the stated need may shortchange the customer. Consumers didn't know much about Tablet computers when they were first introduced, but Apple worked hard to shape consumer perceptions of them. To gain an edge, companies must help customers learn what they want.
2. Target Markets, Positioning, And Segmentation
- Marketers therefore identify distinct segments of buyers by identifying demographic, psychographic, and behavioural differences between them. They then decide which segment(s) present the greatest opportunities. For each of these target markets, the firm develops a market offering that it positions in target buyers' minds as delivering some key benefit(s).
3. Offerings and brands
- Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences.
- A brand is an offering from a known source. A brand name such as Apple carries many different kinds of associations in people's minds that make up its image: creative, innovative, easy to use, fun, cool, iPod, iPhone, and iPad to name just a few.
4. Marketing Channels
- There are 3 kinds of marketing channels
1. Communication channels
deliver and recieve messages from target buyers and include news papers, magazines, radio, television, mail, telephone, smartphone, billboards, posters, fliers, CDs, audiotapes, and the internet. (e-mail, blogs, text messages, and URLs)
2. Distribution channels
help display, sell ,or deliver the physical product or services to the buyer or user. These channels may be direct via the internet, mail, or mobile phone or telephone or indirect with distributors, wholesalers, retailors, and agents, as intermediaries.
3. Service channels
it include warehouses, transportation companies, banks, and insurance companies.
5. Paid, Owned, and Earned Media
1. Paid media
TV, magazine, and display ads, paid search, and sponsorships...
2. Owned media
communication channels marketers actually own, like a company or a brand brochure, website, blog, Facebook page, or Twitter account...
3. Earned media
it streams in which consumers, the press, or other outsiders voluntarily communicate something about the brand via word of mouth, buzz, or viral marketing methods.
6. Impressions and engagements
- There are 3 screens to reach consumers: TV, Internet, and mobile.
- Impressions, which occur when consumers view a communication, are a useful metric for tracking the scope or breadth of a communication's reach that can also be compared across all communication types. (Impressions don't provide any insight into the results of viewing the communication)
- Engagement, is the extent of a customer's attention and active involvement with a communication. It reflects a much more active response than a mere impression and is more likely to create value for the firm. Some online measures of engagement are Facebook "Likes", Twitter tweets, comments on a blog or website, and sharing of video or other content. Engagement can extend to personal experiences that augment or transform a firm's products and services.
7. Value and satisfaction
- Value, a central marketing concept, is primarily a combination of quality, service, and price (QSP), called the customer value triad.
- Value perception is increase with quality and service but decrease with price.
- It's able to think marketing as the identification, creation, communication, delivery, and monitoring of customer value.
- Satisfaction reflects a person's judgement of a product's perceived performance in relationship to expectation. If performs falls short of expectations, the customer is disappointed. If it matches expectations the customer is satisfied. If it exceeds them, the customer is delighted.
8. Supply chain
- The supply chain is a channel stretching from raw materials to components to finished products carried to final products.
- When a company acquires competitors or expands upstream or downstream, it's aim is to capture a higher percentage of supply chain value.
- Problems with a supply chain can be damaging or even fatal for a business.
9. Competition
- Competition includes all the actual and potential rival offerings and substitues a buyer might consider.
10. Marketing environment
- It consists of the task environment and broad environment.
- Task environment, includes the actors engaged in producing, distributing and promoting the offering. These are the company suppliers, distributors, dealers and target customers.
- In the supplier group are material suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies, and telecommunication companies.
- Distributors and dealers include, agents, brokers, manufacturer representatives, and others who facilitate finding and selling to customers.
- Broad environment, consists of 6 components: demographic environment, economic environment, social- cultural environment, natural environment, technological environment, and political- legal environment.
The New Marketing Realities
1. Technology
2. Globalization
3. Social responsibility
1. Technology
⸭ The pace of change and the scale of technological achievement can be staggering.
⸭ With the rapid rise of e-commerce, the mobile internet, and web penetration in emerging markets, the Boston consulting group believes brand marketers must enhance their "digital balance sheets".
⸭ The old credo "information is power" is giving way to the new idea that "sharing is power".
⸭ Software giant SAP's online community numbers more than 2 million customers, partners, and others. Once a year, 100 are chosen to contribute ideas to product development.
2. Globalization
⸭ The world has become a smaller place. New transportation, shipping and communication technologies have made it easier for us to know the rest of the world, to travel, to buy and sell anywhere.
⸭ Globalization has made countries increasingly multicultral.
⸭ One survey found that 87 percent of companies planned to increase or maintain multicultural media budgets.
⸭ Globalization changes innovation and product development as companies take ideas and lessons from one country and apply them to another.
Ex: After years of little success with it's premium ultra sound scanners in the chinese market, GE successfully developed a portable, ultra low cost version that addressed the country's unique market needs. Later it began to successfully sell the product throughout the developed world for use in ambulances and operating rooms where existing models were too big.
3. Social responsibility
⸭ Poverty, pollution, water shortages, climate change, wars, and wealth concentration demand our attention. The prrivate sector is taking some reponsibility for improving living conditions, and firms all over the world have elevated the role of corporate social responsibility.
⸭ Marketing's effects extend to society as a whole, Marketers must consider the ethical, environmental, legal and social context of their activities.
⸭ The organization's task is thus to determine the needs, wants, and interests of target markets and satisfy them more effectively and efficiently than competitors while preserving or enhancing consumers' and society's long term well being.
The future marketing will be horizontal: consumer to consumer. They feel the recent economic downturn has not fostered trust in the market place and that customers now increasingly turn to one another for credible advice and information when selecting products.
Marketing In Practice
Marketing balance
Marketing accountability
Marketing in the organization
Marketing balance
⸭ Companies must always move forward, innovating products and services staying in touch with customer needs, and seeking new advantages.
⸭ Marketers must balance increased spending on search advertising, social media, e-mails, and text messages with appropriate spending on traditional marketing communications.
Marketing accountability
⸭ Marketers are increasingly asked to justify thier investments in financial and profitability terms...
Organizations recognize that much of their market value comes from intangible assets, particularly brands, customer base, employees, distributor and supplier relations, and intellectual capital. They are thus applying more metrics to understand and measure their marketing and business performance and a broader variety of financial measures to assess the direct and indirect value their marketing efforts create.
Marketing in the organization
⸭ Marketing is not done only by the marketing department. To create a strong marketing organization, marketers must think like executives in other departments, and executives in other departments must think more like marketers.
Interdepartmental teamwork that includes marketers is needed to manage key processes like production innovation, new business development, customer acquisition and retention, and order fulfillment.
Customer Orientation Toward the Marketplace
Evolution of marketing philosophies:
1. The production concept
2. The product concept
3. The selling concept
4. The marketing concept
5. The holistic marketing concept
1. The production concept
⸭ One of the oldest concept.
⸭ It holds that consumers prefer products that are widely available and inexpensive.
⸭ Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution.
2. The product concept
⸭ It proposes that consumers favor products offering the most quality, performance, or innovative features.
⸭ Managers believing a better product will by itself lead people to beat a peth to their door. As many start-ups have learned the hard way, a new or improved product will not necessarily be successful unless it's priced, distributed, advertised and sold properly.
3. The selling concept
⸭ The selling concept holds that consumers and businesses, if left alone, won't buy enough of the organization's products.
⸭ It is practiced most aggressively with unsought goods and when firms with overcapacity aim to sell what they make, rather than make what the market wants.
⸭ Marketing based on hard selling is risky.
⸭ It assumes customers coaxed into buying a product not only won't return or bad mouth it or complain to consumer organizations but might even buy it again.
4. The marketing concept
⸭ It emerged in 1950s as a customer centered, sense and respond philosophy. The job is to find not the right customers for your products, but the right products for your customers. ⸭ This concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your target markets.
⸭ "Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating; delivering and finally consuming it". (by Harvard's Theodre Levitt)
5. The holistic marketing concept
⸭ It is based on the development, design and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies.
⸭ It is based on the development, design and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies.
⸭ It acknowledges that everything matters in marketing and that a broad, integrated perspective is often necessary.
⸭ The 4 components of holistic marketing:
1. Integrated marketing
- Communications, Products & services, Channels, Price
2. Internal marketing
- Marketing department, Senior management, Other departments
3. Performance marketing
- Sales revenue, Brand & customer equity, Ethics, Environment, Legal, Social
4. Relationship marketing
- Customers, Employees, Partners, Financial community
Relationship marketing
• It aims to built mutually satisfying long term relationships with key constituents in order to earn and retain their business.
• To develop strong relationship with stakeholders requires understanding their capabilities, and resources, needs, goals, and desires.
• The ultimate outcome of relationship marketing is a unique company asset called a marketing network, consisting of the company and its suppoting stakeholders with whom it has built mutually profitable business relationships.
• Companies are also shaping seperate offers, services, and messages to individual customers, based on information about their past transactions, demographics, psychographics, and media and distribution preferences. By focusing on their most profitable customers, products, and channels, these firms hope to achieve profitable growth, capturing a larger share of each customer's expenditures by building high customer loyalty. They estimate individual customer lifetime value and design their market offerings and prices to make a profit over the customer's lifetime.
• Marketing must skillfully conduct not only customer relationship management (CRM), but partner relationship management (PRM) as well.
Integrated marketing
• It occurs when the marketer devises marketing activities and assembles marketing programs to create, communicate, and deliver value for consumers such that "the whole is greater than the sum of its parts".
• Two key themes are;
1. many different marketing activities can create, communicate, and deliver value
2. marketers should design and implement anyone marketing activity with all other activities in mind.
• A marketer might selectively employ television, radio, and print advertising, public relations and events, and PR, and Website communications so each contributes on its own and improves the effectiveness of the others.
Internal marketing
• It is the task of hiring , training, and motivating able employees who want to serve customer well. Smart marketers recognize that marketing activities within the company can be as important than those directed outside the company. It makes no sense to promise excellent service before the company's staff is ready to provide it.
• Marketing succeeds only when all departments work together to achieve customer goals.
• Internal marketing requires vertical alignment with senior management and horizontal alignment with other departments so everyone understands, appreciates, and supports the marketing efforts.
Performance marketing
• It requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. As noted previously, top marketers are increasingly going beyond sales revenue to examine the marketing scorecard and interpret what is happening to marketshare, customer loss rate, customer satisfaction, product quality, and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities and programs.
Updating the 4Ps
• 4Ps are: Product, Price, Place, and Promotion.
Product: Product variety, Quality, Design, Features, Brand name, Packaging, Sizes, Services, Warranties, Returns
Price: List price, Discounts, Allowances, Payment period, Credit terms
Promotion: Sales promotion, Advertising, Sales force, Public relations, Direct marketing
Place: Channels, Coverage, Assortments, Locations, Inventory, Transport
• 4As are: Acceptability, Affordability, Accessibility, Awareness
Acceptability: It is the extent to which a firm's total product offering exceeds customer expectations. Acceptability is the dominant component in the framework and that design, in turn, is at the root of acceptability.
Affordability: It is the extent to which customers in the target market are able and willing to pay the product's price. It has two dimensions: economic (ability to pay) and psychological (willingness to pay). Acceptability combined with affordability determines the product's value proposition.
Accessibility: It is the extent to which customers are able to readily acquire the product, has two dimensions: availability & convenience.
Awareness: It is the extent to which customers are informed regarding the product's characteristics, persuaded to try it, and reminded to repurchase. It has two dimensions: brand awareness and product knowledge.
• The 4 distinctive roles a consumer plays in the marketplace; Seeker, Buyer, Payer, and User. 5th is Evangelizer.
Evangelizer: It captures the fact that consumers often recommend products to others and are increasingly critical with the advent of the internet and social media platforms.
• Relate the 4As to the 4Ps:
Product- which mainly influences Acceptability
Price- which mainly influences Affordability
Place- which mainly influences Accessibility
Promotion- which mainly influences Awareness
• Modern marketing management 4Ps are:
People, Processes, Programs, Performance
People: It reflects employees are critical to marketing success, & marketers must view consumers as people to understand their lives more broadly, and not just as shoppers who consume products and services.
Processes: It reflects all the creativity, discipline and structure brought to marketing management.
Programs: It reflects all the firm's consumer-directed activities.
Performance: It captures the range of possible outcome measures that have financial and nonfinancial implications (profitability as well as brand and customer equity) and implications beyond the company itself (social responsibility, legal, ethical, and the environment)
Marketing Management Tasks
The New Marketing Realities
• The major market forces:
Technology, Globalization, Social responsibility
• Two key market outcomes:
New consumer capabilities, New comapny capabilities
• Four fundamental pillars of Holistic marketing:
Relationship marketing, Integrated marketing, Internal marketing, Performance marketing
Developing Marketing Strategies and Plans
1. Capturing marketing insights
⁜ A firm's microenvironment consists of all the players who affects its ability to produce and sell such as suppliers, marketing intermediaries, customers, and competitors.
⁜ A firm's macroenvironment includes demographic, economic, physical, technological, political-legal, and social cultural forces that affect sales and profits.
2. Connecting with customers
⁜ A firm must consider how to best create value for its chosen target markets and develop strong, profitable, long-term relationships with customers. It needs to gain a full understanding of how organizational buyers buy. It needs a sales force well trained in presenting product benefits. It must also take into account changing global opportunities and challenges.
3. Building strong brands
⁜ A firm not want to market to all possible customers. It must divide the market into major market segments, evaluate each one, and target those it can best serve. A firm must consider growth strategies while also paying close attention to competitors, anticipating their moves and knowing how to react quickly and decisively. It may want to initiate some surprise moves, in which case it needs to anticipate how its competitors will respond.
4. Creating value
⁜ At the heart of the marketing program is product. Which includes the product quality, design, features, and packaging.
5. Communicating value
⁜ A firm must adequately communicate to the target market the value embodied by its products and services. It needs an integrated marketing and communication program that maximizes the individual and collective contribution of all communication activities. A firm also needs to plan more personel communications, in the form of direct and database marketing, as well as hire, train, and motivate salespeople.
6. Delivering value
⁜ A firm must also determine how to properly deliver to the target market the value embodied in its products and services. It must identify, recruit and link various marketing facilitators to supply its products and services efficiently to the target market.
7. Conducting marketing responsibly for long term success
⁜ A firm must build a marketing organization capable of responsibly implementing the marketing plan. It needs feedback and control to understand the efficiency and effectiveness of its marketing activities and how it can improve them.
Summary
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.
2. Marketers are skilled at managing demand: They seek to influence its level, timing, and composition for goods, services, events, experiences, persons, places, properties, organizations, information and ideas. They also operate in 4 different market places: consumer, business, global and nonprofit.
3. Marketing is not done only by the marketing department. It needs to affect every aspect of the customer experience. To create a strong marketing organization, marketers must think like executives in other departments, and executives in other departments must think more like marketers.
4. Today's marketplace is fundamentally different as a result of major societal forces that have resulted in many new consumer and company capabilities. Technology, Globalization, and Social responsibility have created new opportunities and challenges and significantly changed marketing management. Companies seek the right balance of tried and true methods with breakthrough new approaches to achieve marketing excellence.
5. There are 5 competing concepts under which organizations can choose to conduct their business: the production concept, the product concept, the selling concept, the marketing concept, and the holistic marketing concept. The first 3 are of limited use today.
6. The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities, that recognize their breadth and interdependencies. Holistic marketing recognizes that everything matters in marketing and that a broad, integrated perspective is often necessary. 4 componenets of holistic marketing are relationship marketing, integrated marketing, internal marketing and performance marketing.
7. The set of tasks necessary for successful marketing management includes developing marketing strategies and plans,, capturing marketing insights, connecting with customers, building strong brands, creating, delivering and communicating value, and creating long term value.
APPLICATIONS
Marketing Debate
Does marketing create or satisfy needs?
Marketing has often been defined in terms of satisfying customers' needs and wants. Critics, however, maintain that marketing goes beyond that and creates needs and wants that didn't exist before. They feel marketers encourage consumers to spend more money than they should on goods and services they do not really need.
Take a position: Marketing shapes consumer needs and wants versus marketing merely reflects the needs and wants of consumers.
Marketing shapes consumer needs and wants
Marketing merely reflects the needs and wants of consumers
Marketing Discussion
Shifts in marketing
Consider the three key forces driving the new marketing realities. How are they likely to change in the future? what other major trends or forces might affect marketing?
Marketing Excellence
NIKE
1. What are the pros,cons, and risks associated with NIKE's core marketing strategy?
2. If you were Adidas, how would you compete with NIKE?
GOOGLE
1. With a portfolio as diverse as Google's, what are the company's core brand values?
2. What's next for Google? Is the company right to put so much focus on Mobile?
2. Developing Marketing Strategies and plans
Developing the right marketing strategies over time requires a blend of discipline and flexibility. Firms must stick to a strategy but also constantly improve it.
Marketing and Customer Value
⸭ The task of any business is to deliver customer value at a profit. A company can win only by fine tuning the value delivery process and choosing, providing, and communicating superior value to increasingly well informed buyers.
The Value Delivery Process
⸭ Companies that take successful view only in economies marked by goods shortages where consumers are not fussy about quality, features, or style.
⸭ In economies with many different types of people, each with individual wants, perceptions, preferences, and buying criteria, the smart competitor must design and deliver offerings for well defined target markets. This realization inspired a new view of business processes that place marketing at the beginning of planning. Instead of emphasizing making and selling, companies now see themselves as part of a value delivery process.
⸭ Value delivery process can be in 3 phases;
1. Choosing the value- marketers must do it before any product exists. The formula "Segmentation, Targeting, Positioning (STP) is the essence of strategic marketing.
2. Providing the value- must identify the specific product features, prices, and distribution.
3. Communicating the value- by utilizing the internet, advertising, sales force, and any other communication tools.
⸭ The value delivery process begins before there is a product and continues through development and after launch.
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