Chapter 1 What is marketing?

Marketing 1.3 Chapter 1 – What is marketing?The main difference between marketing and selling is the difference between a society in which consumers can choose from products and services designed to meet their specific needs and wants, and a society in which people have very little if any choice.The main purpose of marketing-oriented companies is to anticipate and satisfy the needs and wants of the customer.Marketing builds a bridge between production and consumption. Selling is ‘trying to get rid of what you have on the shelves’. Marketing is ‘making sure that what you have on the shelves is what the customer wants’.If any of the 4 elements of the marketing mix is lacking, a product will not achieve the sales and profit objectives as listed in its annual plan or marketing plan. Not only will the company fail to maximise sales and profits, the target market will probably be left with unsatisfied needs and wants.Marketing is the process of developing, pricing, promoting and distributing products, services or ideas that are tailored to the market.

The marketing mix:

-Product: goods, services or ideas that meet the wants and needs of the customer  packaging, brand image, product image, product range and customer service.-Price: the amount of money exchanged for a product or service  also competitors pricing and how an increase or reduction in the price is likely to affect demand.

-Place: how the product gets into the buyers hands  distribution

-Promotion: the suppliers activities to communicate with the market and to promote sales.Companies must concentrate on the desires of a specific group of potential buyers  the target market.

Exchange process between buyer and seller:

Something of value: money labour, effort etc.

Buyer (market, demand)Seller (industry, supply)

Something of value: product, service, idea

MacromarketingMesomarketingMicromarketing Macromarketing: at this level the role of marketing is described only in general terms. Primarily interested in the system that a society has developed to arrange the exchange of goods and services to ensure that its scarce resources will meet its needs as effectively as possible.Mesomarketing: devision of labour, specialisation and the principle of exchange gave rise to a system of production and trade in which different parties within society were depended on one another  the supply chain. 1 / 3

Simplified supply chain for consumer products:

Producer Product and Wholesaler Money and product informationmarket information Retailer Consumer

Micromarketing: the focus is on the individual firm

Marketing management is the analysis, planning, implementation and constant evaluation of all activities designed to ensure that the products and services produced and provided by an organisation are tailored to meet the needs and wants of potential customers as effectively as possible.Productionproduct selling marketingrelationship Orientationorientationorientationorientationmarketing

190019502000

Product orientation: everything possible to make its production process highly efficient

Product orientation: improve the quality

Selling orientation: buyers’ market

Marketing orientation: companies learned to tailor their products and services to meet the needs and wants of the buyers more effectively. Market-oriented companies consider not only customers, but also intermediaries and competitors.Relationship marketing: companies are working to strengthen long-term relationships with suppliers.Product orientation vs. marketing orientation  p.41 Selling orientation vs. marketing orientation  p.41 Transactional marketing vs. relationship marketing  p.43 Society (human welfare) Societal Marketing concept Company (profit motive)Consumer (satisfaction of needs) The marketing concept is an attitude or mindset in which the needs and wants of customers are factored into virtually every decision. This should be actively supported by senior management.

Marketing concept:

1.Customer satisfaction  the firm must be dedicated to satisfying customer needs. To make sure that customers are satisfied, we have to make choices: offering a very wide range or focussing on certain groups. Marketing-oriented companies make sure that they provide great customer service and that they handle customer complaints well.

2.Integrated approach  the difference between a product- and marketing-oriented approach is the extent to which the various activities are systematically integrated into the overall marketing policy. 2 / 3

3.Broad business definition  self-limiting definitions can lead to marketing myopia. These companies fail to recognise that their cherished products may fall out of flavour.To facilitate a rapid adjustment to the changing needs of the market, many companies now choose to formulate a business definition as well as a mission in broad, customer-oriented terms.

4.Competitive analysis  firms understand products will someday be obsolete. Hopefully, the company itself, rather than the competitor, is able to develop an alternative product or service that replaces the existing products. Regular analysis of the competition is indispensable if any company is to gain and develop competitive advantages.

5.Marketing research and target market selection  managers can obtain information by consciously observing the environment. Companies select segments on which to concentrate.

6.Profit contribution  it is important to know how much profit sales contribute to the enterprise, is it satisfying a customer or a societal need?Every company has to strive, for example by building brand equity, to make profit in the long term.By implementing a demarketing strategy companies are focusing on consumers that make for example more calls and use other services, such as data bundles. Their objective is to gain the loyalty of the most profitable subscribers.The first task of marketing is to anticipate and identify the needs and wants of the market.Marketing research on needs and wants Ideas about ‘ideal’ products and services

Potential buyers: the market

Needs Wants consumer behaviour Search behaviour Demand Buying behaviour Use of consumption The second task is catering to demand with the 4P’s and 3R’s.The 4P’s are necessary as marketing instruments, but have become less important as ‘weapons’ in the fierce competitive battle.

The 3R’s:

Reputation: brand image

Relationship: interaction with customers

Response: marketing offers, customizing for each customer.

Increasing customer equity is the value of the relationships the company maintains with its customers.

Customer equity can be increased by:

-Reducing the cost of getting new customers -Retaining more customers longer -Increases profits from retained customers by selling them.More products at higher margins and with lower marketing costs.

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