PART-I: UNDERSTANDING MARKETING, MARKETING PROCESS AND THE MARKETING ENVIRONMENT
CHAPTER-1: MARKETING – ‘Managing profitable customer relationships’.
•Definition of Marketing
•Needs, Wants and Demands
•Marketing offers- Products, Services and Experiences
•Exchange, Transaction and Relationship
•Marketing management
•Customer Value & Satisfaction
•Customer Relationship Management
CHAPTER-2: THE MARKETING ENVIRONMENT
•The Company’s Micro environment-
The company
Suppliers
Marketing Intermediaries
Customers- Competitors
•The Company’s Macro environment
Demographic environment
Economic environment
Natural environment
Technological environment
Political environment
Cultural environment.
CHAPTER-1: MARKETING
Market is the set of all actual and potential buyers of a product or service.
Originally the term Market stood for the place where buyers and sellers gathered to exchange their goods, such as a village square. Marketers are keenly interested in markets. Marketers work to understand the needs and wants of specific markets and to select the markets that they can serve best. In turn they develop products and services that create value and satisfaction for customers in these markets. The result is profitable long-term customer relationships.
What is marketing?
Marketing more than any other business deals with customers, building customer relationships based on customer value and satisfaction is at the very heart of modern marketing.
The simplest definition of marketing is “Marketing is managing profitable customer relationships”.
You already know a lot about marketing – its all around you. You see the results of marketing in the abundance of products in your nearby shopping mall. You see marketing in the advertisements that fill your TV, spice up your magazines. At home, at school, where you work and where you play, you see marketing in almost everything you do. Yet there is much more to marketing than meets the consumers’ casual eye. Behind it all is a massive network of people and activities competing for your attention and purchases.
This course will give you a more complete and formal introduction to the basic concepts of today’s marketing, we begin with defining marketing and its core concepts.
Define marketing?
Marketing is defined as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products of value with others.
Many people think of Marketing only as selling and advertising. And no wonder- every day we are bombarded with television commercials, newspaper ads, direct mail offers, sales calls etc. However, selling and advertising is only the tip of the marketing iceberg. Although they are important, they are only two of many marketing functions.
Today, Marketing must be understood not in the old sense of making a sale- but in the new sense of Satisfying customer needs.
To explain the above definition we will examine the following important core marketing concepts.
NEEDS: The most basic concept underlying marketing is that of human need. ‘Human needs are states of felt deprivation’. They include basic physical needs for food, clothing, warmth and safety. Social needs for belonging and affection and individual needs for knowledge and self-expression. These needs were not created by marketers; they are basic part of the human behavior or makeup.
WANTS: Are the form human needs take as they are shaped by culture and individual personality. Example: If an American needs food wants big Mac Donald, French fries etc. if a person in Mauritius needs food wants a mango, rice, lentils and beans etc. ‘Wants are shaped by one’s society and are described in terms of objects that will satisfy needs’.
DEMANDS: Given there wants and resources, people demand products with benefits that add up to the most value and satisfaction. ‘When back by buying power wants become demand’.
What are marketing offers?
MARKETING OFFERS- ‘Products, Services and Experiences’
Marketing offers are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing offers are not limited to physical products. In addition to tangible products, marketing offers include services, activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, tax preparation, and home repair services. More broadly, marketing offers also include other entities, such as persons, places, organizations, information, and ideas.
EXCHANGE, TRANSACTIONS AND RELATIONSHIPS
‘Marketing occurs when people decide to satisfy needs and wants through exchange’.
Exchange is the act of obtaining a desired object by offering something in return.
Transaction consists of a trade of value between two parties.
Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences involving a product, service, idea or other object. Beyond simply attracting new customers and creating transactions, the goal is to retain customers and grow their business with the company.
CUSTOMER VALUE AND SATISFACTION
Consumers usually face a broad range of products and services offered to them that might satisfy a given need.
How do they make their choice among the given Marketing offers?
Consumers make choices based on their perception of the value and satisfaction that various products and services deliver.
Customer Value is the difference between the values the customer gains from owning and using a product and the costs of obtaining the product.
Customers form expectations about the value of various marketing offers and buy accordingly.
Customer Satisfaction with a purchase depends on how well the product’s performance lives up to the customer’s expectations. Customer satisfaction is a key influence on future buying behavior.
Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and discourage the products to others.
CUSTOMER RELATIONSHIP MANAGEMENT
Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.
Thus, today’s companies are going beyond designing strategies to attract new customers and create transactions with them. They are using customer relationship management to retain current customers and build profitable, long term relationships with them. The new view is that ‘Marketing is the science and art of finding, retaining and growing profitable customers’.
MARKETING MANAGEMENT
‘The Art and Science of choosing target markets and building profitable relationships with them’.
This involves getting, keeping and growing customers through creating, delivering and communicating superior customer value. Thus, marketing management involves managing demand, which in turn involves managing customer relationships.
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CHAPTER-2: THE MARKETING ENVIRONMENT
A company’s Marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The marketing environment offers both opportunities and threats. Successful companies know the vital importance of constantly watching and adapting to the changing environment.
The Marketing environment is made up of a Microenvironment and a Macro environment.
THE COMPANY’S MICRO ENVIRONMENT
The Microenvironment consists of the actors close to the company that affect its ability to serve its customers- the company, suppliers, marketing intermediaries, customers, and competitors.
THE COMPANY
In designing marketing plans, marketing management takes other company groups into account- groups such as top management, finance, research and development (R&D), purchasing department, operations and accounting. All these interrelated groups form the internal environment.
SUPPLIERS
Suppliers form an important link in the company’s overall customer value delivery system. They provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability.
MARKETING INTERMEDIARIES
Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. They include resellers, physical distribution firms, marketing services agencies and financial intermediaries. Resellers are distribution channel firms that help the company find customers or male sales to them. These include wholesalers and retailers. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies and other businesses that help in finance transactions or insure against the risks associated with the buying and selling of goods.
CUSTOMERS
The company needs to study five types of customer markets. Consumer markets consists of individuals and households that buy goods and services for personal consumption. Business markets buy goods and services for further processing or for use in their production process. Reseller Markets buy goods and services to resell at a profit. Government markets are made up of government agencies that buy goods and services to produce public services or transfer goods and services to others who need them. The international markets consist of these buyers in other countries; include consumers, producers, resellers and governments.
COMPETITORS
The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do. No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared to those of its competitors.
THE COMPANY’S MACRO ENVIRONMENT
The company and all of the other actors operate in a large macroenvironment of forces that shape opportunities and pose threats to the company. Following are the six major forces in the company’s macroenvironment.
DEMOGRAPHIC ENVIRONMENT
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. The demographic environment is of major interest to marketers because it involves people, and people make up markets.
The world’s large and highly diverse population poses both opportunities and challenges. The explosive world population growth has major implications for business. A growing population means growing human needs to satisfy. Depending on purchasing power, it may also mean growing market opportunities.
NATURAL ENVIRONMENT
The natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment. The first involves growing shortages of raw materials. A second environmental trend is increased pollution. Industry will almost always damage the quality of the natural environment. A third trend is increased government intervention in natural resource management.
TECHNOLOGICAL ENVIRONMENT
The technological environment is perhaps the most dramatic force now shaping our destiny. Forces that create new technologies, creating new products and marketing opportunities. Technology has released such wonders as antibiotics, organ transplants, notebook computers and internet. It has released such mixed blessings as the automobile, television and credit cards. The technological environment changes rapidly. Think of all today’s common products that were not available 100 years ago or even 30 years back. New technologies create new markets and opportunities. Companies that do not keep up with technological change soon will find their products outdated and they will miss new product and market opportunities.
POLITICAL ENVIRONMENT
Political environment consists of laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Marketing decisions are strongly affected by developments in the political environment. Marketers must work hard to keep up with changes in government regulations and their interpretations. Business legislations are enacted for a number of reasons. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose of government regulation is to protect the interest of society against unrestrained business behavior. New laws and their enforcement will continue to increase.
Business executives must watch these developments when planning their products and marketing programs. Marketers need to know about the major laws protecting competition, consumers and society.
CULTURAL ENVIRONMENT
The cultural environment is made up of institutions and other forces that affect a society’s basic values, perceptions, preferences and behaviors. People grow up in a particular society that shapes their basic beliefs and values. They absorb a worldview that defines their relationships with others. The following cultural characteristics can affect marketing decision making.
Persistence of cultural values
Shifts in secondary cultural values
People’s views of themselves
People’s views of others
People’s views of organizations
People’s views of Society
People’s views of Nature
ECONOMIC ENVIRONMENT
The economic environment consists of factors that affect consumer purchasing power and spending patterns. Nations vary greatly in their levels and distribution of income. Some countries have subsistence economies- they consume most of their own agricultural and industrial output. These countries offer few market opportunities. At the other extreme are industrial economies, which constitutes rich markets for many different kinds of goods. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets.
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