3 understanding marketing and marketing proces 6-7

7/31/2019 3 Understanding Marketing and Marketing Proces 6-7

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What is Marketing Mix?

It is a set of marketing tools that the firmuses to pursue its marketing objectives inthe target market.

It is a set of controllable and interrelatedvariables (4 Ps) that a company assemblesto satisfy a target group better than itscompetition.

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It is also termed as Integrated Marketing

McCarthy classified these tools into fourbroad groups, which he called the four Psof marketing: product, price, place, and

promotion.

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Components of Marketing Mix

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Marketing Mix

Product

Product VarietyQualityDesignFeaturesBrand Name

PackagingSizesServicesWarrantiesReturns

Place

ChannelsCoverageAssortmentsLocationsInventory

Transport

Promotion

Sales PromotionAdvertisingSales ForcePublic RelationsDirect Marketing

Price

List PriceDiscountsAllowancesPayment PeriodCredit Terms

Target Market


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Marketing-mix decisions must be made forinfluencing the trade channels as well asthe final consumers.

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Function of Each MarketingMix

Product

To satisfy the needs and wants of the targetmarket.

Placement (or Distribution)

To make the product conveniently available to

the target market consistent with theirpurchasing pattern.

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Promotions

To build and improve consumer demand.Promotions has four components called the

Promotions Mix : Advertising to effectively inform and persuade the

target market.

Public Relations to offer a positive image of the

company and the brand.

Selling to get the customers to buy.

Sales Promotions to convince customers to buyimmediately.

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Price

To make the product affordable to targetmarket and reflect the value of benefits

provided.

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The firm can change its price, sales forcesize, and advertising expenditures in theshort run.

It can develop new products and modify itsdistribution channels only in the long run.

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Thus the firm typically makes fewer period-to-period marketing-mix changes in theshort run than the number of marketing-mix

decision variables might suggest.

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The four Ps represent the sellers' view ofthe marketing tools available forinfluencing buyers.

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From a buyer's point of view, eachmarketing tool is designed to deliver

a customer benefit. RobertLauterbornsuggested that thesellers' four Ps correspond to thecustomers' four Cs:

Four Ps Four Cs

Product Customer

solution Price Customer cost

Place Convenience

Promotion Communication 11


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Winning companies will be those that canmeet customer needs economically andconveniently and with effective

communication.

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No single element of the marketing mixmust be decided on independently of theother elements.

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As an Exmple:

Shakeys primary target market are

families. In the late 70s up to the early80s, another segment composed of beer

drinkers who would patronize the pizzaparlor late in the evening was steadilygrowing.

Music and bands were thus added to caterthe needs of this emerging segment.

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The image of the new segment, however,dominated and alienated the originallyfamily market which values a wholesome

place to eat without the noise and smokecreated by beer drinkers.

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Shakeys then decided to refocus its

attention back to its original target marketby renovating their stores to attain a

brighter and more wholesome look asexpected by their customers.

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Illustration of Marketing Mix

TACO BELL

Product...Border Lights, a new menu of"light foods"

Price.....Value Pricing as with their othermenu items

Promotion...Various media and methods, acommercial that appeared during the 1995Superbowl to announce the arrival.

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Place...Taco Bell has increased its pointsof access (where you can by its products)by a factor of 4 over the last couple of

years...including gas stations etc.

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Exercises

Group the class with 2 members each.Think of two (2) products and two (2)service oriented business, and apply the

marketing mix principle.

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M k ti M t


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Marketing ManagementPhilosophies

The Production Concept

Consumers favor products that are available &highly affordable.

Managers of production-oriented businessesconcentrate on achieving high productionefficiency, low costs, and mass distribution.

(considers economies of scale)

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This orientation makes sense in developingcountries such as China where the largest PCmanufacturer, Legend, and domestic

appliances giant Haiertake advantage of thecountry's huge inexpensive labor pool todominate the market.

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It is also used when a company wants toexpand the market.

The key idea focus on efficiency of internaloperations The firm is focused on what it does best

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Less concerned on customers needs

The management focus on improvingproduction and distribution.

Oldest philosophy

This type of philosophy is useful in two typesof situation

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1. when the demand for a product exceeds thesupply

2. when the products cost is too high andimproved productivity is needed to bring itdown.

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The Product Concept

It holds that consumers favor those productsthat offer the most quality, performance, or

innovative features.

Managers in these organizations focus onmaking superior products and improving them

over time, assuming that buyers can appraisequality and performance.

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Product-oriented companies often design theirproducts with little or no customer input, trustingthat their engineers can design exceptional

products.

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A General Motors executive said years ago:How can the public know what kind of car

they want until they see what is available?

GM today asks customers what they value in acar and includes marketing people in the verybeginning stages of design.

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However, the product concept can lead tomarketing myopia.

Railroad managementthought that travellers

wanted trains rather than transportation andoverlooked the growing competition from airlines,buses, trucks, and automobiles.

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Colleges, department stores, and the post officeall assume that they are offering the public theright product and wonder why their sales slip.

These organizations too often are looking into amirror when they should be looking out of thewindow.

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The Selling Concept

The consumers will buy products ONLY if thecompany promotes/ sells the product.

It holds that consumers and businesses, if leftalone, will ordinarily not buy enough of theorganizations products.

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The organization must, therefore, undertakean aggressive selling and promotion effort.

This concept assumes that consumers must

be coaxed into buying, so the company has abattery of selling and promotion tools tostimulate buying.

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The selling concept is practiced mostaggressively with unsought goodsgoods thatbuyers normally do not think of buying, such

as insurance and funeral plots. The selling concept is also practiced in the

nonprofit area by fund-raisers, collegeadmissions offices, and political parties.

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Most firms practice the selling concept whenthey have overcapacity. Their aim is to sellwhat they make rather than make what the

market wants. In modern industrial economies, productive

capacity has been built up to a point wheremost markets are buyer markets (the buyers

are dominant) and sellers have to scramble forcustomers.

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Prospects are bombarded with salesmessages. As a result, the public oftenidentifies marketing with hard selling and

advertising. But marketing based on hard selling carries

high risks.

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It assumes that customers who are coaxed intobuying a product will like it; and if they dont, that

they wont bad-mouth it or complain to consumer

organizations and will forget their disappointmentand buy it again. These are indefensibleassumptions.

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In fact, one study showed that dissatisfiedcustomers may bad-mouth the product to 10 ormore acquaintances; bad news travels fast,

something marketers that use hard selling shouldbear in mind

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Examples of Selling Driven


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Examples of Selling DrivenCompanies

Avon Cosmetics

Life Insurance

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The Marketing Concept

It holds that the key to achievingorganizational goals consists of the

company being more effective than itscompetitors in creating, delivering, andcommunicating customer value to itschosen target markets.

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Theodore Levitt of Harvard drew a perceptivecontrast between the selling and marketingconcepts: Selling focuses on the needs of the

seller; marketing on the needs of the buyer.

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Selling is preoccupied with the sellers need to

convert his product into cash; marketing withthe idea of satisfying the needs of the

customer by means of the product and thewhole cluster of things associated withcreating, delivering and finally consuming it.

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The marketing concept rests on four pillars:target market, customer needs, integrated

marketing, and profitability. The selling

concept takes an inside-out perspective.

Itstarts with the factory, focuses on existingproducts, and calls for heavy selling andpromoting to produce profitable sales.

The marketing concept takes an outside-inperspective. It starts with a well-definedmarket, focuses on customer needs,coordinates activities that affect customers,

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holds that achieving organizational goals(making profit) depends on understanding theneeds and wants of target markets and

delivering the desired satisfactions moreeffectively and efficiently than competitors do.

E.g. Disney, McDonalds, Bosch are

customer-drivencompanies.

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The Societal Marketing Concept

It holds that the organization should not onlysatisfy the needs and wants but also improve

both customers and societys well-being. This newest philosophy focus on customer

long-term welfare, since today we haveenvironmental problems, resource shortages,population growth etc.

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E.g. Critics against fast-food restaurants thatfood has a lot of fat and salt harmful for health,a lot of packaging increasing waste and

pollution.

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Here, the companies try to balance (1) companyprofits, (2) consumer wants, (3) societys

interests.

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Less toxic products

More durable products

Products with reusable or recyclable materials

Marketing that preserves or enhances anindividuals and societys long-term bestinterests

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Assignment:

Think of businesses or companies thatadopt the different marketing managementphilosophies. (three for each philosophy)

3 understanding marketing and marketing proces 6-7

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