advance mkts
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UNDERSTANDINGUNDERSTANDING
MODERNMODERN
MARKETINGMARKETING
The Marketing ConceptThe Marketing Concept
Marketing Mix ModelMarketing Mix Model
Broadening Scope of MarketingBroadening Scope of Marketing
Marketing’s Role in the OrganizationMarketing’s Role in the Organization
Creating Customer Value andCreating Customer Value and
SatisfactionSatisfaction
Marketing and the “Value Chain”Marketing and the “Value Chain”
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““The underlying philosophyThe underlying philosophy
of modern marketingof modern marketingmanagement (since themanagement (since the
1960’s) is the outward focus1960’s) is the outward focus
on customers as the “Centeron customers as the “Centerof the Universe”of the Universe”
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e ar e nge ar e ngConceptConceptCaptured in terms such asCaptured in terms such as
Customer orientationCustomer orientation
Customer focusedCustomer focused
Customer drivenCustomer driven
Customer centeredCustomer centered
Customer satisfactionCustomer satisfaction
Market drivenMarket driven Exceed customerExceed customer
expectationsexpectations
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Marketing ConceptMarketing Concept
Key CharacteristicsKey Characteristics
Focus on profitsFocus on profits
Profits = f (customer satisfaction)Profits = f (customer satisfaction)
Supply adjusts to will of demandSupply adjusts to will of demand
Assumes intense competitive environmentAssumes intense competitive environment
Long-term time horizonLong-term time horizon
Normative not descriptive modelNormative not descriptive model
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Selling and MarketingSelling and Marketing
Concepts ContrastedConcepts ContrastedSelling and MarketingSelling and Marketing
Concepts ContrastedConcepts Contrasted
Factory Existingproducts Selling andpromotion Profits throughsales volume
Targetmarket
Integratedmarketing
Profits throughcustomer
satisfaction
Customer needs
Startingpoint Focus Means Ends
(b) The marketing concept
(a) The selling concept
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Implementing theImplementing the
Marketing ConceptMarketing Concept
Inertia, entrenchment (old ways die hard)Inertia, entrenchment (old ways die hard) Projection of own beliefs and valuesProjection of own beliefs and values
Confusion of MC with superficial PRConfusion of MC with superficial PR
Learning about customer needs difficult toLearning about customer needs difficult to
operationalizeoperationalize
Information lost in organizational mazeInformation lost in organizational maze
Calls for integrated organization to supportCalls for integrated organization to support
marketing effortmarketing effort
Requires continuous monitoringRequires continuous monitoring
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ConclusionConclusion
Marketing conceptMarketing concept
is more relevantis more relevant
than ever as wethan ever as we
approach the nextapproach the next
milleniummillenium
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Operational Model forOperational Model for
Implementing theImplementing thePhilosophy of thePhilosophy of the
Marketing Concept isMarketing Concept is
the:the:
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of Four Basic Strategicof Four Basic Strategic
VariablesVariables
(the four “P’s”)(the four “P’s”)
Product StrategyProduct Strategy
Price StrategyPrice Strategy Promotional StrategyPromotional Strategy
Place Strategy (Channels of Place Strategy (Channels of
Distribution)Distribution)
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The role of marketingThe role of marketingmanagement is to mixmanagement is to mix
or blend these fouror blend these fourstrategic variables instrategic variables in
such a way as to meetsuch a way as to meetthe needs of...the needs of...
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THE TARGET
MARKET
Target Market
ProductProduct PricePricePromotionPromotion PlacePlace
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This processThis process
does not takedoes not takeplace in aplace in a
vacuumvacuum
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IllustrativeIllustrative
Representation of theRepresentation of the
Marketing MixMarketing Mix
Pla c e
Pla c e
InternalInternalControllableControllable
VariablesVariables
(endogenous)(endogenous)
ProductProduct
P r i c e
P r i c e
PromotionPromotionTargetTarget
MarketMarket
EnvironmentEnvironment•EconomicEconomic
•CompetitiveCompetitive•Socio-Cultural-Socio-Cultural-
DemographicDemographic•Legal-Political-Legal-Political-
GovtGovt•TechnologyTechnology
h k i i d l
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InternalInternal
ControllableControllableVariablesVariables
(endogenous)(endogenous)Pro d u
c t
Pro d u
c t
PricePrice
Pro mo tio n
Pro mo tio n
TargetTarget
MarketMarket
EnvironmentEnvironment•EconomicEconomic•CompetitiveCompetitive•Socio-Cultural-Socio-Cultural-
DemographicDemographic•Legal-Political-Legal-Political-
GovernmentGovernment•TechnologyTechnology
PlacePlace
The Marketing Mix ModelThe Marketing Mix Model
PortraysPortrays
Marketing Management as:Marketing Management as:•Based on the marketingBased on the marketing
conceptconcept•Having a supply sideHaving a supply side
and demand sideand demand side•Supply adapting toSupply adapting to
demanddemand•Highly interactiveHighly interactive•An open systemAn open system
•Requiring humanRequiring humandirectiondirection•Highly dynamic processHighly dynamic process•An extremelyAn extremely
challenging managerialchallenging managerialtask task
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Marketing’sMarketing’s
Broadened ScopeBroadened Scope
ManufacturersManufacturers RetailersRetailers AccountingAccounting
LawLaw
Non-profitsNon-profits UniversitiesUniversities GovernmentGovernment People (politicalPeople (political
candidates)candidates) Etc.Etc.
YesYes
-- even applies to banks !-- even applies to banks !
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Component of theComponent of the
OrganizationOrganization
Marketing is elevated to aMarketing is elevated to a
level of level of strategicstrategic position in theposition in the
organizationorganization
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Marketing-ManagementMarketing-Management
Inextricably Tied toInextricably Tied to
Decisions Involving:Decisions Involving:
Future direction of the organizationFuture direction of the organization
Markets to be servedMarkets to be served
Creation of competitive advantageCreation of competitive advantage
Long term organizationalLong term organizational
performanceperformance
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Therefore Strategic MarketingTherefore Strategic Marketing
Management Consists of atManagement Consists of at
Least Six Major AreasLeast Six Major Areas
1)1) Defining the organization’s businessDefining the organization’s business
2)2) Specifying the purpose of the organizationSpecifying the purpose of the organization
3)3) Identifying opportunitiesIdentifying opportunities4)4) Formulating product/market strategiesFormulating product/market strategies
5)5) Budgeting: financial, production, humanBudgeting: financial, production, human
resourcesresources
66 Monitorin evaluatin and ada tinMonitorin evaluatin and ada tin
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Defining theDefining the
Organization’s BusinessOrganization’s Business
Type of customers (markets) to be servedType of customers (markets) to be served
Needs of those customersNeeds of those customers Means by which organization will meet theMeans by which organization will meet the
needsneeds
Competitive advantage (attainment andCompetitive advantage (attainment andsustainedsustained
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Production
Output andefficiency
measures, e.g.output per
Man hour
Finance
ROIROS
Profit
Cash Flow
Marketing
Sales VolumeMargin
Market ShareCustomerSatisfaction
Specifying the Purpose of Specifying the Purpose of
the Organizationthe Organization
Aspirations of the organizationAspirations of the organization
and what it wishes to achieveand what it wishes to achieve
ie., objectives and goalsie., objectives and goals
d if iId if i
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IdentifyingIdentifying
OrganizationalOrganizational
OpportunitiesOpportunitiesExternal (environmental)External (environmental)
opportunities matched with internalopportunities matched with internal
(organizational) capabilities(organizational) capabilities
What do we do best? (distinctive competency)What do we do best? (distinctive competency)
What must we do? (success requirements)What must we do? (success requirements)
What might we do? (environmental opportunity)What might we do? (environmental opportunity)
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Product/MarketProduct/Market
StrategiesStrategies
MarketPenetratio
n
MarketDevelopmen
t
NewOffering Diversificati
on
EXISTING NEW
EXISTING
NEW
MARKETSOf f
ering
s
B d ti Fi i lB d ti Fi i l
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Budgeting, Financial,Budgeting, Financial,
Production, and HumanProduction, and Human
ResourcesResources
Financial implications and allocationsFinancial implications and allocations
relevant to the marketing planrelevant to the marketing plan
Revenue, expense, and profitRevenue, expense, and profit
projectionsprojections
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,,and Adapting Marketingand Adapting Marketing
StrategyStrategy
Marketing audit --comprehensive,Marketing audit --comprehensive,
systematic, independent, and periodicsystematic, independent, and periodic
examination of the organization’sexamination of the organization’s
marketing objectives and strategies tomarketing objectives and strategies to
identify problems and opportunities asidentify problems and opportunities as
well as to recommend ways of well as to recommend ways of
improving marketing performanceimproving marketing performance
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Customer Value andCustomer Value and
SatisfactionSatisfaction
InputInput Customer CostsCustomer Costs
OutputOutput Customer BenefitsCustomer Benefits= = CV
Note:Note: Costs defined broadlyCosts defined broadly
Benefits (customer’s viewpoint)Benefits (customer’s viewpoint)
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Customer SatisfactionCustomer Satisfaction
Customer’s perception of perceived
performance of offering relative to experience
Perceived performance below expectations = dissatisfied custome
Perceived performance meets expectations = satisfied customer
Perceived performance exceeds expectations = delighted custome
ar e ng an e a ue a nar e ng an e a ue a n
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ar e ng an e a ue a nar e ng an e a ue a nMichael PorterMichael Porter CompetitiveCompetitive
AdvantageAdvantage
Every firm is a collection of activitiesEvery firm is a collection of activities
Primary ActivitiesPrimary Activities Inbound logisticsInbound logistics
OperationsOperations Outbound logisticsOutbound logistics
Marketing andMarketing and
salessales
Support ActivitiesSupport Activities
Firm infrastructureFirm infrastructure
Human resource mgt.Human resource mgt.
TechnologyTechnology
ProcurementProcurement
Th G i V lTh G i V lTh G i V lTh G i V l
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The Generic ValueThe Generic Value
ChainChainThe Generic ValueThe Generic Value
ChainChain
Primary Activities
S u p p o rt
Ac t ivit ie s
Firm infrastructure
Human resource management
Technology developmentProcurement
Inboundlogistics Outboundlogistics
Marketingand
salesServiceOpera-tions
Marg in
M a
r g i n
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Marketing can be viewedMarketing can be viewed
as the “heart” of the valueas the “heart” of the valuechain because it ties all of chain because it ties all of
the activities together fromthe activities together from
thethe customer’scustomer’s point of point of
viewview
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MarketingMarketing
The development and maintenanceThe development and maintenance
of long-term, cost effectiveof long-term, cost effective
relationships with customers in orderrelationships with customers in orderto retain their preferenceto retain their preference
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Relationship MarketingRelationship Marketing
Compared to TransactionCompared to Transaction(Traditional) Marketing(Traditional) Marketing
Factor Transaction
Time orientation Short-term
Organizational goal Make sale
Customer service priority Relatively low Very Customer contact Low to moderate
Customer commitment Low
Seller-customer interaction Conflict manipulation Cooperation
Source of quality Mainly from production Company wide
Tools for ImplementingTools for Implementing
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Tools for ImplementingTools for Implementing
Relationship MarketingRelationship Marketing
Affinity programsAffinity programs
Frequent-buyer/user programsFrequent-buyer/user programs
Database marketingDatabase marketing
Partnerships (strategic alliancesPartnerships (strategic alliances
Co-marketing and co-brandingCo-marketing and co-branding
EDI (electronic data interchange)EDI (electronic data interchange)VMI (vender-managed inventory)VMI (vender-managed inventory)
QR (quick response)QR (quick response)
Life-time value of customer analysisLife-time value of customer analysis