marketing by amir nasry printed ver 3

MARKETING Marketing: Creating and Capturing Customer Value Prof: Amir Nasry

What Is Marketing?

Marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others

PHILIP KOTLER

Simply put:

Marketing is the delivery of customer satisfaction at a profit.

What Is Marketing? The Marketing Process

Understanding the Marketplace and Customer Needs

Customer needs, wants, and demands

Market offerings (P&S)

Value and satisfaction

Exchanges and relationships

Markets

Core Concepts

Needs, Wants And Demands

• NEED : A state of felt deprivation of some basic satisfaction (Food, Clothing, Shelter, Belonging etc. )

• WANTS : Wants are desires for specific satisfiers of the deeper needs. Needs are few and wants are many .

• DEMANDS : are wants backed by ------Ability to buy and Willingness to buy


•States of deprivation

•Physical—food, clothing, warmth, safety

•Social—belonging and affection

•Individual—knowledge and self-expression

Needs

•Form that needs take as they are shaped by culture and individual personality Wants

•Wants backed by buying power Demands

Customer Needs, Wants, and Demands

Products / Offers / Satisfiers / Resources

Anything that can be offered to someone to satisfy a need or want is a product .

Product refers to physical object

Services refer to intangible object

Value and Satisfaction

• Value is the customers’ estimate of the Product’s capacity to satisfy a set of goals

• Value is the ratio between what the customer gets and what he gives (V=B/C)

• Customer gets benefits & assume costs

• WHEN :Customer Expectance=Performance (satisfied)

• Customer Expectance>Performance (dis-satisfied)

• Customer Expectance<Performance (Highly satisfied)


Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want

Marketing myopia is focusing only on existing wants and losing sight of underlying consumer needs

Customer Value and Satisfaction Expectations

Customers

• Value and satisfaction

Marketers • Set the right level of

expectations

• Not too high or low


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Three Basic Principles Of Marketing

(1) The Customer Value and Value Equation:

V=B/P Where; V=Value

B= Perceived Benefits

P= Price

Value Map

Designing a Customer-Driven Marketing Strategy

Choosing a Value Proposition

The value proposition is the set

of benefits or values a company

promises to deliver to customers

to satisfy their needs

Value Proposition

Value Proposition

Involving all benefits

Favourable points of difference

Resonating focus

Exchange is the act of obtaining a

desired object from someone by offering something in return


Exchange and Transaction

• Exchange is the act of obtaining a desired product by offering something in return .

• Exchange takes place when 5 conditions are satisfied:

(a) Two parties should be there

(b) Each party must have something of value to the other

(c) Each party is capable of communication & delivery

(d) Each party is free to accept or reject the offer

(e) Each party believes that it is appropriate to deal with the other party

Exchange and Transaction

Exchange is a process rather than event. It is a value creating process because it normally leaves both parties better off.

A transaction is a trade of values between two or more parties ( A BARTER TRANSACTION OR A MONETARY TRANSACTION ).


Markets are the set of actual and potential buyers of a product

Strategic Concept of Marketing

• Shifted the focus of Marketing from Product or customer to the CUSTOMER IN THE CONTEXT OF THE BROADER EXTERNAL ENVIRONMENT .

• To succeed, marketers must know the customer in a context including the competition, Govt. Policy& regulation and the broader economic, social and political macro forces that shape the evolution of market.


Shifted the Marketing Objectives from PROFIT TO STAKEHOLDER BENEFITS.

Stakeholders are individuals or groups who have an interest in the activity of a company . They include-----The employees

and management, Customers, Society, Shareholders, Financiers/ Bankers, Government etc.


Strategic Marketing Concept is Strategic Management, which integrates marketing with the other management functions. ( Major task is Profit for Stakeholders’ benefits ).


Marketing management is the art and science of choosing target markets and building profitable relationships with them

What customers will we serve?

How can we best serve these customers?

Marketing System

Marketing is concerned with the flow of goods and services from the points of production to the points of consumption.

There is a systematic arrangement of these functions of marketing to move the goods and services to the needy persons. This system is essential to the creation of time, place and possession utilities.

Marketing System

• A dynamic marketing system must be willing to undertake the following specific activities: 1. Define market area.

2. Research consumer wants and needs.

3. Develop and redevelop product / service.

4. Select, train, motivate and control human resources.

5. Develop sales approach and advertising support.

Goals Of The Marketing System

1. Maximize Consumption

2. Maximize Consumer Satisfaction

3. Maximize Choice

4. Maximize Life Quality


The essence of marketing can be summarized in three great principles.

first identifies the purpose and task of marketing,

second is the competitive reality of marketing

Third is the principal means for achieving the first two.


Competitive or Differential Advantage :

The total offer must be more attractive than that of the competition in order to create a competitive advantage.

Focus or the Concentration of Attention :

The task of creating Customer Value at a Competitive advantage.

Customer As The Controlling Function

Production Finance

Marketing Personnel

CUSTOMER

Marketing As The Integrative Function

CUSTOMER

Production

HR Finance

Marketing

Three Levels Of Marketing

Responsive Marketing

Anticipative Marketing

Need Shaping Marketing

Responsive Marketing

It is the form of marketing when some company defines an existing clear need and prepare an affordable solution.

(Recognizing that women wanted to spend less time for cooking and cleaning, led to the invention of modern washing machine, microwave oven etc.)

Anticipative Marketing

It is a form of marketing when a company recognize an emergent or latent need, and come out with an affordable solution. Evian, Perrier anticipated growing market for bottled drinking water as the quality of water deteriorated in many places.

Anticipative marketing is more risky than responsive

marketing; companies may come into market too

early or too late, or may even be totally wrong about

thinking that such a market would develop.(eg. Dish

washers in India)

Need Shaped Marketing

The broadest level of marketing occurs when a company introduces product that nobody asked for and often could not even conceive of.

(e.g. Sony Walkman, Sony Compact Disc )

Late Akio Morita, founder and chairman of Sony, who introduced these and many other new products, summarized his marketing philosophy in these words: “ I don’t serve markets. I create them.”

WHAT IS MARKET ?

A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want.

WHAT IS MARKETING ?

Marketing is the management process which identifies, anticipates, and supplies customer requirements efficiently and profitably.

In other words, it is the process of understanding, creating, and delivering profitable value to targeted customers better than the competition.

WHAT IS MARKETING ?

Its aim is to establish, maintain, enhance long term relationship with customers at a profit so that the objectives of the parties involved are met.

In short marketing consists of attracting, developing, and retaining profitable customers.

BUSINESS IS MARKETING

Marketing can not be considered as a separate function , it is the whole business, seen from the point of view of its final results.................that is profit, through customer satisfaction

PETER DRUCKER

A SIMPLE MARKETING SYSTEM

Industry Market

Communication

Information/Feedback

Goods & Services

Money


Market segmentation refers to dividing the markets into segments of customers

Target marketing refers to which segments to go after

Selecting Customers to Serve

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Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it

Selecting Customers to Serve


Production concept

Product concept

Selling concept

Marketing concept

Societal concept

Marketing Management Orientations

(1) THE PRODUCTION CONCEPT

Consumers

Company

Produce more & more

Practically sells itself

Consumers will favor those products that are widely available and low in cost.

Therefore increase production and cut down costs.

And build profit through volume.

(2) THE PRODUCT CONCEPT

Consumers

Practically sells itself, if

it gives most quality for

money

Buyers admire well-made products and can appraise

product quality and performance.

Consumers will favor those products that offer the most quality, performance, or innovative features.

Therefore, improve quality, performance and features.

This would lead to increased sales and profits.

(3) SELLING CONCEPT

Consumers have normal tendency to resist.

Consumers

Aggressive selling &

promotion efforts

Making sales becomes primary function

and consumer satisfaction secondary .

Consumers , if left alone , will not buy enough of company’s products.

Therefore, promote sales aggressively.

Build profit through quick turnover.

(4) MARKETING CONCEPT

“ LOVE THE CUSTOMER , NOT THE PRODUCT ”

Consumers

Learn what they

want(MR)

Sell what they want(Satisfy

needs of customers)

The key to achieving organizational goals consist in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.

And build profit through customer satisfaction and loyalty.

(5) THE SOCIETAL MARKETING CONCEPT

It is Marketing Concept (+) Society’s well being. Balancing of following three considerations while

setting marketing policies : Customer’s want satisfaction Society’s well being Company’s profits

The societal marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well being.

It addresses conflicts between consumer’s and firm’s short run wants and long term welfare.

Marketing Strategy



Marketing concept is the idea

that achieving organizational

goals depends on knowing the

needs and wants of the target

markets and delivering the

desired satisfactions better than

competitors do



Societal marketing concept

is the idea that a company

should make good marketing

decisions by considering

consumers’ wants, the

company’s requirements,

consumers’ long-term

interests, and society’s long-

run interests

Ansoff Matrix

The BCG Matrix Product Portfolio Method

Porter model for Competitive Forces

Preparing an Integrated Marketing Plan and Program

The marketing mix is the set of tools (four Ps) the firm uses to implement its marketing strategy. it includes product, price, promotion, and place.

Integrated marketing program is a comprehensive plan that communicates and delivers the intended value to chosen customers.

The Marketing Environment

Microenvironment

Customers : individuals & households -Business Markets; Government Markets; -International Markets;

Competitors

Intermediates: Resellers transportation, warehousing, financing

Suppliers: supply problems that affect the marketing can be supply shortage, or delays, labor strikes , supply costs …etc

Public: comprises of consumers, labor unions, press & media, Govt. officials etc.

Macro environment

Demographic Environment: age, gender, income, religion

Economic Factors: Changes in Income, Changing customer spending patterns, Unemployment, Inflation

Political / Legal Factors: Governmental regulations & rules, Tax regime, Trade policies, Special interests

Technological Factors: forces that create new technologies, creating new products and opportunities, Examples mobiles; laptops, robotic surgery ..etc

Natural Factors: involves the natural resources needed as inputs by marketers and may affect marketing activities; as : Shortage of raw materials, Increased pollution, Energy Sources

Marketing Mix

The Marketing Mix

The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives

7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment

Traditional 4Ps extended to cope with today's changing environment

The Marketing Mix

Product

Product

The firm must come up with a product or service that people will want to buy.

It must fulfil some need

or want.

It must be (or at least seem) unique.

Product Variety

•Quality

•Design

•Brand name

•Packaging

•Services

•Warranties

Product Methods used to improve/differentiate

the product and increase sales or target sales more effectively to gain a competitive advantage e.g.

Extension strategies

Specialised versions

New editions

Improvements – real or otherwise!

Changed packaging

Technology, etc.

Product or service Core Product Actual Product Augmented

Product

CAR Transportation A motor car Finance

Availability

Hotel Accommodation Rooms Room service

Airline Transportation An air plane In flight

Entertainment

A Football Club Entertainment T-shirts – photos

with players

An Insurance Company Safety Insurance policy Online availability

Air Condition Cooling AC Warranty

Price

Pricing Strategy

- International

Comparative

Cost plus

• The price must be one that the customer thinks is good value for money.

• This is not the same as

being cheap!

• Prices have a great psychological effect on customers.

•List Price

•Discounts

•Allowances

•Payment period

•Credit Terms

Price

Maximize short term profit

Maximize current market share

Market skimming

Product quality leadership

Survival

Place

The means by which products and services get from producer to consumer and where they can be accessed by the consumer

The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?)

People

People

People represent the business

The image they present can be important

First contact often human – what is the lasting image they provide to the customer?

Extent of training and knowledge of the product/service concerned

Do staff represent the desired culture of the business?

People

People represent the business

The image they present can be important

First contact often human – what is the lasting image they provide to the customer?

Extent of training and knowledge of the product/service concerned

Mission statement – how relevant?

Do staff represent the desired culture of the business?

Process

Process

How do people consume services?

What processes do they have to go through to acquire the services?

Where do they find the availability of the service? Contact Reminders Registration Subscription Form filling Degree of technology

Physical Environment

Physical Environment

The ambience, mood or physical presentation of the environment

Packaging.

Internet/web pages.

Paperwork (such as invoices, tickets,…..).

Brochures.

Furnishings.

Uniforms.

Business cards.

The building itself (such as prestigious offices or scenic headquarters).

Mailboxes and many others . . . . . .

Promotion

Promotion

Strategies to make the consumer aware of the existence of a product or service

NOT just advertising

1.Advertising

2.Sales Promotion

3.Public Relations

4.Personal Selling

5.Direct Marketing

Marketing communication MIX

1.Advertising Popular means of reaching a target audience. Cost effective way to build awareness. To create a good ad, the marketer must create a

message that is distinct, meaningful and credible. There are many advertising 'media' such as

newspapers, magazines and journals, television, cinema, outdoor advertising (such as posters, bus sides).

2. Sales Promotion Short term incentive to encourage customers to make a

purchase. There are many sales promotion types as :

a. Advertising Specialties: A product imprinted with a logo as mugs, T shirts..etc b. Cash Rebates: A partial refund to the buyer c. Discounting : reducing the listed price for a limited period of time d. Coupons e. Samples N.B Advertising offers reasons to buy a product or service, sales promotion offers reasons to buy now



3. Public Relations Used to obtain favorable publicity, building good

corporate image and handling unfavorable rumors, stories and events

Influence the public beliefs, feelings and opinions about the company .

Mass promotion tool & cheap There are several types of public relations :

a. Written material as brochures, magazines, articles..etc b. Special Events as presentations, conferences c. Public Service Activities as donating money, volunteers or resources to activities designed to a social cause d. Speeches as giving talks

4. Personal Selling Personal presentation by the firm’s sales force for

the purpose of making sales & building customer relations

The sales message can be customized to meet the needs of the customer.

Involves 2 way personal communication as face-to-face, by telephone, through video or web conference.



5. Direct Marketing The Direct marketing is a type of advertising

campaign that seeks to elicit an action (such as an order, a visit to a store or Web site, or a request for further information) from a selected group of consumers in response to a communication from the marketer.

Types of direct marketing: Direct Mail Telemarketing Email Marketing Catalogs Websites

The promotional message should

Grab Attention

Stimulate Interest

Create Desire

Promote Action

The Marketing Analysis

SWOT analysis

It is a marketing analysis tool that involves monitoring the external and internal marketing environment.

Internal environment

Strength is something a firm does well or a characteristic that enhances its competitiveness.

Weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage

External environment

opportunity is a factor that the company may be able to exploit to its advantage.

Threat is current and emerging external factors that may challenge the company’s performance.

SWOT Build on your Strengths

Evaluate your Opportunities

Research your Threats

Recognize your Weakness

Identifying Market Segments and

Targets

Segmenting Consumer Markets

Geographic Segmentation Calls for dividing the market into geographical units such as nations, states, regions, countries, cities or neighborhoods

Demographic Segmentation Divides a market into groups based on variables as age, gender, family size, income, education, occupation, generation and nationality.

Psychographic Segmentation Divides buyers into different groups based on social class, lifestyle, or personality characteristics.

Behavioral Segmentation Divides buyers into groups based on their knowledge, attitudes, uses or responses to a product.

Segmenting International Markets

Companies can segment international markets using one or a combination of several variables, ex. Geographic location, grouping countries by region as Asia, Middle East or Western Europe.

•Geographic segmentation assumes that nations close to one another have common traits and behaviors, example: United States and Canada.

•World markets can be segmented on the basis of economic factors . Ex. Countries might be grouped by population income levels or overall level of economic development

Requirements for Effective Segmentation

Measurable

Accessible

Substantial

Differentiable

Actionable

Market Targeting

Evaluating Market Segments

Segment Size and Growth:

Segment Structural Attractiveness:

Company Objectives and Resources

Selecting Target Market Segments

Target Market Definition: consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Differentiation and Positioning

Differentiation: to be branded, products must be differentiated from competitors‟ ones. (size, shape or physical structure Features Performance quality, Durability, Reliability, Style

Dimensions of service differentiation: Ordering ease, Delivery, Installation, Customer Training, Maintenance and repair

Product Position : the place the product occupies in consumer's minds relative to competing products. A product must have a unique identity.

Toyota Yaris & Honda positioned as Economy Mercedes and Cadillac positioned as Luxury BMW & Porsche positioned as Performance

Marketing Plan

Importance of Marketing Plan

Forces the marketing personnel to look internally in order to fully understand the results of past marketing decisions.

Forces the marketing personnel to look externally in order to fully understand the market in which they operate.

Sets future goals and provides direction for future marketing efforts that everyone within the organization should understand and support.

Marketing plan is a key component in obtaining funding to pursue new initiatives.

Purpose of the Marketing Plan

Offer brief explanation for why this plan was produced

–e.g., introduce new product, enter new markets, continue growth of existing product, yearly review and planning document, etc.

Suggest what may be done with the information contained in the plan

–e.g., set targets to be achieved in the next year, represents a departmental report to be included in larger business or strategic plan, etc.

Marketing Plan Structure

Executive Summary Vision & Mission Statements –Pre defined Situation Analysis SWOT Analysis

Marketing Goals & Objectives Marketing Strategies (Market penetration, Market

development, Product development, Diversification)

Marketing Implementation (marketing activities) Budgeting Evaluation & Control (assessing and correcting

actions)

Marketing Myopia

What is Myopia

• Nearsightedness--not inherited. It can be prevented.

• Short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers' needs and wants.

Marketing Myopia Today

Airline Industry

- IndiGo V/s Kingfisher

- Private carriers v/s National Carriers

Marketing Myopia Today

• Technology Industry

▫ More focused on the customer today than in 1960

▫ Apple

▫ E-commerce and E-Business ranked high in customer satisfaction report

“There is no such thing as a growth industry, what we have is growth opportunities.” -Theodore Levitt

Guarantee a Self-Deceiving Cycle

• Believe growth is guaranteed by an expanding population

• Believe there is no competitive substitutes

• Have too much faith in mass production

• Preoccupation with a product: focus on product instead of customer

Assured Growth by Expansion

• Belief that increases in population and affluence ensure growth

• Lack of innovation – A common characteristic

▫ Companies focus on efficiency, not innovation

• Petroleum industry

▫ A prime example of this fallacy

▫ Reinforces Levitt’s caution of myopically defining one’s industry

No Threat of Obsolescence

• The fallacy of believing competitive substitutes don’t exist

• Petroleum industry

▫ A history of obsolete products due to competitive substitutes

Kerosene Lamp

Kerosene Space Heater

Mass Production

• Lower product’s unit costs as output increases

• Focus on production, neglect marketing

• Selling is not marketing

• Focus on company’s needs, not customer’s needs

Henry Ford

Brilliant Marketer Senseless Marketer

• Created a product customer’s needed

• Created a product customer’s could afford

• Created production system to fit market needs

• Refused to make cars in any other color but black

Preoccupation with Product

• Industry declines instead of growing

• Example – Oil Companies

• Survival entails change

Creative Destruction

• When something new eliminates something old

• Must become innovative – reinvent business

• Must change business strategy to survive

Customer Relationships

Model of Consumer Decision Making

Stages in the Consumer Decision-Making Process

Relevant Internal Psychological Processes

External Factors Influencing the Consumer Buying Behavior

Culture

Social Class

Reference Group and Opinion Leader

Family

Building Customer Relationships

The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

Customer Relationship Management (CRM)

Building Customer Relationships Relationship Building Blocks: Customer Value and Satisfaction

Customer perceived value

• The difference between total customer value and total customer cost

Customer satisfaction

• The extent to which a product’s perceived performance matches a buyer’s expectations


Customer Relationship Levels and Tools

Basic Relationships

Full Partnerships


Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers

Relating more deeply and interactively by incorporating more interactive two way relationships through blogs, Websites, online communities and social networks

The Changing Nature of Customer Relationships


Partner relationship management involves working closely with partners in other company departments and outside the company to jointly bring greater value to customers


Partners inside the company is every function area interacting with customers

Electronically

Cross-functional teams

Partners outside the company is how marketers connect with their suppliers, channel partners, and competitors by developing partnerships

Partner Relationship Management


Supply chain is a channel that stretches from raw materials to components to final products to final buyers

Supply management

Strategic partners

Strategic alliances

Partner Relationship Management

Capturing Value from Customers

Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage

Creating Customer Loyalty and Retention


Share of customer is the portion of the customer’s purchasing that a company gets in its product categories

Growing Share of Customer


Customer equity is the total combined customer lifetime values of all of the company’s customers


Building the right relationships with the right customers involves treating customers as assets that need to be managed and maximized

Different types of customers require different relationship management strategies

Build the right relationship with the right customers

Building Customer Equity

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The New Marketing Landscape

Digital age Rapid

globalization

Ethics and social

responsibility

Not-for-profit marketing

Major Developments

So, What Is Marketing? Pulling It All Together

Customer Satisfaction and Customer Retention

Customer satisfaction is the key to customer retention

Fully satisfies customers are more likely to become loyal customers.

Customer satisfaction is a big challenge for marketers.

“It is no longer enough to satisfy customers. You must delight them.”-Philip Kotler

1 in 4 unhappy

Customers

switch

1 in 27 unhappy

customers

complain

5 times easier

and cheaper to

keep a

customer than

to have a new

one

The key question – “what business are

you in?”

Summary of Modern Marketing

Modern marketing is consumer oriented.

It begins and ends with Consumers.

It precedes & succeeds production.

It is competition oriented.

Its strategy is target marketing

The distribution policy under modern marketing is direct marketing and direct selling.

Modern marketing relies on information.

It emphasizes mutuality of benefit.

Business networks.

Emphasis on retaining customers

Marketing on the net.

Shifting from international to borderless world marketing.

Innovation.

Business Process Outsourcing.

Branding shifting values.

Conclusion

“Organizations must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it.”

Theodore Levitt

marketing by amir nasry printed ver 3

Marketing

customer needs customer

marketing marketing

customer valueprof

deeper needs

marketing process

satisfaction value

satisfaction exchanges

basic satisfaction food