Introduction to Marketing
What is marketing?
• Marketing is the management process that identifies, anticipates and
satisfies customer requirements profitably by providing customers the
right product, in the right place, at the right time, and at the right price.
• Marketing is the human activity directed at satisfying human needs and
wants through an exchange process. Kotler 1980
• Marketing is a social and managerial process by which individuals and
groups obtain what they want and need through creating, offering and
exchanging products of value with others. Kotler 1991
What is marketing?
American Marketing Association Definition
Marketing is the process of planning and executing the conception,
pricing, promotion, and distribution of ideas, goods, and services
to create exchanges that satisfy individual and organizational goals.
For an exchange to occur…..
• There are at least two parties.
• Each party has something that might be of value to the other party.
• Each party is capable of communication and delivery.
• Each party is free to reject the exchange offer.
• Each party believes it is appropriate or desirable to deal with the
other party
What is Marketed?
• Goods • Places
• Services • Properties
• Events • Organizations
• Experiences • Information
• Persons • Ideas
Key Customer Markets
• Consumer markets
• Business markets
• International Markets/Global markets
• Nonprofit/Government markets
Evolution of Marketing
• Production Era
• Sales Era
• Marketing Concept Era
• Societal Era
1. Production Orientation
• Focuses on internal capabilities of firm.
• Best used when
• competition is weak
• demand exceeds supply
• generic products competing solely on price
• Problem is that they don’t understand wants/needs of
marketplace.
2. Sales Orientation
• People will buy more goods/services if aggressive sales techniques are
used.
• High sales will result in high profits.
• Used with unsought products
• life insurance
• encyclopedias
• Problem is that they don’t understand wants/needs of marketplace.
• I can sell everything, if I know how to sell it.
3. Marketing Orientation
Marketing concept
The social and economic justification for an organization’s existence is
the satisfaction of customer wants and needs, while meeting
organizational objectives.
3. Marketing Orientation . . .
• Focusing on customer wants so the organization can distinguish its
products from competitors .
• Integrating all the organization’s activities, including promotion, to
satisfy these wants.
• Achieving long term goals for the organization by satisfying customer
wants and needs legally and responsibly.
3. Marketing Orientation . . .
• Requires:
• Top management leadership
• A customer focus
• Competitor intelligence
• strengths
• weaknesses
• Inter functional coordination to meet customer wants/needs and
deliver superior values.
4. Societal Marketing
Orientation
• Organization exists not only to satisfy customer wants/needs and to
meet organizational objectives, but also to preserve and enhance
individuals’ and society’s long-term best interests.
• Extends marketing concept to serve one more customer - society as a
whole.
Differences between
Sales & Marketing
Orientations
Production/Sales Focus Marketing Focus
• Organization’s needs • Customer’s needs
• Producing/Selling • Satisfying customer
goods/services wants/needs
• Everybody • Specific groups of people
• Profit through max. • Profit through customer
sales volume satisfaction
• Intensive promotion • Coordinated mktg.
activities (4 p’s)
Marketing Philisophies
Orientatio Key Ideas
n
Production Focus on efficiency of internal operations –
if we make it, they will buy it
Sales Focus on aggressive sales techniques and believe
that high sales result in high profits
Marketing Focus on satisfying customer needs and wants
while meeting objectives - if they will buy it, we will
make it
Societal Focus on satisfying customer needs and
wants while enhancing individual and
societal well-being. I.e.-mfg using recyclables
Marketing Mix and the
Customer
Four Ps Four Cs
Product Customer
Price solution
Place Customer cost
Promotion Convenience
Communication
Marketing Segmentation
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Introduction
• Market - Group of people with sufficient purchasing power, authority,
and willingness to buy.
• Target market - Group of people a firm believes is most likely to buy
its goods and services.
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Types of Markets
• Consumer products - Products bought by ultimate consumers for
personal use
• Business products - Goods and services purchased for use either
directly or indirectly in the production of other goods and services for
resale
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Types of Markets
• A product can be either a consumer product or business product,
depending on its use
• Example: Tires can be purchased by consumers for the family car or by
General Motors for its production line
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The Role of Market
Segmentation
• Marketing strategies must be adjusted to meet the needs of different
consumer groups
• Market segmentation - Division of the total market into smaller,
relatively homogenous groups
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Criteria for Effective
Segmentation
• The market segment must present measurable purchasing power and
size
• Marketers must find a way to effectively promote and serve the
market segment
• Segment must be sufficiently large to offer good profit potential
• Firm must aim for segments that match its marketing capabilities
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Segmenting Consumer Markets
• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation
• Product-related segmentation
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Geographic Segmentation
• Division of an overall market into homogenous groups based on their
locations.
• Marketers look at:
• Economic variables
• Geographic indicators
• Migration patterns
• Pay close attention to fastest-growing states.
Using Geographic Segmentation
• Marketers focus on core regions, those from which they draw 40 to
80 percent of sales.
• Residence location within a region is an important variable.
• Provides useful distinctions when regional preferences or needs exist.
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Geographic Information
Systems (GISs)
• Computer systems that assemble, store, manipulate, and display data
by location.
• Simplifies the job of analyzing geographic marketing information.
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Demographic Segmentation
• Division of an overall market into homogenous groups based on:
• Gender and age
• Income and occupation
• Education
• Household size
• Stage in the family life cycle
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What is Psychographic
Segmentation?
• Division of a population into groups that have similar attitudes,
values, and lifestyles.
• AIO statements - Items on lifestyle surveys that describe various
activities, interests, and respondents’ opinions.
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Using Psychographic
Segmentation
• Quantify aspects of consumers’ personalities and lifestyles.
• Plan and promote more effectively.
• Acts as a good supplement to geographic and demographic
segmentation.
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Product-Related Segmentation
• Division of a population into homogeneous groups based on their
relationships to a product
• Segmenting by benefits sought
• Focuses on the benefits people expect from using the product
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Product-Related Segmentation
• Segmenting by usage rates
• 80/20 principle (Praedo’s law) - 80 percent of a product’s revenues come
from 20 percent of its customers
• Marketers may target heavy, moderate, light users or nonusers
• Segmenting by brand loyalty
• Example: Frequent purchaser programs.
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Product-Related Segmentation
• Using multiple segmentation bases
• Segmentation helps marketers increase their accuracy in reaching the right
markets.
• Segmentation helps marketers to know their potential customers better.
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The Market Segmentation
Process
• Develop a relevant profile for each segment
• In-depth analysis helps managers accurately match buyers’ needs with the
firm’s marketing offerings.
• Forecast market potential
• Market potential sets the upper limit on the demand competing firms can
expect from a segment.
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The Market Segmentation Process
• Forecast probable market share
• Comes from analysis of competitors’ market position and development of
marketing strategy.
• Select specific market segments
• Use demand forecasts and cost projections to determine profits and the
return on investment from each segment.
• Marketers weigh more than monetary costs and benefits.
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