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Transcript of 2013 Mkt Chapter 01
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PRINCIPLES OF
MARKETINGNADEEM FAROOKI.
Dean of Management Sciences / Director Academics.
CONTACT: [email protected]
INTRODUCTION AND CHAPTER NO 01.
BOOK RECOMMENDED. KOTLER &ARMSTRONG
13thEDITION. PRINCIPLES OFMARKETING.CHAPTER NO 01
Completed in 7 lectures. One hour each.
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World War I
World War I (WWI) was a global warcentredin Europe that began on 28July 1914and lasted until 11November 1918.
Militarism,alliances, imperialism, andnationalismplayed major roles in theconflict as well. The immediate originsof the war, was the assassination of
Archduke of Austria and his wife bySerbs living in southern centraleurope.
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The Great Depression
A host of unemployedcitizens face the grim
problem of existence,and
an equally great numbertoil with little return.Only
a foolish optimistcan deny
the dark realities of themoment.FranklinRoosevelt,March 1933.
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Causes of the Great
Depression The stock market crash of 1929. Over speculation in the market was not
regulated by the government. Somebusinesses were over-rated in value so thatstock prices would rise.Many Americans purchased stock on credit.This was known as margin buying.Consumers often did not have the cash onhand when stock brokers called in the "loan."Banks were permitted to speculate in landand the stock market with little governmentregulations.High tariffs and war debts helped spread theeconomic depression world wide.
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CAUSES OF THE GREATDEPRESSION
Massive business inventories ( up 300%from 1929 to 1933)
Lack of diversification in AmericanEconomy.
Poor distribution of purchasing poweramong consumers.
Steady stream of Bank failures in late1929as customers were unable to paymortgages
Farm Income declined 66%from 1929 to1933.
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CAUSES OF THE GREATDEPRESSION
Declinein Demand for Americangoods in International Trade.
Some Nations particularly
Germany,were so beset by financialcrisis and inflation that they couldnot afford to purchase Americangoods.
High American protective tariffdiscouraged Trade.
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CAUSES OF THE GREATDEPRESSION
Stock Market crash,1929.
Economic downturnaccelerated by market crash.
Between 1929and1933,100,000businessesfailed.
Corporate profits fell from$10bto $1b.
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World War II
World War II, or the Second WorldWar was a global war that wasunderway by 1939 and ended in
1945. The main causes of World War II
were nationalistic tensions,unresolved issues, and resentmentsresulting from the World War I andthe interwar period in Europe, plusthe effects of the Great Depression inthe 1930s.
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MARKETING HAS EVOLVED
THROUGH
THREE STAGES OF DEVELOPMENT.
A Production orientation
focusing on manufacturing aproduct.
A Sales orientation focusing onselling a product.
A Marketing orientation focusingon satisfying the customersNeeds.
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THE EVOLUTION OF MARKETORIENTATION
PRODUCTION ERA.
PRODUCT ERA.
SALES ERA. MARKETING CONCEPT ERA.
MARKET ORIENTATIONERA.
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Some indus tr ies and organizat ions remain at the
produ ct ion -or ientat ion stage.
PRODUCTION ORIENTATION
PRODUCTION ORIENTATION SALES ORIENTATION
Other indu str ies and organizations have progressed only to the
sales-orientatio n stage.
Many indu str ies and organizat ions have progressed to the
market ing -or ientat ion stage.
PRODUCTION
ORIENTATION
SALES
ORIENTATION
MARKETING
ORIENTATION
Late 1800s Early 1930s Mid-1950s 1900s
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Designing a Customer-DrivenMarketing Strategy
Productionconcept
Productconcept
Sellingconcept
Marketingconcept
Societalconcept
Marketing Management Orientations
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1- Production phi losophy;it holds that consumers will favor products that
are available and highly affordable. Its
effective strategy in two situations:
-When a demand for a product exceeds the
supply.
-When the product cost is too high, and improve
productivity is needed to reduce the cost, to
gain market share.
Example;Aquafina water, McDonalds.
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PRODUCT ORIENTEDSTAGE
In the product oriented stage theDemand for goodsgenerallyexceeded supplytherefore the
primary focus was to efficientlyproduce large quantities. Findingthe customerwas viewed as arelatively minor function. Producers
had salesdepartments to carry outthe transactions.
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2- Product phi losophy;holds that consumers will favor a products that
offer the most in quality, performance,and
innovative features.
In this case the company should focus on the
continuous improving.
Examples;Nokia Mobile, Motorola, Sony..
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SALES-ORIENTATION STAGE. As the developed countries emerged from
the depression it became clear that the main
economic problem was no longer how to
produce efficiently, but rather it was how to
sell the resulting output. To make sales, the
companies had to rely on promotionalactivitiesto sell their prodcts.Thus
advertisingconsumed a larger share of a
firms resources
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3- Sell ing phi losophy;
Holds that the customer will not buy enough ofthe firms products unless it under-takes alarge-scale selling and promotion effort.
Example;Life-Insurance
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Market Orientation Stage
At the end of the World War ii therewas a strong pent up demandforconsumer goods created by wartime shortages.
As a result Manufacturing plantturned out tremendous quantity ofgoods.
Companies began realizing that
they had to produceWhatConsumers Wanted
Thus the era of Market Orientation.
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-Marketing phi losophy;Holds that achieving organizationalgoals depends onknowing the needsand wants of target markets and delivervalueto compete in the marketplace.The job is no t to f ind the r igh t
custom ers for your produc t , but the
r ight p roducts for you r customers.
Dell, Marriott, Tapal Tea
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Factory
Starting
point
Market
Focus
Existing
products
Means Ends
SellingPromoting
ProfitsThrough
Sales volume
Customer
needs
Integrated
Marketing
Profits
Through
Customer
Satisfaction
Sellingphilosophy
Marketing
philosophy
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MARKETINGCONCEPT
In Marketing oriented approach business gives
the highest priorityto the CUTOMER. This
philosophy holds that Achieving Organizational
Goalsdepends on determining the NEEDS andWANTSof the Target market& delivering the
DESIRED SATISFACTIONmore EFFECTIVELYand
EFFICIENTLYthan Competitors do.
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THE MARKETING CONCEPTIS A PHILOSOPHYTHAT EMPHASIZES. CUSTOMER ORIENTATION
AND COORDINATION OF MARKETINGACTIVITIES,TO ACHIEVE THE ORGANIZATIONS
PERFORMANCE OBJECTIVES.
A Revised philosophy, called the societalMarketing Concept, involves broadly
defining customer and taking a long-
term view of customerssatisfaction.
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DIFFERENCES BETWEEN MARKETING
AND SELLING.
Marketingis the process of Determiningcustomer wantsand then developing a productto satisfy that needand yield a Satisfactoryprofit. It is Externally focused.
Sellingis Producing a product and then tryingto Persuade customersto purchase it -- ineffect, trying to alter consumer demand. It isInternally focused.
2 U d t di th
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2. Understanding theMarketplace
and Customer Needs
States of deprivation
Physicalfood, clothing, warmth, safety
Socialbelonging and affection
Individualknowledge and self-expression
Needs
Form that human needs take as theyare shaped by culture and individualpersonality
Wants
Human wants backedby buying powerDemands
Customer Needs, Wants, and Demands
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CONSUMER NEEDS & WANTS
What is customer needs & wants? A needoccurs when a person feelsphysiologically deprived of basicnecessities such as food ,clothing,andshelter.
A wantis a felt that is shaped by apersons knowledge,culture,andpersonality.
Examples.
New diet coke, hify stereo system, surfexcel.etc etc.
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NEEDS+WANTS+DEMAND
WANTS+BUYING
POWER= DEMAND.
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Value & Satisfaction
If performance is lower thanexpectations, satisfaction is low
If performance is higher thanexpectations, satisfaction is high
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Customer Perceived Value
Customers evaluation ofthe differencebetween allthe benefitsand all the
costsof a marketing offerrelative to those ofcompeting offers.
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Customer Satisfaction
Dependent on the productsperceived performance
relative to a buyers
expectations.
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Value Proposition
The set of benefitsorvaluesa companypromises to deliver toconsumers to satisfytheir needs.
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What is a Market?
The set of actual and potentialbuyers of a product.
These people share a needorwantthat can be satisfiedthrough exchange
relationships.
WHAT IS MARKET?
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WHAT IS MARKET?
Potential consumersmake up a
market,which is:
People
With the desire and
With the ability to buy a specificproduct.
Target Market:
one or more specific groups of potential
consumers toward which anorganization directs its marketingprogram.
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Marketing process
Understand
The marketplace
And customer needs
And wants
Design a
Customer-drivenMarketing strategy
Construct aMarketing program
That delivers
Superior value
Build profitable
Relationships and
Create customer
delight
Capture value from
Customers to
Create profits and
Customer quality
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MARKETING PROCESS
The processof analyzingmarketingopportunities,selecting targetmarkets,developing the marketingmix,and managing the marketing
effort. MARKETING OFFER. Somecombination ofproducts,services,information,or
experiences offered to a market tosatisfy a need or want.
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Marketing program & CustomerValue
Marketing program: A plan that integratesthe
marketing mixto providegoods,service,or idea to
prospective buyers. Customer value: The unique combination of benefits
received by target buyers that
includes quality,price,convenience,on-timedelivery, & after-sale service.
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CORE MARKETING CONCEPT
CORE MARKETING
CONCEPTPRODUCTS &SERVICE
MARKETS
NEEDS, WANTS,
& DEMANDS
EXCHANGE,
TRANSACTION&
RELATIONSHIP
VALUE,
SATISFACTION
& QUALITY
Forces
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Forces
CONSUMER
MARKETING
PROGRAM
PRICE
PRODUCT PROMOTION
PLACE
TECHNOLOGICAL FORCES
C t ti S l &
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Contrasting Sales &Marketing Orientations
The most fundamental difference is asales orientation is internally focused.
Market orientation is externally focused.
A Sales Oriented Company makes a
product and persuade the prospects tobuy it.
In Marketing Orientation firms find outwhat is the Customer Demand before
going for mass production.
SELLING VS MARKETING
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SELLING VS. MARKETINGCONCEPT
SELLING CONCEPT MARKETING CONCEPT
Starting point MarketFactory
Focus
Ends
Means
Existing product
Selling & promotion
Profits through
sales volume
Consumer needs
Integrated marketing
Profits through
customer satisfaction
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ORGANIZATIONALMARKETING
To Create,Maintainor Changethe attitudes and Behaviour ofTARGETAUDIENCE towards an
Organization. OrganizationalMarketing calls for assessing theOrganizations Image and develop
a Marketing Planto improve it.
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MASS CUSTOMIZATION &RELATIONSHIP MARKETING
Mass Customisation:
Tailoring goods or services to thetastes of individual customers in
high volumes at relatively low cost. Relationship Marketing:
Linking the organization to itsindividual,customers,employees,su
ppliers,and other partners for theirmutual long-term benefits.
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Marketing Management
Demand ManagementFinding and increasing demand,
also changing or reducing
demand, such as in demarketing. Demarketing
Temporarily or permanentlyreducing the number ofcustomers or shifting theirdemand
Customer Relationship
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Customer RelationshipManagement
The processof building andmaintaining profitablecustomer relationshipsby
delivering superiorcustomer valueandsatisfaction.
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less loyalty high loyalty
High
Profitability
Low
profitability
Butterflies
Good fit between companys
Offerings and customers
Needs. High profit potential
True friends
Good fit between companys
Offerings and customers
Needs, highest profit potential
Strangers
Little fit between companysOfferings and customers
Needs, lowest profit potential
Barnacles
Limited fit between company'sOfferings and customers
Needs, low profit potential
Elements of a Modern Marketing
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Elements of a Modern Marketingsystems
Supplier
Company
Competitors
Marketing
IntermediariesFinal
Consumers
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MARKETING DEFINED
Marketing is the Business Functionthat Identifies Customer Needsand
Wants,determine which Target
Market the organization can bestserve, Design appropriate
Products,Servicesand programmesto serve these Markets, and call upon
everyone in the Organization to thinkand serve the Customer