8/13/2019 2013 Mkt Chapter 01

1/47

PRINCIPLES OF

MARKETINGNADEEM FAROOKI.

Dean of Management Sciences / Director Academics.

CONTACT: nadeemfarooki04@yahoo.com

INTRODUCTION AND CHAPTER NO 01.

BOOK RECOMMENDED. KOTLER &ARMSTRONG

13thEDITION. PRINCIPLES OFMARKETING.CHAPTER NO 01

Completed in 7 lectures. One hour each.

8/13/2019 2013 Mkt Chapter 01

2/47

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.

8/13/2019 2013 Mkt Chapter 01

3/47

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.

8/13/2019 2013 Mkt Chapter 01

4/47

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.

8/13/2019 2013 Mkt Chapter 01

5/47

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.

8/13/2019 2013 Mkt Chapter 01

6/47

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.

8/13/2019 2013 Mkt Chapter 01

7/47

CAUSES OF THE GREATDEPRESSION

Stock Market crash,1929.

Economic downturnaccelerated by market crash.

Between 1929and1933,100,000businessesfailed.

Corporate profits fell from$10bto $1b.

8/13/2019 2013 Mkt Chapter 01

8/47

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.

8/13/2019 2013 Mkt Chapter 01

9/47

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.

8/13/2019 2013 Mkt Chapter 01

10/47

THE EVOLUTION OF MARKETORIENTATION

PRODUCTION ERA.

PRODUCT ERA.

SALES ERA. MARKETING CONCEPT ERA.

MARKET ORIENTATIONERA.

8/13/2019 2013 Mkt Chapter 01

11/47

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

8/13/2019 2013 Mkt Chapter 01

12/47

Designing a Customer-DrivenMarketing Strategy

Productionconcept

Productconcept

Sellingconcept

Marketingconcept

Societalconcept

Marketing Management Orientations

8/13/2019 2013 Mkt Chapter 01

13/47

8/13/2019 2013 Mkt Chapter 01

14/47

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.

8/13/2019 2013 Mkt Chapter 01

15/47

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.

8/13/2019 2013 Mkt Chapter 01

16/47

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..

8/13/2019 2013 Mkt Chapter 01

17/47

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

8/13/2019 2013 Mkt Chapter 01

18/47

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

8/13/2019 2013 Mkt Chapter 01

19/47

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.

8/13/2019 2013 Mkt Chapter 01

20/47

-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

8/13/2019 2013 Mkt Chapter 01

21/47

Factory

Starting

point

Market

Focus

Existing

products

Means Ends

SellingPromoting

ProfitsThrough

Sales volume

Customer

needs

Integrated

Marketing

Profits

Through

Customer

Satisfaction

Sellingphilosophy

Marketing

philosophy

8/13/2019 2013 Mkt Chapter 01

22/47

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.

8/13/2019 2013 Mkt Chapter 01

23/47

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.

8/13/2019 2013 Mkt Chapter 01

24/47

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

8/13/2019 2013 Mkt Chapter 01

25/47

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

8/13/2019 2013 Mkt Chapter 01

26/47

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.

8/13/2019 2013 Mkt Chapter 01

27/47

NEEDS+WANTS+DEMAND

WANTS+BUYING

POWER= DEMAND.

8/13/2019 2013 Mkt Chapter 01

28/47

Value & Satisfaction

If performance is lower thanexpectations, satisfaction is low

If performance is higher thanexpectations, satisfaction is high

8/13/2019 2013 Mkt Chapter 01

29/47

Customer Perceived Value

Customers evaluation ofthe differencebetween allthe benefitsand all the

costsof a marketing offerrelative to those ofcompeting offers.

8/13/2019 2013 Mkt Chapter 01

30/47

Customer Satisfaction

Dependent on the productsperceived performance

relative to a buyers

expectations.

8/13/2019 2013 Mkt Chapter 01

31/47

Value Proposition

The set of benefitsorvaluesa companypromises to deliver toconsumers to satisfytheir needs.

8/13/2019 2013 Mkt Chapter 01

32/47

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?

8/13/2019 2013 Mkt Chapter 01

33/47

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.

8/13/2019 2013 Mkt Chapter 01

34/47

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

8/13/2019 2013 Mkt Chapter 01

35/47

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.

8/13/2019 2013 Mkt Chapter 01

36/47

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.

8/13/2019 2013 Mkt Chapter 01

37/47

CORE MARKETING CONCEPT

CORE MARKETING

CONCEPTPRODUCTS &SERVICE

MARKETS

NEEDS, WANTS,

& DEMANDS

EXCHANGE,

TRANSACTION&

RELATIONSHIP

VALUE,

SATISFACTION

& QUALITY

Forces

8/13/2019 2013 Mkt Chapter 01

38/47

Forces

CONSUMER

MARKETING

PROGRAM

PRICE

PRODUCT PROMOTION

PLACE

TECHNOLOGICAL FORCES

C t ti S l &

8/13/2019 2013 Mkt Chapter 01

39/47

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

8/13/2019 2013 Mkt Chapter 01

40/47

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

8/13/2019 2013 Mkt Chapter 01

41/47

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.

8/13/2019 2013 Mkt Chapter 01

42/47

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.

8/13/2019 2013 Mkt Chapter 01

43/47

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

8/13/2019 2013 Mkt Chapter 01

44/47

Customer RelationshipManagement

The processof building andmaintaining profitablecustomer relationshipsby

delivering superiorcustomer valueandsatisfaction.

8/13/2019 2013 Mkt Chapter 01

45/47

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

8/13/2019 2013 Mkt Chapter 01

46/47

Elements of a Modern Marketingsystems

Supplier

Company

Competitors

Marketing

IntermediariesFinal

Consumers

8/13/2019 2013 Mkt Chapter 01

47/47

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