Chapt 1A - Markets and Mktg

8/3/2019 Chapt 1A - Markets and Mktg

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1. Marketing Orientation1. Marketing Orientation

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing - Exchanged

o exchanging own bred animals for food and clothes in the primitive (ancient)

world

- Bartering

o one person offering to exchange his spare food for someone elses spare

clothes, or his own spare beef for anothers spare vegetables

- Specialization

o one person might not produce any food himself, but might get food from

other people in exchange for curing their sick animals

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1.1 History of markets and marketing - Money

o people avoid exchanging goods directly for other goods or services by

inventing money

o for a trade to take place, both parties had to want what the other party had.The demands of growing business and trade caused a money system to

be developed

- Market

o there were lots of different farmers and lots of vets during primitive world

o there were several markets: a beef market, a mutton market and a market

for veterinary services

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1. Marketing Orientation1. Marketing Orientation~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1.1 History of markets and marketing - Production

o became concentrated in big factories, towns grew bigger

- Tradeo increased as people became more likely to buy goods rather than to

produce themselves

o producers and markets to which they sold became geographically

separated

o businessmen started to think more about their customers

- Production Orientation

o they would concentrate on making things efficiently, and assume that

someone would buy whatever they made

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1.1 History of markets and marketing - Mass production techniques

o increased the number and types of goods on the market

o increased productivity reduced unit costs

- Demand

o with new cheaper products on offer, many business problems centered on

production and selling rather than marketing

o It was more important to produce enough of a product to satisfy strong

demand than to think about customer needs market for manufactured

goods

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1.1 History of markets and marketing - Competition

o great Britain dominated world trade until the First World War where

countries emerged to compete

o the US, Japan and Germany took much of Britains share in the market formanufactured goods

o presently, UK businesses have to compete effectively

o marketing enables them to identify customer needs and to find products

that satisfy those needs

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1.1 History of markets and marketing - Competition

o production no longer the main problem not excess supply rather than excess

demand which is the problem. Focus has switched from how to produce

enough (supply factory) to how to increase demand (demand factory)

o marketing techniques have been developed as a result of this switch in

orientation

- Marketing Techniques

o Mass marketing techniques were applied to selling fast-moving consumer

goods

o Marketing techniques have grown in importance as competition and consumer

choice have increased.

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1.2 Marketing defined

Definition 1

Marketing is the management of

exchange relationships

o all relationships between the organization and the outside world, especially

when they relate to customers, need to be managed

o organization will be judged by customers, suppliers, competitors and

others according to their personal experience

o e.g. manner of telephone operator or tone of a receptionists voice

contacts are vital in creating a positive image for the organization with

customers and the public

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Definition 2

Marketing is the management process

which identifies, anticipates andsupplies customer requirements

efficiently and profitably

o definition is that of the Chartered Institute of MarketingChartered Institute of Marketing

o emphasizes the wide scope of marketing, ranging from initial identification

of customer needs by means of research, right through to eventual

profitable satisfaction of those needs

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Definition 3

Marketing is concerned with meeting

business objectives by providingcustomer satisfactions

o stresses the importance of the customer and more particularly, customer

satisfaction

o when people buy products or services they do not simply want the

products, they also want the benefits from using the products or services

o products and services help to solve a customer's problems. It is the

solution to these problems that customers are buying

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Definition 4

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

o definition provided by American MarketingAssociationAmerican MarketingAssociation

o expands on the previous one and considers what is involved in marketing

to satisfy both the customer and the company

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These definitions serve to demonstrate useful distinctionsuseful distinctions betweenmarketing as a thing that is done and marketing as an approach tohow something is achieved.

There must be a systematic method and there must be a purpose:

o the main purpose is the mutual satisfaction of both supplier and customer

o the method is the process of shaping and managing the marketing mix in

a way which takes into consideration the needs of the customer and the

goals of the organization at one and the same time

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1.3 The Marketing Concept - Consumer wants

o Based on what consumer wants

o Would people mind paying extra?

o How to satisfy the consumer while still making a profit?

o

or

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1.4 Customer Orientation- Customer satisfactiono without customers, you dont have a business

o satisfying customers needs at a profit should be the central drive of any

company

- Sales orientation

o focuses on the needs of the seller

o Preoccupied with sellers need to convert his product into cash

The marketing conceptmarketing concept suggests that companies should focus their

operations on their customers needs rather than be driven solely by the

organizations technical competence to produce a particular range of

products or services or by a belief in the sales force

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1. Marketing Orientation~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1.5 Implications for businesses

When a company understands consumers, it can

design products to appeal to them

Therefore, a company needs to:

o an understanding of the market, based on research and not on

unsupported hunches (guesses)

o a spirit of innovation: the company must be willing to change ascustomers requirements change

o skilled direction and administration of its marketing activities

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1.6 The history of production and marketing orientations

Definition:

Production orientationProduction orientation describes a company

which makes what it thinks the customerit thinks the customer

will buywill buy. It may make good products but will

not take the trouble to find out whether there

is a market for them.

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Organizations realized that in the face of strong

competition they had to get closer

to their markets and to their customers.

Amarket orientated organizationAmarket orientated organization will have:

33 a commitment to meeting the needs of customers more successfully than the

competition

33 a structure and process of operation which are designed to achieve this aim

o all activities must be coordinated around the needs of the customer when

making decisions about what to produce and subsequently, how and where

the product or service is to be made available.

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1. Marketing Orientation~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Marketing concept has three elements:

33 Customer orientation

33 Coordination of market led activities

33 Profit orientation

1.7 The different orientations in modern practice- Production orientated companies

o believe that consumers will buy products that are widely available and cheap

o managers concentrate on achieving high production efficiency and wide distribution

- Sales orientated companies

o make products which are not carefully tailored to consumers needs, but will then use

aggressive advertising and selling methods

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- Market orientated companieso only commit itself to meeting the needs of the customer

o will set up right structures and processes

o Establish customer service departments, often in highly competitive and

low profit margin businesses such as retailing

Advantages of Marketing Orientated Companies:

o Product tailored to the needs of the customer

o Research and development enables the market-led company to

keep ahead of the competition

o Opportunities arise out of a continuous research thrust

o Knowing your customer enables you to communicate more efficiently,

with cost effective marketing communications

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1. Marketing Orientation1. Marketing Orientation~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Advantages of Marketing Orientated Companies: (contd.)

o Produce what you can sell rather than sell what you produce

o Leads to long-term relationships with high customer satisfaction

Disadvantages of Marketing Orientated Companies:

o Extensive market research needed into customer needs/wants

o Expensive and time consuming time delay for product to market

o Me-too products that can undercut because there are no costs of

research and development

o Irrational consumer behavior no amount of research will alter the fickle

nature of the average customer

o Dynamic nature of market place todays products become tomorrows

throwaways

o Too narrow a focus

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Advantages of Sales Orientated Companies:o Product manufactured relatively inexpensively with minimum time delay to

market

o Flexibility within production capabilities which ensures swift response to supply

demand imbalance

o

Suits small and medium sized business units that are not particularly wellfinanced minimizes cash flow problems

Disadvantages of Sales Orientated Companies:

o Sell what you produce as opposed to produce what will sell no product

innovation

o Needs extensive sales promotion effort to sell product

o No opportunity for long-term profitable growth concentration on short-term

transactional approach

o Little emphasis on customer satisfaction means limited loyalty and word of

mouth marketing

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1.8 Marketing and the business system1.8 Marketing and the business system

- Distribution system

o system for getting goods to customers

o

involves lorries, wholesalers and retailers andmail order

o also includes warehouses and the system for

agreeing to supply customers

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Features of distribution system:33 It may be long or short

o e.g. of short chain is an airline buying a new aircraft from manufacturer

o e.g. of long chain is pocket calculators made in the Far East and sold to

Britain, involving the maker, an export agent, a shipping company, a

wholesaler and retailers

33 It may be owned by the producer (branches)

o owned by producers - e.g. manufacturer of plywood with its own furniture

shops

o owned by independent - e.g. book wholesalers and bookshops which arenot owned by publishers

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Features of distribution system:33 Final customers

o the customers at the end of the system

o they may also be producer of other goods e.g. customers of the car

headlamp bulbs are mostly car manufacturers)

- Information systemo gets information from customers perhaps by conducting interviews or

questionnaire

o sends information to customers by advertising, catalogues and other forms

of publicity. The main goal is to get across the special features of aThe main goal is to get across the special features of a

product, which make it a better buy than its rivalsproduct, which make it a better buy than its rivals this message is

called the products unique selling propositionunique selling proposition, or USP.

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The flow of influence33 Pest factors

o Political and legal factors e.g. consumer boycotts of countries with

oppressive regimes (government) and laws on employment, advertising,

product safety and the granting of credit to customers

o Economic influences such as income levels, employment levels, the rate

of inflation and the rate of economic growth

o Social influences such as fashion and peer group pressure

o Technological influences such as the growth of computer-aided

manufacturing and the availability ofCD-ROM to consumers

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2. Marketing Issues2. Marketing Issues~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

2.1 Differentiation and product positioning2.1 Differentiation and product positioning Definition

Product differentiationProduct differentiation occurs when specific

products or brands each have a specific

combination of costs and benefits which aparticular set of potential customers seek. This

allows the product to be positioned in the market

for specific customerso In marketing, product differentiation (also known simply as differentiation is the

process of distinguishing the differences of a product or offering from others, to make it

more attractive to a particular target market. This involves differentiating it from

competitors products as well as one's own product offerings.

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2.2 Contact and distribution2.2 Contact and distribution Definitions

ContactContactis ensuring that the customers

know about a product or service.

DistributionDistribution is ensuring that products

or services are made accessible and

available to consumers or buyers.

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2.3 Marketing in business2.3 Marketing in business Definitions

Marketing is the performance of business activitiesMarketing is the performance of business activities

that direct the flow of goods and services fromthat direct the flow of goods and services from

organizations to their customers.organizations to their customers.

Marketing involves the business understanding theMarketing involves the business understanding the

needs and wants of customers and adapting theneeds and wants of customers and adapting the

operations to deliver the right goods andoperations to deliver the right goods andservices more efficiently and effectively than itsservices more efficiently and effectively than its

competitors.competitors.

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2.4 Needs and profit2.4 Needs and profit Definitions

Marketing is concerned with the matching of anMarketing is concerned with the matching of an

organizations capabilities with consumersorganizations capabilities with consumers

wantswants

Marketing is the process of determining consumerMarketing is the process of determining consumer

demand for a product, motivating its sale anddemand for a product, motivating its sale and

distributing it into ultimate consumption at adistributing it into ultimate consumption at aprofit.profit.

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Chapt 1A - Markets and Mktg

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