A. ROAD MAP B. UNDERSTANDING MARKETING AND MARKETING PROCESS C. CORE MARKETING CONCEPTS

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1 Lesson 2 Lesson overview and learning objectives: In last Lesson we tried to understand the term of marketing its need and its impact on the organization. The focus in this discussion is to have concept of about different core concepts of the marketing and the increasingly important role of the marketing process in the ever-changing domestic and global business environment Today we will be covering following topics: A. ROAD MAP B. UNDERSTANDING MARKETING AND MARKETING PROCESS C. CORE MARKETING CONCEPTS Now we will discuss these topics one by one: A. Road Map We will cover following topics in our coming Lessons: Introduction-an overview of marketing. Understanding Marketing and Marketing Process Marketing Functions and Customer Relationship Management Marketing in Historical perspective and Evolution of Marketing Marketing Challenges in the 21st century Marketing Management Process Strategic Planning and Marketing Process The Marketing process Marketing Environment (Micro) Marketing Environment (Macro) Analyzing Marketing opportunities and developing strategies-mis Marketing Research Consumer Market-understanding the consumer Consumer Markets and consumer buying behavior Buying Behaviors for New Products and services Business Buying Behavior Market segmentation Developing the Marketing Mix--- 4 P s Product Planning Service Strategy Pricing Pricing Strategies Price Adjustment and Price Changes Distribution Channels

2 Logistics Management Retailing and wholesaling Promotion Planning Advertising Public Relations Personal Selling Sales Promotion Sales Force Management Integrating and analyzing the marketing plan Global Marketing Technological developments and Marketing Web base Marketing Social Marketing Social, Ethical and Consumer issues Review Marketing in a Glance B. Understanding Marketing and Marketing Process Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others is termed as marketing process. The marketing process consists of four steps: analyzing market opportunities; developing marketing strategies; planning marketing programs, which entails choosing the marketing mix (the four Ps of product, price, place, and promotion); and organizing, implementing, and controlling the marketing effort. Marketing is the organizational function charged with defining customer targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and business buyers face an abundance of suppliers seeking to satisfy their every need, companies and nonprofit organizations cannot survive today by simply doing a good job. They must do an excellent job if they are to remain in the increasingly competitive global marketplace. Many studies have demonstrated that the key to profitable performance is to know and satisfy target customers with competitively superior offers. This process takes place today in an increasingly global, technical, and competitive environment. The concept of markets brings one full circle to the concept of marketing. Suppliers Actors and Forces in a Modern Marketing System Environment Company (marketer) Competitors Marketing intermediaries End-user market 1). Sellers must search for buyers, identify their needs, design good products and services, set prices for them, promote them, and store and deliver them. 2). A modern marketing system includes all of the elements necessary to bring buyers and sellers together. This might include such activities as product development, research, communication, distribution, pricing, and service.

3 3). Each of the major actors in a marketing system adds value for the next level of the system. There is often critical interdependency among network members. There are certain factors that can influence the marketing process directly or indirectly termed as, actors and forces in marketing system. Let s have brief explanation of these actors and forces: Company or Marketing Organization -marketing plans must accommodate the needs of other functional areas of the firm to coordinate product/service delivery effectively. Suppliers - are the firms and persons that provide the resources needed by the company and competitors to produce goods and services. Marketing Intermediaries - include various middlemen and distribution firms as well as marketing service agencies and financial institutions. Customers -usually consist of consumer, industrial, reseller, government, and international markets. Competitors - are usually considered those companies also serving a target market with similar products and services, although broader definitions may apply. Publics - may consist of any group that perceives itself having an interest in the actions of the firm. Publics can have positive as well as negative influences on the company's objectives. Other than factors above there are certain macro environmental factors that can have impact or that can affect the marketing process. These forces and environmental factors will be discussed in more detail in coming Lessons. As described in a fig: important connections with customers, connections with marketing partners, and connections with the World around us are to be made in order to perform the marketing process. The main connections required in this regard are connecting with marketing partners: (These connections occur by (a) connecting with other marketing departments, (b) connecting with suppliers and distributors, and (c) connecting through strategic alliances). Marketing companies do not operate in a vacuum. They have to be interacting with intermediaries that have information to share, ideas to explore, and experiences that are invaluable. New technologies can bring this information to the decision maker in new rapid ways. Finally companies need to have information about the competitors and other environmental factors and are need to have updated knowledge because for success, change adoption with change occurrence is required otherwise company will not able to stay in this completive era. What image comes to mind when you hear the word marketing? Some people think of advertisements or brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk shows). The truth is, all of these and many more things make up the field of marketing because as we have discussed in our last Lesson that marketing is more than just advertisement or promotion. The Knowledge Exchange Business Encyclopedia defines marketing as planning and executing the strategy involved in moving a good or service from producer to consumer.

4 With this definition in mind, it s apparent that marketing and many other business activities are related in some ways. In simplified terms, marketers and others help move goods and services through the creation and production process; at that point, marketers help move the goods and services to consumers. But the connection goes even further: Marketing can have a significant impact on all areas of the business and vice versa. Lets have discussion on some basics of marketing: (already mentioned in first Lesson: (first the four P s, and then the six P s) Product What are you selling? (It might Product Price be a product or a service.) Price What is your pricing strategy? Place or distribution How are you distributing your product to get it into the marketplace? Customers Promotion How are you telling consumers in your target group about your product? Place Positioning What place do you want your product to hold in the consumer s mind? Personal relationships How are you building relationships with your target consumers? So based upon all this discussion marketing process can be defined as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others Promotion The sum of the above is called the marketing mix. It is important to have as varied a mix as possible in marketing efforts, since each piece plays a vital role and boosts the overall impact. Let s take a closer look at the basic P s of marketing and particularly at how they might affect what you do in business. Product Marketers identify a consumer need and then provide the product or service to fill that need. The marketer s job is to pinpoint and understand existing needs, expand upon them, and identify new ones. For example, because there are more singles and small families these days than in years past, marketers might see a need for products to be sold in smaller quantities and offered in smaller packages. How can this impact other professionals in the business/marketing process? Let s say your company has developed a new product that generates enormous consumer demand. Your marketing department may ask you to find a way to speed up the workflow in order to crank out more products faster. A year after the product is introduced, however, the market might be flooded with cheap imitations. Since one marketing strategy is to keep products pricecompetitive, a marketer may then ask you to find a way to make the product less expensively. This relationship works both ways. There may be production and industrial engineers who may see a way to change the work process that would create additional options for consumers. Those engineers will also be instrumental in design and development of

5 products for which human factors and ergonomics are important considerations. Maybe there s room to add another product line. For instance, that product X is still blue but new product Y is red. You can suggest this to your marketing department; it, in turn, would do research to gauge potential consumer demand for the new line. Price Ideally, a marketer wants to be proactive in setting price rather than simply react to the marketplace. To that end, the marketer researches the market and competition and plots possible price points, looking for gaps that indicate opportunities. When introducing a new product, the marketer needs to be sure that the price is competitive with that of similar products or, if the price is higher, that the consumers perceive they re getting more value for their money. Various other technical professionals can have an important impact on marketers pricing decisions. Again, you may be asked to determine if productivity can be enhanced so that the product can be manufactured and then sold for a lower price. Place or distribution What good is a product if you can t get it to people who want to purchase it? When marketers tackle this issue, they try to figure out what the optimum distribution channels would be. For example, should the company sell the product to distributors who then wholesale it to retailers or should the company have its own direct sales force? Marketers also look at where the product is placed geographically. Is it sold regionally, nationally, and internationally? Will the product be sold only in high-end stores or strictly to discounters? The answers to all of these questions also help shape how a product can be distributed in the best way. Such distribution questions are potentially of great significance to many professionals, including industrial and other types of engineers in a company. For instance, whether a product will be marketed regionally or internationally can have enormous implications for package design as well as obvious areas of the supply chain: logistics, transportation, distribution, and warehousing. Promotion Promotion encompasses the various ways marketers get the word out about a product most notably through sales promotions, advertising, and public relations. Sales promotions are special offers designed to entice people to purchase a product. These can include coupons, rebate offers, two-for-one deals, free samples, and contests. Advertising encompasses paid messages that are intended to get people to notice a product. This can include magazine ads, billboards, TV and radio commercials, Web site ads, and so forth. Perhaps the most important factor in advertising success is repetition. We re all bombarded with an enormous number of media messages every day, so the first few times a prospective customer sees an ad, it usually barely makes a dent. Seeing the ad over and over is what burns the message into people s minds. That s why it s good to run ads as frequently as possible.

6 Public relations refer to any non-paid communication designed to plant a positive image of a company or product in consumers minds. One way to accomplish this is by getting the company or product name in the news. This is known as media relations, and it s an important aspect of public relations. As with price, changes in demand created by promotions can have a direct impact on the work of many other professionals. Positioning By employing market research techniques and competitive analysis, the marketer identifies how the product should be positioned in the consumer s mind. As a luxury, high-end item? A bargain item that clearly provides value? A fun product? Is there a strong brand name that supports how the image is fixed in the consumer s mind? Once the marketer answers these kinds of questions, he or she develops, through a host of vehicles, the right image to establish the desired position. This, too, can affect the work you do. If an upscale image is wanted, the materials used in the product and packaging are likely to be different from those used in a bargain product a fact that could make the workflow significantly more complex. On the other hand, with your engineering knowledge, you may be able to suggest alternative materials that would preserve the desired image but be easier or less expensive to use. Personal Relationships In recent years, personal relationships have come to the forefront of marketing programs. Now even the largest companies want their customers to feel that they have a personal relationship with the company. Companies do this in two ways: They tailor their products as much as possible to individual specifications, and they measure customer satisfaction. The firm s contribution can significantly impact the area of personal relationships. If the work processes the firm creates cannot meet the customer time frames, the relationship will be damaged. If the firm develops manufacturing lines that cannot be tailored to fit individual customer needs, it will be difficult for the company to give consumers the perception of personal commitment. If salespeople promise delivery by a certain date, but the product cannot be produced on schedule, consumers will not be happy. Marketing, engineering, and many other professional activities are interrelated and interdependent disciplines. By understanding the role that marketers play in moving a good or service to consumers, others can operate more effectively, for the present and the future. C. Core Marketing Concepts To have more clear view about the marketing and to understand the marketing process first we should discuss the some basic concepts, which we will be discussing in the coming Lessons and what is the main essence of the marketing process and we can say that the marketing revolves around theses concepts. a. Needs, wants, and demandsneeds Human needs are the most basic concept Needs, wants, and demands Markets Core Marketing Concepts Products and Services Exchange, transactions, and relationships Value, satisfaction, and quality

7 underlying marketing. A human need is a state of felt deprivation. 1). Humans have many complex needs. a). Basic, physical needs for food, clothing, warmth, and safety. b). Social needs for belonging and affection. c). Individual needs for knowledge and self-expression. 2). These needs are part of the basic human makeup. Wants A human want is the form that a human need takes as shaped by culture and individual personality. Demands are human wants that are backed by buying power. 1). Consumers view products as bundles of benefits and choose products that give them the best bundle for their money. 2). People demand products with the benefits that add up to the most satisfaction. Outstanding marketing companies go to great lengths to learn about and understand their customer s needs, wants, and demands. The outstanding company strives to stay close to the customer. b. Products and Services A product is anything that can be offered to a market to satisfy a need or want. A service is an activity or benefit offered for sale that is essentially intangible and does not result in the ownership of anything. 1). The concept of product is not limited to physical objects and can include experiences, persons, places, organizations, information, and ideas. 2). Be careful of paying attention to the product and not the benefit being satisfied. 3). Marketing myopia is caused by shortsightedness or losing sight of underlying customer needs by only focusing on existing wants. c. Value, satisfaction, and quality Customer value is the difference between the values that the customer gains from owning and using a product and the costs of obtaining the product. Customers do not often judge product values and costs accurately or objectively--they act on perceived value. Customer satisfaction depends on a product s perceived performance in Delivering value relative to a buyer s expectations. If performance exceeds expectations, the buyer is delighted (certainly a worthy goal of the marketing company). 1). Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. 2). The aim of successful companies today is total customer satisfaction. 3). Customer delight creates an emotional affinity for a product or service, not just a rational preference, and this creates high customer loyalty. 4). Quality has a direct impact on product or service performance. Quality is defined in terms of customer satisfaction. The term total quality management (TQM) is an approach in which all the company s people are involved in constantly improving the quality of products,

8 services, and marketing processes. 1). In the narrowest sense, quality can be defined as freedom from defects. 2). Quality has a direct impact on product or service performance. Quality is defined in terms of customer satisfaction. 3). The fundamental aim of today s total quality movement has become total customer satisfaction. d. Exchange, transactions, And relationships Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. Exchange is only one of many ways to obtain a desired object. Exchange is the core concept of marketing. Conditions of exchange include: 1. At least two parties must participate. 2. Each must have something of value to the other. 3. Each must want to deal with the other party. Each must be free to accept or reject the other's offer Whereas exchange is a core concept of marketing, a transaction (a trade of values between two parties) is marketing s unit of measurement. Most involve money, a response, and action. Transaction marketing is part of a larger idea of relationship marketing. Beyond creating short-term transactions, marketers need to build long- term relationships with valued customers, distributors, dealers, and suppliers. Ultimately, a company wants to build a unique company asset called a marketing network (the company and all its supporting stakeholders). The goal of relationship marketing is to deliver long-term value to the customer and thereby secure customer satisfaction and retention of patronage. 1). Competition is increasingly between networks. 2). Build a good network of relationships with key stakeholders and profits will follow. e. Markets The concepts of exchange and relationships lead to the concept of a market. A market is the set of actual and potential buyers of a product. 1). Originally a market was a place where buyers and sellers gathered to exchange goods (such as a village square). 2). Economists use the term to designate a collection of buyers and sellers who transact in a particular product class (as in the housing market). 3). Marketers see buyers as constituting a market and sellers constituting an industry. 4). Modern economies operate on the principle of division of labor, where each person specializes in producing something, receives payment, and buys needed things with this money. Thus, modern economies abound in markets. 5). Marketers are keenly interested in markets.