MGT-519 STRATEGIC MARKETING AAMER SIDDIQI

LECTURE 2

RECAP Personal Introduction Course Requirements Course Description Course Objectives Course Contents Definition of Marketing levels of marketing STP+ branding Needs Maslow's hierarchy of needs

U NDERSTANDING N EEDS, W ANTS & D EMAND Need: a basic requirement that an individual has to satisfy to continue to exist Maslow’s Hierarchy of Needs 5 level Pyramid Higher needs only come into focus when lower needs are met Once individual moved to next level, needs in lower level no longer prioritized. If a lower set of needs are deficient; temporarily re-prioritize those needs but will not permanently regress to the lower level Humans have different needs based on demographics

Want: A strong desire for something but it’s not vital to continued existence Customer needs are broad, wants are usually narrow Wants shaped by social and cultural forces, media and marketing activities A want is specific and goes beyond the basic to include aspirational values and need satisfaction This diversity of wants and needs allows variety of ‘solutions’ to be developed

Demand is a want for a specific product/service supported by the ability and willingness to pay for it Concept of demand fundamental to marketing Customers who want and can pay for the product/service. e.g. many consumers want a Ferrari car, but few are able and willing to buy Marketers spend time trying to predict patterns & level of demand of products/services and the needs/wants of the consumers Businesses influence demand by designing products/services that are; –Attractive –Work well –Are affordable –Are available

T HE E XCHANGE P ROCESS To understand Marketing we need to understand the exchange process There must be two parties, each with unsatisfied needs. For the seller it is money Each must have something to offer. Marketing involves voluntary “exchange” relationships where both sides must be willing parties. Thus, a consumer who buys a soft drink for Rs must value the soft drink, available at that time and place, more than the money. Conversely, the vendor must value the money The parties must be able to communicate. An exchange process exists when two or more parties benefit from trading something of value.

T HE E XCHANGE P ROCESS (C ONT ’ D ) Because of marketing, the buyer’s need for a certain product is satisfied, and the seller’s business is successful Marketing can contribute to the continuing improvement of a society’s overall standard of living So we can see that Marketing is said to have a positive effect on an economy and helps satisfy needs

U TILITY Utility : Measure of the relative satisfaction/desirability of consumption of various goods and services. Utility is a concept within economics that is related to marketing. Product /service and their marketing form the foundation of the exchange process create a utility. marketing is an activity that creates from, place, time and ownership utility-Richard Buskirk 1. Form utility: Usefulness of a product due to its form (raw materials to finished products). Product planning and development activities create form utility. 2. Time utility: Product availability when consumers want to purchase it. Storage of product after production 3. Place utility: Flow of goods from the place of abundant to the place creates place utility.

U TILITY (C ONT ’ D ) –From producer to consumer. making a product available in a location convenient for customers, the. 4. Ownership utility: Orderly transfer from seller to buyer via a sales transaction. Production process creates Form Utility Marketing function creates time, place, and ownership utility Greater the utility, the greater the demand and potentially the more successful the business

C OMPETITIVE A DVANTAGE Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm's cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation - Michael Porter, Competitive Advantage, 1985:3

Firm's relative position within an industry is given by its choice of competitive advantage (costleadership vs. differentiation) and its choice of competitive scope Competitive scope distinguishes firms targeting broad industry segments and firms focusing on narrow segment “All things to all people" is a sure recipe for mediocrity - getting "stuck in the middle". Treacy and Wiersema (1995) - Firm to emphasize one of three “value disciplines” –product leadership, –operational excellence, and –customer intimacy Service dominant approach to marketing C OMPETITIVE A DVANTAGE (C ONT ’ D )

Discovering new and better ways to compete Act of innovation not invention shifts competitive advantage when Rivals fail to perceive new way of competing or unwilling/unable to respond Causes of innovations –new technologies –new or shifting buyer needs –the emergence of a new industry segment –shifting input costs or availability –changes in government regulations Significant advantages to early movers responding to innovations Diffusion of innovations (1962) - Everett Rogers drew a variety of outlines together to develop a framework C REATION OF C OMPETITIVE A DVANTAGE

–Becoming aware of the new product –Seeking information about it –Developing favorable attitudes toward it –Trying it out in some direct or indirect way –Finding satisfaction in the trial –Adopting the product into a standing usage or repurchase pattern Roger’s 5 Adopter characteristics Innovator: Purchase the product at the beginning of the lifecycle; not afraid of trying new products that suit their lifestyle and will also pay a premium for that benefit Early Adopters: Opinion leaders and naturally adopt products after the innovators; crucial because adoption by them means the product becomes acceptable, spurring on later purchasers C REATION OF C OMPETITIVE A DVANTAGE (C ONT ’ D )

Early Majority: Spurred on by the early adopters; wait to see if the product will be adopted Late Majority: Usually purchase the product at the late stages of majority within the lifecycle Laggards: Usually purchase the product near the end of its life; ‘wait and see’ group (wait to see if the product will get cheaper) C REATION OF C OMPETITIVE A DVANTAGE (C ONT ’ D )

S UMMARY Definition of Marketing 3 levels of Marketing The value of Marketing Understanding Needs, Wants and Demands The exchange process Utility Competitive advantage Creation of Competitive advantage

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