INTRODUCTION TO PRINCIPLES OF MARKETING

UNDERSTANDING MARKETING AND MARKETING PROCESS Part-1 UNDERSTANDING MARKETING AND MARKETING PROCESS

CHAPTER-1 MARKETING – “Managing profitable customer relationships”. Definition of Marketing Needs, Wants and Demands Marketing offers- Products, Services and Experiences

Market is the set of all actual and potential buyers of a product or service.

Originally the term Market stood for the place where buyers and sellers gathered to exchange their goods, such as a village square. Marketers work to understand the needs and wants of specific markets and to select the markets that they can serve best. In turn they develop products and services that create value and satisfaction for customers in these markets. The result is profitable long-term customer relationships.

Define marketing? Marketing is defined as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products of value with others.

Many people think of Marketing only as selling and advertising Many people think of Marketing only as selling and advertising. And no wonder- every day we are bombarded with television commercials, newspaper ads, direct mail offers, sales calls etc. However, selling and advertising is only the tip of the marketing iceberg. Although they are important, they are only two of many marketing functions.

Today, Marketing must be understood not in the old sense of making a sale- but in the new sense of Satisfying customer needs.

To explain the above definition we will examine the following important core marketing concepts. NEEDS: The most basic concept underlying marketing is that of human need. ‘Human needs are states of felt deprivation’. They include basic physical needs for food, clothing, warmth and safety.

WANTS: Are the form human needs take as they are shaped by culture and individual personality. Example: If an American needs food wants big Mac Donald, French fries etc. if a person in Mauritius needs food wants a mango, rice, lentils and beans etc. ‘Wants are shaped by one’s society and are described in terms of objects that will satisfy needs’.

DEMANDS: Given there wants and resources, people demand products with benefits that add up to the most value and satisfaction. ‘When back by buying power wants become demand’.

What are marketing offers? MARKETING OFFERS- ‘Products, Services and Experiences’

Marketing offers are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Marketing offers are not limited to physical products. In addition to tangible products, marketing offers include services, activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, tax preparation, and home repair services.

‘Marketing occurs when people decide to satisfy needs and wants through exchange’. Exchange is the act of obtaining a desired object by offering something in return. Transaction consists of a trade of value between two parties.

CUSTOMER VALUE AND SATISFACTION Consumers usually face a broad range of products and services offered to them that might satisfy a given need. How do they make their choice among the given Marketing offers? Consumers make choices based on their perception of the value and satisfaction that various products and services deliver.

Customer Value is the difference between the values the customer gains from owning and using a product and the costs of obtaining the product. Customer Satisfaction with a purchase depends on how well the product’s performance lives up to the customer’s expectations. Customer satisfaction is a key influence on future buying behavior.

Satisfied customers buy again and tell others about their good experiences. Dissatisfied customers often switch to competitors and discourage the products to others.

CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction.

Thus, today’s companies are going beyond designing strategies to attract new customers and create transactions with them. They are using customer relationship management to retain current customers and build profitable, long term relationships with them. The new view is that ‘Marketing is the science and art of finding, retaining and growing profitable customers’.

MARKETING MANAGEMENT ‘The Art and Science of choosing target markets and building profitable relationships with them’. This involves getting, keeping and growing customers through creating, delivering and communicating superior customer value. Thus, marketing management involves managing demand, which in turn involves managing customer relationships.

THE MARKETING ENVIRONMENT CHAPTER-2 THE MARKETING ENVIRONMENT

Marketing environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.

The Marketing environment is made up of (1) Microenvironment and (2) Macro environment

MICROENVIRONMENT The actors close to the company that effect its ability to serve its customers- the company, suppliers, marketing intermediaries, customers, competitors.

COMPANY CUSTOMER COMPETITOR MARKETING INTERME DIARIES SUPPLIERS MICRO ENVIRON MENT

THE COMPANY In designing marketing plans, Marketing Management takes other company groups into account. Groups such as top management, finance, research & development, purchasing department etc. All this interrelated groups form the internal environment.

THE SUPPLIERS Suppliers form an important link in the company’s overall customer value delivery system. They provide the resources needed by the company to produce its goods and services.

MARKETING INTERMEDIARIES Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers.

CUSTOMERS The company needs to study all the types of customer markets. Consumer markets consists of individuals and households that buy goods and services for personal consumption. Business markets buy for further processing or in production process. Reseller markets buy to resell at profit.

COMPETITORS The Marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors.

MACROENVIRONMENT The macro environment of marketing pose opportunities and threats to the company that effect its ability to serve its customers- The Major forces in the company’s macro environment are Demographic environment, Natural environment, Technological environment, political environment, cultural environment and economic environment.

MACRO TECNOLOGICAL ECONOMIC CULTURAL POLITICAL NATURAL DEMOGRAPHIC ENVIRONMENT ECONOMIC CULTURAL POLITICAL NATURAL DEMOGRAPHIC MACRO

DEMOGRAPHIC ENVIRONMENT The demographic environment is of major interest to marketers because it involves people, and people make up markets. Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics.

Natural environment The natural environment involves the natural resources that are needed as inputs by marketers. Marketers should be aware of several trends in the natural environment. It involves growing shortages of raw materials and increased pollution.

Technological environment The technological environment is perhaps the most dramatic force now shaping our destiny. Forces that create new technologies, creating new products and marketing opportunities. The technological environment is changing rapidly.

POLITICAL ENVIRONMENT Political environment consists of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society.

CULTURAL ENVIRONMENT The cultural environment is made up of forces that affect a society’s basic values, perceptions, preferences and behaviors. People grow up in a particular society that shapes their basic beliefs and values.

ECONOMIC ENVIRONMENT The economic environment consists of factors that affect consumer purchasing power and spending patterns. Nations vary greatly in their levels and distribution of incomes. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world markets.