MGT301 Principles of Marketing Lecture-4

Summary of Lecture-3

Information Buying Risk Taking Selling Financing Transporting Standardizing and Grading Storing Marketing Functions

Demarketing  …Marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but only to reduce or shift it.

Customer Relationship Management

 Loyal customers provide more and more credible referrals  But the angry gossip of disloyal customers can devastate a firm!

Today’s Topics

Marketing in Historical perspective and Evolution of Marketing

How has Marketing Changed Over Time?

How it Started

1.The Production Concept (Mass Production) (prior to 1920’s): Mass lowest cost affordable price No options for consumer

2. The Product Concept ( ’s): Build a More Innovative Product Build a Better Mousetrap

3. Selling Concept (1940’s-1980’s) - Few product-- sell, sell, sell! - Few product-- sell, sell, sell! - Largest volume at any price - Largest volume at any price - Focus on one time transaction - Focus on one time transaction

Until the ‘90’s “Transaction Marketing” – focus one time sale “Transaction Marketing” – focus one time sale Focus on product Focus on product

4. Marketing Concept (1990’s and beyond) -Idea: identify most profitable customers who value your service/product the most and build relationships with those individuals -Idea: identify most profitable customers who value your service/product the most and build relationships with those individuals - Customers become more demanding/empowered - Customers become more demanding/empowered - Able to produce based on customers needs: - Able to produce based on customers needs: - Technological advances allow for customer tracking databases

 Relationship Marketing (1990 ’ s)  Definition: Marketing is the process of establishing and maintaining mutually beneficial exchange relationships with customers and other stakeholders  KEEP CUSTOMERS FOR LIFE!!!

Marketing Philosophies

SOCIETAL MARKETING CONCEPT PRODUCTION CONCEPT PRODUCT CONCEPT MARKETING CONCEPT KEY MARKETING PHILOSOPHIES SELLING CONCEPT

The Production Concept..Holds that consumers will favor products that are available and affordable. Implies work towards mass production and low cost

The Product Concept …Assumes customers favor products that offer the most quality, performance, and features. Implies firm should strive to continually upgrade product and product features.

…The idea that customers will not buy enough of the organization’s products unless the organization undertake a large scale selling and promotion efforts. The Selling Concept

..Business assumption that consumers will resist purchasing nonessential goods and services with the attitude toward marketing that only creative advertising and personal selling can overcome consumers’ resistance and convince them to buy.

Inside-out perspective: Assumes people need to be sold on whatever it is the firm has decided to offer. 1st: Decide what to produce; 2nd: Figure out how to get people to buy what you have. Implies lots of selling/promotional activities are needed to move product

After WWII Shortages in goods ended. Economy changed from a seller’s market to a buyer’s market. Seller’s market: marketplace characterized by a shortage of goods and/or services. Buyer’s market: marketplace characterized by an abundance of goods and/or services.

The Marketing Concept …Holds that achieving organizational goals depends upon determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than do competitors.

Marketing Concept Components  Means of achieving goals  determine needs and wants –implies research and/or appropriate assumptions  Target markets –implies clear target groups: people whose needs/want you will try to fill  Satisfaction  Competitors acknowledged

Marketing Era With a continually increasing buyer’s market, marketing would no longer be regarded as a supplemental activity performed after completion of the production process. The marketer would play a lead role in product planning. Marketing and selling would no longer be synonymous terms.

Marketing Concept Vs. Selling Concept Marketing Concept: Begin with customer needs Develop 4 Ps in light of customer needs “Have what you can get rid of” Selling Concept: Begin with what firm wants to produce Given products, persuade customers to buy “Get rid of what you have.”

Selling A company makes a product and then uses various selling methods to persuade customers to buy it. Marketing Company finds out what the customer wants and develops a product to satisfy those wants while yielding a profit.

SOCIETAL MARKETING CONCEPT: ….in a way that maintains or improves the consumer’s and the society’s well-being. Typical thinking in 1990 Marketer must act in a socially responsible manner. External environment’s influence on firm’s marketing program.

Society (Human Welfare) Society (Human Welfare) Consumers (Satisfaction) Consumers (Satisfaction) Company (Profits) Company (Profits) Societal Marketing Concept Societal Marketing Concept

Relationship Era

 Relationship marketing: development and maintenance of long-term, cost-effective exchange relationships with individual customers, suppliers, employees, and other partners for mutual benefit.  Strategic alliances: partnerships with vendors and retailers play major roles in relationship marketing.4

Relationship Marketing

Effective relationship marketing relies heavily on information technologies such as computer databases that record customers’ tastes, price preferences, and lifestyles along with the increase of electronic communications. Some examples are frequent buyer clubs/cards.)

Marketing Management  Marketing management is “the art and science of choosing target markets and building profitable relationships with them.”  Creating, delivering and communicating superior customer value is key.

Marketing Management Customer Management: –Marketers select customers that can be served well and profitably. Demand Management: –Marketers must deal with different demand states ranging from no demand to too much demand.

Evolving Views of Marketing’s Role

a. Marketing as an equal function b. Marketing as a more important function Finance Production Marketing Human resources Finance Human resources Marketing Production

c. Marketing as the major function d. The customer as the controlling factor Marketing Finance Human resources Production Customer Human resources Finance Production Marketing

e. The customer as the controlling function and marketing as the integrative function Customer Marketing Production Human resources Finance

Let’s stop it here

Summary How has Marketing Changed Over Time?

SOCIETAL MARKETING CONCEPT PRODUCTION CONCEPT PRODUCT CONCEPT MARKETING CONCEPT KEY MARKETING PHILOSOPHIES SELLING CONCEPT

Society (Human Welfare) Society (Human Welfare) Consumers (Satisfaction) Consumers (Satisfaction) Company (Profits) Company (Profits) Societal Marketing Concept Societal Marketing Concept

The customer as the controlling function and marketing as the integrative function Customer Marketing Production Human resources Finance

Next…. Marketing Challenges in the 21st century Marketing Challenges in the 21st century

MGT301 Principles of Marketing Lecture-4