Lecture 1 Defining Marketing for the 21 st century By: Dr Shahinaz Abdellatif

Lecture Objectives What are the major concepts and tools of marketing? What are the major forces driving the New Economy and how marketers are responding to the new challenges? How are business and marketing practices changing as a result of the New Economy? What orientations do companies exhibit in the marketplace? How are marketers using the Internet, customer databases, and customer relationship management in the New Economy to attract & retain customers?

The New Economy Substantial increase in buying power A greater variety of goods and services A greater amount of information. A greater ease in interacting and placing and receiving orders An ability to compare notes on products and services

Marketing Marketing is about identifying and meeting human and social needs. Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

1-5 Marketing Management Marketing Management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value.

The Scope of Marketing Places Properties Organizations Information Ideas Goods Services Experiences Events Persons

A Simple Marketing System

The Decisions Marketers Make Consumer Markets Business Markets Global Markets Nonprofit and Governmental Markets

Figure 2: Structure of Flows in a Modern Exchange Economy

Figure 3: The Four P Components of the Marketing Mix

Figure 4: Marketing-Mix Strategy

Marketing Mix and the Customer Four Ps Product Price Place Promotion Four Cs Customer solution Customer cost Convenience Communication

Company Orientations Toward the Marketplace Production Concept Product concept Selling Concept Marketing Concept

Figure 5: Contrasts Between the Sales Concept and the Marketing Concept

Product Orientation vs. Market Orientation CompanyProductMarket Missouri-Pacific Railroad We run a railroadWe are a people- and-goods mover XeroxWe make copying equipment We improve office productivity Standard OilWe sell gasolineWe supply energy Columbia PicturesWe make moviesWe entertain people

The Customer Concept Company Orientations Toward the Marketplace

Traditional Organizational Chart versus Modern Customer-Oriented Company Organization Chart

What is Holistic Marketing? Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and prosperity among key stakeholders.

Internal Marketing Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well.

How Business and Marketing are Changing Marketer Responses and Adjustments  Customer relationship marketing  Customer lifetime value  Customer share  Target marketing  Customization  Customer database  Integrated marketing communications  Channels as partners  Every employee a marketer  Model-based decision making

Old Economy vs. New Economy Old EconomyNew Economy Organize by product units Focus on profitable transactions Look primarily at financial scorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction measurement Overpromise, underdeliver Organize by customer segments Focus on customer lifetime value Look also at marketing scorecard Focus on stakeholders Everyone does the marketing Build brands through behavior Focus on customer retention and growth Measure customer satisfaction and retention rate Underpromise, overdeliver

The Supplier- Customer Relationship: Traditional and New Economy Structures

Adapting Marketing to the New Economy Internet Domains: B2B (Business to Business) Internet Domains: B2C (Business to Customer) Internet Domains: C2C (Consumer to Consumer) Internet Domains: C2B (Customer to Business)

Premier Dell.com is a special business-oriented part of the Dell Web site that allows customers to interact with Dell and customize all phases of doing business with Dell.

Adapting Marketing to the New Economy How Marketing Practices are Changing: Customer Relationship Marketing Reduce rate of customer defection Increase longevity of customer relationship Enhance growth potential through cross- selling and up-selling Make low profit customers more profitable or terminate them

Mass Marketing vs. One-to-One Marketing Mass MarketingOne-to-One Marketing Average customer Customer anonymity Standard product Mass production Mass distribution Mass advertising Mass promotion One-way message Economies of scale Share of market All customers Customer attraction Individual customer Customer profile Customized market offering Customized production Individualized distribution Individualized message Individualized incentives Two-way messages Economies of scope Share of customer Profitable customers Customer retention

Adapting Marketing to the New Economy Four steps for One-to-One Marketing Don’t go after everyone, identify prospects. Define customers by their needs and their value to the company. Individual interaction with customers builds stronger relationships. Customize messages, services, and products for each customer.

Tools for Tracking and Measuring Customer Satisfaction Complaint and suggestion systems: Customer satisfaction surveys: A customer-centered organization makes it easy for customers to register suggestions and complaints. Some customer-centered companies-P&G, General Electric, Whirlpool—establish hot lines with toll-free numbers. Companies are also using Web sites and for quick, two-way communication. Studies show that although customers are dissatisfied with one out of every four purchases, less than 5 percent will complain. Most customers will buy less or switch suppliers. Responsive companies measure customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others.

Functions of CMOs Strengthening the brands Measuring marketing effectiveness Driving new product development based on customer needs Gathering meaningful customer insights Utilizing new marketing technology

Marketing Management Tasks Develop market strategies and plans Capture marketing insights Connect with customers Build strong brands Shape market offerings Deliver value Communicate value Create long-term growth