1. Foundations of Marketing
Tuesday
1pm – 3.30pm
Felix Stravens

2. Foundations of Marketing
Lecture 1
Overview & Introduction

3. Overview of the Subject
Week 1: Introduction and overview of Marketing
Week 2: Marketing Planning and outline of the Marketing Plan
Week 3: Target Markets and Segmentation
Week 4: Copy Testing and Message Development
Week 5: Media Planning and Selection

4. Overview of the Subject
Week 6: The use of Promotions
Week 7: Distribution
Week 8: The use of PR and Direct Marketing
Week 9: The use of New Media
Week 10: Class Free

5. Overview of the Subject
Week 11: Class Free
Week 12: The use of Viral Marketing
Week 13: Summary of the Subject
Week 14: Presentation of the Marketing Plan
Week 15: Revision

6. Assessment Class Presentation 20% Marketing Plan 40%
Final Examination 30%
Class Participation 10%

7. Foundations of Marketing The Changing Face of Marketing

8. Marketing: A Definition
Marketing today is not a function.
It is a way of doing business.
It is not a new ad campaign or this month’s promotion.
It has to be all-pervasive, part of everyone’s job description.
Marketing concepts, processes, and principles are universally applicable all over the world

9. The underlying Theory of Marketing
Marketing draws on a number of social science disciplines
In particular economics, sociology, anthropology, psychology and social psychology
Many of the theories, concepts and techniques used in various fields within marketing are borrowed from these social science disciplines

10. What is Marketing Satisfaction of human needs and wants
Aim is to make selling superflous
Aim is to know and understand the customer
Process for identifying, anticipating and satisfying

11. What is 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 and value with others

12. The underlying assumptions
Economists such as Smith, Ricardo and Mengler based their theories on premises about individual psychology and behaviour.
They emphasised individual activity and choice: market exchange.
Twentieth-century anthropologists were also concerned about the central role that exchange plays in social life: social exchange.

13. Exchange theory
Exchange theorists conceptualise social interaction as an exchange of tangible and intangible goods and services, ranging from food and shelter to social approval or sympathy.
The exchange process is a process by which one or more parties give something of value to each other to satisfy perceived needs.

14. Nothing new
The underlying assumption of contemporary marketing thinking – the marketing concept – is nothing new.
Contrary to popular mythology, it was not invented in America during the 1950s or 1960s.

15. It’s as old as the hills ...
… the idea that consumer needs and wants should be the starting point for business thinking is certainly not revolutionary. For a century or more, economists have made assertions that the aim of our economic and business structure and its functioning was the satisfaction of consumer needs.
H.R. Tosdal, ‘Some recent changes in the marketing of consumer goods’, Harvard Business Review, X1, no.2, January, 1993, p.157.

16. Evolution of marketing thought and practice
High demand for
manufactured goods
P&G product manager
Use of the term ‘marketing management’
US scholars in Germany 1820s–late 1800s
– advertising, selling, branding
Adam Smith
– classical economics
1776
Mid–late 1800s
1920s–1930s
1950s

17. Marketplace transition from 1950s
21st-century
marketplace
Marketplace transition from 1950s
Transition of
information technology
Logistics/
digitalisation
Market orientation
Cost-cutting
re-engineering
Price competition
Growing emphasis towards competitiveness
– emergence of strategic marketing concept
Rise of quality
Globalisation
Re-emergence of
competition
Rediscovery of the marketing concept
1950s–1960s
1970
1980
1990
2000

18. The rediscovery of the marketing concept
General Electric
Drucker
Levitt
McCarthy
Kotler

19. 1 General Electric
Our philosophy introduces the marketing man at the beginning rather than the end of the production cycle and would integrate marketing into each phase of the business. Thus marketing, through its studies and research, will establish for the engineer, the designer and the manufacturing man what the customer wants in a given product, what price he is willing to pay, and where and when it is wanted. Marketing would have authority in product planning, production scheduling and inventory control, as well as in sales distribution and servicing of the product.
General Electric Company, Annual Report, New York, 1952, p.21.

20. 2 Drucker: The Practice of Management, 1954
There is only one valid definition of business purpose: to create a customer …
It is the customer who determines what a business is … Because it is its purpose to create a customer, any business enterprise has two – and only two – basic functions: marketing and innovation.
P.F. Drucker, The Practice of Management, Harper & Row, New York, 1954, p.37.

21. 3 Levitt: ‘Marketing Myopia’, 1960
Levitt asserted that short-sightedness by business firms causes management to define their business too narrowly, for example:
Railroads assumed they were in the railroad business rather than in the transportation business.
Hollywood assumed it was in the movie business when it was actually in the entertainment business.
The buggy whip industry might have staved off its death sentence had it defined itself as being in the transportation business rather than the buggy whip business.

22. 4 Kotler (1967) and McCarthy (1960)
Marketing is the performance of business activities which direct the flow of goods and services from producer to consumer or user in order to satisfy customers and accomplish the company’s objectives.
E.J. McCarthy & W.D. Perreault, Jr, Basic Marketing, Irwin, Homewood, Ill., 1960.
Marketing is human activity directed at satisfying needs and wants through exchange processes.
P. Kotler, Marketing Management: Analysis, Planning, Implementation and Control, Prentice-Hall, Englewood Cliffs, NJ, 1967.

23. What’s the difference? A focus on what the organisation makes.
Production orientation
A focus on what the organisation makes.
Sales orientation
A focus on selling what the organisation makes.
Marketing orientation
A focus on satisfying the needs and wants of the organisation’s customers.

24. Consumer (goods) marketing
The Development of Marketing Science.
This CTR corresponds to Figure 1-1 on p.5 and relates to the discussion on pp. 5-6.
The Development of Marketing Science
Consumer (goods) marketing
Major
areas of
marketing
focus
Business-to-business marketing
Non-profit & societal marketing
Relationships
and Customer
Retention
Services marketing
Customer Satisfaction,
Global Marketing,
Synchronous Marketing
1950’s
1960’s
1970’s
1980’s
1990’s

26. Needs, Wants, and Demands
Emerge from a state of felt deprivation
Wants
The form taken by human needs
Shaped by culture and individual experiences
Demands
Wants backed by buying power

27. Value, Satisfaction, and Quality
The difference between the values the customer gains from owning and using the product and the cost of obtaining the product
Satisfaction
Dependant on the product’s perceived performance in delivering value relative to expectation
Quality
Achieved only when the product or service meets or exceeds the customer’s expectation

28. Exchange, Transactions, and Relationships
There must be two parties involved
The item for exchange must have a perceived value
A medium to communicate and deliver the exchange of value must exist
Parties should be free to accept or reject the offer
Parties should be comfortable with each other

29. Exchange, Transactions, and Relationships
Two parties involved
At least two things of value
Agreed upon conditions
A time of agreement
A place of agreement
Relationships
Long-term commitment built with valued customers

30. The Marketing System Suppliers Company Competitors (Marketer Marketing
This CTR corresponds to Figure 1-4 on p.13 relates to the material on pp
The Marketing System
Competitors
Company
(Marketer
Marketing
Intermediaries
Environment
Environment
End User
Market
The Marketing System
A modern marketing system consist of four levels of activity. In a very real sense, each level influences the other levels. Each level adds value to the system.
Discussion Note: Consumers add value to the system when they buy products. Their purchase price in turn funds the efforts (as profits) of each of the other layers to create more value as the system continues the cycle.
Suppliers. This level provides the inputs to the production of goods and services.
Company and Competitors. Each company adds value to supplies to create the products (goods, services, or both) offered to various markets.
Marketing Intermediaries. Because of specialisation, one or more other firms can get products to consumers more efficiently than most producers can (though there are important exceptions).
End User Market. The consumer is the “final cause” of the efforts of each level of the marketing system.
Discussion Note: Ask students to comment on whether the schematic should have “dotted line” feedback connection from the end user to each level of the system. What form of communication does that feedback take? Purchase? Satisfaction level? Brand loyalty? Brand switching? You might encourage students to remember this system perspective throughout the course and relate examples back to this CTR from time to time.