2. Problem Solving Introduction to marketing concepts 1

3. Marketing What you’ll learn... What is marketing? What is the marketing mix? What does it involve? 2

4. About Marketing 3

5. Marketing in the 21 century WHY 4

6. What is marketing? Marketing… Marketing… –is not ADVERTISING –is not SELLING –is not PROMOTION “The aim of marketing is to make selling unnecessary.” Peter Drucker (1973) “The aim of marketing is to make selling unnecessary.” Peter Drucker (1973) 5

7. What is marketing? Businesses need to sell products if they are to achieve their objectives. Businesses need to sell products if they are to achieve their objectives. Marketing is about ensuring that businesses can sell as many products as possible in order to make profits. Marketing is about ensuring that businesses can sell as many products as possible in order to make profits. 6

8. What does it involve? Marketing is a very complex concept. Marketing is a very complex concept. It involves: It involves: Research Research Product design Product design Setting prices Setting prices Making sure the customer knows about products Making sure the customer knows about products Choosing how and where to sell products Choosing how and where to sell products 7

9. Why is it needed? Each year millions of new products are launched: Each year millions of new products are launched: Without careful marketing these products would fail 8

10. “Marketing is the science and art of exploring, creating and delivering value to satisfy the needs and wants of a target market maintaining loyalty at a profit.” Professor Philip Kotler 9

11. NeedsEat, Dress, Move Wants Cheeseburger, Tuxedo, Car Marketer 10

12. This Is Demand “Demand” Wants Buying Power 11

13. First Task: Detect Needs 12

14. Organization’s marketing focus Discover consumer needs Information about needs Potential consumers: The market Marketing’s first task: discovering consumer needs 13

15. What is a Market? Potential consumers make up a market, which is: 1.People 2.with the Desire and 3.with the Ability to Buy a specific product. 14

16. Organization’s marketing focus Concepts for products Discover consumer needs Information about needs Potential consumers: The market Satisfy consumer needs Find the right combination of: Product Price Promotion Place Goods, services, ideas Marketing’s Second Task: Satisfying Consumer Needs Marketing’s Second Task: Satisfying Consumer Needs 15

17. The Target Market Because the organization obviously can’t satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consumers This is the target market -- one or more specific groups of potential consumers toward which an organization directs its marketing programme 16

18. Inactive or ex-customers Customer Development PartnersAdvocatesClients Repeat customers First-time customers Suspects Prospects Disqualified prospects 17

19. Marketing Vs Sales Is there a difference? 18

20. The Marketing Concept Organizations must concentrate on the customer and not the product or the company Organizations must concentrate on the customer and not the product or the company Organizations should revolve round the customer and not the other way around Organizations should revolve round the customer and not the other way around The purpose of a business is to create and keep a customer The purpose of a business is to create and keep a customer 19

21. The Selling Concept Focuses on matching your product or service features and benefits in a way that suits the prospect sales Focuses on matching your product or service features and benefits in a way that suits the prospect sales process is any thing that you do to close the sale and get signed agreement or contract process is any thing that you do to close the sale and get signed agreement or contract It is any thing that engages you with the prospect or customer on a personal level rather than at a distance It is any thing that engages you with the prospect or customer on a personal level rather than at a distance 20

22. The Major Role of Marketing and Selling People DO NOT buy products people buy 21

23. Marketing Management 22

24. Building Customer Relationships 23

25. Relationship Marketing Relationship marketing is linking the organization to its individual customers, employees, suppliers, and other partners for their mutual long-term benefits. Mutual long-term benefits between the organization and its customers require links to other vital stakeholders-- including suppliers, employees, and “partners” such as wholesalers or retailers in a manufacturer’s channel of distribution. 24

26. How Marketing became so important? 25

27. Production era Sales era Marketing concept era SocietalMarketing era 18601880190019201940196019802000 Four different orientations in the history of business 26

28. The Marketing Mix The marketing mix is the combination of variables that a business uses to carry out its marketing strategy and meet customer needs. The marketing mix is often called the 4Ps: Product Product Price Price Place Place Promotion Promotion 27

29. The Marketing Mix The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives 7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment 7Ps – Price, Product, Promotion, Place, People, Process, Physical Environment Traditional 4Ps extended to cope with today's changing environment Traditional 4Ps extended to cope with today's changing environment 28

30. The Marketing Mix 29

31. Product 30

32. Product Product’ refers to the functions and features of a good or service Product’ refers to the functions and features of a good or service Should satisfy the needs of the customer Should satisfy the needs of the customer May have a Unique Selling Proposition (USP) May have a Unique Selling Proposition (USP) ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding ‘Product’ also includes a range of factors such as packaging, quality, warranties, after-sales service and branding 31

33. Product The firm must come up with a product or service that people will want to buy. The firm must come up with a product or service that people will want to buy. It must fulfil some need It must fulfil some need or want. It must be (or at least seem) unique. It must be (or at least seem) unique. 32

34. Product Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e.g. –Extension strategies –Specialised versions –New editions –Improvements – real or otherwise! –Changed packaging –Technology, etc. Image copyright: www.freeimages.co.uk 33

35. The Product Life Cycle The product lifecycle looks at the sales of a product over time The product lifecycle looks at the sales of a product over time 34

36. Stages in the Product Lifecycle Development – high costs but no sales Launch – high expenditure on promotion and product development, low sales Growth – sales increase and product should break-even Maturity – sales stabilise, less expenditure on promotion needed, revenue & profit should be high Decline – sales decline, extension strategies can be adopted or the product withdrawn 35

37. Extension Strategies Extension strategies should maintain or increase sales. They include: Modifying the product Modifying the product Reducing the price Reducing the price Adding a feature Adding a feature Promoting to a Promoting to a different market sector 36

38. Product or service or brandCore ProductActual Product Augmented Product BMWFreedom to travelA motor car Sheraton RoomsRoom service Egypt Air FlightAn airline journey Zamalek Football Club Excitement and leisure T-shirts – photos with players ALICOInsurance policyFinance UNIONAIR CoolingWarranty 37

39. Price 38

40. Price The price of a product will depend on: The cost to make it The cost to make it The amount of profit desired The amount of profit desired Other objectives of the business Other objectives of the business The price competitors charge The price competitors charge The price customers are willing to pay The price customers are willing to pay –Is there a high demand? –Is demand sensitive to changes in price? 39

41. Price Pricing Strategy Pricing Strategy - International - International –Comparative –Cost plus The price must be one that the customer thinks is good value for money. The price must be one that the customer thinks is good value for money. This is not the same as This is not the same as being cheap! Prices have a great psychological effect on customers. Prices have a great psychological effect on customers. 40

42. Price Leader/Taker Price leader – businesses that dominate the market can often dictate the price charged for a product. Other businesses follow this lead Price taker – businesses have to charge the market price. This is often the case where there are many small firms competing against each other 41

43. Pricing Strategies & Tactics Skimming Launching with a high price when there is little competition, then reducing the price later. Often used with technology. Penetration Low price charged initially to penetrate the market and build brand loyalty; prrice is then increased e.g. introductory offers on magazines. 42

44. Pricing Strategies & Tactics Competitive A similar price is charged to that of competitors’ products. Loss leader Products may be sold at a price lower than the cost to produce it. Often used by supermarkets to encourage people into the store where it is hoped they will buy other products. 43

45. Pricing Strategies & Tactics Psychological A price is set which customers perceive as lower than it is e.g. €39.99 instead of €40 44

46. Price Pricing Strategy Pricing Strategy Importance of: Importance of: –knowing the market –elasticity –keeping an eye on rivals Image copyright: www.freeimages.co.uk 45

47. Promotion 46

48. Promotion Strategies to make the consumer aware of the existence of a product or service Strategies to make the consumer aware of the existence of a product or service NOT just advertising NOT just advertising 47

49. Promotion The aims of promotion are to: Raise awareness Raise awareness Encourage sales Encourage sales Create or change a brand image Create or change a brand image Maintain market share Maintain market share Increase market share Increase market share 48

50. 49

51. Promotion Above-the-line promotion This uses advertising media over which a firm has no direct control e.g. television, radio and newspapers Below-the-line promotion Below-the-line promotion This uses promotional media which the firm can control e.g. direct mail, sales promotions and sponsorship 50

52. The promotional message should Grab A ttention Stimulate I nterest Create D esire Promote A ction 51

53. Promotional Activities Advertising e.g. TV, billboards and internet. Advertising e.g. TV, billboards and internet. Sales promotions e.g. Loyalty cards, BOGOF, discounts & free gifts Sales promotions e.g. Loyalty cards, BOGOF, discounts & free gifts Sponsorship – a business pays to be associated with another firm, event or cause Sponsorship – a business pays to be associated with another firm, event or cause 52

54. Promotional Activities Direct mailing – promotional material is sent to potential customers by post/email Direct mailing – promotional material is sent to potential customers by post/email Public relations – building the relationship between the firm and the public by enhancing its reputation Public relations – building the relationship between the firm and the public by enhancing its reputation 53

55. Promotional Mix Most businesses use a combination of different promotional activities. The chosen promotional mix will depend on: Cost Cost Target market Target market Product Product Competitors Competitors 54

56. Place 55

57. Place The means by which products and services get from producer to consumer and where they can be accessed by the consumer The means by which products and services get from producer to consumer and where they can be accessed by the consumer The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) The more places to buy the product and the easier it is made to buy it, the better for the business (and the consumer?) 56

58. Place Products should be conveniently available for customers to buy Products should be conveniently available for customers to buy ‘Places’ include: ‘Places’ include: Stores Stores Mail order Mail order Telesales Telesales Internet - The use of e-commerce (promoting and selling on the internet) has grown massively over recent years Internet - The use of e-commerce (promoting and selling on the internet) has grown massively over recent years 57

59. 58

60. Jobber One that buys merchandise from manufacturers and sells it to retailers 59

61. People 60

62. People People represent the business People represent the business The image they present can be important The image they present can be important First contact often human – what is the lasting image they provide to the customer? First contact often human – what is the lasting image they provide to the customer? Extent of training and knowledge of the product/service concerned Extent of training and knowledge of the product/service concerned Do staff represent the desired culture of the business? Do staff represent the desired culture of the business? 61

63. People People represent the business People represent the business –The image they present can be important –First contact often human – what is the lasting image they provide to the customer? –Extent of training and knowledge of the product/service concerned –Mission statement – how relevant? –Do staff represent the desired culture of the business? 62

64. People People represent the business People represent the business –The image they present can be important –First contact often human – what is the lasting image they provide to the customer? –Extent of training and knowledge of the product/service concerned –Mission statement – how relevant? –Do staff represent the desired culture of the business? 63

65. Process 64

66. Process How do people consume services? How do people consume services? What processes do they have to go through to acquire the services? What processes do they have to go through to acquire the services? Where do they find the availability of the service? Where do they find the availability of the service? –Contact –Reminders –Registration –Subscription –Form filling –Degree of technology 65

67. Physical Environment 66

68. Physical Environment The ambience, mood or physical presentation of the environment The ambience, mood or physical presentation of the environment Packaging. Packaging. Internet/web pages. Internet/web pages. Paperwork (such as invoices, tickets,…..). Paperwork (such as invoices, tickets,…..). Brochures. Brochures. Furnishings. Furnishings. Uniforms. Uniforms. Business cards. Business cards. The building itself (such as prestigious offices or scenic headquarters). The building itself (such as prestigious offices or scenic headquarters). Mailboxes and many others...... Mailboxes and many others...... 67

69. 68

70. Physical Environment The ambience, mood or physical presentation of the environment The ambience, mood or physical presentation of the environment –Smart/shabby? –Trendy/retro/modern/old fashioned? –Light/dark/bright/subdued? –Romantic/chic/loud? –Clean/dirty/unkempt/neat? –Music? –Smell? 69

71. Stages in Consumer Decision Process Awareness Interest Decision Satisfaction Action Advertising Channel Product / Service Price Word- of- Mouth 70

72. The Marketing Mix Blend of the mix depends upon: Blend of the mix depends upon: Marketing objectives Marketing objectives Type of product Type of product Target market Target market Market structure Market structure Rivals’ behaviour Rivals’ behaviour Global issues – culture/religion, etc. Global issues – culture/religion, etc. Marketing position Marketing position Product portfolio Product portfolio –Product lifecycle –Boston Matrix 71

73. Marketing Model Target Market AwareUnderstandBelieveWantFindBuy Use Prefe r Cost Revenue Value Experience Point of Purchase Above the Line Loyal Below the Line Intention to Purchase Behavior 72

74. Marketing Management Philosophies CompetingPhilosophiesCompetingPhilosophies Production Sales Market Societal Marketing 73

75. Marketing Management Philosophies Philosophy Key Ideas Production Sales Market Societal Focus on efficiency of internal operations Focus on satisfying customer needs and wants Focus on satisfying customer needs and wants while enhancing individual and societal well-being Focus on aggressive techniques for overcoming customer resistance 74

76. The Marketing Concept Focus on Customer Wants and Needs Integrate Organization’s Activities to Satisfy Customer Needs and Wants Achieve Organization’s Long Term Goals by Satisfying Customer Wants and Needs 75

77. Comparing Sales and Market Orientations Market Orientation Outward Coordinated use of all marketing activities Customer satisfaction Specific groups of people Satisfying wants and needs Organization’s Focus Firm’s Business For Whom? Primary Profit Goal? Tools to Achieve Selling goods and services Everybody Maximum sales volume Primarily promotion Inward Sales Orientation 76

78. Developing Competitive Advantage Competitive Advantage Customer Value Customer Relationships Customer Satisfaction 77

79. Evolving Marketing Mix The marketing mix will evolve over time The marketing mix will evolve over time The product portfolio may grow as a business becomes more established The product portfolio may grow as a business becomes more established More expensive promotional activities may be adopted as a firm’s revenue increases More expensive promotional activities may be adopted as a firm’s revenue increases More outlets may be opened, or products sold via the internet More outlets may be opened, or products sold via the internet Price may change as demand changes Price may change as demand changes 78

80. Value and Satisfaction Expectation Performance 810 If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high. ExpectationPerformance 108 79

81. Why Do So Many Products Fail? 80