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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
Lesson ­ 2
Lesson overview and learning objectives:
In last Lesson we tried to understand the term of marketing its need and its impact on the
organization. The focus in this discussion is to have concept of about different core concepts of
the marketing and the increasingly important role of the marketing process in the ever-changing
domestic and global business environment Today we will be covering following topics:
A. ROAD MAP
B. UNDERSTANDING MARKETING AND MARKETING PROCESS
C. CORE MARKETING CONCEPTS
Now we will discuss these topics one by one:
A. Road Map
We will cover following topics in our coming Lessons:
Introduction-an overview of marketing.
Understanding Marketing and Marketing Process
Marketing Functions and Customer Relationship Management
Marketing in Historical perspective and Evolution of Marketing
Marketing Challenges in the 21st century
Marketing Management Process
Strategic Planning and Marketing Process
The Marketing process
Marketing Environment (Micro)
Marketing Environment (Macro)
Analyzing Marketing opportunities and developing strategies-MIS
Marketing Research
Consumer Market-understanding the consumer
Consumer Markets and consumer buying behavior
Buying Behaviors for New Products and services
Business Buying Behavior
Market segmentation
Developing the Marketing Mix--- 4 P's
Product Planning
Service Strategy
Pricing
Pricing Strategies
Price Adjustment and Price Changes
Distribution Channels
Logistics Management
Retailing and wholesaling
Promotion Planning
Advertising
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Principles of Marketing ­ MGT301
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 Public Relations
 Personal Selling
 Sales Promotion
 Sales Force Management
 Integrating and analyzing the marketing plan
 Global Marketing
 Technological developments and Marketing
 Web base Marketing
 Social Marketing
 Social, Ethical and Consumer issues
 Review
 Marketing in a Glance
B. Understanding Marketing and Marketing Process
Process by which individuals and groups obtain what they need and want through creating and
exchanging products and value with others is termed as marketing process. The marketing process
consists of four steps: analyzing market opportunities; developing marketing strategies; planning
marketing programs, which entails choosing the marketing mix (the four Ps of product, price,
place, and promotion); and organizing, implementing, and controlling the marketing effort.
Marketing is the organizational function charged with defining customer targets and the best way
to satisfy needs and wants competitively and profitably. Since consumers and business buyers face
an abundance of suppliers seeking to satisfy their every need, companies and nonprofit
organizations cannot survive today by simply doing a good job. They must do an excellent job if
they are to remain in the increasingly competitive global marketplace. Many studies have
demonstrated that the key to profitable performance is to know and satisfy target customers with
competitively superior offers. This process takes place today in an increasingly global, technical,
and competitive environment.
The concept of markets brings one full circle to the concept of marketing.
1).  Sellers must search for buyers,
Actors and Forces in a
identify their needs, design good products and
Modern Marketing System
services, set prices for them, promote them,
and store and deliver them.
Environment
2).
A modern marketing system
includes all of the elements necessary to bring
buyers and sellers together.  This might
include
such
activities
as
product
Company
(marketer)
development,
research,
communication,
Marketing
End-user
distribution, pricing, and service.
inter-
Suppliers
market
mediaries
3).  Each of the major actors in a
marketing system adds value for the next level
Competitors
of the system.
There is often critical
interdependency among network members.
There are certain factors that can influence the marketing process directly or indirectly termed as,
"actors and forces in marketing system". Let's have brief explanation of these actors and forces:
Company or Marketing Organization -marketing plans must accommodate the needs of other
functional areas of the firm to coordinate product/service delivery effectively.
Suppliers - are the firms and persons that provide the resources needed by the company and
competitors to produce goods and services.
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Principles of Marketing ­ MGT301
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Marketing Intermediaries - include various middlemen and distribution firms as well as
marketing service agencies and financial institutions.
Customers -usually consist of consumer, industrial, reseller, government, and international
markets.
Competitors - are usually considered those companies also serving a target market with similar
products and services, although broader definitions may apply.
Publics - may consist of any group that perceives itself having an interest in the actions of the
firm. Publics can have positive as well as negative influences on the company's objectives.
Other than factors above there are certain macro environmental factors that can have impact or
that can affect the marketing process. These forces and environmental factors will be discussed in
more detail in coming Lessons. As described in a fig: important connections with customers,
connections with marketing partners, and connections with the World around us are to be made in
order to perform the marketing process.  The main connections required in this regard are
connecting with marketing partners: (These connections occur by (a) connecting with other
marketing departments, (b) connecting with suppliers and distributors, and (c) connecting through
strategic alliances). Marketing companies do not operate in a vacuum. They have to be interacting
with intermediaries that have information to share, ideas to explore, and experiences that are
invaluable. New technologies can bring this information to the decision maker in new rapid ways.
Finally companies need to have information about the competitors and other environmental
factors and are need to have updated knowledge because for success, change adoption with change
occurrence is required otherwise company will not able to stay in this completive era.
What image comes to mind when you hear the word "marketing"? Some people think of
advertisements or brochures, while others think of public relations (for instance, arranging for
clients to appear on TV talk shows). The truth is, all of these--and many more things--make up
the field of marketing because as we have discussed in our last Lesson that marketing is more than
just advertisement or promotion. The Knowledge Exchange Business Encyclopedia defines marketing as
"planning and executing the strategy involved in moving a good or service from producer to
consumer."
With this definition in mind, it's apparent that marketing and many other business activities are
related in some ways. In simplified terms, marketers and others help move goods and services
through the creation and production process; at that point, marketers help move the goods and
services to consumers. But the connection goes even further: Marketing can have a significant
impact on all areas of the business and vice versa. Lets have discussion on some basics of
marketing: (already mentioned in first Lesson:
(first the four P's, and then the six P's)
Product--What are you selling? (It might
Price
Product
be a product or a service.)
Price--What is your pricing strategy?
Place or distribution--How are you
distributing your product to get it into
Customers
the marketplace?
Promotion--How  are  you  telling
consumers in your target group about
Place
Promotion
your product?
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Principles of Marketing ­ MGT301
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Positioning--What place do you want your product to hold in the consumer's mind?
Personal relationships--How are you building relationships with your target consumers? So
based upon all this discussion marketing process can be defined as a social and managerial
process by which individuals and groups obtain what they need and want through creating,
offering and exchanging products of value with others
The sum of the above is called the marketing mix. It is important to have as varied a mix as
possible in marketing efforts, since each piece plays a vital role and boosts the overall impact.
Let's take a closer look at the basic P's of marketing and particularly at how they might affect what
you do in business.
Product
Marketers identify a consumer need and then provide the product or service to fill that need. The
marketer's job is to pinpoint and understand existing needs, expand upon them, and identify new
ones. For example, because there are more singles and small families these days than in years past,
marketers might see a need for products to be sold in smaller quantities and offered in smaller
packages.
How can this impact other professionals in the business/marketing process? Let's say your
company has developed a new product that generates enormous consumer demand. Your
marketing department may ask you to find a way to speed up the workflow in order to crank out
more products faster. A year after the product is introduced, however, the market might be
flooded with cheap imitations. Since one marketing strategy is to keep products price-competitive,
a marketer may then ask you to find a way to make the product less expensively.
This relationship works both ways. There may be production and industrial engineers who may see
a way to change the work process that would create additional options for consumers. Those
engineers will also be instrumental in design and development of products for which human
factors and ergonomics are important considerations. Maybe there's room to add another product
line. For instance, that product X is still blue but new product Y is red. You can suggest this to
your marketing department; it, in turn, would do research to gauge potential consumer demand for
the new line.
Price
Ideally, a marketer wants to be proactive in setting price rather than simply react to the
marketplace. To that end, the marketer researches the market and competition and plots possible
price points, looking for gaps that indicate opportunities. When introducing a new product, the
marketer needs to be sure that the price is competitive with that of similar products or, if the price
is higher, that the consumers perceive they're getting more value for their money.
Various other technical professionals can have an important impact on marketers' pricing
decisions. Again, you may be asked to determine if productivity can be enhanced so that the
product can be manufactured and then sold--for a lower price.
Place or distribution
What good is a product if you can't get it to people who want to purchase it? When marketers
tackle this issue, they try to figure out what the optimum distribution channels would be. For
example, should the company sell the product to distributors who then wholesale it to retailers or
should the company have its own direct sales force?
Marketers also look at where the product is placed geographically. Is it sold regionally, nationally,
and internationally? Will the product be sold only in high-end stores or strictly to discounters? The
answers to all of these questions also help shape how a product can be distributed in the best way.
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Principles of Marketing ­ MGT301
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Such distribution questions are potentially of great significance to many professionals, including
industrial and other types of engineers in a company. For instance, whether a product will be
marketed regionally or internationally can have enormous implications for package design as well
as obvious areas of the supply chain: logistics, transportation, distribution, and warehousing.
Promotion
Promotion encompasses the various ways marketers get the word out about a product--most
notably through sales promotions, advertising, and public relations.
Sales promotions are special offers designed to entice people to purchase a product. These can
include coupons, rebate offers, two-for-one deals, free samples, and contests.
Advertising encompasses paid messages that are intended to get people to notice a product. This
can include magazine ads, billboards, TV and radio commercials, Web site ads, and so forth.
Perhaps the most important factor in advertising success is repetition. We're all bombarded with
an enormous number of media messages every day, so the first few times a prospective customer
sees an ad, it usually barely makes a dent. Seeing the ad over and over is what burns the message
into people's minds. That's why it's good to run ads as frequently as possible.
Public relations refer to any non-paid communication designed to plant a positive image of a
company or product in consumers' minds. One way to accomplish this is by getting the company
or product name in the news. This is known as media relations, and it's an important aspect of
public relations.
As with price, changes in demand created by promotions can have a direct impact on the work of
many other professionals.
Positioning
By employing market research techniques and competitive analysis, the marketer identifies how the
product should be positioned in the consumer's mind. As a luxury, high-end item? A bargain item
that clearly provides value? A fun product? Is there a strong brand name that supports how the
image is fixed in the consumer's mind? Once the marketer answers these kinds of questions, he or
she develops, through a host of vehicles, the right image to establish the desired position.
This, too, can affect the work you do. If an upscale image is wanted, the materials used in the
product and packaging are likely to be different from those used in a bargain product--a fact that
could make the workflow significantly more complex. On the other hand, with your engineering
knowledge, you may be able to suggest alternative materials that would preserve the desired image
but be easier or less expensive to use.
Personal Relationships
In recent years, personal relationships have come to the forefront of marketing programs. Now
even the largest companies want their customers to feel that they have a personal relationship with
the company. Companies do this in two ways: They tailor their products as much as possible to
individual specifications, and they measure customer satisfaction.
The firm's contribution can significantly impact the area of personal relationships. If the work
processes the firm creates cannot meet the customer time frames, the relationship will be damaged.
If the firm develops manufacturing lines that cannot be tailored to fit individual customer needs, it
will be difficult for the company to give consumers the perception of personal commitment. If
salespeople promise delivery by a certain date, but the product cannot be produced on schedule,
consumers will not be happy.
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Principles of Marketing ­ MGT301
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Marketing, engineering, and many other professional activities are interrelated and interdependent
disciplines. By understanding the role that marketers play in moving a good or service to
consumers, others can operate more effectively, for the present and the future.
C. Core Marketing Concepts
To have more clear view about the marketing and to understand the marketing process first we
should discuss the some basic concepts, which we will be discussing in the coming Lessons and
what is the main essence of the marketing process and we can say that the marketing revolves
around theses concepts.
a. Needs,
wants,
and
demandsNeeds
Human
,
Pr
needs are the most basic concept
nts s
od
u
wa
Se and cts
s,  and
underlying marketing. A human need
rvi
ed  m
ce
Ne d de
s
is a state of felt deprivation.
an
1).
Humans have many complex
needs.
Corre
Co e
a).
Basic, physical needs for
Markettiing
Marke ng
food, clothing, warmth, and
Conceptts
Concep s
safety.
b).
Social needs for belonging
and affection.
Exchange,
transactions,
c).
Individual
needs
for
and relationships
knowledge
and
self-
expression.
2).
These needs are part of the basic human makeup.
Wants A human want is the form that a human need takes as shaped by culture and individual
personality.
Demands are human wants that are backed by buying power.
1). Consumers view products as bundles of benefits and choose products that give them
the best bundle for their money.
2). People demand products with the benefits that add up to the most satisfaction.
Outstanding marketing companies go to great lengths to learn about and understand their
customer's needs, wants, and demands. The outstanding company strives to stay close to the
customer.
b. Products and Services
A product is anything that can be offered to a market to satisfy a need or want.
A service is an activity or benefit offered for sale that is essentially intangible and does not result
in the ownership of anything.
1). The concept of product is not limited to physical objects and can include experiences,
persons, places, organizations, information, and ideas.
2). Be careful of paying attention to the product and not the benefit being satisfied.
3).
"Marketing myopia" is caused by shortsightedness or losing sight of
underlying customer needs by only focusing on existing wants.
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Principles of Marketing ­ MGT301
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c. Value, satisfaction, and quality
Customer value is the difference between the values that the customer gains from owning and
using a product and the costs of obtaining the product. Customers do not often judge product
values and costs accurately or objectively--they act on perceived value.
Customer satisfaction depends on a product's perceived performance in
Delivering value relative to a buyer's expectations. If performance exceeds expectations, the buyer
is delighted (certainly a worthy goal of the marketing company).
1). Smart companies aim to delight customers by promising only what they can deliver, then
delivering more than they promise.
2). The aim of successful companies today is total customer satisfaction.
3). Customer delight creates an emotional affinity for a product or service, not just a
rational preference, and this creates high customer loyalty.
4). Quality has a direct impact on product or service performance. Quality is defined in
terms of customer satisfaction.
The term total quality management (TQM) is an approach in which all the
company's people are involved in constantly improving the quality of products,
services, and marketing processes.
1). In the narrowest sense, quality can be defined as "freedom from defects."
2). Quality has a direct impact on product or service performance. Quality is
defined in terms of customer satisfaction.
3). The fundamental aim of today's total quality movement has become total
customer satisfaction.
d. Exchange, transactions, And relationships
Marketing occurs when people decide to satisfy needs and wants through exchange.
Exchange is the act of obtaining a desired object from someone by offering something in return.
Exchange is only one of many ways to obtain a desired object. Exchange is the core concept of
marketing. Conditions of exchange include:
1. At least two parties must participate.
2. Each must have something of value to the other.
3. Each must want to deal with the other party.
Each must be free to accept or reject the other's offer
Whereas exchange is a core concept of marketing, a transaction (a trade of values between two
parties) is marketing's unit of measurement. Most involve money, a response, and action.
Transaction marketing is part of a larger idea of relationship marketing. Beyond creating short-
term transactions, marketers need to build long- term relationships with valued customers,
distributors, dealers, and suppliers. Ultimately, a company wants to build a unique company asset
called a marketing
network (the company and all its supporting stakeholders). The goal of
relationship marketing is to deliver long-term value to the customer and thereby
secure
customer satisfaction and retention of patronage.
1). Competition is increasingly between networks.
2). Build a good network of relationships with key stakeholders and profits will follow.
e. Markets
The concepts of exchange and relationships lead to the concept of a market. A
market is
the set of actual and potential buyers of a product.
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Principles of Marketing ­ MGT301
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1). Originally a market was a place where buyers and sellers gathered to exchange goods
(such as a village square).
2). Economists use the term to designate a collection of buyers and sellers who transact in a
particular product class (as in the housing market).
3). Marketers see buyers as constituting a market and sellers constituting an industry.
4). Modern economies operate on the principle of division of labor, where each person
specializes in producing something, receives payment, and buys needed things with this money.
Thus, modern economies abound in markets.
5). Marketers are keenly interested in markets.
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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE