Transcript Session 2-What is Marketing

MGT-519
STRATEGIC MARKETING
AAMER SIDDIQI
LECTURE 2
RECAP
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Personal Introduction
Course Requirements
Course Description
Course Objectives
Course Contents
Definition of Marketing
levels of marketing
STP+ branding
Needs
Maslow's hierarchy of needs
UNDERSTANDING NEEDS, WANTS & DEMAND
• Need: a basic requirement that an individual has to satisfy to
continue to exist
Maslow’s Hierarchy of Needs
• 5 level Pyramid
• Higher needs only come into focus when lower needs are met
• Once individual moved to next level, needs in lower level no longer
prioritized.
• If a lower set of needs are deficient; temporarily re-prioritize those
needs but will not permanently regress to the lower level
• Humans have different needs based on demographics
• Want: A strong desire for something but it’s not vital to continued
existence
• Customer
needs
are
broad,
wants
are
usually
narrow
• Wants shaped by social and cultural forces, media and marketing
activities
• A want is specific and goes beyond the basic to include aspirational
values and need satisfaction
• This diversity of wants and needs allows variety of ‘solutions’ to be
developed
• Demand is a want for a specific product/service supported by the
ability and willingness to pay for it
• Concept of demand fundamental to marketing
• Customers who want and can pay for the product/service. e.g. many
consumers want a Ferrari car, but few are able and willing to buy
• Marketers spend time trying to predict patterns & level of demand of
products/services and the needs/wants of the consumers
• Businesses influence demand by designing products/services that
are;
– Attractive
– Work well
– Are affordable
– Are available
THE EXCHANGE PROCESS
• To understand Marketing we need to understand the exchange
process
• There must be two parties, each with unsatisfied needs. For the
seller it is money
• Each must have something to offer. Marketing involves voluntary
“exchange” relationships where both sides must be willing parties.
Thus, a consumer who buys a soft drink for Rs 30.00 must value the
soft drink, available at that time and place, more than the money.
• Conversely, the vendor must value the money
• The parties must be able to communicate.
• An exchange process exists when two or more parties benefit from
trading something of value.
THE EXCHANGE PROCESS (CONT’D)
• Because of marketing, the buyer’s need for a certain product is
satisfied, and the seller’s business is successful
• Marketing can contribute to the continuing improvement of a
society’s overall standard of living
• So we can see that Marketing is said to have a positive effect on an
economy and helps satisfy needs
UTILITY
• Utility : Measure of the relative satisfaction/desirability of
consumption of various goods and services. Utility is a concept
within economics that is related to marketing.
• Product /service and their marketing form the foundation of the
exchange process create a utility.
• marketing is an activity that creates from, place, time and ownership
utility-Richard Buskirk
1. Form utility: Usefulness of a product due to its form (raw materials to
finished products). Product planning and development activities create
form utility.
2. Time utility: Product availability when consumers want to purchase
it. Storage of product after production
3. Place utility: Flow of goods from the place of abundant to the place
creates place utility.
UTILITY (CONT’D)
– From producer to consumer. making a product available in a
location convenient for customers, the.
4. Ownership utility: Orderly transfer from seller to buyer via a sales
transaction.
• Production process creates Form Utility
• Marketing function creates time, place, and ownership utility
Greater the utility, the greater the demand and potentially the more
successful the business
COMPETITIVE ADVANTAGE
• Competitive advantage grows out of value a firm is able to create for its
buyers that exceeds the firm's cost of creating it. Value is what buyers are
willing to pay, and superior value stems from offering lower prices than
competitors for equivalent benefits or providing unique benefits that more
than offset a higher price. There are two basic types of competitive
advantage: cost leadership and differentiation - Michael Porter,
Competitive Advantage, 1985:3
COMPETITIVE ADVANTAGE (CONT’D)
• Firm's relative position within an industry is given by its choice of
competitive advantage (costleadership vs. differentiation) and its
choice of competitive scope
• Competitive scope distinguishes firms targeting broad industry
segments and firms focusing on narrow segment
• “All things to all people" is a sure recipe for mediocrity - getting
"stuck in the middle".
• Treacy and Wiersema (1995) - Firm to emphasize one of three
“value disciplines”
– product leadership,
– operational excellence, and
– customer intimacy
• Service dominant approach to marketing
CREATION OF COMPETITIVE ADVANTAGE
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Discovering new and better ways to compete
Act of innovation not invention
shifts competitive advantage when
Rivals fail to perceive new way of competing or unwilling/unable to
respond
• Causes of innovations
– new technologies
– new or shifting buyer needs
– the emergence of a new industry segment
– shifting input costs or availability
– changes in government regulations
• Significant advantages to early movers responding to innovations
• Diffusion of innovations (1962) - Everett Rogers drew a variety of
outlines together to develop a framework
CREATION OF COMPETITIVE ADVANTAGE (CONT’D)
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Becoming aware of the new product
Seeking information about it
Developing favorable attitudes toward it
Trying it out in some direct or indirect way
Finding satisfaction in the trial
Adopting the product into a standing usage or repurchase
pattern
• Roger’s 5 Adopter characteristics
• Innovator: Purchase the product at the beginning of the lifecycle;
not afraid of trying new products that suit their lifestyle and will also
pay a premium for that benefit
• Early Adopters: Opinion leaders and naturally adopt products after
the innovators; crucial because adoption by them means the product
becomes acceptable, spurring on later purchasers
CREATION OF COMPETITIVE ADVANTAGE (CONT’D)
• Early Majority: Spurred on by the early adopters; wait to see if the
product will be adopted
• Late Majority: Usually purchase the product at the late stages of
majority within the lifecycle
• Laggards: Usually purchase the product near the end of its life;
‘wait and see’ group (wait to see if the product will get cheaper)
SUMMARY
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Definition of Marketing
3 levels of Marketing
The value of Marketing
Understanding Needs, Wants and Demands
The exchange process
Utility
Competitive advantage
Creation of Competitive advantage
THANKYOU!