Transcript Introduction to Marketing

Introduction to Marketing
Presentation and
Discussion
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Introduction
Marketing is simple, yet complex.
We are all involved in marketing
and: “the enigma of marketing is
that it is one of man’s oldest
activities and yet it is regarded
as the most recent of the
business disciplines (Baker,
1976).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Introduction contd.
Marketing came into existence with the first
barter exchange (e.g. the barter trade in
ancient Egypt, Songhai, and Ghana empires
in Africa etc.) when someone realized that
exchanges add value for both parties.
This was the first real step forward in
economic development.
Marketing has evolved (like other practices
such as architecture, medicine, engineering)
over the centuries to where it is today
(Michael Baker).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Introduction contd.
According to Peter Drucker, the first test of
any business is not the maximization of
profit but the achievement of sufficient
profit to cover the risks of economic activity
and thus avoid loss.
Customers are the foundation of a business
and their purpose of existence.
In other words, customers are the mainstay
of the business.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Introduction contd.
As Peter Drucker puts it: There is only one
valid definition of business purpose: to
create a customer.
It is the customer who determines what
business is…
What the business thinks it produces is not
of first importance, especially not to the
future of the business and to its success in
the market place.
The customer determines what a business
is, what it produces and whether it will
prosper.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
What is Marketing?
It is the most interesting, dynamic,
versatile of all academic disciplines.
It is both theoretical and practical in
nature.
It yields real results in the form of
profits and/or satisfaction of business
aims/objectives.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
What is Marketing? contd.
It is a multidisciplinary (economics, psychology,
sociology, history, statistics…) management process
of identifying and satisfying consumer and
organizational needs profitably.
The aim of marketing is to make profit and/or satisfy
business objectives.
Thus, overall, it enhances human and national
economic development/progress.
Marketing can be applied in all economies (e.g.,
advanced countries and underdeveloped countries),
and all types of businesses (small, medium and
large) however, the impact on business performance
will differ.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Definition of Marketing
Marketing is broadly defined as:
“what the whole company does (HR,
finance, production, R & D, management,
marketing departments) to achieve
customer preference and, thereby, its own
goals (profits, market share, improvement
of customer perception, global brand
leadership, good citizen) (Webster, 1992;
Ambler et al., 2004).
Ambler, T., Kokkinaki, F. and Puntoni, S. (2004), Assessing
Marketing Performance: Reasons for Metrics Selection, Journal of
Marketing Management, Vol.20, No.3-4 (April), pp.475-498.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Definition
Marketing is the process of
planning and executing the
conception, pricing, promotion,
and distribution of ideas, goods,
and services to create exchanges
that satisfy individual and
organizational goals.
Source: The American Marketing Association (AMA) (see
www.ama.org).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Updated Definition from AMA
Marketing is an organizational
function and a set of processes
for creating, communicating, and
delivering value to customers
and for managing customer
relationships in ways that benefit
the organization and its
stakeholders (2004).
Source: American Marketing Association, 2004
Charles Blankson, Ph.D., Department of
Marketing & Logistics
More recent definition from AMA
“Marketing is the activity, set of
institutions, and processes for
creating, communicating,
delivering, and exchanging
offerings that have value for
customers, clients, partners, and
society at large.” (2007).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Definition
Marketing is the management
process responsible for
identifying, anticipating, and
satisfying customer
requirements profitably.
Source: The Chartered Institute of Marketing (CIM) (UK) (see
www.cim.co.uk)
Charles Blankson, Ph.D., Department of
Marketing & Logistics
More recent definition by CIM in 2007
“Marketing is the strategic business function that
creates value by stimulating, facilitating and fulfilling
customer demand.”
– It does this by “building brands, foreseeing market
behavior long term, nurturing innovation, developing
relationships, creating good customer service and
communicating benefits.”
– “By operating customer-centrically, marketing brings
positive return on investment, satisfies shareholders
and stakeholders from business and the community, and
contributes to positive behavioral change and a
sustainable business future.”
–
A suggestion to the second paragraph is offered as
–
“It does this by building brands, foreseeing market behavior long term, nurturing
innovation, developing relationships, creating good customer service and
demonstrating economic value to customers.”
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Analytical definition of marketing
It is a “management function”
It “organizes and directs”
It has a function of “assessing” information/data
It has a function of “conversion” (NPD)
It deals with “consumer purchasing power”
It deals with “consumers or users” in the real world (unlike say,
economics, which must make assumptions to build models of the
world – unreal assumptions about behavior of humans)
It deals with “moving product or service (offering) to the final
consumer or user”
Marketing is not an end in itself, but exists to achieve the overall
objectives of the organization.
Thus, marketing objectives are dependent upon the establishment
of overall organization objectives.
Note that the organization may have objectives other than profit
(e.g., charities, not-for-profit, government, institutions).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Marketing goals and effect/impact of the
application of strategies and tactics
Customer attitudes:
awareness, perceptions,
customer satisfaction
Consumer behavior:
consumer purchasing
habits, number of
customers, customer
loyalty
Trade customer:
distribution/availability,
customer satisfaction,
number of customer
complaints
Relative to competitor:
relative customer
satisfaction, perceived
quality and value, share
of the market
Innovation: number of
new products/services,
profit margin of new
products/services
Accounting/finance:
sales, gross margins,
profitability.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
The ultimate purpose of marketing
scholarship
Descriptive or
Prescriptive (i.e., normative
guidelines), or both
Brown, S. (2004), Writing Marketing: The Clause That Refreshes, Journal of
Marketing Management, Vol.20, No.3-4 (April), pp.321-342.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Role of Marketing
Organizational Resources
Effective match
Specification
of
Target Market
Customer Satisfaction
Organizational
Aims/objectives
Charles Blankson, Ph.D., Department of
Marketing & Logistics
The Concept of Marketing
The marketing concept is a business
philosophy or business culture.
It is not a system of marketing or an
organizational structure. It is founded on
the belief that sales and profits and
satisfactory return on business
actions/policies can only be achieved by
identifying, anticipating and satisfying
customer needs, wants, desires/aspirations
.. And in that order.
It is an attitude of (business) mind which
places the customer at the very center of a
business activity.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
The Marketing Concept
The Marketing Concept states
that if a business or organization
is to achieve profitability, and
sustained growth, then the entire
organization must be oriented
towards satisfying consumer
needs, wants and aspirations,
profitably.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
The Marketing Concept contd.
In other words, The Marketing
Concept holds that the key to
success is through determining
the needs/wants/aspirations of
target markets and delivering
these more effectively and
efficiently than competitors.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Marketing concept
Marketing involves the following:
– organisational culture: set of values and beliefs for
the organisation to serve customers needs
– strategy: develop effective responses to changing
market environments by defining market
segments, and developing and positioning product
offerings for targets
– tactics: concerned activities of product
management, pricing, distribution and
communications such as advertising, personal
selling, publicity and sales promotion
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The Marketing Concept (key issues)
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.
The purpose of a business is to
create and keep a customer
(Theodore Levitt).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Elements of the Marketing Concept
Consumer/customer Orientation
Total Organization effort
Profitability/sustained growth
and achievement of objectives.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Criticisms of the Marketing Concept
Do customers really know their
needs/wants/aspirations?
The choice of either consumer or
competitive orientation.
Adapting to change (rigidity,inflexibility of
the concept).
Conflict with social responsibility.
Limits in the applicability of the concept
(e.g. the arts, ideology such as political
parties, environmentalists – “greenpeace”,
religions – churches/synagogues etc,
etc.……
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Some Criticisms of Marketing in general
Too many advertisements are
annoying, misleading, or both.
There are too many unnecessary
products.
Middlemen raise prices but don’t add
value.
Marketing makes people materialistic.
Most of the criticisms result from
misunderstandings about marketing
& McCarthy, 1999).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
(Perreault
Do you know your market?
What is the product or service being
offered?
What are the market trends in the industry?
What is the market?
Who are your customers? And what are they
looking for?
Who are your competitors? And how do they
operate/react/behave?
Why do (should) your customers buy your
product/service rather than that of your
competitors?
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Marketing objectives
“if you don’t know where you are
going any road will take you there”
(Levitt)
–
–
–
–
Where the company has been,
What its competence and strengths are,
What the competition is doing,
What is happening out there in society
(marketplace), and
– What is happening in the consumer’s
enigmatic mind (note: consumers’
attitudes/demands are stochastic and
fickle).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Three types of objectives
Basic: those which define organization’s
long term purposes. They are usually broad,
and may be linked with corporate
objectives.
Goals (or specific objectives): are the first
components of corporate or functional
plans. They could be marketing objectives
and must be supportive of corporate
objectives
Specific Targets: seen as the objectives of a
sub-unit (sales targets, advertising
objectives, logistics objectives) and must be
consistent with the organization’s goals.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
What is a Market ?
According to Kotler (2004), “a market
consist of all the potential customers
sharing a particular need or want who
might be willing and able (i.e.,
propensity to) to engage in exchange
to satisfy that need or want”.
Source: Kotler, P. (2004), Marketing Management, Prentice-Hall, Englewood
Cliff, NJ.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Market Types
1) Consumer Markets.
2) Industrial/Business to Business Markets.
3) Reseller (Retailers, Distributors) Markets.
4) Publics (Government
agencies/departments/institutions).
5) International/global Markets.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
What is Market(ing) Orientation?
The process of applying the marketing
concept in the market place.
Maintaining a customer orientation.
All departments work together guided
by customer
needs/wants/aspirations.
Focus on profits/objectives.
Source: Kohli and Jaworski (1990); Narver and Slater (1990).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Market orientation
Philosophy of marketing into reality
Definition from Kohli and Jaworski
(1990):
– Market orientation are activities toward
developing an understanding of
customers’ current and future needs.
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Antecedents (beginnings) of market
orientation
Industrial revolution – Western
Europe
Great Britain
Adam Smith – “the wealth of
nations” and the birth of capitalism
Industrialization – division of labor
Wealth creation – small business
ownership, ownership of property
Jobs in factories, ship yards, cities…
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Market Orientation
Production Orientation
--1850s -> 1930s
Sales Orientation
-- 1930s -> 1950s
Time
Marketing Orientation
-- 1960s -> ??
Consumer Relationship Marketing
(CRM)
-- 1990s -> ??
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Production Orientation
Focus on the means of
production, and assumes
customers will want the
product/service.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Product Orientation
Focus on the technical
perfection of the
product/service seen
through the producer’s
(firm) eyes. Assumes
customers will perceive
product/service in the
same way and thus buy.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Selling Orientation
Focus on persuading
(usually aggressive) customers
to buy products which do
not usually match their
requirements. This is
unlikely to lead to repeat
buy/business.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Customer Orientation
Focus on discovering
customer needs (basic
survey/question & answer type)
and
satisfying them.
However, this is unlikely to
make best uses of production
and other organizational
resources.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Marketing Orientation
Focus on the identification of
customers needs, organizational
resources and objectives.
Achieve effective match through
market segmentation, targeting,
positioning and resource
development (see also Role of
Marketing).
Charles Blankson, Ph.D., Department of
Marketing & Logistics
So how do you actually define Market(ing)
Orientation?
Market orientation is the
organization-wide generation of
market intelligence (information)
pertaining to current and future
customer needs, dissemination
of the intelligence across all
departments/sections of the
organization, and organizationwide responsiveness
(appreciation of it) to it.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Measuring or determining Market
Orientation
According to Narver and Slater
(1990), Market orientation
comprises three factors or
constructs:
Customer orientation
Competitor orientation and
Inter-functional co-ordination.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Factors or constructs underpinning (i.e.,
measuring) Market Orientation
Top Management
Interdepartmental Dynamics
Organizational Systems
Market (customer) Orientation
Employees
Environment
Business Performance.
Source: Kohli and Jaworski (1990)
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Measuring Market Orientation construct contd.
Customer Orientation
Customer commitment activities
Creation of customer value
Understanding customer needs
Measuring customer satisfaction
Offering after sales service
Competitor Orientation
Salespeople share competitor information
Responding rapidly to competitors’ actions
Top managers discuss competitors’ strategies
Targeting opportunities for competitive advantage
Interfunctional Coordination
Engaging in interfunctional customer calls
Sharing information among functions
Integrating all functions in strategy
Contribution of all functions to customer value
Sharing resources with other functions.
Source: Narver and Slater (1990)
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Resource based view of
marketing
Focus on ‘core competencies’
Performance is driven by the
resource profile of the organization
Possession and deployment of
distinctive, hard to imitate or
protected resources
Three alternative approaches are
apparent
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Product push marketing
Activities on existing products and
services and look for ways to
encourage, or persuade customers to
buy.
The key is to make customer want
what we are good at.
6-45
Customer-led marketing
Under this approach organisations
chase their customers at all costs.
The retailers react by giving
customers more choice, heavy
promotions and deals to stimulate
purchases, and aggressive sales
force targets.
Customers get confused because of
the over complex promotions.
6-46
Resource based marketing
Companies base their marketing
strategies on equal consideration of
the requirements of the market and
their abilities to serve it.
Resource based marketing seeks a
long term fit between the
requirements of the markets and the
abilities of the organisation to
compete in it.
6-47
Marketing approaches
Market needs
Customer-led
marketing
Customer-led
marketing
Customer-led
marketing
Organizational capabilities
6-48
Organizational stakeholders
Customers
Shareholdrs
Distributors
Focal
Organizat
ion
Managers
Suppliers
Employees
6-49
Contribution of marketing to
stakeholders objectives
Firms that do well in marketplace
also do well financially
Adding value of firm for shareholders
Firm adopting market-oriented
culture perform better financially
than those that do not
6-50
Marketing and performance outcomes
Marketoriented
culture
Marketing
resources
Market
performance
Assets
Customer
satisfaction
& loyalty
capabilit
ies
Financial
performance
Sales
volume
& market
share
6-51
Marketing fundamentals
Set of basic and pragmatic marketing
principles that guide marketing
thought and action
Follow logic of value-based processes
described by webster
Their applications can revolutionize
how organizations respond to,
interact with, their customers
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Principle 1: Focus on the
customer
High degree of customer focus-But
not blind focus!
Market-led approach
– What business are we in?
– What business could we be in?
– What business do we want to be in?
– What must we do to get into or
consolidate in that business?
6-53
Principle 2: Only compete in markets where
you can establish a competitive advantage
Choosing where to compete and
where to commit its resources
How attractive the market appears
Do we have the competencies and
skills to compete here?
6-54
Principle 3: Customers do not
buy products
Customers do not buy products ,
they buy what the product can do for
them – the problem it solves
6-55
Principle 4: Marketing is too
important to leave to the
marketing department (even if
there still is one)
Marketing is everyone’s job in the
organisation
6-56
Principle 5: Markets are
heterogeneous
Different customers, sub-markets
and segments; buy a car for cheap
transport from a to b or for
comfortable or save travel; different
benefits requirements
6-57
Principle 6: Markets and customers are
constantly changing
Markets are dynamic and products
have a limited life; need product and
service improvement; customer
expectations change
Two main processes of
improvement; innovation and
changes in technology (which is a
continuous process)
6-58
The role of marketing in the organization
Identify and communicate customer wants and
needs throughout the organization
Determine the competitive positioning to match
the needs of the customers with company
capabilities
Marshal all relevent organizational resources to
deliver customer satisfaction
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Identification of customer requirements
Identify and communicate customers
wants and needs throughout the
organisation
Identify the requirements of
customers and communicate them
effectively; who the customers are
and what will give them satisfaction
or create “customer delight”
Customers expectations, wants and need
must be understood and communicated
6-60
Deciding on the competitive
positioning to be adopted
Which target markets or markets the
organisation will seek to serve
Two main set of factors;
– First, how attractive the alternative
potential targets are
– Second, how well the company can
hope to serve potential target relative to
the competition
6-61
Implementing the marketing
strategy
Marshal all relevant organisational
resources to deliver customer
satisfaction
Implement the marketing strategy;
no gaps between offer, design,
production and delivery;
6-62
Social Responsibility and
Marketing Ethics
Social responsibility concerns a
firm’s obligation to improve its
positive effects on society and
reduce its negative effects.
Marketing ethics are the moral
standards that guide marketing
decisions and actions.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Final comments on Market
Orientation
An organization’s success in a dynamic business
environment is more dependent on adaptation to
changing and evolving customer needs/wants.
Higher degree of market orientation emanates from a
changing and dynamic market environment.
Lower degree of market orientation can be evidenced
in a market with a fixed set of customers whose
preferences are stable. Here, few changes are
expected in the marketing mix deliberation.
Source: Kohli and Jaworski (1990)
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Future of Marketing Theory and Practice
In the present “network-centric”
business environment, marketing
must be re-thought in ways
“dramatically different from the
traditional bureaucratic,
functional, self-contained
corporate forms” (Robert Lusch and Frederick Webster, Jr.
– University of Arizona – In MSI, Fall 2010)
The customer’s definition of value changes
continuously, and therefore marketing must be a
learning process.
Charles Blankson, Ph.D., Department of
Marketing & Logistics
Future of Marketing Theory and Practice
contd. – from USP to ROI
Recent marketing activities have
concentrated on creating a Unique Selling
Proposition (which evolved later into the
“value proposition”) to distinguish firms
from their competitors.
The shareholder and ROI became important.
Management concentrated on market
growth, market share, average unit price,
units sold, and cost control.
What suffered was the “long term view of
the firm”, positioning, innovation, employee
development, brand loyalty, sustainable
return on assets and so forth.
Important revision questions
Distinguish between marketing and selling.
What does the term “marketing concept” mean?
What are the differences between market orientation,
product orientation, selling orientation and CRM?
Explain why you think companies should be interested in
the application of marketing concept.
How could a company be market oriented?
The definition of marketing has been said to be too narrow
and does not reflect the way marketing is currently
conducted in modern business environment; how would
you define marketing to alleviate this problem?
Charles Blankson, Ph.D., Department of
Marketing & Logistics