Chapter 1 OVERVIEW OF MARKETING 1 1 What is Marketing A 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 a Desired outcome of marketing is an exchange i People giving up something in order to receive something they would rather have ii Five conditions must be met 1 There must be at least two parties 2 Each party has something that might be of value to the other party 3 Each party is capable of communication and delivery 4 Each party is free to accept or reject the exchange offer 5 Each party believes it is appropriate or desirable to deal with the other party 1 2 Marketing Management Philosophies A Production Orientation a Production orientation is a philosophy that focuses on the internal capabilities of the firm rather than on the desires and needs of the marketplace i If we build it they will come mentality ii Firms that succeed in competitive environments understand that they have to determine customer wants and adjust accordingly instead of focusing on what management thinks should be produced and hoping the product is desired by customers B Sales Orientation a Sales orientation is based on the ideas that people will buy more goods and services if aggressive sales techniques are used and that high sales result in high profits i To sales oriented firms marketing means selling things and collecting money ii Fundamental problem lack of understanding of the needs and wants of marketplace iii Despite quality of sales force they cannot convince people to buy things C Market Orientation unneeded wanted a Market orientation social and economic justification for an organization s existence is the satisfaction of customer wants and needs while meeting organizational objectives i Emphasizes what the customers think they are buying and it s perceived value 1 Focusing on customer wants and needs so the company can distinguish itself 2 from its competitors Integrating all the organization s activities including production to satisfy customer wants 3 Achieving long term goals for the organization by satisfying customer wants and needs legally and responsibly b Firms that adopt and implement the marketing concept are said to be market oriented i Sales rely on the consumers decision not aggressive sales ii Understanding the competitive arena and others strengths weaknesses D Social Marketing Orientation a Societal Marketing extends marketing concept to the concept of society at large i Preserve or enhance individuals and society s long term best interest 1 More durable reusable materials recyclable products E Who s in Charge a Internet has causes a shift in power from manufacturers and retailers to consumers and business users b Carefully studying customers and using deep market insights inform companies from the outside in view 1 3 Differences Between Sales and Market Orientations A The Organization s Focus a Sales oriented firms tend to be inward looking look at what they sell and not what the market wants benefits b External Market oriented focus put customers at the center of their business in ways most companies do poorly or not at all c Customer Value relationship between benefits and the sacrifice necessary to obtain those i Offer products that preform function to what the customers expect ii Earn trust earn a loyal customer base that grows with time iii Avoid unrealistic pricing e marketers eBay can lower prices now due to lower costs iv Give the buyer facts understand needs of customer and explain the product solution v Offer organization wide commitment to service after sales vi Co Creation allow the customer to customize their product experience d Customer Satisfaction customers evaluation of a good or service in terms of whether that good or service has met their needs and expectations e Building Relationships i New customers are launching points for developing and enhancing a long term ii Relationship marketing focuses on keeping and improving relationships with current customers f Customer Oriented Personnel i Empowerment delegation of authority which lead to employees gaining ownership attitudes and are expected to act the part 1 Gives customers the feeling that their concerns are being addressed and gives employees the feeling that their expertise matters ii Teamwork collaborative efforts of people to accomplish common objectives B The Firm s Business a Sales oriented firms defines business in terms of goods and services b Market oriented firms defines business in terms of the benefits its customers seek i Advantages to the market oriented approach 1 Ensures that the firm keeps focusing on customers and avoids becoming preoccupied with goods services or the internal needs 2 Encourages innovation and creativity by reminding people that there are many ways to satisfy customer wants 3 Stimulates an awareness of changes in customer desires and preferences so that product offerings are more likely to remain relevant C Those to Whom the Product is Directed a Market oriented recognize different customer groups want different features or benefits i Develop different goods services and promotional appeals ii Analyze the market and divides it into groups of people who are fairly similar in terms of selected characteristics b Customer Relationship Management CRM company wide business strategy designed to optimize profitability revenue and customer satisfaction by focusing on highly defined and precise customer groups i Shotgun Approach scattering messages far and wide across mass media ii Rifle Approach CRM marketers are homing in on individuals for each product a Sales oriented place higher premium on making a sale than on developing a long term D Firm s Primary Goal relationship b Market oriented make a profit by creating customer value providing customer satisfaction and building long term relationships with customers E Tools the Organization Uses to Achieve its Goals a Sales oriented seek to generate sales through intensive promotional activities and personal selling and advertising b Market oriented Recognize the four basic marketing mix decisions product decisions place distribution decisions promotion decisions and pricing decisions Chapter 2 STRATEGIC PLANNING FOR COMPETITIVE ADVANTAGE 2 1 The Nature of Strategic Planning A Strategic Planning managerial process of creating and maintaining a fit between the organization s objectives and
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