Principles of Marketing | Dissertation

Principles of selling DissertationDefinition of martingMarketing is part of all of our lives and touches us in some way every day. Most pile take that trade is only about the advertising and/or personal sell of goods and go. Advertising and interchange, however, ar just two of the m whatsoever merchandising activities.In general, tradeing activities ar all those associated with identifying the particular wants and ask of a target market of nodes, and then going about self-colored those customers better than the competitors. This involves doing market inquiry on customers, analyzing their take, and then making strategic decisions about overlap design, pricing, promotion and scattering.Philip Kotler says, Marketing is managing profitable customer relationships. The twofold goal of marketing is to attract bleak customers by promising superior tax and to keep and grow current customers by delivering satisfaction.Broadly defined, marketing is a social and managerial pr ocess by which individuals and groups obtain what they need and want through creating and exchanging place with others. Narrowly defined marketing involves building profitable, set-laden shift relationships with customers.In short, it has been defined as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.The new definition given by Ameri seat Marketing Association reads, Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that shake value for customers, clients, partners, and society at large.The marketing processCreate value for customers and build customer relationships hitch value from customers in returnIn the first four steps, companies work to understand consumers, create customer value and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. By creating value for customers, they in turn capture value from customers in the form of gross sales, profits and long name customer equity.Core models of marketingTarget Markets and SegmentationA marketer can r atomic number 18ly satisfy everyone in a market. Everyone in the market has divergent taste, likeliness, income and spending habit. Not everyone likes the same soft drink, automobile, college, and movie. Therefore, marketers start with market segmentation. They identify and profile distinct groups of buyers who might prefer or require varying harvest-times and marketing mixes. Market segments can be identified by examining demographic, psychographic, and behavioral differences among buyers. The unassailable then decides which segments present the greatest opportunitywhose needs the firm can receive in a superior fashion. The lucrative segment/s are selected or targeted for offering/selling the product. For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers as delivering some central benefit(s). For example, Volvo develops its railroad cars for the target market of buyers for whom auto- mobile safety is a major concern. Volvo, therefore, positions its car as the safest car a customer can buy.Customer Needs, Wants and DemandsNeeds are the staple human requirements. People need food, air, water, clothing, and shelter to survive. People also see strong needs for creation, education, and entertainment.The above needs reverse wants when they are directed to specific objects that might satisfy the need. An American needs food but may want a hamburger, French fries, and a soft drink. A person in Mauritius needs food but may want a mango, rice, lentils, and beans. Wants are conventiond by ones society.Demands are wants for specific products backed by an ferocity to pay. Many community want a Mercedes only a few are able to buy one. Companies essential measure non only how many people want their product but also how many would actually be willing and able to buy it.Product or OfferingCustomers needs and wants are fulfilled through a marketing offer or product. A product is any offering that can satisfy a need or want, such as one of the 10 basic offerings of goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.A marking is an offering from a kn give birth source. A brand name such as McDonalds carries many associations in the minds of people hamburgers, fun, children, fast food, and golden arches. These associations make up the brand image. All companies strive to build a strong, favorable brand image.Value and SatisfactionIn terms of marketing, the product or offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of which is perceived to deliver the nearly value. We define value as a ratio between what the customer gets and what he gives. The customer gets benefits and assumes costs, as shown in this equationBased on this equation, the marketer can adjoin the value of the customer offering by (1) raising benefits, (2) reducing costs, (3) raising benefits and reducing costs, (4) raising benefits by more than the raise in costs, or (5) big(p) benefits by less than the reduction in costs.Exchange and TransactionsExchange, the core of marketing, involves obtaining a desired product from someone by offering something in return. For exchange potential to exist, five conditions must be satisfiedThere are at least two parties.Each party has something that might be of value to the other party.Each party is capable of communication and voice communication.Each party is free to accept or reject the exchange offer.Each party believes it is re come to or desirable to deal with the other party.Whether exchange actually takes place depends upon whether the two parties can agree on terms that will leave them twain better off (or at least non worse off) than before. Exchange is a value-creating process beca make use of it normally leaves both parties better off.Marketing MixMarketers use numerous tools to elicit the desired responses from their target markets. These tools constitute a marketing mix. Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four Ps of marketing Product, Price, Place, and Promotion.Robert Lauterborn suggested that the sellers four Ps correspond to the customers four Cs.Winning companies are those that pick up customer needs economically and conveniently and with effective communication.Marketing Philosophies and ConceptsThere are five competing concepts under which organizations conduct marketing activities produc- tion concept, product concept, selling concept, marketing concept, and social mar- keting concept.The Production ConceptThe production concept, one of the oldest in crinkle, holds that consumers prefer products that are widely available and inexpensive. Managers of production-oriented lineagees concentrate on achieving high production efficiency, low-down costs, and mass distribution. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. It is also used when a fraternity wants to expand the market. Texas Instruments is a leading exponent of this concept. It concentrates on building production volume and upgrading technology in order to bring costs down, leading to trim back prices and expansion of the market. This orientation has also been a light upon strategy of many Japanese companies.The Product ConceptOther businesses are guided by the product concept, which holds that consumers favor those products that offer the most quality, performance, or innovative features. Manager s in these organizations focus on making superior products and improving them over time, assuming that buyers can surveil quality and performance.Product-oriented companies often design their products with little or no customer input, trusting that their engineers can design exceptional products. A General Motors executive tell years ago How can the public know what kind of car they want until they see what is availablefi GM today asks customers what they value in a car and includes marketing people in the very beginning stages of design.The Selling ConceptThe selling concept, another common business orientation, holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organizations products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers must be coaxed into buying, so the company has a battery of selling and promotion tools to stimulate buying.The selling concept is pract iced most aggressively with unsought goodsgoods that buyers normally do not think of buying, such as policy and funeral plots. The selling concept is also practiced in the nonprofit area by fund-raisers, college admissions offices, and policy-making parties.Most firms practice the selling concept when they produce overcapacity. Their look at is to sell what they make rather than make what the market wants.The Marketing ConceptThe marketing concept, in the mid-1950s, challenges the three business orientations we just discussed. The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than its competitors in creating, delivering, and communicating customer value to its chosen target markets.The marketing concept focuses on the needs of the buyer. Marketing is inattentive with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and in the end consuming it.The marketing concept rests on four pillars target market, customer needs, integrated marketing, and profitability. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates activities that affect customers, and produces profits by satisfying customers.The Societal Marketing ConceptSome necessitate questioned whether the marketing concept is an appropriate philosophy in an age of environsal deterioration, resource shortages, explosive nation growth, world hunger and poverty, and neglected social services. Are companies that successfully satisfy consumer wants necessarily acting in the best, long-term interests of consumers and societyfi The marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.Yet some firms and industries are criticized for satisfying consumer wants at societys expense. Such situations call for a new term that enlarges the marketing concept. We propose calling it the societal marketing concept, which holds that the organizations task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumers and the societys well-being.The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often confiicting criteria of company profits, consumer want satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept.Marketing vs. SellingOftentimes, marketing and sales are perceived interchangeably. solely in actuality, these are two different things. Selling is a small portion of the entire marketing scheme. Selling is the transaction where a pro duct is take awayred from the business owner to a buyer for a price. In contrast, marketing is a process that involves several steps ranging from the generation of a product idea to the delivery of that product to the customer.Even after delivery of the product to the customer, the marketing process continues with direct communication with the customer to obtain feedback about the product.Profits from satisfied customersTheodore Levitt of Harvard draw a perceptive contrast between the selling and marketing concepts Selling focuses on the needs of the seller marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his product into cash marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.The marketing concept rests on four pillars target market, customer needs, integrated marketing, and profitability. The selling concep t takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates activities that affect customers, and produces profits by satisfying customers.CHAPTER 2MARKETING surroundIn order to correctly identify opportunities and monitor threats, the company must begin with a thorough understanding of the marketing environment in which the firm operates. The marketing environment consists of all the actors and forces outside marketing that affect the marketing attentions ability to develop and maintain successful relationships with target customers.A companys marketing environment consists of the actors and forces outside marketing that affect marketing managements ability to develop and maintain successful relationships with its target customersImportanceThe mark eting environment offers both opportunities and threatsChanges in the marketing environment often occur at a rapid pace.Marketers tend to be trend trackers and opportunity undertakeers.The company must use its marketing seek and marketing intelligence systems to monitor the changing environment.A systematic scan of the environment attend tos marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the market place.The marketing environment is made up of a micro environmental and macro environment.The Companys MicroenvironmentThe micro environment consists of six forces (actors) close to the company that affect its ability to serve its customersThe company itself (including various internal departments)Suppliers.Marketing channel firms (intermediaries)Customer markets.Competitors.Publics.The CompanyThe first actor is the company itself and the role it plays in the microenvironment.Top management is responsible for setting the companys mission, objectives, broad strategies, and policies.Marketing managers must make decisions within the parameters established by top management.Marketing managers must also work about with other company departments. Areas such as finance, R D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals.All departments must think consumer if the firm is to be successful.SuppliersSuppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the companys overall customer value delivery system.One consideration is to watch supply availability (such as supply shortages).Another point of concern is the monitoring of price trends of key inputs.Marketing IntermediariesMarketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers.Resellers are distribution channel firms that help the company find customers or make sales to them.These include wholesalers and retailers who buy and resell merchandise.Resellers often perform important functions more cheaply than the company can perform itself. Seeking and working with resellers, however, is not well because of the baron that some demand and use.Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the nigh destination).Marketing services agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products to the right markets.Financial intermediaries (such as banks, extension companies, insurance companies, etc.) help finance transactions and insure against risks associated with buying and selling goods.CustomersThe company must study its customer markets closely because each market has its own special characteri stics. These markets normally includeConsumer markets (individuals and households that buy goods and services for personal consumption).Business markets (buy goods and services for further processing or for use in their production process).Reseller markets (buy goods and services in order to resell them at a profit). regime markets (agencies that buy goods and services in order to produce public services or transfer them to those that need them).International markets (buyers of all types, including political relations, in foreign countries).CompetitorsEvery company faces a wide range of competitors. A company must secure a strategic advantage over competitors to be successful in the marketplace. No single competitive strategy is best for all companies .PublicsA public is any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives. A company should prepare a marketing plan for all of its major publics as well as its customer markets.Generally, publics can be identified as beingFinancial publics.Media publics.Government publics.Citizen-action publics.Local publics.General public.Internal publics.The Companys MacroenvironmentThe macroenvironment consists of the larger societal forces that affect the microenvironmentDemographic.Economic.Natural.Technological.Political.CulturalThe company and all of the other actors operate in a larger macroenvironment of forces that shape opportunities and pose threats to the company. Major forces in the companys macroenvironment includeDemographic environmentDemography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people, and people make up markets.Demographic trends are constantly changing. Some of the more interesting trends areThe worlds population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties.The most important trend is the changing age construction of the population. Generational marketing is possible, however, caution must be used to avoid generational alienation.Changing family structureGeographic shifts in population will also alter demographics.Changing educational level In general, the population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future.The final demographic trend is the increasing ethnic and racial diversity .Economic EnvironmentThe economic environment includes those factors that affect consumer buying power and spending patterns. Major economic trends includeChanges in incomepersonal consumption (along with personal debt) has g one up (1980s) and the 1990s brought recession that has caused adjustments both personally and corporately in this country. In the 2000s, consumers are more careful shoppers.Value marketing (trying to offer the consumer greater value for their dollar) is a very serious strategy in the 2000s. material income is on the rise again but is being carefully guarded by a value-conscious consumer.Income distribution is still very skewed in the unite States and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a two-tiered market where there are those that are affluent and less affluent.Classes of consumers includeUpper classspending patterns are not affected by current economic events and who are a major market for luxury goods.Middle classsomewhat careful about its spending but can still afford the good life some of the time.Working classmust stick close to the basics of food, clothing, and shelter and must try tricky to save.Under class(persons on welfare and many retirees) must count their pennies when making even the most basic purchases.Changing consumer spending patternsConsider Engles Laws where differences were remark over a century ago by Ernst Engle regarding how people shift their spending across food, housing, transportation, health care, and other goods and service categories as family income rises. Spending patterns have generally supported his ideas.Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.Natural EnvironmentThe natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labeled the 1990s as the Earth Decade, where protection of the natura l environment became a major worldwide pop facing business and the public.Specific areas of concern wereShortages of raw materials. Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion.Increased pollution is a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming environmentally favorable and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging.Government intervention in natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.Concern for the natural enviro nment has spawned the so-called green movement.Environmentally sustainable strategies and practices are being created.Companies are recognizing a link between a healthy economy and a healthy ecology.Technological EnvironmentThe technological environment includes forces that create new technologies, creating new product and market opportunities.Technology is perhaps the most dramatic force shaping our destiny.New technologies create new markets and opportunities. Every new technology, however, replaces an older technology.The challenge is not only technical but also commercialto make practical, affordable versions of products.Political EnvironmentThe political environment includes laws, government agencies, and pressure groups that influence and throttle various organizations and individuals in a given society. Business is regulated by various forms of legislation.Governments develop public policy to guide commercesets of laws and regulations limiting business for the good of societ y as a whole.Almost every marketing activity is subject to a wide range of laws and regulations.Some trends in the political environment includeIncreasing legislation toProtect companies from each other.Protecting consumers from unfair business practices.Protecting interests of society against unrestrained business behavior.Changing government agency enforcement. New laws and their enforcement will continue or increase.Increased emphasis on morality and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment.The recent rash of business scandals and increased concerns about the environment have created fresh interest in the issues of ethics and social responsibility.The boom in e-commerce and Internet marketing has created a new set of social and ethical issues.Privacy issues are the primary concern.Another net income concern is that of access by vulnerable or unauthorized groups.Cultur al EnvironmentThe cultural environment is made up of institutions and other forces that affect societys basic values, perceptions, and behaviors. Certain cultural characteristics can affect marketing decision-making. Among the most dynamic cultural char- acterisitics arePersistence of cultural values. Peoples core beliefs and values have a high degree of persistence.Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government.Secondary beliefs and values are more open to change.Shifts in secondary cultural values. Because secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential.The Yankelovich observe has identified eight major consumer themesParadox.Trust not.Go it alone.Smarts really count.No sacrifices.Stress hard to beat.Reciprocity is the way to go.Me 2.Societys major cultural views are expressed inPeoples views of themselves. Peop le vary in their emphasis on serving themselves versus serving others..Peoples views of others. Observers have noted a shift from a me-society to a we-society. Consumers are spending more on products and services that will improve their lives rather than their image.Peoples views of organizations. People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes.Peoples views of society. This orientation influences consumption patterns. Buy American versus buying abroad is an issue that will continue into the next decade.Peoples view of reputation. There is a growing trend toward peoples feeling of mastery over nature through technology and the belief that nature is bountiful. Nature, however, is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years.Peoples views of the universe. Studies of the origin of man, rel igion, and thought-provoking ad campaigns are on the rise. Spiritual individualism may be a new theme.Chapter 3Marketing segmentationMarket SegmentationIt is the process of dividing a market into distinct group of buyers who have distinct needs, characteristics or behavior and who might require separate product or marketing mixes.Market segmentA group of consumers who respond in a similar way to a given set of marketing efforts.For Example In the car market, consumers who want the biggest, most comfortable car regardless of the price make up one market segment. Consumers who care mainly about price and operating economy make up another segment.Requirements of Market SegmentsIn addition to having different needs, for segments to be practical they should be evaluated against the following criteriaIdentifiable the differentiating attributes of the segments must be measurable so that they can be identified. favorable the segments must be reachable through communication and distributi on channels.Substantial the segments should be sufficiently large to justify the resources required to target them.Unique needs to justify separate offerings, the segments must respond differently to the different marketing mixes.Durable the segments should be relatively stable to minimize the cost of frequent changes.A good market segmentation will result in segment members that are internally homogenous and externally heterogeneous that is, as similar as possible within the segment, and as different as possible between segments.Bases for Segmentation in Consumer MarketsConsumer markets can be segmented on the following customer characteristics.GeographicDemographicPsychographicBehavioralGeographic SegmentationThe following are some examples of geographic variables often used in segmentation.Region by continent, country, state, or even neighborhoodSize of metropolitan area segmented according to size of populationPopulation density often classified as urban, suburban, or ruralClima te according to weather patterns common to certain geographic regionsDemographic SegmentationSome demographic segmentation variables includeAge sexualityFamily sizeFamily lifecycleGeneration baby-boomers, Generation X, etc.IncomeOccupationEducationEthnicityNationalityReligionSocial classMany of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the c