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AN OVERVIEW OF MARKETING

PERSPECTIVES ON MARKETING

We could study marketing from the perspective of

  • Sellers
  • Consumers
  • Public policy makers
For the most part, we will take a seller's perspective.  Consumerism has to do with a focus on the rights of consumers.  Public policy makers include those who make laws (or set industry standards) that affect businesses.


MARKETING

Marketing is the process of:

  • creating, distributing, promoting, and pricing
    goods, services, ideas, people, places, and organizations
    in a dynamic environment
    with the result of satisfaction for both buyer and seller.

Note that this definition includes controllable marketing factors, a product, uncontrollable marketing factors, and an exchange that results in satisfaction for both parties of the exchange.


EXCHANGE
obtaining something desired for giving something in return

  • simple exchange
    E.g., you pay $50 to a mechanic who repairs your car.

  • complex exchange
    E.g., a drug manufacturer promotes products to physicians who write prescriptions.  You as the final consumer, however, purchase the prescribed product from a pharmacist.  There are many beneficiaries, including the manufacturer, the physician, the pharmacist, and you, but no direct exchange relationship between you and the manufacturer or even between you and the prescribing physician.

Satisfaction to all parties should be the result of an exchange.


VALUE, SATISFACTION, AND QUALITY

customer value
what the customer gains from owning and using a product
  -minus-
the costs of obtaining the product

customer satisfaction
perceived product performance
  -minus-
expectations for performance

i.e., satisfaction is a function of rewards - costs

If you bought a cheap screwdriver for fifty cents, and it broke the first time you used it, would you believe that you received good value for your money?  Would you be dissatisfied?  If you bought an expensive, name-brand screwdriver and it broke, would you be more or less dissatisfied?  Use the above equations to answer these questions.  (Note that the process of satisfaction is actually more complicated than this.)

quality
the ability of a product to perform its functions as expected by the buyer

conformance to specifications

Is a gold plated screwdriver of higher quality than a nickel plated screw driver?  What if the gold plated screwdriver breaks the first time that you use it and the nickel plated screw driver never breaks in even the toughest applications - which screwdriver is of higher quality?

Remember that providing more of some attribute merely makes the product more expensive, not better, if it does not provide additional value to the prospective buyer.


PRODUCT
anything, tangible or intangible, received in an exchange to satisfy a want or need

need
a state of deprivation or tension that leads to motivation

wants
needs that are shaped by culture and individual personality

Americans like to have desert after a fancy meal.  You don't need that piece of cake, but it is on the menu because the restaurant knows that you want it.  Students from countries with a socialist background sometimes have trouble understanding that marketing fills wants as well as needs, but keep in mind that either results in motivation to buy. 


PRODUCTS

Good:
a tangible physical entity that one can touch

  • e.g., car, computer, shirt

Service:
an action that one party can offer to another which provides an outcome with intangible benefits but does not result in the ownership of anything

  • e.g., marketing class, haircut, bank machine transaction

Idea:
a concept, philosophy, image, or issue

  • e.g., messages of: don't do drugs, do use condoms, don't wear fur, do eat meat

Entities such as people, places, and organizations can also be products.  A political candidate provides promises of future performance in exchange for your vote.  A state or country can promise low taxes and operating expenses to attract businesses which provide jobs.


MARKETING MIX VARIABLES
also known as the 4Ps

  • Product
  • Price
  • Promotion
  • Distribution (place)

These are directed toward a target market, which is a group of people or organizations at which the organization is aiming its products.

A market can be all actual and potential buyers of a product.

These 4Ps are the controllable factors in marketing because the marketer generally has direct control over the design of the product that is offered, the price level at which the product is offered, the means and amount used in promoting the product, and ways that the product is distributed to reach its final consumer.  This marketing mix would form the basis of initial questions that are asked by a marketing consultant. 


MARKETING OCCURS IN A DYNAMIC ENVIRONMENT

External factors that are constantly changing:

  • competition
  • economic conditions
  • political pressures
  • laws
  • regulations
  • technological advances
  • sociocultural factors
  • and others

These factors affect both customers and marketers, creating both opportunities and threats for the marketer.  Although these are uncontrollable factors to the marketer, knowledge of the environment surrounding an organization helps the marketer to take advantage of opportunities and to steer clear of threats.


MARKETING CONCEPT

  • a managerial philosophy that an organization should
    try to satisfy customers needs
    through activities
    that allow the organization to achieve its goals

Customer satisfaction is the major aim of the marketing concept.

Therefore, the achievement of organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than do competitors.

The idea is that a focus merely on, say, profits, will not necessarily meet buyer needs, and could result in decreased sales and, therefore, decreased profits.  E.g., raising prices will increase profits in the short run, but might ultimately chase away customers.

On the other hand, a blind focus on customer satisfaction could result in putting the organization out of business. E.g., increasing quality and lowering prices might result in great customer satisfaction, but could also result in such high costs that the company can no longer pay shareholders and employees, or no longer has the profits to invest into the research and development of new products to replace older obsolete products.

Those entertaining dog-and-pony consultants who blindly preach "quality" and "give customers what they want at any cost" are just as dangerous as the organizational "bean counters" with a cost-cutting production orientation.  Both are fools and neither understands the notion of the marketing concept.


PSEUDO EVOLUTION OF THE MARKETING ORIENTATION

Note that there is some controversy regarding the notion of eras in marketing and that not all textbooks will include these ideas.  The idea is here considered to be conceptually useful, albeit without dates.  That is, consider that there are different orientations with regard to marketing, and it is currently appropriate for some organizations to have a selling orientation, for others to have a marketing orientation, and for others to have a societal orientation.

Production Orientation:
make things and people will buy them

  • Sales are increased by producing more.
  • Profits are increased by cutting expenses (scientific management).
  • Works if demand exceeds supply.

Sales Orientation:
find people who need what you have because supply exceeds local demand

  • Sales are increased with greater selling efforts.
  • Profits are increased by selling more.
  • Works if there are a lot of people who need what you have, they aren't aware of many choices, and they are difficult to identify or reach.

Marketing Orientation:
find out what people need before you make something because they have many choices.

  • Sales and profits are increased by better meeting customers' needs than is done by competitors.
  • Works if prospective buyers are aware of competitive offerings.

During the evolution of an economy or social system, if there are not enough products available to meet consumer demand, organizations can produce whatever they want without regard to consumer needs (production orientation).  When competition exists, however, a bean-counter mentality will probably destroy an organization's reputation by dictating that costs be reduced in order to increase profits.  Profits are increased in the short run while customers (and revenues) leave in the long run.

If prospective buyers have knowledge products and competition, as when sales people visit prospective buyers to promote competing products, then buyers with choices will buy the products which best suit their needs and wants (selling orientation).  When prospective buyers have enough choices, only those organizations that can anticipate buyer needs before production will be able to make the best product at the lowest cost, and will, therefore, achieve sales (marketing orientation).

Most successful organizations in the U.S. now maintain a marketing orientation - doing a better job than the competition of anticipating prospective buyer needs and wants.  If I design a product that better meets people's needs and wants, and you and I both launch our products at the same time, people will buy mine and you won't survive.  Note, however, that it is possible in many industrial situations to hold a sales orientation.  If I manufacture wiring harnesses used in the aircraft industry, producing a better product than the competition won't work in absence of a sales force.  In this case, I need to do a better than the competition at finding the right people in the right organizations in the right industry who would use my wiring harnesses.

Societal Marketing Concept:
a philosophy that focuses on balancing:

  • satisfaction of customers' needs
  • satisfaction of long-term societal needs
  • satisfaction of the organization's objectives

Would you rather buy gas from a company that recently experienced a second tanker accident, spilling millions of gallons of oil into the ocean, or from a company that has a reputation for being environmentally conscious?

If a fast food company has a reputation for donating profits to worthy causes which benefit children in hospitals, would you be more or less likely to sympathize with the company when someone is seriously burned from a cup of hot coffee?

Is public sympathy likely to be supportive of a software company that is under investigation worldwide for problems generally related to "unfair competition" if that company is one of the biggest in the world and yet has given back only a small percentage of its profits with regard to social issues?

The societal marketing concept, an emphasis on social responsibility, suggests that a focus merely on the exchange relationship between the company and customers might not be sufficient to sustain long term success.


RELATIONSHIP MARKETING
marketing activities that are performed with the intention of developing and managing long-term, trusting customer relations

Relationship marketing relies on developing trust and confidence in both buyer and seller and on developing mutual dependency.


MARKETING MANAGEMENT

  • analysis,
  • planning,
  • implementation,
  • and control
  • of programs designed to create, build, and maintain programs of product design, promotion, pricing, and distribution.

One important result of these activities should be a marketing plan and a periodic review of this plan.  If a fast food company has a reputation for donating profits to worthy causes which benefit children in hospitals, would you be more or less likely to sympathize with the company when someone is seriously burned from a cup of hot coffee?

Is public sympathy likely to be supportive of a software company which is under investigation worldwide for problems generally related to "unfair competition" if that company is one of the biggest in the world and yet has given back only a small percentage of its profits with regard to social issues?

The societal marketing concept suggests that a focus merely on the exchange relationship between the company and customers might not be sufficient to sustain long term success.


MARKETING MANAGEMENT

  • analysis,
  • planning,
  • implementation,
  • and control
  • of programs designed to create, build, and maintain programs of product design, promotion, pricing, and distribution.

One important result of these activities should be a marketing plan and a periodic review of this plan.


edited 31 MAY 05