Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
 Structure of Flows
Resources Resources
Money Resource Money
markets
Services,
money Taxes,
goods
Services, Taxes
money
Manufacturer Government Consumer
markets markets markets
Taxes,
goods Services
Services, Taxes,
money goods
Money Money
Intermediary
Goods, services markets Goods, services
Core Concepts of Marketing
Target
Target Markets
Markets &
& Segmentation
Segmentation
Needs, Wants, and Demands
Product
Product or
or Offering
Offering
Value
Value and
and Satisfaction
Satisfaction
Marketing
Marketing Channels
Channels

Supply
Supply Chain
Chain

Competition
Competition
Marketing
Marketing Environment
Environment
AMA “ marketing is an organisational function and
a set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organisation and its stakeholders”

“ marketing is an art and science of choosing

target markets and getting, keeping, and
growing customers through creating , delivering
and communicating superior customer value”
 Defining Marketing
Marketing is a societal process by
which individuals and groups obtain
what they need and want through
creating, offering, and freely
exchanging products and services of
value with others.
- Philip Kotler (p. 7)
 What is marketed?
• Goods
• Services
• Events
• Experiences
• Persons
• Places
• Properties
• Organisations
• Information
• Ideas
 The Four Ps
The Four Cs

Marketing
Mix

Place
Product

Conven-
Customer
Solution Price Promotion ience

Customer Communication
Cost
Company Orientations Towards
the Marketplace
Consumers prefer products that are
Production
Production Concept
Concept widely available and inexpensive

Consumers favor products that

Product
Product Concept
Concept offer the most quality, performance,
or innovative features

Consumers will buy products only if

Selling
Selling Concept
Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing
Marketing Concept
Concept markets & delivering value
better than competitors
 Customer Delivered Value
Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
 Customer-Oriented
Organization Chart
Customers

Front-line people

Middle management

s
C

er
us

om
t

Top
om

t
us
manage-
er

C
s

ment
 Determinants of Customer
Delivered Value
Image
Image value
value
Personnel
Personnel value
value Total
Total
customer
customer
Services
Services value
value value
value
Product
Product value
value Customer
Customer
delivered
delivered
Monetary
Monetary cost
cost value
value

Time
Time cost
cost Total
Total
customer
customer
Energy
Energy cost
cost cost
cost
Psychic
Psychic cost
cost
Satisfaction is a person’s
feelings of pleasure or
disappointment resulting
from comparing a product’s
perceived performance (or
outcome) in relation to his or
her expectations.
 High Performance Business

Set strategies to
satisfy key .. Stake-
holders

By improving Processes
critical business...

and
Resources Organization
aligning...
 The Generic Value Chain

Firm infrastructure
Activities
Support

Human resource management

Ma
Technology Development

rg in
Procurement

Market-

n
Out- Serv-

rgi
Inbound Opera- ing
bound ice

Ma
Logistics tions and
Logistics
sales

Primary Activities
 Levi Strauss’
Value-Delivery Network

Order Order Order Order

Du
Du Pont
Pont Milliken
Milliken Levi’s
Levi’s Sears
Sears Customer
(Fibers)
(Fibers) (Fabric)
(Fabric) (Apparel)
(Apparel) (Retail)
(Retail) Customer

Delivery Delivery Delivery Delivery

Competition is between networks, not companies.

The winner is the company with the better network.
 Satisfied Customers:
• Are loyal longer
• Buy more (new products & upgrades)
• Spread favorable word-of-mouth
• Are more brand loyal (less price sensitive)
• Offer feedback
• Reduce transaction costs
 Levels of Relationship
Marketing
High Medium Low
margin margin margin
Many Basic or
customers/ Accountable Reactive reactive
distributors

Medium
number of Proactive Accountable Reactive
customers/
distributors

Few
customers/ Partnership Proactive Accountable
distributors
 Customer Development

Suspects

First-time Repeat
Prospects customers customers
Clients Advocates Partners

Disqualified
prospects Inactive or
ex-customers
 People stop buying from people for five primary
reasons:

• 4% aren't there any more.

• 5% change to another supplier on the
recommendation of a friend or business
associate.
• 9% change to the competition because
there is a true, competitive advantage, an
honest benefit offered over your product or
service.
• 14% change because they are unhappy
with the results of the service or product
you are providing.
• 68% change because of lack of caring
expressed by some one person inside your
company!
 Customer/Product
Profitability Analysis
Customers
C1 C2 C3

+ + +
Highly
P P1 profitable
r product

o P2
+ Profitable

- -
d product

u P3 Losing
c

-
product

t
s
P4
+High
Mixed-bag Losing
Mixed-bag
product

profit
customer customer
customer
 The Profit Triangle

Int
n

er
io

na
at
re

lo
ec

pe
lu

Profit

ra
Profit
Va

tio
s n
Competitive advantage
 Objectives
• Corporate and division strategic planing
• Business unit planning
• The marketing process
• Product level planning
• The marketing plan
Strategic-Planning, Implementation,
and Control Process

Planning Implementation Control

Corporate Measuring
planning Organizing results
Division
planning Diagnosing
results
Business Implementing
planning
Taking
Product corrective
planning action
Good Mission Statements:

Limited number of goals

Stress major policies & values

Define competitive scopes