This is called 'High Involvement'
Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organisational objectives (1985, American Marketing Association).
Marketing is a management process.
Marketing is about giving customers what they want.
History:
• First Era Classical School (1900–50): These theories focused on aggregate market behaviour and focused on the use of economics and sociology.
• Second Era Managerial Marketing (1950-75): This era began in marketing departments within managerial or business schools, and they focused their attention on individual behaviour, but continued their reliance on borrowing techniques from social sciences.
• Third Era Behavioural Marketing School (1965-present): These schools have borrowed from different branches, mostly psychology, in an effort to gain even greater insight into individual consumer behaviour.
• Fourth Era Adaptive/Strategic Marketing School (1980 —present): once again, a return to a more macro-or aggregate focus. Influence of M. Porter and the competitive advantage paradigm.
Marketing is not a theoretical discipline. It is a framework composed of different disciplines.
Though its roots are in industrial economics,actually it is a composite of three academic
disciplines: Economics; Psychology and Management
2.Marketing concepts
Production: focus on producing more, selling high volumes; controlling costs and production efficiency. (Ford 1920s — Model T)
Product: focus on improving quality; assumes that customers want a better quality version of the same product. ( GM 1930s — Diversified product line)
Selling: focus on aggressive sales and promotion to sell whatever the organisation wants to make; sellers needs come first
Marketing: focus on defining customer needs and then developing offerings that deliver what the customer wants; customer needs come first .
• Production Concept
Concentrate on achieving high production efficiency, low cost & mass distribution
Consumers prefers inexpensive items in developing countries.
This concept is the oldest of the concepts in business.
It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution.
They assume that consumers are primarily interested in product availability and low
prices. This orientation makes sense in developing countries, where consumers are more
interested in obtaining the product than in its features
• Product Concept
Consumers favors quality, performance or innovative features
This orientation holds that consumers will favor those products that offer the most
quality, performance, or innovative features.
Managers focusing on this concept concentrate on making superior products and
improving them over time.
They assume that buyers admire well-made products and can Appraise quality and
performance.
However, these managers are sometimes caught up in a love affair with their product
and do not realize what the market needs.
Selling Concept
• Consumers & businesses if left alone will not buy enough
• Undertake aggressive Selling & Promotion
• Consumers shows buying inertia until coaxed
• Many use it at the time of over capacity or competition
This is another common business orientation. It holds that consumers and
businesses, if left alone, will ordinarily not buy enough of the selling company’s
products.
The organization must, therefore, undertake an aggressive selling аnd promotion
effort.
This concept assumes that consumers typically show buying resistance and must be
coaxed into buying.
It also assumes that the company has a whole battery of effective selling and
romotional tools to stimulate more buying.
Most firms practice the selling concept when they have overcapacity. Their aim is to
sell what they make rather than make what the market wants.
• Marketing Concept
More effective than competitors in creating, delivering, and communicating superior customer value
Putting people first
Fulfilling buyers needs
This is a business philosophy that challenges the above three business orientations.
Its central tenets crystallized in the 1950s.
It holds that the key to achieving its organizational goals (goals of the selling
company) consists of the company being more effective than competitors in creating,
delivering, and communicating customer value to its selected target customers.
The marketing concept rests on four pillars: target market, customer needs,
Integrated marketing and profitability.
Factors leading to Marketing Concept:
• Sales Decline
• Slow Growth
• Changing buying Patterns
• Increasing competition
• Increasing marketing expenditure
Distinctions between the Sales Concept and the Marketing Concept:
The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the needs of the buyer.
2. The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).
The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage.
Societal marketing concept holds that organization should not develop marketing strategy by only keeping customer needs and wants in mind but also consider the well being and betterment of society.
• Societal Concept
To determine the needs, wants and interest of the Target Market and deliver the desired satisfaction that preserves the society's well being
• Environment deterioration
• Resource Shortages
• Population Growth
• Unhealthy Food
This concept holds that the organization’s task is to determine the needs, wants, and
interests of target markets and to deliver the desired satisfactions more effectively and
efficiently than competitors (this is the original Marketing Concept).
Additionally, it holds that this all must be done in a way that preserves or enhances the
consumer’s and the society’s well being.
• Internal marketing environment
The market environmentis a marketing term and refers to all of the forces outside of marketing that affect marketing management ‘s ability to build and maintain successful relationships with target customers.
Internal driving forces are those kinds of things, situations, or events that occur inside the business, and are generally under the control of the company. Examples might be as follows.
• organization of machinery and equipment
• technological capacity
• organizational culture
• management systems
• financial resources and management
• employee morale
• marketing research
External marketing environment
External factors , these include
Macro factor and micro factors.
Macro factors are the one that affect the organization indirectly, these are (pestel)
• Political
• enviroment
• socia-cultural
• technological and
• Ecological
• leagal
while micro factors are those which affect the organization directly it involve
• customers
• competitors
• suppliers and
• public
5.Macro environment
The Macroenvironment consist of the larger societal forces that affect the macro environment-demographics, economic, natural , technological, political, & cultural forces.
The economic environment includes those factors that affect consumer purchasing power and spending patterns.
There are six major forces in the company’s
Macroenvironment:
• Demographic.
1) It is of major interest to marketers because it involves people and people make up markets.
2) 1)The world’s 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.
3) The most important trend is the changing age structure of the population. life expectancy is increasing.
4) Baby boomers following World War II have produced a huge bulge´ in our population’s age distribution. The new prime market is the middle age group
• Economic.
1)The economic environment includes those factors that affect consumer purchasing power and spending patterns.Personal consumption has gone up (2000s) and the world economic crises of 2008 brought recession that has caused adjustments both personally and corporately in this country.
2)Today, consumers are more careful shoppers
• Natural.
• 1) Shortages of raw materials.
Resourses 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.
2)Increased pollutionis a worldwide problem. Industrial damage to the environment is very serious. However, lack of adequate funding, especially in third world countries, is a major barrier.
3)Natural Environmentinvolves 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.
4)Government interventionin 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.
5)Environmentally sustainable strategies.The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.
• Technological.
1)The technological environment includes forces that create new technologies, creating new product and market opportunities.
2)Technology is perhaps the most dramatic force shaping our destiny.
3)New technologies create new markets and opportunities.
4)Faster pace of technological change. Products are being technologically outdated at a rapid pace.
5)There seems to be almost unlimited opportunities being developed daily.
• Political.
1)The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business.
2)Governments develop public policyto guide commerce -sets of laws and regulations limiting business for the good of society as a whole.
3)Almost every marketing activity is subject to a wide range of laws and regulations.
• Cultural.
1)People’s views of themselves.
People vary in their emphasis on serving themselves versus serving others.
In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary.
2)People’s 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.
3)People’s 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. Honesty in appeals is a must.
• Micro environment
The Microenvironment consist of the factors close to the company that affect the ability to serve its customers the company, suppliers, marketing intermediaries, customer markets, competitors , & publics.
The microenvironment consists of five components.
• The first is the organization’s internal environment its
several departments and management levels as it affects
marketing management's decision making.
• The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries(middlemen, physical distribution firms, marketing-service agencies, financial intermediaries).
• The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets.
• The fourth component consists of the competitors facing the organization.
• The fifth component consists of all the publics that have an actual or potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, and internal publics.
The microenvironment consists of six forces close to the company that affect its ability to serve its customers.
This includes all the elements existing within the company’s paradigm.
• The Company
a) Top management is responsible for setting the company’s mission objectives, broad strategies, and policies.
b) Marketing managers must make decisions within the parameters established by top management.
c) All departments must think about consumer if the firm is to be successful. The goal is to provide superior customer value and satisfaction.
• Suppliers
a)Suppliers 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 company’s overall customer value delivery system.
b)One consideration is to watch supply availability (such as supply shortages).
Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored
• Marketing Intermediaries
a)Resellersare distribution channel firms that help the company find customers or make sales to them. However, seeking and working with resellers is not easy because of the power that some demand and use.
b)Physical distribution firmshelp the company to stock and move goods from their points of origin to their destinations.
c)Marketing service agencies(such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products.
d)Financial intermediaries(such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks
• Customers
a)Consumer markets(individuals and households that buy goods and services for personal consumption).
b)Business markets(buy goods and services for further processing or for use in their production process).
c)Reseller markets(buy goods and services in order to resell them at a profit).
d)Government markets(agencies that buy goods and services in order to produce public services or transfer them to those that need them).
e)International markets(buyers of all types in foreign countries).
• Public and Many Other Stakeholders
a)Financial publics -influence the company’s ability to obtain funds.
b)Media publics-carry news, features, and editorial opinion.
c)Government publics-take developments into account.
d)Citizen-action publics-a company’s decisions are often questioned by consumer organizations.
e)Local publics-includes neighborhood residents and community organizations.
f)General publics- a company must be concerned about the general public’s attitude toward its products and services.
g)Internal publics-workers, managers, volunteers and the board of directors.
Competitors
a)Every company faces a wide range of competitors.
b)A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace.
c)No single competitive strategy is best for all companies.
8. Market system
• Market consists of:
• Consumers - create a demand for a product
• Demand
• the amount consumers desire to purchase at various prices
• Not what they will buy, but what they would like to buy!
• Effective demand – must be willing AND able to pay
• Market demand – consists of the sum of all individual demand schedules
in the market
Ось x Quantity Bought and Sold (000s)
Ось У Price
S- A shift in the demand curve to the left will reduce the demand to 300 from 500 at a price of £5. Suppliers do not have the information or time to adjust supply immediately and still offer 600 for sale at £5. This results in a market surplus (S > D)
D- In an attempt to get rid of surplus stock, producers will accept lower prices. Lower prices in turn attract some consumers to buy. The process continues until the surplus disappears and equilibrium is once again reached.
Квадрат-shortage
Orange line- D
Ось x- Quantity Bought and Sold (000s)
Ось y – Price
9.Demand Curve
• Market demand – consists of the sum of all individual demand schedules
in the market
• Represented by a demand curve
• At higher prices, consumers generally willing to purchase less than at lower prices
• Demand curve – negative slope, downward sloping from left to right
Ось x Quantity Demanded (000s)
Orange line The demand curve slopes downwards from left to right (a negative slope) indicating an inverse relationship between price and the quantity demanded. Quantity demanded will be higher at lower prices than at higher prices. As price falls, quantity demanded rises. As price rises, quantity demanded falls
The Demand Curve 2
• The level of demand – determines where on the graph it sits
• Low demand – nearer the origin
• High demand – further from the origin (assuming same scale)
• Dependent on a variety of factors
• Demand curve moves in response
to changing factors
The Demand Curve 3
• Factors influencing demand
D = f (Pn,Pn…Pn-1, Y, T, P, A, E)
Where:
• Pn = Price
• Pn…Pn-1 = Prices of other goods – substitutes and complements
• Y = Incomes – the level and distribution of income
• T = Tastes and fashions
• P = The level and structure of the population
• A = Advertising
• E = Expectations of consumers
The Demand Curve 4
Changes in any of the factors other than price causes the demand curve to shift either:
Left (Less demanded at each price) or
Right (More demanded at each price)
The Demand Curve 5
Ornage line- D1
D1Changes in any of the factors affecting demand other than price cause the entire demand curve to shift to the left (less demanded at each price) or to the right (more demanded at each price).
10.Customers Behaviour
Buyer behavior involves both simple and complex mental processes.
Marketers cannot capture human nature in its entirety but we can learn a lot about customers through research, observation and thinking.
A customer's approach to purchasing a product or service is influenced by their situation - whether they have money and how important, frequent, risky or urgent the purchase is to them in their situation.
Many purchases are influenced by a whole host of emotional reasons like esteem and image.
'Low Involvement Purchases'. In these situations, consumers can fall into a routine purchasing pattern which requires little thought and even less effort.
Whenever the need is stimulated - a particular brand is automatically purchased. This is called 'Routinised Response Behaviour.'
Alternatively, an expensive high risk infrequent purchase like your first computer will require a lot of detailed information and careful analysis before deciding which machine.
This is called 'High Involvement'.
Here the consumer goes through an extensive problem solving process - searching and collecting information, evaluating it and eventually deciding on a particular choice.
There is a third type of buying situation. This is where the customer has had some experience of buying a particular type of product or service before. There is less risk attached and less information is required. This is called 'Limited Problem Solving'.
11.Custom Loyalty
The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers. However, customer loyalty includes much more. It is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide more business.
Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer loyalty programs is happy customers who will return to purchase again and persuade others to use that company's products or services. This equates to profitability, as well as happy stakeholders.
12.Swot Analysis
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues.
SWOT stands for strengths, weaknesses, opportunities, and threats
• Strengths and weaknesses are internal factors. Opportunities and threats are external factors
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