Principles of Marketing | Dissertation

Principles of market DissertationDefinition of merchandise grocerying is part of tout ensemble of our lives and touches us in close to way every day. Most mountain think that marting is only approximately the advertising and/or personal sell of goods and run. Advertising and change, however, be just twain of the many market activities.In general, selling activities are all those associated with identifying the particular compulsions and postulate of a sign market of guests, and whence going about satisfying those nodes better than the competitors. This involves doing market research on guests, analyzing their needs, and then do strategic decisions about product design, pricing, promotion and diffusion.Philip Kotler says, Marketing is managing profitable customer relationships. The twofold goal of merchandise is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction.Broadly defined, merchandisin g is a social and managerial cognitive process by which individuals and groups obtain what they need and motive through creating and exchanging value with others. Narrowly defined marketing involves building profitable, value-laden exchange 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 transport value from customers in re originate.The new definition given by Ameri bath Marketing Association reads, Marketing is the bodily function, score of institutions, and processes for creating, communicating, delivering, and exchanging offerings that hurl value for customers, clients, partners, and society at large.The marketing processCreate value for customers and build customer relationships Capture value from customers in returnIn the first four steps, companies work to agnise consumers, create customer value and build strong customer relationships. In the fina l 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 sales, profits and long term customer equity.Core conceptions of marketingTarget Markets and sectionalisationA marketer can rarely satisfy everyone in a market. Everyone in the market has dissimilar taste, likeliness, income and expense habit. Not everyone likes the same soft drink, automobile, college, and movie. Therefore, marketers start with market segmentation. They identify and indite distinct groups of buyers who might prefer or require varying products and marketing mixes. Market segments can be identified by examining demographic, psychographic, and behavioral differences among buyers. The firm then decides which segments present the greatest opportunitywhose needs the firm can meet in a superior fashion. The lucrative segment/s are selected or targeted for offering/selling the product. For each chosen target m arket, 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 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 grassroots human requirements. commonwealth need food, air, water, clothing, and shelter to survive. People also have strong needs for creation, education, and entertainment.The above needs become wants when they are localiseed to particular proposition 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 shaped by ones society.Demands are wants for specific products backed by an magnate to pay. many a(prenominal) people want a Mercedes only a few ar e able to buy one. Companies mustiness measure not only how many people want their product but also how many would actually be get outing 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, work, experiences, events, persons, places, properties, organizations, information, and ideas.A brand is an offering from a known 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. revalue and SatisfactionIn terms of marketing, the product or offering will be victorious 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 most value. We define value as a ratio between what the customer gets and what he gives. The customer gets benefits and assumes costs, as staten in this equationBased on this equation, the marketer can increase the value of the customer offering by (1) raising benefits, (2) reduction costs, (3) raising benefits and reducing costs, (4) raising benefits by more than the raise in costs, or (5) lowering 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 delivery.Each party is abandon to accept or reject the exchange offer.Each party believes it is attach or desirable to deal with the other party.Whether exchange actually takes place depends upon whethe r the two parties can agree on terms that will leave them both better off (or at least not worse off) than before. Exchange is a value-creating process because it normally leaves both parties better off.Marketing MixMarketers use numerous tools to elicit the desired receipts 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 bodeed 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 meet 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 conce pt, and societal mar- keting concept.The Production ConceptThe production concept, one of the oldest in business, holds that consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries, where consumers are more fire in obtaining the product than in its features. It is also used when a social club wants to expand the market. Texas Instruments is a leading exponent of this concept. It concentrates on building production stack and upgrading technology in order to bring costs down, leading to lower prices and expansion of the market. This orientation has also been a key strategy of many Nipponese 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. Manage rs in these organizations focus on making superior products and improving them everyplace time, assuming that buyers can appraise quality and performance.Product-oriented companies often design their products with little or no customer input, bank that their engineers can design exceptional products. A General Motors executive said 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 allow ins marketing people in the very nonplusning 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 caller-out has a battery of selling and promotion tools to stimulate buying.The selling con cept is practiced most aggressively with unwanted goodsgoods that buyers normally do not think of buying, such as insurance and funeral plots. The selling concept is also practiced in the nonprofit area by fund-raisers, college admissions offices, and political parties.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.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 preoccupied with the idea of satisfying the needs of the customer by bureau 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, structured marketing, and profit big businessman. 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 haves profits by satisfying customers.The Societal Marketing ConceptSome have questioned whether the marketing concept is an appropriate philosophy in an age of milieual deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that successfully satisfy consumer wants of necessity acting in the best, long-run 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 fo r 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 efficaciously 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 symmetricalness 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. But in actuality, these are two different things. Selling is a small function of the entire marketing scheme. Selling is the transaction where a product is transferred from the business owner to a buyer for a price. In contrast, marketing is a process that involves some(prenominal) 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 drew 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 concept takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promoting to throw 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 ENVIRONMENTIn 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 managements 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 custom ersImportanceThe marketing environment offers both opportunities and threatsChanges in the marketing environment often occur at a rapid pace.Marketers tend to be trend trackers and opportunity seekers.The company must use its marketing research and marketing intelligence systems to monitor the changing environment.A systematic scan of the environment upholds 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 big environment.The gilds MicroenvironmentThe micro environment consists of six forces (actors) close to the company that affect its ability to serve its customersThe company itself (including dissimilar 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 c ompanys mission, objectives, broad strategies, and policies.Marketing managers must make decisions within the parameters schematic by top management.Marketing managers must also work closely 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 offer 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 inexpensively than the company can perform itself. Seeking and working with resellers, however, is not easy because of the power that some demand and use.Physical distribution firms help the company to received and move goods from their points of origin to their destinations. mannikins would be warehouses (that store and protect goods before they move to the next 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, credit companies, insurance companies, etc.) help finance transactions and insure against risks associated with buying and selling goods.CustomersThe company must report card its customer markets closely because each market h as its own special characteristics. 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).Government 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 governments, 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 sensation competitive strategy is best for all companies .PublicsA public is any group that has an actual or potential interest in or reach on an organizations ability to achieve its objectives. A company should prepare a marketing plan for all of its major publi cs 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. scientific. governmental.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 surroundingsDemography is the study of human populations in terms of coat, 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 elicit 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 structure of the population. Generational marketing is possible, however, watchfulness 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 next 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 regeneration .Economic EnvironmentThe economic environment includes those factors that affect consumer buying power and spending patterns. Major economic trends includeChanges in incomepersonal consumption (al ong with personal debt) has gone 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. Real income is on the rise again but is being carefully guarded by a value-conscious consumer.Income distribution is still very skewed in the United 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. in-between classsomewhat careful about its spending but can st ill afford the good life some of the time.Working classmust stick close to the basics of food, clothing, and shelter and must try hard 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 noted 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 natural environment became a major worldwide issue facing business and the public.Specific areas of concern wereShortages of raw materials. Staples such as air, water, and forest 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 friendly 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.Co ncern for the natural environment has spawned the questionable 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. forward-looking 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 limit 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 society 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 partial 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 ethics and socially responsible actions. affectionately 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 increase 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 cyberspace concern is that of acces s by vulnerable or unauthorized groups.Cultural EnvironmentThe ethnical 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 reenforce 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 Monitor has identified eight major consumer themesParadox.Trust not.Go it alone.Smarts really count.No sacrifices. test hard to beat.Reciprocity is the way to go.Me 2.Societys major cultural views are exp ressed inPeoples views of themselves. People vary in their emphasis on answer 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. grease ones palms American versus buying abroad is an issue that will continue into the next decade.Peoples view of nature. 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 view s of the universe. Studies of the origin of man, religion, 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 criteria specifiable the differentiating attributes of the segments must be measurable so that they can be identified.Accessible the segments must be reachable through communication and distribution 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. unchanging 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 dens ity often classified as urban, suburban, or ruralClimate according to weather patterns common to certain geographic regionsDemographic SegmentationSome demographic segmentation variables includeAgeGenderFamily 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