Introduction to Marketing

1. MAANZ International
Marketing in Black and White
Introduction to Marketing
Dr Brian Monger
Copyright February 2013.
This Power Point program and any associated documents remain the intellectual property and the
copyright of the author and MAANZ International. These notes may be used only for personal study
associated with in the above referenced course and not in any education or training program. Persons and/or
corporations wishing to use these notes for any other purpose should contact MAANZ (www.marketing.org.au)
for written permission.
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2. MAANZ International
• MAANZ International, is an internet based
professional and educational institute which
has operated for over 25 years.
• MAANZ International offers Professional
Memberships;
• Marketing Courses (Formal and Short)
• And Marketing Publications
• www.marketing.org.au
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3. Dr. Brian Monger
• Brian Monger is the CEO of MAANZ International and a
Professional marketer and consultant with over 40 years
experience.
• This presentation is based on slides produced to support the
Marketing Textbook, Marketing in Black and White,
published by Pearsons
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4. Introduction
• The purpose of this presentation is to illustrate
the pervasiveness and diversity of marketing
activities in the world, to demonstrate the
significance of these activities in your life and
work, and to encourage you to read thought‐
fully and inquisitively.
• Marketing is a fundamental human activity; it
plays a significant role in society.
• Effective management of marketing activities is
essential to the success of any organisation.
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5. Success
•Success comes from a combination of luck and good
management.
•Good luck alone cannot be relied on.
•Successful organisations manage (scarce) resources to achieve
the best results (return on our investments of money, skills, time
etc.)
•Marketing is an effective way of applying resources where they
will have the best return on investment.
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6. Introduction
• The essence of marketing is exchange ‐ trading
value for value ‐ for the purpose of satisfying
human wants.
• Exchange is a fundamental human activity; it
develops whenever and wherever people exist.
• Exchange activities are one of the major driving
forces in the economic development of
societies.
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7. The Concept of a ‘Business’
• We can define a business as an organised or
managed activity aimed at exchanging value
with its market(s)
•
• The business (eg supplier, seller, originator, etc)
has a value proposition or product (eg goods, an
idea, place, program, services, technology, etc)
and it wants to get something back for it (sell it)
for payment (eg money, barter, goodwill, more
business, etc) from a buyer (the market ‐ buyer,
customer and consumer).
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8. Product (Goods
and Services)
Portfolio
Customer Financial
Interaction Viability
Business
Model
Supplier and
Processes and Facilitator
Network
Activities
Resources and
Capabilities
Figure 1.1
A Business Model
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9. Basic assumptions and the approach
to business in this book
•It doesn’t matter what type of organisation it is or
what sort of market the business operates in, this
book is based on the following assumptions:
•Most organisations want to continue to be in
business. They want customers to come back. It is
not just about short‐term objectives.
•If you want to make a profit, you need first to
create customers.
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10. FIGURE 1.2 The key business development questions facing an
organisation
Where are we
now?
Marketing Audit How will the
What do we organisation
want? succeed?
Organisational Mangement
Vision Goals and Strategy and tactics
Objectives
What Where will the
competencies and ? organisation
resources are compete best?
needed? (The market)
What are our What
competencies and Environmental
competitive factors will
advantages? play a role?
What is our
Macro Environment
Value Offer? Competition
Suppliers
Intermediaries
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11. The Key Components of any
Organisation’s Business
• 1. A market: The people or organisations who will
buy, rent or hire your product. Without a market (the
source of your payment), you have no basis for
exchange.
• 2. A value proposition/product (goods and services,
anything of value to offer): What you believe the
market will want and will pay for.
• 3. Operations: How you produce and/or offer your
product for exchange.
• 4. Management and organisation: How you manage
your resources and activities in relation to producing
your product. This includes management of the above
operations as well as financial management.
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12. Generally when referring to ‘marketing’, people use the
term in any of the following three ways:
• 1. To describe some part of a firm’s internal organisation or a job title,
such as the ‘marketing department’ or ‘marketing director’.
• 2. To describe certain functions within an organisation, such as
advertising, market research, merchandising, sales or product
management. These functions can conveniently be described by the
collective term ‘marketing’ to distinguish them from other activities
coming under the headings of ‘production’, ‘finance’ and the other
subdivisions of an organisation.
• 3. To indicate a particular approach to business or a management
attitude in relation to customers and their needs. This ‘business
philosophy’ has become known as the marketing concept
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13. The Marketing Concept
• The marketing concept puts customers at the
centre of the company's activities.
• The organisation is then concerned with
satisfying customers' needs
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14. Marketing
• 'What the customer thinks he/she is buying,
what he/she considers value, is decisive ‐ it
determines what a business is, what it
produces and whether it will prosper.'
• The marketing approach is of value not only
in commercial situations but in any
'transaction' (exchange of values between
two parties), including 'social marketing'.
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15. Marketing Defined
• 1. Marketing is the business philosophy that
centres on the needs of the buyer.
• 2. Marketing is the management process of
identifying and satisfying customer needs,
(while also achieving the objectives of the firm).
• 3. Marketing is the way in which an
organisation matches its own needs and
resources with the wants of its customers.
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16. Marketing Defined
• 4. The purpose of marketing is to create and
retain a customer by understanding that
customers needs, profitably.
• 5. Marketing is the process of getting the right
product (or value offer) to the right consumer at
the right price at the right time.
• 6. Marketing is the process of exchange to
satisfy the needs of producer and consumer.
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17. The Marketing Concept
Peter Drucker, says:
• It is the customer who determines what a
business is.
• It is the customer alone whose willingness to
pay for a good or service converts economic
resources into wealth, things into goods.
• What the business thinks it produces is not of
first importance ‐ especially not to the future
of the business and to its success...
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18. The Marketing Concept
•Because its purpose is to create a customer, the business
enterprise has two ‐ and only these two ‐ basic functions:
marketing and innovation.
•Marketing and innovation produce results; all the rest are
'costs'.
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19. Marketing is Not a New Concept.
• There is nothing new in the idea that the entire
activity of a business should be devoted to serving
its customers’ interests. Indeed, it is suggested that
marketing and trading are the world’s oldest social
activities.
• The 18th‐century economist Adam Smith (1891) wrote: ‘Consumption is
the sole end and purpose of all production; and the interest of the
producer ought to be attended to, only so far as it may be necessary for
promoting that of the consumer…..’
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20. MAANZ International says:
•The marketing concept is a •Marketing is a philosophy
philosophy. It makes the and a process involving all the
customer, and the satisfaction activities designed to
of their needs, the focal point generate and facilitate any
of all business activities. exchange intended to satisfy
human needs and wants.
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21. MAANZ International says:
•Marketing is essentially about
effectively managing the resources
of an organisation so that it meets
the (changing) needs of the target
market (customer) on whom the
organisation depends, in a way that
best satisfies the objectives of that
organisation.
•(www.marketing.org.au.marketing
glossary)
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22. Customers and Their Behaviour
• Since the customer is the focal point of all
business activity, we must be clear about
how customers behave.
•
• Because marketing is concerned with
satisfying people's needs, we must
understand what those needs are and the
ways in which people go about getting them
satisfied.
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23. The Four Basic Questions of Marketing
• 1. What is the situation we are dealing with? ‐
• 2. Who are they? Marketing recognises that not
everyone is going to be a customer.
• 3. What do they want? What value do they
seek? What are the key preferences and
expectations of customers and potential
customers?
• 4. What do we want? (the marketing
organisation/supplier/seller)
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24. Exchange
•Marketing means more than simply advertising or
selling a product; it involves developing and
managing a product that will satisfy certain needs.
•Marketing focuses on making the product
available at the right place, at the right time, and
at a price that is acceptable to customers.
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25. Figure 1.3 The basic marketing
exchange
Something of Value
Seller Buyer
Something of Value
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26. The Competitive Situation
•Marketing is not carried out in a vacuum but usually in a highly competitive
situation.
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27. The Five Common Business Styles
• For the first style, some organisations focus on a
product or operations‐centred approach.
• They try to develop a technically superior value
proposition (product).
• This approach is used by many technology/engineer‐
driven organisations.
• In the second style, organisations become focused on
maintaining their production capacity. A production‐
centred approach is about getting business at any
price in order to maintain production.
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28. The Five Common Business Styles
• In the third style, known as the promotional or
selling approach, businesses decide that
customers can be persuaded to buy their
products. Persuasive communication is a useful
aspect of marketing, but it is not enough on its
own to guarantee success.
• These three styles or approaches are known as
‘push’ approaches ‐ that is, they put the
organisation’s perspective ahead of that of the
market.
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29. The ‘Low Price’ Focus
• The fourth style is the most persistent of all non‐
marketing approaches. This is the ‘low price is
the answer to all problems’ approach.
• Price is an important factor in marketing; but it
is only one factor and it is rarely well understood
outside of the value‐based marketing approach
that this book takes.
• Not everyone wants the product with the lowest
price ‐ but everyone wants the best value.
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30. Variations
• The product concept ‐ consumers favour
products that offer the most quality,
performance and features.
• The production concept ‐ buyers favour products
that are available and cheap. The focus is on
improving
• production and distribution efficiency.
• The selling concept ‐ consumers will not buy
enough of the organisation’s products unless the
organisation undertakes a large‐scale selling and
promotion effort.
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31. A Wider View of Marketing
• The marketing concept is applicable in non‐
commercial situations, where profit ‐ at least in
the strict sense ‐ is not one of the key objectives.
•
• The term ‘social marketing’ is often used in this
context.
• Government departments, the police, trade
unions and trade associations, environmental
groups and churches can all be said to have
‘customers’ and to be offering ‘products’.
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32. The Marketing Plan
• There are four primary questions to be asked when
developing a marketing plan in connection with a marketing‐
focused approach to business.
• 1. What situation are we dealing with? Everything relates
differently in different situations or contexts. Are we talking
about an entertainment or a machine business tool?
• 2. Who are our customers? Marketing recognises that not
everyone is going to be a customer. The organisation needs
to determine who the best markets (target segments) are.
Where should investments and efforts be focused to achieve
the best results?
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33. Four Primary Questions
• 3. What do they want? What value do they seek?
What are the key preferences and expectations of
customers and potential customers ?
• 4. What do we want (the marketing
organisation/supplier/seller) ? Determining their
goals and objectives enables the organisation to
better understand which markets to target in an
effort to utilise its talents and resources to the best
effect.
• These questions are the bases for developing an
effective business development strategy that will
enable the organisation to fulfil the customer’s needs
better than competitors can.
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34. Understanding the Market
• Apart from our four basic questions, a marketing plan
should also answer these additional questions:
• Is there a demand for the organisation’s value
proposition (product ‐ goods and services) ?
• Are there competitors who provide the same or
similar propositions ?
• Can we effectively compete in value terms (price,
quality and delivery) ?
• Will this market meet our goals and objectives? Will it
give us the projected profit and meet our
organisational needs ?
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35. The ‘Marketing Mix’ Approach
•The marketing mix describes the key elements of marketing
in a marketing strategy for a target market. The elements of a
marketing mix are the variables which have to be carefully
designed and managed to meet the needs of the defined
target segment.
•The 4 Ps, or marketing mix, is the best‐known model or
approach to understanding the elements of marketing and is
particularly useful in developing marketing plans. All
marketing plans should consider the following marketing mix
elements (variables).
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36. Environment Influences
External
Product Price/Payment
Constraints
Internal
Constraints
The Target
The Marketing Segment
Organisation Mix
Internal
Constraints
Delivering Value External
Communicate
Place(ment) Constraints
Value
Promotion
Environment Influences
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37. The Product Variable.
• A product can be anything ‐ a good, a service,
an idea a person or a place.
• The product variable deals with consumers'
product wants and designing a product with
the desired characteristics.
• It also involves the creation or alteration of
packages and brand names and may include
decisions about guarantees and repair
services.
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38. A Value Offer Or Proposition
• What the organisation offers to its customers
in response to its concept of what they value
and will invest in possessing.
• We can define the value proposition (product
offer) as a bundle of tangible and intangible
attributes that could potentially satisfy
customers’ needs, wants or desired
outcomes.
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39. A Value Acquisition
• What the customer actually gets when they buy
(acquire) the product. It includes everything that
the customer will experience after the purchase
has been made.
• Organisations often forget that aspects of the
offer that have nothing to do with them, have
not been designed by them and are not
controllable by them, form part of what a
customer gets.
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40. The Distribution Variable. (Place or
Placement)
•To satisfy consumers, products must be
available at the right time in a convenient
location, a useful form and at a price which is
appropriate.
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41. The Promotion Variable
•The promotion variable relates to •advertising
activities used to inform one or •sales promotion (including direct
more groups of people about an marketing)
organisation and its products or •personal selling
programs. The promotional mix
includes: •marketing public relations
(MPR/publicity).
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42. The Price Variable
• The price variable relates to activities associated
with establishing pricing and payment policies
and determining product or program prices.
• Price is only one component of the marketing
mix.
• Usually, it is poorly conceived and used ‐ which
is why a newer marketing approach, the
marketing exchange and value concept
discussed in the next section, is useful.
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43. The Value Planning Model
• Another marketing variables approach is the VPM
• Instead of the 4 P’s it focuses on:
• Understanding Value
• Configuring Value
• Communication Value
• Delivering Value
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44. Figure 1.6 The Value Exchange Model
Intermediaries/Facilitators
Other Inputs
Other Inputs
Value
Offer/Proposition
(Something of Value)
Product - Goods and Services Value
Acquisition
Buyer/Consumer
Supplier/Producer PROCESS OF EXCHANGE Use
Partner(s)
Payment/Investment/Sacrifice
(Something of Value)
Money/Barter
Goodwill
Other Inputs
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45. The Value Exchange Approach to
Marketing
• In essence, a market transaction is about exchanging
value. The essential meaning of the marketing
concept is trying to get value (payment) from the
market through offering value to it.
• Marketing is concerned with adding maximum value
to a value offer to make it attractive and desirable to
buyers while at the same time achieving for the
organisation the best returns on its investment (ie
most commonly, but not exclusively, a profit).
• The marketer’s challenge is to create attractive
exchange value(s).
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46. ADDING VALUE
SUPPLY
Inbound Logistics Distribution
Goods and Services Operations Out Bound Logistics
Services
Customers
(production)
Marketing
Support Structure DEMAND
(Human Resource Management;
Technology;
The Value Chain
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47. Value Planning Model
Situational/Environmental
Organisational Factors
Re source s
Inve stme nt
Ne e de d
Understanding Creating and
Value Configuring Value
Organisational
Goals and The Value Planning Target
Organisational
Obje ctive s Model
Strate gy Segment
Value Sought
Delivering Value Communicating
Value
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48. CUSTOMER SUPPLIER
Value Sought Value Sought
Investments Value Exchange Investments
Benefits and Desired
Outcomes Benefits and
Received Outcomes
The two sides of the Value Exchange Model
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49. Value and Competitors
• In the modern marketplace, customers are faced with a
wide choice of products that potentially offer them value.
It is important that an organisation understands the
influence that competitors have on customers.
• Value is comparison‐based ‐ that is, it is perceived in
terms of competitive offerings. For a competitive
advantage to eventuate, an organisation must be seen to
provide better value than its competitors. This requires a
good understanding of the competitors’ strengths and
weaknesses, their capabilities and, most importantly, the
customer’s value perception of their offerings.
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50. Adding Value
• The value‐adding chain is essentially a series of individual
and organisational activities that add value throughout
the process of delivering value to an end user (eg from
raw material such as sugar cane to a Mars bar).
• The ‘primary activities’ include: inbound logistics,
production, outbound logistics, sales and marketing, and
maintenance. The ‘support activities’ include:
administrative infrastructure management, human
resources management, R&D and procurement. The costs
and value drivers are identified for each value activity.
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51. F
P
Supplier
M Supplier
Raw
Materials
Processor
F
P
F M
P Supplier
Supplier
Raw
Materials Processor M
Intermediary
(e.g. a
Processor, Supplier Retailer
Manufacturer, Intermediary
Internal VAS (Value Adding
Service) (e.g. Production; Marketing; Finance)
Intermediary
Facilitator
External VAS (Value
Adding Service/Input)
Buyer
User
FIGURE 1.7 A value‐adding
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52. END
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53. • These slides were originally developed to support the
Marketing in Black and White textbook Written by Brian
Monger and published by Pearsons.
• For more information about MAANZ International and articles
about Marketing, visit:
• www.marketing.org.au
• http://smartamarketing.wordpress.com
• http://smartamarketing2.wordpress.com
• . http://www.linkedin.com/groups/MAANZ‐
SmartaMarketing‐Group‐2650856/about
• Link to this site ‐ ‐ http://www.slideshare.net/bmonger for
further presentations
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