lectures in marketing

Dr.Mayar Farrag Elsayed Page 2 Part 1.Understanding marketing: Chapter 1: Marketing in a changing world: creating customer satisfaction.. Dr.Mayar Farrag Elsayed Page 3 Marketing in a c

Dr.Mayar Farrag Elsayed Page 1

Lectures in Marketing

Prepared by:

Dr.Mayar Farrag El-Sayed

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Part 1.Understanding marketing:

Chapter 1: Marketing in a changing world: creating customer satisfaction

Chapter 2: strategic planning and the market process

Chapter 3: The global marketing environment

Chapter 1:

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Marketing in a changing world: creating customer

satisfaction

Chapter Overview

In this chapter, we introduce the basic concepts of marketing It starts with the question, “What is marketing?” Simply put, marketing is managing profitable customer relationships The aim

of marketing is to create value for customers and to capture value from customers in return Next is discussed the five steps in the

marketing process – from understanding customer needs, to designing customer-driven marketing strategies and programs, to building customer relationships and capturing value for the firm Finally is discussed the major trends and forces affecting marketing in this age of customer relationships

Marketing is the delivery of customer satisfaction at a profit The goal of marketing is to attract new customers by promising superior value, and to keep current customers by delivering satisfaction

Some people think that only large business organizations operating in highly developed economies use marketing, but

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sound marketing is critical to the success of every organization—whether large or small, for-profit or nonprofit, domestic or global

Large for-profit firms such as Coca-Cola, McDonald's, Sony, IBM, General Electric, Federal Express, Wal-Mart, and Marriott use marketing But so do nonprofit organizations such as colleges, hospitals, museums

What is marketing?

What does the term marketing mean? Many people think of

marketing only as selling and advertising And no wonder—every day we are bombarded with television commercials, newspaper ads, direct mail, and sales calls Someone is always trying to sell us something

Therefore, you may be surprised to learn that selling and advertising is only the tip of the marketing iceberg Although they are important, they are only two of many marketing functions, and often not the most important ones

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Today, marketing must be understood not in the old sense of making a sale—"telling and selling"—but in the new sense of

satisfying customer needs

If the marketer does a good job of understanding consumer

needs; develops products that provide superior value; and prices, distributes, and promotes them effectively, these products will sell very easily

Marketing

A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others

We define marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others

To explain this definition, we examine the following important terms: needs, wants, and demands; products; value, satisfaction, and quality; exchange, transactions, and relationships; and

markets

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Figure 1-1 shows that these core marketing concepts are linked, with each concept building on the one before it

NEEDS , WANTS , AND DEMANDS

The most basic concept underlying marketing is that of human

needs Human needs are states of felt deprivation Humans

have many complex needs

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These include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression These needs

are not invented by marketers; they are a basic part of the human makeup When a need is not satisfied, a person will try either

to reduce the need or look for an object that will satisfy it

Wants are the form taken by human needs as they are shaped by culture and individual personality A hungry person in Egypt

may want a fool or falafel sandwich

Wants are described in terms of objects that will satisfy needs

As a society evolves, the wants of its members expand As people are exposed to more objects that arouse their interest and desire, producers try to provide more want-satisfying products and services

People have almost unlimited wants but limited resources Thus, they want to choose products that provide the most value and satisfaction for their money

When backed by buying power, wants become demands

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Consumers view products as bundles of benefits and choose products that give them the best bundle for their money

Thus, a Fiat Car means basic transportation, low price, and fuel economy A Mercedes means comfort, luxury, and status

Given their wants and resources, people demand products with the benefits that add up to the most satisfaction

Outstanding marketing companies go to great lengths to learn about and understand their customers' needs, wants, and demands

They conduct consumer research, focus groups, and customer clinics They analyze customer complaint, inquiry, warranty, and service data They train salespeople to be on the lookout for unfulfilled customer needs They observe customers using their own and competing products, and interview them in depth about their likes and dislikes

In these outstanding companies, people at all levels—including top management—stay close to customers in an ongoing effort

to understand their needs and wants

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For example, top executives from Wal-Mart spend two days each week visiting stores and mingling with customers At Motorola, in addition to surveying customers about their quality needs, analyzing customer complaints, and studying customer service records, top executives routinely visit customers at their offices to gain better insights into their needs

PRODUCTS

People satisfy their needs and wants with products A product is anything that can be offered to a market to satisfy a need or want Usually, the word product suggests a physical object,

such as a car, a television set, or a bar of soap

However, the concept of product is not limited to physical objects—anything capable of satisfying a need can be called a

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product The importance of physical goods lies not so much in

owning them as in the benefits they provide

Marketers often use the expressions goods and services to

distinguish between physical products and intangible ones

Moreover, consumers obtain benefits through other vehicles, such as persons, places, organizations, activities, and ideas

Many sellers make the mistake of paying more attention to the physical products they offer than to the benefits produced by

these products They see themselves as selling a product rather than providing a solution to a need

VALUE , SATISFACTION , AND QUALITY

Consumers usually face a broad array of products and services that might satisfy a given need How do they choose among these many products and services?

Consumers make buying choices based on their perceptions of the value that various products and services deliver

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Customer value is the difference between the values the customer

gains from owning and using a product and the costs of obtaining the product For example, Federal Express customers gain a number of benefits The most obvious are fast and reliable package delivery

Customer satisfaction The extent to which a product's perceived

performance matches a buyer's expectations If the product's performance falls short of expectations, the buyer is dissatisfied

If performance matches or exceeds expectations, the buyer is satisfied or delighted

Customer satisfaction depends on a product's perceived performance in delivering value relative to a buyer's expectations

If the product's performance falls short of the customer's expectations, the buyer is dissatisfied If performance matches expectations, the buyer is satisfied If performance exceeds expectations, the buyer is delighted

Satisfied customers make repeat purchases, and they tell others about their good experiences with the product

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The key is to match customer expectations with company performance Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise

Customer satisfaction is closely linked to quality In recent years, many companies have adopted total quality management (TQM) programs, designed to constantly improve the quality of their products, services, and marketing processes Quality has a direct impact on product performance, and hence on customer sat-isfaction

Quality begins with customer needs and ends with customer satisfaction

EXCHANGE , TRANSACTIONS , AND RELATIONSHIPS

Marketing occurs when people decide to satisfy needs and

wants through exchange Exchange is the act of obtaining a desired object from someone by offering something in return

Exchange is only one of many ways people can obtain a desired object For example, hungry people can find food by hunting, fishing, or gathering fruit

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For an exchange to take place, several conditions must be satisfied Of course, at least two parties must participate, and each must have something of value to the other Each party also must want to deal with the other party and each must be free to accept or reject the other's offer Finally, each party must be able to communicate and deliver

In this sense, exchange creates value just as production creates value It gives people more consumption possibilities

Whereas exchange is the core concept of marketing, a transaction is marketing's unit of measurement

A transaction consists of a trade of values between two parties

In a transaction, we must be able to say that one party gives

X to another party and gets Y in return

Transaction marketing is part of the larger idea of relationship marketing Beyond creating short-term transactions, marketers

need to build long-term relationships with valued customers, distributors, dealers, and suppliers

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Increasingly, marketing is shifting from trying to maximize the profit on each individual transaction to maximizing mutually beneficial relationships with consumers and other parties

The operating assumption is: Build good relationships and profitable transactions will follow.

Originally the term market stood for the place where buyers and sellers gathered to exchange their goods

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Marketers see the sellers as constituting an industry and the buyers as constituting a market The sellers send products, services, and communications to the market; in return, they receive money and information

MARKETING MANAGEMENT

PHILOSOPHIES

Marketing management is described as

carrying out tasks to achieve desired

exchanges with target markets What

philosophy should guide these marketing

efforts?

There are five alternative concepts under which

organizations conduct their marketing

activities: the production, product, selling,

marketing, and societal marketing concepts.

THE PRODUCTION CONCEPT

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The production concept holds that consumers

will favor products that are available and

highly affordable and that management should

therefore focus on improving production and

distribution efficiency

This concept is one of the oldest philosophies

that guide sellers The production concept is

still a useful philosophy in two types of

situation:

The first occurs when demand for product

exceeds the supply Here, management should

look to ways to increase production

The second situation occurs when the product's

cost is too high and improved productivity is

needed to bring it down

For example, Henry Ford's whole philosophy

was to perfect the production of the Model T

so that its cost could be reduced and more

people could afford it

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However, companies operating under a

production philosophy run a major risk of

focusing too narrowly on their own operations

They might focus on lowering cost to deliver

low prices and neglect design

THE PRODUCT CONCEPT

The production concept holds that consumers

will favor products that offer the most quality,

performance, and features and that the

organization should therefore devote its

energy to making continuous product

improvements

THE SELLING CONCEPT

Many organizations follow the selling concept,

which holds that consumers will not buy

enough of the organization's products unless it

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undertakes a large-scale selling and promotion

effort

The concept is typically practiced with

unsought goods—those that buyers do not

normally think of buying, such as encyclopedias

or insurance These industries must be good at

tracking down prospects and selling them on

product benefits

The selling concept also is practiced in the

nonprofit area A political party, for example,

will vigorously sell its candidate to voters as a

fantastic person for the job

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 Thus,

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marketing based on hard selling carries high

risks

It focuses on creating sales transactions

rather than on building long-term, profitable

relationships with customers

THE MARKETING CONCEPT

The marketing concept holds that achieving

organizational goals depends on determining

the needs and wants of target markets and

delivering the desired satisfactions more

effectively and efficiently than competitors do

The marketing concept has been stated in

colorful ways such as "We make it happen for

you" (Marriott); "To fly, to serve" (British

Airways); and "We're not satisfied until you are"

(GE)

JC Penney's motto also summarizes the

marketing concept: "To do all in our power to

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pack the customer's dollar full of value,

quality, and satisfaction."

The selling concept and the marketing concept

are sometimes confused Figure 1-3 compares

the two concepts

The selling concept takes an inside-out

per-spective It starts with the factory, focuses on the

company's existing products, and calls for heavy

selling and promotion to obtain profitable sales

It focuses heavily on customer requests—

getting short-terms sales with little concern

about who buys or why

In contrast, the marketing concept takes an

outside-in perspective It starts with a

well-defined market, focuses on customer needs,

coordinates all the marketing activities affecting

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customers, and makes profits by creating

long-term customer relationships based on customer

value and satisfaction

Figure 1-3

THE SOCIETAL MARKETING CONCEPT

The societal marketing concept holds that the

organization should determine the needs,

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wants, and interests of target markets It

should then deliver superior value to

customers in a way that maintains or

improves the consumer's and the society's

well-being

The societal marketing concept is the newest

of the five marketing management

philosophies

The societal marketing concept questions

whether the pure marketing concept is

adequate in an age of environmental

problems, resource shortages, rapid

population growth, worldwide economic

problems, and neglected social services

It asks if the firm that senses, serves, and

satisfies individual wants is always doing

what's best for consumers and society in the

long run

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According to the societal marketing

concept, the pure marketing concept

overlooks possible conflicts between

consumer short-run wants and consumer

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1- What does the term marketing mean?

2- What is the difference between needs, wants

5- Explain what do we mean by markets?

6- Is there a difference between exchanges,

transaction, and relationship?

7- Compare between the selling concept and

marketing concept?

8- Explain the newest of the five marketing

management philosophies?

Application of concepts

1 Go to McDonald's and order a sandwich

Note the questions you are asked, and

ob-serve how special orders are handled Next,

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go to a local burger restaurant and order a

sandwich or a pizza

Note the questions you are asked here, and

observe whether special orders are handled

the same way as they are at McDonald's

 Did you observe any significant

differ-ences in how orders are handled?

 Consider the differences you saw Do

you think the restaurants have different

marketing management philosophies?

Which is closest to the marketing concept?

Is one closer to the selling or production

concept?

 What are the advantages of closely

fol-lowing the marketing concept? Are there

any disadvantages?

2 Take a trip to your local mall List five

major categories of Stores, such as

department stores, shoe, book, and

women's clothing shops, and restaurants

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List the competing stores in each

category, and take a walk past

them and quickly observe their

merchandise and style

Take a look at the public spaces of the mall,

and note how they are decorated Watch

the shoppers in the mall

Were the competing stores really unique,

or could one pretty much substitute for

another?

 Three basic goals for the marketing

sys-tem have been suggested: consumer

satisfaction, choice, or quality of service

Discuss whether you think the mall serves

some of these goals better than others

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Chapter 2 :

Strategic Planning and The Marketing Process

Chapter Overview

In the first chapter, we explored the marketing

process by which companies create value for

consumer in order to capture value in return In

this chapter, we look at designing

customer-driven marketing strategies and constructing

marketing programs First we look at the

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organization’s overall strategic planning, which

guides marketing strategy and planning Next, we

discuss how marketing partners closely with

others inside and outside the firm to create value

for customers We then examine marketing

strategy and planning Lastly, we will look at the

step of measuring and managing return on

marketing investment

All companies must look ahead and develop

long-term strategies to meet the changing

conditions in their industries Each company

must find the game plan that makes the most

sense given its specific situation, opportunities,

objectives, and resources The hard task of

selecting an overall company strategy for

long-run survival and growth is called strategic

planning

Marketing plays an important role in strategic

planning It provides information and other

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inputs to help prepare the strategic plan In turn,

strategic planning defines marketing's role in the

organization Guided by the strategic plan,

marketing works with other departments in the

organization to achieve overall strategic

objectives

Figure 2-1 Relationship between Strategic

Planning & Marketing

In this chapter, we look first at the organization's

overall strategic planning Next, we discuss

marketing's role in the organization as it is

defined by the overall strategic plan Later in

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chapter 6, we will explain the marketing

management process—the process that

marketers undertake to carry out their role in

the organization

STRATEGIC PLANNING

Formal planning can yield many benefits for all

types of companies, large and small, new and

mature It encourages management to think

ahead systematically

It forces the company to sharpen its objectives

and policies, leads to better coordination of

company efforts, and provides clearer

performance standards for control

Planning helps the company to anticipate and

respond quickly to environmental changes, and

to better prepare for sudden developments

Companies usually prepare annual plans,

long-range plans, and strategic plans

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The annual plan is a short-term marketing plan

that describes the current marketing situation,

company objectives, and the marketing strategy

for the year, the action program, budgets, and

controls

The long-range plan describes the major factors

and forces affecting the organization during the

next several years It includes the long-term

objectives, the major marketing strategies that

will be used to attain them, and the resources

required

This long-range plan is reviewed and updated

each year so that the company always has a

current long-range plan

Whereas the company's annual and long-range

plans deal with current businesses and how to

keep them going, the strategic plan involves

adapting the firm to take advantage of

opportunities in its constantly changing

environment

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Strategic planning is the process of developing

and maintaining a strategic fit between the

organization's goals and capabilities and its

changing marketing opportunities

It relies on defining a clear company mission;

setting supporting company objectives,

designing a sound business portfolio, and

coordinating functional strategies (see Figure

2-1)

At the corporate level, the company first defines

its overall purpose and mission This mission

then is turned into detailed supporting

objectives that guide the whole company Next,

headquarters decides what portfolio of

businesses and products is best for the

company and how much support to give each

one In turn, each business and product unit

must develop detailed marketing and other

departmental plans that support the

companywide plan

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Thus, marketing planning occurs at the

business-unit, product, and market levels It supports

company strategic planning with more detailed

planning for specific marketing opportunities

DEFINING THE COMPANY MISSION

A mission statement is a statement of the

organization's purposes A clear mission

statement acts as an "invisible hand" that

guides people in the organization so that they

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can work independently and yet collectively

toward overall organizational goals

When management senses that the organization

is drifting, it must renew its search for purpose

It is time to ask: What is our business? Who is

the customer? What do consumers value?

What will our business be? What should our

business be? These simple-sounding questions

are among the most difficult the company will

ever have to answer Successful companies

continuously raise these questions and answer

them carefully and completely

Traditionally, companies have defined their

businesses in product terms ("We manufacture

furniture"), or in technological terms ("We are a

chemical-processing firm")

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But mission statements should be market

oriented Market definitions of a business are

better than product or technological definitions

A market-oriented mission statement defines

the business in terms of satisfying basic

customer needs Thus, AT&T is in the

communications business, not the telephone

business

Management should avoid making its mission

too narrow or too broad

A pencil manufacturer that says it is in the

communication equipment business is stating its

mission too broadly

Missions should be realistic

Singapore Airlines would be deluding itself if it

adopted the mission to become the world's

largest airline

Missions should also be specific

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The statement "We want to become the leading

company in this industry by producing the

high-est-quality products with the best service at the

lowest prices" sounds good, but it is full of

generalities and contradictions It will not help

the company make tough decisions

Missions should fit the market environment

The Girl Scouts of Egypt would not recruit

successfully in today's environment with their

former mission: "to prepare young girls for

motherhood and wifely duties."

Mission should focus on its distinctive

competencies

McDonald's could probably enter the solar

energy business, but that would not take

advantage of its core competence—providing

low-cost food and fast service to large groups of

customers

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Mission should be motivating

A company's mission should not be stated as

making more sales or profits When IBM sales

were $50 billion, president John Akers said that

IBM's goal was to become a $100 billion

company by the end of the century

Meanwhile, Microsoft's long-term goal has

been IAYF—"information at your fingertips"—

to put information at the fingertips of every

person Microsoft's mission is much more

motivating than IBM's

Missions are best when guided by a vision, an

almost "impossible dream."

(Sony's president, Akio Morita, wanted

everyone to have access to "personal portable

sound," and his company created the Walkman

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The company's mission statement should provide

a vision and direction for the company for the

next ten to twenty years Still, a company

must redefine its mission that lost its

credibility or no long defines an optimal course

for the company

SETTING COMPANY OBJECTIVES AND GOALS

The mission leads to a hierarchy of

objectives including business objectives and

market objectives Example the mission of

"increasing agricultural productivity" leads to

the company's business objective of

researching new fertilizer that promises higher

yields

But research is expensive and requires

improved profits to flow back into research

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programs So improving profits becomes

another major business objective

Profits can be improved by increasing sales or

reducing costs Sales can be increased by

improving the company's share in the local

market, or by entering new foreign markets,

or both These goals then become the

company's current objectives (marketing

objectives)

Marketing strategies must be developed to

support these marketing objectives To increase

its local market share, the company may increase

its product's availability and promotion To enter

new foreign markets, the company may reduce

prices and target large farms abroad These are

its broad marketing strategies

Each broad marketing strategy must then be

defined in greater detail For example,

increasing the product's promotion may require

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more salespeople and more advertising In this

way, the firm's mission is translated into a set of

objectives for the current period

The objectives should be as specific as possible

The objective to "increase our market share" is

not as useful as the objective to "increase our

market share to 15 % by the end of the second

year."

DESIGNING THE BUSINESS PORTFOLIO

Guided by the company's mission statement and

objectives, management now must plan its

business portfolio—the collection of businesses

and products that make up the company

ANALYZING THE CURRENT BUSINESS PORTFOLIO