What is Marketing…??

Selling?
Advertising?
Promotions?
Making products available in stores?
Maintaining inventories?
• What is Marketing ?

Old sense: making a sale – “telling and selling”

New sense: satisfying customer needs profitably

 Marketing = ?
Marketing is the process of planning and executing
the conception, pricing, promotion, and distribution of
ideas, goods, services to create exchanges that satisfy
individual and organizational goals
American Marketing Association
 The Marketing System
Communication

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

Information
Marketing mix is the set of marketing tools that the
firm uses to pursue its marketing objectives in the
target market. Marketing Mix consist of the Four Ps
1. Product planning
2. Pricing
3. Promotion
4. Distribution (place)
of goods and services desired by the ultimate and
intermediate customer in exchange of these products
for value (money).
 The Four Ps and the Four Cs
Marketing
Mix

Convenience
Customer Solution

Customer Cost Communication

TEBEK
 Difference between Goods and
Services
Services Goods
1. Services are often intangible. Many 1. Goods are tangible. They are objects, things,
services can not be physically possessed. materials, value is based on ownership.
The value of a service may based on an
experience.

2.Services are usually perishable. 2. Goods can be stored.

Unused capacity can not be stored or
shifted from one time to another
3. Services are inseparable from the seller 3. Goods can be manufactured by one firm and
or service provider marketed by another. The quality of a good can be
differentiated from a distribution intermediaries/s
quality. And they can be stored in store

4. Services may vary in quality over time. it 4. Goods can be standardized. Mass production and
is difficult to standardize some services quality control can be used. So, that the quality of
because of their labor intensiveness and the goods can be uniform until they are expired
involvement of the services user in
diagnosing his or her service needs.
• Later on after the 4 Ps, it was suggested
that the 4 Ps suit goods product business
but, were too limited to apply for
services product businesses for various
reasons including the intangibility,
inseparability, perishability and
variability characteristics of services.
• 7 Ps with addition 3 P’s were suggested
for services.
Extended
Marketing
Mix
 4Ps + (People + Physical evidence + Process)
• People: People are vital element of the marketing
mix. People refer to all people directly or indirectly
involved in the consumption of a service
• Due to the inseparability of production and
consumption for services which involves the
simultaneous production and consumption of
services, service firms depend heavily on the ability
of contact employees to deliver the service.
• Contact employees contribute to service quality by
creating a favorable image for the firm, and by
providing better service than the competitions.
• Physical evidence: The intangible nature of services means
the potential customers are unable to test (judge) a
service before it is consumed, increasing the riskiness
inherent in the purchase decision. An important part of
this service strategy is to reduce the level of perceived risk
by offering tangible evidence about the nature of the
service related to the environment in which the service is
delivered, and the tangibles that help to communicate and
perform the service
• Physical evidences include clean environment in which the
services are offered, brochures, pictures, the appearance
of the staff, tidiness and the appearance of the building
and office including color
17
• Process: Services are best defined by their
production process rather than their
tangible outcomes. The process used in
goods is of little concern in goods. The
process is of critical concern in services
because of high contact and where the
consumer is a co-producer of the service.
The customer goes through the process.
Eg. Barber, Restaurant
18
• Marketing management is a process of
planning, organizing, directing, coordinating, and
controlling of the activities of creating value
(offering products and services) for customers
and build strong customer relationships in order
to capture value (revenue and profit) from
customers in return.
• Marketing management is the art and science of
choosing target markets and building profitable
relationships with them.
• It is a process that aims to find, attract, keep, and
grow target customers by creating, delivering,
and communicating
20 superior customer value.
 5. Core Marketing Concepts
-To understand the marketing function, we need to
understand a set of core concepts. The following
concepts are among many other concepts of
marketing
• Needs, Wants, and Demands
• Target Markets, Positioning, and
Segmentation
• Offerings and Brands
• Marketing Channels
• Value and Satisfaction
Market Offerings
5.1 Needs, Wants, and Demands
Understanding Customers’ Needs
Need is a state of felt deprivation or void that exists
in people such as:
•Physical—food, clothing, warmth, safety
•Social—belonging and affection
•Individual—knowledge and self-expression
•Need is natural, It is not affected by culture, and
marketing has no influence in creating needs
People buy products when they need them
Need Theory S.A

Esteem
Status

Social
Friendship

Safety
Insurance

Physiological
Module One
FoodThe Nature of Marketing
 Needs, Wants, and Demands
Understanding Customers Wants
Wants
• The forms by which people communicate their
needs. They are assortments (bundles) of products
that people chose to satisfy their needs.
• When an Italian and an Ethiopian feel hungry both
have need for food but the (form) they choose to
satisfy their need may be different.
• The Ethiopian may prefer “KITFO” or “Raw Meat”
but the Italian may prefer “Spaghetti” or
“Lasagna”
• Culture and marketing can influence the wants of
people
TEBEK
• The closer that a product matches the consumer’s
Needs, Wants, and Demands

Understanding Demands

Demands
• Demands are wants that are backed by buying
or purchasing power
• Two people may have the same need for
example need for food; and may have the same
want for example Spaghetti; but one my not
afford the cost of spaghetti because he can not
afford it and therefore shift his demand to a
cheaper food item.
 Demand States
Marketing management has the task of influenc­ing the level,
timings and composition of demand in a way that will help
the organization to achieve its objectives. Also, A marketer
has to take into consideration different types of demand for
his product before he comes up with a strategy.

• Negative • Irregular
• Nonexistent • Unwholesome
• Latent • Full
• Declining • Overfull
TEBEK
1 Negative Demand
When a major part of the market dislikes the
product and may even pay a price to avoid it. Eg:
patients have a negative demand for dental work,
gall bladder operation, Employers feel a negative
demand for ex-convicts. The marketing task is
conversion marketing
Analyze, why the market dislikes the products?
2 No Demands
Target consumers may be uninterested in the
product. The marketing task is to find ways to
connect the benefits of the products to the
person’s natural needs and interests. The
TEBEK
3 Latent Demand:
Many consumers may share a strong need that cannot be
satisfied by any existing products. Latent demand for
harmless cigarettes, more fuel efficient cars.
The marketing task is to measure the size of the potential
market and develop goods and services that would satisfy
the demand.. The Marketing task is developmental
marketing
4 Declining Demand
A substantial drop in the demand for products.
Analyze the cause of market decline. The marketing
task is remarketing
5 Irregular Demand
Demand
TEBEK that varies on a seasonal, daily or even
6 Full Demand
When businesses are pleased with there
volume of business. Demand near or equal to
capacity: the marketing task is maintenance
marketing
7 Overfull Demands
Some organizations face a demand level that
is higher then they can or want to handle. The
marketing task is de marketing
8 Unwholesome Demand
Unwholesome products are products
demanded by customers which consumption
need to be discouraged through organized
TANGIBLE AUGUMENTED
PRODUCT
• Image
• Color
CORE • Guarantee
• Design PRODUCT
• Delivery
• Size Satisfies food
• Installation
• Weight and drink
consumption • Repair facility
• Materials used needs:
• Technical advice
• Efficiency in use •Stores
• Credit Facility
• Etc. •Preserves
• Return policy
•Cools
• Etc.
 5.3 Value, Cost, Satisfaction, Quality
•• Value
Valueisisthe
thebenefit,
benefit,that
thataacustomer
customerreceives
receives
from
fromthe
theproduct
product
•• Companies
Companiesaddress
addressneeds
needsbybyputting
putting
forth
forthaavalue
valueproposition,
proposition,aaset setof
of
benefits
benefitsthat
thatthey
theypromise
promiseto toconsumers
consumers
to
tosatisfy
satisfytheir
theirneeds.
needs.TheThevalue
value
proposition
propositionisisfulfilled
fulfilledthrough
throughaamarket
market
offering,
offering,which
whichdelivers
deliverscustomer
customervalue
value
and
andsatisfaction,
satisfaction,resulting
resultingininlong-term
long-term
exchange
exchangerelationships
relationshipswith
withcustomers.
customers.
 Value, Cost, Satisfaction, Quality
•• Costs
Costsisisthe
theamount
amountaacustomer
customerpays
paysexpends
expendsto to
get
getor
orown
ownthe
theproduct.
product.Customer
Customersatisfaction
satisfaction
perception
perceptionof ofthe
theperformance
performanceof
ofthe
theproduct
productasas
compared
comparedwith withexpectations.
expectations.
 Value, Cost, Satisfaction, Quality
•• Satisfaction
Satisfactionisisthe
themeasure
measureof ofthe
the
performance
performanceof ofthe
theproduct
productin infulfilling-
fulfilling-
matches
matchesperceived
perceivedexpectation.
expectation.
•• The
Thecustomer
customerisissatisfied,
satisfied,ififthe
thevalue
value
obtained
obtainedmeets
meetsexpectations;
expectations;ififitit
exceeds
exceedsexpectation
expectationthe thecustomer
customerisis
delighted
delightedand
andififititfalls
fallsshort
shortofof
expectations
expectationsthen
thenthe thecustomer
customerisis
dissatisfied
dissatisfied
 Value, Cost, Satisfaction, Quality
Quality is totality of features and
characteristics of product (goods and services)
that bears on its ability to satisfy given needs
Though quality is an abstract perception, it has a
quantitative measure- Q= (P / E ) where
Q=quality,
P= Performance(as measured by the
producer), and
E = Expectations( of the customer).
 5. 4 Exchange, Transactions, and
Relationships
• Exchange is the act of obtaining a desired object from
someone by offering something in return. Exchange is
only one of many ways that people can obtain a
desired object. For example, X gives something of
value to Y and receives something of value from Y
• Transaction is marketing's unit of measurement. A
transaction consists of a trade of values between two
parties through exchange of money or product
exchange
• Not all transactions involve money. Barter is also
transaction. Transaction marketing is part of the larger
idea of relationship marketing.
5.4 Exchange, Transactions, and
Relationships
Customer relationship management (CRM) is
the overall process of building and maintaining
long term profitable customer relationships by
delivering superior customer value and
satisfaction
• The aim of customer relationship
management is to produce high customer
equity, the total combined customer lifetime
values of all of the company’s customers.
• The key to building lasting relationships is
keeping customers for life by creating superior
customer value and satisfaction.
 Customer Relationships
• Different types of customers require different
customer relationship management strategies.
The marketer’s aim is to build the right
relationships with the right customers
• In building customer relationships, good
marketers realize that they cannot go it alone.
They must work closely with marketing
partners inside and outside the company. In
addition to being good at customer relationship
management, they must also be good at partner
relationship management.
 Customer Relationships Characteristics
• Different types of customers require different
customer relationship management strategies.
 Customer Relationship Characteristics
True Friends: Long term High Profit Customers
Butterflies: Short term High profit Customers
Strangers: Short term Low Profit Customer
Barnacles: Long-term Low Profit Customer.

• Marketing Management need to evaluate

the customers based on potential
Profitability and projected Loyalty.
 The Process of Relationship
 The process of building and maintaining profitable
customer relationships by delivering superior
customer value and satisfaction.

Advocate Partner

Disqualified X-Customers

TEBEK Module One

The Nature of Marketing
Customer Loyalty Ladder : Seth Godin
(1999)
Partner

Advocate

Supporter

Client

Customer

Prospect
Disqualified Inactive or
Customers Suspect ex-customer
 Customer Loyalty Ladder
Suspect
Anyone who reads or hears an ad,
looks at a brochure or
encounters some other
type of promotion is a suspect
 Customer Loyalty Ladder
Prospect

Someone who pays attention

to your promotion
 Customer Loyalty Ladder
First time
Customer

Those who buy your product or service

First time and repeatedly
 Customer Loyalty Ladder
Client
A customer who buys the product
category from the company only
 Customer Loyalty Ladder
Supporter

• A client when he is satisfied

With the offering &
recommends it further
• Positive Word of Mouth
 Customer Loyalty Ladder
Advocate

A customer who gives unpaid

advertising for the
products or services of a business
and proactively works with the
Company to improve its products
and services
 Customer Loyalty Ladder
Partner
An advocate who becomes
actively involved in the decision
of the company
 Disqualified

Those who have bad

relations-business with the
organization
Customer Loyalty Ladder

Inactive or ex-customers
Customers who some how stopped
to deal With the organization

Teshome Bekele
CRM Process
The CRM Process includes the following actions:
•Identifying Customers – Every piece of user
information a firm receives goes into a database that helps
firms identify the best (highest value, longest loyalty, highest
frequency of purchase, etc) customers.
•Differentiating Customers – Many firms differentiate
customers by value, which is evident by the 80/20 principle
(80% of a company’s business comes from 20% of their
customers) Pareto Principle. Technology allows firms to identify
high-value customers and respond with offers in real time over
the Internet.
 What is Marketed?
Goods
Goods
Services
Services
Events
Events &
& Experiences
Experiences
Persons
Persons

Places
Places &
& Properties
Properties
Organizations
Organizations

Information
Information
Ideas
Ideas
1-54
 Marketing Philosophies

Production
Productionconcept
concept

Product
Productconcept
concept

Selling
Sellingconcept
concept

Marketing
Marketingconcept
concept

Social
Socialmarketing
marketingconcept
concept
 6.1 The Production philosophies
Production philosophy holds that customers will
favor products that are available and highly
affordable, and therefore management should focus
on production and distribution efficiency.
The philosophy can be good for two situations
• Where demand is greater than supply
• Where the product cost is too high and
improved productivity is needed to lower the
cost
It is Inside-Out approach. It starts every thing from
the organization and proceed to the customer.
 6.2 The Product philosophy
• The product philosophy holds that consumers
will favor products that offer the most quality,
performance and innovative (new) features
• Thus a company should focus on making
continuous product improvements
• This can lead to marketers suffering
‘marketing myopia’( myopia=short
sightedness; can’t see properly need glasses)
Product Philosophy is an inside-out approach. It
starts from the organization and moves to the
customer.
 6.3 The Selling philosophy
• The selling philosophy holds that consumers
will not buy enough of the organization’s
products unless the organization undertakes
a large-scale selling and promotional efforts
• Companies practice the selling concept when
they have overcapacity/ excessive amount of
products
• It carries high risk because it focuses on
short-term selling strategy and ignores
building long-term customer relationship
• It is inside-out approach. It starts from the
organization and
TEBEK moves
Module One
The Nature of Marketing
to the customer
 6.4 Marketing Philosophy
The marketing Philosophy holds that achieving
organizational goals depends on determining the
needs and wants of target markets and delivering the
desired satisfaction more effectively than
competitors.
•Discover needs and wants of customers
•Create value-Produce Goods and services based on
customer needs and wants
•Offer customer value through the goods and
services
•Satisfy-delight customers
•Obtain value in return for satisfaction and delight
 Marketing & Sales philosophies
Contrasted
Starting Focus Means Ends
Point

Selling Profits
Existing
Factory and through
Products
Promoting Volume

The
TheSelling
SellingConcept
Concept

Profits
Customer Integrated
Market through
Needs Marketing
Satisfaction

The
TheMarketing
MarketingConcept
Concept
 6.5 Societal Marketing philosophy

Society
Society
(Human
(Human Welfare
Welfare))

Societal
Societal Marketing
Marketing
Philosophy
Philosophy
Three
Three Considerations
Considerations

Consumers
Consumers Company
Company
(Wants
(Wants Satisfaction)
Satisfaction) (Profits)
(Profits)
TEBEK
 Societal Marketing philosophies

• Societal marketing philosophy holds that the

organization should determine the needs,
wants, and interests of target markets and
deliver the desired satisfactions more
effectively than competitors in a way that
maintains or improves the customer’s and
society’s well-being.
• No smoking floors, anti-drunk driving
promotions, environmentally-friendly food
containers, energy conservation.
 7. The Changing Marketing Landscape
• The Economy: Economic recession or depression,
leave consumers short of both money and
confidence, creating a new age of consumer
frugality that will last well into the future
• The Technology: The boom in technology such as
in computer, telecommunications, information,
transportation, and other technologies has created
exciting new ways to learn about and relate to
individual customers. It has also allowed new
approaches by which marketers can target
consumers more selectively and build closer, two-
way customer relationships
 The Changing Marketing Landscape

• Globalization: The world is increasingly becoming

smaller world, many marketers are now connected
globally with their customers and marketing partners.
Today, almost every company, large or small, is
touched in some way by global competition.
• Ethical and social responsibility: calls on marketers to
take greater responsibility for the social and
environmental impact of their actions.
• Marketing also has become a major part of the
strategies of many not-for-profit organizations, such as
colleges, hospitals, museums, zoos, symphony
orchestras, and even churches.
 End of
Chapter 1