2. Core Concepts of Marketing
• Needs, wants, demands
– Needs -- state of felt deprivation -- don’t create
needs
– Wants -- specific satisfiers -- shaped by culture and
individual experience -- we can influence wants
– Demands -- wants backed by buying power --
demands often for a group of benefits and may be
addressed by a number of needs/wants
– Basic needs are relatively few -- usually have many
wants -- and limited demand
3. 3
Core Concepts of Marketing
Need – food ( is a must )
Want – Pizza, Burger, French fry's ( translation of a need
as per our experience )
Demand – Burger ( translation of a want as per our
willingness and ability to buy )
Desire – Have a Burger in a five star hotel
4. 4
• Converting Needs to Wants
– The need for a vacation becomes a desire to
take Caribbean Holiday
– The need for fitness becomes a desire for
exercise classes
5. Core Concepts of Marketing
• Products
–Anything that satisfies a need or want
–We buy the service/benefit -- sell the
service
–Marketing myopia -- focus on the
product versus customer need
6. What Will Satisfy Consumer’s
Needs and Wants?
• Products - anything that
can be offered to a
market for attention,
acquisition, use or
consumption and that
might satisfy a need or
want.
• Examples: persons,
places, organizations,
activities, and ideas.
• Services - activities or
benefits offered for sale
that are essentially
intangible and don’t
result in the ownership
of anything.
• Examples: banking,
airlines, haircuts, and
hotels.
7. 1 - 7
The Marketing Myopia
• Marketing myopia was initially described
as a firm's shortsightedness or
narrowness when attempting to define
its business.
• The key question – “what business are
you in?”
8. 1 - 8
The Marketing Myopia
• According to Levitt, "the organization
must learn to think of itself not as
producing goods or services but as buying
customers, as doing the things that will
make people want to do business with it."
9. No Threat of Obsolescence
• The fallacy of believing competitive substitutes
don’t exist
• Petroleum industry
▫ A history of obsolete products due to competitive
substitutes
Kerosene Lamp
Kerosene Space Heater
10. Product Orientation vs. Market Orientation
Company Product Market
Missouri-Pacific
Railroad
We run a railroad We are a people-
and-goods mover
Xerox We make copying
equipment
We improve office
productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain
people
11. Core Concepts of Marketing
• Value, cost and satisfaction
– Value is consumer’s estimate of product’s capacity to satisfy a need or
want --versus the cost
– Cost is part of the need-satisfaction equation
– Often more emotionally driven than rational
• Value - the value or benefits the customers gain from using
the product versus the cost of obtaining the product.
• Satisfaction - Based on a comparison of performance and
expectations.
– Performance > Expectations => Satisfaction
– Performance < Expectations => Dissatisfaction
12. 12
Customers - Problem
Solution
• As a priority , we must bring to our customers
“WHAT THEY NEED”
•We must be in a position to UNDERSTAND their
problems
•Or in a new situation to give them a chance to
AVOID the problems
13. 13
Customer looks for Value
•Value = Benefit / Cost
•Benefit = Functional Benefit + Emotional
Benefit
•Cost = Monetary Cost + Time Cost +
Energy Cost + Psychic Cost
14. MARKETING AND CUSTOMER VALUE
The Japanese have further refined this view with the following concepts:
•
Zero customer feedback time. Customer feedback should be collected
continuously after purchase to learn how to improve the product and its
marketing.
• Zero product improvement time. The company should evaluate all
improvement ideas and introduce the most valued and feasible
improvements as soon as possible.
• Zero purchasing time. The company should receive the required parts
and supplies continuously through just-in-time arrangements with
suppliers. By lowering its inventories, the company can reduce its costs.
• Zero setup time. The company should be able to manufacture any of its
products as soon as they are ordered, without facing high setup time or
costs.
• Zero defects. The products should be of high quality and free of flaws.
15. • Exchanges & transactions
– Exchanges -- the act of obtaining desired objects by offering something in
return of equal value
– Transactions -- actual trade of value between two or more parties
• Agreement reached -- the event
• Exchange and Transactions
– Involves obtaining a desired product from someone by offering
something in return.
– 5 conditions
• 2 parties
• Has something that might be of value to other party
• Capable of communication and delivery
• Free to accept or reject the exchange offer
• Appropriate or desirable to deal with the other party
– Transaction is a trade of values between two or more parties
– Transfer – gifts, subsidies, etc.
Core Marketing Concepts
16. The Concept of Exchange
The idea that people give up
something to receive something they
would rather have.
1
17. Exchange and Marketing
In very basic economic
systems, each seller
must meet directly with
each buyer in order to
exchange something of
value. As needs
increase, the number of
exchanges can soon
become unmanageable
for one person.
Ten exchanges required
without central market
Pots
bats
Hats
knife
soap
18. Exchange and Marketing
Central
market
middleman
Pots
bats
Hats
knife
soap
Five exchanges required
with central market
In a centralized market,
a buyer can go to one
location to find many
different products from
many different sellers.
By reducing the time both
buyers and sellers must
spend to complete an
exchange, prices can be
lowered.
20. The Concept of Exchange
Necessary
Conditions for
Exchange
At Least Two Parties
Something of Value
Communication and Delivery
Freedom to Accept or Reject
Desire to Deal With Other Party
1
21. Exchange may not take place even
if conditions are met
An agreement must be reached
Marketing occurs even if exchange does
not take place
The Concept of Exchange
1
22. What is a Market?
• Traditionally, a “market” was a physical place
where buyers and sellers gathered to buy and
sell goods.
• Economists describe a market as a collection
of buyers and sellers who transact over a
particular product or product class (such as
the housing market or the grain market).
25. What is a Market?
Potential consumers make up a market,
which is:
1.people
2.with the desire and
3.with the ability to buy a specific product.
26. Types of Customer markets
• Consumer Markets Companies selling mass consumer goods and services such as
juices, cosmetics, athletic shoes, and air travel establish a strong brand image by
developing a superior product or service, ensuring its availability, and backing it
with engaging communications and reliable performance.
• Business Markets Companies selling business goods and services often face well-
informed professional buyers skilled at evaluating competitive offerings.
Advertising and Web sites can play a role, but the sales force, the price, and the
seller’s reputation may play a greater one.
• Global Markets Companies in the global marketplace navigate cultural, language,
legal, and political differences while deciding which countries to enter, how to enter
each (as exporter, licenser, joint venture partner, contract manufacturer, or solo
manufacturer), how to adapt product and service features to each country, how to
set prices, and how to communicate in different cultures.
• Nonprofit and Governmental Markets Companies selling to nonprofit
organizations with limited purchasing power such as churches, universities,
charitable organizations, and government agencies need to price carefully. Much
government purchasing requires bids; buyers often focus on practical solutions and
favor the lowest bid, other things equal.
27. One or more specific groups of potential
customers toward which an organization
directs its marketing program.
Target Market
29. Role of Marketers
• Identify needs and wants
• Communicate customer expectations for product
design
• Make sure company is delivering the product/service
• Follow up and control feedback from the customer
• Provide feedback to the organization
• Make sure adjustments get made where
necessary(customisation 0r tailormade)
