Marketing Concepts: Customer Needs and Value Delivery

Principles of marketing Notes Introduction Marketing includes virtually all customer related activities a business carries out, from developing a product consumers will enjoy, to attracting customers, to maintaining a customer base, to serving and satisfying the customer. The term 'marketing concept 'pertains to the fundamental premise of modern marketing. This concept proposes that in order to satisfy the organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors. Marketing and marketing concepts are directly related. Marketing Concepts There are 5 different concepts of marketing, each of which vary in the function that they deal with. For example – production concept deals with production and selling concept deals with selling. Each of the concept was developed as per the need of the market. As the market changed, so did the concepts of marketing. And today, we have an opportunity to look at all 5 concepts of marketing and what they represent. Production Concept – Consumers prefer products that are widely available and inexpensive. The production concept is more operations oriented than any other concept. Product Concept – Consumers favor products that offer the most quality, performance, or innovative features. The product concept believes in the consumer and it says the consumers are more likely to be loyal if they have more options of products or they get more benefits from the product of the company. Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your product. You have to focus on marketing as well. Marketing Concept – Focuses on needs/wants of target markets & delivering value better than competitors. The marketing concept believes in the pull strategy and says that you need to make your brand so strong that customers themselves prefer your brand over every other competitor. This can be achieved through marketing. Societal Marketing concept – Focuses on needs / wants of target markets & delivering value better than competitors that preserves the consumer’s and society’s well-being. Functions of Marketing Marketing Information Management Managing marketing information helps you understand your customers’ needs. You can gather information by reviewing published market research reports, asking your sales team for feedback or carrying out a survey using a market research firm. You should also monitor product review sites and social media, such as Facebook and Twitter, where you can find information on consumers’ needs and attitudes toward products. Distribution Your distribution strategy determines how and where customers can obtain your products. If you market products to a small number of business customers, you may deal with them directly through a sales team. If your business expands to other regions or countries, it may be more cost effective to deal with customers through local distributors. Companies marketing consumer products distribute them through retail outlets or, increasingly, via the Internet. Product/Service Management Marketing provides valuable input to product and service development. Information on customers’ needs helps to identify the features to incorporate in new products and product upgrades. Marketing also identifies opportunities to extend a product range or launch existing products into new sectors. Pricing Pricing plays an important role in determining market success and profitability. If you market products that have many competitors, you may face strong price competition. In that situation, you must aim to be the lowest-cost supplier so you can set low prices and still remain profitable. You can overcome low price competition by differentiating your product and offering customers benefits and value that competitors cannot match. Promotion Promotion makes customers and prospects aware of your products and your company. Using promotional techniques, such as advertising, direct marketing, telemarketing or public relations, you can communicate product benefits and build preference for your company’s products. Selling Marketing and selling are complementary functions. Marketing creates awareness and builds preference for a product, helping company sales representatives or retail sales staff sell more of a product. Marketing also supports sales by generating leads for the sales team to follow up. Financing Successful marketing provides a regular flow of revenue to pay for business operations. Marketing programs that strengthen customer loyalty help to secure long-term revenue, while product development programs open new revenue streams. Financing also plays a role in marketing success by offering customers alternative methods of payment, such as loans, extended credit terms or leasing. Micro-environment Company aspect of micro-environment refers to the internal environment of the company. This includes all Departmentalization departments such as management, finance, research and development, purchasing, Business operations and accounting. Each of these departments influences marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budget in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship. Marketing intermediaries refers to resellers, physical distribution firms, marketing services agencies, and financial intermediary financial intermediaries. These are the people that help the company promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the company's product. They match the distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store and transport the company's product from its origin to its destination. Marketing services agencies are companies that offer services such as conducting marketing research, advertising, and consulting. Financial intermediaries are institutions such as banks, credit companies and Insurance companies. Another aspect of micro-environment is the customer market. There are different types of customer markets including consumer markets, business markets, government markets, Globalization international markets, and reseller markets. The consumer market is made up of individuals who buy goods and services for their own personal use or use in their household. Business markets include those that buy goods and services for use in producing their own products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as is for a profit. These are the same companies mentioned as market intermediaries. The government market consists of government agencies that buy goods to produce public services or transfer goods to others who need them. International markets include buyers in other countries and includes customers from the previous categories. Competitors are also a factor in the micro-environment and include companies with similar offerings for goods and services. To remain competitive a company must consider who their biggest competitors are while considering its own size and position in the industry. The company should develop a strategic advantage over their competitors. Macro-environment The macro-environment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture. Factors affecting organization in Macro environment are known as PESTEL, that is: Political, Economic, Social, Technological, Environmental and Legal. Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is a very important factor to study for marketers and helps to divide the population into market segments and target markets. An example of demography is classifying groups of people according to the year they were born. These classifications can be referred to as baby boomers, who are born between 1946 and 1964, generation X, who are born between 1965 and 1976, and generation Y, who are born between 1977 and 1994. Each classification has different characteristics and causes they find important. This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment. Demography covers many aspects that are important to marketers including family dynamics, geographic shifts, work force changes, and levels of diversity in any given area. Another aspect of the macro-environment is the economic environment. This refers to the purchasing power of potential customers and the ways in which people spend their money. Within this area are two different economies, subsistence and industrialized. Subsistence economies are based more in agriculture and consume their own industrial output. Industrial economies have markets that are diverse and carry many different types of goods. Each is important to the marketer because each has a highly different spending pattern as well as different distribution of wealth.