DEFINITION OF MARKETING
Marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others. (Philip Kotler)
Marketing is the analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives. It relies heavily on designing the organization’s offering in terms of the target markets’ needs and desires, and on using effective pricing, communication, and distribution to inform, motivate, and service the markets. (Philip Kotler)
KEY POINTS
a) Managerial Process involving analysis, planning and control. (The view of marketing as social process is not of interest to us as managers)
b) Carefully formulated programs and not just random actions. (A charity organization sending volunteers out to collect money – this is not marketing, it is selling)
c) Voluntary exchange of values; no use of force or coercion. Offer benefits. (A museum, seeking members, tries to design a set of benefits that are appealing to potential members.)
d) Selection of Target Markets rather than a quixotic attempt to win every market and be all things to all men.
e) Purpose of marketing is to achieve Organizational Objectives. For commercial sector it is profit. For non-commercial sector, the objective is different and must be specified clearly.
f) Marketing relies on designing the organization’s offering in terms of the target market’s needs and desires rather than in terms of seller’s personal tastes or internal dynamics. User-oriented and not seller-oriented.
g) Marketing utilizes and blends a set of tools called the marketing mix – product design, pricing, distribution and communication. Too often marketing is equated either with just advertising or with just personal selling.
MARKETING vs. SELLING
There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. (Peter Drucker)
Examples: Sony’s Walkman, Nintendo’s superior video game Marketing includes selling but should be preceded by needs assessment, marketing research, product development, pricing and distribution. Marketing based on hard selling carries high risk. Dissatisfied customers.
BENEFITS & CRITICISMS OF MARKETING
Benefits
a) Improved Satisfaction of Target Market
b) Improved efficiency in activities
Criticism
a) Marketing wastes money
b) Marketing activity is intrusive
c) Marketing is manipulative
NATURE OF ORGANIZATIONS
The Unresponsive Organization
a) It does nothing to measure the needs, perceptions, preferences or satisfaction of its constituent publics.
b) It makes it difficult for its constituent publics to place inquiries, complaints, suggestions or opinions.
Examples: Sovereign, monopoly or high demand positions insulated from popular control.
The Casually Responsive Organization
a) It shows an interest in learning about consumer needs, perceptions, preferences, and satisfaction.
b) It encourages consumers to submit inquiries, complaints, suggestions and opinions.
Examples: US universities in early seventies faced decline in student applications. College administrators till then were largely oriented towards problems of hiring faculty, scheduling classes, and running efficient administrative services – the earmarks of the bureaucratic mentality. They started listening to students. They left their doors open, made occasional surprise appearances in the student lounge, encouraged suggestions from students, and created faculty-student committees. These steps converted the university organization into being informally responsive.
ORIENTATION OF ORGANIZATIONS
a) Production Orientation – Arose in scarcity economies. Business concentrated on production output and efficiency. Finding customers easy; products kept simple and often quality scaled down to increase profits.
b) Sales Orientation – Key assumptions are as follows:
1) The main task of the firm is to get sufficient sales for its products.
2) The consumer can be induced to buy through various sales stimulating techniques and devices.
3) The customer will probably come back again and even if he does not, there are many other customers out there.
Examples: Encyclopedia salesmen, insurance agents, many Indian companies
c) Marketing Orientation – The marketing concept is a consumers’ needs orientation backed by integrated marketing aimed at generating consumer satisfaction as the key to satisfying organizational goals.
NATURE OF NEEDS
A human need is a state of felt deprivation of some basic satisfaction. (food, clothing, shelter, safety, belonging, esteem etc.)
Abraham Maslow noticed that some needs take precedence over others. For example, if you are hungry and thirsty, you will tend to try to take care of the thirst first. After all, you can do without food for weeks, but you can only do without water for a couple of days! Thirst is a “stronger” need than hunger. Likewise, if you are very thirsty, but someone has put a choke hold on you and you can’t breath, which is more important?
The need to breathe, of course. On the other hand, sex is less powerful than any of these. Let’s face it, you won’t die if you don’t get it!
Maslow took this idea and created his now famous hierarchy of needs. Beyond the details of air, water, food, and sex, he laid out five broader layers:
1) Physiological needs. These include the needs we have for oxygen, water, protein, salt, sugar, calcium, and other minerals and vitamins. They also include the need to maintain a pH balance (getting too acidic or base will kill you) and temperature. Also, there’s the needs to be active, to rest, to sleep, to get rid of wastes (CO2, sweat, urine, and feces), to avoid pain, and to have sex.
2) Safety and security needs. When the physiological needs are largely taken care of, this second layer of needs comes into play. You will become increasingly interested in finding safe circumstances, stability, protection. You might develop a need for structure, for order, some limits. Looking at it negatively, you become concerned, not with needs like hunger and thirst, but with your fears and anxieties. In the ordinary adult, this set of needs manifest themselves in the form of our urges to have a home in a safe neighborhood, a little job security and a good retirement plan and a bit of insurance, and so on.
3) Love and belonging needs. When physiological needs and safety needs are, by and large, taken care of, a third layer starts to show up. You begin to feel the need for friends, a sweetheart, children, affectionate relationships in general, even a sense of community. Looked at negatively, you become increasing susceptible to loneliness and social anxieties. In our day-to-day life, we exhibit these needs in our desires to marry, have a family, be a part of a community, a member of a church, a brother in the fraternity, a part of a gang or a bowling club. It is also a part of what we look for in a career.
4) Esteem needs. Next, we begin to look for a little self-esteem. Maslow noted two versions of esteem needs, a lower one and a higher one. The lower one is the need for the respect of others, the need for status, fame, glory, recognition, attention, reputation, appreciation, dignity, even dominance. The higher form involves the need for self-respect, including such feelings as confidence, competence, achievement, mastery, independence, and freedom. Note that this is the “higher” form because, unlike the respect of others, once you have self-respect, it’s a lot harder to lose! The negative version of these needs is low self-esteem and inferiority complexes. Maslow felt that these were at the roots of many, if not most, of psychological problems. In many countries, most people have what they need in regard to their physiological and safety needs. Almost everyone, more often than not, has quite a bit of love and belonging, too. It’s a little respect that often seems so very hard to get!
All of the preceding four levels he calls deficit needs, or D-needs. If you don’t have enough of something -- i.e. you have a deficit -- you feel the need. But if you get all you need, you feel nothing at all! In other words, they cease to be motivating. As the old blues song goes, “you don’t miss your water till your well runs dry!”
WANTS AND DEMANDS
Human wants are desires for specific satisfiers of these deeper needs. Demands are wants for specific products that are backed by an ability and willingness to buy them.
VALUE AND SATISFACTION
Benefits Functional Benefits + Emotional Benefits
Value = ____________ = ________________________________________________
Costs Monetary Costs+ Time Costs + Energy Costs + Psychic Costs
Tools for tracking and measuring Customer Satisfaction: Complaint and Suggestion systems, Customer satisfaction surveys, Ghost shopping, Lost customer analysis
