The Marketing Concept

What is Marketing?
• Simple Definition: Marketing is
managing profitable customer
relationships.
• Goals:
1. Attract new customers.
2. Keep and grow current
customers.
• Therefore; Is this a fair true definition
of Marketing?
• American Marketing Association (2007)
defined Marketing as “the activity, set
of institutions, and processes for
creating, communicating, delivering, and
exchanging offerings that have value
for customers, clients, partners, and
society at large”.

• But, How this definition was set up?

Evolution of Marketing Concept

Marketing Concept

Selling Concept

Product Concept

Production Concept
 Marketing Concept
A Philosophy that achieving
organizational goals depends on
Knowing the Needs and Wants of
target market and delivering
the desired satisfaction better
than competitors do.
Marketing concept vs. Sales concept
Characterises of Marketing Concept
• The marketing concept is not a second
definition of marketing. It is a management
philosophy that guides an organization’s
overall activities.
• The marketing concept is not a
philanthropic philosophy, it should benefit
the organization as well as customers
• This concept is a customer centric “sense
and respond”.
• Customer satisfaction is the major focus
of the marketing concept.
• The purpose of Marketing concept is to
rivet the attention of marketing
managers on serving broad class of
customers needs rather than on the
firms current product (Production
orientation) or on devising methods to
attract customers to current product
(Sales orientation).
 Core Marketing Concepts
• Needs, Wants, and Demands
• Target Market, Segmentation and
Positioning
• Offerings and Brands.
• Value and Satisfaction
• Marketing Channels and Supply
chain.
• Competition
• Marketing Environment.
 New Marketing Realities
• Network and Information technology
• Globalization.
• Deregulations.
• Privatization.
• Heightened Competition.
• Industry Convergence.
• Disintermediation.
• Consumer buying power
• Retail transformation.
 Society
(Human Welfare)

Societal Marketing
Concept

Consumers Company
(Want Satisfaction) (Profits)
Holistic Marketing Concept
 Four Ps
• Four Ps
 Marketing Mix
• The concept is simple. Think about
another common mix - a cake mix. All
cakes contain eggs, milk, flour, and sugar.
However, you can alter the final cake by
altering the amounts of mix elements
contained in it. So for a sweet cake add
more sugar!
 Marketing Mix
• It is the same with the marketing mix.
• The offer you make to your customer can
be altered by varying the mix elements.
• So for a high profile brand, increase the
focus on promotion and desensitize
the weight given to price.
 Target Market is the key
• Competition
 E. Jerome
McCarthy
• A prominent marketer, E. Jerome
McCarthy, proposed a 4 P classification in
1960, which has seen wide use.
 4Ps & 4Cs
• Product- Customer /Consumer
• Price- Customer cost
• Place- Convenience
• Promotion- Communication
 4Ps & 4Cs
• Four Cs
• The Four Ps is also being replaced by the
Four Cs model, consisting of consumer,
cost, convenience, and communication.
• The Four Cs model is more consumer-
oriented and fits better in the movement
from mass marketing to niche marketing.
 Product- Consumer
• The product part of the Four Ps model is
replaced by consumer or consumer
models, shifting the focus to satisfying the
consumer.
 Price- Cost
• Pricing is replaced by cost, reflecting the
reality of the total cost of ownership.
 Place- Convenience
• Placement is replaced by the convenience
function.
• With the rise of internet and hybrid models
of purchasing, place is no longer as
relevant as before.
• Convenience takes into account the
ease to buy a product, find a product, find
information about a product, and several
other considerations.
 Promotion- Communication
• Finally, the promotions feature is replaced
by communication.
• Communications represents a broader
focus than simply promotions.
• Communications can include advertising,
public relations, personal selling, viral
advertising, and any form of
communication between the firm and the
consumer.
 Extended Marketing Mix
• There have been attempts to develop an
'extended marketing mix' to better
accommodate specific aspects of
marketing.
• For example, in the 1970s, Nickels and
Jolson suggested the inclusion of
packaging.
• In the 1980s Kotler proposed public
opinion and political power
Extended- MarketingMix
 Extended Marketing Mix
• Booms and Bitner included three
additional 'Ps' to accommodate trends
towards a service or knowledge
based economy:
• People
• Process
• Physical Evidence
 People
• People – all people who directly or
indirectly influence the perceived value of
the product or service, including
knowledge workers, employees,
management and consumers.
 Process
• Process – procedures, mechanisms and
flow of activities which lead to an
exchange of value.
 Physical Evidence
• The direct sensory experience of a product or
service that allows a customer to measure
whether he has received value.
• Examples might include the way a customer is
treated by a staff member, or the length of time a
customer has to wait, or a cover letter from an
insurance company, or the environment in which
a product or service is delivered.
 Physical Evidence
• Physical evidence is the material part of
a service.
• Strictly speaking there are no physical
attributes to a service, so a consumer
tends to rely on material cues.
 Physical evidence
• There are many examples of physical
evidence, including some of the following:
• Packaging.
• Internet/web pages.
• Paperwork (such as invoices, tickets and
despatch notes).
• Brochures.
 7Ps & 7Cs
The 7 Ps The 7 Cs
Organisation Facing Customer Facing
Product = Customer/ Consumer
Price = Cost
Place = Convenience
Promotion = Communication
People = Caring
Processes = Co-ordinated
Physical Evidence = Confirmation
 Product
• Product:
• A product, service or idea is that
which satisfies the needs & wants of
the customers
 Product
• Variety
• Quality
• Design
• Features
• Brand Name
• Packaging
• Service
 Place
• Place represents the location where a
product can be purchased.
• It is often referred to as the distribution
channel. It can include any physical store
as well as virtual stores on the Internet.
 Place
• Physical distribution are activities involved
in transporting products from the
producer to the consumer:
• Mode of transport
• Warehousing & Storage
• Order processing
• Inventory control
 Place
• Channels of distribution are the routes
through which the ownership of goods flow
on its way from the producer to the
customer
• Distributor
• Super-stockist
• Wholesalers
• Retailers
 Place
• Instruments that determine the intensity &
manner in which goods or services will
be made available
• Types of channels, density of distribution,
trade-relation mix, merchandising advise
 Place
• Channels
• Coverage
• Locations
• Inventory
• Transportation
• Logistics
 Price
• The price is the amount a customer pays
for the product.
• It is determined by a number of factors
including market share, competition,
material costs, product identity and the
customer's perceived value of the product.
• The business may increase or
decrease the price of product if other
stores have the same product.
 Price
• List Price
• Discounts
• Allowances
• Payment Period
• Credit Terms
 Price
• Price is the amount a consumer pays in
exchange for the product or service.
• Marketers must consider the following in
setting prices:
 Promotion
• Promotion activities are meant to
communicate & persuade the target
market to buy the company’s products
• This is done by:-
 Promotion
• Advertising
• Personal selling
• Sales promotion- POS
• Public Relations
• Word of mouth – Viral advertising
 Promotion
• Promotion represents all of the communications
that a marketer may use in the marketplace.
• Promotion has five distinct elements –
advertising, personal selling, public relations,
word of mouth and point of sale.
• A certain amount of crossover occurs when
promotion uses the five principal elements
together
• Advertising covers any communication that is
paid for, from and cinema commercials,
radio and Internet adverts through print
media and billboards.
 ATL & BTL
• Above the line (ATL) is an advertising technique using
mass media to promote brands.
• Major above-the-line techniques include TV and radio
advertising, print advertising and internet banner
ads.
• This type of communication is conventional in nature and
is considered impersonal to customers.
• The ATL strategy makes use of current traditional media:
television, newspapers, magazines, radio, outdoor, and
internet.
• It differs from BTL (Below the line), that believes in
unconventional brand-building strategies, such as direct
mail.
 BTL- Below the line
• The terms "below the line" promotion or
communications, refers to forms of
non- media communication, even non-
media advertising.
• Below the line promotions are becoming
increasingly important within the
communications mix of many companies,
not only those involved in FMCG products,
but also for industrial products.
 ATL & BTL
• What’s the difference between ‘Above the line’ and
‘below the line’ advertising?

• Below the line (BTL) is an advertising technique.

• It uses less conventional methods than the usual specific
channels of advertising to promote products, services,
etc. than ATL (Above the line) strategy.
• These may include activities such as direct mail, public
relations and sales promotion for which a fee is
agreed upon and charged up front.
 Below theLine
• Below the line advertising typically focuses on direct
means of communication, most commonly direct mail
and e-mail, often using highly targeted lists of names to
maximize response rates
• The term "Below the Line" is rapidly going out of fashion
in advertising circles as agencies and clients switch to an
'Integrated Communication Approach.'
• BTL is a common technique used for touch and feel
products. Those consumer items where the customer will
rely on immediate information than previously
researched items.
• BTL techniques ensures recall of the brand while at the
same time highlighting the features of the product.
PORTER’s FIVE FORCEs MODEL
Potential

entrants
Threat of
new entrants

Bargaining power Industry competitors

of suppliers
Suppliers Buyers
Rivalry among Bargaining power
existing firms of buyers

Threat of
substitutes

Substitute
products
PORTER’s FIVE FORCEs MODEL
 Threat of New Entrants
Barriers to
Entry
PORTER’s FIVE FORCEs MODEL
PORTER’s FIVE FORCEs MODEL

Bargaining
Power of
Buyers
PORTER’s FIVE FORCEs MODEL

Threat of
Substitute
Products
Threat of Substitute Products
PORTER’s FIVE FORCEs MODEL
Threat of
new entrant

Rivalry Among Bargaining

Competing Firms in Power of
Industry Buyers
Coca-cola
• Traditional competition:
 Prices of Pepsi, local brands
 Market share
 Promotional actions of competition

• New entrants:
 New “look-a-like” manufacturers

• Substitute products:
 Fashionable new drinks, milk drinks, coffee, beer, ...
Coca-cola
• Suppliers:
 Price and availability of ingredients on world market
 Quality speed safety, traceability, flexibility of supply
chain

• Buyers/consumers:
 High as a result of intense competition both
among branded and unbranded products.
 Combined purchase power of shops, bars, supermarkets
 Competitive Advantage
• The Competitive Advantage model of Porter learns that
competitive strategy is about taking offensive or defensive
action to create a defendable position in an industry, in order
to cope successfully with competitive forces.

• Companies can combat the pressure of the five forces and

create competitive advantages.

• There are 2 basics types of Competitive Advantage :

 Cost leadership (low cost)
 Differentiation
Strengths of five forces model:
 The model is strong tool for competitive
analysis at industry level.

 It provides useful input for performing a

SWOT analysis.
 Limitations
• Inside-out strategy is ignored (core competence)

• It does not cope with synergies and interdependencies

within the portfolio of large corporations
(parenting advantage)

• The environments which are characterized by rapid,

systemic and radical change require more flexible, dynamic
or emergent approaches to strategy formulation (disruptive
innovation)

• Sometimes it may be possible to create completely new

markets instead of selecting from existing ones (blue ocean
strategy)