Marketing

1. Course objectives:
- Provide students w basic marketing concepts and execution of marketing activities in
businesses, including describing, analyzing..

LECTURE 1
WHAT IS MARKETING

- Marketing is descended from:

o Psychology: the study of ppl’s needs wants and motives
o Journalism: persuasive communication
 We know what ppl want and need, we know how to persuade them that our products will
satisfy those needs and wants
- Marketing is the process where companies create value for customers and build strong
customer relationships to create value from customers in return
- Marketing is a social and managerial process by which individuals and organizations obtain what
they need and want through creating and exchanging value with others
- Marketing is 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
 Mkt is the art of making ppl happier with what they get than what they exchange for it

MARKETING PROCESS

ORGANIZATION’S MISSION

Market opportunity analysis

Marketing strategy

Target market Marketing

selection objectives

Marketing mix Environmental scanning

- Product
- Distribution
- Promotion
- Price

Implementation

Evaluation
MARKETING IS NOT JUST FOR PRODUCTS
- Services
- Ideas (ideologies)
- People
- Places

MARKETING CORE CONCEPTS

- Needs: states of felt deprivation (a physical need for food) “I need to commute to work”
- Wants: manifestation of human needs, as shaped by culture and individual personality. “I want a
Mercedes” (more specific because it is associated with a product)
- Demands: human wants that are backed by buying power. “I can afford a Ford”

Self-actualization: promotion, scholarship, championship of something, following ideology

Self-esteem needs: appraisals, certification, motivation from friends and family
Social needs: friendships,… => Discord, facebook
Safety: House, secure room, security camera, online security => Nord vpn, kaspersky, adobe security
Physiological: Rice, water, pork, clothes =)) => FOOD FR RESTAURANT
- Market offerings – combination of gns and experiences
o Ppl satisfy needs and wants by exchanging value with the marketer
o In exchange for their money (time and effort), they obtain a market offering – a
combination of gns, info and experiences
o A market offering may include services, activities and benefits that are intangible
o The importance of market offering lies in the benefits it provides
- Customer value = total benefits – total costs
o Customer benefits: the bundle of economic, functional and psychological benefits
customers expect from a product
o Customers costs: bundle of costs customers expect to incur in evaluating, obtaining,
using and disposing of the offering
 Monetary, time, energy, mental
- Customer satisfaction: is the customer;s exp of the product is equal to their expectation then
they will be satisfied
o Expectation < exp: delighted
o Expectation > Exp: dissatisfied
 May be influenced by past buying exp, the info and promises made by the org and
competitors and what customers think is fair
o Expectations gone wild or mild: Uber will suspend drivers scoring less than 4.6, placing
drivers under extreme pressure to give good service, this is unreasonable sometimes.
- Exchange and relationships
o Exchange: the act of obtaining a desired object fr someone offering sth in return
 For it to occur, conditions are:
 2 parties present at least
 Sth of value the other wants
 Ability to communicate offer
  Freedom to accept or reject
 Desire to deal with the other party
o Transaction: a trade between 2 parties that involves at least 2 things of value, agreed-
upon conditions, a time of agreement and a place of agreement
- A free digital service is usually paid for by you. The service provider uses ur data and intrudes
upon ur privacy. (see terms and service)
- HW: READ SLIDES, PROVIDE EXAMPLES – 5 mkt orientations/ concepts
- MARKETING ENVIRONMENT:
o Macro- environmental: large-scale, pervasive forces that aren’t typically controllable by
the org; changes may come gradually to shape opportunities or threats
o Micro-environmental: actors close to the company that affect its business ability;
typically may interact and/ or be influenced by the company
- Understanding the marketing environment  through environmental scanning (collect and
interpret info about forces, events, relationships in the mkt environment that may
- Environment Analysis: situation analysis  first step
o SWOT analysis framework
- DEMOGRAPHIC ENVIRONMENT:
o Demography is the study of human population in terms of size, density, location, age,
gender, race, occupation
o Demographic dev often move at a predictable pace but can have massive impacts on
consumers and products
o Key demographic changes:
 Growing ethnic diversity
 Education
 Healthy food enthusiasts: high education
 Geographic shifts
 Age structures: the one who pay vs the one who uses the product (Pingo, EUC…)
 Changing family structures
 Growth in the number of working women
 Increase in dual-career families
 Greater household incomes
 Increasingly time-poor
 Greater reliance on home entertainment
 Family members’roles, responsibilities, purchasing patterns are
changing
o Marketing by generation
- THREE ECONOMIC AREAS OF GREATEST CONCERN TO MOST MARKETERS, INCLUDE:
o D
o F
o D
- Changes in income:
o Over the past severa; decades, the rich have grown richer faster than have
- Micro-environment: actors close to the company
o The company
 Marketers need to coordinate the work of other departments to implement mkt
strategy, creating customer value and relationship
 Top management
 Finance
 Rs and development
 Purchasing
 Operations
  Accounting
o Suppliers
 Provide resources needed by the company to produce gns
 Marketing managers must watch supply availability supply shortages or delays,
labor strikes and other events that can cost sales in the SR and damage
customer satisfaction in the LR
 Marketing mana must also monitor price trends
o Marketing intermediaries: help company promote, sell, distribute products to final
buyers
 Resellers are distribution channels firms that help the org find customers or
make sales to them
 Physical distribution: help org stock and move goods from their points of origin
to their destinations such as transportation firms (more in ecom)
 Marketing service agencies: mkt rs firms, advertising agencies, media firms, mkt
consulting firms that help company target and promote its products to the right
mkters
 Financial intermediaries: bank, credit companies, insurance companies, other
businesses that help finance transactions or insure against
o Competitors: to be successful, an org must provide greater customer value and
satisfaction
 No single competitive mkt strats is best for all org. Each mkter should consider
its own industry position compared w those of its competitors
 Orgs are facing competition from international competitors as well as
opportunities in international companies
o Publics: any group that has an actual potential interest in, or impact on, an org’s ability
to achieve its objectives
 7 types of public
o Customers: must study its customer markets closely
 3 types of customer markets
- 5C analysis
MARKET RESEARCH
Key Concepts:

1. Definition of Price:
o Price is the amount of money charged for a product or service, or the sum of all
values customers exchange for the benefits of using the product.
o To customers: cost of sth given away for some gns
o To seller: indication of revenue
o To npo: income to fund missions and activities
2. Importance of Price:
o Price plays a vital role as it affects revenue and profits. It is the only element of
the marketing mix that generates revenue for a company.
o Price is important for both the consumer (cost) and the seller (revenue).
o Marketers: select price that ensure sustainability of business, and equals the
perceived value of TA
 Coordinate with design, distribution and promotion of product =>
consistent and effective
3. Factors Affecting Pricing Decisions:
o Internal factors: company's objectives, costs, and overall marketing strategy.
o External factors: market demand, competition, and regulatory environment.
4. Pricing Objectives:
o Profit-oriented: Aim to maximize profits or achieve satisfactory returns.
 Set prices so revenue as big as possible compared to TC
 Target return on investment: effectiveness of profit generation given
available assets
o Sales-oriented: Focus on market share or sales maximization.
 Market share: a company’s product sales as a percentage of total sales
for that industry
 Ensure sales are rising, ignore profit  useful for start-ups, deterring
competition
o Status quo: Seeks to maintain existing prices or match competitors’ prices.
 Little planning, passive
 After maturity phase of plc
 Growth>stability
5. Steps for Setting the Price:
o Establish pricing goals: pricing objectives and trade-offs
o Estimate demand, costs, and profits.
 Price flexible for PLC and mkt conditions
o Choose a price strategy (e.g., cost-based, value-based, competition-based).
o Fine-tune pricing tactics such as discounts, bundling, or psychological pricing.
6. Demand Elasticity:
o Elastic demand: When demand changes significantly with a price change.
o Inelastic demand: When price changes have little effect on demand.
 o Factors affecting elasticity include availability of substitutes (many then elastic),
product durability (very then elastic), and necessity of the product (staples are
inelastic)
7. Pricing Strategies:
o Cost-based pricing: Based on production, distribution, and selling costs plus a
fair return (product-driven)
 Good: certain costs, minimized competition, perceived as fair
 Bad: ignores demand and competitor prices, narrow def of value
 Break-even sales point?
 Mark-up pricing is simplified cost-based, when true calculations are
unknown
o Value-based pricing: Driven by the customer’s perception of value, still need to
be aware of costs
o Competition-based pricing: Set based on competitors’ prices and strategies.
o Performance-based pricing: Seller is paid based on the actual performance of its
product or service.
8. New Product Pricing:
o Price Skimming: Setting a high introductory price to "skim" the top of the
market.
 Success based on: superiority of product + brand rep; barriers to
competitive entry, demand inelasticity
 Start-ups are forced to stay afloat
o Penetration Pricing: Setting a low price to capture a large market share quickly.
subsidize = venture K funding
 Success based on: price sensitive mkt, economies of scale/ scope, can
withstand SR losses
 Bad: lower profit, more volume >> break even, slow recovery, unable to
raise price later, competitors
9. Tactics for Fine-tuning Price:
o Product line pricing: Setting price differences based on product features and
customer evaluations. (decoy effect  upselling)
o Optional product pricing: Pricing optional accessories with the main product.
(base + feature, cross-selling strats)
o Captive product pricing: Setting low prices for the main product but high prices
for essential complementary goods.
o Bundle pricing: Offering products as a package at a reduced price.
o Segmented pricing: Charging different prices for the same product in different
markets or customer segments (age, gender, health, nationality, when, how
many)
o Psychological pricing: Using techniques like charm pricing (.99 pricing) or decoy
effects to influence consumer behavior.
 Segmentation:

 Definition: Dividing a market into distinct groups with common needs and
characteristics who will respond similarly to a marketing action
 Purpose: Allows firms to identify consumer needs more precisely, develop targeted
marketing strategies, and allocate resources more effectively.
 Bases for Segmentation: set of characteristics
o Geographic: By location (e.g., region, city, climate).
o Demographic: Age, gender, income, occupation, education, etc. (widely used bc
available data, close proxy for needs, attitudes, behaviors)
o Psychographic: Personality, lifestyle, values, life goals
o Behavioral: Based on usage rate, loyalty, benefits sought, and buyer-readiness
stage., user status
 Market: ppl/ orgs with wants, needs and the ability and willingness to buy
 WHY:
o There can’t be mass mkting: no mass promotion to sell 1 product to all buyers 
low customer satisfaction (One offering doesn’t work for all)
o One-to-one mkting is unprofitable
o Consumers becoming more sophisticated, demanding, since they have more
access to info and choices
o Consumers are sceptical
 WHY 2:
o Needs and wants more defined
o Accurate mkting objectives
o Precise evaluation of performance
 BENEFITS:
o Design effective mkting programs
o Opportunities for new product dev
o Allocation of mkting rs

2. Targeting:

 Definition: Selecting specific segments to serve and creating tailored marketing mixes
for them.
 Strategies:
o Undifferentiated Targeting: Treating the market as one whole, offering a single
marketing mix.
o Concentrated (Niche) Targeting: Focusing on a single market segment.
o Multi-Segment (Differentiated) Targeting: Targeting multiple segments with
different marketing mixes.
 Evaluating Attractiveness of Segments:
o Size and Growth: Is the segment large and growing?
 o Structural Attractiveness: How strong is the competition? (competitive
landscape); are our rs enough to target this segment (accessibility/ entry barrier)
o Fit with Company: Does it align with the company’s objectives? Can we
effectively reach out (actionable)? Can we stand out (differentiable)

3. Positioning:

 Definition: Differentiating a product or service in the minds of the target customers.

 Positioning Strategies:
o Product Differentiation: Emphasizing unique product attributes.
o Positioning Statement: A clear statement that communicates the brand’s unique
value to the target market.
 Key Elements:
 Target Audience
 Frame of Reference (category)
 Point of Difference (unique selling proposition)
 Reason to Believe (proof of claim)
 Positioning Maps: Visual representations of consumer perceptions, showing how
products are viewed relative to competitors on various dimensions (e.g., price, quality).
Marketing - Chapter 10 Summary: Promotion

1. The Promotion Mix

Promotion is a form of communication used by marketers to inform, persuade, or remind

consumers about a product, influencing their opinions or actions. The Promotion Mix refers to a
combination of tools that companies use to communicate value and build relationships with
customers. It includes:

 Advertising: Paid, non-personal communication to mass audiences.

 Direct Marketing: Personalized marketing using channels like emails, catalogs, and social media.
 Personal Selling: Direct interaction between a sales representative and customers.
 Sales Promotion: Short-term incentives to stimulate immediate sales (e.g., discounts, coupons).
 Public Relations (PR): Managing the company’s image and relationships with stakeholders
through media and events.

2. Types of Promotion Tools

 Advertising: Can be institutional (promoting the company’s image) or product

advertising (highlighting product benefits). Personal selling is focused on face-to-face
interactions to generate sales.
 Sales Promotion: Includes tools like:
o Coupons: Discounts provided on purchase.
o Samples: Offering a product for trial.
o Premiums: Free or low-cost items offered as incentives.
o Patronage rewards: Programs that reward repeat customers, like airline loyalty points.

 Public Relations (PR): Focuses on maintaining a positive public image. It includes:

o Media relations
o Community involvement
o Crisis management

3. Promotion Strategies

 Push Strategy: Promoting the product by pushing it through the distribution channels to
the final consumers, often used by B2B companies.
 Pull Strategy: Directing marketing efforts toward consumers to encourage them to
demand the product from retailers, common in B2C companies.

4. Developing Effective Marketing Communications

The process follows these steps:

1. Sender: The company initiating the communication.

 2. Encoding: The message is created using symbols (words, images).
3. Message: The information transmitted.
4. Media: Channels used to send the message (TV, social media).
5. Decoding: The receiver interprets the message.
6. Receiver: The audience receiving the communication.
7. Response: How the receiver reacts to the message.
8. Feedback: The reaction communicated back to the sender.
9. Noise: Any interference that distorts the message.

5. Setting Advertising Objectives

 Informative advertising: Introduces new products or features.

 Persuasive advertising: Creates preference and purchase intention, often using comparisons.
 Reminder advertising: Ensures customers remember the brand for future purchases.
 Reinforcement advertising: Convincing buyers they made the right choice.

6. Choosing Media and Evaluating Campaigns

 Media decisions are crucial for reaching the target audience effectively.
 Evaluating the campaign includes pre-tests and post-tests to measure its success in meeting the
advertising objectives.