Basic Principles of Marketing

Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of

marketing is meeting needs profitably.

What are the three stages of Marketing?

1. Entrepreneurial marketing: Most companies are started by individuals who visualize an

opportunity and knock on every door to gain attention. Jim Koch, founder of Boston Beer
Company, whose Samuel Adams beer has become a top-selling craft beer, started out in 1984
carrying bottles of Samuel Adams from bar to bar to persuade bartenders to carry it. For 10 years,
he sold his beer through direct selling and grassroots public relations. Today his business pulls in
nearly $200 million, making it the leader in the U.S. craft beer market.

2. Formulated marketing: As small companies achieve success, they inevitably move toward more
formulated marketing. Boston Beer recently began a $15 million television advertising campaign.
The company now employs more that 175 salespeople and has a marketing department that
carries on market research, adopting some of the tools used in professionally run marketing
companies.

3. Intrepreneurial marketing:Many large companies get stuck in formulated marketing, poring over
the latest ratings, scanning research reports, trying to fine-tune dealer relations and advertising
messages. These companies lack the creativity and passion of the guerrilla marketers in the
entrepreneurial stage.3 Their brand and product managers need to start living with their
customers and visualizing new ways to add value to their customers lives.
What are the Scopes of Marketing?

Marketing associates are involved in marketing 10 types of entities:

1. Goods: Particularly food, commodities, clothing, and housingare the mainstay of the economy.

2. Services: As economies advance, a growing proportion of their activities are focused on the
production of services. The U.S. economy today consists of a 7030 services-to-goods mix.
Services include airlines, hotels, and maintenance and repair people, as well as professionals
such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable
mix of goods and services.

3. Experiences: By orchestrating several services and goods, one can create, stage, and market

experiences. Walt Disney Worlds Magic Kingdom is an experience; so is the Hard Rock Cafe.

4. Events: Marketers promote time-based events, such as the Olympics, trade shows, sports

events, and artistic performances.

5. Persons: Celebrity marketing has become a major business. Artists, musicians, CEOs,

physicians, high-profile lawyers and financiers, and other professionals draw help from celebrity

marketers.

6. Places: Cities, states, regions, and nations compete to attract tourists, factories, company

headquarters, and new residents. Place marketers include economic development specialists,
real estate agents, commercial banks, local business associations, and advertising and public
relations agencies.
 7. Properties: Properties are intangible rights of ownership of either real property (real estate) or
financial property (stocks and bonds). Properties are bought and sold, and this occasions a
marketing effort by real estate agents (for real estate) and investment companies and banks (for
securities).

8. Organizations: Organizations actively work to build a strong, favorable image in the mind of their
publics. Philips, the Dutch electronics company, advertises with the tag line, Lets Make Things
Better. The Body Shop and Ben & Jerrys also gain attention by promoting social causes.
Universities, museums, and performing arts organizations boost their public images to compete
more successfully for audiences and funds.

9. Information: The production, packaging, and distribution of information is one of societys major

industries.6 Among the marketers of information are schools and universities; publishers of
encyclopedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web
sites.

10. Ideas: Every market offering has a basic idea at its core. In essence, products and services are
platforms for delivering some idea or benefit to satisfy a core need.

A Broadened View of Marketing Tasks

Marketers are skilled in stimulating demand for their products. However, this is too limited a view of the
tasks that marketers perform. Just as production and logistics professionals are responsible for supply
management, marketers are responsible for demand management. They may have to manage negative
demand (avoidance of a product), no demand (lack of awareness or interest in a product), latent demand
(a strong need that cannot be satisfied by existing products), declining demand (lower demand), irregular
demand (demand varying by season, day, or hour), full demand (a satisfying level of demand), overfull
demand (more demand than can be handled), or unwholesome demand (demand for unhealthy or
dangerous products). To meet the organizations objectives, marketing managers seek to influence the
level, timing, and composition of these various demand states.

The Decisions That Marketers Make

Marketing managers face a host of decisions in handling marketing tasks. These range from major
decisions such as what product features to design into a new product, how many salespeople to hire, or
how much to spend on advertising, to minor decisions such as the wording or color for new packaging.
Among the questions that marketers ask (and will be addressed in this text) are: How can we spot and
choose the right market segment(s)? How can we differentiate our offering? How should we respond to
customers who press for a lower price? How can we compete against lower-cost, lower-price rivals? How
far can we go in customizing our offering for each customer? How can we grow our business? How can
we build stronger brands? How can we reduce the cost of customer acquisition and keep customers loyal?
How can we tell which customers are more important? How can we
measure the payback from marketing communications? How can we improve sales-force productivity?

How can we manage channel conflict? How can we get other departments to be more customer-oriented?

Marketing Concepts and Tools

Marketing boasts a rich array of concepts and tools to help marketers address the decisions they must
make. We will start by defining marketing and then describing its major concepts and tools. Defining
Marketing We can distinguish between a social and a managerial definition for marketing. According to a
social definition, marketing is a societal process by which individuals and groups obtain what they need
and want through creating, offering, and exchanging products and services of value freely with others. As
a managerial definition, marketing has often been described as the art of selling products. But Peter
Drucker, a leading management theorist, says that 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. The American
Marketing Association offers this managerial definition: Marketing (management) is the process of
planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services
to create exchange.

Target Markets and Segmentation

A marketer can rarely satisfy everyone in a market. Not everyone likes the same soft drink, automobile,
college, and movie. Therefore, marketers start with market segmentation. They identify and profile distinct
groups of buyers who might prefer or require varying products and marketing mixes. Market segments can
be identified by examining demographic, psychographic, and behavioral differences among buyers. The
firm then decides which segments present the greatest opportunitythose whose needs the firm can
meet in a superior fashion. For each chosen target market, the firm develops a market offering. The
offering is positioned in the minds of the target buyers as delivering some central benefit(s). For example,
Volvo develops its cars for the target market of buyers for whom automobile safety is a major concern.
Volvo, therefore, positions its car as the safest a customer can buy. Traditionally, a market was a physical
place where buyers and sellers gathered to exchange goods. Now marketers view the sellers as the
industry and the buyers as the market. The sellers send goods and services and communications (ads,
direct mail, e-mail messages) to the market; in return they receive money and information (attitudes, sales
data).
Today we can distinguish between a marketplace and a marketspace. The marketplace is physical, as
when one goes shopping in a store; marketspace is digital, as when one goes shopping on the Internet. E-
commercebusiness transactions conducted onlinehas many advantages for both consumers and
businesses, including convenience, savings, selection, personalization, and information. For example,
online shopping is so convenient that 30 percent of the orders generated by the Web site of REI, a
recreational equipment retailer, is logged from 10 P.M. to 7 A.M., sparing REI the expense of keeping its
stores open late or hiring customer service representatives. However, the e-commerce marketspace is
also bringing pressure from consumers for lower prices and is threatening intermediaries such as travel
agents, stockbrokers, insurance agents, and traditional retailers. To succeed in the online market-space,
marketers will need to reorganize and redefine themselves.

Marketers and Prospects

Another core concept is the distinction between marketers and prospects. A marketer is someone who is

seeking a response (attention, a purchase, a vote, a donation) from another party, called the prospect. If

two parties are seeking to sell something to each other, both are marketers.

Needs, Wants, and Demands

The successful marketer will try to understand the target markets needs, wants, and demands. Needs
describe basic human requirements such as food, air, water, clothing, and shelter. People also have
strong needs for recreation, education, and entertainment. These needs become wants when they are
directed to specific objects that might satisfy the need. An American needs food but wants a hamburger,
French fries, and a soft drink. A person in Mauritius needs food but wants a mango, rice, lentils, and
beans. Clearly, wants are shaped by ones society. Demands are wants for specific products
backed by an ability to pay. Many people want a Mercedes; only a few are able and willing to buy one.
Companies must measure not only how many people want their product, but also how many would
actually be willing and able to buy it. However, marketers do not create needs: Needs preexist marketers.
Marketers, along with other societal influences, influence wants. Marketers might promote the idea that a
Mercedes would satisfy a persons need for social status. They do not, however, create the need for social
status. Product or Offering People satisfy their needs and wants with products.

A product is any offering that can satisfy a need or want, such as one of the 10 basic offerings of goods,
services, experiences, events, persons, places, properties, organizations, information, and ideas. A brand
is an offering from a known source. A brand name such as McDonalds carries many associations in the
minds of people: hamburgers, fun, children, fast food, golden arches. These associations make up the
brand image. All companies strive to build a strong, favorable brand image.

Value and Satisfaction

In terms of marketing, the product or offering will be successful if it delivers value and satisfaction to the

target buyer. The buyer chooses between different offerings on the basis of which is perceived to deliver

the most value.

Value Benefits: Functional benefits emotional benefits Costs Monetary costs time costs energy costs
psychic costs Based on this equation, the marketer can increase the value of the customer offering by
(1) raising benefits, (2) reducing costs, (3) raising benefits and reducing costs, (4) raising benefits by more
than the raise in costs, or (5) lowering benefits by less than the reduction in costs. A customer choosing
between two value offerings, V1 and V2, will examine the ratio V1/V2. She will favor V1 if the ratio is
larger than one; she will favor V2 if the ratio is smaller than one; and she will be indifferent if the ratio
equals one.

Exchange and Transactions

Exchange, the core of marketing, involves obtaining a desired product from someone by offering
something in return. For exchange potential to exist, five conditions must be satisfied:

1 There are at least two parties.

2 Each party has something that might be of value to the other party.

3 Each party is capable of communication and delivery.

4 Each party is free to accept or reject the exchange offer.

5 Each party believes it is appropriate or desirable to deal with the other party.

Whether exchange actually takes place depends upon whether the two parties can agree on terms that

will leave them both better off (or at least not worse off) than before. Exchange is a value-creating process

because it normally leaves both parties better off.

Marketing Channels

To reach a target market, the marketer uses three kinds of marketing channels. Communication channels
deliver messages to and receive messages from target buyers. They include newspapers, magazines,
radio, television, mail, telephone, billboards, posters, fliers, CDs, audiotapes, and the Internet. Beyond
these, communications are conveyed by facial expressions and clothing, the look of retail stores, and
many other media. Marketers are increasingly adding dialogue channels (e-mail and toll-free numbers) to
counterbalance the more normal monologue channels (such as ads). The marketer uses distribution
channels to display or deliver the physical product or service(s) to the buyer or user. There are physical
distribution channels and service distribution channels, which include warehouses, transportation vehicles,
and various trade channels such as distributors, wholesalers, and retailers. The marketer also uses selling
channels to effect transactions with potential buyers. Selling channels include not only the distributors and
retailers but also the banks and insurance companies that facilitate transactions. Marketers clearly face a
design problem in choosing the best mix of communication, distribution, and selling channels for their
offerings.
Supply Chain

Whereas marketing channels connect the marketer to the target buyers, the supply chain describes a
longer channel stretching from raw materials to components to final products that are carried to final
buyers. For example, the supply chain for womens purses starts with hides, tanning operations, cutting
operations, manufacturing, and the marketing channels that bring products to customers. This supply
chain represents a value delivery system. Each company captures only a certain percentage of the total
value generated by the supply chain. When a company acquires competitors or moves upstream or
downstream, its aim is to capture a higher percentage of supply chain value.

Competition

Competition, a critical factor in marketing management, includes all of the actual and potential rival
offerings and substitutes that a buyer might consider. Suppose an automobile company is planning to buy
steel for its cars. The car manufacturer can buy from U.S. Steel or other U.S. or foreign integrated steel
mills; can go to a minimill such as Nucor to buy steel at a cost savings; can buy aluminum for certain parts
of the car to lighten the cars weight; or can buy some engineered plastics parts instead of steel.

Marketing Environment

Competition represents only one force in the environment in which all marketers operate. The overall
marketing environment consists of the task environment and the broad environment. The task environment
includes the immediate actors involved in producing, distributing, and promoting the offering, including the
company, suppliers, distributors, dealers, and the target customers. Material suppliers and service
suppliers such as marketing research agencies, advertising agencies, Web site designers, banking and
insurance companies, and transportation and telecommunications companies are included in the supplier
group. Agents, brokers, manufacturer representatives, and others who facilitate finding and selling to
customers are included with distributors and dealers.

Marketing Mix

Marketers use numerous tools to elicit the desired responses from their target markets. These tools
constitute a marketing mix:12 Marketing mix is the set of marketing tools that the firm uses to pursue its
marketing objectives in the target market. McCarthy classified these tools into four broad groups that he
called the four Ps of marketing: product, price, place, and promotion.
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 Importance of Marketing Mix

A marketing mix is important in business because it maximizes a company's chances of achieving steady,
continual success in its operations. A marketing mix also ensures that a company remains responsible to
its customers by living up to its product claims.
The marketing mix is an integral tool in building an effective marketing strategy and implementing it with

tactics. Also known as the 4 P's of marketing, the mix includes an assessment of the roles your product,

place or distribution, price and promotion play in your overall approach to marketing.

Offering
Part of marketing is conveying to customers what you have to offer and why it is different and better than
alternatives. The product element is most obvious in the offering, since your product is what people buy.
Where you offer it, whether in-store or online, also is important, making the distribution element a factor.
The price point is part of the overall offering, because it affects your product's value.

The Target
When you market, you also have to strategize about who to target with your messages. Your primary
customer group becomes the target customers of your marketing campaign. Your product and price offer
some direction in identifying the right audience. For instance, cutting-edge mobile technology ads often are
targeted to young consumers. Identifying the media used by these customers is also important, which
brings the "promotion" P into play.

Message Delivery
Tangibly, the promotion P addresses the actual process of creating and distributing messages about your
brand and products. Under the promotion umbrella, you have to decide what messages and formats to
use to persuade your target customers to buy. Humor, sexuality, fear and anxiety are all used to present
emotional appeals in marketing. Selecting the right media within television, radio, newspapers,
magazines, the Internet, billboards and other support media is another critical part of successful
promotion.

Value Creation
In a general sense, the marketing mix allows you to understand how to build and sell value to your
customers. Ultimately, customers buy what they perceive is the best value for their money in a purchase
situation. Implementing marketing campaigns that show off great products at fair prices gives you an
opportunity to succeed. Finding affordable marketing options also helps you get better return on your
investment from marketing
 Best Business to Consumer

marketing strategies

Cause Marketing

Cause marketing is a cooperative effort between a for-profit business and a non-profit organization to
mutually promote and benefit from social and other charitable causes. Cause marketing is not to be
confused with corporate giving, which is tied to specific tax-deductible donations made by an organization.
Cause marketing relationships are feel goods, and assure your customers you share their desire to
make the world a better place.
Fast Fact: 64% of consumers want corporations to integrate social impact directly into their business

models.

Direct Selling

Direct selling accomplishes exactly what the name suggests marketing and selling products directly to
consumers. In this model, sales agents build face-to-face relationships with individuals by demonstrating
and selling products away from retail settings, usually in an individuals home. The top three direct sellers
in 2015 are Amway, Avon and Herbalife.
Fast Fact: The top 3 direct-sell companies averaged $9 billion in sales in 2015.

Co-branding and Affinity Marketing

Co-branding is a marketing methodology in which at least two brands join together to promote and sell a
single product or service. The brands lend their collective credibility to increase the perception of the
product or services value, so consumers are willing to pay more at retail. Secondarily, co-branding may
dissuade private label manufacturers from copying the product or service.
Fast Fact: In 2014, 6% of all product launches relied on co-branding.

Earned Media/PR

Earned media (or free media) is publicity that is created through efforts other than paid advertising. It
can take a variety of forms a social media testimonial, word of mouth, a television or radio mention, a
newspaper article or editorial but one thing is constant: earned media is unsolicited and can only be
gained organically. It cannot be bought or owned like traditional advertising.
Fast Fact: Nearly 75% of consumers identify earned media as a key influencer in purchase decisions.
Point-of-Purchase Marketing (POP)

Point-of-Purchase marketing (or, POP marketing) sells to a captive audience those shoppers already in-
store and ready to purchase. Product displays, on-package coupons, shelf talkers that tout product
benefits and other attention-getting sizzle often sways buying decisions at the shelf by making an offer
simply too good and too visible to pass up.
Fast Fact: 64% of consumers making unplanned purchases switch brands when a deal is offered in-store.

Internet Marketing

Internet marketing, or online marketing, combines web and email to advertise and drive e-commerce
sales. Social media platforms may also be included to leverage brand presence and promote products
and services. In total, these efforts are typically used in conjunction with traditional advertising formats like
radio, television and print.
Fast Fact: 97% of consumers search for businesses online.

Paid Media Advertising

Paid media is a tool that companies use to grow their website traffic through paid advertising. One of the
most popular methods is pay-per-click (PPC) links. Essentially, a company buys or sponsors a link that
appears as an ad in search engine results when keywords related to their product or service are searched
(this process is commonly known as search engine marketing, or SEM). Every time the ad is clicked, the
company pays the search engine (or other third party host site) a small fee for the visitor a literal pay
per click.
Fast Fact: 76% of businesses use promoted posts and search engine marketing.

Word of Mouth Advertising

Word of mouth advertising is unpaid, organic and oh-so-powerful because those having nice things to say
about your product or service generally have nothing to gain from it other than sharing good news. A
recommendation from a friend, colleague or family member has built-in credibility, and can spur dozens of
leads who anticipate positive experiences with your brand. Its important to note that word of mouth isnt
strictly verbal. Leveraging online reviews and opinions are equally effective at spreading the word.

Fast Fact: Word of mouth referrals drive $6 trillion in annual consumer spending.
Social Networks and Viral Marketing

Social media marketing focuses on providing users with content they find valuable and want to share
across their social networks, resulting in increased visibility and traffic. Social media shares of content,
videos and images also influence Search Engine Optimization (SEO) efforts in that they often increase
relevancy in search results within social media networks like Facebook, Twitter, YouTube and Instagram
and search engines like Google and Yahoo.
Fast Fact: 54% of B2C companies report revenue generated from social media leads.

Storytelling

Brand storytelling uses a familiar communication format to engage consumers at an emotional level.
Rather than just spew facts and figures, storytelling allows you to weave a memorable tale of who your
company is, what you do, how you solve problems, want you value and how you engage and contribute to
your community and the public in general.
Fast Fact: Brands that inspire a higher emotional intensity influence consumer purchase intent 3 times

more often than less emotionally connected brands.

Every Strategy Requires an Effective Marketing Plan. Regardless of the strategy you choose, marketing

effectiveness is most dependent on how you execute.

What is Marketing?

Marketing consists of all the activities of individuals and

organizations designed to identify, anticipate, and mutually
satisfy the needs of all parties involved in the exchange.

Marketing cannot take place unless some sort of exchange occurs. One party must exchange a product or

service with another party for some form of payment. This is the exchange process and is the central

focus for all marketing activities.

Marketing Utilities

Four marketing utilities, which are the capacities of the product offering to satisfy the needs of a customer,

are enhanced when the exchange occurs. These include:

Form Utility - The product is produced, or modified for the customer. An example of this might be a car
manufacturer designing their car so that a driver will be able to plug in his I-pod or other devices.
Time Utility - The consumer's ability to buy the product when he or she wants to buy the product. A

grocer may store certain amounts of certain foods until the prime season they are bought. It is ensuring

customers will have access to the food when they most desire them.

Place Utility - This describes when a consumer is able to buy the product at a location that is convenient

to him or her. The best example of this is online sales. Home is the most convenient location for a

consumer.

Possession Utility - Ownership of the product is transferred from the marketer to the buyer. An example

is a getting a loan and then buying a car. This is concerned with the ease of transferability for the

consumer.
 The Marketing Management Concepts

There are four marketing management concepts that companies will utilize in their marketing objectives.

All of these aim to achieve profits and objectives, but the focus and means by which they do so will differ.

They will typically follow one of these four major concepts:

Product Concept - This management orientation says that if you build a quality product and set a
reasonable price, very little marketing effort is needed to sell it. The product generates the demand "build
it, and they will come"

Selling Concept - This management orientation says that consumers will not normally buy enough of a
product unless it is aggressively PROMOTED to them.

Marketing Concept - This management orientation says the major purpose of an organization is to
identify consumer needs and then adapt the organization in a way that will satisfy the customers needs
more effectively and efficiently than competition. (i.e. Chain restaurants may alter their menu in different
countries)

Societal Concept - This management orientation focuses on satisfying consumers needs and
demonstrating long run concern for societal welfare in order to achieve company objectives and attend to
its responsibilities for society. The idea is to find a balance between social welfare,consumer needs, and
company profits.
Traditional vs. Integrated Marketing

To understand the fundamentals of marketing, it is important to understand two different approaches used

when a company chooses to introduce a new product. Here we see traditional and integrated marketing.

There are typically 5 different departments directly involved with the product during creation and launch:
Development, Engineering, Production, Marketing, and Distribution.

If a company opts to use a traditional approach, all of these departments work as separate entities. For
example, development will draw up a product and then pass it along to engineering to create it.
Engineering will then pass it along to production mass produce it. They will afterwards pass it to
marketing, who will eventually move the product to distribution for a product launch.

If a firm opts to utilize an integrated marketing approach, all of the departments work together as a single
unit. Engineering will not begin a product without ensuring that production has the capabilities to produce
it. Development will check with marketing to ensure the product is line with the company image and
approach. Basically, every department will at some point integrate their work with all other departments in
the process.

Clearly, integrated marketing is the better approach. While it may take longer to launch a product, the
likelihood of success is greater. The traditional approach leaves much room for interdepartmental
conflicting interest and is therefore regarded as an outdated approach in marketing. It all too often ignores
the consumers needs. The integrated marketing approach helps a business work collectively as one unit.

Perceived Value and Satisfaction

A customers perceived value is equal to the benefits derived divided by the costs.

Value = Benefits/Costs

Further, benefits can include functional and emotional benefits. Costs may include monetary costs, time

costs, energy costs, and psychic costs.

Value = Functional benefits + emotional benefits / monetary cost +

time cost + energy cost + psychic costs

Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing a product's

performance in relation to the person's expectations of performance.

Most expectations are derived from past buying experiences, friends, the marketer, peers, competitors,

and promises of performance.

It is also important to keep in mind that a person is twice as likely to tell others about a negative product or

experience than they are about a good product or positive experience. Dissatisfied customers can also

have a negative impact on employee morale.

How Marketing is So Misunderstood

Far too often, organizations try to develop a product to meet customers needs without ever really verifying
what the customers wanted in the first place. Instead, those organizations make a strenuous effort to sell
the product through rigorous, ongoing advertising, promotions and publicity -- through "outbound"
marketing. These organizations may have built a beautiful ladder but it may be entirely on the wrong
roof! Far too often, that lesson comes from painful experience.
Experienced organizations have learned that it is not their opinion that matters most regarding whether
their product is needed or not. The opinion that matters most is that of the customers. These organizations
have learned that they might not know what they don't know about their customers. That precious
knowledge about the customers comes from "inbound" marketing -- through market research to clarify
customers' needs and what they are willing to do to get those needs met. If the inbound marketing is done
well, the outbound marketing is particularly easy -- and effective.

Inbound Marketing Includes Market Research to Find Out:

1. What specific groups of potential customers/clients (markets) might have which specific needs
(nonprofits often already have a very clear community need in mind when starting out with a new
program -- however, the emerging practice of nonprofit business development, or earned income
development, often starts by researching a broad group of clients to identify new opportunities for
programs)

2. How those needs might be met for each group (or target market), which suggests how a product
might be designed to meet the need (nonprofits might think in terms of outcomes, or changes, to
accomplish among the groups of clients in order to meet the needs)

3. How each of the target markets might choose to access the product, etc. (its "packaging")

4. How much the customers/clients might be willing pay and how (pricing analysis)

5. Who the competitors are (competitor analysis)

6. How to design and describe the product such that customers/clients will buy from the
organization, rather than from its competitors (its unique value proposition)

7. How the product should be identified -- its personality -- to be most identifiable (its naming and

branding)
Outbound Marketing Includes:

1. Advertising and promotions (focused on the product)

2. Sales

3. Public and media relations (focused on the entire organization)

4. Customer service

5. Customer satisfaction