Module 1 Flashcards
Marketing in Daily Life
Spending Patterns:
-Recent Expenditure: In the last 48 hours, reflect on what you have spent money on.
-Logo Exposure: Since waking up, consider how many logos (brands) you have encountered.
Advertising Impact:
-Message Exposure: A typical consumer is exposed to approximately 4,000 advertising messages a day.
-Attention Capture: Despite exposure, individuals notice less than 5% of these messages.
Variability in Exposure:
-Individual Factors: Exposure varies based on individual activities; for example, a police officer directing traffic sees fewer ads than someone surfing the web for hours.
Definition of Marketing
Process Definition: Marketing is the process by which individuals and organizations create value for customers and establish strong customer relationships.
Value Exchange: The ultimate goal is to capture value from customers in return for the value created.
Chernev’s Perspective:
Marketing is described as the “art and science of creating value by designing and managing successful exchanges” (Chernev, 2014).
5 Important Concepts
- Needs, wants, and demands
-Definition: Fundamental concepts in marketing representing human requirements (needs), desires (wants), and the willingness to pay for them (demands).
-Significance: Understanding these distinctions helps tailor marketing strategies to consumer motivations. - Market offerings
-Definition: Products, services, or experiences offered in a market to satisfy a need or want.
-Role: Central to marketing, as successful market offerings address customer needs and preferences. - Value
-Definition: The perceived benefit a customer receives from a product or service compared to its cost.
-Importance: Key determinant of consumer choices; creating and communicating value is central to effective marketing - Exchange and relationships
-Exchange Definition: The act of obtaining a desired product or service from someone by offering something in return.
-Relationships Definition: Building and maintaining long-term connections with customers, emphasizing mutual trust and satisfaction.
-Significance: Central to marketing dynamics, fostering repeat business and customer loyalty. - Markets
-Definition: The set of actual and potential buyers with a particular need or want, along with the sellers offering products to meet those needs.
-Dynamic Concept: Reflects the evolving interactions between buyers and sellers in response to changing needs and preferences.
Let’s start with a scenario. Imagine it’s a hot day, and you’ve just finished a long walk. ( Needs wants and demands should be considered) You are thirsty… (which is a fundamental need-body requires hydration to function)
- Needs, Wants, and Demands:
-Need: Thirst (fundamental biological need for hydration).
-Want: Desire for a specific drink, influenced by personal preferences (e.g., fizzy soda).
-Demand: Decision to purchase handcrafted lemonade, shaped by the want and purchasing power (having $5).
- Market Offering:
-Options: Various market offerings such as water, soda, and services like enjoying a drink in a café with favorite music.
-Features: Each offering has distinct benefits and features (e.g., water for hydration, soda for sweetness and energy, smoothie for nutrition and flavor).
- Value:
-Evaluation: Assessing the value of each option based on factors like cost, health benefits, and presentation.
-Example: Choosing lemonade for its organic nature, health benefits, and serving in a glass for longer-lasting coldness.
- Exchange and Relationships:
-Transaction: Exchange of $5 for the handcrafted lemonade.
-Post-Transaction: Possibility of building a relationship if the lemonade meets expectations, potentially leading to loyalty and positive word-of-mouth.
- Market:
-Location: Physical stores and online platforms where the exchange can take place.
-Consideration: Ability to compare prices and products, making an informed decision in the market.
Needs, Wants & Demands Market Offerings:
Definition: Customers’ needs and wants are met through market offerings.
Demands: Supported by purchasing power.
Market Offerings: Combinations of products, services, information, or experiences provided to satisfy a market’s needs or wants.
Exchange & Value:
Foundation of Marketing: The exchange of value forms the basis of marketing.
Exchange Process:
a. Obtaining a desired object by offering something in return.
b. Early market economies used barter systems, which were time-consuming.
c. Today, money facilitates quicker and more efficient market exchanges.
The Marketing Mix aka 4 P’s of Marketing
The elements of the marketing mix are defined as product, price, place and promotion (also referred to as the 4 P’s of Marketing).
Product decisions include product and service attributes, packaging, branding and warranty.
Pricing decisions include pricing strategies, credit offerings, and return policies.
Place refers to distribution, which is defined as how products are delivered to the end consumer. There are many decisions to be made related to which distribution channel(s) to use and the logistics associated with those channels.
Promotion decisions focus on the combination of advertising, public relations, direct sales and digital marketing that should be used to communicate with and persuade consumers
Marketing Mix - 4 P’s:
Components: Product, Price, Place, and Promotion (4 P’s of Marketing).
Product Decisions:
Attributes: Consideration of product and service attributes.
Additional Aspects: Packaging, branding, and warranty decisions.
Pricing Decisions:
Strategies: Formulation of pricing strategies.
Inclusions: Consideration of credit offerings and return policies.
Place (Distribution):
Definition: Refers to distribution, i.e., how products are delivered to consumers.
Considerations: Decision-making on distribution channels and associated logistics.
Promotion Decisions:
Focus: Combination of advertising, public relations, direct sales, and digital marketing.
Objective: To communicate with and persuade consumers effectively.
Applying 4 P’s to Quenching Thirst Example
- Product:
Variety and Features: Consider different products like water, soda, or sports drinks, each with unique features.
Meeting Needs: The chosen product must effectively quench thirst and stand out among alternatives.
Marketing Question: What problem does it solve, and how is it unique?
- Price:
Affordability and Convenience: Consider the price you’re willing to pay, influenced by convenience and psychological factors.
Considerations: Evaluate competitors’ prices, value offered, and your willingness to pay.
Marketing Question: How does the price align with perceived value and convenience?
- Place:
Availability and Convenience: Consider where the product is available (vending machines, online) and the convenience for the consumer.
Strategic Placement: Place the product in locations like gyms or through an app strategically.
Marketing Question: Where and how can the product be conveniently accessed by the target audience?
- Promotion:
Awareness and Persuasion: Consider how customers will know about the product and be persuaded to choose it.
Marketing Tactics: Utilize advertising, coupons, colorful signage to catch attention and convince customers of the need.
Marketing Question: How can the product be effectively promoted to create awareness and drive demand?
Customer Relationships in Marketing
Old View: Relationship viewed through data management.
New View: Relationship encompasses economic, social, and experiential aspects.
Societal Marketing Concept
Focus: Shifts from solely satisfying customer needs and business goals to benefiting society as a whole.
Broad Perspective: Extends beyond profit margins and customer satisfaction to contribute positively to the well-being of the broader community.
Empowerment: Companies have the power to positively impact and enhance human welfare.
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Impact of Marketing:
Example - Colombian Civil Wa
Objective: End a 52-year civil war.
Campaign: Christmas lights campaign using advertising.
Results: 331 rebels (5% of the force) surrendered.
Quoted: “Advertising is a very, very powerful force. In the good you can do by changing minds of people in certain ways.” – Jose Sokoloff.
Introduction to Marketing
Key Role: Integral role in organizations by creating and capturing value for customers.
Role of Marketing
Function: Essential function in both for-profit and not-for-profit businesses.
Collaboration: Works collaboratively with other functional areas (human resources, finance, operations, IT) and external stakeholders (customers, shareholders, suppliers).
Focus: Primarily on consumers, providing value through products that meet their needs.
Marketing Objectives
Image Creation: Aims to create distinct images for products, setting them apart from competitors.
Relationship Building: Focuses on building lasting relationships with consumers.
Value Capture: Seeks to capture value from consumers through effective marketing strategies.
Advertising vs. Marketing
Misconception: Advertising is often misunderstood as synonymous with marketing.
Clarification: Advertising is just one part of the broader promotion element within the comprehensive scope of marketing.
Marketing Strategy Elements: Simplified model known as the 4P’s (Product, Price, Place, and Promotion).
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Focusing on Customer Needs and Wants
Marketing Success: Achieved by focusing on consumer needs and wants.
Customer Value: Developed through engaging programs that encourage loyalty.
Nature of Needs:
-Types: Physical (hunger, thirst), social (love, friends), aspirational (learning, achieving goals).
-Importance: Varying forms of needs contribute to the complexity of consumer desires.
Wants and Demands:
Wants: Desires of humans.
Demands: Wants backed by purchasing power, leading to market offerings.
Market Offerings
Goods, services, ideas, information, or experiences provided to consumers to satisfy needs or wants
Customer Value and Exchange:
Customer Value
Definition: Fulfillment of customer’s unique needs and wants.
Perception: Every person’s perception of value is unique.
Evaluation: Based on perceived benefits minus perceived costs.
Components: Quality, price, convenience, on-time delivery, and service.
Delivery: Marketers provide value through effective planning and strategy implementation.
Value to Marketers
Measurement: Sales, profits, donations, long-term customer relationships, or idea adoption.
Exchange
Definition: Obtaining a desired object by offering something in return.
Foundation: Foundational concept in marketing.
Mutual Benefit: Involves mutual benefit between customers and marketers.
What do marketers exchange?
- Goods: pots and pans, houses (tangible)
- Services: transportation, life insurance (intangible)
- Ideas: innovative processes, religious beliefs
- People: movie stars, musicians, politicians
- Experiences: university education, travel adventures
- ETC.
Exchange in Modern Economies
Facilitator: Money is the primary facilitator of exchange in modern economies.
Marketing Perspective: Exchange in marketing occurs when the buyer (customer) and seller (marketer representing a business) trade something of value.
Mutual Benefit: The goal is for both parties to benefit from the exchange.
Components: Involves the transaction of goods, services, or other offerings in return for monetary compensation.
Learning Highlight 1.2
Definition of Marketing:
Quoted Source: “Marketing is the art and science of creating value by designing and managing successful exchanges” (Chernev, 2014).
Nature of Marketing:
-Art and Science: Encompasses both artistic and scientific elements.
-Evidence and Creativity: Some aspects are straightforward, evidence-based, and research-driven, while others require creative and imaginative ideas.
Concept of Exchange:
-Mutual Value: Consumers receive value from products meeting their needs, and businesses receive value in return.
-Integral Role: Exchange is a crucial component in the art and science of marketing.
Markets and Targeting
Market Definition:
Scope: Set of actual and potential buyers sharing common wants and needs.
Satisfaction: These wants and needs are satisfied through exchange of products or services.
Resource Constraints:
Reality: Companies have finite resources.
Challenge: Cannot satisfy everyone’s needs.
Target Market:
Definition: Specified group (segment) of existing and potential consumers.
Purpose: Companies design products and marketing efforts specifically for this group.
Focus: Marketing mix is tailored to appeal to this specific target market.
The Marketing Mix (4 P’s)
Definition: Elements of the marketing mix are product, price, place, and promotion.
Product Decisions:
Components: Include product and service attributes, packaging, branding, and warranty.
Pricing Decisions:
Aspects: Encompass pricing strategies, credit offerings, and return policies.
Place (Distribution):
Definition: Involves how products are delivered to the end consumer.
Considerations: Decisions related to distribution channels and associated logistics.
Promotion Decisions:
Focus: Combination of advertising, public relations, direct sales, and digital marketing.
Purpose: Used to communicate with and persuade consumers.
