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Marketing Fundamentals Christina HovanesianSummary marketing fundamentals
Chapter 1 – What is marketing?
Differences between selling and marketing: selling is ‘trying to get rid of what you have on the
shelves and marketing is making sure that what you have on the shelves is what the customer wants.
Marketing requires not only an appropriate product, but also the right type of distribution, the right
price and the right kind of promotion marketing mix. If any of these four elements is lacking, a
product will not achieve the sales and profit objectives as listed in its annual plan or marketing plan.
Formal definition of marketing: the process of developing, pricing, promoting and distributing
product, services or ideas that are tailored to the market; it includes all other activities that create
value and systematically lead to increased sales or another desired response, establish a good
reputation and ongoing relationships with customers, so that all stakeholders achieve their
objectives.
Marketing mix: four marketing instruments that are used to tackle the market. If we change one of
them, this may have consequences for the other three.
Product: goods services or ideas that meet the wants and needs of the customer
Price: the amount of money exchanged for a product or service
Place (distribution): how the company gets it product into the buyers’ hands
Promotion: the supplier’s activities to communicate with the market and to promote sales
4C-model: the modern Cs to more customer-oriented organisations that see themselves through the
eyes of the costumer.
Customer solution: the solution for the customer
Cost to the customer: value for money
Convenience: ease for the customer
Communication: mutual communication between the organisation and the customer
Target market: specific group of potential buyers, the part of the market that an organisation
concentrates on and wants to turn into customers.
Exchange transactions: items of worth. Both parties involve are prepared to part with. Exchange
could be money, service, idea, labour or even status.
Bartering: goods exchanging for goods primitive societies.
Levels of marketing:
Micromarketing: society and environment level
Mesomarketing: supply chain level
Micromarketing: individual firm level
Supply chain: the series of persons and organisations from the original manufacturer to the
customer.
Marketing management: the analysis, planning, implementation and constant evaluation of all
activities designed to ensure that the products and services produced and provided by an
organisation are tailored to meet the needs and wants of potential customers as effectively as
possible.
Development of the marketing concept:
Production- and product-oriented companies: production-orientated company does
everything possible to make its production process highly efficient. Once the product concept
was adopted in the era, the main objective became to improve quality.
Selling-oriented companies: buyer’s market.
Marketing-oriented companies: marketing orientation. Companies learned to tailor their
products and services to meet the needs and wants of the buyers more effectively. Market-
oriented companies consider not only customers, but also intermediaries and competitors.
Relationship marketing: working on strengthening of long-term relationships with suppliers.
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Marketing concept: an attitude or mindset in which the needs and wants of customers are factored
into virtually every decision. This should be actively supported by senior management.
Customer satisfaction: the firm must be dedicated to satisfying customer needs. To make
sure that customers are satisfied, we have to make choices: offering a very wide range of
products or concentrating on certain groups of customers. Marketing-oriented companies
make sure that they provide great customer service and that they handle customer
complaints well.
Integrated approach: the difference between a product- and a marketing-oriented approach
is the extent to which the various activities are systematically integrated into the overall
marketing policy.
Broad business definition: self-limiting definitions can lead to marketing myopia. These
companies fail to recognise that their cherished products may fall out of flavour.
To facilitate a rapid adjustment to the changing needs of the market, many companies now
choose to formulate a business definition as well as a mission in broad, customer-oriented
terms.
Competitive analysis: firms understand products will someday be obsolete. Hopefully, the
company itself, rather than the competitor, is able to develop an alternative product or
service that replaces the existing products. Regular analysis of the competition is
indispensable if any company is to gain and develop competitive advantages.
Marketing research and target market selection: managers can obtain information by
consciously observing the environment. Companies select segments on which to
concentrate.
Profit contribution: it is important to know how much profit sales contribute to the
enterprise, is it satisfying a customer or a societal need?
Every company has to strive, for example by building brand equity, to make profit in the long
term.
Demarketing: many marketing-oriented organisations implement a demarketing policy to discourage
demand for their products among certain groups of buyers. Gain the loyalty of the most profitable
subscribers.
The first task of marketing is to anticipate and identify the needs and wants of the market. They need
to conduct a marketing research on needs and wants. The second task is to demand with the 4P’s
and 3R’s.
The 3R’s: marketing managers focus on more than just transaction-oriented marketing instruments
(4P’s).
Reputation: brand image
Relationship: interaction with customers
Response: marketing offers and customizing for each customer
Customer equity: the financial value of the relationship the company maintains with its customers.
This includes both the profits from first-time customers and the expected profits from future sales to
these new and to existing customers. Customer equity can be increased by:
Reducing the cost of getting new customers
Retaining more customers longer
Increasing profits from retained customers by selling them more products at higher margins
and with lower marketing costs
Lifetime value: the present value of the profits derived from this customer’s future purchases from
the company. They are trying to develop ongoing relationships with customers, because this leads to
customer loyalty and a greater customer retention rate.
Customer complaints: need to be dealt with properly to satisfy the buyer’s needs and to build a good
relationship for the company.
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Business-to-business (B2B) marketing: target markets made up for other businesses.
Important applications of the principles of marketing:
Services marketing: the marketing strategy of a supplier of intangible services, such as bank
or insurance company.
International marketing: marketing activities that are planned domestically and aimed at
customers outside of the domestic market.
Direct marketing: a form of marketing in which the supplier not only wants a transaction, but
also tries to develop an ongoing relationship with them, through direct communication.
Database marketing: a form of (direct) marketing in which a company systematically collects
and analyses information about customers and uses this information, which is stored in a
database.
Demarketing: a marketing strategy designed to reduce the overall demand (“general
demarketing”) or the demand of a specific group of customers (“selective demarketing”) for
a certain product either temporarily or permanently.
Internal marketing: marketing activities aimed at part of a company’s own organization.
Digital marketing (or online or internet marketing): potential customers create value and
products to share via internet
Non-profit marketing: marketing strategy of organisations without profit objectives
Chapter 2 – Strategy development and marketing planning
Management: analysis, planning, implementation and control.
Strategy: a long-term planning. Defines the marketing goals for a period of two to five years and
indicates how those goals can be realised. This long-term plan is based on certain assumptions,
estimates and scenarios.
Tactics: a short-term planning. Is more operational in that it describes the tactics the company will
implement to achieve its short-term objectives. An operational marketing plan for a period of one
year is quite common.
Three levels of strategy:
1. Corporate strategy: developed at the uppermost levels
2. Business strategy: second level of planning
3. Marketing strategy: product, brand or product line
The four cornerstones of a marketing strategy:
Brand image: to make products and services recognisable and attractive in the customers’
eyes
Quality: which must meet customers’ expectations about the products’ performance
Innovation: to create new and unique benefits in using the product
Ongoing customer relationship: to be able to meet customers’ needs as well as possible
Analysis: a company striving to satisfy its customers has to make choices, focus on a certain target
market (SWOT).
Planning and implementation: formulation of marketing objectives in light of use of the results of
the analysis (SWOT). Next step is to define and evaluate strategic options.
Control: the chosen marketing strategy results in a marketing plan for the year ahead. It requires
control, which involves monitoring results to determine if any adjustment in the strategy need to be
made.
The Abdell model:
Customers: which groups/markets do we distinguish and what target market do we single
out (what type of customer?)
Needs: what features/benefits are customers looking for in order to satisfy their needs (what
‘customer functions’ should we fulfil?)
Technologies: how can we satisfy the identified needs (with which products and services?)
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Hogeschool Saxion
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