Theories of Marketing Lectures
___________________________________________________________________________
Week 1 Lecture 1
Development in marketing thinking
2 sept
What is Marketing?
Understand the market to sell something
Create additional (customer) value
Understand what is it that you have
How to lounge a new brand
Selling a brand/product: brand represents more than just the product
A business philosophy -> a way to approach the market.
Functions and processes/activities to deliver customer value
History of marketing thought – the philosophy
Marketing thinking is very contextual
- Production: Bringing products to the market. Farmers that just distributed products
to the people. Getting production/distribution right. All focus was on the product
itself, not on the market.
- Selling: Then the selling concept started. Because there came more sellers,
competition started.
- Marketing: Then the marketing thinking started: how companies think that they
are going to be more successful. To do so they had to start looking at what
customers want.
How to sell? Create customer value. Create exchanges that satisfy individual and
organizational goals. Not just about the individual product, but to create value for the
customers. Trying to sell more than just one individual product (for example Apple, sell the
value). Focus on smaller groups, create relevant value for these specific groups.
CHANGE: From transaction and product driven → To relation and value driven
Market Share → Share of wallet
Share of wallet: Customer point of view: how much of his/her wallet amount of total wallet
does he/she spend on your product. How big is the part of his wallet he spends in the
category of your product.
Segmentation: understanding your customers. People have so many different needs.
Value differentiation: offer something different then your competitors to your customers.
Not just price or quality differentiation.
What will make the value of your product higher?
- Service
- The whole experience
- Convenience
- Costs lower, quality and service higher
- Reputation
1
,From how → To what and why
Marketing strategy
- Value (actual value of product) and innovation (value of product)
- Branding
- Customer relationships
Marketing mix elements
- Promoting, pricing, place, product
- Personell, processes etc..
Understanding consumers (our focus will be here)
- Needs, wants, value
- Effects, reaction
- Research techniques
Article 1: Market Orientation (Narver & Slater 1990)
Market orientation is crucial for sustainable superior value.
A philosophy of putting customer value first.
Companies that are market orientated are more focused on the consumer.
Market orientation is the organization culture that most effectively and efficiently creates the
necessary behaviors for the creation of superior value for buyers and, thus, long-term
superior performance of the business.
But what is market orientated?
= The implementation of the marketing concept:
- Customer orientation
- Competitor orientation
- Interfunctional coordination, all the different departments in a company should be
aligned with all this information. Everybody has to know the customer values. All
departments need to create customer value this way. For example, HR, is
responsible for hiring people that know the customer value. This really was a new
way of thinking, of doing marketing.
- Longterm, profit focus.
- What are the core dimensions and what is the effect? (Exam)
o The effect of MO on profitability diminishes over time. So do we have to
change something, is it enough? → Listen more closely to the customers.
Market orientation as a culture
Set of beliefs that put the customers’ interest first, while not excluding that of all other
stakeholders, such as owners, managers and employees, in order to develop a long-term
profitable enterprise.
Market Orientation is the implementation of the marketing concept (agree/disagree?)
We can only be successful if we start at the customer value and then think back and see how
we can do this. Or you can think, combine the market start and your own imput.
2
,Market Orientation a behavior
The ability to generate, disseminate and use superior information about customers and
competitors
Market orientation is the implementation of the marketing concept
(Kohli& Jaworski1990)
Summary of the article (Narver & Slater 1990)
Important and classic article that has generated a broad stream of research on Market
Orientation.
1) Measurement of Market Orientation
• New measure development
• Reliability
• Construct validity
2) Effect on profitability
• Differences between (non)commodity markets.
• Commodity: generic products (thing you cannot change like milk). Only the
price is differential in this market.
• Non-commodity: all kinds of products, you can easily change them.
• Inclusion of control variables
Commodity market: u-shaped, in the beginning when you infest a little it means much, in
the middle it means less it then only will cost you a lot of money, when you infest a lot it
means a lot.
Non-commodity market: The more market orientation, the higher the profit. Linear shaped.
Main message: it will cost you money to do this.
There is a diminishing effect of marketing orientation on sales and profit: but still you have
to invest in this. Because your competitors will do so, to stay up track you have to do so too.
The first ones that apply this method will have the most benefits. So like a domino effect,
when one company does this, you have to do so too. Even though the effects are not that
good.
So it is contextual:
It changes over time, related to the changes in context (competitive environment/soncumer
needs). In different cultures, the customer orientation will be different. In some business
areas this competition did not start yet.
3
, Article 2: Slater & Narver (1998): Different views on MO
The same authors discovered that you have to focus on customer satisfaction. Surveys, talk
to people etc. Change from responsive MO to proactive MO. What is it that people want,
that they are not telling you. People don’t know what they want, and you still have to find
out → proactive.
Find the market through visionaries then expand the market through pragmatists. You need
a long term perspective: know what people want. New products, like a tablet. If you ask
people if they are interested in buying one. They will say no. But the moment it is there,
people will see it can be very useful. People are not going to tell you that they want it, unless
you bring it to them. Apple: did not only gave the Ipod, it also gave the content. You need to
know both sides (below). Find the market through visionaries then expand the market
through pragmatist.
4
