Marketing Series: What is Marketing?

 NTRODUCTION

The purpose of a business is to create and maintain satisfied, profitable customers. Customers are attracted and retained when their needs are met. When a business satisfies its customers, the customers will pay a fair price for the product, which includes a profit for the firm. Therefore, it is wise to assess the customer’s long-term value and take appropriate actions to ensure a customer’s long-term support. For example, a hotel that can increase its repeat customers from 35 to 40 percent should gain at least an additional 25 percent in profits.

So, what is Marketing?

Marketing is the process by which companies create value for customers and society, resulting in strong customer relationships that capture value from the customers in return. Marketing is the art and science of finding, retaining, and growing profitable customers.

Importance of Marketing 

• The entrance of corporate giants into the hospitality market and the marketing skills these companies have brought to the industry have increased the importance of marketing within the industry. 

• Analysts predict that the hotel industry will consolidate in much the same way as the airline industry has, with five or six major chains dominating the market. Such consolidation will create a market that is highly competitive. The firms that survive this consolidation will be the ones that understand their customers. 

• In response to growing competitive pressures, hotel chains are relying on the expertise of the marketing director. 

 

Marketing means “hitting the mark.”

According to Peter Drucker: “The aim of marketing is to make selling superfluous. The aim is to know and understand customers so well that the product or service fits them and sells itself.” This does not mean that selling and promotion are unimportant, but are part of a larger set of marketing tools that work together to produce satisfied customers. 

EXAMPLE: McDonald's Product: fast-food with quality ingredients  Place: most customers will not travel more than 15 minutes to a McDonald’s, so they need restaurants that are conveniently located to their target market  Price: sells at prices people expect to pay for fast food  Promotion: they appeal to different market segments, which allows McDonald’s to make effective use of mass media for promotional purposes

Marketing Process

The marketing process is a five-step model of the marketing process. In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. By creating value for customers, they in turn capture value from customers in the form of sales, profits, and long-term customer equity. >Read more<

• Needs - A human need is a state of felt deprivation. Included are:

• • The basic physical needs for food, clothing, warmth, and safety

  • Social needs for belonging, affection, fun, and relaxation

  • Esteem needs - prestige, recognition, and fame

  • Individual needs for knowledge and self-expression 

• Wants - The form human needs take as they are shaped by culture and individual personality

• • As society evolves, the wants of its members expand. Be careful not to confuse wants with needs

  • For example, a manufacturer of drill bits may think that customers need a drill bit, but what the customers really need is a hole (aka “marketing myopia”) 

Learn from Video: Marketing Myopia The Explainer: Don’t Just Sell Stuff — Satisfy Needs Source: Harvard Business Review

• Demands - People have almost unlimited wants, but limited resources. Therefore, wants to become demands when backed by buying power

• Exchange is the act of obtaining a desired object from someone by offering something in return
  

• Beyond simply attracting new customers and creating transactions, the goal is to retain customers and grow their business with the company

• Marketers want to build strong relationships by consistently delivering superior customer value

• • Customer value is the difference between the benefits that the customer gains from owning and/or using a product and the costs of obtaining the product
    

  • Customer expectations are based on past buying experiences, the opinions of friends, and market information

  • Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s expectations

Five Marketing Management Philosophies (Orientation)

There are five alternative concepts under which organizations design and carry out their marketing strategies: the production, product, selling, marketing, and marketing 3.0

1. Production

   Belief that consumers will favour products that are available and highly affordable, and therefore management should focus on production and distribution efficiency

   Problem: The management may become so focused on production systems that they forget the customer. 

2. Product
   Belief that consumers will favour products that offer the most in quality, performance, and innovative features Problem: Focusing only on the company’s products can lead to marketing myopia

3. Selling
   Belief that consumers will not buy enough of the organization’s products unless the organization undertakes a large selling and promotion effort
   Problem: Doesn’t establish a long-term relationship with the customer because the focus is on getting rid of what one has, rather than creating a product to meet the needs of the market 

4. Marketing
   Belief that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors
   Problem: Niche opportunities may sometimes remain available long after suppliers recognize the need
   Benefits: Focuses on customer needs and integrates all the marketing activities that affect customers, thereby meeting the organizational goals by creating long-term customer relationships based on customer value and satisfaction 

5. Societal Marketing 
   The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and society’s well-being. 

   
   

Main Responsibilities of the Marketing Department in Organisation

Identifying market opportunities

It should research the needs and wants of the different types of customers to be found in the marker. It needs to be aware of technological developments taking place in order to identify the trends in the demand pattern for existing products and market opportunities for new products. 

Managing Product

Forecasting and managing the rate of supply and distribution of the company’s existing products. Equally important will be its prime role in determining what new products should be developed and launched into various markets.

Choosing and motivating the channels of distribution

A manufacturer must use distributors to stock and sell its products on its behalf. It must select those wholesalers and retailers who will best look after its interests, and who wish to buy such merchandise from amongst the wide choice of competing suppliers.

Advertising and promoting products and services

The marketing department will be responsible for communicating to target market customers the existence of its products and the benefits to be obtained from purchasing them. It aims to stimulate the potential buyer into becoming interested in purchasing.

Setting prices and terms of supply

It involved in agreeing and setting market prices, terms of supply, and payment conditions. Other functional activities such as finance and credit control will also be involved in this important business area.