Class/1.1 What is Marketing?..…

Marketing, more than any other business function, deals with customers. Understanding, creating, communicating, and delivering customer value and satisfaction are at the very heart of modern marketing thinking and practice.

Perhaps the simplest definition is this one:

Marketing is the delivery of customer satisfaction at a profit.

The twofold goal of marketing is to :

1- attract new customers by promising superior value

2- keep current customers by delivering satisfaction.

Wal-Mart has become the world's largest retailer by delivering on its promise, "Always low prices—always."

FedEx dominates the U.S. small-package freight industry by consistently making good on its promise of fast, reliable small-package delivery.

Coca-Cola, long the world's leading soft drink, delivers on the simple but enduring promise, "Always Coca-Cola"—always thirst-quenching,

always good with food, always cool, always a part of your life.

These and other highly successful companies know that if they take care of their customers, market share and profits will follow.

You already know a lot about marketing—it's all around you. You see the results of marketing in the abundance of products in your nearby shopping mall.

You see marketing in the advertisements that fill your TV, spice up your magazines, stuff your mailbox, or enliven your Internet pages. At home, at school, where you work, and where you play, you are exposed to marketing in almost everything you do. Yet, there is much more to marketing than meets the consumer's casual eye. Behind it all is a massive network of people and activities competing for your attention and purchasing dollars.

Evolution of Companies orientation toward Marketing

There are five alternative concepts under which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.

The Production Concept

The production concept holds that consumers will favor products that are available and highly affordable.

Therefore, management should focus on production and distribution efficiency.

Although this concept is the oldest one but still a useful philosophy in two types of situations:

1. When the demand for a product exceeds the supply. Here, management should look for ways to increase production
2. When the product's cost is too high and improved productivity is needed to bring it down.

The Product Concept

The product concept, holds that consumers will favor products that offer the most in quality, performance, and innovative features.

Thus, an organization should devote energy to making continuous product improvements.

The product concept also can lead to marketing myopia.

For instance, railroad management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and automobiles. Many colleges have assumed that high school graduates want a liberal arts education and thus have overlooked the increasing challenge of vocational schools.

The Selling Concept

Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization's products unless it undertakes a large-scale selling and promotion effort.

Most firms practice the selling concept when Their aim is to sell what they make rather than make what the market wants.

Such marketing carries high risks. It focuses on creating sales transactions rather than on building long-term, profitable relationships with customers.

it leads to win-lose situation NOT Win-win situation.

because the customers will never forget their disappointment and will never buy that product again later.

Most studies show that dissatisfied customers do not buy again. Worse yet, whereas the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others about his or her bad experiences.

The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.

The marketing concept has been stated in colorful ways, such as "We make it happen for you" (Marriott); "To fly, to serve" (British Airways); "We're not satisfied until you are" (GE); and "Let us exceed your expectations" (Celebrity Cruise Lines).

The selling concept and the marketing concept are sometimes confused. Figure 1.4 compares the two concepts. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company's existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses primarily on customer conquest—getting short-term sales with little concern about who buys or why.

In contrast, the marketing concept takes an outside-in perspective. As Herb Kelleher, Southwest Airlines's colorful CEO, puts it, "We don't have a Marketing Department; we have a Customer Department." The marketing concept starts with a well-defined market, focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating long-term customer relationships based on customer value and satisfaction. Thus, under the marketing concept, customer focus and value are the paths to sales and profits. In the words of one Ford executive, "If we're not customer driven, our cars won't be either."

Many successful and well-known companies have adopted the marketing concept. Procter & Gamble, Disney, Wal-Mart, Marriott, Nordstrom, Dell Computer, and Southwest Airlines follow it faithfully.

The goal is to build customer satisfaction into the very fabric of the firm. L.L. Bean, the highly successful catalog retailer, was founded on the marketing concept. In 1912, in his first circulars, L.L. Bean included the following notice:

Notice

I do not consider a sale complete until goods are worn out and the customer is still satisfied. We will thank anyone to return goods that are not perfectly satisfactory.

Should the person reading this notice know of anyone who is not satisfied with our goods, I will consider it a favor to be notified.

Above all things we wish to avoid having a dissatisfied customer.

The marketing concept: L.L. Bean and its reps dedicate themselves to delivering the promise first spelled out in a 1916 L.L. Bean circular and still practiced today.

Today, L.L. Bean dedicates itself to giving "perfect satisfaction in every way." To inspire its employees to practice the marketing concept, L.L. Bean has for decades displayed posters around its offices that proclaim the following:

What is a customer? A customer is the most important person ever in this company—in person or by mail. A customer is not dependent on us, we are dependent on him. A customer is not an interruption of our work, he is the purpose of it. We are not doing a favor by serving him, he is doing us a favor by giving us the opportunity to do so. A customer is not someone to argue or match wits with—nobody ever won an argument with a customer. A customer is a person who brings us his wants—it is our job to handle them profitably to him and to ourselves.

In contrast, many companies claim to practice the marketing concept but do not. They have the forms of marketing, such as a marketing vice president, product managers, marketing plans, and marketing research, but this does not mean that they are market-focused and customer-driven companies.

The Societal Marketing Concept

The societal marketing concept holds that the organization should deliver superior value to customers in a way that maintains or improves the consumer's and the society's well being.

The societal marketing concept is the newest of the five marketing management philosophies.

The societal marketing concept questions whether the pure marketing concept is adequate in an age of environmental problems, resource shortages, rapid population growth, worldwide economic problems, and neglected social services.

It asks if the firm that senses, serves, and satisfies individual wants is always doing what's best for consumers and society in the long run.

According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare.

Consider the fast-food industry. Most people see today's giant fast-food chains as offering tasty and convenient food at reasonable prices. Critics point out that hamburgers, fried chicken, French fries, and most other foods sold by fast-food restaurants are high in fat and salt.

The products are wrapped in convenient packaging, but this leads to waste and pollution. Thus, in satisfying consumer wants, the highly successful fast-food chains may be harming consumer health and causing environmental problems.

Such concerns and conflicts led to the societal marketing concept. As Figure 1.5 shows, the societal marketing concept calls on marketers to balance three considerations in setting their marketing policies: company profits, consumer wants, and society's interests. Originally, most companies based their marketing decisions largely on short-run company profit. Eventually, they began to recognize the long-run importance of satisfying consumer wants, and the marketing concept emerged. Now many companies are beginning to think of society's interests when making their marketing decisions.

One such company is Johnson & Johnson, rated each year in a Fortune magazine poll as one of America's most admired companies, especially for its community and environmental responsibility. Johnson & Johnson's concern for societal interests is summarized in a company document called "Our Credo," which stresses honesty, integrity, and putting people before profits.

Under this credo, Johnson & Johnson would rather take a big loss than ship a bad batch of one of its products. The company supports many community and employee programs that benefit its consumers and workers and the environment. Johnson & Johnson's chief executive puts it this way: "If we keep trying to do what's right, at the end of the day we believe the marketplace will reward us."

============

Reference: "Principles of Marketing" - Kotler & Armstrong-chapter.1