Core Marketing Concepts

Core Marketing Concepts

To understand the marketing function, we need to understand the following core set of concepts. Needs, Wants, and Demands Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans also have strong needs for recreation, education, and entertainment. These needs become wants when they are directed to specific objects that might satisfy the need. A U.S. consumer needs food but may want a Philly cheesesteak and an iced tea. A person in Afghanistan needs food but may want rice, lamb, and carrots.Wants are shaped by our society.

Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are able to buy one. Companies must measure not only how many people want their product, but also how many are willing and able to buy it.

These distinctions shed light on the frequent criticism that “marketers create needs” or “marketers get people to buy things they don’t want.” Marketers do not create needs: Needs preexist marketers. Marketers, along with other societal factors, influence wants. They might promote the idea that a Mercedes would satisfy a person’s need for social status. They do not, however, create the need for social status.

Some customers have needs of which they are not fully conscious or that they cannot articulate. What does it mean when the customer asks for a “powerful” lawn mower or a “peaceful” hotel? The marketer must probe further.We can distinguish five types of needs:

1. Stated needs (The customer wants an inexpensive car.)
2. Real needs (The customer wants a car whose operating cost, not initial price, is low.)
3. Unstated needs (The customer expects good service from the dealer.)
4. Delight needs (The customer would like the dealer to include an onboard GPS navigation
5. Secret needs (The customer wants friends to see him or her as a savvy consumer.)

Responding only to the stated need may shortchange the customer.18 Consumers did not know much about cellular phones when they were first introduced, and Nokia and Ericsson fought to shape consumer perceptions of them. To gain an edge, companies must help customers learn what they want.

Target Markets, Positioning, and Segmentation

Not everyone likes the same cereal, restaurant, college, or movie. Therefore, marketers start by dividing the market into segments. They identify and profile distinct groups of buyers who might prefer or require varying product and service mixes by examining demographic, psychographic, and behavioral differences among buyers.

After identifying market segments, the marketer decides which present the greatest opportunities— which are its target markets. For each, the firm develops a market offering that it positions in the minds of the target buyers as delivering some central benefit(s). Volvo develops its cars for buyers to whom safety is a major concern, positioning its vehicles as the safest a customer can buy.

Offerings and Brands

Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences.

A brand is an offering from a known source. A brand name such as McDonald’s carries many associations in people’s minds that make up its image: hamburgers, cleanliness, convenience, courteous service, and golden arches. All companies strive to build a brand image with as many strong, favorable, and unique brand associations as possible.

Value and Satisfaction

The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the tangible and intangible benefits and costs to her. Value, a central marketing concept, is primarily a combination of quality, service, and price (qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price.

We can think of marketing as the identification, creation, communication, delivery, and monitoring of customer value. Satisfaction reflects a person’s judgment of a product’s perceived performance in relationship to expectations. If the performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is satisfied. If it exceeds them, the customer is delighted.

The concept of marketing revolves around demand for the product/services. Here we are going to study 8 different types of demands, which play a major role in the marketing activities. At the end of this topic you will be in the position to understand briefly all the major concepts of marketing which will be dealt in detail in the coming lessons.

However to be successful any organization has to be competition- oriented too. Thus marketing concept involves:

  • Customer Orientation: Successful marketing companies continuously monitor customer needs, wants and preferences.
  • Competition Orientation: Successful marketing companies integrate all elements of the marketing mix, not merely advertising and selling into a sound business plan that could help them to effectively fight competition.
  • Ability to respond to environmental changes before competition does: This includes changes in customer needs, competition, government policy, technology, etc. Examples are Sony and Microsoft who have consistently invested in futuristic technologies and products.

Marketing orientation involves a six dimensional approach which leads to successful marketing organizations in India and abroad.

  • Consumer Orientation
  • Integrated approach to exploiting market opportunities
  • Futuristic approach
  • Highly developed marketing systems
  • Marketing culture
  • Speed

Key Points

  • Managerial Process involving analysis, planning and control.
  • Carefully formulated programs and not just random actions. (A charity organization sending volunteers out to collect money – this is not marketing, it is selling)
  • Voluntary exchange of values; no use of force or coercion. Offer benefits. (A museum, seeking member, tries to design a set of benefits that are appealing to potential members.) Selection of Target Markets rather than a quixotic attempt to win every market and be all things to all men.
  • Purpose of marketing is to achieve Organizational Objectives. For commercial sector it is profit. For non-commercial sector, the objective is different and must be specified clearly. (City Health Department wishes to reduce diseases and enhance health level. National Safety Council wants to bring down the death and accident rate in the nation)
  • Marketing relies on designing the organization’s offering in terms of the target market’s needs and desires rather than in terms of seller’s personal tastes or internal dynamics. User-oriented and not seller-oriented.
  • Marketing utilizes and blends a set of tools called the marketing mix – product design, pricing, distribution and communication. Too often marketing is equated either with just advertising or with just personal selling.