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The Marketing Concept and Process


The Marketing Concept and Process Lecture 1 18 Nov. 2004 1 - * The Marketing Myopia In addition, they are considered to have inbred management. Some managers have ... – PowerPoint PPT presentation

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Title: The Marketing Concept and Process

The Marketing Concept and Process
  • Lecture 1
  • 18 Nov. 2004

The Marketing Concept What It Is and What It Is
  • The marketing concept has suffered in two ways
  • First, it has been established as optimal
    management philosophy when it is not necessarily
    so in all instances, and
  • Second, we can see many examples of poor
    marketing practice that have been adopted in the
    name of the marketing concept.
  • .It is time that we relearn the marketing

The Marketing Concept What It Is and What It Is
  • The marketing concept
  • Customer focus, profits, and integration of
    organizational efforts.

The Marketing Concept What It Is and What It Is
  • Customer orientation
  • Satisfying its customers at a profit
  • Determining the needs and wants of target
  • Discovering the wants of a target audience and
    then creating the goods and services to satisfy

The Marketing Concept What It Is and What It Is
  • Kotlers social definition
  • Marketing is a social and managerial process by
    which individuals and groups obtain what they
    need and want through creating and exchanging
    products and value with others.

The Marketing Concept What It Is and What It Is
Many Things Can Be Marketed!
  • Goods
  • Services
  • Experiences
  • Events
  • Persons
  • Places
  • Properties
  • Organizations
  • Information
  • Ideas

What is Marketing?
Core Marketing Concepts
  • Value and satisfaction
  • Exchange, transactions and relationships
  • Markets
  • Needs, wants, and demands
  • Marketing offers including products, services
    and experiences

The Marketing Concept What It Is and What It Is
  • The conditions under which the marketing concept
    offers the proper guidance to the marketer

The Marketing Concept What It Is and What It Is
  • To the extent that the organization relies on
    exchange as the means of obtaining compliance
    with organizations needs, we describe that
    organization as engaging in marketing.
  • Strive to understand exchange partners and tailor
    offerings for them through what is called the
    marketing mix (Borden 1964).

The Marketing Concept What It Is and What It Is
  • it is important to recognize that under some
    circumstances, the production concept or the
    sales concept would be a more appropriate
    management philosophy for the organization than
    the marketing concept.
  • Can you give some examples?

The Marketing Concept What It Is and What It Is
.customers are not necessarily good sources of
information about their needs a decade from now
sometimes customers have to learn about new
technologies, beliefs, and ways of behaving
The Marketing Myopia
  • In 1960, Theodore Levitt wrote "Marketing
    Myopia," a widely quoted and frequently reprinted
    Harvard Business Review article.
  • Chapter eight in Theodore Levitt's book - The
    Marketing Imagination (New York The Free Press,

The Marketing Myopia
  • What does the term marketing myopia means?
  • What were the evidence and examples used to
    illustrate the notion of marketing myopia?
  • How is the self-deceiving cycle related to
    marketing myopia?
  • Is this notion of marketing myopia still valid
    today, and explain?

The Marketing Myopia
  • Marketing myopia was initially described as a
    firm's shortsightedness or narrowness when
    attempting to define its business.
  • The key question what business are you in?

The Marketing Myopia
  • Levitt cites the railroads and Hollywood as
    examples of "industries that have been and are
    now endangering their futures by improperly
    defining their purposes." Their problem, he says,
    is they were "product-oriented instead of

The Marketing Myopia
  • Warning of the dangers of being product-oriented
    rather than customer-oriented - creating the Ford
    Edsel, New Coke or smokeless cigarettes, as it
    were, rather than products consumers wanted.

The Marketing Myopia
  • According to Levitt, "the organization must learn
    to think of itself not as producing goods or
    services but as buying customers, as doing the
    things that will make people want to do business
    with it."

The Marketing Myopia
  • Since its publication, corporate leaders have
    moved from product-orientation toward

The Marketing Myopia
Customer orientation has also been considered as
a type of marketing myopia.
The Marketing Myopia
  • Firms overemphasize the satisfaction of customer
    wants and needs and as a result ignore

The Marketing Myopia
  • Competitor orientation has been proposed as a
    replacement for the customer orientation with
    this orientation, a firm's strategy is influenced
    by its competitors (Oxenfeldt and Moore, 1978).

The Marketing Myopia
The marketing myopia described by Levitt has
also evolved into a planning myopia
The Marketing Myopia
  • Businesses need to take Levitt's idea to its
    ultimate end
  • do not just sell a product, sell the solution to
    a problem.

The Marketing Myopia
  • Oil companies have followed that strategy by
    developing minimarts in service stations.
  • Digital Equipment Corp. earned one-third of its
    7 billion in revenue from computer maintenance
  • General Motors Acceptance Corp. financial
    services accounted for 1 billion of the
    automaker's 4 billion in 1985 revenues, and
  • Gerber Products is opening day care centers as
    well as acquiring baby-related product companies.
  • By recognizing customer needs, these companies
    have used available corporate resources to enter
    nonmanufacturing segments of the market.

The Marketing Myopia
The marketing myopia to the world market
The Marketing Myopia
  • Yves Doz, Jose Santos and Peter J. Williamson
    draw on some examples of companies that are major
    successes because they sought knowledge in other
    countries, such as
  • Shiseido, the Japanese cosmetic company that
    looked to France to become once again a leading
  • Little Scandinavian Nokia overtook Motorola in
    the early days of the mobile wars simply by
    monitoring the radar for emerging phenomena in
    markets around the world.

The Marketing Myopia
  • Innovating using local knowledge, perfecting your
    product and service to meet the needs of
    customers in your home market, and benchmarking
    yourself against domestic competitors-each of
    these has become a high risk strategy.

The Marketing Myopia
  • After all, cellular telephony had been invented
    in America-at Bell Laboratories, and Motorola was
    among the first to massproduce mobile telephones.
  • So then, how did Nokia, a little-known upstart
    from the edge of the Arctic Circle leave Motorola
    behind and manage to become the global leader in
    mobile telephony?
  • Nokia was the first to see the potential of a
    cellphone as a fashion accessory from
    observations of its customers in Asia.

The Marketing Myopia
  • Nokia has the ability to plug into knowledge
    about new technologies and emerging customer
    needs from every corner of the world.
  • It understood the need for customised handsets
    from its experience in Europe, where it first
    became apparent that there were different
    segments of users.
  • Observing pilot users across Scandinavia, it was
    among the first to recognise that digital
    technology could dramatically improve the
    functionality of mobile phones.
  • And in China, India and Africa, it saw that
    mobile phones could potentially become substitute
    for wire-line phones.

The Marketing Myopia
  • While Nokia prospected the world for insight
    about promising technologies, diverse customer
    behavior and new ways to use mobile phones,
    Motorola continued to develop its products based
    on its knowledge of the customers and
    technologies in its U.S. backyard.

The Marketing Myopia
  • The result Motorola missed the shift to digital
    mobile telephony and the growing strength of the
    European GSM standard. It didn't see the
    potential to turn the phone into a fashion icon
    it was slow to take on board the new ways mobiles
    were being used and to recognise that a broader,
    but more fragmented user base would spell the end
    of "one-size-fits-all" products.
  • This myopic approach to competition, and the
    failure to engage fully with the rest of the
    world and capture the potential of global markets
    and the innovative ideas in them, would cost
    Motorola dearly.

The Marketing Myopia
The types of marketing myopia can be classified
along two dimensions 1. the management's
definition of the firm, and 2. the firm's
business environment perspective.
The Marketing Myopia
  • The second dimension concerns the firm's business
    environment perspective. In essence, these firms
    have an inward orientation toward that industry.
  • Firms with a single-industry perspective are
    preoccupied with the actions and reactions of
    immediate competitors.

The Marketing Myopia
  • In addition, they are considered to have inbred
    management. Some managers have spent the greater
    part of their professional careers in one
  • Inbred management is not necessarily undesirable,
    but it is potentially detrimental when it fosters
    the contention that it can learn nothing from
    firms in other industries, and it keeps its firm
    perceptually insulated from such other firms.
  • For example, managers of the cold breakfast
    cereal firm may be concerned only with the
    actions and reactions of other cold cereal firms.

The Marketing Myopia
  • Firms with a multi-industry perspective, on the
    other hand, have a broader view of the market.
  • While they are concerned with immediate
    competitors, they also realize that firms in
    other industries can serve as sources of
    innovative strategies as well as being potential

The Marketing Myopia
  • Such management is said to be cross-bred, in that
    managers may have experience in a broad range of
    industries or they are willing to learn from
    firms facing similar situations in other
  • Firms with a multi-industry perspective are
    outwardly oriented and not perceptually insulted
    from other industries.

The Marketing Myopia
  • The combination of the two dimensions produces a
    matrix with four types of firms

The Marketing Myopia
  • 1. classic myopia, with a product-definition/singl
    e-industry perspective,
  • 2. competitive myopia, with a customer-definition
    /single-industry perspective,
  • 3. efficiency myopia, with a product-definition/m
    ulti-industry perspective,
  • 4. innovative myopia, with a customer-definition/
    multi-industry perspective.

The Marketing Myopia
  • Marketing managers who wish to achieve the
    innovative firm orientation should
  • take a generic view of their firm or industry,
  • monitor other industries,
  • engage in benchmarking to determine the
    objectives for relevant areas of marketing,
  • recruit marketing people, and
  • be flexible enough to apply unique solutions to

Case Study
  • Strong sales, no profits
  • Customer-driven to its core
  • Each customers experience is unique
  • Provides great selection, good value, discovery
    and convenience
  • A true online community

Discussion Will Survive?
What is Marketing?
  • Marketing is managing profitable customer
  • Attracting new customers
  • Retaining and growing current customers
  • Marketing is NOT synonymous with sales or

Marketing Management
  • Marketing management is the art and science of
    choosing target markets and building profitable
    relationships with them.
  • Creating, delivering and communicating superior
    customer value is key.

Marketing Management
  • Customer Management
  • Marketers select customers that can be served
    well and profitably.
  • Demand Management
  • Marketers must deal with different demand states
    ranging from no demand to too much demand.

Marketing Management
Marketing Management
Management Orientations
  • Selling concept
  • Marketing concept
  • Production concept
  • Product concept
  • Societal marketing concept

  • CRM Customer relationship management . . .is
    the overall process of building and maintaining
    profitable customer relationships by delivering
    superior customer value and satisfaction.

  • It costs 5 to 10 times MORE to attract a new
    customer than it does to keep a current customer
  • Marketers must be concerned with the lifetime
    value of the customer.

  • Customer value/satisfaction
  • Perceptions are key
  • Meeting/exceeding expectations creates
  • Loyalty and retention
  • Benefits of loyalty
  • Loyalty increases as satisfaction levels increase
  • Delighting consumers should be the goal
  • Growing share of customer
  • Cross-selling

Key Concepts
  • Attracting, retaining and growing customers
  • Building customer relationships and customer

  • Customer equity
  • The total combined customer lifetime values of
    all customers.
  • Measures a firms performance, but in a manner
    that looks to the future.

Key Concepts
  • Attracting, retaining and growing customers
  • Building customer relationships and customer

  • Customer relationship levels and tools
  • Target market typically dictates type of
  • Basic relationships
  • Full relationships
  • Customer loyalty and retention programs
  • Adding financial benefits
  • Adding social benefits
  • Adding structural ties

Key Concepts
  • Attracting, retaining and growing customers
  • Building customer relationships and customer

Marketing Challenges
  • Technological advances, rapid globalization, and
    continuing social and economic shifts are causing
    marketplace changes.
  • Major marketing developments can be grouped under
    the theme of Connecting.

Marketing Challenges
  • Advances in computers, telecommunications,
    video-conferencing, etc. are major forces.
  • Databases allow for customization of products,
    messages and analysis of needs.
  • The Internet
  • Facilitates anytime, anywhere connections
  • Facilitates CRM
  • Creates marketspaces
  • Via technology
  • With customers
  • With marketing partners
  • With the world

Marketing Challenges
  • Selective relationship management is key.
  • Customer profitability analysis separates winners
    from losers.
  • Growing share of customer
  • Cross-selling and up-selling are helpful.
  • Direct sales to buyers are growing.
  • Via technology
  • With customers
  • With marketing partners
  • With the world

Marketing Challenges
  • Partner relationship management involves
  • Connecting inside the company
  • Connecting with outside partners
  • Supply chain management
  • Strategic alliances
  • Via technology
  • With customers
  • With marketing partners
  • With the world

Marketing Challenges
  • Globalization
  • Competition
  • New opportunities
  • Greater concern for environmental and social
  • Increased marketing by nonprofit and
    public-sector entities
  • Social marketing campaigns

  • Via technology
  • With customers
  • With marketing partners
  • With the world
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