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What Is Marketing?

Dr. Cengiz Yilmaz


Professor of Marketing
METU
Dr. Yilmaz

What Is Marketing?

Marketing is a societal and managerial


process by which individuals and
groups obtain what they need and
want through creating, offering, and
freely exchanging products and
services of value with others (Kotler
2003)
As a scientific discipline, the core subject
matter of marketing is the EXCHANGE
BEHAVIOR.
Dr. Yilmaz

What Is Marketing?

As a business practice, the art of marketing


involves, nonexaustively, following activities:
* Collecting marketing information.
* Designing market offerings.
* Making the goods and services available at times and
places that meet customer needs.
* Communicating information about those goods and services
to prospective buyers and other audiences.
* Branding and image management.
* Pricing goods and services to reflect costs, competition,
and customers ability to buy.
* Providing the necessary service and follow-up to ensure
customer satisfaction.

Dr. Yilmaz

History of marketing
thought and practice

Production concept:

Product concept:

Selling concept:

Marketing concept:

Societal marketing concept:Long-term

Consumers prefer products


that are widely available and inexpensive.
Consumers favor products that
offer the most quality, performance, or innovative features
Consumers will buy products only
if the company aggressively promotes/sells these products
Focuses on needs/ wants of
target markets & delivering value better than competitors
customer goodwill and societal concerns do matter.

Dr. Yilmaz

Evolving Views of
Marketings Role
Production
Marketing

Finance

Production

Human
resources

Human
resources

a. Marketing as an
equal function

Finance

Marketing

b. Marketing as a more
important function

Dr. Yilmaz

Evolving Views of
Marketings Role

Customer
e
c
n
a
n

c. Marketing as the
major function

M
ar

ke

tin
g

re Hu
so m
ur an
ce
s

n
ma ces
Hu ur
so
re

Fi

ce

Marketing

n
na
Fi

n
o
ti
c
u
d
o
r
P

Production

d. The customer as the


controlling factor
Dr. Yilmaz

Evolving Views of
Marketings Role
Production
Marketing
n
ma ces
Hu ur
so
re

Customer

e
c
n
a
n
i
F

e. The customer as the controlling


function and marketing as the
integrative
function
Dr. Yilmaz

Key Terms

Satisfaction: Performance compared to


expectations.

Expected Quality Perceived Quality

Benefits: Functional, symbolic, and


experiental (hedonic).
Value: Benefits gained by a customer
compared to the costs of obtaining and using
the product.

Perceived benefits /Costs of acquiring & using a


product.
Transaction Value, Shopping Momentum, Cognitive
Effort
Dr. Yilmaz

The value of satisfied


customers

Buy more.
Loyalty (5 % migration rate).
Positive WOM
Less price sensitive.
Less attentative to competitors
marketing efforts.
More profitable (valuable) customers.
Dr. Yilmaz

The value of satisfied


customers

Dissatisfied customers:

Buy less.
Switch to competitors (40 %).
Do not complain to the company (96
% never report).
Complain to others; negative WOM

Dr. Yilmaz

Share
Shareof
ofmarketing-related
marketing-relatedexpenditures
expendituresin
inproduct
productcosts
costsisis
substantially
substantiallyhigh;
high;why,
why,then,
then,do
dowe
weneed
needmarketing?
marketing?

Modern marketing
philosophy

Customer satisfaction and loyalty are key driving forces behind


marketing success and superior financial performance.
Delivering the best value at the lowest possible cost and thereby
developing a superior customer equity should be the number 1
strategic objective.
Close monitoring of the markets (competitors, customers, and
other actors) is critical for success.
Marketing should put emphasis on long-term relationships.
Long-term success, as opposed to short term profit orientation,
should be the objective of marketing strategies and actions.
Marketing efforts should proceed in accordance with ethical
practices and should effectively serve the interests of both the
society and organizations.
The driving force behind the economic welfare of nations is an
effective marketing system.
Dr. Yilmaz

Key Terms

Customer Motivation:

Needs: State of felt deprivation (a


discrepancy betwen the actual state
and desired state).
Wants: needs shaped by culture and
personality (needs directed to an
object).
Demands: wants backed up by buying
power.
Dr. Yilmaz

Key Terms
Quality
* Functionality
* Performance
* Dependability
* Reliability and Precision
* Aesthetics
* Comfort, practicality, and usableness
* Safety
etc.)

* Additional features (after sales, optional features,


Dr. Yilmaz

Key Issues
Perceived quality and individual differences in
quality assessments.
Price-Quality relationship.
How does satisfaction develop?
When?
Based on what criteria?
How much should be invested in satisfaction
improvement?
Customer oriented versus customer driven?
How does problem resolution affect satisfaction?
How can customer satisfaction levels be measured and
monitored?

Dr. Yilmaz

Customer Lifetime Value

The value of the entire stream of


purchases that the customer would
make over a lifetime of patronage
(present value of all revenues
minus present value of costs).
Some customers are more valuable
than others.
Dr. Yilmaz

Customer Lifetime Value

A General Motors customer can be


worth $276,000 including 11+
vehicles bought, plus WOM
endorsement.

Dr. Yilmaz

Relationship Marketing

Creating, maintaining, and enhancing


strong, long-term relationships with
customers, partners, employees, and
other stake holders.
Competiton is not between individual
firms but between networks of firms.
It costs 5 times as much to attract a
new customer as to keep a current one.

Dr. Yilmaz

Dr. Yilmaz

The value delivery system

External Partnerships

The entire supply chain (suppliers, partners,


distributors,retailers, etc.) must work in
cooperation to add value.

Internal Teamwork

The company value chain: Everyone at all


levels must always keep the customers
desires in mind and contribute to value
creation.
Focus on internal customers.
Dr. Yilmaz

Key Terms ctnd.

Market: A composition of buyers with a


particular need/want combination that
can be satisfied by the companys
market offerings.

Existing buyers
Potential buyers

Market Offering: Products, services,


persons, ideas, organizations, events,
etc.
Dr. Yilmaz

HOW DO FIRMS
COMPETE?

Business competition is the constant


struggle among firms for
comparative advantages in
resources that will yield marketplace
positions of competitive advantage
for some market segment(s) and,
thereby, superior financial
performance (Hunt 2000).
Dr. Yilmaz

Societal Resources

Societal Institutions

Resources

Market Position

Financial Performance

.Comparative Advantage
.Parity
.Comparative Disadvantage

.Competitive Advantage
.Parity
.Competitive Disadvantage

.Comparative Advantage
.Parity
.Comparative Disadvantage

Competitors-Suppliers

Consumers

Public Policy

NOTE: Read: Competition is the disequilibrating, ongoing process that consists of the constant struggle among firms for a comparative advantage in
resources that will yiels a marketplace position of competitive advantage and, thereby, superior financial performance. Firms learn through competition as
a result of feedback from relative financial performance signaling relative market position, which, in turn, signals relative resources.
SOURCE: Hunt & Morgan 1997, Journal of Marketing, (Oct.) p. 78.

Copyright Dr. Cengiz Ylmaz

Dr. Yilmaz

11

Discussion
DiscussionIssues:
Issues:(1)
(1)The
Theproblem
problemof
ofidentifying
identifyingthe
thetrue
truecompetitors.
competitors.
(2)
(2)The
Theproblem
problemof
ofpseudo
pseudosuperiority
superiorityperceived
perceivedin
ingrowing
growingmarkets.
markets.

HOW DO FIRMS COMPETE?

Superior financial performance equates with both

more than and better than some referent(s) in


terms of some measure(s) of financial
performance.

Possible measures of financial performance:

Accounting profits.

Earnings per share.

Return on assets.

Return on equity, etc.


Possible referents (comparison points):

Firms own performance in a previous time (?) period.

Performance of rival(?) firms.

An industry average.

A stock market average, etc.


Dr. Yilmaz

Measuring Marketing
Performance

Percentage of new customers to average number of customers.


Percentage of lost customers to average number of customers.
Percentage of win-back customers to average number of customers.
Percentage of customers falling into very dissatisfied,
dissatisfied,neutral, satisfied, and very satisfied categories.
Percentage of customers who say they would repurchase from the firm.
Percentage of customers who say they would recommend the firm to
others.
Percentage of customers who say that the companys products are the
most preferred in its category.
Percentage of customers who correctly identify the companys intended
positioning and differentiation.
Average perception of companys product quality relative to chief
competitor.
Average perception of companys service quality relative to chief
competitor.
Dr. Yilmaz

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