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Principles of Marketing Summary - IBMS Year 1
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This summary is written for the exam 'Principles of Marketing' that is given in year 1 of the IBMS course. The document summarises chapter 1 until 6.
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Marketing SummaryPrinciples of Marketing summary
Subject: Principles of Marketing
Chapter’s summarized: Chapter 1 until 6
Chapter 1:
The main purpose of marketing-oriented companies is to anticipate and satisfy
the needs and wants of the customer.
Marketing vs. selling; selling is “trying to get rid of what you have on the
shelves”, while marketing is “making sure that what you have on the shelves is
what the customer wants”. Note that if you are referring to marketing the product
rather than selling the product. The difference between the two is that marketing
entails an integrated plan.
Marketing mix (four P’s);
Product; goods, services or ideas that meet the wants and needs of the customer
Price; the amount of money exchanged for a product or service
Place (distribution); how the company gets its product into the hands of the
buyers
Promotion; activities a supplier implements to communicate with the market and
to promote sales
The target market is a part of the market that an organisation concentrates on
and wants to turn into customers. Customers, after all, are loyal consumers who
will make repeat purchases.
Exchange transactions are items of worth. Often they are products that are
exchanged for money, but they can also be something less tangible, such as a
service, an idea, labour or even status. Next to this, you have also bartering,
when goods were exchanged for other goods.
Marketing as a whole, so not of the individual company, is macro-marketing. You
look at a broader level. You can neither control nor influence them.
Meso-marketing occurs at a level that lies between the two. This form of
marketing is best analysed within the framework of the supply chain. The meso-
environment is essentially the branch of the industry or market in which the
company operates.
When you talk about the individual company, you talk about micro-marketing.
A Sector is made up of companies that perform the same function in the
production or trade of a certain product.
A branch of industry is a group of organisations that is similar in its production
techniques and end products, those companies are within a sector. For example,
within the retail sector the food industry.
Evolution of marketing from 1900 till 2000;
Production orientation > Selling orientation > Marketing orientation >
Relationship marketing
A production-oriented company does everything possible to make its production
process highly efficient.
,Marketing Summary
Market-oriented companies consider not only customer, but also intermediaries
and competitors, in making business decisions at all levels of the organisation. In
these companies the marketing planning begins with the customers. The
customers are the most important factors.
In the final analysis the marketing concept is a business philosophy.
> page 20, see figure.
The customer service is the external face of the company’s quality standards, but
it is often regarded as one of the most important marketing instruments.
The ‘average’ consumer does not exist. So the company first has to analyze and
then segment the market.
Every company has to strive for example by building brand equity (merkwaarde),
to make a profit in the long term.
If you evaluate a business, it is not important how many sales a product
generates, but it is important how much profit those sales contribute to the
enterprise. Increased sales do not assure increased profits.
Telecom companies like T-mobile are implementing a demarketing strategy by no
longer targeting ‘pay as you go’ customers (with prepaid phone cards) in their
advertising campaigns for mobile phones. They are focusing on consumers that
make more calls and use other services, such as SMS.
Needs have to do with a shortage of something and with a person’s strong -
almost instinctive - inclination (neiging) to relieve this shortage.
Wants; once a consumer becomes aware of a need and considers the available
alternatives, he will usually develop a preference for a certain product. This is the
product he wants.
The three R’s;
Response; ultimately the company tries to get consumers to respond to a
marketing offer
Reputation; the image that buyers have of the organisation and its products or
brands - through what is does in comparison with competitors
Relationships; ongoing interaction with the customer, which eventually creates a
certain loyalty, is indispensable when developing a relationship. Interactive
websites, direct mail with a freepost address and a customer service line are
examples to improve relationships and loyalty
If all these three R’s are very positive, the company will increase their chances of
long-term success.
Customer equity is the financial value of the relationships the company maintains
with its customers. Customer equity can be increased by;
- Reducing the cost of getting new customers
- Retaining more customers longer
- Increasing profits from retained customers by selling them more products at
higher margins and with lower marketing costs.
The lifetime value of an individual customer is the present value of the profits
derived from this customer’s future purchases from the company.
Applications of the principles of marketing;
, Marketing Summary
Services marketing; the marketing strategy of a supplier of intangible services,
such as a bank or an insurance company.
International marketing; marketing activities aimed at global target markets.
Direct marketing; try to get a relationship with the customer through direct
communication (direct mail, telephone, internet etc.)
Database marketing; information of, for example, buying behaviour which a
company has stored in a database, now he uses this information.
Internal marketing; marketing activities aimed at part of a company’s own
organisation.
Non-profit marketing;
They develop professional consumer campaigns or tap new donors through
corporate sponsorship.
Chapter 2:
Managers are basically concerned with four things; the analysis, planning,
implementation and control of the company’s activities. These tasks are essential
for an effective marketing management.
The long-term plan sets out the strategy, a strategic marketing plan defines the
marketing goals (such as increased market share and revenue) for a period of
two to five years and indicates how (in which markets and with what
products)those goals can be realised.
A short-term plan (or annual plan), on the other hand, is more operational in that
it describes the tactics the company will implement to achieve its short-term
objectives. A operational marketing plan for a period of one year is quite
common.
A business plan sets out the business strategy. The marketing strategy described
in the business plan must, in turn, be optimally aligned with the overall corporate
strategy.
The corporate strategy is developed at the uppermost levels of the organisation.
A concern or parent company is usually comprised of various “Strategic Business
Units (SBU’s). Each of these SBU’s is a division of the organisation that operates
more or less independently. A loose example would refer to Microsoft, with SBU's
for operating systems, business software, consumer software and mobile and
Internet technologies.
The four cornerstones of a marketing strategy are;
Brand image; to make products and services recognizable and attractive in the
customers’ eyes
Quality; which must meet customers’ expectations about the products’
performance
Innovation; to create new and unique benefits in using the product
Ongoing customer relationship; to be able to meet customers’ needs as well as
possible.
At the core of the business definition is the business domain or business scope;
“The extend of the firm’s current activities”. To describe a company’s broader
business definition, we often use three dimensions, which also form the basis of
the Abell model.
Customers, needs and technologies
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