Marketing 101 | Wharton Business School

What is Marketing? The study of a market.
What is a Market? An exchange between a buyer and seller. You need to have that exchange for a market to exist.
What marketing means will differ depending on what aspect of that exchange you are looking at.

Basic Exchange: 1 Buyer & 1 Seller
*very simplified, real markets lie somewhere in the middle

Sellers Market

Production based: focuses inward on company (not customers) to be profitable. Inside-Out strategy.

Product Focused Marketing

  • Companies develop a product to the best of their ability.
  • Company should innovate in that product, reduce costs, and focus on product.
  • Profitability comes from volume and market share.
  • Objective is to increase market share. Greater market share leads to higher volumes sold (revenue) which allows for greater economies of scale, and thus higher profitability.
  • Growth comes from new products and/or new markets. Companies use their experience developing successful products to develop those new products and markets.
  • Competition is high.
  • Power is in the hands of the buyer.
  • Marketing focuses on customer and competition.

Buyers Market

Marketing based: focuses outward on customers and competition (not production) to be profitable. Outside-In strategy.

Customer Focused Marketing

  • Company develops a product based on what the customer wants in order to deliver value.
  • Company focuses on customer in order to get the customer to buy from them instead of their competition.
  • The challenge is that every customer wants something different
  • Segmentation is necessary to stay in business. Saying no to some customers and yes to others.
  • Profitability is achieved with a premium price, loyalty, and cross selling.
  • Premium Price. Giving customers exactly what they want creates value, customers are willing to pay a premium for that.
  • Loyalty is achieved delivering value over time. This is referred to as customer share or share of wallet, as opposed to market share. Target a niche market, but try to get more from each customer. Loyalty is profitable because it is more expensive to acquire new customers than it is to keep existing customers.
  • Cross selling is achieved by producing additional products you know the customer might need. Example: a denim retailer also selling leather belts. Companies will cross sell products to build loyalty and profitability.
  • Objective. Give the customer exactly what they want so they will pay a premium for it.
  • Growth comes from increasing customer loyalty.
  • Marketing focuses on value (customization/personalization) vs the competition.
Types of Marketing Orientation Production Orientation. Persuade customers to want what the company has. Marketing Orientation. Persuade firm to offer what the customer wants. Experience Orientation. Manage customer’s entire experience with the company. Trust Orientation. Prioritize building a relationship of trust and discipline.
What You Offer Generic Products Differentiated Product/Service Experiential Value Genuine Value
Competitive Advantage Lowest Cost Quality and Service

Customer Knowledge

Transformation; Customer as co-creator or value Trust
Profitability Drivers Market Share Customer Share
Customer Loyalty
Buzz, word of mouth, referrals Discipline, reduced costs