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