Fundamentals of Marketing

What is marketing?

- Is the action of communicating value of your product or service to your target market?
- Is the process of planning and executing the conception, pricing, promotion, and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational goals?
- Is the business process of creating relationships with and satisfying customers? With its
focus on the customer, marketing is one of the premier components of business
management.
- Is the process of continuously and profitably satisfying the target customer’s needs, wants
and expectations superior to competition?

Market

The term market refers to the group of consumers or organizations that is interested in the

product, has the resources to purchase the product, and is permitted by law and other regulations
to acquire the product.

What is NOT marketing?

Marketing has often been misunderstood. One of the most common misconceptions is
associating with sales. While selling is an important activity of marketing and is a central
function in daily business operations, marketing is not selling.
Another common misconception- “marketing equals advertising” is often reinforced
when some companies spend huge amounts in advertising. A related pitfall is for a misinformed
executive to jump into mass media advertising thinking he is “doing marketing” without an
understanding of the prerequisites as well as the constraints of both marketing and advertising.

Many people think of marketing only as selling and advertising.

Marketing: the strategic 3Cs concept

Exhibit 1-1: Two interacting components of marketing

Company Market

The above equation shows that the company and its market are equally important.
Satisfying one without satisfying the other is not marketing.
A marketer should always consider the strengths and weaknesses of his company in
serving the needs and wants of his market. He must therefore choose the market segment or

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segments where he can have potential leaderships or at least have a strong and profitable
challenger role.
The market, on the other hand, is composed of two other interacting components:
customers and competition. Customers, which may either be trade intermediaries (like
wholesalers or retailers) or end users, are people or organizations buying from you while
competitors are those with products or services that can offer similar benefits to your customers.

Exhibit 1-2: two interacting components of a market

Customer Competition

The overriding objective of the company is first to have customer bonding to develop a
relationship that is customer-centric, then to think of a competitive advantage that addresses gaps
in the customer’s world. This means that firms must primarily satisfy the needs and wants of
their customers and then do so profitably BETTER THAN competition.

Combining the three interacting and equally important components of marketing will produce the
strategic 3Cs of marketing.

Exhibit 1-3: the strategic 3Cs of marketing

Customers
Company

Competition

3Cs KEY OBJECTIVES

1. Customers – to satisfy the needs, wants ad expectations of target customers.

2. Competition – to outperform competition.
3. Company – to ensure corporate health and profit.

Exhibit 1-5: input and output of marketing

customers

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company competition

Key result areas:

a. Sales

Sales result from satisfying customer’s needs and wants. Gaining market share is an effect of
outperforming competition. Profit comes from having an excess of sales over cost and expenses
in earning market shares. Before one can sell anything, demand must be created. More sales will
come when more demand is created.

b. Market share

The ratio of your brand’s sales and the total sales in your market. In addition, market share is the
portion of a market controlled by a particular company or product.

c. Profit

Profit is an indispensable component for a firm to continuously satisfy its customers.

The marketing process

1. Understand the market place and customer needs and wants.

Core customer and marketplace concepts

● Needs, wants, and demands

● Marketing offers
● Value and satisfaction
● Exchange, transaction and relationships
● Markets

Needs – the basic human requirements.

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Wants – the form taken by a human need as shaped by culture and individual.

Demands – human wants that are backed by buying power.

Marketing offers

- Some combination of products, services, information, or experiences to a market to

satisfy a need or want.

Customer value and satisfaction

-customer value is the difference between the values the customer gains from owning and using
the product and the costs of obtaining the product.

-customer satisfaction is the extent to which a product’s perceived performance matches a

buyer’s expectation.

Exchange, transactions and relationships

Exchange – is the act of obtaining a desired object from someone by offering something in
return.

Transactions – a trade of values between two parties.

2. Design a customer driven marketing strategy.

Value proposition – the set of benefits or values it promises to deliver to consumers to satisfy
their needs.

3. Construct a marketing program that delivers superior value.

4. Build profitable relationships and create customer delight.

5. Capture the value from customers to create profits and customer quality.

3 interrelated concepts of marketing principles:

1. An organization’s basic purpose is to satisfy customer needs.

2. Satisfying customer needs requires integrated and coordinated efforts throughout the
organization.
3. Organizations should focus on long-term success.

Customer loyalty concept relationships

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 achieving
Organizational Providing
completely
strategy and exceptional
satisfied
execution customer value
customers

increased sales earning high

growth and profits customer loyalty

Customer loyalty, sales and profits

1. Keeping loyal customers requires no acquisition costs. Getting new customers often
requires high acquisition costs.
2. The longer a firm keeps a customer, the more base profit earned from continuing
purchases over time.
3. Loyal customers tend to buy more from a firm over time.
4. It usually costs less to deal with loyal customers than with new customers.
5. Loyal customers are typically an excellent source of referrals for new business.
6. Loyal customers are often willing to pay a price premium to receive a desired value.

Marketing mix

Product Place

4Ps

Price Promotion

Marketing mix
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 1. PRODUCT – what a company sells to its customers is called a product.
- The first element of the marketing mix
2. PRICE – Is what the customers must give up in order for them to receive the product.
-Is an indicator of product quality.

3. PROMOTION – how a company inform and persuade consumers of their products.

(It can be through advertising, public relations, sales promotion and personal selling)

4. PLACE – refers to distribution, how is the product will be available?

–right location
-convenient location
-direct distribution or through retailing

The Marketing environment

Marketing environment – Refers to factors and forces that affect a firm's ability to build and
maintain successful customer relationships. 

The marketing environment is composed of the internal and external environment.

1. Internal environment is the company itself which includes the owners, workers,
machines, materials etc.

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 2. External environment

Micro environment - It comprises of external forces and factors that are directly related to
the business.

▪ Suppliers include all the parties which provide resources needed by the organization.
▪ Market intermediaries include parties involved in distributing the product or service of the
organization.
▪ Partners are all the separate entities conduct business with the organization.
▪ Customers comprise of the target group of the organization.
▪ Competitors are the players in the same market who targets similar customers as that of the
organization.
▪ Public is made up of any other group that has an actual or potential interest or affects the
company’s ability to serve its customers.

Macro environment- the external factors and forces which affect the industry as a whole but
don’t have a direct effect on the business

Demographic Environment
The demographic environment is made up of the people who constitute the market. It is
characterized as the factual investigation and segregation of the population according to
their size, density, location, age, gender, race, and occupation.

Economic Environment
Refers to the purchasing power and spending patterns.

Physical Environment/natural
The physical environment includes the natural environment in which the business operates. This
includes the climatic conditions, environmental change, accessibility to water and raw materials,
natural disasters, pollution etc.

Technological Environment
The technological environment constitutes innovation, research and development in technology,
technological alternatives, innovation inducements also technological barriers to smooth
operation. Technology is one of the biggest sources of threats and opportunities for the
organization and it is very dynamic.

Political-Legal Environment
The laws and government’s influence or limit the working of the industry and/or the business in
the society.

Social-Cultural Environment
It refers to the lifestyle, values, culture, prejudice and beliefs of the people.

General strategic planning process

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 1. Examine current situation
2. Identify potential threats and opportunities
3. Set objectives
4. Develop strategies
5. Execute

Competitive advantage – refers to the way a business tries to get consumers to purchase its
products over those offered by competitors.

The nature of consumer

Consumer behavior – is defined as the mental and emotional processes and the physical
activities that people engage in when they select, purchase, use, and dispose of products or
services to satisfy particular needs and desires.

Types of consumer choices:

1. Attitudes
2. Experiential choices
3. Cultural influences
4. Social class influences
5. Family influences
6. Interpersonal influences

Market segmentation – divides a market into subsets of prospective customers who behave in
the same way, have similar wants, or have similar characteristics that relate to purchase behavior.

Market positioning - refers to the process of establishing the image or identity of a brand or
product so that consumers perceive it in a certain way.

References:

Ac-Ac,M. (2009). Principles of Marketing.Mandaluyong city: Anvil Publishing Inc.

Bearder, W., Ingram, T., & LaForge, R. (2001). Marketing: Principles and Perspectives. (3rd
ed.). New York:Mcgraw-Hill Companies, Inc.

Go, C., & Go, J. (2010). Fundamentals of Marketing. (2nd ed.). Philippine copyright, Josiah and
Carolina Go Foundation, Inc.