Chapter One:

Introduction to Marketing Management

1.1 An Overview of Marketing
1.1.1 The Nature of Marketing?
The Purpose of Marketing is “Satisfaction”
Satisfaction: Is a person’s feeling of pleasure or disappointment resulting from comparing a
product’s perceived performance (or outcome) in relation to his or her expectations.
Satisfaction can be
• Functional Satisfaction
• Psychological Satisfaction
1.1.2 Definition of Marketing
Marketing deals with identifying and meeting human and social needs. One of the shortest
definitions of marketing is "meeting needs profitably."
Marketing has been defined in various ways. The definition that serves our purpose best is as
follows: -

i) Marketing is a social and managerial process by which an individual or group obtain

what they need and want through creating, offering and exchanging of product of
values with others (Philip Kotler)
ii) Marketing is the total business activity designed to plan, price, promote and distribute
want satisfying products to target market to achieve organizational goal (William
J.Stanton)
iii) Marketing is the creation and delivery of standard of living to society (Paul. Mazor)
iv) Marketing management is the process of planning and executing, the conception,
pricing, promoting and distributing of ideas, goods and services to create an exchange
that satisfy individual or group objectives (American marketing Association)
1.2 Core Concepts of Marketing
The definition of marketing rests on the following concepts:
Needs, wants and demands;
Products;
Value and satisfaction;
Exchange and Transaction
 Market;
i. NEEDS, WANTS AND DEMANDS
Needs Marketing starts with human needs and wants. People need food, air, water, clothing and
shelter to survive. Beyond this, people have a strong desire for recreation, education and other
services. Need describe basic human requirements, Needs become wants when they are directed
to specific objects that might satisfy the need.

Need for food ---> Want for a Hamburger

Abraham Maslow, a behavioral scientist has talked about human needs. He said, a human need
takes the form of a hierarchy. That is, once a person is satisfied with his basic needs, he keeps on
opting for his secondary needs.

1. Physiological Needs: - Physiological needs arise out of physical imbalances. Which includes:
Food, Shelter, Air, Water, Cloth etc? Once the person is satisfied with his primary needs, he
keeps on opting to satisfy his secondary needs.

2. Psychological needs arise out of psychological imbalances. The various needs under the
various sub headings are as follows: -

- Safety and security needs

 Security and safety in the work place

 Protection
 Comfort and peace
 No threats or danger
 Orderly and net surroundings
 Assuming of long term economic well being
- Social Needs

 Acceptance
 Feeling of belonging
 Membership in group
 Love and affection
 Group participation
-Esteem or ego needs

 recognition and prestige

 confidence and leadership
 competence and success
 strength and intelligence

- Self-actualization needs

 Self fulfillment of potentials

 Doing things for the challenge of accomplishment
 Intellectual curiosity
 Creative and aesthetic appreciation
 Acceptance of reality
Therefore, the marketers’ duty is to identify the unfilled needs of their product purchasers and
tailor all activities towards fulfilling them.

Demands are wants for specific products that are backed up by an ability and willingness to buy
them. Wants become demands when backed up by purchasing power. Marketers do not create
needs but needs pre-exist marketers. Marketers along with other social influencers influence
wants.
ii. PRODUCT OR OFFERING:
People satisfy their needs and wants with products. A product is anything that can be offered to
satisfy a need or want. Products broadly classify as tangibility and intangibility.

Tangible products (Goods) are those products, which can be seen, touched, felt etc.

Intangible products (services) are those products which cannot be seen, touched, felt etc.

Example: A computer manufacturer supply goods (computer, monitor, printer), services

(delivery, installation, training, maintenance etc) and an idea (computation power)

iii. VALUE AND SATISFACTION:

Value is what customer gets and what he gives. Customer gets benefits and assumes costs.
Benefits include functional and emotional benefits. Costs include monetary costs, time costs,
energy costs and psychic cost.

Benefits (functional and emotional benefits)

Value = ----------- = ---------------------------------------------

Costs (include monetary costs, time costs, energy costs and psychic cost)

Value of customer offering can be increased by:

_ Raise benefits

_ Reduce costs

_ Raise benefits AND reduce costs

_ Raise benefits by MORE THAN the raise in costs

_ Lower benefits by LESS THAN the decrease in costs

iv. EXCHANGE AND TRANSACTIONS:
Exchange involves obtaining a desired product from someone by offering something in return.

For exchange potential to exist, five conditions must be satisfied:

At least two parties

Each party has something that might be of some value to the other party.
Each party is capable of communication and delivery
Each party is free to accept or reject offer
Each party believes that it is appropriate or desirable to deal with the other party.
Exchange is value-creating process as it leaves both the parties NORMALLY better off.

Exchange is a process rather than an event. When an agreement is reached, we say that a
transaction takes place.

A transaction is a trade of values between two or more parties.

Monetary transaction: Paying money in exchange of goods

Barter transaction: Goods or services for other goods or services.

Dimensions of a transaction:

 At least two things of value

 Agreed upon conditions
 A time of agreement
 Place of agreement
Transaction differs from transfer. In a transfer A gives goods to B but does not receive anything
tangible in return. Example: Gifts, charities, subsidies etc.

V. MARKETS
The concept of exchange leads to the concept of a market.

A market consists of all the potential customers sharing a particular need or want who might be
willing and able to engage in exchange to satisfy their need or want.

Traditionally, a market was the place where buyers and sellers gathered to exchange their goods.
The seller and the buyer are connected by four Flows. The seller sends goods and services and
communications (ads, direct mail and so forth) to the market; in return they receive money and
information (attitudes, sales data, and so forth).

In the diagram below the inner loop shows an exchange of money for goods and services; the
outer loop shows an exchange of information.
1.2.1 Demand States and Their Respective Marketing Tasks
Marketers are responsible for demand management.

Eight demand states are possible. In each case, marketers must identify the underlying cause(s)
of the demand state and then determine a plan for action to shift the demand to a more desired
state.

The Eight different states of demands:

Negative demand: if a major part of market dislikes the product and may even pay a price to
avoid it – vaccinations, gall bladder operations etc.
Marketing Task

Conversational Marketing: the marketing task is to analyze why the market dislikes the product
and whether a marketing program consisting of product redesign, lower prices, and more positive
promotion can change beliefs and attitudes.

No Demand: Target consumers may be unaware of or uninterested in the product. Ex. College
students may not be interested in foreign language courses.
Marketing Task

Stimulation marketing: The marketing task is to find ways to connect the benefits of the product
with people’s natural needs and interests.

Latent demand: Consumers may share a strong need that cannot be satisfied by any existing
product. There is a strong demand for harmless cigarettes, safer neighborhoods, better schools,
and more fuel-efficient cars.

Marketing Task

Developmental marketing: The appropriate marketing task is to measure the size of the market and develop
goods and services to satisfy the demand.
Declining demand: Market for the product declines.

Marketing Task
Remarketing (Re-stimulating): The marketer must analyze the causes of the decline and
determine whether demand can be re-stimulated by new target markets, and by changing product
features, or by more effective communication styles.

Irregular demand: Demand of many products and services are seasonal.

Marketing Task

Synchronic marketing: is to find ways to alter the pattern of demand through flexible pricing,
promotion, and other incentives.

Full demand: sometimes full demand is there.

Marketing Task

Maintain marketing: The marketing task is to maintain the current level of demand in the face of
changing consumer preferences and increasing competition.

Overfull demand: sometimes demand is higher than what organization can handle.
Marketing Task

De-marketing: The marketing task requires finding ways to reduce demand temporarily or
permanently.

Unwholesome demand: Unwholesome products will attract organized efforts to discourage

consumption. Like UN selling campaigns against cigarettes, alcohol, handguns.
Marketing Task:

The marketing task is to get people who like something to give it up, obey the rules of some
established agencies, using fear messages (e.g., Cigarettes are dangerous for health,

Cigarettes are dangerous for pregnant women etc) and reduce availability.
1.3 Marketing Philosophy
There are five competing concepts under which organizations conduct marketing activities: the
production concept, selling concept, marketing concept, customer concept and societal marketing
concept.
The Production Concept:
The production concept is the oldest concept in business. The production concept holds that
consumers will prefer products that are widely available and inexpensive. Managers of
production-oriented business concentrate on achieving high production efficiency, low costs and
mass distribution. They assume that consumers are primarily interested in product availability
and low prices.
The Product Concept:
The product concept holds that consumers will favor those products that offer the most quality,
performance and features.
Management in these product-oriented organizations focuses their energy on making good
products and improving them over time. These organizations fail in the market because they fail
to find what the consumers actually need and what they would accept.
The product concept leas to ‘marketing myopia’ short-sightedness about business meaning
wrong or inadequate understanding of the market and hence failure in the market place.
The Selling Concept:
The selling concept is another common business orientation. The selling concept holds that
consumers and businesses, if left alone, will ordinarily not buy enough of the organizations
products. The organization must, therefore, undertake an aggressive selling and promotion effort.
The Marketing Concept
The Marketing Concept is a business philosophy that challenges the three businesses orientations
we just discussed.
The marketing concept holds that marketing starts with the determination of consumer wants
and ends with the satisfaction of those wants. Only the marketing concept is capable of keeping
the organization free from ‘marketing myopia’.
The salient features of the marketing concept are:

Consumer orientation
Integrated marketing
Consumer satisfaction
Realization of organizational goals
Difference between Selling and Marketing
Selling Marketing
Selling starts with the seller Marketing starts with the buyers.

Selling emphasizes on profit. Marketing emphasizes on fulfilling the needs of the

customers.

Selling views business as a ‘goods producing Marketing views business as a ‘customer satisfying
processes’. processes.

Emphasizes the ‘exchange’ aspect without It concerns primarily with the ‘value satisfactions’
caring for the ‘value satisfactions’ to the buyers.

Costs determine price Consumer determines price

No coordination among the different functions Emphasis is on integrated marketing approach.

of the total marketing task.

The firms which practice ‘selling concept’, The firms which practice ‘marketing concept’,
production are the central function. marketing is the central function.

‘Selling’ views the customer as the last link in ‘Marketing’ views the customer as the very purpose of
the business. the business.

Societal Marketing Concept

The Societal Marketing Concept holds that the Organizations task is to determine the needs,
wants and interests of target markets and to deliver the desired satisfaction more effectively and
efficiently than competitors in a way that preserves and enhances the consumers and the societies
well being.
It calls for social and Ethical considerations in marketing. They must balance the conflicting
criteria of Company profits, consumer want satisfaction and Public Interest. In an age of
environmental deterioration, resource shortage, explosive population growth, world hunger and
poverty and lack of Social Services Marketers needs to be sensitive on these issues.
1.4 Importance of Marketing

1. Marketing process brings goods and services to satisfy the needs and wants of the people.

2. It helps to bring new varieties and quality goods to consumers.

3. By making goods available at al places, it brings equipment distribution.

4. Marketing converts latent demand into effective demand.

5. It gives wide employment opportunities.

6. It creates time, place and possession utilities to the products.

7. Efficient marketing results in lower cost of marketing and ultimately lower prices to
consumers.

8. It is vital link between production and consumption and primarily responsible to keep the
wheel of production and consumption constantly moving.

9. It creates to keep the standard of living of the society.

1.5 Scope of Marketing

Marketing people are involved in 10 types of entities:
1) Goods like eggs, steel, cars
2) Services like airlines, hotels, barbers
3) Experiences like Walt Disney world’s magic kingdom, at planet Hollywood
4) Events like Olympics, trade shows, sports events (T20 World Cup).
5) Persons like celebrity marketing by making major film star as brand ambassador
6) Places like cities, states, nations to attract tourists, factories, company headquarters, and new
residents,
7) Properties like real state owners market properties or agent markets securities
8) Organizations corporate identity ads like by using tag line ‘Let’s make things better’, or like
Richard Branson (virgin) or Phil knight of Nike are some identities
9) Information likes encyclopedias, CDs and visits the Internet for information. This is
information marketing
10) Ideas like the buyer of a drill are really buying a hole. Church should market itself as a place
of worship or a community center.