Basics of Marketing

BASICS OF MARKETING
Marketing is the creation of long-term demand, while

Sales is the execution of marketing strategies
The aim of the marketing is to know and understand the customer so well that the
product or service fits him and sells itself. Marketing should result in a customer
who is ready to buy.
Products are made and services are provided in response to consumer needs and wants. If
consumers need or want a particular product and they know it is available and believe it
offers some advantages over similar product, they will buy it. The problem is to make the
consumer aware of the product and the advantages it offers. This process is known as
marketing or sales promotion.
The basic function of marketing is to determine the needs of the customers and then to
satisfy them, thus, bring profit to the company.
Marketing research collects and analyses the product for sale and of the product produced
by competing companies.
Export promotion means economic and political publicity, advertising, personal selling,
fairs, exhibitions and sales promotion.
Advertising informs people about the new product, gives its characteristics, and persuades
people to buy it.
Personal selling means personal contacts between the seller and prospective buyers. In
other words it means collecting contacts.
Public relations are to show the reliability of the company, its respectful attitude to the
clients, the high quality of its products and specialists working in it. They also mean the
presentation of films (commercials), and booklets on the history and achievements of the
company as well as special radio and TV programmes.
 Complete the following definition of marketing. Vocabulary exercises.

Insert these verbs in the right place:
design improvement persuade develop development
research modify identify influence
Marketers have to: 1) _______________ or anticipate a consumer need; 2) _______________
a product or service that meets that need better than any competing products or services;
3) _____________________ target consumers to try the product or service; and, in long term,
4) _____________________ it to satisfy changes in consumer needs or market conditions.
Marketers can 5) _____________________ particular features, attractive packaging, and
effective advertising, that will 6)_____________________ consumer’s wants. Marketing thus
combines market ________________, new product ____________, distribution, advertising,
promotion, product _________________, and so on.
 Match the verbs with the nouns they might go with

1. Maximize a) profitability
2. Increase b) sales
3. Bring out c) films
4. Produce d) tasks
5. Duplicate e) advertising
 Make compound nouns from the list given below

Compiled by lecturersVida Burbiene and Jurate Merkiene 1 Vilnius College, Faculty of Economics, 2007
BASICS OF MARKETING
The first noun The second noun Your compound noun

(this noun classifies the second one)
1) market Spending
2) consumer Sheet
3) laser Forces
4) balance Executive
5) service Printer
6) chief Industry
7) voice Limit
8) brand Costs
9) labour Stripper
10) asset Resort
11) time Mail
12) ski leader
THE MARKETING CONCEPT

In recent year marketing has become a driving force in most companies.
Underlying all marketing strategy is ‘The Marketing Concept’, explained below:
We must produce what people want, not what we want to produce.

This means that we put the customer first.
We organise the company so that this happens.

We must find out what the customer wants.
We carry out market research.

We must supply exactly what the customer wants

We can do this by offering the right marketing mix: “The Four P’s”
the right Product
at the right Price
available through the right channels of distribution: Place
presented in the right way: Promotion
Nowadays, all divisions of a company are urged to ‘Think Marketing’:
To think marketing we must have a clear idea of:
what the customer needs
what the customer wants
what causes him/her to buy
what the product is to the customer: functional, technological, economic +
aesthetic, emotional, psychological aspects
what features and benefits our product possesses.
A company that believes in marketing is forward - thinking company and doesn’t rest on its
past achievements: it must be aware of its strengths and weaknesses as well as the
opportunities and threats it faces in the market SWOT.
THE FOUR P’s
BASICS OF MARKETING
PRODUCT we understand it as the goods or services that we are marketing.

The product is not just a collection of components, but includes its design, quality and
reliability. Products have a life cycle.
Forward thinking companies are continually developing new products to replace products
whose sales are declining and coming to the end of their lives.
PRICE we understand it as making it easy for the customer to buy.
The marketing view of pricing takes account of the value of a product, its quality, the ability
of the customer to pay, the volume of sales required, the level of market saturation and the
prices charged by the competition.
PLACE we understand it as getting the product to the customer.
Decisions have to be made about the channels of distribution and delivery arrangements.
Retail products may go through various channels of distribution:
 Producer  end
user
( producer sales directly to the end users via own sales force)
 Producer retailers end users
 Producer wholesalers  retailers end users
 Producer wholesalers end users
 Producer multiple store groups end users
 Producer market wholesalers retailers end users
Each stage adds ‘value’ to the product to justify the costs.
The middle-man is someone whose own sales force and delivery system can make the
product more easily and cost- effectively available to the largest number of customers.
One principle behind this is ‘breaking down the bulk’: the producer may sell in
minimum quantities of, say 10,000 units to the wholesaler, who sells in minimum
quantities of 100 units to the retailer, who sells in minimum quantities of 1 unit to the
end user.
Thus, distribution is done through wholesalers and then retailers, who each ‘add value’ to
the product by
 providing a good service to the customers and
 stocking a wide range of similar products.
PROMOTION we understand it as presenting the product to the customer.
Promotion involves considering the packaging and presentation of the product, its image, the
product name, advertising, literature, price lists, after-sales service and training, trade
exhibitions or fairs, public relations, publicity, and personal selling, where the seller develops
a relationship with the customer.
Every product must possess a unique selling proposition USP – unique features and
benefits that make it unlike any other product in its market.
In promoting a product,
 the attention of potential customer is attracted A
 an interest in the product aroused I
 creating a desire for the product D
 encouraging customers to take prompt action A
BASICS OF MARKETING
 Consider the answers for these questions:  Pair-work exercises

1. What is marketing?
2. What is the basic function of the marketing?
3. What is the purpose of market research?
4. What is the job of marketers?
5. What must a company be aware of nowadays?
6. What does SWOT signify?
7. What is the aim of Public Relations?
8. What does the marketing view of pricing take account of?
9. What is the intermediary’s role in the process of “getting the product to the customer”?
10. What does AIDA signify?
DISCUSS
 Discuss the statements listed below?
1. We must produce what people want, not what we want to produce.
2. Nowadays, all divisions of a company are urged to ‘Think Marketing’.
3. Each stage adds ‘value’ to the product to justify the costs.
4. The middle-man is someone whose own sales force and delivery system can make the
product more easily and cost- effectively available to the largest number of customers.
5. Every product must possess unique selling preposition.
 Chose the best alternative to complete the sentences: Vocabulary exercises.

(use the dictionary, if you need it)
1. Prices are very---------------------- these days.
a) big b) expensive c) high d) increased
2. It is always a good idea to ----------------- the bill before paying it.
a) add b) calculate c) control d) check
3. These figures will give you a ------------------ estimate of the cost of the goods
a) rough b) scant c) short d) superficial
4. Everything in the sale has been ---------------- to half price.
a) decreased b) diminished c) lowered d) reduced
5. They were paying for their furniture by -----------------------
a) credits b) deposits c) facilities d) instalments
6. There is a sale next week with ----------------- in all departments
a) basements b) decreases c) reductions d) redundancies
7. The price of fruit ------------------------- according to the season.
a) alternates b) fluctuates c) oscillates d) waves
8. Most prices were --------------------------- in the final days of the clearance.
a) declined b) diminished c) slashed d) taken down
9. Who do I make the cheque --------------to?
a) in b) on c) out d) up
10. Will you pay cash for the goods or would you like them to be--------------to your account?
a) charged d) indebted c) priced d) receipted
BASICS OF MARKETING
Read the text given below.  Reading

Consider the answers for these questions
1. What is the purpose of the marketing department?
2. Why do the marketing and production departments need to co-operate?
3. What needs to be done before a production line is set up?
4. What do business people and footballers have in common?
5. In what ways do the marketing team depend on the production team?
6. Why is the rapidly changing world a challenge to the marketing team?
7. What does a business need to do to survive and prosper?
8. In what ways can a government help or hinder a business?
9. How do we all benefit (or suffer) from the activities of business firms?
MARKETING
Having made a product the problem becomes to find someone who will buy it. It is the
responsibility of a marketing department to promote and organise the sale of products to the
purchaser. Broadly speaking, activities such as sales promotion, advertising and market
research are covered. It would be possible for the factory simply to produce a motor car and
then hope that it sells.
However, it takes a long time to set up a production line for a car assembly plant and even
minor modifications can prove difficult and expensive. It is much better to discover what
people are looking for when they buy a car and then try to satisfy their needs.
 Do car drivers want speed - or safety?
 Are they looking for the power to accelerate - or comfort?
 Is their aim to impress their neighbours or other road users, or are they just concerned
with getting from A to B and back?
 How important is the price, and the cost of petrol and maintenance?
 Which designs and colours are preferred?
 Who is buying the car? Is it a company or an individual?
 It is questions like these the marketing department will have to answer even before
production commences.
It becomes obvious that making and selling are two facets of the same undertaking. The
marketing manager and the production manager are two members of the same team,
depending on each other in much the same way as the players in the Liverpool football team.
What good does it do if our strikers are scoring goals but our goalkeeper has to pick the ball
out of the back of the net? This situation could be compared to the marketing team who make
great efforts to find customers for their cars, only to find the cars cannot be delivered on time,
or that the cars develop faults as soon as they arrive.
The problem facing any business is that the market for goods - and services - is ever
changing. Take the case of a company manufacturing cigarettes. Not so long ago the market
for cigarettes was aroused. Then the medical research discovered the link between cigarette
smoking and lung cancer and many other diseases. Prospects for further growth evaporated as
many people decided both to save money and live longer to spend it.
The government joined in by restricting advertising and sponsoring their own ant-smoking
campaign.
BASICS OF MARKETING
New technologies have an even more devastating effect on the markets. The rapidly changing
world is both a headache and an exciting challenge to those engaged in marketing. If they
predict correctly their business will survive and prosper. If they misread the signs the business
will fail and, perhaps more importantly for all of us, valuable economic resources will be
wasted.
Complete the text.
Insert an appropriate word from the list given below.
 Writing
recoup customers attracted flow reaction
stabilise trend-setters continues products provided
emerge fade reach persuade described
bound careful develop product obliged
attitude cyclical perfected tested during
queue sales economies
LIFE CYCLE
Much of the world about us is 1) ________________ in nature. The moon circles the earth
every 24 hours. The earth takes 365 ¼ days to circle the sun. The flowers in the garden bloom
in the summer 2) _____________ in the autumn die in the winter only to 3) _____________
again the following spring. In much the same way, industrial 4) ______________ have a life
cycle. The original ideas may come from either the marketing or the production side.
Interaction 5) _____________ as the market is 6) _____________ and designs are modified.
Eventually the 7) ____________ is ready for the market.
The first stage entails introducing the product to the market. No one will know about your
new wonderful creation unless we tell them about it. So this is when you are 8) __________
to spend money on advertising. One way or another you must 9) ____________ potential
customers to ‘taste your wares’. At this stage the people who buy the product are often aptly
10) _____________ as 11) _____________ or innovators. Their 12) ____________ is often,
“I’ll be one of the first ones to have this”.
At the second stage the sales grow and your organisation begins to 13) ________________
some of the expenditure incurred 14) ______________ the development stage. You also
begin to benefit from 15) _____________ of scale. Many of the people who buy the product
at this stage will be saying “I mustn’t get left behind”. A problem may 16) ______________
as sales outstrip the supplies coming from the factory, but the 17) ________________ will be
keener than ever to buy because it is obvious there is a growing demand for your product.
It is the same 18) ___________ as when you go to the cinema. If there is a long 19)
________ outside the cinema you would think it was going to be a good film. Conversely, if
there was hardly anyone in the cinema you would think it was almost 20) _____________ to
be boring.
In the third stage the product is said to 21) _____________ maturity At this time sales reach
a peak, perhaps they even 22) _____________ on a sort of plateau. People will have got used
to buying the product. There will be repeat purchases. Some will say, “We always buy these”.
However, the time will come when 23) ____________ begin to decline. Customers will be
24) ______________ to other products, perhaps 25) ______________ by competitors.
By then you should have 26) _______________ a new product which you can now introduce.
By 27) ____________________ timing of a new product you can hope to maintain a steady
28) ______________________ of revenue and profits.
BASICS OF MARKETING
VOCABULARY
Write the Lithuanian meaning for the English phrases listed
below. Then learn these phrases.
You may need them for your further discussion.
1. Long-term demand
2. Execution of marketing strategies
3. To make the consumer aware of the product
4. Products are made and services provided
5. To determine the need of the customer
6. To bring profit to the company
7. Products produced by competing companies
8. Services provided
9. To persuade people to buy
10. Prospective buyer
11. Target customer
12. To identify or anticipate a consumer needs
13. To find out what the customer wants
14. To offer some advantages over a similar product
15. Respectful attitude to the clients
16. To show the reliability of the company
17. Changes in the market conditions
18. The ability of the customer to pay
19. The volume of sales required
20. The level of market saturation
21. Prices charged by the competition
22. Channel of distribution
23. Delivery arrangements retail products
24. To justify the product costs
25. Cost-effectively available product
26. To stock a wide range of similar products
27. After-sales service
28. Wholesaler
29. Retailer
30. features and benefits
31. unique selling proposition
32. to be obliged to spend money on advertising
33. to recoup some of expenditure incurred
34. to benefit from the economy of scale
35. Sales outstrip the supplies
36. to reach maturity
37. sales reach a peak
38. people have got used to buying a product
39. there will be repeat purchases
40. sales begin to decline
41. by careful timing of a new product
42. to maintain steady flow of revenue and profits
43. products available though different channels of distribution
PRODUCT POLICY  Reading
BASICS OF MARKETING
Product we understand as goods or services that we are marketing.

The product is not just a collection of components, but includes
its design, quality and reliability.
Marketing theorists tend to give the word product a very broad meaning, using it to refer to
anything capable of satisfying a need or want. Thus services, activities, people, places,
organisations, and ideas, as well as physical objects offered for sale by retailers, can be
considered as products. Physical products can usually be augmented by benefits such as
customer advice, delivery, credit facilities, a warranty or guarantee, maintenance, after-sales
service, and so on.
Some manufacturers use their name (family name, e.g. Philips, Colgate) for all their products.
Others market various products under individual brand names,(Procter Gamble) with the
result that many customers are unfamiliar with the name of the manufacturing company. The
major producers are famous for their multi-brand strategy which allows them to compete in
various market segments, and to fill shelf space in shops, thereby leaving less room for
competitors. It also gives them a chance of getting some of the custom of brand-switchers.
Most manufactures produce a large number of products, often divided into product lines.
Most product lines consist of several products, often distinguished by brand names (a range of
toothpaste). Several different items (different sizes or models) may share the same brand
name. Together, a company’s items, brands and products constitute its product mix.
Since different products are always at different stages of their life cycles. With growing,
stable or declining sales and because markets, opportunities and resources are in constant
evolution, companies are always looking to the future, and re-evaluating their product mix..
Companies are continually developing new products to replace products whose sales are
declining and coming to the end of their lives.
Companies whose objectives include high market share and market growth generally have
long product lines (large number of items.
Companies whose objective is high profitability will have shorter lines, including only
profitable items. Yet most product lines have a tendency to lengthen over time, as companies
produce variations on existing items, or add additional items to cover further market
segments.
Additions to product lines can be the result of either length-stretching or line- filling.
The process of Line starching is to lengthen a product line by moving either up-market or
down market, making items of higher or lower quality. This can be carried out in order to
reach new customers, to enter growing or more profitable market segments, to react to
competitor’s initiatives, and so on. Yet such moves may cause image problems: moving to the
lower end of a market dilutes a company’s image for quality, while a company at the bottom
of a range may not convince dealers and customers that it can produce quality product for the
high end.
Line-filling means adding further items in that part of a product range which a line already
covers - might be done in order to compete in competitors’ niches to utilise excess production
capacity.
A total product includes the image of the product as well as its features and benefits.
 Get ready to answer these questions:  Pair-work exercises
BASICS OF MARKETING
1. What do marketing theorists tend to mean defining a product?

2. What can be considered by a product?
3. What can physical products be augmented by?
4. Why do some manufacturers market their products under individual brand names?
5. What does the multi-brand strategy allow a producer?
6. What do different items share?
7. What is a product mix constituted of?
8. What is meant by life-cycle of a product?
9. What do a company’s objectives include?
10. How can we know which company’s objectives are of high profitability?
11. What tendency do most product lines have?
12. Why do they tend to lengthen?
13. What do the additions to product line give?
14. What does line-stretching mean?
15. What does up-market (low-market) mean?
16. What does line-filling mean?
17. What are the reasons for filling the line?
 Find words or expressions in the text which mean the following:

1) the possibility of paying for a product over an extended period______________________
2) a promise by a manufacturer or seller to repair or replace defective goods during a certain
period of time_______________________________________________________________
3) a surface in a store on which goods are displayed ________________________________
4) consumers who buy various competing products rather than being loyal to a particular
brand _____________________________________________________________________
5) the standard pattern of sales of a product over the period that it is
marketed____________
6) the extent to which an activity provides financial gain_____________________________
7) possibilities of filling unsatisfied needs in sectors in which the company can produce
goods or services effectively___________________________________________________
8) the sales of a company expressed as a percentage of total sales in a given market_______
9) the set of beliefs that the public at large holds of an organisation____________________
10) a small, specialised, but profitable segment of a market __________________________
 Write what the following terms mean

Line stretching __________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Line filling __________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
 Match up the words or expressions on the left with the definitions on the right.
BASICS OF MARKETING
a) all the companies or individuals involved in moving particular

goods or service from the producer to the consumer;
b) an idea for a new product, which is tested with target
consumers before the actual product is developed;
c) attributes or characteristics of a product: quality, price,
reliability and etc.
d) dividing a market into distinct groups of buyers who have
different requirements or buying habits.
e) place where goods are sold to the public - shops, stores,
kiosks, market stalls, etc.
f) possibilities of filling unsatisfied needs in sectors in which a
company can profitably produce goods or services;
g) someone who contacts existing and potential customers, and
tries to persuade them to buy goods or services;
h) collecting, analysing and reporting data relevant to a specific
marketing situation ( such as a proposed new product;
i) to introduce a new product onto the market
j) wrappers and containers in which products are sold
1. distribution channel
2. to launch a product
3. market opportunities
4. market research
5. market segmentation
6. packaging
7. points of sale
8. product concept
9. product features
10. sales representative
 Match the words given below

with the relevant dictionary definitions: Vocabulary exercises.
mark-up turnover persuade gimmick
quotation contract diversification order
distributor inquiry invoice franchise
1) to convince or induce someone to make a purchase; ________________
2) a widening of the product range or the entering of a new markets; ________________
3) another name for the total sales figure for a business,
over a period of time; ________________
BASICS OF MARKETING
4) a request for information about a product or service prior to

the placing of an order; ________________
5) a trading agreement whereby a manufacturer supplies and supports
a retailer who sells the manufacturer’s products exclusively; ________________
6) an idea or object which is novel or unusual and has the purpose
of attracting public attention; ________________
7) a request from a customer to receive goods or services; ________________
8) the document which lists the charges being set against the buyer
and being entered on his account; ________________
9) a statement of the price at which a firm is prepared to supply
goods or services; ________________
10) the amount added to a purchase price to provide a selling price; ________________
11) a firm which deals in the goods of a specified manufacturer ________________
12) a legally binding document in which a seller and a buyer agree
to specified transactions. ________________
Learn these definitions. Be able to define the terms you have matched.
 Choose the best alternative to complete the sentences PUBLIC RELATIONS
1 The task of the Public relation department is to project the right ----------------- of a company.
a) painting b) image c) picture d) drawing
2. When the product was launched they issued a press ---------------------to all the news
agencies.
a) escape b) issue c) release d) promotion
3. A public relations officer should not knowingly --------------------------------- false
information.
a) disseminate b) dissociate c) dispose d) dissolve
4. Sponsorship can be an effective way of promoting ----------------------towards an
organisation.
a) will b) goodwill c) willingness d) goodness
5. At a press reception don’t ---------------------------------------------guests with irrelevant
material.
a) overload b) override c) overtake d) overcompensate
6. We use every ------------------------------------------ of communication to get our message
across.
a) flow b) stream c) channel d) canal
7. The use of such things as logos and colour----------------helps to maintain a corporate
identity.
a) schemes b) systems c) styles d) fashions
8. The reception must be held at a convenient ---------with good transport and parking
facilities.
a) revue b) venue c) view d) venture
9. We have to highlight our strengths and ---------------------------------------------- any
weaknesses.
a) play up b) think through c)play down d) talk back
BASICS OF MARKETING
10. Participating in local events is a good way of developing -------------------------------

relations.
a) common b) commonplace c) communal d) community
 Choose the best alternative to complete the sentences BUYING AND SELING
1. The market has reached ---------------------so we need to concentrate on finding new
products.
a) full b) saturation c) filling d) boiling
2. We have pulled down the old market and built a shopping
-------------------------------------------.
a) premises b) precinct c) franchise d) retailer
3. Often a discount is offered as an --------------------------------to get a customer to pay
promptly.
a) investment b) incentive c) interim d) inventory
4. We hope that business will ---------------------------------------------when the tourist season
starts.
a) set off b) get up c) pick up d) pick off
5. Remember that was only an -----------------------------------------. The final cost could be
higher.
a) enquiry b) estimate c) encouragement d) engagement
6. Every month account customers are sent
a-------------------------------------------------------------.
a) final demand b) statement c) request d) stocktaking
7. Check the -------------------------------------------------note and see that you have got
everything.
a) deliver b) delivery c) delivered d) delivering
8. I have just received an ----------------------note telling me that the goods have been
dispatched.
a) advice b) advise c) invoice d) advisory
 Pair-work exercises  Complete the text.

Insert the missing words from the list below
advertising aimed awareness

limited channel loyalty
maturity trial replaced
medium tactics target
promotional price
PROMOTIONAL STRATEGIES
Companies have to develop good products or services, 1) ______________ them attractively,

and make them accessible to their target customers. But this is not enough: they also have to
use various promotional tools to generate sales. According to a classification used in most
marketing text-books, advertising is only one of four standard 2) ________________tools.
BASICS OF MARKETING
The others are sales promotions, public relations, and personal selling. The basic idea behind
‘marketing concept’ - that you make what you can sell rather than sell what you make - does
not mean that your product will sell all by itself. Even a good, attractively-priced product that
clearly satisfies a need has to be made known to its 3) ________________ customers.
During the introduction and growth stages of the standard product life cycle, the producer (or
importer) has to develop product 4) _______________ i.e. inform potential customers (and
distributors, dealers and retailers) about the product’s existence, its features, its benefits and
advantages. According to the well-known ‘Four Ps’ formulation of the marketing mix
(product, place, promotion and price), this is clearly a matter of promotion. Since budgets are
always 5) _______________, marketers usually have to decide which tools - advertising,
public relations, sales promotion, or personal selling - to use, and in what proportion.
Public relations (often abbreviated to PR) are concerned with maintaining, improving or
protecting the image of a company or product. The most important element of PR is publicity
which (as opposed to advertising) is any mention of a company’s products that is not paid for,
in any 6) ________________ read, viewed or heard by a company’s customers or potential
customers, aimed at assisting sales. Many companies attempt to place stories or information
in new media to attract attention to a product or service.
Publicity can have a huge impact on public awareness that could not be achieved by
advertising, or at least not without an enormous cost. A lot of research has shown that people
are more likely to read and believe publicity than advertising.
Sales promotions such as free samples, coupons, price reductions, competitions, and so on,
are temporary 7) ______________ designed to stimulate either earlier or stronger sales of a
product. Free samples, for example, (combined with extensive advertising), may generate the
initial 8) ______________ of a new product. But the majority of products available at any
time are of course in the 9) _________________ stage of the lifecycle. This may last many
years, until the product begins to be 10) ________________ by new ones and enters the
decline stage. During this time, marketers can try out a number of promotional strategies and
tactics. Reduced price packs in supermarkets, for example, can be used to attract price-
conscious brand-switchers and also to counter a promotion by a competitor. Stores also often
reduce prices of specific items as loss leaders which bring customers into the shop where they
will also buy other goods. Sales promotions can also be 11) _____________ at distributors,
dealers and retailers, to encourage them to stock new items or larger quantities, or to
encourage off-season buying, or the stocking of items related to an existing product. They
might equally be designed to strengthen brand 12) ___________________ among retailers, or
to gain entry to new markets. Sales promotions can also be aimed at the sales force,
encouraging them to increase their activities in selling a particular product.
Personal selling is the most expensive promotional tool, and is generally only used sparingly,
e.g. as a complement to 13) _______________. As well as prospecting for customer,
spreading information about a company’s products and services, selling these products and
services, and assisting customers with possible technical problems, salespeople have another
important function. Since they are often the only person from a company that customers see,
they are an extremely important 14) ______________ of information. It has been calculated
that the majority of new product ideas come from customers via sales representatives.
 Complete the following sentences to summarise the text above.
BASICS OF MARKETING
1. When a new product is launched, the producer has to

______________________________
___________________________________________________________________________
2. Promotion is one of the four
__________________________________________________
___________________________________________________________________________
3. Sales promotions are one of the four different
____________________________________
___________________________________________________________________________
4. The advantage of publicity include
____________________________________________
___________________________________________________________________________
5. The four stages of the standard product life cycle are
______________________________
___________________________________________________________________________
6. Reasons to offer temporary price reductions
include_______________________________
___________________________________________________________________________
7. Sales promotions need not only be aimed at customer
_____________________________
___________________________________________________________________________
8. Apart from selling a company’s products, sales representatives
______________________
___________________________________________________________________________
 Discuss which of the following claims you agree with: DISCUSS
1. Advertising is essential for business, especially for launching new consumer

products.
2. A large reduction of advertising would decrease sales.
3. Advertising often persuades people to buy things they don’t need.
4. Advertising often persuades people to buy things they don’t want.
5. Advertising lowers the public’s taste.
6. Advertising raises prices.
7. Advertising does not present a true picture of products.
8. Advertising has a bad influence on children.
9. People remember advertisements not products
10. Promoting alcohol on TV is not acceptable
 Read the text given below.Find the answer for the following questions:
1. What is the best kind of advertising?  Reading
2. Why do most companies use advertising agencies?
HOW COMPANIES ADVERTISE
BASICS OF MARKETING
Advertising informs consumers about the existence and benefits of products and services, and
attempts to persuade them to buy them. The best form of advertising is probably word-of-
mouth advertising, which occurs when people tell their friends about the benefits of products
or services that they have purchased. Yet virtually no providers of goods or services rely on
this alone, but use paid advertising instead. Indeed, many organisations also use institutional
or prestige advertising, which is designed to build up their reputation rather than to sell
particular products.
Although large companies could easily set up their own advertising departments, write their
own advertisements, and buy media space themselves, they tend to use the services of large
advertising agencies. These are likely to have more resources, and more knowledge about all
aspects of advertising and advertising media than a single company. The most talented
advertising people generally prefer to work for agencies rather then individual companies as
this gives them the chance to work on a variety of advertising accounts (contracts to advertise
products or services). It is also easier for an unsatisfied company to give its account to
another agency than it would be to fire its own advertising staff.
A client company generally gives the advertising campaign, known as a brief; and an overall
advertising strategy concerning the message to be communicated to the target customers. The
agency creates advertisements (the word is often abbreviated to adverts or ads) and develops
a media plan specifying which media - newspapers, magazines, radio, television, cinema,
posters, mail, etc. - will be used and in which proportions. On television and radio, ads are
often known as commercials. Agencies often produce alternative ads or commercials that are
pre-tested in newspapers and television in different parts of a country before a final choice is
made prior to a national campaign.
The agency’s media planners have to decide what percentage the target market they want to
reach (how many people will be exposed to the ads) and the number of times they are likely
to see them. Advertising people talk about frequency or ‘OTS’ (opportunities to see) and the
threshold effect - the point at which advertising becomes effective. The choice of advertising
media is generally strongly influenced by the comparative cost of reaching 1,000 members of
the target audience, the cost per thousand (often abbreviated to CPM, using the Roman
numeral for 1,000). The timing of advertising campaigns depends on factors such as
purchasing frequency and buyer turnover (new buyers entering the market).
How much to spend on advertising is always problematic. Some companies use the
comparative-party method - they simply match their competitors’ spending, thereby avoiding
advertising wars. Others set their ad budget at a certain percentage of current sales revenue.
But both these methods disregard the fact that increased ad spending or counter-cyclical
advertising can increase current sales. On the other hand, excessive advertising is counter-
productive because after too many exposures people tend to stop noticing ads, or begin to find
them irritating. And once the most promising prospective customers have been reached, there
are diminishing returns, i.e. an ever-smaller increase in sales in relation to increased
advertising spending
 Find the terms in the text which mean the following:

1. free advertising, when satisfied customers recommend products to their friends
___________________________________________________________________________
2. advertising that mentions a company’s name but not specific products
___________________________________________________________________________
BASICS OF MARKETING
3. companies that handle advertising for clients ____________________________________

___________________________________________________________________________
4. a contract with a company to produce its advertising_______________________________
5. the amount of money a company plans to spend in developing its advertising and buying
media time and space__________________________________________________________
6. the statement of objectives of an advertising campaign that a client works out with an
advertising agency ___________________________________________________________
7. the advertising of a particular product or service during a particular period of time
___________________________________________________________________________
8. a definite set of customers whose needs a company plans to satisfy
___________________________________________________________________________
9. the people who choose where to advertise, in order to reach the right customers
___________________________________________________________________________
10. the fact that a certain amount of advertising is necessary to attract a prospective
customer’s attention __________________________________________________________
11. choosing to spend the same amount on advertising as one’s competitors
___________________________________________________________________________
12. advertising during periods or seasons when sales are normally relatively poor
___________________________________________________________________________
creative process design distribution end-user first

hire purchase image labels mail order need
outlets opportunities patterns place posters
price product production - orientated profitably promotion
range satisfy strengths threats weaknesses
 Insert the missing words given in the box above. Vocabulary exercises.
Marketing is the 1) of satisfying customer needs 2) ____
‘The marketing mix’ consists of the ‘four P’s: providing the customer with the right
3) , at the right 4) _____, presented in the most attractive
way
5) and available in the easiest way 6) _____. A
product is
something customers buy to 7) a 8) they feel they have.
The 9) __ and the 10) ______ of the product are
as important as its specification. The product is presented to the customers through
advertising
BASICS OF MARKETING
(TV commercials, 11) , etc) packaging (design, 12) ______,etc)

publicity and personal selling. Your product must be available to customers through the most
cost- effective channels of 13) _. A consumer product must be offered to
14) in suitable retail 15) __, or available on 16) ____
or by 17) __. A firm must be aware of its 18) S
______ and
18) W __ and the 19) O ___ and 20) T ____it faces
in the market place. Companies become more customer-oriented and less 21) ____.
New products must be created to meet the changing 22) of customers needs.
A firm can’t rely on the success of its existing 23) of products.
The customer and his or her needs must come 24) 
 Complete the sentences:

1.When an older man is choosing a car
___________________________________________________________________________
1. The purpose
2.The sales people in a firm
of market research is a) could be expected not to welcome the news
which manufactures pushchairs and prams that a substantial increase in the petrol tax was
___________________________________________________________________________
contemplated by the government
2.
3. Insurance
When a newcompanies
product offering
is developed b) would be encouraged by the news that the
cover against motor accidents… death rate was falling
___________________________________________________________________________
3.
4. The traffic manager for a company c) will be pleased to hear that the T
operating a cross-channel ferry…
o increase our sales we may need to Meteorological Office are predicting a severe
winter
___________________________________________________________________________
4. The Sales Manager of a firm
d) should approve of a long-term rise in oil
making hearing-aids…
5. prices T
he marketing and production
5. Oil company executives… departments
e) would benefit from a rise in property prices
___________________________________________________________________________
6. A publisher specialising in f) would be pleased to hear of a reduction in
 Join the halves of the given sentences: air fares
text books for schools…
7. The Chief Buyer g) would be grateful to learn that the school
in a large city department store… leaving age is going to be raised
8. The line workers h) would expect to be very busy after a
in a factory producing cigarettes… serious gale had swept over the city
9. The Marketing Manager of travel i) would be disappointed to learn that a new
agency specialising in holidays in France airport was going to be developed for London
k) would be dismayed to read in the news-
10. A firm of London builders and repairers
paper that the government was planning to
prohibit the sale of all products harmful to
11. A Young man who had just finished health
training to be a coal-minor… l) would react favourably to the news that
improvements were planned for the London
Underground
12. The high-street banks… m) would expect to earn more after the birth
rate has risen
BASICS OF MARKETING
 Reading
 Read the given text.

1) In most markets there is a definite market leader: the firm with the largest market share.
This is often the first company to have entered the field, or at least the first to have succeeded
in it. The market leader is frequently able to lead other firms in the introduction of new
products, in price changes, in the level or intensity of promotions, and so on.
2) Market leaders usually want to increase their market share even further, or at least to
protect their current market share. One way to do this is to try to find ways to increase the
size of the entire market. Contrary to common belief, wholly dominating a market, or having
a monopoly, is seldom an advantage: competitors expand markets and find new uses and
users for products, which enriches everyone in the field, but the market leader more than its
competitors. A market can also be expanded by stimulating more usage: for example, many
households no longer have only one radio or cassette player, but perhaps one in each room,
one in the car, plus, a Walkman or two.
3) In many markets, there is often also a distinct market challenger, with the second- largest
market share. In the car hire business, the challenger actually advertises this fact: for many
years Avis used the slogan “We’re number two. We try harder”. Market challengers can
either attempt to attack the leader, or to increase their market share by attacking various
market followers.
4) The majority of companies in any industry are merely market followers which present no
threat to the leader. Many market followers concentrate on market segmentation: finding a
BASICS OF MARKETING
profitable niche in the market that is not satisfied by other goods or services, and that offers
growth potential or gives the company a different advantage because of its specific
competencies.
5) A market follower which does not establish its own niche is in a vulnerable position: if its
product does not have a “unique selling proposition” there is no reason for anyone to buy it.
In fact, inmost established industries, there is only room for two or three major companies:
think of soft drinks, soap and washing powders, jeans or sport shoes and so on. Although
small companies are generally flexible, and can quickly respond to market conditions, their
narrow range of customers causes problematic fluctuations in turnover and profit.
Furthermore, they are vulnerable in a recession when, largely for psychological reasons,
distributors, retailers and customers all prefer to buy from big, well-known suppliers.
 Discuss: Which of the following three paragraphs most accurately summarise the text?
First summary:
In most markets there is a definite market leader, with the largest market share, which
frequently helps others to introduce new products. In many cases, there is also a market
challenger, which wants to replace the leader, and various market followers, which seek out
particular niches that do not interest the leader. Other followers merely imitate the products of
larger companies, but this is a dangerous strategy during recessions.
Second summary:
In most markets there is a leader that strongly influences other firms in the introduction of
new products, price changes, promotions, and so on. There is frequently also a market
challenger, with the second-largest market share, which can attempt to increase its market
share by attacking either the leader or some market followers. Market followers often
concentrate on profitable niche products that are in some way differentiated from the products
of larger companies.
Third summary:
The first company in a particular market nearly always becomes the market leader, a position
it will try to keep by regularly attacking distinct market challengers and followers. Most
followers can either concentrate on small market segments or niches, or follow the safer
strategy of imitating the leader’s products.
1) a company-to-company marketing
 Look quickly through the text below. 2) identifying market opportunities
Decide which paragraphs are about these subjects. 3) the marketing mix
4) the selling and marketing concept
Write the heading for each paragraph 5) the importance of market
research
1. …………………………………………………
A.) Most management and marketing writers now distinguish between selling and
marketing. The ‘selling concept’ assumes that resisting consumers have to be persuaded by
vigorous hard-selling techniques to buy non-essential goods or services. Products are sold
rather than bought. The ‘marketing concept’ , on the contrary. Assumes that the producer’s
task is to find wants and fill them. In other words, you don’t sell what you make what will be
bought. As well as satisfying existing needs, marketers can also anticipate and create new ones.
2. …………………………………………………
BASICS OF MARKETING
B) Marketers are consequently always looking for market opportunities - profitable

possibilities of filling unsatisfied needs or creating new ones in areas in which the company is
likely to enjoy a different advantage, due to its distinctive competencies (the things it does
particularly well). Market opportunities are generally isolated by market segmentation. Once a
target market has been identified, a company has to decide what goods or service to offer. This
means that much of the work of marketing has been done before the final product or service
comes into existence. It also means that the marketing concept has to be understood throughout
the company - in the production department of a manufacturing company as much as in the
marketing department itself. The company must also take account of the existence of
competitors, who always have to be identified, monitored and defeated in the search for loyal
customers.
3. …………………………………………………
C) Rather than risky launching a product or service solely on the basis of intuition or
guesswork, most companies undertake market research. They collect and analyse information
about the size of a potential market, about consumers’ reactions to a particular product or
service features, and so on. Sales representatives, who also talk to customers, are another
important source of information.
4. …………………………………………………
D) Once the basic offer has been established, the company has to think about the marketing
mix - all the various elements of a marketing programme, their integration, and the amount of
effort that a company can expend on them in order to influence the target market. The best-
known classification of these elements is the ‘4Ps’: product, place, promotion and price.
Aspects to be considered in marketing products include quality, features, style, brand name,
size, packaging, services and guarantee. Place in a marketing mix includes such factors as
distribution channels, locations of points of sale, transport, inventory size etc. Promotion
groups together advertising, publicity, sales promotion, and personal selling, while price
includes the basic list price, discounts, the length of the payment period, possible credit terms,
and so on. It is a job of a product manager or a brand manager to look for ways to increase
sales by changing the market mix.
5. …………………………………………………
E) It must be remembered that quite apart consumer markets (in which people buy products for
direct consumption) there exits an enormous producer or industrial or business market,
consisting of all the individuals and organisations that acquire goods and services that are used
in the production of other goods, or in the supply of services to others. Few consumers realise
that the producer market is actually larger than the consumer market, since it contains all the
raw materials, manufactured parts and components that go into consumer goods, plus capital
equipment such as buildings and machines, supplies such as energy and pens and paper, and
services ranging from cleaning to management consulting, all of which have to be marketed.
There is consequently more industrial than consumer marketing, even though ordinary
consumers are seldom exposed to it.
 Rearrange the following sentences and part sentences  Writing

BASICS OF MARKETING
to make up a short text about market concentration like this:
 Begin with a paragraph containing arguments both against and in favour of

monopoly.
 Continue with a paragraph defending or justifying market concentration.
 End with a paragraph arguing that monopolies are always short-lived, and so not a
problem.
1. according to this position, the government only needs to ensure that there is no monopoly
over important inputs, because there will never be a monopoly of scientific or artistic genius
or business idea;
2. according to this view, market concentration arises naturally from a few successful firms
growing larger as a result of increased efficiency, innovation, and economies of scale in
production, distribution, R&D, capital financing, and so on;
3. a counter argument is that erecting barriers - for example, process innovation, product
differentiation, persuasive advertising, or pricing policy - in order to be successful and to
make competitors less successful, is a normal part of rivalry and competition;
4. although some people argue that any barrier to competition will inevitably lead to
inefficiency;
5. an example here would be telecommunication;
6. and business facing no competition have no incentive to find ways to reduce costs;
7. even the profits made by a natural monopoly will be temporary, because they are an
incentive for entrepreneurs to discover and implement new low-cost technologies;
8. for example, although entrepreneurs introduce new products and techniques and open up
new markets, their profits are soon competed away by rivals;
9. it is right that inventors should be granted a temporary monopoly as a reward for innovation
or discovery;
10. monopolists are always able to make excessive profits;
11. some people even argue that monopolies are always temporary and consequently not a
problem;
12. the arguments against market concentration, or at least against monopoly, are obvious;
13. the only common argument in favour of monopoly concerns patents.
Market concentration
_______________________________________________________________
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BASICS OF MARKETING
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Here are two contrasting views on the role of
A CASE-STUDY advertising
as it affects our daily lives.
Which of the views do you prefer?
Against advertising
An enormous sum of money is spent every day on advertising. It is unproductive. If the
money were not dissipated, the cost of the goods to the consumers could be substantially
reduced. Work out how much is spent by television advertisers on the ‘commercial breaks’
during every single evening and you will begin to appreciate the sums involved. And this is
just one advertising medium! Somebody has to foot the bill, and that somebody is you –
through higher prices.
In normal circumstances the consumer is entitled to expect that healthy competition will keep
down the prices of the goods he buys, but when a firm spends large sums on advertising it
may be a device to restrict the entry of competitors into the market. The heavy expenditure a
competitor would have to incur to gain a share of the market acts as an effective deterrent.
BASICS OF MARKETING
By their very nature advertisements are misleading. They play on our weaknesses, our
susceptibilities, our egos and our vanities. They create a demand which would not otherwise
exist. One London confectioner keeps his shop open in the evenings and watches television in
between serving customers. Invariably he finds that within a few minutes of an advertisement
appearing on the screen, people come in and ask for the particular line of chocolates or sweets
advertised.
The dangers are indicated by some of the research which has been carried out on subliminal
advertising (reklama, veikianti pasąmonę) . There is just one frame in a roll of movie film with,
say, the word ‘coffee’ on it. This flashes on the screen during a normal programme. It appears
for such a small fraction of a second that it registers only in the viewer’s subconscious. As a
result some of the people subjected to the treatment decide to make themselves a cup of
coffee – without having any idea as to why they want a coffee at that particular time. No
wander this invidious form of brain-washing has been banned! Have you ever wondered why
some television advertisements are repeated over and over again during the course of the
same evening? It may irritate but it is certainly not accidental.
Would the world not be a better place without glaring posters fouling the landscape – without
trivial jingles and film snippets distracting us during a serious television programme –
without newspapers and magazines more than half-filled with specious advertisements/ Is
advertising not the art of persuading someone to buy something he doles not really want? Is it
not, at best, wasteful of economic resources, and at its worst unethical to the point of
dishonesty? Isn’t it an offence for a trader to make untrue statements about his goods,
services or prices?
For advertising
Society in general and the consumer in particular benefit considerably –directly or indirectly
– as a result of advertising. The typical manufacturer has to assess constantly the nature and
extent of the consumers’ needs, and generate production accordingly. If he anticipates a
grater need than there actually is, he can, through advertising, persuade the market to ‘soak
up’ the surplus goods that have been produced. He can look on advertising as a sort of
insurance policy – protecting him against his own too optimistic forecasts. If, as a result, he
tends to overproduce rather than under produce, who benefits? There are more goods than
there would otherwise be –and there are more jobs. Advertising plays the role of an industrial
lubricant.
Perhaps more important than the confidence it can give to the manufacturer is the stability
that advertising helps to bring to the industrial scene. As demand for product sags, it can be
stimulated through advertising. This allows stocks to be stabilised, the workforce to be
stabilised –and ever prices to be stabilised. Without the possibility of advertising, work-force
would have to be laid off at the first sign of flagging sales. Alternatively, prices would have
to be lowered –that would be acceptable to the consumer –but raised as sales picked up again.
Running an industrial concern with advertising ruled out would be like driving a car without
an accelerator.
Commercial television is entirely dependent upon revenue from their revenue from
advertising –either through classified advertisements or displays. Many newspapers and
magazines would not be financially viable if advertising revenues were cut off.
Advertising can also be seen as a means of communication benefit from those with goods or
services to sell and those who might benefit from those goods or services. There are many
forms of advertising, not least of which are window-displays and catalogues.
BASICS OF MARKETING
Questions for the group to consider

1) What restrictions, if any, would you impose on advertising?
2) Do any of you have criticisms or grievances regarding specific advertisements or methods
employed by advertisers?
‘Competition brings out the best in products

DISCUSS the statement:
and worst in people’ (David Sarnoff, an American business
leader)
Before you start your discussion, read the text given below.
Competition means a business relation in which two parties compete to gain customers;
"business competition can be fiendish at times.
Competitiveness is a comparative concept of the ability and performance of a firm, sub-sector
or country to sell and supply goods and/or services in a given market.
We are all familiar with competition—from childhood games, from sporting contests, from
trying to get ahead in our jobs. But our firsthand familiarity does not tell us how vitally
important competition is to the study of economic life. Competition for scarce resources is the
core concept around which all modern economics is built.
The effects of competition permeate economic life. Prices, wages, methods of production,
which products are produced and in what quantities, the size and organization of business
firms, the distribution of resources, and people's incomes all result from competitive processes
The firm wants to get as much revenue as it can, taking into account the willingness of its
customers to pay and the threat of lower offers from its rivals. The customers want to pay as
little as possible, taking into account that rival customers may outbid them. This two-sided
competition will again set a price that "clears the market."
The market-clearing price represents the lowest price that buyers of steel must pay, and the
highest price that sellers of steel can receive, each without being outbid by rivals. This
competitive process fixes the rates of all productive resources—from the prices of steel and
semiconductors to the wages of busboys and brain surgeons. At the same time that competitive
bidding fixes prices in the market, it also determines incomes and allocates goods. The low
wages earned by the busboy give him a relatively low income with which to go into the market
and purchase consumer goods.
The high wages earned by the doctor give him a relatively high income with which to purchase
goods. Naturally, the doctor will be able to buy a larger share of consumer goods than will the
preacher or busboy.
Purchases by consumers act as a kind of silent auction in which those who buy commodities
bid them away from those who do not. If we could assemble gigantic snapshots of all the food
in all the refrigerators in America, or all the furniture in all the rooms, or all cars in all the
garages, we would see how competitive bidding allocates consumer goods.
The same kind of allocation occurs with producer goods. Automobile makers want steel for
engines and auto bodies. Appliance manufacturers want it for washers, dryers, and
refrigerators. Construction firms want it for reinforcement bars. Businessmen in all these
industries compete for steel by placing orders to the manufacturers. Their purchases channel
steel into its various uses in the economy. And what is true for steel is true for all resources
used in production.
BASICS OF MARKETING
Competition acts as both stick and carrot in economic life. If the worker does not keep his
hands to the machine, his employer will replace him. If the employer does not treat his
employee as well as other employers would, the employee quits and goes somewhere else. If
the manufacturer does not run his shop efficiently, his customers will go where they can find
better service at the same price or equal service at a lower price. All of us, as producers, are
subject to replacement by those who are able and willing to do the job better or cheaper.
On the other side, if we do our jobs well, we are more likely to be rewarded. The successful
manufacturer draws in more customers and increases his revenues. The productive worker
moves up to higher wages and more responsibility. The incentives created by competition—or
not created because of the lack of it—reveal themselves in the attitudes and activities of
producers. Compare the listless indifference of the postal worker to the speed and efficiency of
the United Parcel Service driver. Look at the shoddy workmanship in Eastern European goods
as compared to their Western European counterparts. Now that firms in the two parts of
Germany can openly compete, the Wartburg and Trabant have lost out to Opel and
Volkswagen. Because producers are freer to compete by offering better products and
employees freer to compete by working harder, competent work is better rewarded in market
economies than in planned or bureaucratic ones.
The carrot of successful market competition takes the form of profits. By introducing new
goods, new technology, or new forms of organization, or by finding new markets or new
sources of raw material, entrepreneurs can earn profits. The lure of profits inspires alertness,
creativity, judgment, and risk taking. Similarly, workers who perform better will, all other
things being equal, get bigger raises and more promotions.
The competitive process is governed by rules that, taken collectively, we call the market
economy or the system of private property. This system recognizes the right of each person to
use his property as he sees fit, and to keep the fruits of his labor. This leaves the worker free to
pursue the occupations for which he thinks himself best suited. It leaves the entrepreneur free
to explore new forms of production.
Despite its importance to modern economic life, competition is not the be-all and end-all of
economic activity. The modern market economy is as much a system of cooperation as it is a
system of competition. Within the family and within the firm, between the customer and the
supplier, we cooperate to achieve our ends. This cooperation is as vital as competition to a
productive economy.
From the article of by Jack High, a professor of economics at George Mason University.

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BASICS OF MARKETING

Marketing is the creation of long-term demand, while

 Complete the following definition of marketing. Vocabulary exercises.

 Match the verbs with the nouns they might go with

 Make compound nouns from the list given below

The first noun The second noun Your compound noun

THE MARKETING CONCEPT

PRODUCT we understand it as the goods or services that we are marketing.

 Consider the answers for these questions:  Pair-work exercises

 Chose the best alternative to complete the sentences: Vocabulary exercises.

Read the text given below.  Reading

Product we understand as goods or services that we are marketing.

 Get ready to answer these questions:  Pair-work exercises

1. What do marketing theorists tend to mean defining a product?

 Find words or expressions in the text which mean the following:

 Write what the following terms mean

a) all the companies or individuals involved in moving particular

 Match the words given below

4) a request for information about a product or service prior to

10. Participating in local events is a good way of developing -------------------------------

 Pair-work exercises  Complete the text.

advertising aimed awareness

Companies have to develop good products or services, 1) ______________ them attractively,

 Complete the following sentences to summarise the text above.

1. When a new product is launched, the producer has to

 Discuss which of the following claims you agree with: DISCUSS

1. Advertising is essential for business, especially for launching new consumer

 Find the terms in the text which mean the following:

3. companies that handle advertising for clients ____________________________________

creative process design distribution end-user first

(TV commercials, 11) , etc) packaging (design, 12) ______,etc)

 Complete the sentences:

 Read the given text.

B) Marketers are consequently always looking for market opportunities - profitable

 Rearrange the following sentences and part sentences  Writing

to make up a short text about market concentration like this:

 Begin with a paragraph containing arguments both against and in favour of

Questions for the group to consider

‘Competition brings out the best in products

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