Chapter 1

CHAPTER 1
Defining Marketing Management

Learning Outcomes
After studying this chapter, you should be able to:
❑Explain the role of marketing and its importance.

❑Define marketing and marketing management.
❑Describe the core concepts of marketing.
❑Explain the marketing orientations of a firm.
❑Outline the differences between marketing and sales.
❑Describe the marketing management process.
ORS Marketing Management (Second Edition) All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2016 1– 3
Introduction
Marketing plays an important role in an

organization’s achievements and success
stories
One example would include Apple iPhone as

the leading brand name in the smart phone
market, beating out others and undeniably the
credit goes to their brilliant marketing
strategies.

The role of marketing and
its importance
❑Marketing deals with the demand aspects of the

organization.
❑ Marketing drives the existence of the organization.

Contributions of marketing to
society
Maximizing
Maximizing
customer
consumption
satisfaction
Maximizing quality
Maximizing choice
of life

The definition of marketing
❑ ‘The management process responsible for identifying,

anticipating, and satisfying customer requirement
profitably’(CIM, 2009).
❑ ‘The activity, set of institutions, and processes for creating

communication, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large’
(AMA,2013).

The definition of marketing
(cont.)
❑ ‘A societal process by which individuals and groups obtain

what they need and want through creating, offering and freely
exchanging products and services of value with others’ (Kotler
& Keller, 2012).
All definitions emphasize:
─marketing as a process and activity which satisfies customers’

requirements or needs by offering something of value to them,
and in return, companies earn something of value which is profit.

What entities are marketable?
❑ Products are entities that are marketable. It is a need-satisfying

offering of a firm to the market for the individual’s attention,
acquisition, use & consumption.
A “good” is a tangible product
Non tangible product forms –

services, experience, information, places, events, ideas, activities
and organization

Whose needs and wants are
fulfilled?
Consumer Business
market market
Government Reseller
market market
International
market

Who fulfils the market needs?
❑ A physical market like a night market or a wet market is called

a market place.
❑ The online market is where marketers take orders from

customers who are thousands of miles away through the
Internet. Then the products are mailed and payments are done
through credit cards. No physical contact is ever made.

Basic concepts of marketing
- Needs
❑ Human need is a requirement for something necessary in a
person’s life.
Types of needs:
─ Stated need, e.g. ‘I want a simple mobile phone.’
─ Real need, e.g. ‘I want a mobile phone with many features but is
not highly priced.
─ Unstated need, e.g. ‘I want the seller to explain to me how to

use the smart phone’s features until I am capable of using it
on my own.’
- Needs (cont.)
─ Delight need, e.g. ‘I want the seller to give me high trade-in

value for my old mobile phone.’
─ Secret need, e.g. ‘I want my friend to think that I am an extra

smart consumer.’

- Wants
❑ Wants are influenced by culture and individual

personality.
❑ A hungry person in the United States may want a beef burger

and a glass of orange juice for lunch, but a hungry person in
Malaysia may be satisfied only if they can have a plate of
chicken rice and a glass of lime juice.

- Demand and Offerings
❑ Demand
Demand is a person’s want supported by the buying power.
❑ Offerings
Offerings are benefits from the value given by organizations to the
customers. These benefits can be a mix of products, services,
experiences, and information. Offerings could include after-sales
service, training, installations, product warranties, etc.

Basic concepts of marketing -
Value
How do consumers pick a product among the many choices of
offerings available?
❑ Value is the difference between the perceived benefits that a

person gains from a product and the costs incurred in obtaining
the product.
❑ Customers measure the perceived benefits versus costs.
❑ The costs may not just be monetary costs from fare charges or
petrol costs but also emotional costs and psychological costs.

Basic concepts of marketing -
Satisfaction
Satisfaction is the difference between a buyer’s perceived

performance of a product in delivering value relative to the buyer’s
expectations before the product is purchased.
❑ If perceived performance < buyer expectations = dissatisfied

buyer
❑ If perceived performance = buyer expectations = satisfied buyer
❑ If perceived performance > buyer expectations = delighted buyer

- Exchange
Exchange
The act of returning something of value to someone who has
offered you something you desire.
For an exchange to occur, five conditions must be satisfied

(Lamb et. al., 2010):
❑ There is a minimum of two parties.
❑ Each party has something valuable to offer to the other.
❑ Each party is able to communicate and pass the needed
product to the other party.
❑ Each party is free to accept or decline the offer from the other
party.
❑ Each party is interested to deal with the other party.

- Transaction
Transaction
❑ In a transaction, when person A gives X to person B,

person A should get Y in return.
❑ Cash (monetary transaction) or goods (barter transaction)

may be involved.

- Relationship
Relationship
❑ Relationship is the bond between a customer and the product

or the producer of the product.
❑ Relationship marketing builds on the idea of long-term

relationships between marketers and their customers,
suppliers and distributors based on mutual benefits.

- Relationship (cont.)
❑ Through relationship building, marketers will be able to gain

from:
─ Increase in customer loyalty.
─ Increase in customer lifetime value.
─ Increase in share of customer.

Marketing Orientation Application
Societal Holistic
Product Selling Marketing
Production Marketing Marketing
Concept Concept Concept
Concept Concept

(cont.)
Marketing Orientations:
❑ Production Concept
─ Producers concentrate on producing and distributing at a lower cost
by mass-producing products.
─ This orientation is applicable when the demand for a product is
greater than the supplies of the product.
❑ Product Concept
─ The product concept holds that consumers will buy products that
offer the most quality, performance and features.
─ This orientation is suitable when the market is highly competitive
and there are many similar products in the market.
(cont.)
❑ Selling Concept
─ This orientation is useful when supply of goods exceed
demand and for unsought products like encyclopedias and
funeral plots.
❑ Marketing Concept
─ The concept holds that organizations must determine the
needs of its customers.
─ Three basic features of this concept are customer
satisfaction, coordinated efforts by every unit in the
organization, and emphasis on long-run profit goals.

(cont.)
❑ Societal Marketing Concept
─ This concept not only focuses on customer satisfaction but also
impact of the products on the society.
❑ Holistic Marketing Concept

─ Holistic marketing recognizes that ‘everything matters’ with
marketing—the consumer, employees, other companies,
competition as well as the society as a whole.
The four components of holistic marketing are:

─ Relationship marketing
─ Integrated marketing
─ Internal marketing
─ Performance marketing
Differences between sales and
marketing concepts
Differences Sales concept Marketing concept
Firms start activities after products Firms begin their activities from a
Starting Point are produced and focus on the target market based on market
employees’ abilities to sell research.
The firm focuses on existing The firm focuses on a specific

Focus products and how to sell them. target markets in mind.
Firm’s business A sales-oriented photocopier Defines its business in terms of

company defines itself as a how it fulfils customers’ needs.
photocopier producer. The firm
sees itself as involved in producing
photocopiers only.
Firm’s goals and The goal is to make profits through The goal is to make profits by
satisfying customers who become
primary method higher sales volume. loyal and will repeatedly buy
products from the firm.

What is marketing management?
Process of embracing the marketing concept, and applying marketing strategies and
techniques in managing an organization’s resources and activities.


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Defining Marketing Management

After studying this chapter, you should be able to:

❑Explain the role of marketing and its importance.

ORS Marketing Management (Second Edition) All Rights Reserved

Marketing plays an important role in an

One example would include Apple iPhone as

ORS Marketing Management (Second Edition) All Rights Reserved

❑Marketing deals with the demand aspects of the

❑ Marketing drives the existence of the organization.

ORS Marketing Management (Second Edition) All Rights Reserved

ORS Marketing Management (Second Edition) All Rights Reserved

❑ ‘The management process responsible for identifying,

❑ ‘The activity, set of institutions, and processes for creating

ORS Marketing Management (Second Edition) All Rights Reserved

❑ ‘A societal process by which individuals and groups obtain

All definitions emphasize:

─marketing as a process and activity which satisfies customers’

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Products are entities that are marketable. It is a need-satisfying

A “good” is a tangible product

Non tangible product forms –

ORS Marketing Management (Second Edition) All Rights Reserved

ORS Marketing Management (Second Edition) All Rights Reserved

❑ A physical market like a night market or a wet market is called

❑ The online market is where marketers take orders from

ORS Marketing Management (Second Edition) All Rights Reserved

─ Stated need, e.g. ‘I want a simple mobile phone.’

─ Unstated need, e.g. ‘I want the seller to explain to me how to

─ Delight need, e.g. ‘I want the seller to give me high trade-in

─ Secret need, e.g. ‘I want my friend to think that I am an extra

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Wants are influenced by culture and individual

❑ A hungry person in the United States may want a beef burger

ORS Marketing Management (Second Edition) All Rights Reserved

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Value is the difference between the perceived benefits that a

❑ Customers measure the perceived benefits versus costs.

ORS Marketing Management (Second Edition) All Rights Reserved

Satisfaction is the difference between a buyer’s perceived

❑ If perceived performance < buyer expectations = dissatisfied

❑ If perceived performance = buyer expectations = satisfied buyer

❑ If perceived performance > buyer expectations = delighted buyer

ORS Marketing Management (Second Edition) All Rights Reserved

For an exchange to occur, five conditions must be satisfied

ORS Marketing Management (Second Edition) All Rights Reserved

❑ In a transaction, when person A gives X to person B,

❑ Cash (monetary transaction) or goods (barter transaction)

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Relationship is the bond between a customer and the product

❑ Relationship marketing builds on the idea of long-term

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Through relationship building, marketers will be able to gain

─ Increase in customer loyalty.

─ Increase in customer lifetime value.

─ Increase in share of customer.

ORS Marketing Management (Second Edition) All Rights Reserved

ORS Marketing Management (Second Edition) All Rights Reserved

ORS Marketing Management (Second Edition) All Rights Reserved

❑ Holistic Marketing Concept

The four components of holistic marketing are:

The firm focuses on existing The firm focuses on a specific

Firm’s business A sales-oriented photocopier Defines its business in terms of

ORS Marketing Management (Second Edition) All Rights Reserved