1.1.1.

Definition of Marketing
Chapter 1: Overview of Marketing
• 1.1. Key concepts and definitions
• 1.1.1. Definition of marketing American Marketing Association (1985):
• 1.1.2. Nature of marketing
• 1.1.3. Related concepts • the process of planning and executing the
• 1.2. Evolution of marketing and marketing concepts conception, pricing, promotion, and distribution
• 1.2.1. Evolution of marketing of ideas, goods, and services to create
• 1.2.2. Core Marketing concepts
• 1.3. Objectives and functions of marketing exchanges that will satisfy individual and
• 1.3.1. Objectives of marketing organizational objectives.
• 1.3.2. Functions of marketing
• 1.4. Marketing strategies, marketing mix decisions and
marketing plans
• 1.4.1. Marketing strategies
• 1.4.2. Marketing mix decisions
• 1.4.3. Marketing plans

1.1.1. Definition of Marketing 1.1.1. Definition of Marketing

American Marketing Association (2007):
• Marketing is the activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings that have
value for customers, clients, partners, and
society at large.
Kotler (1976):
• human activity directed at satisfying needs
and wants through exchange processes
Kotler & Armstrong (2012):
• the process by which companies create
value for customers and build strong
customer relationships to capture value
from customers in return.

1.1.1. Definition of Marketing

1.1.2. Nature of Marketing
The Marketing Process
• Understand the marketplace and customer
• Marketing is a process...
wants and needs • Marketing means carrying out
• Design a customer-driven marketing strategy market research in order to
• Construct a marketing plan that delivers superior discover needs...
value
• Marketing helps companies to
• Build profitable relationships and create
customer satisfaction satisfy customers’ needs...
• Capture value from customers to create profits • Marketing helps companies to
and customer equity obtain optimum profits...

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 1.1.3 Related concepts Maslow’s Hierarchy of Needs
Needs are states of felt deprivation.
– Basic part of human being
5. Self-
actualization
– Not created by marketers (self-development,
self fulfilment)
– The core idea of Marketing is satisfying human
needs 4. Esteem needs
(self-esteem, recognition)
3. Social needs
(sense of belonging, love)
2. Safety needs
(security, protection)

1. Physiological needs
(food, clothing, shelter)

Conclusions of Maslow’s
1.1.3. Related concepts
Hierarchy of Needs
• Human needs develop from low to high, from Wants: The form human needs take
simple to complicated as they are shaped by culture and
• When low hierarchy needs are satisfied, customers individual personality
will have high hierarchy needs
– Described in terms of specific objects that will
• The satisfied need level of everybody is different
satisfy needs
from the others
– Shaped by one’s society

1.1.3. Related concepts 1.1.3. Related concepts

Demands: Human wants that are
backed by buying power
– Specific things will be purchased by human
being
– People will demand products that provide
them most value and satisfaction
– Choices of products depend on people’s
resources (i.e., income)
Product: anything that is offered to the
market for sale or consumption.
Market offerings:
– Some combination of products, services,
information, or experiences offered to a market
to satisfy a need or want.
– Also include persons, places, organizations,
information, and ideas.

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 1.1.3. Related concepts Conditions of exchange

• Needs are satisfied by exchange For an exchange to occur:

processes.
• Exchange is the act of obtaining a
desired object from someone by offering
something in return.
• Marketing is based on product and value
exchange.
• There are at least two parties.
• Each party has something that might be of value
to the other party.
• Each party is capable of communication and
delivery.
• Each party is free to reject the exchange offer.
• Each party believes it is appropriate or desirable
to deal with the other party.

Exchange and Transactions

1.1.3. Related concepts
Transaction: A trade of values between
two parties
• Transaction is measurement unit of
exchange
• One exchange can be divided into many
transactions
A) Exchange is a value-creating process
because it normally leaves both parties better off.
B) A transaction is a trade of values between two
or more parties and involves several dimensions:
1) At least two things of value.
2) Agreed upon conditions.

3) A time of agreement.

4) A place of agreement.

1.2.1. Evolution of marketing Traditional marketing & modern marketing

Traditional marketing (early 20th cent. – 1950’s)

History of AMA: Early 1900’s
Advertising & Target:
• 1937 - American Marketing Association Organization Products
selling Consumption

(AMA) created
• Diffusion of marketing practices to Modern marketing (late 1950’s - early 1960’s)

Vietnam: Early 1990’s Needs Marketing-mix

Customer

Target: Customer’s
Satisfaction satisfaction

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 1.2.2. Marketing management
orientations Production Concept (1)
Evolution of marketing management orientations
Philosophy: Consumers will favor
products that are available and

Production Product Selling Marketing

Societal highly affordable
Marketing
Focus: Improving production and
concept concept concept concept
Concept

distribution efficiency

1930 1960 1980 Time

Core ideas of the concepts?

Production Concept (1) Product Concept (2)

Disadvantage:  Philosophy: Consumers will favor products that

offer the most quality, performance, and
– May have a risk of focusing too narrowly
on their own operations & losing sight of features
the real objective: satisfying customers’  Focus: Improving product attributes like
needs quality, performance and innovative features
 Disadvantage:
Conditions:
– Assume that all customers like certain
– Demand > Supply attributes
– Product’s cost is too high

Selling Concept (3) Selling Concept (3)

Philosophy: Consumers will not buy
enough of the firm’s products unless it Disadvantage:
– May create negative image of the organization
undertakes a large-scale selling and or the product
promotion efforts – Focus on creating sales transactions rather
than on building long-term, profitable customer
Focus: Aggressive selling teams relationships
and promotion efforts Conditions:
– Over capacity
– Suitable for unsought goods

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 Marketing Concept (4)
Marketing Concept (4)
 Focus:
– Understanding the targeted customer
 Philosophy: Achieving organizational goals depends
on knowing the needs and wants of target – Customer satisfaction
markets and delivering the desired satisfactions – Co-ordinated marketing
better than competitors do. – Business profitability

Selling and Marketing Concepts Societal Marketing Concept

Contrasted
Philosophy: a company should make good
marketing decisions by considering
Starting point Focus Means Ends

Selling &
consumers’ wants, the company’s
Existing Profits through sales
Factory
products promoting volume requirements, consumers’ long-
The Selling Concept term interests, and society’s long-
run interests.
Market Customer Integrated Profits through customer
needs marketing satisfaction

The Marketing Concept

Source: Kotler & Armstrong, 2012

Societal Marketing Concept 3 considerations of the

Societal Marketing Concept
Focus: Beside fufilling the customers’ SOCIETY
needs at a profit, the organization must (Human Welfare)

contribute to the society, e.g. CSR

Today
activities - participate in Charity
programs, support the green movement
Before 1970
or Social business. Before 2nd world
war

CONSUMERS COMPANY
(Want Satisfaction) (Profits)

Source: Kotler & Armstrong, 2012

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 1.3.1. Objectives of marketing 1.3.1. Objectives of marketing
• Competitive advantage: The set of
• Sales revenues & profits unique features of a company and its
• Competitive advantage products that are perceived by the target
market as significant and superior to the
• Business safety
competition.
• 3 types:
Which objective is the most important?

1.3.2. Functions of marketing 1.4.1. Marketing strategies

• Analysis: Analyze marketing environment & do
market research
• Planning: Anticipate future events & determine
marketing strategies to achieve organizational objectives
• Implementing: Implement marketing strategies &
coordinate marketing activities
• Controlling: Control, evaluate the results & take
corrective action
Perreault et al. (2010):
• “A marketing strategy specifies a target market
and a related marketing mix. It is a big picture of
what a firm will do in some market. Two
interrelated parts are needed:
1. A target market – a fairly homogeneous
(similar) group of customers to whom a
company wishes to appeal
2. A marketing mix – the controllable variables
the company puts together to satisfy this target
group.

1.4.2. Marketing mix decisions MARKETING MIX

Marketing Mix
• The marketing mix is the set of tools (four Marketing Mix
Quality
Ps) the firm uses to implement its marketing Features Distribution
channel
strategy: Design
Packaging Wholesaling
– Product Brand name Retailing
Guarantee... Stock
– Price Transportation…
Place
– Place Product

– Promotion Advertising
Targeted market Sales Promotion
Mix pricing Public Relations
Discount
• For a services firm: 7 Ps (4Ps + People, Price
Personal selling
Price Direct marketing…
Process, Physical evidence) change.. Promotion

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 1.4.2. Marketing mix decisions 1.4.3. Marketing plans
Robert Lauterborn suggests that the Planning:
sellers’ 4Ps correspond to the -The development of strategic and marketing plans
customers’ 4Cs: to achieve the company’s objectives.
4Ps 4Cs
Product Customer solution Marketing planning:
-The process of assessing opportunities and
Price Customer cost resources, determining objectives, defining
Place Convenience strategies, and establishing guidelines for
implementation and control of the marketing
Promotion Communication program.

Contents of a marketing plan

1.4.3. Marketing plans 1. Executive Summary

Marketing plan: 2. Market Situation Analysis

-A written document that acts as a 3. SWOT Analysis

guidebook of marketing activities for the
marketing manager. 4. Specification of
The Traditional Marketing Objectives
Marketing Plan
5. Formulation of
Marketing Strategies
(Target market & Marketing Mix)

6. Preparation of Action
Programs and Budgets

7. Development of Control
Procedures
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