Chapter One

An Overview to Marketing
Management

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 1.1 Marketing concepts and tools
Contents to be covered are:
•Definition of marketing
•What is Marketed?
•Who Markets?
•Why marketing?
•Core Marketing Concepts
•Marketing management
•Marketing Management Philosophies

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 What is Marketing?
Selling?
Advertising?
Promotions?
Making products available in stores?
Maintaining inventories?
All of the above, plus much more!
• Marketing is the process of planning, pricing, promotion,
and distribution of ideas, goods, services to create
exchanges that satisfy individual and organizational goals
• is about identifying and meeting human and social needs.
• is “meeting needs profitably- shortest definitions
•
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 Who markets?
Marketers:
• is someone who seeks a response—attention, a
purchase, a vote, a donation—from another party, called
the prospect.
• If two parties are seeking to sell something to each
other, we call them both marketers.

•Goods (products), Services, Events, Experiences,

Places, Information, Idea etc. can be marketed

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 Markets
• Traditionally, a “market” was a physical place
where buyers and sellers gathered to buy and
sell goods.

• Economists describe a market as a collection

of buyers and sellers who transact over a
particular product or product class (such as the
housing market or the grain market).

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 Market----------------

• Marketers use the term market to cover various groupings

of customers.

• They view sellers as constituting the industry and buyers as

constituting the market.

• They talk about need markets (the diet-seeking market),

product markets (the shoe market), demographic markets
(the youth market), and geographic markets (the Chinese
market); or they extend the concept to cover voter markets,
labor markets, and donor markets)
• Marketing system see the next two figures----------

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 Market-places, Market-space
• Market-place is physical, such as a store you shop in
• Market-space is digital, as when you shop on the Internet

Why Marketing?

The importance of marketing can be judged from the following

points:

1. Marketing Creates Utility

Together with production marketing supply different economic
utility that provide customer satisfaction.

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 Why Marketing? ---
These are:
• Form Utility: is related to the change of form of inputs to
convert them in output. Production of something tangible.

• Place Utility: The role of distribution in marketing is mostly

attached with creating place utility

• Time Utility: It is created when products are available to

customers, as they want them

• Possession Utility: As selling is one major activity in

marketing, it creates possession utility by selling the products
to the customers. (transfer of ownership)
2. Marketing is Important Personal life
– Through marketing activates individuals may get many befits
such as knowledge & how and what to buy that is information
about products, so that can live good standard of life or save
money!

3. Marketing is Important to the Firm

• It is still the only revenue-generating department. It is the only
function through which a firm collects money from others. The
other functions incur cost.
4. Marketing affects standard of living and economic growth
• It encourages research and innovation to better satisfy
customers need.
- Competition drives price down.
- New goods, services and ideas that better
satisfy the need.
-employment opportunities and carrier
development for large number of people and they can acquire
higher income.
5. Marketing is Important to the World Economy
• Global (international) marketing facilitates the movement of
goods and services and factors of production from one part of
the world to the other and hence plays a great role in resources
redistribution across the globe.
 Discuss in group

1) What are potentially marketed?

2) Information, place and events are some of the things

that can be marketed. Do you agree or disagree?
Discuss by giving examples

3) List and discuss at least four importance of

marketing (Why marketing?)
 Core Marketing Concepts
• To understand the marketing function, we need to
understand the following core set of concepts.
 Needs, wants, and demands
 Products and services
 Value, satisfaction and quality
 Exchange, transactions, and relationships
 Core Marketing Concepts
Needs:
• The most basic concept underlying marketing is that of human
needs.

• Human needs are states of felt deprivation.

• Human have many complex needs:

– Physical needs for food, clothing, warmth, and safety
– Social needs or belonging and affection
– Individual needs for knowledge and self – expression

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 Core Marketing Concepts
Wants

•Want are the form taken by human needs as they are

shaped by culture and individual personality.
•People have almost unlimited wants but limited
resources.
•They want to choose products that provide the most
value and satisfaction for their money

•I need food. I want burger

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 Core Marketing Concepts

Demands:
• When backed by buying power, wants for specific product
become demands.

• Consumers view products as bundles of benefits and choose

products that give them the best bundle for their money.

• The different categories of demand states are possible that

marketers are required to understand and manage:

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 Products and Services

Product:
• Anything that can be offered to a market to satisfy a need or
want.
• The concept of product is not limited to physical objects –
anything capable of satisfying a need can be called a product.
Services:
• In addition to tangible goods, products also include services,
which are activities or benefits offered for sale that are
essentially intangible and do not result in the ownership of
anything.

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 Values, Satisfaction, and Quality
Values:
• Customer value is the difference between the values the customer gains
from owning and using a product and the costs of obtaining the products.
• Customers often do not judge product value and costs accurately or
objectively. They act on perceived value.

• Value = Benefits / Costs =(Functional benefits + Emotional benefits)

/(Monetary costs + Time costs + Energy costs +Psychic costs)
.

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 Values, Satisfaction, and Quality
Satisfaction:
• Customer satisfaction depends on a product’s perceived performance in
delivering value relative to a buyer’s expectation.
• If the product’s performance falls short of the customer’s expectations, the
buyer is dissatisfied.
Quality:
• Customer satisfaction is closely linked to quality.
• Quality has a direct impact on product performance.
• Quality can be defined as “freedom from defects”.
• TQM programs designed to constantly improve the quality of products,
services, and marketing processes

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 Exchange and Relationships

Exchange :
• The act of obtaining a desired object from someone by
offering something in return

Relationship marketing :
• The process of creating, maintaining, and enhancing strong,
value – laden relationships with customers and other
stakeholders

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 Discuss on the following concepts

1) Need, wants and demand

2) Value, satisfaction and quality

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 Marketing Management
• The analysis, planning, implementation, and control of
programs designed to create, build, and maintain beneficial
exchanges with target buyers for the purpose of achieving
organizational objectives.

• The art and science of choosing target markets and

getting, keeping, and growing customers
through creating, delivering, and communicating
superior customer value.

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 Marketing Management Involves:
• Demand Management : The organization has a
desired level of demand for its products. At any point
in time, there may be no demand, adequate demand,
irregular demand, or too much demand, and
marketing management must find ways to deal with
these different demand states.

• Building Profitable Customer Relationships :

Beyond designing strategies to attract new customers
and create transactions with them, companies now are
striving to retain current customers and build lasting
customer relationships.

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 MARKETING MANAGEMENT PHILOSOPHIES

• The role that marketing plays within a company varies

according to the overall strategy and philosophy of each firm.
• There are five alternative concepts/orientations under which
organizations conduct their marketing activities:
 Production concept
 Product concept
 Selling concept
 Marketing concept
 Societal marketing concepts

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 PHILOSOPHIES-----

1. The production Concept

- The production concept is oldest orientation which holds that
consumers will favor products that are widely available and
low in cost.
- Conditions under which the assumption holds true:
- When demand for a product is greater than its supply
- When unit cost of the product is high.
Mangers of production oriented organizations concentrate on
achieving:
– high production efficiency
- wide distribution coverage
 PHILOSOPHIES------

2. The product concept: it holds that consumers will

favor those products that offer the most quality,
performance or innovative features.

- Mangers of these companies pay attention to produce

superior quality products and improving it over time
- They will suffer from marketing myopia i.e. to give
more attention to their products with out considering
consumers’ interest.
 PHILOSOPHIES------

3. Selling concept
• This concept assumes that consumers typically show buying
inertia or resistance and they will not buy enough of the firm’s
product unless extensive promotions made, and large scale
selling goes or (aggressive selling and promotional effort
undertaken)
• The concept is practically true with unsought products
- Example: insurance/blood donation
• When firms face overcapacity
• The selling concept states that firms sell what they make
instead of making what is actually wanted in the market:
 PHILOSOPHIES----------

4. The marketing concept

• It holds that achieving organizational goals depends on
determining the needs and wants of target markets and
delivering the desired satisfactions more effectively then
competitor do.

• There are four pillars under which marketing concept

operate:
1. Target market: Companies must define their target market
carefully and prepare a tailored marketing program.
 PHILOSOPHIES------

2. Customer Needs: The key to this philosophy is to fully

understand their customers real needs and meet them better
than the competitor.
3. Integrated Marketing: It means that all the different
functions of the business must be tightly integrated to serve
the interest of the customer as every function has a bearing
on it.
4. Profit making by satisfying customers
• The ultimate purpose of the concept is to help organizations
achieve their goals.
Comparison of the selling and marketing concepts

Starting Focus Means Ends

Point
Selling Factory Exiting Selling and Profit through
products promoting sales volume
Concept

Marketing Market Customer Integrated Profit through

Concept needs marketing customer
satisfaction
 PHILOSOPHIES --------
5. The social Marketing Concepts
• It holds that the organization task is to determine the
needs, wants, and interests of target market so as to
deliver superior quality or value

• It questions whether the pure marketing concept

overlooks possible conflict between consumer short-
run wants and consumer long-run welfare.

• It maintains the balance between the society ( human

welfare), consumer (wants satisfaction) and company
( profits)