Wel come

To
Principles of Marketing Course
 Chapter one– Understanding Marketing
Management

At the end of this Chapter, you would be able to:

Define marketing

Explain the importance of marketing

Describe the scope of marketing

Comprehend the fundamental concepts of marketing

Marketing Thoughts/evolution

Grasp the undergoing changes in marketing management

2 January 10, 2021

 Marketing
What is Marketing ?
Importance & scope of Marketing
Its Relationship with other disciplines
Definitions – Others, AMAs & Kotler
Terminologies- need, want, demand, exchange ,
transaction ….
Marketing pillars /mixes /strategies : 4, 7, 11+
Marketing philosophies/ Marketing orientations
/Evolution/stages in Marketing dev’t- 5 +

3 January 10, 2021

 1.1. Definition of Marketing

Definitions of marketing by different authors:

 The performance of business organizations that directs the
flow of goods and services from producers to consumers or
users in exchange of some thing of value or profit.
 Marketing is getting the right goods and services to the
right people at the right place at the right time at the right
price with a right communication and promotion”.
 The process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational objectives.”
(American Marketing Association).
 AMA () Social & managerial process ---------
Kotler () the process of C , C & D V to a T @ a P
4 January 10, 2021
 Definition of Marketing-Cont’d
 Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating, offering and exchanging products of
value with others.
(A social definition shows the role of marketing that it
plays in society. For instance: to deliver “a higher
standard of living.”)
The above definitions implies basic marketing concepts.
the core concepts like needs, wants and demands.
Similarly the concept of products (goods, service and
idea), value, cost and satisfaction, exchange and
transactions relationships and networks markets and
marketers and prospect
5 January 10, 2021
 Definition of Marketing Contd.
Marketing is managing profitable customer relationships.
Attract new customers by offering superior value and retaining
customers by delivering satisfaction..
Walmart: Always low price.

 Marketing management is the art and science of

choosing target markets and getting, keeping, and

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

6 January 10, 2021

1.2 Basic concepts of Marketing

1.2.1. NEEDS, WANTS AND DEMANDS

 A human need is a state of felt deprivation of some basic
satisfaction
 They exist in the very nature of human biology and the human
condition
 These needs are not created by society or by marketers.
 Wants are desire for specific satisfiers of needs
 they are shaped by culture and responsibility
 Demands are wants for specific products that are backed by
an ability and willingness to buy them.
 Companies must therefore measure not only, how many
people wants their products more importantly how many
would actually be willing and able to buy it.
7 January 10, 2021
1.2 Basic concepts of Marketing

1.2.1. NEEDS, WANTS AND DEMANDS

 A human need is a state of felt deprivation of some basic
satisfaction
 They exist in the very nature of human biology and the human
condition
 These needs are not created by society or by marketers.
 Wants are desire for specific satisfiers of needs
 they are shaped by culture and responsibility
 Demands are wants for specific products that are backed by
an ability and willingness to buy them.
 Companies must therefore measure not only, how many
people wants their products more importantly how many
would actually be willing and able to buy it.
8 January 10, 2021
 Examples for Need, want and Demand
Needs – is a perceived lack of something.
Ex: I am thirsty

Wants - form that a human need takes as shaped by

culture and individual personality. i.e. I want a Coca-
Cola.
Demands - human wants backed by buying power. i.e.
I have money to buy a Coca-Cola.
 Wants become demands when the potential customer
also has the means to pay for the product.
 The demand for a given product= f (need, want, and
ability to pay)

9 January 10, 2021

 STATE OF DEMANDS
1. Negative demand

01/10/21
2. Nonexistent/no Demand
3. Latent Demand
4. Declining Demand
5. Irregular Demand
6. Unwholesome Demand
7. Overfull Demand
8. Full Demand

10
ENTITIES TO BE MARKETED

01/10/21
11
 Marketing Basic concepts-Cont’d:
What Will Satisfy Consumer’s Needs and Wants? (Product, services and Ideas)

1.2.2. THE CONCEPT OF PRODUCT, SERVICE, AND IDEA/entities to be Marekting

 Products - anything that can  Services - activities or benefits

be offered to a market for offered for sale that are essentially
intangible and don’t result in the
attention, acquisition, use or ownership of anything.
consumption and that might  Examples: banking, airplane
satisfy a need or want. travel, haircuts, medical care, day
 Examples: persons, places, care, hotels.
organizations, activities, and  Ideas- include concepts,
ideas. philosophies, image and issues
 Ex. A marriage counselor, for a
 A good is a physical entity
fee, gives spouse ideas to help
one can touch. Ex.: Car, improve their relationships
Compact disk player, soap---  Other marketers of ideas include
political parties, churches, and
schools.
12 January 10, 2021
 Marketing Concepts-Cont’d
1.2.3. INFORMATION, EVENTS, PERSONS
Information
 Information can be produced and marketed as a product.
Events
 Marketers promote time based events, such as the Olympics, company
anniversaries, major trade shows, sport events and artistic performance.
Persons-virtually all services are reliant on people to perform
them
 Marketing skills are used to promote political, cultural,
churches, civic and charitable activities
 People like Haile Gebreselasie, Madonna and Beckham have
done a master full job of marketing management consultants,

13 January 10, 2021

 Marketing Pillars/Mixes/Strategies
Four traditional Ps
Thee extended pillars
Newly added pillars (programming,
packaging, positioning, productivity)
What do u propose (additional P)

14 January 10, 2021

 The elements of the marketing
mix

Figure 8.12  The elements of the marketing mix

Copyright Atomic Dog Publishing, 2002

Who
Who Purchases
Purchases Products
Products
and
and Services?
Services?

Actual
Actual
Market
Market--buyers
buyers Buyers
Buyers
who
whoshare
shareaa
particular
particularneed
need
or
orwant
wantthat
thatcan
can
be
besatisfied
satisfiedby
byaa
company’s
company’sproducts
products Potential
Potential
or
orservices.
services. Buyers
Buyers

16 January 10, 2021

 Marketing Concepts-Cont’d
1.2.7. Markets and prospects
Market
 “Market”: the place where buyers and sellers gathered to
exchange their goods, such as a village square.
 It is a collection of buyers and sellers who transact over a
particular product or product class hence the housing market,
the grain market and soon.
 A market consists of all the potential customers sharing a
particular need or want who might be willing and able to
engage in exchange to satisfy that need or want.
 A market is (1) people (2) with the desire and (3) with the
ability (authority, time, and money) to buy a specific product.
 A prospect is some one whom the marketer identifies as
potentially willing and able to engage in exchange of values.
17 January 10, 2021
 Market Cont’’’d
 Marketplace- as a physical store.

 Marketspace- digital as shop on the internet

 Metamarket- a cluster of complementary products and services

that are closely related in the minds of consumers.

 Metamediary- such as Edmund’s web site.

18 January 10, 2021

 Types of Customer Markets
 Consumer Markets: companies selling mass consumer goods and
services such as soft drinks , cosmetics, air travel , and athletics shoes
and equipment to ultimate/end users to satisfy their personal
gratification.
 Business Markets: companies selling business goods and services
often face well-trained professional buyers who are skilled in evaluating
competitive offerings.
 Global Markets: companies selling goods and services in the global
market place face additional decisions and challenges.
 Non Profit and Government Markets: companies selling their goods
to nonprofit organisations such as churches, universities, charitable
organisations, or government agencies need to price carefully because
these organisations have limited purchasing power.

19 January 10, 2021

 Marketing Concepts-Cont’d
1.2.4. VALUE AND SATISFACTION

How Do Consumers Choose Among Products and Services?

 Customer Value - benefit that the customer gains from owning
and using a product compared to the cost of obtaining the product.
o Value can be seen as primarily a combination of quality, service,
and price------ Customer Value
Value = Benefit = functional benefits + emotional benefit__________
Cost Monetary cost + Time cost + Energy cost + psychic cost
 Customer satisfaction implies the extent to which a product’s
perceived performance matches a buyer’s expectation.
 If the product performance < consumer’s expectation = dissatisfaction
 If the product performance > consumer’s expectation = delight
 If the product performance > consumer’s expectation = satisfaction
 The guiding concept in making choice among product sets is value and
satisfaction.
20 January 10, 2021
 Marketing Basic Concepts-Cont’d
1.2.5. Exchange and Transaction

How do Consumers Obtain Products and Services?

 Exchanges - act of obtaining a desired object from someone by offering
something in return.
o Exchange must be seen as a process rather than an event. Two parties are engaged
in exchange if they are negotiating and moving towards an agreement. When an
agreement is reached we say that the transaction takes place.
 Transactions - trade of values between parties. Usually involves money
and a response.
 classical monetary transaction
 A barter transaction
Something of value
money, credit, labor, goods

Market/Buy Something of value Industry/Seller/

ers Goods, services, ideas marketer

21 January 10, 2021

 Marketing Basic Concepts-Cont’d

1.2.5. EXCHANGE AND TRANSACTION

1.2.6. Relationships and Network
Relationships - building long-term
relationships with consumers, distributors,
dealers, and suppliers.
The ultimate outcome of relationship
marketing is the building of a unique company
asset called a marketing network.

22 January 10, 2021

Modern
Modern Marketing
Marketing System
System
Suppliers
Suppliers

Company
Company
Competitors
Competitors (Marketer)
(Marketer)
Environment

Environment
Marketing
Marketing
Intermediaries
Intermediaries

End
EndUser
User
Market
Market

23 January 10, 2021

Company orientations
towards the marketplace
Marketing Concepts
 Production concept
 Product concept
 Selling concept
 Marketing concept
 Holistic marketing concept
 Relationship marketing
 Integrated marketing
 Internal marketing
 Socially responsible marketing

January 10, 2021 25

Production Concept
 Consumers favor products that are
available and highly affordable
 Improve production and distribution
 Focus On Manufacturing (D>S)
 Goal: Produce All That Is Possible

January 10, 2021 26

Product Concept
 Assumption: Consumers favor products that
offer the most quality, performance, and
innovative features
 Focus on Manufacturing (D>S)
 Means: Make quality products
 “You can have any color you want as long as
it’s black.”
 “Make the best product you can and people
will buy it.”
 “Build a better mousetrap”

January 10, 2021 27

Selling Concept
 Mid-1920s–early 1950s: weakened demand
required that products would have to be
“sold.” (personal selling, advertising, and
distribution was the focus)
 Focus on selling existing products (D=S)
 Means: Aggressive Sales & promotion
 Goal: Maximize Sales
 “Sell this inventory no matter what it takes.”
 “You don’t like black? I’ll throw a set of
glassware.”
January 10, 2021 28
Marketing Concept

 Early 1950s–2000s: adopting a customer

focus means a commitment to researching
and responding to customer needs.
 Long-Run View
 Consumer want focus
 Integrated planning and feedback
 Adapt to the environment

January 10, 2021 29

 Selling versus Marketing

Selling
Starting
point Focus Means Ends

Factory
Factory Product
Product Selling
Selling&& Profits
Profitsthrough
through
promoting
promoting sales
salesvolume
volume

Marketing
Target
Target Customer
Customer Integrated
Integrated Profits
Profitsthrough
through
market
market needs
needs marketing
marketing customer
customersatisfaction
satisfaction

Marketing is not synonymous with “sales” or “advertising”.

January 10, 2021 30
Marketing Management Philosophies: The development of the
marketing concept

• Consumers favor products that are

1.Production
1.Production Concept
Concept available and highly affordable
•Improve production and distribution

•Consumers favor products that offer

2.
2. Product
Product Concept
Concept the most quality, performance, and
innovative features

•Consumers will buy products only if

3.
3. Selling
Selling Concept
Concept the company promotes/ sells these
product: they need to be persuaded.

•Focuses on needs/ wants of target

4.
4. Marketing
Marketing Concept
Concept markets & delivering satisfaction
better than competitors
• Customer-centered

5.Societal
5.SocietalMarketing
MarketingConcept
Concept •Focuses on needs/ wants of target
markets & delivering superior value
•Society’s well-being
31 January 10, 2021
Societal
Societal Marketing
Marketing Concept
Concept

Society
Society
(Human
(Human Welfare
Welfare))

Societal
Societal
Marketing
Marketing
Concept
Concept

Consumers
Consumers Company
Company
(Wants)
(Wants) (Profits)
(Profits)
32 January 10, 2021
Holistic Marketing Concept
 Holistic marketing recognizes that “
everything matters” with marketing
 A broad, interdependent, and integrated
perspective is often necessary

January 10, 2021 33

Four Components of Holistic Marketing
1. Relationship marketing–is “the overall process of
building & maintaining profitable customer
relationships by delivering superior customer value
and satisfaction.” (Kotler, 13ed 2006)
Building mutually satisfying long-term relationships
with key parties in order to earn and retain their
business
 Relationship mktg builds strong economic,
technical, and social ties among partners.
 Developing Marketing Networks

 Using CRM

January 10, 2021 34

 Cont’d
2. Integrated marketing–
 is a comprehensive plan that communicates and
delivers the intended value to chosen customers
 a set of coordinated cross functional activities (a
unity of purpose)
 traditional approach- McCarthy 4P’s
 Robert Lauterborn- 4C’s
All
marketing activities are coordinated to
maximize their joint effects.

January 10, 2021 35

 Cont’d
3 Internal marketing– to ensure that
everyone in the organization embraces
appropriate marketing principles, especially
senior management.
Various marketing functions must work well

together.
Marketing must be embraced by other

departments; they must “think customer”.

 Cont’d
Internal Marketing
 Internal Customers
 External Customers
Marketing Strategy

Marketing Implementation

Internal Marketing External Marketing

Program Program

Marketing Mix Marketing Mix

Target Groups Within Customer Groups or

the Organization Target Markets

January 10, 2021 37

 Con’d
4. Social Responsibility Marketing
to understand broader concerns and the
ethical, environmental, legal and social
context of marketing activities and
programs.
It requires that marketers carefully

consider the role that they are playing in

terms of social welfare.

January 10, 2021 38

 SRM
 Act socially responsibly; consider
 The ethical consequences of one’s actions;
 Focus on satisfying customer needs and
wants while enhancing individual and
societal well-being
 Consider the collective needs of society as well as customer
desires and the organization’s profits. (Bell& Emory,1971 JM)
 Society..…… #1 (Human welfare)
 Consumers ..#2 (Want satisfaction)
 Company ….#3 (Profits)

January 10, 2021 39

Green Marketing

January 10, 2021 40

Green Marketing

 According to the American Marketing

Association, green marketing is the marketing of
products that are presumed to be
environmentally safe.
 It incorporates a broad range of activities,
including product modification, changes to the
production process, packaging changes, as well
as modifying advertising
 Other similar terms used are Environmental
Marketing and Ecological Marketing
January 10, 2021 41
Green Marketing

 "Green Marketing" refers to holistic marketing

concept wherein the production, marketing
consumption and disposal of products and
services happen in a manner that is less
detrimental to the environment with growing
awareness about the implications of global
warming, non-biodegradable solid waste,
harmful impact of pollutants etc

January 10, 2021 42

Green Products & Its Characteristics
 The products those are manufactured through
green technology and that cause no environmental
hazards are called green products
 We can define green products by following
characteristics:
 Products those are recyclable, reusable and
biodegradable, compostable environmentally safe
 ozone friendly and biodegradable
 Products contents under approved chemical
 Products that do not harm or pollute the environment
 Products that will not be tested on animals

January 10, 2021 43

Green Power
 Green marketing heavily used in
electricity generation/marketing
 What is green power?
 electric power that is
• generated by renewable resources
• less polluting than fossil fuels and
nuclear power

January 10, 2021 44

What types of power are “green”?

 Wind
 Bioenergy
 Geothermal energy
 Solar power
 Hydroelectric power


January 10, 2021 45

Why is green power attractive to
consumers?
 Electricity generation is largest industrial
polluter in US; currently produces:
 two-thirds of the annual U.S. emissions of
sulfur dioxide (main cause of acid rain)
 30 percent of the nitrogen oxide emissions
(stress forest ecosystems; combine with
organic compounds in sunlight to form smog)
 40 percent of carbon dioxide emissions
 toxic-metal emissions (mercury and lead)
 nuclear waste.


January 10, 2021 46

What are the “dirtiest” energy
sources?
 Coal
 Oil
 Nuclear power
 Natural Gas


January 10, 2021 47

How Marketing is Changing
 Changing technology
 Globalization
 Deregulation
 Privatization
 Customer empowerment
Con’d
 Customization
 Heightened competition
 Industry convergence
 Retail transformation
 Disintermediation ( E-tailers)
 Reintermediation (“brick and click”)
 Paradigm Shifts in Marketing
The main new trends in Marketing as responded by Philip Kotler in his
book ‘FAQs on Marketing’:
 From make-and-sell marketing to sense-and-respond marketing
 From owning assets to owning brands
 From vertical integration to virtual integration (outsourcing)
 From mass marketing to customized marketing
 From operating only in marketplace to operating in cyberspace
 From pursuing market-share to pursuing customer share
 From focusing on customer attraction to customer retention
 From transaction marketing to relationship marketing

01/10/21 Copyright Atomic Dog Publishing,

502002
 Paradigm Shifts in Marketing
 From customer acquisition to customer retention and customer
satisfaction
 From mediated marketing to direct marketing
 From marketer monologue to customer dialogue
 From separated planning of communications to integrated marketing
communications
 From single channel marketing to multi-channel marketing
 From product-centric marketing to customer-centric marketing
 From marketing department doing marketing to everyone in the
company doing marketing
 From exploiting suppliers and distributors to partnering with them

01/10/21 Copyright Atomic Dog Publishing,

512002