Nature and Scope of Marketing & Marketing Management

MARKETING MANAGEMENT
Chapter One: NATURE AND SCOPE OF

MARKETING & MARKETING MANAGEMENT
Dr. Gashaw T. (Assistant Professor)
and
Dr. Mesfin W. (Assistant Professor)
•05/05/21 Maryland International College

•1
Discussion Questions
 What is Marketing?
 Some people argue that marketing mean all
about distribution (i.e. it is a matter of the
actual flow of good /service); where as in the
other extreme others believe that marketing
activity is start before the creation of a product
and don’t end until customers are satisfied.
what do you say on this issue? Why?
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Overview of Marketing
• Marketing is a process/an act of

 Identifying, serving and fulfilling unfulfilled demands of
customers
 Is all about producing, pricing, promoting and placing
the right product to the right market and sale it at
desired profit/price
 Refers to conducting business activities, which
involves exchanging some thing of value i.e. birr for
product/service either with in or out side a given
nation
 Is an act of either producing a product/service or
purchase and resale it at a desired profit/price.
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What is Marketing?
• Many people think of marketing only as
selling and advertising.
What is Marketing?
• Selling and advertising are only the tip of the
marketing iceberg.
• Today marketing must be understood not in
the old sense of making a sale---“telling and
selling” – but in the new sense of “Satisfying
customer needs”.
Marketing Definition by AMA
• ‘Marketing consists of those activities
involved in the flow of goods and services
from the point of production to the point of
consumption.’ (AMA, 1938)
• ‘Marketing is the process of planning and
executing the conception, pricing, promotion
and distribution of ideas, goods and services
to create exchange and satisfy individual
and organizational objectives.’ (AMA, 1985)
Marketing Definition by AMA
• ‘Marketing is an organizational function and a set
of processes for creating, communicating and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.’ (AMA, 2004)
• ‘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.’
(AMA, 2007)
Definition of Marketing
 Generally, the definition of marketing can be

grouped in to two: classical (narrow) definition
and modern (broad) definition.
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Classical Definition
 In classical terms marketing can be defined as
“the performance of business activities that
direct the flow of goods and services from
producers to consumers”.
This definition is too narrow to describe
marketing.
It emphasizes the distribution aspect of
marketing.
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Modern Definition
In marketing, there are combinations of
activities, which start before the creation of
a product and don’t end until customers are
satisfied.
Therefore, product planning, pricing,
distribution and promotion are the main
activities performed in marketing.
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The Core Concepts of Marketing
Need, Want and Demand

Need: human needs are the most basic
concept underlying marketing.
Human beings are born with needs to be satisfied
and they are in continuous struggle and effort to
satisfy them.
 They need food, air, clothing and shelter, all of
which are biological in nature.
•Human needs are state of felt deprivation of the
basic human requirements.
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 Humans have many complex needs:
 Basic physical need-for food, clothing, shelter & safety
 Social needs-for belongingness, affection and love
 Individual needs-for knowledge and self expression.
• NB. Marketers cannot create human needs rather
they have to understand and create product and
services which can satisfy those needs.
– Generally, needs are shaped by culture and individual
personality.
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Wants: are shaped by ones society and
described in terms of objects that satisfy needs.
•Are desires/wishes for something without having
money
– It express in terms of objects.
– Are not to be backed up by purchasing power
– Provide some clue to the marketer
– An Ethiopian needs food but wants enjera and
bread.
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Demand–are wants for specific products backed
by purchasing power.
 Demands are occurred when there is only the
willingness to buy a product and the ability to pay for
it. E.g. many people want a Mercedes but only few
are able and willing to buy one.
 Companies must measures not only how many people want
their product but also how many would actually be willing and
able to buy it.
 Provide many clue/starting point to the marketer.
Want + money
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Market Offers (Product, Services,

Information, etc.)
•Consumers’ needs and wants are fulfilled
through market offerings
– Offerings include products, services,
information, or experiences as well as persons,
places, organizations, information, and ideas.
– Services—activities or benefits offered for sale
that are essentially intangible and do not result
in the ownership of anything.
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Customer Value and Satisfaction

•The offering will be successful if it delivers value and
satisfaction to the target buyer.
Value is the customer estimate of the product’s over all capacity to
satisfy his/her needs and wants.
 Reflects the perceived tangible and intangible benefits and costs
to customers.
 It is the combinations of quality, service and price.
•Customer value is the difference b/n the values that the customers
gain from owning and using product and the cost of obtaining it.
– Value = Benefits / Costs = (Functional benefits + Emotional
benefits) /(Monetary costs + Time costs + Energy costs + Psychic
costs)
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Discussion Question

•Think about the last time you visited one of
the commercial banks in Ethiopian. Evaluate
your experience using the personal value
equation.

•Satisfaction: is a person’s feeling of pleasure or
disappointment resulting from comparing product perceived
performance and expectation
– Customer satisfaction– reflects person’s comparative
judgments resulting from a product’s perceived
performance (or outcomes) in relation to his/her
expectations.
• It is the key influence on future buying behavior
• Customers expectations must be set at the right level of
expectations, neither too low or too high.
– Customer Value & Satisfaction are key building blocks for
developing & managing customer relationships.
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•Satisfaction = f (perceived performance and
expectation).
A. if P > E = delighted
B. if P = E = satisfied
C. if P < E = dissatisfied
 Satisfied customer repurchases, spreads word of mouth
and maintains long term relationship with the company.
 Dissatisfied consumer switches to competitors brands
and disparages the product.
Exchange and Relationships

•Exchange: The act of obtaining a desired object from someone by
offering something in return.
•There are five conditions that needs to be satisfied:
 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 & delivery
 Each party is free to accept or reject the exchange offer
 Each party believes it is appropriate or desirable to deal
with the other party

•Transaction: It takes place when the two parties
reach into an agreement.
– A transaction consists of a trading of values between
two parties: one party gives X to another party and gets
Y in return.
– Transaction-A trade between two parties that involves
at least two things of value, agreed-upon conditions, a
time of agreement and a place of agreement.
– It involves two things:
 A time of agreement and a place of agreement
• Customer Relationship Management

• The overall process of building and maintaining profitable
customer relationships by delivering superior customer value
and satisfaction.
• Relationship Building Blocks: Customer Value and Satisfaction
• Customer-perceived value
– The customer’s evaluation of the difference between all the
benefits and all the costs of a marketing offer relative to those
of competing offers.
• Customer satisfaction
– The extent to which a product’s perceived performance matches a
buyer’s expectations.
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Customer Relationship Management

CRM: The process of creating, maintaining and
enhancing strong, value-laden relationships with
customers and other stakeholders.
Beyond creating short-term transactions, smart
marketers work at building long-term relationships
with valued customers, distributors, dealers and
suppliers.
They build strong economic and social connections by
promising and consistently delivering high-quality
products (good/service) and fair prices.
Customer Relationship Management

•The final step involves capturing value in
return in the form of current and future sales,
market share, and profits.
•By creating superior customer value, the
firm creates highly satisfied customers who
stay loyal and buy more.
– This, in turn, means greater long-run returns
for the firm.

Relationship Marketing: aims to build long term
mutually satisfying relationship with key parties
(customers, suppliers, distributors) in order to earn
and retain their long term preference and business.
 The ultimate outcome of relationship marketing
is the building of a unique company asset called
a marketing network.
 Marketing network: it consists of the company and all of its
supporting stakeholders: customers, employees, suppliers,
distributors, retailers, ad agencies, and others with whom it has built
mutually profitable business relationships.
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• Market
• Economists describes a market as a
collection of buyers and sellers who transact
over a particular product or product class.
• Marketers define a market as:
– Market is the set of actual and potential buyers
of a product.
– These buyers share a particular need and want
that can be satisfied through exchange
relationship.
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Market
•There are five types of customer markets:
– Consumer markets
– Business/industrial markets
– Reseller markets
– Government markets
– International markets
Designing a Customer Driven
Marketing Strategy
• Marketing Management is the process of
planning, organizing, directing and controlling
the activities of product planning, pricing,
promotion and distribution of products to create
exchange that satisfy individuals and
organizational needs.
• 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.
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Marketing Strategy
• The marketing manager’s aim is to find, attract,
keep, and grow target customers by creating,
delivering, and communicating superior
customer value.
• Thus, marketing management involves managing
demand, which in turn involves managing customer
relationships.
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Marketing Strategy
Negative demand: a type of demand in which a
major part of the market dislike the product and
may even pay a price to avoid it.
 E.g. People prefer tablet than surgery
Reason: Poor income, wrong perceptions,
attitudes,
• Marketing task: conversational marketing.
Analyze why the market dislike the product.
 Free trial, conducting reinforcement
advertising, low sales price, change perception
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Marketing Strategy
No demand: this is a demand situation when the
target customers may be unaware or
uninterested in the product.
E.g. farmers vs. new farming methods
Large customers are not aware as to the
existence of a product
Marketing task: find ways to connect the
benefits of the product with people’s natural
needs and interests.
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Marketing Strategy
• Latent demand: Customers may share a strong
need that can not be satisfied by any existing
product.
e.g. better school and safer neighborhoods.
Marketing task: measure the size of the market
and develop goods and services to satisfy the
demand.
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Marketing Strategy
Declining demand: lower demand in the market
 Every organization faces declining demand for one or
more of its products.
 Marketing task: creative remarketing.
 Analyze causes of declining.
Irregular demand: varies on a seasonal, daily,
even hourly basis.
 Marketing task: synchromarketing.
 Find ways to alter the pattern of demand through flexible
pricing, promotion and other incentives.
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Marketing Strategy
• Full demand: a satisfying level of demand
– It is a demand situation where the actual demand is
fairly equal or at least proportional to what the
firm can assume with its existing resources.
• Marketing task: maintain the current level of
demand in the face of changing consumer
preferences and increasing competition.
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Marketing Strategy
Overfull demand: more demand than can be
handled or delivered
A demand level that is higher than they can or
want to handle.
Marketing task: de-marketing.
Finding ways to reduce demand temporarily or
permanently.
It consists the market that are less profitable.
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Marketing Strategy
Unwholesome demand: demand for
unhealthy or dangerous products.
Unwholesome product will attract organized
efforts to discourage their consumptions.
• Marketing task: get people who like
something to give it up, obey the rule of some
established agencies, using fear message and
reduce availability.
•05/05/21
Company Philosophy towards
Marketing Management
• Marketing management orientations are
the basic orientations that help a given
organization market its products and
achieve its objectives.
• What philosophy should guide marketing
mangers’ effort to develop strategies?
• What weight should be given to the
interests of customers, the organization,
and society?
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• There are five alternative concepts under which
organizations design and carry out their marketing
strategies:
– Production Concept
– Product Concept
– Selling Concept
– Marketing Concept
– Societal Marketing Concepts.
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• Production Concept
 holds the idea that consumers will favor products that
are widely available and inexpensive.
 It is the oldest orientation that guides sellers.
 State that to sale more, company should reduce cost of
production/sales prices
 Assume that customer fail in love with low cost products
 Marketers assume that consumers are primarily
interested in product availability and low prices
 The management should therefore focus on improving
production and distribution efficiency.
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 Managers concentrated on achieving high production
efficiency, low costs and mass distribution.
 Mostly production concept is used when the company
wants to expand the market.
 The production concept is still a useful situation:
– When demand for a product exceeds the supply
– When product cost is too high and improved productivity is
needed to brining it down.
– In developing countries, where consumers are more
interested in obtaining the product than its features.
– When a company wants to expand its market.
•05/05/21
• Can lead to marketing myopia-risk of
focusing too narrowly on their own operations
and losing sight of the real objective
– For example, computer maker Lenovo dominates the
highly competitive, price-sensitive Chinese PC market
through low labor costs, high production efficiency, and
mass distribution.
• Dominant between industrial revolution and
1920s
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• Product Concept
• Is a quality based approach
• State that to sale more, company should
maximize quality levels of products/services
• Hold that consumers will favor products
that offer the most quality, performance,
and innovative features
• Organization devote energy to making
continuous product improvement
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• Product Concept
• They will suffer from marketing myopia i.e.
to give more attention to their products
with out considering consumers’ interest
• Dominant between 1950s and 1990s
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• Selling Concept
• The idea that consumers will not buy enough of the firms
products unless it undertakes a large scale selling &
promotion effort.
• It is typically practiced with unsought goods. I.e. goods
that buyer doesn’t think buying normally (insurance, blood
donation & funeral plot).
• The aim of aggressive selling: most firms practice the
selling concept when they face over capacity.
• Their aim is to sell what they make rather than make what
the market wants.
– Such marketing carries high risk and also inside-outside flow.
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• Selling Concept
• Successful when organizations track down prospects
selling them on product benefits
• Dominant between 1920s to 1950s
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• Marketing Concept
• Holds that achieving organizational goals
depending on knowing the needs & wants of
target market and delivering the desired
satisfaction better than competitors do.
• Marketing concept is customer centered “sense &
respond” philosophy rather product centered
“make & sell” philosophy.
• The job is not finding the right customer for your
product, but right product for your customers.
– It takes outside-inside flow.
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• Marketing Concept
• Customer focus and value are the paths to sales
and profits
• Customer-driven and customer-driving
• Dominant since 1990s
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• Marketing Concept: Pillars under which
marketing concept operates
A. Target market: Companies must define their target market
carefully and prepare a tailored marketing program.
B. Customer Needs: The key to this philosophy is to fully
understand their customers real needs and meet them better
than the competitor.
C. 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.
D. Profit making by satisfying customers - The ultimate
purpose of the concept is to help organizations achieve their
goals.
•05/05/21
• Market Versus Internal Driven Businesses
– Customer concern throughout the business
– Know how products and services are being evaluated
against competition
– Base segmentation analyses on customer differences
– Consider marketing research expenditure as investment
– Understand competitive objectives and strategies and
anticipate competitive actions.
– Employees who take risks and are innovative are
rewarded.
– Fast to respond to latent markets, innovate,
manufacture and distribute their products and services.
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• Societal Marketing Concept
• Holds that organization should determine the
needs, wants and interest of target markets.
– Then, it should deliver superior value to
customers in a way that maintains & improves
the customers and the society’s well being.
 Consider consumers’ wants, the company’s
requirements, consumers’ long-run interests,
and society’s long-run interests.
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• Societal Marketing Concept
• According to the societal marketing concept, the
pure marketing concept overlooks possible
conflicts between short-run consumer wants and
long-run society welfare.
• The societal marketing concept calls on
marketers to balance three considerations in
setting their marketing policies.
• These are: Company profit; Consumer want
satisfaction; and Societies interest ( human welfare)
•05/05/21
Societal Marketing Concept
Society
(human welfare)
societal
marketing concept
Consumers Company
(want satisfaction)
(profits)
Scope of Marketing
• Marketers are skilled in stimulating demand for a company’s
product, but this is too limited view of the tasks marketers
perform.
– Marketing people are involved in marketing ten types of
entities:
1. Goods: Physical goods constitute the bulk of most
countries’ production and marketing effort.
2. Services: Services include airlines, hotels, and
maintenance as well as professionals such as accountants,
lawyers, engineers, and doctors.
 As economies advance, a growing proportion of their
activities are focused on the production of services.
•05/05/21
Scope of Marketing
3. Experience: By orchestrating several services

and goods, one can create, stage, and market
experiences.
4. Events: Marketers promote time-based
events.
 Olympics, trade shows, sports events,
company anniversaries and artistic
performances.
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Scope of Marketing
5. Persons: Celebrity marketing has become a

major business.
Artists, musicians, CEOs, physicians, high-profile
lawyers and financiers, and other professionals
draw help from celebrity marketers.
6. Place: Place marketers include economic
development specialists, real estate agents,
commercial banks, local business associations,
and advertising and public relations agencies.
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Scope of Marketing
7. properties: are intangible rights of ownership of

either: Real property (real estate) or
Financial property (stocks and bonds).
8. Organizations: it actively work to build a
strong, favorable image in the mind of their
publics.
Universities, museums, and performing arts
organizations all use marketing to boost their
public images to compete more successfully for
audiences and funds.
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Scope of Marketing
9. Information: It can be produced and marketed as a

product.
 Among the marketers of information are schools and
universities, publishers of encyclopedias, nonfiction
books, and specialized magazines, makers of CDs, and
Internet Web sites.
10. Ideas: Every market offering has a basic idea at its
core. In essence, products and services are platform for
delivering some idea or benefit to satisfy a core need.
 Social marketers are busy promoting such ideas as “say no to
drugs”, save the rainforest”, “avoid fatty foods”
•05/05/21

Nature and Scope of Marketing & Marketing Management

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Nature and Scope of Marketing & Marketing Management

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MARKETING MANAGEMENT

Chapter One: NATURE AND SCOPE OF

•05/05/21 Maryland International College

• Marketing is a process/an act of

 Generally, the definition of marketing can be

Need, Want and Demand

Need, Want and Demand

Market Offers (Product, Services,

Customer Value and Satisfaction

Customer Value and Satisfaction

Customer Value and Satisfaction

Customer Value and Satisfaction

Exchange and Relationships

Exchange and Relationships

• Customer Relationship Management

Customer Relationship Management

Customer Relationship Management

Exchange and Relationships

3. Experience: By orchestrating several services

5. Persons: Celebrity marketing has become a

7. properties: are intangible rights of ownership of

9. Information: It can be produced and marketed as a

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