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CHAPTER II
THEORETICAL FRAMEWORK
2.1. Marketing
In these times of constantly increasing competition, marketing plays
an important role in business. A company’s ability to understand its market
and the consumers and design the most appropriate marketing strategy is the
key to sustain the business.
Kotler and Keller (2012) described marketing as a human activity
directed to meet the needs and wants through exchange processes. The most
fundamental concept in marketing is human needs, which is described as such
a loss of feeling in a person. Human needs are complex. It includes basic
needs, security, social, respect and self-actualization. Meanwhile, human want
is derived from human needs that are shaped by the culture and an
individual’s personalities.
In order to obtain a more comprehensive understanding of the
marketing, below are several definitions of marketing.
Kotler and Armstrong (2012) define marketing as a social and
managerial process whereby individuals and groups obtain what they need
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and want through creating and exchanging products and value with others. In
addition, marketing is an activity that occurs when people decide to satisfy
their needs and wants through exchange.
William J. Stanton (2001) defines marketing as a total system of
business activities designed to plan, price, promote, and distribute want
satisfying product to target markets to achieve organization objective.
The management guru Peter Drucker (Simkin, 2000) states that the
aim of marketing is to make selling superfluous. The aim is to know and to
understand the customer so well that the product or service fits him or her and
sells itself. Subsequently, Lyndon Simkin (2000) added that there are common
themes in most explanations of marketing. The most important are:
1. the ability to satisfy customers;
2. the exchange of product or service for payment or donation;
3. the need to create an edge over competitors;
4. the identification of favourable marketing opportunities;
5. profits or financial surpluses to enable a viable future for the
organisation;
6. that resources are utilised shrewdly to maximize a business's
market position; and
7. the aim to increase market share in priority target markets.
Based on all of the definitions above, it can be concluded that
marketing is a set of strategy undertaken by companies to transfer goods or
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services to buyers. The process involves motivating consumers to purchase a
product that can fulfill their needs and help company achieve their goals.
2.2. Marketing Management
Solomon (2011) describes marketing management as the process of
planning and implementation of ideas, pricing, promotion and distribution of
ideas, goods and services to create exchanges which satisfy the goals of
individuals and organizations. In other words, that marketing is the process of
planning and conception of the implementation, pricing, promotion and
distribution of ideas, goods, and services to create exchanges, which satisfy
individual and organizational objectives.
To understand a marketing management as a process, a system
approach is described as follow:
Inputs
Process
Inputs
Objective
Figure 2.1 Marketing Management Process (Buchari Alma, 2013)
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A company needs input, which are gathered from information about
activities that are happening in the field or market. Then, the information is
processed and analyzed together with several other information sources. The
outcome is anoutput, which is a decision or policy that must be taken in order
to achieve company goals. Once the decision is made and implemented, the
company waits for the results of the implementation or feedbacks. Feedbacks
are useful for management to further improve its policies.
Meanwhile, Kotler and Keller (2012) defines marketing management
as the art and science of choosing target markets and getting, keeping, and
growing customers through creating, delivering, and communicating superior
customer value.
From the explanation above, it can be concluded that marketing
management is the process of understanding, creating products or services
attracts consumers, and developing the strategy market them.
2.3. The Four Ps of Marketing
The term “marketing mix” was first introduced in 1964 by Professor
Neil Borden of the Harvard Business School. He defined marketing mix as a
related group of activities designed to influence buyer behavior. The mix
consisted of what are generally referred to as the Four Ps: product, price, place
and promotion (Knilans, 2009).
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Darlymplle and Parsoons (1996) define markketing mix as
a the specific
colleection of actiions and asssociated instruments empployed by ann organizatiion
to stiimulate acceeptance of itss ideas, prodducts, or servvices.
William J. Stanton (2001);
(
markketing mix is
i the term that
t
is used to
descrribed the coombination of
o the four inputs that constitute the
t core of an
organ
nization’s marketing
m
s
system.
Theese four ellements aree the produuct
offerring, the priice structuree, the prom
motion activiities, and thhe distributiion
systeem.
McCarthyy classified various maarketing activities into marketing
m
m
mix
toolss of four brooad kinds, which
w
he callled the four Ps of markeeting: produuct,
pricee, place and promotion
p
(K
Kotler and Keller,
K
2012)).
Marketing Mix
Product P
(product variety, quaality, design, feeatures, brand
d name, pacckaging, sizes,, services, warrranties, returrns)
Price
(list pricce, discounts, allowances, payment period, creedit terms)
Place
(chan
nnels, coveragge, assortmentts, locations, invento
ory, transport))
Prromotion
(sales p
promotion, advertising, salees force, publicc direct marketing)
relations, d
Figu
ure 2.2. Marrketing Mix or the Fourr Ps (Kotlerr and Kellerr, 2012)