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Introduction to marketing
Learning objectives:
After reading this chapter, you
should be able to:
1. Define marketing and discuss its core concepts.
2. Define marketing management and examine how
marketers manage demand and build profitable
customer relationships.
3. Compare the five marketing management
philosophies.
4. Differentiate the parts of the marketing process and
show how they relate to each other.
5. Understand the importance of marketing
6. To gain insight into the basic elements of the
Introduction to marketing
A
marketing conceptsPrepared
and byitsJudeimplementation.
7. To understand the major components of a
marketing strategy and the marketing mix
8. To gain a sense of general strategic
marketing issues, such as marketing
opportunity analysis, target market selection
and marketing mix development.
9. To grasps the ethos and structure of this
presentation.
Introduction to marketing
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Introduction to marketing
Today’s successful companies have one thing in
common. Like Nike, their success
comes from a strong customer focus and heavy
commitment to marketing. These
companies share an absolute dedication to sensing,
serving and satisfying the needs
of customers in well-defined target markets.
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Marketing is about customers. Customers are
essential component of a marketing
system. Creating customer value and satisfaction is
at the very heart of modern
marketing thinking and practice.
Today, marketing is practiced widely all over the
world.
Many people think that only large companies
operating in highly developed economies
use marketing, but sound marketing is crucial to the
success of every organisation,
whether large or small, domestic or global.
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Marketing fundamental – Marketing mix, marketing strategy,
marketing environment
Political
Target market
strategy
Product/brand
Posi
tioning
place
Economic
Product
price
Buyer/consumer
satisfaction
Social
people
process
promotion
Physical evidence
Differential advantage
Competitive edge
Customer satisfaction
Technological
The marketing mix
Legal
Marketing strategy
The marketing environment
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Ecological
Introduction to Marketing
Marketing Definitions
Chartered Institute
of Marketing
Philip Kotler
The management process
responsible for
identifying , anticipating
and satisfying customer
requirements
profitability’
The common theme is meeting
needs and providing benefits.
Introduction to marketing
Satisfying needs and
wants through an
exchange process
Learnmarketing.net
‘Marketing is not about
providing products or services
it is essentially about
providing changing benefits to
the changing needs and demands of
the customer’ (P.Tailor –
Learnmarketing.net 7/00)
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Introduction to marketing
• What is marketing?
There are so many definitions of marketing:
According to Philip Kotler – Principles of
marketing 4th European Edition
‘Marketing is a social and managerial process by
which individuals and groups
obtain what they need and want through creating
and exchanging products and
Value with others’.
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According to the Chattered Institute of
Marketing (CIM definition)
‘Marketing is ‘the management process which
identifies, anticipates and
satisfies customer requirements efficiently and
profitably’. ( This is the most
widely used and accepted definition of
marketing)
Thus, operative marketing involves the
processes of market research, new
product development, product life cycle
management, pricing, channel
management
as wellPrepared
as bypromotion.
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Jude A
Introduction to marketing
According to Dibb and Sally in the Marketing
concepts and strategies,
Marketing consists of individual and
organizational activities that
facilitate and expedite satisfying
exchange relationships in a dynamic
environment through the creation,
distribution, promotion and pricing of
goods, services and ideas ( by Dibb,
2000)
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Introduction to marketing
‘Marketing means working with markets to bring
about exchanges for the
purpose of satisfying human needs and wants. It
is a process by which
individuals and groups obtain what they need
and want creating and
exchanging products and value with others’.
(Kotler, 2000).
"Marketing is the ongoing process of moving people closer to making a
decision to purchase, use, follow...or conform to someone else's products,
services or values. Simply, if it doesn't facilitate a "sale" then it's not
marketing." (encyclopedia)
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Marketing, as suggested by the American Marketing Association, 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"
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Introduction to Marketing
• Philip Kotler in his earlier books
defines as: "Marketing is human
activity directed at satisfying
needs and wants through
exchange processes".
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“Marketing is the discipline
concerned with solving people’s
problems with products and
services profitably.”
Procter & Gamble
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“The difference between selling
and marketing is that selling is
getting rid of what you have,
while marketing is having what
people want.”
Ted Levitt
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“The business enterprise has
two—and only two—basic
functions: marketing and
innovation. Marketing and
innovation produce results; all
the rest are costs.”
Peter Drucker
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“Marketing is the engine that
drives business.”
Phil Kotler
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“Marketing may be the engine
which drives business, but in
most companies the engine is
broken: most marketing
programs don’t work as well as
they could or should.”
Clancy and Krieg
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Core marketing concepts:
Needs, wants and
demands
Markets
Core marketing
Concepts
Exchange, transaction
And relationships
Introduction to marketing
Marketing offers
(products,
Services and experiences)
Value and satisfaction
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Introduction to Marketing
• In popular usage, "marketing" is the promotion
of products, especially advertising and
branding. However, in professional usage the
term has a wider meaning that recognizes that
marketing is customer centered.
• Products are often developed to meet the
desires of groups of customers or even, in
some cases, for specific customers. McCarthy
divided marketing into four general sets of
activities.
• His typology has become so universally
recognized that his four activity sets, the Four
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Ps,
have passed into
the language.
Introduction to Marketing
• The are now 7 p’s of the marketing mix: Originally, there were
4 but due to more research work, 3 additional elements known
as the soft elements have been added: namely people
physical evidence and processes.
• Product: The Product management and Product marketing
aspects of marketing deal with the specifications of the actual
good or service, and how it relates to the end-user's needs
and wants.
• Pricing: This refers to the process of setting a price for a
product, including discounts. Price is the monetary value of a
good or service. The amount of money you pay to obtain a
product.
• Promotion: This includes advertising, sales promotion,
publicity, and personal selling, and refers to the various
methods
promoting thePrepared
product,
or company.
Introduction to of
marketing
by Judebrand,
A
Introduction to Marketing
• As well as the standard four Ps (Product, Pricing,
Promotion and Placement), there are also sometimes
considered an extra three, totaling seven and known
together as the extended marketing mix. These are:
• People: Any person coming into contact with
customers can have an impact on overall satisfaction.
Whether as part of a supporting service to a product or
involved in a total service, people are particularly
important because, in the customers' eyes, they are
generally inseparable from the total service. As a
result of this, they must be appropriately trained, well
motivated and the right type of person.
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Process: This is the processes involved in providing
a service and the behaviour of people, which can be
crucial to customer satisfaction.
Physical evidence: Unlike a product, a service
cannot be experienced before it is delivered, which
makes it intangible. This therefore means that
potential customers perceive greater risk when
deciding whether or not to use a service. To reduce
the feeling of risk, thus improving success, it is often
vital to offer potential customers the chance to see
what a service would be like. This is done by
providing physical evidence, such as case studies,
or testimonia
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Introduction to Marketing
• Prior to the advent of market research, most companies were productfocused, employing teams of salespeople to push their products into or onto
the market, regardless of market desire. A market-focused, or customerfocused, organization instead first determines what its potential customers
desire, and then builds the product or service. Marketing theory and practice
is justified on the belief that customers use a product/service because they
have a need, or because a product/service has a perceived benefit.
• Two major aspects of marketing are the recruitment of new customers
(acquisition) and the retention and expansion of relationships with existing
customers (base management).
• An emerging area of study and practice concerns internal marketing, or how
employees are trained and managed to deliver the brand in a way that
positively impacts the acquisition and retention of customers.
• Once a marketer has converted the prospective buyer, base management
marketing takes over. The process for base management shifts the marketer
to building a relationship, nurturing the links, enhancing the benefits that sold
the buyer in the first place, and improving the product/service continuously to
protect her business from competitive encroachments
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For a marketing plan to be successful, the mix of the four "Ps"
must reflect the wants and desires of the consumers in the
target market. Trying to convince a market segment to buy
something they don't want is extremely expensive and seldom
successful. Marketers depend on marketing research, both
formal and informal, to determine what consumers want and
what they are willing to pay for. Marketers hope that this process
will give them a sustainable competitive advantage. Marketing
management is the practical application of this process. The
offer is also an important addition to the 4P's theory.
Most companies today have a customer orientation (also called
customer focus). This implies that the company focuses its
activities and products on customer needs. Generally there are
two ways of doing this: the customer-driven approach and the
product innovation approach.
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Introduction to Marketing
• In the consumer-driven approach, consumer wants are the
drivers of all strategic marketing decisions. No strategy is
pursued until it passes the test of consumer research. Every
aspect of a market offering, including the nature of the product
itself, is driven by the needs of potential consumers. The
starting point is always the consumer. The rationale for this
approach is that there is no point spending R&D funds
developing products that people will not buy. History attests to
many products that were commercial failures in spite of being
technological breakthroughs.
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THE IMPORTANCE OF
MARKETING
• Marketing Activities are used in many
organisations today
• Marketing activities are important to
businesses and the economy
• Marketing knowledge enhances consumer
awareness
• Marketing costs consume a sizeable
portion of buyer’s incomes
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Marketing - introduction
• Marketing consists of activities
• Marketing is performed by individuals and organisations
• Marketing facilitates satisfying exchange relationships.
THE BASIC PRIORITIES OF MARKETING INCLUDES THE
FOLLOWING
• Satisfying customers
• Identifying/maximising marketing opportunities
• Targeting the ‘right’ customers
• Facilitating exchange relationships
• Staying ahead in dynamic environments
• Endeavouring to beat or pre-empt competitors
• Utilising resources/assets effectively
• Increasing market share
• Enhancing profitability
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THE MARKETING CONCEPT (
MARKETING ORIENTATION/The marketing
oriented strategy).1960s-today
The marketing concept focuses on customers.
A company that adopts the marketing concepts does
the following
1. Puts customers at the centre of all business
decision-making and planning
2. Marketing research to better satisfy customers.
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THE MARKETING CONCEPT ( MARKETING ORIENTATION/The marketing
oriented strategy).1960s-today
• A marketing oriented firm (also called market orientation,
the marketing concept, consumer focus, or customer
focus) is one that allows the wants and needs of customers
and potential customers to drive all the firm's strategic
decisions.
• The firm's corporate culture is systematically committed to
creating customer value. The rationale is that the more a
company understands and meets the real needs of its
consumers, the more likely it is to have happy customers who
come back for more, and tell their friends
• This process can entail the fostering of long term
relationships with customers. In order to determine customer
wants, the company usually needs to conduct some form of
marketing research. Overall, the marketer expects that
becoming marketing oriented, if done correctly, will provide
the company with a sustainable competitive advantage.
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The concept of marketing orientation was developed in
the late 1960s and early 1970s at Harvard University
and at a handful of forward thinking companies. It
replaced the previous sales orientation that was
prevalent between the mid 1950s and the early 1970s,
and the production orientation that predominated prior
to the mid 1950s. Since the concept was first
introduced in the late 1960s, it has been modified,
repackaged, and renamed as "customer focus", "the
marketing philosophy", "market driven", "customer
intimacy", "consumer focus", "customer driven", and
"the marketing concept".
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Application of the concept
• Customer focus can been seen as a process that involves
three steps. First customer wants are researched, then the
information is disseminated throughout the firm and products
are developed, then finally customer satisfaction is
monitored and adjustments made if necessary.
• The process can be applied at the individual level (called
personalized marketing), the group level (called market
segmentation), and occasionally at the mass level (mass
marketing). The larger the group size, the more difficult the
concept is to apply
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Techniques that firms use to understand the customer include:
Quantitative marketing research - such as; surveys and
questionnaires
Qualitative marketing research - such as; focus groups and
advisory panels
Market research and industry research - such as; Porter 5 forces
analysis
Face-to-face meetings with customers
Face-to-face meetings with frontline staff - sales reps, clerks, and
receptionists
Customer complaints department
Customer hotlines - Web and telephone
Visits to customers' facilities
Frequent user programs and databases
User groups - Beta testing
Conferences
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Application of the concept
•
•
1.
2.
3.
4.
5.
6.
7.
Richard Heiens of the University of South Carolina Aiken published a
detailed overview of the market orientation concept in the Academy of
Marketing Science Review (2000). In this article, the author examines the
choices between a competitor and customer focus.
A marketing oriented firm will typically show the following characteristics:
Extensive use of various marketing research techniques
Broad product lines
Emphasis on a product's benefits to customers rather than on product
attributes
Use of product innovation techniques, such as; brainstorming, concept
testing, and force field analysis.
The offering of ancillary services like credit availability, delivery, installation,
and warranty
Customer satisfaction and complaint monitoring procedures, including; exit
interviews, customer complaints database, and Web and telephone
information hotlines.
Organizational structure in which the marketing manager reports directly to
the CEO.
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Other forms of orientation.
Productionorientation(1900-1930s)
Product-orientation
Sales-orientation(1930s1960s)
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The Production Orientation or concept
The production concept concentrates on production and
distribution economies.
This is based on the notion that customers will choose lower
priced products that are readily available.
Companies that focus on overproduction of products, thinking
the more the products are produced the more the prices will be
lowered and the more customers will demand the products.
Such companies are production oriented.
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PRODUCT ORIENTATION
The product concept is focused on product quality. Some
companies tend to focus on product quality as the key to
marketing. Those companies that focus on the product quality are
product oriented.
A production orientation dominated business thought from the
beginning of capitalism to the mid 1950's. Business concerned
itself primarily with production, manufacturing, and efficiency
issues. This view point was encapsulated in Says Law which
states Supply creates its own demand (from the French economist
Jean-Baptiste Say). To put it another way, If a product is made,
somebody will want to buy it. The reason for the predominance of
this orientation is there was a shortage of manufactured goods
(relative to demand) during this period so goods sold easily.
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The implications of this orientation are:
•Product lines were narrow
•Pricing was based on the costs of production
and distribution
•Research was limited to technical product
research
•Packaging was designed primarily to protect the
product
•promotion and advertising was minimal
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The sales (selling) concept or orientation
This is of course based on the notion that customers need to
be persuaded to buy through aggressive selling and promotion
Some companies focus more on sales promotion and other
promotional strategies. They believe in more promotion as the
key to marketing their products.
Companies that applies the sales concept is sales oriented.
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The sales orientation era ran from the mid-1950s to the early
1970s, and is therefore after the production orientation era but
before the marketing orientation era. During WWII world industry
geared up for accelerated wartime production. When the war
was over this stimulated industrial machine turned to producing
consumer products. By the mid-'50s supply was starting to outpace demand in many industries. Businesses had to concentrate
on ways of selling their products. Numerous sales techniques
such as closing, probing, and qualifing were all developed
during this period and the sales department had an exalted
position in a company's organizational structure. Other
promotional techniques like advertising, and sales promotions
were starting to be taken seriously. Packaging and labeling were
used for promotional purposes more than protective purposes.
Pricing was usually based on comparisons with competitors
(called competitor indexing).
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MARKETING AS A BUSINESS FUNCTION
Marketing is the function of management.
Management has to control, co-ordinate, plan, motivate, analyze and organize
marketing activities:
The marketing manager has to perform the following:
Marketing / market research
Planning
Environmental analysis
Market segmentation, targeting and positioning.
Marketing mix implementation
Marketing is not only the function of the marketing manager.
Marketing should be part and parcel of each and every department of the company.
The various departments such as Human Resource, Production, Logistics, Finance,
Stock and Technical departments have to corporate with the marketing department
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MARKETING
MANAGEMENT
Marketing management is a business
discipline focused on the practical application of
marketing techniques and the management of a
firm's marketing resources and activities.
Marketing managers are often responsible for
influencing the level, timing, and composition of
customer demand in a manner that will achieve
the company's objectives.
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There is no universally accepted definition of the term. In part, this
is due to the fact that the role of a marketing manager can vary
significantly based on a business' size, corporate culture, and
industry context. For example, in a large consumer products
company, the marketing manager may act as the overall general
manager of his or her assigned product category or brand with full
profit & loss responsibility. In contrast, a small law firm may have
no marketing personnel at all, requiring the firm's partners to make
marketing management decisions on a largely ad-hoc basis.
In the widely used text Marketing Management (2006), Philip
Kotler and Kevin Lane Keller define 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."
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MARKETING MANAGEMENT
From this perspective, the scope of marketing
management is quite broad. The
implication of such a definition is that any activity
or resource the firm uses to acquire
customers and manage the company's
relationships with them is within the purview
marketing management. Additionally, the Kotler
and Keller definition encompasses
both the development of new products and
services and their delivery to customers.
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Noted marketing expert Regis McKenna expressed a similar
viewpoint in his influential 1991
Harvard Business Review article "Marketing is Everything."
McKenna argued that because marketing management
encompasses all factors that influence a
company's ability to deliver value to customers, it must be "allpervasive, part of everyone's job
description, from the receptionists to the Board of Directors.“
This view is also consistent with the perspective of
management guru Peter Drucker, who wrote:
"Because its purpose is to find and keep customers, the
business enterprise has two – and only
two – basic functions: marketing and innovation. Marketing and
innovation produce results; all the
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rest are 'costs.'"
MARKETING MANAGEMENT
• But because many businesses operate with a much more limited definition
of marketing, such statements can appear controversial, or even ludicrous to
some business executives. This is especially true in those companies where
the marketing department is responsible for little more than developing sales
brochures and executing advertising campaigns.
• The broader, more sophisticated definitions of marketing management from
Drucker, Kotler and other scholars are therefore juxtaposed against the
narrower operating reality of many businesses.
• The source of confusion here is often that inside any given firm, the term
marketing management may be interpreted to mean whatever the marketing
department happens to do, rather than a term that encompasses all
marketing activities -- even those marketing activities that are actually
performed by other departments, such as sales, finance, or operations.
• If, for example, the finance department of a given company makes pricing
decisions (for deals, proposals, contracts, etc.), that finance department has
responsibility for an important component of marketing management -pricing.
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OVERVIEWING THE MARKETING PROCESS: MARKETING AS
AN EXCHANGE PROCESS:
Consumer
Costs and benefits
Organization
Individual
money
Tesco / Asda
Coke, Fanta
Insurance premiums
Patient
H
Medical treatment
Private hospital
Student
Volunteer
Voter
Reader
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Fees
Education
Time
Sense of community service
Vote
Sense of economic/social progress
Taxes
A good read
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Source: Principles of marketing by Dr. Frances Brassington & Dr Stephen Pettitt; chp 1 pg 7
University
Non-profit
Youth group
Political party
Public library
EXCHANGE BETWEEN BUYER AND
SELLER
Something of value
Money, credit, donations, labour, goods
Buyer (consumer)
Seller (provider)
Something of value
Goods, services and ideas
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Key definitions
HUMAN NEED – A state of felt deprivation
Human WANT – The form that a human need takes as shaped
by culture and
individual personality.
DEMAND – Human wants that are backed by buying power (or
the ability to pay for the products).
MARKETING OFFER – Some combination of products, services,
information, or experiences offered to a market to satisfy a
need or want.
CUSTOMER VALUE – The consumer’s assessment of the
product’s overall capacity to satisfy his or her needs.
CUSTOMER SATISFACTION – The extent to which a product’s
perceived performance matches a buyer’s expectations. If the
product’s performance falls short of expectations, the buyer is
dissatisfied. If performance matches or exceeds expectations,
the buyer is satisfied or delighted.
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EXCHANGE – The act of obtaining a desired object from
someone by offering something 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.
RELATIONSHIP MARKETING – The process of creating,
maintaining and enhancing strong, value-laden relationships with
customers and other stakeholders.
MARKET – The set of all actual and potential buyers of a product
or service.
MARKETING MANAGEMENT – The art and science of choosing
target markets and building profitable relationships with them.
DEMARKETING – Marketing to reduce demand temporarily or
permanently – the aim is not to destroy demand, but only to
reduce or shift it.
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Key definitions
Production concept – The philosophy that consumers
will favour products that are available and highly
affordable, and that management should therefore
focus on improving production and distribution
efficiency.
PRODUCT CONCEPT – The idea that consumers will
favour products that offer the most quality,
performance and features, and that the organisation
should therefore devote its energy to making
continuous product improvements.
SELLING CONCEPT – The idea that consumers will not
buy enough of the organisation’s products unless the
organisation undertakes a large-scale selling and
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promotion
effort.
MARKETING CONCEPT- The marketing management
philosophy which holds that achieving organisational goals
depends on determining the needs and wants of target
markets and delivering the desired satisfactions more
effectively and efficiently than competitors do.
SOCIETAL MARKETING CONCEPT – The idea that the
organisation should determine the needs, wants and interests
of target markets and delver the desired satisfactions more
effectively and efficiently than competitors in a way that
maintains or improves both the consumer's and society’ wellbeing.
MARKETING PROCESS – The process of (1) Analysing
marketing opportunities; (2) selling target markets; (3)
developing the marketing mix; and (4) managing the marketing
effort.
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Key definitions
MARKET SEGMENTATION – Dividing a market into distinct
groups of buyers with different needs, characteristics or
behaviour, who might require separate products or marketing
mixes.
MARKET SEGMENT – A group of consumers who respond in a
similar way to a given set of marketing stimuli.
MARKET TARGETING – The process of evaluating each market
segment’s attractiveness and selecting one or more segments
to enter.
MARKET POSITIONING – Arranging for a product to occupy a
clear, distinctive and desirable place relative to competing
products in the minds of target consumers. Formulating
competitive positioning for a product and a detailed marketing
mix.
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PRODUCT’S POSITION – The way the product is defined by
consumers on important attributes - the place the product
occupies in consumer’s minds relative to competing
products.
MARKET LEADER – The firm in an industry with the largest
market share; it usually leads other firms in price changes,
new product introductions, distribution coverage and
promotion spending.
MARKET CHALLENGER – A runner-up firm in an industry
that is fighting hard to increase its market share.
MARKET FOUNDER – A runner-up firm in an industry that
wants to hold its share without rocking the boat.
MARKET NICHER – A firm in an industry that serves small
segments that the other firms overlook or ignore.
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Key definitions
MARKETING MIX – The set of controllable tactical
marketing tools – product, price,
place, and promotion, - that the firm blends to produce
the response it wants in the
target market. The marketing mix included the original
four p’s mentioned above but
now there are the additional 3ps known as the soft
elements namely
people, physical evidence and process that the firm
blends.
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PRODUCT – Anything that can be offered to a market
for attention, acquisition, use or consumption that
might satisfy a want or need. It includes physical
objects, services, persons, places, organisations and
ideas.
PRICE – The amount of money charged for a product
or service, or the sum of the values that consumers
exchange for the benefits of having or using the
product or service.
PROMOTION – Activities that communicate the
product or service and its merits to target customers
and persuade them to buy.
PLACE – All the company activities that make the
product
orto marketing
service available
target
customers.
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Key definitions
Marketing strategy:
One that encompasses the selection and analysis of a target market and the
creation and
maintenance of an appropriate marketing mix that will satisfy those people in the
target market.
Marketing strategy involves selecting and analysing a target market (the group
of people whom the organisation wants to reach) and creating and maintaining
an appropriate marketing mix (product, price, place, promotion, people, physical
evidence and process), to satisfy the market.
Marketing strategy requires that managers focus on four tasks to achieve set
objectives:
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Marketing concept: The philosophy that an organisation
should try to
provide products that satisfy customers’ needs through a
co-ordinated
set of activities that also allows the organisation to
achieve its goals.
A BRAND – A brand can be a name, term, sign, symbol, or a collection
used by businesses to distinguish their products from
other businesses.
Examples of brands: Nike, addidas, tesco, Asda, Motorolla, mercedez etc
TRADE MARK / LOGO – It is a mark or a sign used by businesses to
distinguish their products from other competitors.
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TRADE MARK / LOGO
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Questions for revision
1. Explain the marketing concept and the validity of the
concept in any business of your choice.
2. Examine the marketing mix and briefly discuss the
components.
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