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MARKETING AND HUMAN NEEDS • Marketing touches all of us everyday of our lives (How?): • We wake up in the morning to a sears radio alarm clock, which begins to play a song followed by a commercial advertising a united Airline’s vacation flight to Hawaii(service) MARKETING AND HUMAN NEEDS • We move to the bathroom where we brush our teeth with COLGATE, shave with GILLETTE, gargle with LISTERINE, spray our hair with REVLON and use various other TOILETRIES and APPLIANCES produced by manufacturers around the MARKETING AND HUMAN NEEDS • We put on our Calvin Klein JEANS and SHIRT and Bass SHOES. • We enter the Kitchen and pour some Minute Maid orange juice, and prepare a bowl made up of Kellogg’s rice Krispies and a sliced Chiquita banana in Borden Milk. MARKETING AND HUMAN NEEDS • After this, we drink one or two cups of Maxwell House Coffee with two teaspoons of Domino sugar accompanied by a slice of Sara lee coffee cake. • We are the personal beneficiaries of oranges grown in California or South Africa, Coffee imported from MARKETING AND HUMAN NEEDS Brazil, a newspaper made of Canadian wood pulp, and Radio news coming from as far away as Australia. All of these goods ended up in our homes. The marketing system has made all these possible without effort on our part. WHAT IS MARKETING? • Marketing consists of a set of principles for: • Choosing target markets • Measuring their needs • Developing want-satisfying products and services and WHAT IS MARKETING? • Delivering them at a value to the customer and profit to the company DEFINITIONS OF MARKETING Marketing has been defined in a number of ways: The American Marketing Association’s definition: “Marketing is the performance of business activities that directs the flow of goods and services DEFINITIONS OF MARKETING from producer to customer or user”. Criticisms This definition unfortunately makes marketing sound largely like a distribution activity. It fails to indicate marketing’s role in determining what goods are to be produced. DEFINITIONS OF MARKETING • It does not indicate the specific business activities constituting marketing. Another definition “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 the right communication and promotion”. DEFINITIONS OF MARKETING Criticisms This definition supplies an idea of the specific activities that marketers carry out. However, it fails to define marketing activity broadly enough in that other things besides goods and services can be marketed. DEFINITIONS OF MARKETING • Furthermore, it defines marketing as a firm process rather than a social process. Third Definition “Marketing is the creation and delivery of a standard of living”. DEFINITIONS OF MARKETING Criticisms This definition takes a macro or social view of marketing. However, it does not reveal the fundamental and universal nature of marketing. DEFINITIONS OF MARKETING Fourth Definition According to Phillip Kotler : “Marketing is human activity directed at satisfying needs and wants through exchange processes” DEFINITIONS OF MARKETING Comments To understand this definition, the following more basic concepts:needs, wants, demands, products, exchange, transactions and markets have to be defined. DEFINITIONS OF MARKETING Needs The most fundamental concept underlying marketing is that of needs. Inanimate objects do not have needs, but living matter does. “A human need is a state of felt deprivation in a person” DEFINITIONS OF MARKETING • Human needs are many and complex.They include: • The basic Physiological needs for food, clothing,and warmth; safety needs; social needs for belongingness, influence, and affection;and individual needs for knowledge and self expression. DEFINITIONS OF MARKETING • These needs are a basic part of human makeup. • When a need is not satisfied, the person is unhappy, this being greater the more intense and central the need. • An unhappy person will do one of two things: DEFINITIONS OF MARKETING • Undertake steps to obtain an object that will satisfy the need • Try to extinguish the desire. • That is, need reduction can occur in two ways: • Need reduction = Obtaining desired goods or service Extinguishing the desire DEFINITIONS OF MARKETING Wants Human wants are the expression of human needs as they are shaped by a person’s culture and individual development. Wants always have a reference to culturally defined objects that will satisfy the need. DEFINITIONS OF MARKETING Demand • People have numerous wants, many of which they cannot satisfy. • Every person has a finite set of resources(income, savings, time, energy) and must make choices of what things are affordable and will make him or her feel better off. DEFINITIONS OF MARKETING • A want becomes a demand when the person is able and willing to buy the object he or she desires. Products The existence of human needs, wants, and demands implies the concept of products. Product is defined as follows: DEFINITIONS OF MARKETING • “A product is something that is viewed as being capable of satisfying a need or want”. • It is important not to limit our concept of product to physical objects. • The key thing about a product is the service that it renders. DEFINITIONS OF MARKETING • Anything capable of rendering a service- i.e.satisfying a need-can be called a product. This includes: persons places organisations activities and ideas DEFINITIONS OF MARKETING Exchange The fact that people have needs, wants, and demands and there are products capable of satisfying them is necessary but not sufficient to define marketing. DEFINITIONS OF MARKETING • Marketing exists when people decide to satisfy needs and wants through exchange. • “Exchange is the act of obtaining a desired object from someone by offering something in return”. DEFINITIONS OF MARKETING • In most modern societies, producers offer to sell their goods to others in exchange for money. • Exchange is the core concept of the discipline of marketing. For exchange to take place, five conditions must be satisfied: DEFINITIONS OF MARKETING • There are at least two parties • Each party has something that might be of value to the other party (or parties) • Each party is capable of communication and delivery • Each party is free to accept or reject the offer of the other party ( or parties) • Each party believes it is proper to deal with the other party in this way DEFINITIONS OF MARKETING Transactions If exchange is the core concept of the discipline of marketing, what is the discipline’s unit of measurement? The answer is: a transaction! “A transaction consists of a trade of values between two parties” DEFINITIONS OF MARKETING • A transaction involves several measurable entities: * at least two things of value * conditions that are agreed to * a time of agreement * a place of agreement DEFINITIONS OF MARKETING Markets The concept of transactions leads to the concept of a market. “A market is the set of all actual and potential buyers of a product” DEFINITIONS OF MARKETING • A market can grow up around a product, a service, or anything else of value e.g.: * a labour market * a money market * a donor market DEFINITIONS OF MARKETING Marketing The concept of markets finally brings us full cycle to the concept of marketing. Marketing means human activity that takes place in relation to markets. DEFINITIONS OF MARKETING • Marketing means working with markets, which means attempting to actualize potential exchanges for the purpose of satisfying human needs and wants. Thus, we return to our definition DEFINITIONS OF MARKETING of marketing as human activity directed at satisfying needs and wants through exchange processes. Exchange processes involve work in that : DEFINITIONS OF MARKETING • The seller has to: * search for buyers * identify their needs * design appropriate Products * promote them * store and transport them * negotiate and so on . DEFINITIONS OF MARKETING Activities such as : * product development * search communication * distribution * pricing and * service constitute core marketing activities. DEFINITIONS OF MARKETING The buyers also carry out marketing activities. *The housewife does her “marketing” that is, she searches for goods she needs at prices she will be able to pay. DEFINITIONS OF MARKETING • The purchasing agent who needs a commodity in short supply has to track down sellers and offer attractive terms. • Seller’s Market – is one in which the buyer is the more active “marketer” • Buyer’s Market – is one in which the seller is the more active “marketer” MARKETING MANAGEMENT Introduction Those who engage in exchange learn how to do it better over time. In particular, sellers learn how to professionalize their marketing management. MARKETING MANAGEMENT Definition “Marketing Management is the analysis, planning, implementation, and control of programs designed to create, build, and maintain mutually beneficial exchanges and relationships with target markets for the purpose of achieving organizational objectives” MARKETING MANAGEMENT PHILOSOPHIES • Having described Marketing management as the conscious effort to achieve desired exchange outcomes with target markets, what is the philosophy that guides these marketing efforts? • That is, what is the relative weight given to serving the interests of the organization, the customer and the society? MARKETING MANAGEMENT PHILOSOPHIES • There are five alternative concepts under which business and other organisations can conduct their marketing activity ( or activities): MARKETING MANAGEMENT PHILOSOPHIES • The production concept • The product concept • The selling concept • The marketing concept and • The societal marketing concept MARKETING MANAGEMENT PHILOSOPHIES 1.The production concept The production concept is one of the oldest concepts guiding sellers. Definition The production concept is a management orientation that assumes that consumers will MARKETING MANAGEMENT PHILOSOPHIES favor those products that are available and affordable, and therefore the major task of management is to pursue improved production and distribution efficiency. The implicit premises of the production concept are: MARKETING MANAGEMENT PHILOSOPHIES Consumers are primarily interested in product availability and low price. Consumers know the prices of the competing brands. Consumers do not see or attach much importance to nonprice differences within the product class. MARKETING MANAGEMENT PHILOSOPHIES The organisation’s task is to keep improving production and distribution efficiency and lowering costs as the key to attracting and holding customers. Appropriate situations: The production concept is an MARKETING MANAGEMENT PHILOSOPHIES appropriate philosophy of management in two types of situations. The first is where the demand for a product exceeds supply.Here consumers are ready to buy any version of the product they can find. MARKETING MANAGEMENT PHILOSOPHIES The second situation favouring a production orientation is where the product’s cost is high and has to be brought down through learning how to produce it more efficiently. MARKETING MANAGEMENT PHILOSOPHIES Criticisms - It is open to: The charge of impersonality and Consumer insensitivity. 2.The Product Concept Introduction The product concept is another major concept guiding sellers. MARKETING MANAGEMENT PHILOSOPHIES Definition The product concept is a management orientation that assumes that consumers will favor those products that offer the most quality for the price, and therefore the organization should devote its energy to improving product quality. MARKETING MANAGEMENT PHILOSOPHIES The implicit premises of the product concept are: Consumers buy products rather than solutions to needs. Consumers are primarily interested in product quality. Consumers choose among competing brands on the basis MARKETING MANAGEMENT PHILOSOPHIES of obtaining the most quality for their money. The organisation’s task is to keep improving product quality as the key to attracting and holding customers. MARKETING MANAGEMENT PHILOSOPHIES 3.The Selling Concept Introduction The Selling Concept (also called the Sales Concept) is another hallowed way in which many producers guide their exchange activity. MARKETING MANAGEMENT PHILOSOPHIES Definition The Selling Concept is a management orientation that assumes that consumers will either not buy or not buy enough of the organisation’s products unless the organization makes a substantial effort to stimulate their interest in its products. MARKETING MANAGEMENT PHILOSOPHIES The implicit premises of the selling concept are: Consumers have a normal tendency to resist buying most things that are not essential. Consumers can be induced to buy more through various sales-stimulating devices. MARKETING MANAGEMENT PHILOSOPHIES The organization’s task is to organize a strong salesorientated department as the key to attracting and holding customers. Examples of Where the Selling Concept is practiced: MARKETING MANAGEMENT PHILOSOPHIES “unsought goods” i.e. those goods that buyers normally do not think of buying.Examples include: * insurance * encyclopedias and * funeral plots Manufacturers and resellers MARKETING MANAGEMENT PHILOSOPHIES Nonprofit areas. Examples include: *Political Parties *Churches MARKETING MANAGEMENT PHILOSOPHIES 4. The Marketing Concept Introduction The marketing concept is a more recent idea in the history of exchange relations. Definition The marketing concept is a management orientation that MARKETING MANAGEMENT PHILOSOPHIES holds that the key to achieving organizational goals consists of the organization’s determining the needs and wants of target markets and adapting itself to delivering the desired satisfactions more effectively and efficiently than its competitors. MARKETING MANAGEMENT PHILOSOPHIES Expressions of the Marketing Concept The Marketing Concept has been expressed in more colorful ways, such as: * “Find wants and fill them” * “Make what you can sell instead of trying to sell MARKETING MANAGEMENT PHILOSOPHIES what you can make” *”Love the customer and not the product” * “Have it your way” (Burger King) and * “You’re the boss” (United Airlines) MARKETING MANAGEMENT PHILOSOPHIES The underlying premises of the Marketing Concept are: Consumers can be grouped into different market segments depending on their needs and wants. The consumers in any market MARKETING MANAGEMENT PHILOSOPHIES segment will favor the offer of that organization that comes closest to satisfying their particular needs and wants. The organization’s task is to research and choose target markets and develop effective offers and marketing programs MARKETING MANAGEMENT PHILOSOPHIES as the key to attracting and holding customers. Comments The selling concept and the marketing concept are frequently confused by businesspeople and the public. MARKETING MANAGEMENT PHILOSOPHIES Levitt draws the following contrast between these two orientations: Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing MARKETING MANAGEMENT PHILOSOPHIES with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it. The marketing concept replaces and reverses the logic of the selling concept. MARKETING MANAGEMENT PHILOSOPHIES In essence, the marketing concept is a customer needs and wants orientation backed by integrated marketing effort aimed at generating customer satisfaction as the key to satisfying organizational goals. MARKETING MANAGEMENT PHILOSOPHIES The Marketing Concept is the company’s commitment to the time-honored concept in economic theory known as Consumer Sovereignty. The determination of what is to be produced should not be in the hands of the companies or in the hands of government but MARKETING MANAGEMENT PHILOSOPHIES in the hands of consumers. The companies produce what the consumers want, and in this way they maximize consumer welfare and earn their profits. Examples of companies Practicing marketing Concept Companies that have adopted this concept include: MARKETING MANAGEMENT PHILOSOPHIES * Procter and Gamble * IBM * Avon * McDonald’s 5.Societal Marketing Concept Introduction The Societal Marketing Concept is a response to a call for a new MARKETING MANAGEMENT PHILOSOPHIES concept beyond the marketing concept. This call was motivated by the gaps discovered in an age of: * environmental deterioration * resource shortages * explosive population growth * worldwide inflation and * neglected social services. MARKETING MANAGEMENT PHILOSOPHIES Among the proposals made are: “The human concept” “The intelligent consumption concept” and “The ecological imperative concept” All of these proposals get at different aspects of the same problem. MARKETING MANAGEMENT PHILOSOPHIES However, Kotler et al proposed “the societal marketing concept” Definition “The societal marketing concept is a management orientation that holds that the key task of the organization is to determine the needs, wants, and interests MARKETING MANAGEMENT PHILOSOPHIES of target markets and to adapt the organization to delivering the desired satisfactions more effectively and efficiently than its competitors in a way that preserves or enhances the consumer’s and the society’s well-being”. MARKETING MANAGEMENT PHILOSOPHIES The underlying premises of the societal marketing concept are: Consumers’ wants do not always coincide with their longrun interests or society’s longrun interests. MARKETING MANAGEMENT PHILOSOPHIES Consumers will increasingly favor organizations that show a concern for meeting their wants, long-run interests, society’s longrun interests. The organization’s task is to serve target markets in a way that produces not only want satisfying but long-run individual MARKETING MANAGEMENT PHILOSOPHIES and social benefit as the key to attracting and holding customers.