Download 1.0 overview of marketing

1.1 INTRODUCTION
Dr O.K Mbura
Most people think that marketing is buying,
selling or advertising:
 They are most visible items.
 Marketing is wider and includes:
(i) Find out what consumer wants
(ii) Develop a product to satisfy that want
(iii) Price, distribute and promote that product.
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It is on these bases that marketing is
considered as based on ‘satisfying customer
needs’.
If the marketer understands consumer needs,
develops products and services that provide
superior customer value and price, distributes
and promotes them effectively, these
products will sell easily.
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MARKETING: has been defined in various
ways:
Kotler (2008:5) defines Marketing as a social
and managerial process, by which individual
and organizations obtain what they need and
want through creating and exchanging value
with others.
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At least four factors are required: (i) Two or more parties with unsatisfied needs
Suppose you had unmet need a desire for a
diet sugar free, soft-drink that tasted like
coca-cola but you didn’t yet know that Diet
coke existed.
Also unknown to you that diet coke were
available in a nearest supermarket.
On the other hand, a seller of Diet coke needs
someone to buy.
Hence two parties have unmet needs.
(ii) Desire and ability to satisfy these needs
• Both you and the supermarket owner want to
satisfy these unmet needs.
• You have the money to buy the item and the
seller has the desire and ability to sell Diet
Coke.
(iii) A way for the parties to communicate
• The Marketing transaction of buying the Diet
Coke will never occur unless you know the
product exists and its location.
• Similarly, the storeowner won’t sell diet coke
unless there is a market or potential
consumer near the supermarket who is likely
to buy.
• When an advertisement is seen on the
newspaper
the
communication
barrier
between the seller and the buyer is overcome.
(iv) Something of value to exchange
• Marketing occurs when the transaction takes
place and both the buyer and seller exchange
something of value e.g. money exchanged for
supermarkets diet coke.
• Both of you have gained something and also
given up something but you are both better
off because you have each satisfied your
unmet needs.
• This
exchange process is central to
marketing.
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Marketing could thus be defined as human
activity directed at satisfying needs and wants
through the exchange process.
1.2.1 Marketing entities
(i) Physical goods:
A Physical good is a real physical thing that
we can touch. Most of what is produced is in
the form of goods. E.g. products as cars,
hairdryers, TV sets, machines, shoes etc.
(ii) Services:
Services are intangible activities, benefits or
satisfactions provided by an organization to
consumers in exchange for money.
(iii)Experiences:
•A
marketer can create, stage and market
experiences.
•It takes the form of paying visit to reputable
places. E.g. marketing of climbing the Mount
Kilimanjaro
(iv) Events:
•Marketers may also promote time- based events
such as World cup, Company anniversaries,
Olympics, major trade shows such as Dar Es Salaam
International Trade Fair (DITF).
(v) Persons:
• This has to do with celebrity marketing.
Artists, Musicians, CEOs, Physicians, high
profile lawyers, financiers etc often get help
from celebrity marketers.
• In some cases people may market themselves
and have ‘self branding’.
(vi)Places:
• Places such as cities, regions and even
countries:to attract tourists, investments and
new residents.
• Tanzania has invested a lot in marketing the
country as a tourists and having suitable
climate for investment.
• The 3rd phase and 4th presidents of the
Country have promoted the country as having
suitable climate for the same.
(vii) Properties:
 Properties are intangible rights of ownership
of either real property (such as real estate) or
financial property (such as sale of shares).
 Properties are bought and sold and this
requires marketing.
 Investment companies, brokers and banks are
involved in marketing to investors.
(viii)Organizations:
• Organizations actively work to build strong,
favourable image and building of corporate
identity in the minds of their target publics.
• Universities, museums and performing arts all
use marketing to boost their public images
and to compete for audiences and funds.
(ix) Information:
• Information can be produced and marketed
as a product. This is what schools and
universities produce and distribute at a price
to parents, students and communities,
computers, CDs are bought and sold for
information.
• The visit to internet is also for information.
(x) Ideas
• Every market offering includes a basic idea.
• An idea may take the form of philosophies,
lessons or advice.
• Often ideas are included with a good or
service.
• Thus we may buy a book (a good) that
provides ideas on how to loose weight. Ideas
such as avoid fatty food, exercise daily etc
are often promoted by social marketers.
1.2.2 States of demand and corresponding
marketing tasks
 Marketing management can be defined as
the analysis, planning, implementation and
control of programs designed to create
build and maintain beneficial exchanges
and relationships with target markets for
the purpose of achieving organizational
objectives.
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Marketing Management takes place when at
least one party to a potential exchange gives
thought to objectives and means of achieving
desired responses from other parties
It thus involves setting objectives and develop
strategies for producing satisfactory results to
the target markets.
The work of the marketing Managers is thus to
manage programs.
Their job is to analyze, plan and implement
program that will produce a desired level and
mix of transactions with target markets.
• 1.2.2 States of demand and corresponding
marketing tasks
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Marketing Management has the task of
influencing the level, timing and composition of
demand in a way that will help the organization
achieve its objectives.
Simply put, Marketing Management is demand
management.
The organization forms an idea of a desired level
of transactions with a target market.
At times the actual, demand level may be below,
equal to or above the desired level.
Eight distinguishable tasks that results from
various states of demand exist.
 These provide challenges facing marketers in their
marketing endeavors.
(i) Conversional Marketing
 This grows out of the state of negative demand.
Negative demand is a state in which all or most of
the important segments of the potential market
dislike the product even to the extent of being
prepared to pay a price to avoid it.
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Vegetarians feel negative demand for meats of all
kinds. People have a negative demand for
vaccinations, dental work, vasectomies etc.
Employers also feel negative demand on alcoholic
employees. Muslims dislike poke and tell others
in their community not to like it.
The Marketing task is to analyse why the Market
dislikes the product and whether a marketing
program through product redesign, lower prices
and more positive promotion can change the
market beliefs and attitudes thus cause demand
to rise from negative to positive and eventually
equal the positive supply level.
(ii) Stimulation Marketing
• This arises out of no demand state: no demand is a
state in which all or important segments of a
potential market are unaware, uninterested in or
indifferent to a product.
• Examples:
• Youth markets with pensions
• Boats in areas where no water
• Burglar alarms in areas where there is no crime
• Students with foreign language courses
• Political buttons right after an election
• Farmers may not be interested in using new farming
method
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The task of converting no demand into
positive demand is called stimulation
Marketing.
It involves finding ways to connect the
benefits of the product with the person’s
natural needs and interests.
For example, alternative use of boats (such as
using it to mix ingredients of making flower
bread) could be sought and promoted.
(iii) Developmental Marketing
• Developmental marketing is associated with a state
known as latent demand.
• A state of latent demand exists when a substantial
number of people share a strong desire for
something that doesn't exist in the form of an actual
product or service.
• There
is strong latent demand for unharmful
cigarettes, more fuel-efficient cars, and good
television programs, unpolluted major cities and
underground train, free of charge current accounts,
HIV curing medicine etc.
• The CRDB (1996) Bank in Tanzania introduced Jumbo
Account for children out of demand.
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The process of effectively converting latent
demand to actual demand is that of
developmental marketing.
The marketing task is to measure the size of
the potential market and develop effective
goods and services that would satisfy the
demand.
(iv) Remarketing
• All kinds of products, services, places or
organizations
and
ideas
eventually
experience declining or faltering demand.
• Faltering demands is a state in which the
demand for a product or service is less than
its former level and where further decline is
expected in the absence of remedial efforts to
revise the target market, product and/or
marketing effort.
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Churches and private colleges have seen their
membership
declining.
Life
Insurance
products and the consumption of more fatty
food are also declining in Tanzania.
The Marketing task is re-marketing and it
involves analyzing the causes of Market
decline and determines whether demand can
be re-stimulated through finding new target
markets, changing the product features or
developing more effective communication
(v) Synchromarketing
• Many organizations face demand that varies on a
seasonal, daily or even hourly basis causing problems
of storage, capacity usage, physical distribution etc.
• Synchromarketing arises out of this irregular demand
state.
• The irregular demand is a state in which the current
timing pattern of demand is marked by seasonal or
volatile fluctuations that departs from the timing
pattern of supply.
• It aims to discourage use when demand is at its
strongest and encouraging use when demand is at its
weakest.
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E.g. Museums are under-visited during the
weekdays and overcrowded during weekends.
In mass transit most of the equipment is idle
during the off hours and is in insufficient
supply during the peak hours.
The more use of electricity during day times
versus nigh time
The more use of mobile phones during the
day time than night time.
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The
marketing
task
is
called
synchromarketing.
This is because the effort is to bring demand
and supply into better synchronization.
It involves altering the time pattern of
demand through flexible pricing, promotion
and other incentives.
It is known that electricity charge and mobile
phone charges vary with time. Night time it is
cheaper than day time.
At times 'Daladala' transport charge different
price at different times.
(vi) Maintenance Marketing
• This grows out of state of full demand.
• Full demand is a state in which the current level
and timing of demand is at a desired level.
• A market demand is subject to two erosive
forces. One force is changing needs and tastes in
the market place. This may arise because of
changing market preferences.
• The other force is active competition. When a
product is doing well competitors quickly move
in and attempt to attract away some of the
demand.
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The task of a marketer facing full demand is
maintenance marketing.
It calls for maintaining the current level of
demand in the face of changing consumer
preferences and increasing competition.
The organization must keep up its quality
and
continually
measure
consumer
satisfaction to make sure it is doing a good
job.
(vii) Demarketing:
• This arises out of overfull demand.
• Overfull demand is a state in which demand
exceeds the level at which the marketer feels
able or motivated to supply it.
• The problem may be due to temporary
shortages as when products themselves
facing unexpected rise and fall of demand or
unexpected interruptions of supply.
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The problem could also be due to chronic overpopularity e.g. where you have too many
motorists using a single well-built road. The
impact is to weaken its structure. National parks
are terribly overcrowded in the summer time.
The task of reducing overful demand is called
demarketing.
It deals with attempts to discourage customers in
general or certain class of customers in particular
on either a temporary or permanent basis.
Prices may be raised and product quality, service,
promotion and convenience reduced.
(viii) Countermarketing:
• This grows out of unwholesome demand.
Unwholesome demand is a state in which any
demand is felt to be excessive because of
undesirable qualities of the product.
• Unselling campaigns have been conducted
against cigarettes, alcohol, hand guns, xrated movies, large families and hard drugs.
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The task of trying to destroy the demand for
something is called countermarketing or
unselling.
The product may be the organizations own
product which it wishes to phase out, a
competitors product or third party's product
which is regarded as socially undesirable.
It involves ending promotions, raising price
or use of legal restrictions.
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(i) Market segmentation and Target markets
By market segmentation it means dividing
and profiling distinct group of buyers who
might prefer or require varying product and
service mixes.
Market segments can be identified by
examining
geographic,
demographic,
psychographic and behavioral differences
among buyers.
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In order to satisfy consumer needs, the
organization must concentrate its efforts on
certain needs of a specific group of potential
consumers.
This is the organizations target market.
This
is the
one
or
more
specific
groups/segments of potential consumers
towards which the organization will direct its
marketing program.
Target market is preceded by market
segmentation
(ii) Marketplace, market space and metamarket
• Market
covers the various groupings of
customers.
• Businesspeople talk about need markets (the diet
seeking market), product markets (the computer
market), demographics market (The ladies
market), the geographic market (The Kenyans
market).
• The marketplace is physical as when goes to
shopping in a store.
• Marketspace
is digital as when one goes
shopping on the internet.
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Metamarket
describes a cluster of complimentary
products and services that are closely related in the
minds of consumers but are spread across a diverse
set of industries.
In Tanzania the wedding market is growing rapidly.
Its metamarket consist of master of ceremony,
trumpet,
caterer,
musicians,
decorators,
photographers, video shooters etc.
In purchasing this service a buyer will get involved in
many parts of this metamarket.
This has created opportunity for metamediaries to
assist buyers to move smoothly to these groups.
It is not uncommon for some master of ceremonies to
act as metamediaries
(iii) Needs, wants and demand
• The marketer has to understand the customers needs,
wants and demand.
• Needs are the basic human. People need food shelter,
clothing and shelter to survive.
• People also have strong need for recreation, education and
entertainment.
• These needs become Wants when they are directed to
specific objects that might satisfy the need. A Tanzanian
may need food but may want ‘Steer’s chips’.
• Wants are shaped by one’s society.
• Demands are wants for specific products backed by an
ability to pay. Many people want Nokia mobile handset but
few people can afford.
(iv) Offering, Brand, Value and satisfaction
• Value proposition is set of benefits offered to
customers to satisfy their needs.
• The intangible value proposition is made
physical by an offering.
• An offering is a combination of products,
services, information and experiences.
• Brand is an offering from a known source.
• The offering will be successful if it delivers
value and satisfactions to target buyers.
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The buyer chooses between different offerings on the
basis of what is perceived to deliver the most value.
Value is seen as a combination of quality, service and
price (QSP).
Value increases with quality and service and
decreases with price.
Value has been translated into a ration between what
a customer gets and what he/she gives.
The customer gets the benefits and assumes costs.
The benefits include functional benefits and
emotional benefits.
The costs include monetary costs, time costs, energy
costs and psychic costs.
The business can increase the value of the
customer offering in several ways:
 Raise benefits
 Reduce costs
 Raise benefits and reduce costs
 Raise benefits by more than the raise in costs
 Lower benefits by less than the reduction in
costs.
(v) Relationship marketing
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Relationship
marketing
aims at building
mutually satisfying long term relations with
key parties such as customers, suppliers,
distributors etc in order to earn and retain
business.
Marketers achieve this by promising and
delivering high quality products and services
at fair prices to the other parties overtime.
(vi) Competition
•Includes
all the actual and potential rival
offerings and substitutes that a buyer might
consider. There are 4 levels of competition:
(a) Brand competition
•involves companies offering similar products and
services to the same customers at similar prices.
• A mobile phone company like Tigo sees its
competitors as all companies that sell the same
services: Vodacom, Air Tel, Zentel etc,
(b) Industry competition
•A company sees its competitors as all
companies making the same product or class
of products.
•A car manufacturing company might be
producing products that compete with all
automobiles.
(c) Form competition
• A company sees its competitors as all companies
manufacturing products that supply the same
service.
• A particular car brand such as Honda might see its
competitors as all car manufacturers as well as
manufacturers of motorcycles, bicycles and trucks.
(d) Generic competition
• A company sees its competitors as all companies
that compete for the same customers’ money.
• A company competes with all those that sell other
products such as durables, real estates, food etc
(vii) Integrated marketing
• Integrated
marketing is a concept that
advocate that all the companies should work
together to serve the customer’s interest.
• All employees ought to be trained and
motivated to develop the customer mindset.
• Integrated marketing takes place at the levels
of the marketing functions and among other
departments.
(viii) Marketing Mix
Having selected the target market the firm
must take steps to satisfy their needs.
This may be done by pulling a combination of
four variables; often called 4 p’s which
implies.
• product
• price
• place (Distribution)
• promotion
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The four variables lead to marketing mix.
Marketing mix is the set of controllable
variable that the firm can use to influence the
buyer’s responses.
Recently a 5th P has been introduced. This is
PRECISSION
(a) Product:
• A product is everything that one receives in an
exchange including all tangible and intangible
attributes and expected benefits.
• A product may be a good, service or idea. A good is a
real physical thing that we can touch.
• A service these are intangible activities, benefits or
satisfactions provided by an organization to
consumers in exchange for money.
• An idea may take the form of philosophies, lessons or
advice. Often ideas are included with a good or
service. Thus we may buy a book (a good) that
provides ideas on how to loose weight.
A product decision involves the following: • Quality
• Features
• Options
• Style
• Brand name
• Packing
• Sizes
• Services
All these may be altered in order to satisfy
consumer needs.
(b) Price
Price is the amount of money that customer have to
pay for the product. Organizations have to decide on
the following:•Discounts
•Allowances
•Payment period
•Credit terms
Price is an important variable because: •Consumers are concerned about the value
obtained in an exchange
•It can be used as a competitive tool
•It can be used to establish the product’s
image
(c) Distribution (Place)
• Distribution involves various activities that
the company undertakes to make the product
available to target consumers. Various
decisions are made here:• Channels to be used
• Coverage
• Locations
• Inventory
• Transport
(d) Promotion
• This stands for various activities that the
company undertakes to communicate its
products’ merits and to persuade customers
to buy them. Activities involved include the
following: • Advertising
• Personal Selling
• Sales Promotion
• Publicity
(e) Precision
 This has to do with how efficiency and
effectively can the other 4 Ps be delivered
 Today Customers expect more precision from
business because the world has become
much more precise
 partly because people are more informed
through high tech.
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Customers become more impatient with
inaccuracies, delays and imprecision.
The more efficient and effective this can be done
the higher the chance to win competitors
The purpose of the 5p is to make sure that each of
the first 4 ps operate at their maximum efficiency
and lowest costs.
E.g coca cola has declared the age of precision
marketing
Retailers are becoming more precise in terms of
what they need in their stores to serves customers.
(ix) Marketing Environment
• Marketing divisions do not occur in vacuum. They
are affected by a number of environmental forces
namely “uncontrollable”.
• These unlike the 5Ps are largely beyond the
control of the Marketing department and its
organizations.
• The uncontrollable may serve as an accelerator or
brake on marketing.
• The environmental factors include Legal, Political,
Economic, Social, Technological and competitive
environments (LEPEST $ Co)
6 competing concepts.
(i) Production Concept
• This is the oldest concept guiding Sellers.
• The production concept holds that consumers
will favour those products that are widely
available and low in cost.
• Management
in
production
oriented
organizations concentrate on achieving high
production efficiency and wide distribution
coverage.
•
The assumption that consumer is primarily
interested in product available and low price
holds in at least two types of situations:
• Where the demand>supply
• Where the product’s cost is high and has to
be
brought
down
through
increased
productivity to expand the market.
• When a company wants to expand the market
• Management task is to improve efficiency in
production and distribution.
(ii) The Product Concept
• The product concept holds that consumers will favour
those products that offers the most quality
performance and features.
• Management focuses their energy on making good
products and improving them overtime.
• These managers assume that buyers admire well
made products and are willing to pay more for
product “extras”.
• Many of these managers are caught up in a love affair
with their product and fail to appreciate that market
may be moving in a different direction.
• The quality may be higher than what customers
would wish to tolerate parting with their money.
(iii) The selling Concept
• The selling concept holds that consumers,
is left alone will ordinarily not buy enough
of the organizations products.
• To succeed, the organization must invest in
aggressive promotion effort.
• The
concept assumes that consumers
typically show buying inertia or resistance
and have to be coaxed into buying more,
and that
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the company has available a whole array of
effective selling and promotion tools to
stimulates more buying.
It also assumes that if customers do not buy
will not say bad things about the product.
It is applicable most aggressively with
“unsought goods” -those goods that buyers
normally do not think of buying such as
insurance and funeral plots. It is also practiced
by non profit area such as fund raisers and
political parties where a political party sells its
candidate to voters.
(iv) The Marketing Concept
• This emerged from 1950’s and challenged
preceding concepts.
• The marketing concept holds that the key to
achieving goals consists in identifying or
anticipating the needs and wants of target
markets
and
delivering
the
desired
satisfactions more effectively and efficiently
than competitors.
The underlying premises of the marketing concept:
• The organization conceives of its mission in
terms of satisfying a defined set of want of a
defined group of customers.
• The organization recognizes that satisfying wants
requires an attractive program of Market research
to learn of these wants.
• The organization believes that doing a good job
of satisfying customers’ wins their loyalty, repeat
business and favorable word of mouth; all of
these being crucial in satisfying the organizations
goals.
Marketing concept has been expressed in many
ways:
• Meeting needs profitably
• Find wants and fill them
• Love the customer, not the product
• You are the boss
• Putting people first
• Partners for profit
Differences between selling and marketing
concept
• Selling focuses on the needs of the seller
whereas marketing focuses on the needs of
the buyer
• Selling is preoccupied with the sellers need to
convert his product into cash, marketing with
the idea of satisfying the needs of the
customers by means of the product and the
whole cluster of things associated with
creating, delivering and finally consuming it.
(v) Societal Marketing Concept
• The societal marketing concept holds, that
the organizations task is to determine the
needs wants and interests of target markets
and to deliver the desired satisfaction more
effectively and efficiently than competitors in
away that preserves and enhance the
consumer and society’s well being.
• Other related terms to societal marketing
include humanistic marketing and ecological
marketing.
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Societal marketing calls to build social and
ethical considerations into their marketing
practices.
It calls
for marketers to balance three
considerations in setting the marketing
policies, namely company profits, consumer
want satisfaction and society interest.
(vi) The Customer Concept
• This is a concept that propounds that the key to
achieving organization objectives consist of
shaping the company’s offer and messages to
meeting the interest of the individuals.
• The companies collect information on each
customer past transactions, demographics, and
psychographics and media and distribution
preferences.
• In the bank sector of Tanzania a need to pay
attention to the needs of individual customers
especially corporate customers is generally
important as switching of any one of those
customers could shake the bank.