Principle of marketing chapter | An overview of marketing and management

An overview of marketing and management

1. Principles of Marketing An Overview of Marketing and Marketing Management Chapter One

2. Marketing and Its Core Concepts Marketing is meeting customers’ needs and wants profitably. Marketing is the economic process by which goods and services are exchanged between the producer and the consumer and their values are determined in terms of money (prices). All of us engage in marketing in one or another way. E.g. Searching a job & trying to convince customers

3. Many people think that marketing and selling mean the same thing. Others think that marketing is the same as selling and advertising . Still others have a notion that marketing has got something to do with making products available in the stores, arranging , displays and maintaining inventories of products for future sales. Marketing is a key function of management. It brings success to business organization. A business organization performs two key functions (i.e. producing goods and services and making them available to potential customers for use.)

4. Definition of Marketing Marketing can be defined as “ the performance of business activities that directs the flow of goods and services from producer to consumers/final users. It is a process of transacting goods and services form the producer to consumers”. According to William J. Stanton , Marketing is a system of business activities designed to plan, price, promote and distribute want satisfying goods and services to present and potential customers . The Chartered Institute of Marketing defines Marketing as: “Marketing is the management process for identifying, anticipating & satisfying customer requirements profitably.”

5. Core concepts of Marketing Marketing has been defined in various ways. The definition that serves our purpose best is that, According to Philip Kotler , “ Marketing is a Social and Managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others”. This definition of marketing rests on the following core concepts: needs, wants, and demands; products (goods, services, and ideas); value, cost and satisfaction, exchange and transactions; markets, and marketers. Needs – Marketing starts with human needs and wants. A human need is a state of felt deprivation of some basic satisfaction; people require food, clothing, shelter, safety, belonging, and esteem .

6. Wants – Wants are desires for specific satisfiers of needs. Wants are shaped by society, culture and individual personality. In different society, wants can be satisfied in different ways. For e.g. an Ethiopian needs food and wants " Injera " & "wet", and an American needs food and wants “hamburger ”. Demands – are human wants for specific products that are backed by an ability and willingness to buy them. Wants become demands when supported by purchasing power. Product (Goods, Services, and Ideas): People satisfy their needs and wants with products. A product is anything that can be offered to satisfy a need or want. It can be physical goods, services, ideas or a combination of physical product along with services . For example, a computer manufacturer is supplying goods (computer, monitor, and printer), services (delivery, installation, training, maintenance and repair) and an idea (computational power).

7. Value and satisfaction: Consumers usually face a broad array of products and services that might satisfy a given need. Customer value is the difference between the value customer gains from owning & using a product and the cost of obtaining the product . Customer Satisfaction depends on a product’s perceived performance in delivering value relative to buyers’ expectation. CUSTOMER SATISFACTION (3 Types) Dissatisfied (Bad word of mouth communication)- P<E Satisfied (Good word of mouth communication)- P=E Delighted- P>E Outstanding marketing companies do out of their way to keep their customers satisfied

8. Exchange: Marketing occurs when people decide to satisfy needs and wants through exchange. is the act of obtaining a desired product from someone by offering something in return. It is only one of the ways that people can obtain what they need. A person may get what he needs by begging others, hunting, robbing etc . Exchange must be seen as a process rather than as an event. Two parties are engaged in exchange if they are negotiating and moving toward an agreement. When an agreement is reached, we say that a transaction takes place . A transaction consists of a trade off values between two parties.

9. Market : A market consists of all the potential and actual customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want . Thus the size of the market depends on: the number of people who exhibit the need or want, have resources that interest others, and are willing and able to offer these resources in exchange for what they want. Here, unlike the Economics approach that considers market as a collection of buyers and sellers, we shall consider market as a collection of buyers only and the sellers are considered as industry .

10. Marketer : is a party that seeks a resource from the other party and in return willing to offer something valuable to the other party and the party with whom the marketer needs to make exchange is known as prospect . In the event that both the parties actively seek an exchange, we say that both of them are marketers and call the situation as reciprocal marketing.

11. Marketing Management According to American Marketing Association , marketing management is defined as the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchange that satisfies individual and organizational goals. In light with this, marketing manager is the one who is responsible for all the activities related to the aforementioned aspects and there by enhances the demand (acceptability) of the company’s products in the market. That is why some times marketing management is considered as demand management . At any point in time, there may be no demand, adequate demand, irregular demand or too much demand and marketing management must find ways to deal with these different demand states. Hence, 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 by doing the activities involved in marketing properly .

12. Marketing Management Philosophies 1. The Production Concept The production concept, one of the oldest in business, holds that consumers prefer products that are widely available and inexpensive . Managers of production-oriented businesses concentrate on achieving high production efficiency , low costs , and mass distribution. This orientation makes sense in two types of situations, where consumers are more interested in obtaining the product than in its features( demand is greater than supply ) taking this advantage the company concentrates on building production volume . It is also used when a company wants to expand the market( production cost is high). The company upgrading technology in order to bring costs down, leading to lower prices and expansion of the market. Texas Instruments is a leading exponent of this concept with philosophy of “ GET-OUT-PRODUCTION, CUT THE PRICE”.

13. 2. The Product Concept: The product concept holds that the consumers will favor those products that offer the most quality, performance or innovative features. Managers in these organizations focus their energy on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise product quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs . Product-oriented companies often design their products with little or no customer input , trusting that their engineers can design exceptional products.

14. 3. The Selling Concept The selling concept holds that consumers and businesses will not buy enough of the firm’s products unless it undertakes an aggressive selling and promotion effort . The selling concept is practiced most aggressively with unsought goods—goods that buyers normally do not think of buying, such as insurance, blood donations and funeral plots. Most firms practice the selling concept when whom they have overcapacity. Their aim is to sell what they make rather than make what the market wants . Moreover, prospects are bombarded with TV commercials, newspaper advertisements, direct mail and sales calls .

15. M arketing based on hard selling carries high risks . It assumes that customers who are coaxed(persuaded) into buying a product will like it, and even if they do not like it, they will not bad-mouth it or complain to consumer organizations and will forget their disappointment and buy it again. These are indefensible assumptions because one study showed that dissatisfied customers may bad-mouth the product to 10 or more acquaintances; bad news travels fast.

16. 4. The marketing concept The marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a product-centered “make and sell” philosophy, the marketing concept is a customer-centered “sense and respond” philosophy. It views marketing not as “ hunting,” but as “gardening,” The job is not to find the right customers for your product, but to find the right products for your customers .

17. Cont’d The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promotion to obtain profitable sales. It focuses primarily on customer conquest – getting short-term sales with little concern about who buys or why. In contrast, the marketing concept takes an outside-in perspective. The marketing concept starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers. In turn, it yields profits by creating lasting relationships with the right customers based on customer value and satisfaction.

18. Table : Marketing concept compared with the selling concept     Starting point Focus Means Ends Selling concept     Factory Existing products Selling and promoting Profit through sales volume Marketing concept     Target Market Customer Needs Integrated marketing Profit through Sales volume & customer satisfaction

19. 5. The Societal Marketing Concept The Societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer short-run wants and consumer long-run welfare. Is a firm that satisfies the immediate needs and wants of target markets always doing what’s best for consumers in the long run? A socially responsible company must take into account the long-run consumer and societal welfare. The drawback of marketing concept is that it ignores the long-run societal welfare and focuses only on the short-run benefits. For example, a product, which gives short-run consumer satisfaction, may have adverse effects in the long- run. Cigarette factories and automobile companies which causes environmental problem are good examples for this.

20. Cont’d It has, therefore, been felt that the marketing concept be revised incorporating the long-run societal welfare. The societal marketing concept holds that marketing strategy should deliver value to customers in a way that maintains or improves both the consumer’s and the society’s well-being.

21. Importance of Marketing It enables the customers purchasing the item at all It has incredible benefits and our economy would collapse without it. It employs many people directly or indirectly Not only does it employ the people who make advertisements and get the word out there, but it employs many people indirectly. It increases competition, and it leads to better products. Without marketing, only the company that is well known will get business, while the other companies don't stand a chance. It is an essential part of the capitalist society.

22. Scope of Marketing: Marketing people are involved in marketing 10 types of entities; Goods Services Experiences Events Persons Places Properties Organizations Information Ideas

23. Goods . Physical goods constitute the bulk of most countries’ production and marketing effort . They produces and markets billions of physical goods. In developing nations, goods—particularly food, commodities, clothing, and housing—are the mainstay of the economy. Services . As economies advance , a growing proportion of their activities are focused on the production of services. The U.S. economy today consists of a 70–30 services-to-goods mix. Services include airlines, hotels, and maintenance and repair people, as well as professionals such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and services.

24. Experiences . By coordinating several services and goods , one can create, stage, and market experiences. Events . Marketers promote time-based events , such as the Olympics, trade shows, sports events, and artistic performances. Persons . Famous person in marketing has become a major business . Artists, musicians, physicians, high-profile lawyers and financiers, and other professionals draw help from celebrity marketers.

25. Places . Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and new residents. Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. Properties . Properties are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by real estate agents (for real estate) and investment companies and banks (for securities).

26. Organizations . Organizations actively work to build a strong, favorable image in the mind of their publics. Information . The production, packaging, and distribution of information is one of society’s major industries. Among the marketers of information are schools and universities; publishers, nonfiction books, and specialized magazines; and Internet Web sites. Ideas . Every market offering has a basic idea at its core . In essence, products and services are platforms for delivering some idea or benefit to satisfy a core need.

27. The goals of marketing System The marketing system generally has four goals. Maximizing consumption - marketing stimulates maximum demand. Maximum consumption inter maximize production , employment and wealth . Maximizing Satisfaction - owning one product gives sense when it maximized satisfaction to customers. Marketing systems maximize satisfaction by creating and providing – quality products -- variety products etc. Maximizing choices — marketing system provides varieties . As a result the consumer will find products that fit to their exact test . Maximizing life quality — the participation of marketing system in environmental protection maximize the quality of life of consumer. As a result of this the life style consumers leads to quality of life achieved .

28. THANK YOU!!! END OF THE 1 st CHAPTER!!