Chapter One

Marketing Management
Understanding the Fundamentals of
Marketing
What is Marketing?

Several Definitions
What is Marketing?

Major Business Functions

-Production/Operations
-Finance
-Marketing
 Chartered Institute of Marketing
The management process responsible for identifying ,
anticipating and satisfying customer requirements
profitability’
 Philip Kotler
A process of Satisfying needs and wants through an
exchange process.

The common theme is meeting needs & Exchange

 Marketing is a societal process by which individuals and
groups obtain what they need and want through
creating, offering, and freely exchanging products and
services of value with others.
- Philip Kotler
-Products marketed included goods as well as services,
ideas, people, places etc.…
 Marketing is the process of transaction between
industry (a collection of sellers) and market (a collection
of buyers) in which the sellers provide products (goods
and services) to buyers, and buyers provide money to
sellers
 Marketing is an activity, which is concerned with
the product planning, pricing, promotion and
distribution (place) of goods and services desired by
the ultimate and intermediate customer in
exchange of these products for value (money).
The Marketing Mix,
Creating a Competitive Advantage
Begins with
the Target
Market =Customer Needs
Core Concepts of Marketing

 The definition of marketing rests at the following

core concepts:
I. Needs, Wants, and Demand
II. Products or offering (goods, services & ideas)
III. Value and Satisfaction
IV. Exchange & Transaction
V. Relationship and Networks
VI. Market
VII. Marketers and Prospects.
 I . Needs, Wants & Demand
Needs:
-Need is a state of deprivation or void that exists in people
-Need is natural, It is not affected by culture, and
marketing has no influence in creating needs
-Such as need for food, for drink to satisfy hunger or thirst
-All people regardless of culture feel hungry and have the
same need for eating food
 Wants: -
-The forms by which people communicate their needs. They
are assortments (bundles) of products that people chose to
satisfy their needs.
- Needs become wants when directed to specific objects that
might satisfy the need.
-Wants are desires for specific satisfiers of needs.
-Human wants are continually shaped & reshaped by social
forces & institutions, including churches, schools, families
and business cooperation.
• Culture and marketing can influence the wants of
people
• The closer that a product matches the consumer’s
want, the more successful the product will be.
E.g. A person needs food but wants an Ingera etc.
While people’s needs are few, their wants are many.
 Demand:-
 Demands are wants for specific products that are
backed up by an ability and willingness to buy
them.
 Wants become demands when backed up by
purchasing power.
.
Products or offering
• Anything that can be offered to a market for attention,
acquisition, use or consumption and that might satisfy a
need or want.
• A product is anything that can be offered to a market to
satisfy a want or need.
• Products are solutions to the problems of the customer.
People buy products in order to solve their problems,
because of the benefit they desire form the product.
 Value and Satisfaction
Value:
- The buyer chooses the offerings he or she perceives to
deliver the most value, the sum of the tangible and
intangible benefits and costs.

- Value is the customers estimate of the products ability to

satisfy needs
 Value includes:
 Product value ( Core Benefits)
 Service Value: The augmented product)
 Personnel Value: Experience, knowledge, honesty,
politeness, customer handling etc.
Psychic Value: the image, set of beliefs that are

attached with the product
-Customers prefer products that offer high value, therefore
businesses need to provide a high value product
 Satisfaction:
-Satisfaction reflects a person’s judgment of a product’s
perceived performance in relationship to expectations.

- It is the extent to which a product’s perceived performance

matches a buyer’s expectation

-If the performance matches or exceeds expectations, the

buyer is satisfied.
 Exchange and Transactions
 Exchange is the act of obtaining a desired product from
someone by offering something in return.
 The provision or transfer of goods, services, or ideas in
return for something of value (money, credit, labor,
goods)
Exchange process
 It is act of obtaining a desired object from someone by
offering something in return.
.

 For exchange potential to exist, five

conditions must be satisfied:
1. There are at least two parties.
2. Each party has something that might be of
value to the other party.
3. Each party is capable of communication
and delivery.
contd

4. Each party is free to accept or reject

the exchange offer.
5. Each party believes it is appropriate or
desirable to deal with the other party.
.

 Whether exchange actually takes place depends upon

whether the two parties can agree on terms that will
leave them both better off (or at least not worse off)
than before.
 .
 Transaction:
-A trade of values between two parties, one party gives X
to another party and gets Y in return.

Can include cash, credit, or check.

-Note also that a transaction differs from a transfer.
-In a transfer, A gives a gift, a subsidy, or a charitable
contribution to B but receives nothing tangible in return.
Relationship
- The process of building and maintaining profitable
customer relationships by delivering superior
customer value and satisfaction.
- Relationship marketing aims to build long-term
mutually satisfying relations with key parties
customers, suppliers, distributors—in order to earn
and retain their long-term preference and business.
Market:
-A market is the set of actual and potential buyers of a
product. These buyers share a particular need or want that
can be satisfied through exchanges and relationships.

-The size of the market depends on the number of people

(1) who have the need, (2) have resources (money) for the
exchange and (3) want to spend these resources in the
exchange.
Companies’ Orientation to Marketing
(Philosophies of Marketing)
-Market orientation is the direction of firm’s perspectives moves
towards their target market include the decision-making perspective,
strategic perspective and customer orientation perspective.
-It is also a business philosophy where firms focus in/on identifying
customer desires, needs and/or wants in order to meet them.
-Production philosophy
-Product philosophy
-Selling philosophy
-Marketing philosophy
-Societal Marketing philosophy
 The Production philosophy
Production philosophy holds that customers will favor
products that are available and highly affordable, and
therefore management should focus on production and
distribution efficiency.
The philosophy can be good for two situations
 Where demand is greater than supply
 Where the product cost is too high and improved
productivity is needed to lower the cost
It starts every thing from the organization and proceed to
the customer.
 The Product philosophy
-The product concept holds that consumers will favor
products that offer the most quality, performance and
innovative (new) features
-Thus a company should focus on making continuous
product improvements
-This can lead to marketers suffering ‘marketing myopia’(
myopia=short sightedness; can’t see properly need glasses)
They can end up focusing just on the product and not
seeing wider market trends that may affect demand.
 The Selling philosophy
The selling concept holds that consumers will not buy
enough of the organization’s products unless the
organization undertakes a large-scale selling and
promotional efforts
The concept is largely practiced with unsold goods i.e.
goods that consumers do not normally think of buying such
as insurance, or encyclopedia; political party that tries to
get votes to support candidates
Companies practice the selling concept when they have
overcapacity/ excessive amount of products
• Undertake hard sell without concern to the need of the
customer
• It carries high risk because it focuses on short-term
selling strategy and ignores building long-term
customer relationship
 Marketing philosophy
-The marketing concept holds that achieving organizational
goals depends on determining the needs and wants of target
markets and delivering the desired satisfaction more
effectively than competitors.
-It is based on the satisfaction of customer’s needs and
wants.
 Societal Marketing philosophy
-Societal marketing concept holds that the organization
should determine the needs, wants, and interests of target
markets and deliver the desired satisfactions more
effectively than competitors in a way that maintains or
improves the customer’s and society’s well-being.
-No smoking floors, anti-drunk driving promotions,
environmentally-friendly food containers, energy
conservation.
Importance of Marketing

Why study Marketing?

- Finance, operations, accounting and other business

functions are all dependent on sufficient demand for

products and services from customers who are prepared to

pay for them so that companies can make a profit.

- Thus, financial success often depends on marketing
ability. It contributes greatly to the success of the
organization.
- Marketing’s value also extends to society as a whole.
Scope of Marketing
-Broad
(Philip Kotler & Sidney Jay Levy)
-contended that defining marketing "too narrowly" would
inhibit students of marketing from applying their expertise
to the most rapidly growing sectors of the society.

 Read on Scope of Marketing………………