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Chapter One
An Overview of Marketing and
Marketing Management
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Overview
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Marketing is a process/an act of
Identifying, serving and fulfilling unfulfilled demands of
customers
Is all about producing, pricing, promoting and placing the
right product to the right market and sale it at desired
profit/price
Refers to conducting business activities, which involves
exchanging some thing of value i.e. birr for product/service
either with in or out side a given nation
Is an act of either producing a product/service or purchase
and resale it at a desired profit/price.
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1.1. What is marketing
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Market Definition
Economists describes a market as a collection of
buyers and sellers who transact over a particular
product or product class.
Marketers define a market as:
Market is the set of actual and potential buyers of a
product.
These buyers share a particular need and want that
can be satisfied through exchange relationship.
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Definition of Marketing
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Different authors have defined marketing in
various ways.
Some of them are stated as follows:
American Marketing Association – “It is the
process of planning & executing the
conception, pricing, promotion & distribution
of ideas, goods & services to create exchange
that satisfy individual & organizational goals”
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Definition of Marketing
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Marketing is an organizational function and a
set of processes for creating, communicating,
and delivering value to customers and
managing customer relationship in a way that
benefit the organization and its stakeholders
(American Marketing Associations).
Marketing is managing markets to bring about
profitable customers relationships.
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Definition of Marketing
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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.
According to Philip Kotler, 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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Definition of Marketing
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Generally, the definition of marketing can be
grouped in to two: classical (narrow)
definition and modern (broad) definition.
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Definition of Marketing
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Classical Definition
In classical terms marketing can be defined as
“the performance of business activities that direct
the flow of goods and services from producers
to consumers”.
This definition is too narrow to describe
marketing.
It emphasizes the distribution aspect of
marketing.
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Definition of Marketing
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Modern Definition
In broader terms marketing is defined as a
system of business activities designed to plan,
price, distribute and promote want satisfying
products (goods and services) to present and
potential customers.
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Definition of Marketing
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Modern Definition
In marketing, there are combinations of
activities, which start before the creation of
a product and don’t end until customers
are satisfied.
Therefore, product planning, pricing,
distribution and promotion are the main
activities performed in marketing.
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The Core Concepts of Marketing
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1. Need, Want and Demand
Need: human needs are the most basic concept
underlying marketing.
Human beings are born with needs to be satisfied and
they are in continuous struggle and effort to satisfy
them.
They need food, air, clothing and shelter, all of which
are biological in nature.
Human needs are state of felt deprivation of the basic
human requirements.
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1. Need, Want and Demand
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Humans have many complex needs:
Basic physical need-for food, clothing, shelter & safety
Social needs-for belongingness, affection and love
Individual needs-for knowledge and self expression.
NB. Marketers cannot create human needs rather they
have to understand and create product and services which
can satisfy those needs.
Generally, needs are shaped by culture and individual
personality.
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1. Need, Want and Demand
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Wants: are shaped by ones society and described
in terms of objects that satisfy needs.
Are desires/wishes for something without
having money
It express in terms of objects.
Are not to be backed up by purchasing power
Provide some clue to the marketer
An Ethiopian needs food but wants enjera and
bread.
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1. Need, Want and Demand
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Demand –are wants for specific products backed by
purchasing power.
Demands are occurred when there is only the willingness to
buy a product and the ability to pay for it. E.g. many people
want a Mercedes but only few are able and willing to buy
one.
Companies must measures not only how many people
want their product but also how many would actually be
willing and able to buy it.
Provide many clue/starting point to the marketer.
Want + money
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2. Marketing offers (product, Service
Information, etc.)
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Companies address needs by putting forth a
value proposition.
Value proposition is a set of benefits that they
promise to consumers to satisfied their needs.
It fulfilled through marketing offers.
Marketing offer is some combination of
products, services, information and others that
offered to market to satisfy customers’ needs and
wants.
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3. Values and Satisfaction
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The offering will be successful if it delivers value and satisfaction
to the target buyer.
Value is the customer estimate of the product’s over all capacity
to satisfy his/her needs and wants.
Reflects the perceived tangible and intangible benefits and costs to
customers.
It is the combinations of quality, service and price.
Customer value is the difference b/n the values that the
customers gain from owning and using product and the cost of
obtaining it.
Value = Benefits / Costs = (Functional benefits + Emotional
benefits) /(Monetary costs + Time costs + Energy costs + Psychic costs)
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3. Values and Satisfaction
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Satisfaction: is a person’s feeling of pleasure or
disappointment resulting from comparing product
perceived performance and expectation
Customer satisfaction– reflects person’s comparative
judgments resulting from a product’s perceived performance
(or outcomes) in relation to his/her expectations.
It is the key influence on future buying behavior
Customers expectations must be set at the right level of expectations,
neither too low or too high.
Customer Value & Satisfaction are key building blocks for
developing & managing customer relationships.
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3. Values and Satisfaction
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Satisfaction = f (perceived performance and
expectation).
A. if P > E = delighted
B. if P = E = satisfied
C. if P < E = dissatisfied
Satisfied customer repurchases, spreads word of mouth
and maintains long term relationship with the company.
Dissatisfied consumer switches to competitors brands
and disparages the product.
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4. Exchange, Transaction and Relationship
Marketing
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Exchange: The act of obtaining a desired object from
someone by offering something in return.
There are five conditions that needs to be satisfied:
There are at least two parties
Each party has something that might be of value to the
other party
Each party is capable of communication & delivery
Each party is free to accept or reject the exchange offer
Each party believes it is appropriate or desirable to deal
with the other party
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4. Exchange, Transaction and
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Relationship Marketing
Transaction:
A transaction consists of a trading of values between
two parties: one party gives X to another party and gets
Y 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.
It involves two things:
A time of agreement and a place of agreement
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4. Exchange, Transaction and
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Relationship Marketing
Monetary
Bartery Transaction
In the broadest sense, the market tries to
bring about a response to some offer. The
response may be more than simply ‘buying’
or ‘trading’ goods and services.
A political candidate ‘votes’, a church
‘membership’, and a social-action group
‘idea acceptance’.
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4. Exchange, Transaction and
Relationship Marketing
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CRM: The process of creating, maintaining and
enhancing strong, value-laden relationships with
customers and other stakeholders.
Beyond creating short-term transactions, smart
marketers work at building long-term relationships
with valued customers, distributors, dealers and
suppliers.
They build strong economic and social connections by
promising and consistently delivering high-quality
products (good/service) and fair prices.
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4. Exchange, Transaction and
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Relationship Marketing
Relationship Marketing: aims to build long term
mutually satisfying relationship with key parties
(customers, suppliers, distributors) in order to earn
and retain their long term preference and business.
The ultimate outcome of relationship marketing is the
building of a unique company asset called a marketing
network.
Marketing network: it consists of the company and all of its
supporting stakeholders: customers, employees, suppliers,
distributors, retailers, ad agencies, and others with whom it has
built mutually profitable business relationships.
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Cont….
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1.2. What is Marketing Management?
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Marketing Management
Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering,
and communicating superior customer value.
Marketing Management is the process of planning,
organizing, directing and controlling the activities
of product planning, pricing, promotion and
distribution of products to create exchange that
satisfy individuals and organizational needs.
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1.3. Company Philosophy towards Marketing
Management
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Marketing management orientations are the
basic orientations that help a given organization
market its products and achieve its objectives.
There are five alternative concepts under which
organizations can do their marketing activities
Five alternative concepts which will: Guide, that is,
product/service delivery and selling activities
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1. Production Concept
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holds the idea that consumers will favor products that are
widely available and inexpensive.
It is the oldest orientation that guides sellers.
State that to sale more, company should reduce cost of
production/sales prices
Assume that customer fail in love with low cost products
The management should therefore focus on improving
production and distribution efficiency.
Managers concentrated on achieving high production
efficiency, low costs and mass distribution.
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1. Production Concept
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Mostly production concept is used when the
company wants to expand the market.
The production concept is still a useful
situation:
When demand for a product exceeds the
supply
When product cost is too high and improved
productivity is needed to brining it down.
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2. Product Concept
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Is a quality based approach
State that to sale more, company should maximize
quality levels of products/services
Hold that consumers will favor products that offer the
most quality, performance, and innovative features
Organization devote energy to making continuous
product improvement
They will suffer from marketing myopia i.e. to give more
attention to their products with out considering
consumers’ interest
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3. Selling Concept
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The idea that consumers will not buy enough of the firms
products unless it undertakes a large scale selling & promotion
effort.
It is typically practiced with unsought goods. I.e. goods that
buyer doesn’t think buying normally (insurance, blood donation
& funeral plot).
Most firms practice the selling concept when they face over
capacity.
Their aim is to sell what they make rather than make what the
market wants.
Such marketing carries high risk and also inside-outside flow.
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4. Marketing Concept
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holds that achieving organizational goals depending on
knowing the needs & wants of target market and
delivering the desired satisfaction better than competitors
do.
Marketing concept is customer centered “sense &
respond” philosophy rather product centered “make &
sell” philosophy.
The job is not finding the right customer for your
product, but right product for your customers.
It takes outside-inside flow.
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Pillars under which marketing concept operates
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A. Target market: Companies must define their target market
carefully and prepare a tailored marketing program.
B. Customer Needs: The key to this philosophy is to fully
understand their customers real needs and meet them better than
the competitor.
C. Integrated Marketing: It means that all the different functions
of the business must be tightly integrated to serve the interest of
the customer as every function has a bearing on it.
D. Profit making by satisfying customers - The ultimate purpose
of the concept is to help organizations achieve their goals.
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Comparison b/n Selling and Marketing concept
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The marketing concept
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5. Societal Marketing Concept
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holds that organization should determine the
needs, wants and interest of target markets.
Then, it should deliver superior value to customers in a
way that maintains & improves the customers and the
society’s well being.
According to the societal marketing concept,
the pure marketing concept overlooks possible
conflicts between short-run consumer wants
and long-run society welfare.
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5. Societal Marketing Concept
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The societal marketing concept calls on
marketers to balance three considerations in
setting their marketing policies.
These are: Company profit; Consumer want
satisfaction; and Societies interest ( human
welfare)
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