College of Business and Economics

Department of Marketing Management

Course Title: Principles of Marketing
Course Code: Mktm1022
Credit Hours: 3hrs
Compiled by: Alemayehu G. (MA)
Course Introduction
What comes to your mind when see or hear the term marketing? Marketing must be
understood not in the old sense of making a sale - 'selling' - but in the new sense of satisfying
customer needs. Many people think of marketing o nly as selling and advertising but you may be
surprised to learn that selling and advertising is only the tip of the marketing iceberg. This
course is primarily designed to provide students with some preliminary insights of marketing
management. It deals with the basic concepts of marketing: marketing management; the role
and importance of marketing department in an organization; the main functions of marketing
which include the product designing, promoting, pricing, and distributing want satisfying
products.
This course consists of eight chapters.
The first chapter deals with the basic concept and definition of marketing, major evolutions
and philosophies of marketing, importance of marketing, marketing management and
marketing task.
The second chapter of this module is devoted to the marketing environment.
The third chapter deals with definition of consumer and business market, difference and
similarity business and consumer markets, major factors that influence consumer and
business buyer behavior and the steps in consumer and business buying decision process.
Market segmentation, targeting, and positioning, identification of attractive market segments,
choosing a market-targeting strategy and ways to differentiate and position products are
discussed in chapter four.
Chapter five is concerned with definition and basic concepts of product, branding, packaging,
and labeling.
Points discussed in chapter six are meaning and significance of pricing, factors affecting
pricing decisions and alternative price setting strategies.
In the seventh chapter of the module meaning and significance of promotion, types of
promotion mix elements and factor affecting promotional tools selection are discussed.
Meaning and importance of distribution, marketing intermediaries and their functions,
Channel design and management, Factors affecting marketing channel decisions are
discussed in the last chapter of the module.

Course Objectives
More specifically, after the successful accomplishment of the course, students will able to:
 Define marketing, identify its core concepts, explain the major evolutions and
philosophies, describe the importance of marketing and marketing task.
  Explain the environmental factors that influence marketing decisions.
 Define the consumer and business market; explain how business markets differ from
consumer markets.
 Explain the rationale for market segmentation, targeting, and positioning; explain how to
identify attractive market segments and choose a market-targeting strategy.
 Describe product related decisions and explain the basic concepts of branding,
packaging, and labeling.
 Discuss factors affecting pricing decisions and identify the alternative price setting
strategies.
 Identify the promotional tools used by marketers and Explain the different factors
affecting promotion tool selection
 Describe the benefits of marketing channels and explain the key channel related
decisions.

Table of Contents
Contents
pages
Course Introduction.......................................................................................................................IV
Course Objectives...........................................................................................................................V
CHAPTER ONE..............................................................................................................................1
1. NATURE AND SCOPE OF MARKETING...............................................................................1
1.1 Basic concepts of marketing..................................................................................................1
1.2 Definitions of marketing........................................................................................................7
1.3 Evolution and Philosophies of Marketing..............................................................................8
1.4 Importance of marketing........................................................................................................8
1.5 Marketing management..........................................................................................................9
1.6 Marketing Tasks.................................................................................................................16
1.7 Discussion Questions...........................................................................................................19
CHAPTER TWO...........................................................................................................................20
2. THE MARKETING ENVIRONMENT....................................................................................20
2.1The Company’s microenvironment......................................................................................21
2.2 The Company's Macro environment....................................................................................25
2.3 Responding to the marketing Environment.........................................................................31
2.4 Discussion Questions...........................................................................................................32
CHAPTER THREE.......................................................................................................................33
3. UNDERSTANDING THE MARKET......................................................................................33
3.1 Consumer Buying Behavior.................................................................................................33
3.2. Business Markets and Business Buyer Behavior................................................................45
3.3. Discussion Questions..........................................................................................................55
CHAPTER FOUR.........................................................................................................................56
4. MARKET SEGMENTATION TARGETING AND POSITIONING......................................56
4.1. Market Segmentation..........................................................................................................57
 4.2. Market Targeting.................................................................................................................61
4.3. The Concept of Positioning.................................................................................................62
4.4 Discussion Question.............................................................................................................65
CHAPTER FIVE...........................................................................................................................66
5. MANAGING PRODUCT.........................................................................................................66
5.1. Definition of Product..........................................................................................................66
5.2. Levels of Product................................................................................................................66
5.3. Product Classifications........................................................................................................68
5.4. Individual Product Decisions..............................................................................................71
5.5 Product Line Decisions........................................................................................................79
5.6 Products-Mix Decisions.......................................................................................................80
5.7 Innovation and New-ProductDevelopment Strategy...........................................................81
5.8 Product Life-Cycle Strategies..............................................................................................90
5.9 Discussion Questions...........................................................................................................97
CHAPTER SIX..............................................................................................................................98
6. PRICING DECISIONS.............................................................................................................98
6.1. Factors affecting price decisions.........................................................................................99
6.2. General Pricing Approaches.............................................................................................102
6.3. Pricing Strategy.................................................................................................................104
6.4 Product-mix pricing strategies...........................................................................................105
6.4 Price Changes.....................................................................................................................108
6.5 Discussion Questions.........................................................................................................110
CHAPER SEVEN........................................................................................................................111
7. PROMOTION DECISIONS....................................................................................................111
7.1 Promotion Mix...................................................................................................................112
7.2 The Need for Integrated Marketing Communications.......................................................114
7.3 A view of the communication process...............................................................................116
7.4 The Nature of Each Promotion Tool..................................................................................119
7.5 Factors in Designing Promotion Mix Strategies................................................................122
7.6 Discussion Questions.........................................................................................................123
CHAPER EGHT..........................................................................................................................124
8. MANAGING MARKETING CHANNELS...........................................................................124
8.1 The Nature and Importance of Marketing Channels..........................................................124
8.2 Selecting Channels of Distribution....................................................................................126
8.3 Determining the Intensity of Distribution..........................................................................128
8.4 Channel Design Decisions.................................................................................................129
8.5 Channel Management Decisions........................................................................................131
8.6 Discussion Questions.........................................................................................................132
Reference Materials.....................................................................................................................133