CHAPTER 1

Introduction of Marketing
 WHAT IS MARKETING??

Selling?
Advertising?
Making products available in stores?

All of the above, plus much more

 WHAT IS MARKETING??

No single correct definition or approach!!

→ Common subject matters:
 The ability to satisfy customers,
 The identification of favourable marketing opportunities,
 The need to create an edge over competitors,
 The capacity to make profits to enable a viable future for the
organization,
 The use of resources to maximize a business‘ market position,
 The aim to increase market share mainly in target markets...
 MARKETING CONCEPTUAL DEFINITIONS
Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large.

(AMA, 2007)
Marketing?

Marketing is the management process which identifies,

anticipates, and supplies customer requirements
efficiently and profitably.

(UK Chartered Institute of Marketing)

 MARKETING CONCEPTUAL DEFINITIONS
Marketing as the process by which companies:
(Philips Kotler, 2017)
 Engage customers
 Build strong customer relationships
Marketing?  And create customer value

In order to

 capture value from customers in return.

How does this process take place?

 THE MARKETING PROCESS
Capture value from
customers in return

Understand Design a Construct a Building

the Customer - Integrated profitable Capture
marketplace driven marketing relationships value from
and marketing program that and customers
Customer strategy delivers create to create
needs & superior value customer profits and
wants delight customer
equity

Create value for customers and build

customer relationships
 THE EXPANDED MODEL OF THE MARKETING PROCESS

Understand the Design a Construct an Building Capture value

marketplace and Customer - Integrated profitable from customers
Customer needs & driven marketing program relationships and to create profits
wants marketing that delivers create customer and customer
strategy superior value delight equity

Research Product decisions Customer

customers and Select relationship Create satisfied,
the marketplace customers to management: loyal customers
serve: market build strong
Manage Pricing decisions
segmentation relationships
marketing and targeting with chosen
information and Capture customer
Place/ Distribution: customers
customer data lifetime value
manage demand
and supply chains Partner
Decide on a
relationship
value
management: Increase share of
proposition:
Promotion: build strong market and share
differentiation
communicate the relationships of customer
and
value proposition with marketing
positioning
partners
 “Good marketing is not an accident but the result of careful planning and
execution. But marketing excellence is rare and difficult to achieve. Marketing is
both an art‘ and a science‘ – there is constant tension between the formulated
side of marketing and the creative side ”
 UNDERSTAND THE MARKETPLACE AND
CUSTOMER NEEDS

Core concepts

Customer
Market Perceived
needs, wants, Cost
offerings Value
and demands

Satisfaction Exchanges Markets

 Core Concepts of Marketing
 Needs, wants, and
demands  Needs
 State of felt deprivation
 Marketing offerings:
 Basic human requirements
including products, services e.g. needs food
and experiences


 Wants
 Value, cost, satisfaction  Needs directed to specific objects
 Exchange  The form of needs as shaped by culture
and the individual
 Markets  e.g. wants a BigMac
 Demands
 Wants which are backed by buying power
 NEEDS

“States of felt deprivations”

Three sources of needs:
• Physical needs (physical body): eat, breath,
drink, sex…
• Social needs: belonging and affection
• Individual needs: knowledge and self-expression
 Needs Theories (of motivation)

Maslow’s Hierarchy of Needs

(1940s)

We are motivated to satisfy lower order

needs before higher order needs

1-
 WANTS

- Is human needs
- but Shaped by personal preferences/
culture/ religion …
- People have unlimited wants but
limited resources
Demands:

- Human wants that are backed by buying

Power
- Willing to buy
- Ability to pay
- Needs: foods (must have)
- Wants: Rice, beefsteak,
Burger, Noodle, Alaskan
King Crab…
- Demands: rice/noodle..
(Translation of a want as per
our willingness and ability to
buy)
 Core Concepts of Marketing
 Needs, wants, and  Marketing offering
demands  Combination of
products, services,
 Marketing information or
offerings: experiences offered to a
products, services, market that satisfy a
experiences… need or want.
 Value , cost,  Offer may include
services, activities,
satisfaction people, places,
 Exchange information or ideas.
 Markets
Marketing Myopia: The mistake of paying more attention to the specific products
a company offers than to the benefits and experiences produced by these products.
Market offerings?
“Some combination of products,
Products Services
services, information, or
experiences offered to a market
to satisfy a need or want”
Places Experience

 Market offerings bring

Values to customers
Ideas People
 Core Concepts of Marketing
 Needs, wants, and  Customers form expectations
demands regarding Value
 Marketing offers:  Value:
including products,  the customer‘s estimate of the
services and experiences product‘s overall capacity to
satisfy his or her needs.
 Value, cost, satisfaction  the satisfaction of customer
requirements at the lowest
 Exchange possible Cost
 Satisfaction
 Markets
Customer
Perceived Value
Perceived value:
“The customer’s evaluation of the difference between all the benefits and all
the costs of a marketing offer relative to those of competing offers”
Perceived Value > Cost

What is the cost?

COST
“Total expenses to get the benefits from
using products”
All expenses from purchasing, using &
eliminating market offerings

Purchasing Using Eliminating

Money

Effort

Time

Spirit
 SATISFACTION
“The extent to which a product’s perceived performance matches
a buyer’s expectations”

• Perceived performance < Buyer’s

Not satisfied
expectations

• Perceived performance = Buyer’s

Satisfied
expectations

• Perceived performance > Buyer’s

Delighted
expectations
Satisfaction
Set the right level of expectations

Set expectations too low

Fail to attract enough buyers

Set expectations too high

Switch to competitors
 Value – Cost - Satisfaction
 Customer benefits  Customer satisfaction
Anything desired by the The feeling that a product
customer that is received in has met or exceeded the
an exchange customer‘s expectations
 Customer costs
Anything a customer gives up
in an exchange for benefits
What is the benefit of
 Monetary price of the
benefit
a satisfied customer to
 Search costs (time and
the company?
effort) to locate the product
 Risks associated with the

exchange
  Needs
 Wants
 Demands

Fulfilled

 Market offerings – products,

services and experiences

How do customers
choose?

 Expectations about customers

Value, Cost & Satisfaction

How do customers get

the Value?

 Exchange
at
Company needs
 Markets Marketing management
 Core Concepts of Marketing
 Needs, wants, and  Exchange
 The act of obtaining a desired object from
demands someone by offering something in return
 Marketing offers:  The response may be more than simply

including products, buying or trading products and services

 One exchange is not the goal,
services and experiences relationships with several exchanges
 Value, cost, satisfaction are the goal
 Exchange  Relationships are built through delivering
value and satisfaction
 Marketing network  consists of the
 Markets company and all its supporting stakeholders
 EXCHANGE
The act of obtaining a desired object from someone by
offering something in return

To make exchange happen, two people are required at

least. Both of them must have something to offer each other
and both of them should have a value to offer each other

A successful exchange is a transaction

A marketer does not want a single transaction. His aim is to

continuously make market offerings and the continuous
exchanges / transactions create relationships

 Today’s marketing is relationship marketing

 Transaction

• A transaction is an exchange between two things of value on

agreed conditions and a time and place of agreement.
• To make successful transaction a marketer should understand
what each party expects from transction.
Relationship marketing
aims to build mutually
satisfying long-term
relationships with key
constituents in order to
earn and retain their
businesses.
WHAT IS MARKET?

• A market is a place
where buyers and sellers
can meet to facilitate the
exchange or transaction
of goods and services.
The set of all actual and potential buyers of a product or service
 Core Concepts of Marketing
 Needs, wants, and  Market
demands  Set of actual and potential
 Marketing offers: buyers of a product
including products,  These buyers share a particular
need or want that can be
services and experiences
satisfied through exchange
 Value, cost, satisfaction relationships
 Exchange  Marketing means managing
markets to bring about
 Markets profitable customer
relationships
 PRODUCTION CONCEPT

The idea that consumers will favor products that are

available and highly affordable and that the organization
should therefore focus on improving production and
distribution efficiency
 Production concept

• Consumers will prefer products that are

widely available and inexpensive.
• Managers of production oriented businesses
concentrate on achieving high production
efficiency, low costs, mass distribution.
 PRODUCT CONCEPT

Consumers will favor products that offer the most quality,

performance and features and that the organization should
therefore devote its energy to making continuous product
improvements
 Product Concept

• Consumers will favor those products that

offer the most quality, performance,
innovative features.
• Managers in these organizations focus on
making superior products and imporoving
them over time.
 SELLING CONCEPT

The idea that consumers will not buy enough of the firm’s
products unless it undertakes a large-scale selling and
promotion effort
 Selling Concept

• Consumers ,if left alone,will ordinarily not

buy enough of the organization’s products.
The organization must therefore, undertake
and aggressive selling and promotion effort.
• The aim is to sell what companies make
rather that what the market wants.
 MARKETING CONCEPT

A philosophy that holds that achieving organizational goals

depends on knowing the needs and wants of target markets
and delivering the desired satisfactions better than
competitors do
 Marketing Concept

• Customer-centered, sense and response

philosophy.
• The job is to find right products for your
customers.
• The key to achieve organizational goals consists of the
company being more effective than competitors in
creating , delivering and communication superior
customer value to its chosen target markers.
 SOCIETAL MARKETING CONCEPT

The idea that a company’s marketing decisions should

consider consumer’s wants, the company’s requirements,
consumers’ long-run interests, and society’s long-run
interests
 Production concept  Product concept
The idea that consumers will favor products Consumers will favor products that offer the most
that are available and highly affordable and quality, performance and features and that the
that the organization should therefore focus organization should therefore devote its energy
on improving production and distribution to making continuous product improvements
efficiency

 Selling concept  Marketing concept

The idea that consumers will not buy A philosophy that holds that achieving

enough of the firm’s products unless it organizational goals depends on knowing the

undertakes a large-scale selling and needs and wants of target markets and

promotion effort delivering the desired satisfactions better than

competitors do
 Societal marketing concept
The idea that a company’s marketing decisions should consider consumer’s wants, the company’s
requirements, consumers’ long-run interests, and society’s long-run interests