Lecture 1

Introduction to Marketing
The Scope of Marketing
 Marketing is about identifying and meeting human and social needs; “meeting needs profitably”. It is typically seen
as the task of creating, promoting, and delivering goods and services to consumers and businesses.
 AMA Marketing definition:
Marketing is the activity, set of institution, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients partners, and society at large.

 Marketing management takes place when at least one party to a potential exchange thinks about the means of
achieving desired responses from other parties.
 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.

 Strategic marketing is a market-driven process of strategy development, taking into account a constantly changing
business environment and the need to deliver superior customer value. The focus of strategic marketing is on
organizational performance rather than a primary concern about increasing sales. (Cravens, D and Piercy, N.
Strategic Marketing)

What is Marketed?
 Goods  Places
 Services  Properties
 Events  Organizations
 Experiences  Information
 Persons  Ideas

What is Marketed?
 Marketer is someone who seeks a response – attention, a purchase, a vote, a donation – from another party,
called the prospect.

Demand States and Marketing Tasks

1. Negative  A market is in a state of negative  Analyze why the market dislikes the product
demand demand if a major part of the market  Change the market’s belief and attitudes by means of
dislikes the product or may even pay a implementing a marketing program consisting of
price to avoid it. product redesign, lower prices, and more positive
promotion.
2. No demand  Target consumers may be unaware of  Find ways to connect the benefits of the product with
or uninterested in the product. the person’s natural needs and interests.
3. Latent demand  Many consumers may share a strong  Measure the size of the potential market
need that cannot be satisfied by any  Develop effective goods and services that would satisfy
existing product. the demand.

4. Declining  Every organization, sooner or later,  Analyze the causes of market decline and determine
demand faces declining demand for one or more whether demand can be restimulated by:

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
 of its products. o Finding new target markets
o Changing the product’s features
o Developing more effective communication
 The marketing task is to reverse the declining demand
through creative remarketing of the product.
5. Irregular  Many organization face demand that  Synchomarketing is to find ways to alter the same
demand varies in a seasonal, daily, or even pattern of demand through flexible pricing, promotion,
hourly basis, causing problems of idle or and other incentives.
overworked capacity.
6. Full demand  Organizations face full demand when  Maintain the current level of demand in the face of
they are pleased with their volume of changing consumer preferences and increasing
business. competition.
 Maintain or improve its quality and continually measure
consumer satisfaction to make sure it is doing a good
job.
7. Overfull  Some organizations face a demand  Demarketing requires finding ways to reduce the
demand level that is higher than they can or demand temporarily or permanently.
want to handle. o General demarketing seeks to discourage
overall demand and consists of such steps as
raising prices and reducing promotion and
services.
o Selective demarketing consists of trying to
reduce the demand coming from those parts of
the market that are less profitable or less in
need of the product.
 Demarketing aims not to destroy demand but only to
reduce its levels, temporarily or permanently.
8. Unwholesome  Unwholesome products will attract  The marketing tasks is to get people who like
demand organized efforts to discourage their something to give it up, sung such tools as fear
consumption. message, price hikes, and reduced availability.

 A “market” was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe
a market as a collection of buyers and sellers who transact over a particular product or product class (such as
the housing market or the grain market)

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
  Marketers use the term market to cover various groupings of customers. They view sellers as constituting the
industry and buyers as constituting the market.
 They talk about need markets (the diet-seeking market), product markets (the shoe market), demographic
markets (the youth market), and geographic markets (the Chinese market); or they extend the concept to cover
voter markets, labor markets, and donor markets, for instance.

Key Customer Markets

1. Consumer Markets. Companies selling mass consumer goods and services such as juices, cosmetics, athletic
shoes, and air travel spend a great deal of time establishing a strong brand image by developing a superior
product and packaging, ensuring its availability, and backing it with engaging communications and reliable
service.
2. Business Markets. Companies selling business goods and services often face well-informed professional buyers
skilled at evaluating competitive offerings.
3. Global Markets. Companies in the global marketplace must decide which countries to enter; how to enter each
(as an exporter, licenser, joint venture partner, contract manufacturer, or solo manufacturer); how to adapt
product and service features to each country; how to price products in different countries; and how to design
communications for different cultures. They face different requirements for buying and disposing of property;
cultural, language, legal and political differences; and currency fluctuations. Yet, the payoff can be huge.
4. Nonprofit and Governmental Markets. Companies selling to nonprofit organizations with limited purchasing
power such as churches, universities, charitable organizations, and government agencies need to price
carefully.

Marketplaces, Marketspaces, and Metamarket

 The marketplace is physical, such as a store you shop in; the marketspace is digital, as when you shop on the
Internet. Northwestern University’s Mohan Sawhney has proposed the concept of a metamarket to describe a
cluster of complementary products and services closely related in the minds of consumers, but spread across a
diverse set of industries.

Core Marketing Concepts and Tools

1. Needs, Wants, and Demands
 Needs are the basic human requirements such as for air, food, water, clothing, and shelter.
 These needs become wants when they are directed to specific objects that might satisfy the need.
 Demands are wants for specific products backed by an ability to pay.

2. Target Markets, Positioning, and Segmentation

 Marketers start by dividing the market into segments. They identify and profile distinct groups of buyers who
might prefer or require varying product and service mixes by examining demographic, psychographic, and
behavioral differences among buyers
 After identifying market segments, the marketer decides which present the greatest opportunities which are its
target markets.
 For each, the firm develops a market offering that it positions in the minds of the target buyers as delivering
some central benefit(s).

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
3. Product, Offering, and Brand
 Companies address needs by putting forth a value proposition, a set of benefits they offer to customers to
satisfy their needs.
 The value intangible proposition is made physical by an offering, which can be a combination of products,
services, information, and experiences.
 Brand is an offering from a known source. It is a set of values implied by a product, service, or experience and is
not only symbol or signifier (as defined by the American Marketing Association).
 Brand Image is a set of associations towards the brand.

4. Value and Satisfaction

 The offering will be successful if it delivers value and satisfaction to the target market.
 Value can be seen as primarily a combination of quality, service, and price (QSP), called the customer value
triad. It is also the ratio between what the customer gets and what he gives.

 Value = Benefits = Functional benefits + Emotional benefits .

Costs Monetary costs + Time costs + Energy costs + Psychic costs

 The marketer can increase the value of the customer offering in several ways:
o Raise benefits
o Reduce costs
o Raise benefits and reduce costs
o Raise benefits by more than the raise of costs
o Lower benefits by less than the reduction of costs

 Satisfaction reflects a person’s judgment of a product’s perceived performance in relationship to expectations.

5. Marketing Channels
 To reach a target market, the marketer uses three kinds of marketing channels:
a. Communication channels deliver and receive messages from target buyers and include newspapers,
magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs, audiotapes, and the Internet.
b. The marketer uses distribution channels to display, sell, or deliver the physical product or service(s) to the
buyer or user. These channels may be direct via the Internet, mail, or mobile phone or telephone, or indirect
with distributors, wholesalers, retailers, and agents as intermediaries.
c. To carry out transactions with potential buyers, the marketer also uses service channels that include
warehouses, transportation companies, banks, and insurance companies.

6. Supply Chain is the channel stretching from production of raw materials to components to finished products
carried to final buyers.

7. Competition includes all the actual and potential rival offerings and substitutes a buyer might consider.
Four Levels of Competition (based on the degree of product substitutability)
a. Brand competition – a company sees its competitors as other companies offering similar products and
services to the same customers at similar prices.
b. Industry competition – a company sees its competitors as all companies making the same product or class
of products.
c. Form competition – a company sees its competitors as all companies manufacturing products that supply
the same service.

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
 d. Generic competition – a company sees its competitors as all companies that compete for the same
consumer dollars/pesos.

8. Marketing Environment
 Task environment includes the immediate actors involved in producing, distributing, and promoting the
offering.
Company Dealers
Suppliers Target customers
Distributors

 Broad environment contains forces that can have a major impact on the actors in the task environment.
Demographic environment Technological environment
Economic environment Political-legal environment
Natural environment Social-cultural environment

Company Orientations Towards the Marketplace

1. The Production Concept
 It is the oldest concepts in business. It holds that consumers will prefer products that are widely available and
inexpensive.
 Managers of production-oriented business concentrate on achieving high production efficiency, low costs, and
mass-distribution

2. The Product Concept

 It holds that consumers will favor those products that offer the most quality, performance, or innovative
features.
 Managers in these organizations focus on making superior products and improving then over time.
o Marketing myopia / ‘‘better-mousetrap” fallacy exists if sellers concentrate their thinking on the
physical product instead of the customer’s need.

3. The Selling Concept

 It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s
products. The organization must, therefore, undertake an aggressive selling and promotion effort.
 This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into
buying.

4. The Marketing Concept

 The job is to find not the right customers for your products, but the right products for your customers
 It holds that the key to achieving its organizational goals consists of the company being more effective than
competitors in creating, delivering, and communicating superior customer value to its chosen target markets.

o “Meeting needs profitability.” o “Have it your way.” (Burger King)

o “Find wants and fill them.” o “You’re the boss.” (United Airlines)
o “Love the customer, not the o “Putting people first.” (British Airways)
product.” o “Partners for profit.” (Milliken & Company)

5. The Holistic Marketing Concept

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
  The holistic marketing concept is based on the development, design, and implementation of marketing
programs, processes, and activities that recognize their breadth and interdependencies.
 Holistic marketing acknowledges that everything matters in marketing—and that a broad, integrated
perspective is often necessary.

Broad Components of Holistic Marketing

1. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to
earn and retain their business.

2. Integrated marketing occurs when the marketer devises marketing activities and assembles marketing programs
to create, communicate, and deliver value for consumers such that “the whole is greater than the sum of its parts.”

Two key themes are that (1) many different marketing activities can create, communicate, and deliver value and (2)
marketers should design and implement any one marketing activity with all other activities in mind.

3. Internal marketing, an element of holistic marketing, is the task of hiring, training, and motivating able employees
who want to serve customers well.

4. Performance marketing requires understanding the financial and nonfinancial returns to business and society from
marketing activities and programs.

Updating The Four Ps (Holistic Marketing)

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18
1. People reflects, in part, internal marketing and the fact that employees are critical to marketing success.
 Marketing will only be as good as the people inside the organization.
 It also reflects the fact that marketers must view consumers as people to understand their lives more broadly,
and not just as they shop for and consume products and services.

2. Processes reflects all the creativity, discipline, and structure brought to marketing management.
 Marketers must avoid ad hoc planning and decision making and ensure that state-of-the-art marketing ideas
and concepts play an appropriate role in all they do.

3. Programs reflects all the firm’s consumer-directed activities.

 It encompasses the old four Ps as well as a range of other marketing activities that might not fit as neatly into
the old view of marketing.

4. Performance captures the range of possible outcome measures that have financial and nonfinancial implications
(profitability as well as brand and customer equity), and implications beyond the company itself (social
responsibility, legal, ethical, and community related).

Marketing Management Tasks

 Developing marketing strategies
 Capturing marketing insights
 Connecting with customers
 Building strong brands
 Shaping market offerings
 Delivering value
 Communicating value
 Creating long-term growth

Culled from Kotler, Philip; Marketing Management, 14th ed.; Prepared by Mr. Angelo A. Abejero for class room lecture purposes only.

AAA’17-‘18