CHAPTER ELEVEN

Introduction

Production and marketing of goods and services are the essence of economic life in any society.
All organizations perform these two basic functions to satisfy their commitments to their
stakeholders – the owners, the customers and the society, at large.

What is marketing?

• Marketing is about managing profitable customer relationships.

• Goals:

– Attracting new customers

– Retaining and growing current customers

• Marketing Defined:

Marketing is the activity, set of instructions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.

“OLD view of marketing:

Making a sale—“telling and selling”

NEW view of marketing:

Satisfying customer needs

What is Market?

A market is an arrangement between a seller and a buyer in which:

• The seller agrees to supply the goods or the service.

• The buyer agrees to pay the price.

Defined this way, the market is not necessarily a geographical location. Products and services are
purchased over the phone, through mail and electronic mail, as well as online through the
internet.

► Product: People satisfy their needs and wants with products. “Anything that can be offered to
a market for attention, acquisition, use, or consumption and that might satisfy a want or need”

► Utility: is the ability of goods and services to satisfy consumer wants and since there is wide

range of wants, products can provide utility in a number of different ways.

– Form utility: satisfies wants by converting inputs into a finished form. Clearly, the vast
majority of products provide some kind of form utility.
– Time utility: satisfies wants by providing goods and services at a convenient time for
customers.
– Place utility: satisfies wants by providing goods and services at a convenient place for
customers. For example, ATMs offer banking services in many large supermarkets,
– Ownership utility: satisfies wants by smoothly transferring ownership of goods and
services from seller to buyer
► Marketer: A person whose duties include the identification of the goods and services
desired by a set of consumers, as well as the marketing of those goods and services on behalf of a
company. Marketers are skilled in stimulating demand for their products.
What is Marketing Management?

Marketing management is “the art and science of choosing target markets and building profitable
relationships with them.”

• A winning marketing strategy

– What customers will we serve?

– How can we serve these customers best?

The marketing concept:

● Production Era: The production era, one of the oldest in business, holds that consumers prefer
products that are widely available and inexpensive.

Managers of production-oriented businesses concentrate on achieving high production efficiency,

low costs, and mass distribution. This orientation makes sense in developing countries, where
consumers are more interested in obtaining the product than in its features. It is also used when a
company wants to expand the market.

● Product Era: Other businesses are guided by the product concept, which holds that consumers
Favor those products that offer the most quality, performance, or innovative features. Managers in
these organizations focus on making superior products and improving them over time, assuming
that buyers can appraise quality and performance.

●Selling Era: It starts with the factory, focuses on existing products, and calls for heavy selling
and promoting to produce profitable sales.

The organization must, therefore, undertake an aggressive selling and promotion effort. This
concept assumes that consumers must be coaxed into buying, so the company has a battery of
selling and promotion tools to stimulate buying.

● Marketing Era: It starts with a well-defined market, focuses on customer needs, coordinates
activities that affect customers, and produces profits by satisfying customers.

Target Market

Customer Needs

Integrated Marketing

Profitability

● Societal Marketing Era: Some have questioned whether the marketing concept is an
appropriate philosophy in an age of environmental deterioration, resource shortages, explosive
population growth, world hunger and poverty, and neglected social services. Are companies that
successfully satisfy consumer wants necessarily acting in the best, long-run interests of consumers
and society? The marketing concept sidesteps the potential conflicts among consumer wants,
consumer interests, and long-run societal welfare.

We propose calling it the societal marketing concept, which holds that the organization’s task is
to determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors in a way that preserves or enhances
the consumer’s and the society’s well-being.

Consumer Market Segmentation

Choosing the best target market (or markets) for your product begins with dividing your market
into segments, or groups of people who have similar characteristics. But people can be similar in
a number of different ways, so, not surprisingly, marketers have several options for segmenting
potential consumers.
A. Demographic
Demographic segmentation refers to dividing the market based on measurable characteristics
about people such as age, income, ethnicity, and gender. Demographics are a vital starting point
for most marketers.
B. Geographic:
Geographic segmentation refers to dividing the market based on where consumers live. This
process can incorporate countries, or cities, or population density as key factors.
C. Psychographic
Psychographic segmentation refers to dividing the market based on consumer attitudes, interests,
values, and lifestyles.
D. Behavioral
Behavioral segmentation refers to dividing the market based on how people behave toward
various products. This category includes both the benefits that consumers seek from products and
how consumers use the product.
 EXHIBIT 11.5 Elements That Influence the Consumer Decision-Making Process
INFLUENCE DESCRIPTION
CULTURAL Culture: The values, attitudes, and customs shared by members of a society
Social Class: Societal position driven largely by income and occupation
SOCIAL Family: A powerful force in consumption choices
Friends: Another powerful force, especially for high-profile purchases
Reference Groups: Groups that give consumers a point of comparison
PERSONAL Measurable characteristics such as age, gender, or income.
Demographics:
Perceptions: How people select, organize, and interpret information
Learning: Changes in behavior based on experience
PSYCHOLOGICAL Pressing needs that tend to generate action.
Motivation:

A simple model of the marketing process:

The marketing process can be divided in several different ways. One popular
Conceptualization of marketing tasks is:

1. Strategy formulation – the development of the broadest marketing/business Strategies with

the longest term impact.
2. Marketing planning – the development of longer-term plans which have generally stronger
impact than the short-term programs.
3. Marketing programming, allocating and budgeting
4. Marketing implementation – the actual task of getting the marketing job done.
5. Monitoring and auditing – the review and analysis of programs, plans and strategies to assess
their success and to determine what changes must be made.
6. Analysis and research – the examination of qualitative and quantitative data to improve
decision making.
Modern Marketing Systems
Main elements in a modern marketing system include:

• Suppliers
• Company (marketer)
• Competitors
• Marketing intermediaries
• Consumers

Characteristics of Modern Marketers

Two days, that modern marketing is created for responding Companies needs, it is important that the
marketer become modern too. In this way, the person can coordinate himself for herself with modern
marketing. Paul Christ has enumerated five characteristics for modern marketers. They include:
A. Basic Business Skills
Marketers are first and foremost business people who must perform necessary tasks required of all
successful business people. These basic skills include problem analysis and decision-making, oral and
written communication, basic quantitative skills, and working well with others.
B. Understanding Marketing’s Impact
Marketers must know how their decisions will impact other areas of the Company and others business
partners. They must realize that marketing decisions are not made in isolation and that decisions made
by the marketing team could lead to problems for others. For example, making a decision to run a
special sale that significantly lowers the price of a product could present supply problems if the
production area is not informed well in advance of the sale.
C. Technology Savvy
Today’s marketers must have a strong understanding of technology on two fronts. First, marketers
must be skilled in using technology as part of their everyday activities.
D. Information Seeker
The field of marketing is dynamic. Changes occur continually and often quickly.
Marketers must maintain close contact with these changes through a steady diet of information.
 Functions of Marketing
Marketing Function Description

A) Exchange functions Ensuring that product offerings are available in sufficient quantities
1. Buying to meet customer demands.

2. Selling Using advertising, personal selling and sales

promotion to match goods and services to
customer needs

B) Physical distribution functions
1. Transporting
2. Storing
C. Facilitating functions
1. Standardizing and grading
Moving products from their points of production to locations
convenient for Purchasers.
Warehousing products until needed for sale
Ensuring that product offerings meet established quality and
quantity control Standards of size, weight and so on.
Providing credit for channel members or Consumers.

2. Financing Dealing with uncertainty about consumer purchases resulting from

creation and marketing of goods and services that consumers may
3. Risk taking purchase in the future.

Collecting information about consumers, competitors and channel

4. Securing marketing information members for use in
marketing decision making

Preparing a Marketing Plan and Program

• Build customer relationships by transforming the marketing strategy into action

• Includes the marketing mix and the 4P’s of marketing

– Product
– Price
– Place
– Promotion
 Self-assessment
1. Which of the following are not the goals Marketing.
a. Attracting new customers
b. Retaining and growing current customers
c. Focuses on existing products, and customer satisfaction.
2. In the marketing concept Production Era:
a. Managers of production-oriented businesses concentrate on achieving high
production efficiency, low costs, and mass distribution.
b. Managers of production-oriented businesses concentrate on achieving high
customer satisfaction and lower cost of production.
c. Managers in these organizations focus on making superior products and improving
them over time, assuming that buyers can appraise quality and performance.
3. Which of the following are not Characteristics of Modern Marketers :
a. Information Seeker
b. Understanding Marketing’s Impact
c. Build profitable relationships and create customer delight.
4. Differentiate Market and marketing?
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5. List Consumer Market Segmentation:
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What are the marketing function?
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