An Overview of Marketing and

Marketing Management

“You already know a lot about marketing-it’s all around you”

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 Introduction
• Production and marketing of goods and services are t
he essence (foundations) of economic life in any soci
ety.
• All organizations perform these two basic functions t
o satisfy their commitments to their stakeholders – t
he owners, the customers and the society, at large.
• They create a benefit that economists call utility whi
ch is the want-satisfying power of a good or service.
• There are four basic kinds of utility – form, time, place
and ownership utility.
 Introduction…
• Form utility is created when the firm converts ra
w materials and component inputs into finished
goods and services.
• Although marketing provides important inputs t
hat specify consumer preference, the organizati
on’s production function is responsible for the a
ctual creation of form utility.
• Marketing function also creates time, place and
ownership utilities.
 Introduction…
• Time and place utility occur when consumers find go
ods and services available when and where they want
to purchase them.
• Vending machines focus on providing place utility for
people buying snacks and soft drinks.
• The transfer of title to goods or services at the time o
f purchase creates ownership utility.
• To survive, all organizations must create utility. Desi
gning and marketing want satisfying goods, services
and ideas is the foundation for the creation of utility
.
 What is Marketing?
• Many people think of marketing as only selling and advertising.
• However, selling and advertising are only the tip of the marketing
iceberg.
• Today, marketing must be understood not in the old sense of maki
ng a sale—“telling and selling”—but in the new sense of satisfyin
g customer needs.
• The aim of mktg is to make selling a superfluous (unnecessary). Th
e aim is to know & understand the customer so well that the prod
uct or service fits. ..and sell itself” …….Peter Drucker
• Selling and advertising are only part of a larger “marketing mix”—
a set of marketing tools that work together to satisfy customer ne
eds and build customer relationships.

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 Con’t…
• “Marketing is anticipation, management, and satisfactio
n of demand through the exchange process”
• “Marketing is a total system of business activities desig
ned to plan, price, promote & distribute(place) want-sat
isfying products to target markets to achieve organizatio
nal objectives”
• Marketing is managing profitable customer relationship
s. The aim of marketing is to create value for customers
and capture value from customers in return.

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 Con’t…
• The AMA definition:
“Marketing is the process of planning and executing th
e conception, pricing, promotion, and distribution of i
deas, goods, and services to create exchanges that sat
isfy individual and organizational objectives.”

Marketing is a social and managerial process by which

individuals and groups obtain what they need and wa
nt through creating offering and exchanging products
of value with others.

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1.1 Core Concepts of Marketing

Needs, Wants, and Demands

Product or Offering (goods, services and ideas)
Value and Satisfaction
Exchange and Transactions
Relationships and Networks

Market, Marketer, Prospects

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 Con’t….
 Needs, Wants and Demand
•Need - state of felt deprivation.
•A need is something that is necessary for survival.
•Needs describe basic human requirements such as food, clothing,
shelter, recreation, education, and entertainment.
•These needs were not created by marketers; they are a basic par
t of the human make up.
•Wants are desires for satisfiers of needs.
•Needs become wants when they are directed to specific objects t
hat might satisfy the need.
•Wants are the form human needs take as they are shaped by cult
ure and individual personality.
•Wants are how people communicate their needs.
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 Con’t…
• Demands are wants for specific products backed by an ability a
nd willingness to pay.
Demands= wants + purchasing power
• Wants become demand when supported by purchasing powe
r.

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 Con’t…
 Product
• A Product is any thing that can be offered to a market for atten
tion, acquisition, use or consumption that might satisfy a need
or want.
• It can be an object/goods, service, idea, person, activities, pla
ce etc.
• Market offering is some combination of products, services, in
formation, or experiences offered to a market to satisfy a nee
d or want.

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 Con’t…
 Value, satisfaction and Quality
• Value:- the difference between benefits that the customer gains from
owning /or using a product and the costs of obtaining the product.
• Cost is the amount of money that is going to be expended or already i
ncurred to acquire a product.
• Value is the consumers estimate of the products overall capacity to sati
sfy his or her needs.

Value= benefit
costs
= functional benefits + emotional benefits
monetary costs+ time costs + energy costs+ psychic costs

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 Con’t…
How can we enhance Value?
• Marketers can enhance the value of an offering to the custo
mer by:
– Raising benefits
– Reducing costs
– Raising benefits while lowering costs
– Raising benefits by more than the increase in costs
– Lowering benefits by less than the reduction in costs

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 Customer Value

Customer lifetime value: To keep custo

mers coming back, Stew Leonard’s has
created the “Disneyland of Dairy Stores
.”
Rule #1—The customer is always right.
Rule #2—If the customer is ever wron
g, reread Rule #1.

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 Con’t…
• Satisfaction is a person’s feeling of pleasure or disappointment
resulting from comparing a product’s perceived performance o
r outcome in relation to his or her expectations.
• Satisfaction:-depends on the a product’s perceived performanc
e in delivering value relative to a buyers expectation.
 PP>BE=?
 PP<BE=?
 PP=BE=?
• Marketers must be careful to set the right level of expectations
.

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• If they set expectations too low, they may satisfy those who buy but fai
l to attract enough buyers.
• If they raise expectations too high, buyers will be disappointed.
• Customer value and customer satisfaction are key building rocks for d
eveloping and managing customer relationships.

• Quality:- has a direct impact on product/service performance.

• TQM… Quality begins with customer needs and ends with customer
satisfaction.

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 Con’t…
Exchange, Transaction and Relationships
• Exchange involves obtaining a desired product from someone b
y offering something in return.
• It is the act obtaining a desired object from someone by offeri
ng something in return.
• Marketing consists of actions taken to build and maintain desir
able exchange relationships with target audiences involving a p
roduct, service, idea, or other object.

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 Con’t…
For exchange potential to exist, the following conditions must
be satisfied:
1.There are at least two parties.
2.Each party has something that might be of value to the other
party.
3.Each party is capable of communication and delivery.
4.Each party is free to accept or reject the exchange offer.
5.Each party believes it is appropriate or desirable to deal with
the other party.

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• Transaction involves at least two things of value, agreed-upo
n conditions, a time of agreement, and a place of agreement.
• It consists of the trade of value between two parties.
• Example: Bekele gave 1400 birr to kebede and obtained a tel
evision set.
• This is classic monetary transaction. Transaction however, doe
sn’t require money as one of the traded values.

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Relationship & Network
• Relationship marketing is the practice of building long t
erm satisfying relations with key parties in order to retain th
eir long term preferences and business.
• They accomplish this by promising and delivering high quali
ty, good and service, and fair prices to the other parties over
time.
• The ultimate outcome of relationship marketing is the build
ing of a unique company asset called a marketing network.

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• A marketing network consists of the company and all of
its supporting stockholders: customers, employees, supplies
, distributors, retailers, and agencies, university scientists, a
nd others with whom it has built mutually profitable busines
s relationships.
• Build a good network of relationship with k
ey stakeholders, and profit will follow.

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 Con’t…
Market, Marketer and Prospect
• The concept of exchange and relationships lead
to the concept of market.
• A Market is the set of all actual and potential buyer
s of a product or service.
• A marketer is someone seeking a response (attention
, a purchase, a vote, a donation) from another party c
alled prospect.

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 Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
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DESIGNING A CUSTOMER–DRIVEN MARKETING STRATEGY

 Marketing management is concerned not only with finding and incr

easing demand, but also with changing or even reducing it.
• Negative Demand- A market is in a state of negative demand if a
major part of the market dislikes the product and may even pay a pr
ice to avoid it.
• Some people have negative demand for vaccination and in some situ
ation they even pay a higher price to replace it by tablets or some ot
her form of treatment.
• The marketing task is to analyze why the market dislikes the
product and whether a marketing program consisting of product
redesign, lower prices, and more positive promotion can change
the market’s beliefs and attitudes these marketing task/ activity is
known as “ conversional marketing”
 Cont’d
• No Demand- Target consumers may be unaware of
or uninterested in the product or services. Thus,
farmers may not be interested in a new farming
method, and college students may not be interested
in modulalarization.
• The marketing task is known as “stimulational
marketing”; its task is to find ways to connect the
benefits of the product with the person’s natural
needs and interests.
 cont’d
• Latent Demand- Many consumers may share a strong n
eed that cannot be satisfied by any existing actual product
. There is a strong latent demand for harmless cigarettes a
nd HIV/AIDS medicine.
• The marketing task is called; “developmental market
ing” its main task is to measure the size of the potential
market and develop effective goods and services that wou
ld satisfy the demand.
 Cont’d
• Declining/ falling Demand- Every organization, soon
er or later, faces declining demand for one or more of its
products.
 The marketer must analyze the causes of market decline a
nd determine whether demand can be restimulated by fin
ding new target markets, changing the product’s features
or developing more effective communication.
 The marketing task is, “remarketing” to reverse the de
clining demand through creative remarketing of the produ
ct.
 Cont’d
• Irregular Demand— Many organizations- face deman
d that varies on a seasonal, daily, or even hourly basis, caus
ing problems of idle or overworked capacity.
 Museums are under visited on weekdays and overcrowded
on weekends.
 Hotels, restaurants, recreational areas are also overworke
d in weekends and some specific hours and less attended o
n others.
 The marketing task, which is called ‘synchro marketin
g’, is to find ways to alter the same pattern of demand thr
ough flexible pricing, promotion, and other incentives.
• Full Demand- Organizations face full demand when the
y are pleased with their volume of business.
 “Maintenance marketing” is the marketing task, whic
h designs to maintain the current level of demand in the fa
ce of changing consumer preferences and increasing comp
etition.
 The organization must maintain or improve its quality and
continually measure consumer satisfaction to make sure it
is doing a good job.
 Overfull Demand- In some situations, organizations fac
e a demand level that is higher than what they can or want t
o handle.
 The marketing task, which is called “demarketing”, it re
quires finding ways to reduce demand temporarily or perm
anently.
 Demarketing seeks to discourage overall demand and consi
sts of such steps as raising prices and reducing promotion a
nd service.
 Demarketing aims not to destroy demand but also to reduc
e its level, temporarily or permanently.
• Unwholesome Demand- It is the demand for unhealth
y products like cigarette, alcohol, hard drugs, handguns, a
nd X-rated movies.
 Unwholesome products will attract organized efforts to di
scourage their consumption.
 The marketing task is to get people who like something to
give it up, using such tools as fear massage, price hikes, an
d reduced availability.
 The corresponding marketing task is known as “counter
marketing”.
1.2 Company Orientations to Marketing/Marketing Ph
ilosophies
• There are five alternative concepts under which organizatio
ns design and carry out their marketing strategies: the prod
uction, product, selling, marketing and societal marketing c
oncepts.
• These competing philosophies strongly influence an organiz
ation’s marketing processes.
 1.The Production Concept
• The production concept holds that consumers will favor products
that are available and highly affordable/inexpensive.
• Therefore, management should focus on improving production an
d distribution efficiency.
• This concept is one of the oldest orientations that guide sellers.
• The production concept is still a useful philosophy in two types of
situation. The first occurs when the demand for a product exceeds
the supply.
• The 2nd situation occurs when the product’s cost is too high & im
proved productivity is needed to bring it down.
• Can lead to Marketing Myopia (losing sight of the real objective of
satisfying customers needs and building customer relationship.)
2. Product concept
• The product concept holds that consumers will favor products t
hat offer the most in quality, performance, and innovative featur
es.
• Under this concept marketing strategy focuses on making contin

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uous product improvement.
• Some manufacturers believe that if they can build a better mous
e-trap, the world will beat a path to their door. It can also lead t
o Marketing Myopia.
3. Selling concept
• This concept holds that consumers will not buy enough of the
firms products unless it undertakes a large-scale selling and pr
omotion effort.

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• The concept is typically practiced with unsought goods
• Most firms practice the selling concept when they face overca
pacity. Their aim is to sell what they make rather than make
what the market wants.
• Very Risky—It focuses on creating sales transactions rather th
an on building long-term profitable customer relationships.
4. The Marketing Concept
• The marketing concept holds that achieving organizational goa
ls depends on knowing the needs and wants of target markets
and delivering the desired satisfactions better than competitor
s do.

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• Under this concept, customer focus and value are the paths to
sales and profit.
• Instead of a product centered “market and sell” philosophy, the
marketing concept is a customer-centered “sense and respond”
philosophy.
 Right customer for your product Vs right product for your cus
tomers.
Difference b/n selling and marketin
g concept
Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

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5. The Societal Marketing Concept
• The societal marketing concept holds that the organization sh
ould determine the needs of target customers, then deliver th
e desired satisfaction more effectively and efficiently than co
mpetitors in way that maintains or improves the consumers’ a

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nd societies’ well-being.
• It is the newest of the five marketing management philosophie
s.
• Consider the Coca-Cola Company. Most people see it as a hig
hly responsible corporation producing fine soft drinks that sat
isfy consumer tastes. Yet certain consumer and environmental
groups have voiced concerns that Coke has little nutritional v
alue, can harm people's teeth, contains caffeine and adds to th
e litter problem with disposable bottles and cans.

Ch 1
• The societal marketing concept questions whether the pur
e marketing concept is adequate in an age of environmenta
l problems, resource shortages, worldwide economic probl
ems and neglected social services.

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• According to the societal marketing concept, the pure mar
keting concept overlooks possible conflicts between short-
run consumer wants and long-run consumer welfare.

Ch 1
1.5 The goals of marketing System
• Maximizing consumption
• Maximizing Satisfaction
• Maximizing choices
• Maximizing life quality

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 The Four Ps
The Four Cs

Marketing
Mix

Place
Product

Conven-
Customer
Solution Price Promotion ience

Customer Communication
Cost 42
 Thank you
Questions and Comments

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