CHAPTER 1 Introduction

Fundamentals of
Marketing
MKT243
Chapter 1
Introduction
MKT243 Fundamentals of Marketing 1

Topic Outline
• What Is Marketing?
• Understand the Marketplace and Customer
Needs
• Rules of Exchange
• Marketing Management Orientation/
Philosophies
• Differences between sales and market
orientation

What is Marketing?
• Marketing is a process by which companies
create value for customers and build strong
customer relationships to capture value from
customers in return (Kotler. P & Armstong. G,
2008).
• Marketing is an organization function and a set
of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and the stakeholder. (McDaniel,
Lamb, Hair, 2008)

What is Marketing?
• Marketing involves more than just activities performed
by a group of people in a defined area or department.
• In the often quoted words of David Packard,
cofounder of Hewlett-Packard, “Marketing is too
important to be left only to the marketing department.”
Marketing entails processes that focus on delivering
value and benefits to customers, not just selling
goods, services, and/or ideas.
• It uses communication, distribution, and pricing
strategies to provide customers and other
stakeholders with the goods, services, ideas, values,
and benefits they desire when and where they want
them.
• It involves building long-term, mutually rewarding
relationships when these benefit all parties
concerned. MKT243 Fundamentals of Marketing 6
Understanding the Marketplace
and Customer Needs
Core Concepts
• Customer needs, wants, and
demands
• Market offerings
• Value and satisfaction
• Exchanges and relationships
• Markets

and Customer Needs
Customer Needs, Wants, and Demands
• States of deprivation
Needs •Physical—food, clothing, warmth, safety

•Social—belonging and affection
•Individual—knowledge and self-expression
Wants • Form that needs take as they are shaped by

culture and individual personality
Demands •Wants backed by buying power i.e. money
10
MKT243 Fundamentals of Marketing
and Customer Needs
Markets are the set of actual
and potential buyers of a
product
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The Concept of Exchange
• One desired outcome of marketing is an exchange;
people giving up something to receive something
they would rather have.
• Normally, we think of money as the medium of
exchange. We “give up” money to “get” the goods
and services we want.
• Exchange does not require money, however, two
persons may barter or trade such items as baseball
cards or oil paintings.
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Rules of exchange
• Five conditions must be satisfied for an exchange
to take place:
1. There must be 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.
• Exchange may not take place even if all of these

conditions exist, but these conditions are necessary
for exchange to be possible.
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The Marketing Mix
Marketing
Mix
Product Place Promotion Price
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Product
• Anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a
want or need.
• The product includes not only the physical unit but
also its package, warranty, after-sale service, brand
name, company image, value, and many other
factors.
• We buy things not only for what they do (benefits) but
also for what they mean to us (status, quality, or
reputation). Products can be tangible goods such as
computers, or services such as medical care.
Products should also offer customer value.
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Place
• Place, or distribution, strategies are concerned with
making products available when and where
customers want them.
• Putting products in the market through marketing
channels- sets of interdependent organizations
involved in the process of making a product or
service available (online or/and offline) for use or
consumption.
• A part of this, it also involves all the business
activities concerned with storing and transporting raw
materials or finished products.
• The goal is to make sure products arrive in usable
condition at designated places when needed.
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Promotion
• Promotion’s role in the marketing mix is to bring
about mutually satisfying exchanges with target
markets by informing, educating, persuading, and
reminding them of the benefits of an organization or
a product.
• A good promotion strategy, can dramatically increase
sales.
• Promotion includes advertising, public relations,
sales promotion, and personal selling.
• Each element of the promotion “P” is coordinated and
managed with the others to create a promotional
blend or mix.
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Price
• The amount of money charged for a product or the sum of
the values that consumers exchange for the benefits of
having or using the product
• Price is what a buyer must give up to obtain a product.
• It is often the most flexible of the four marketing mix
elements—the quickest element to change.
• Marketers can raise or lower prices more frequently and
easily than they can change other marketing mix
variables.
• Price is an important competitive weapon and is very
important to the organization because price multiplied by
the number of units sold equals total revenue for the firm.
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Production Orientation
• The production orientation focuses on internal
capabilities of the firm rather than on the desires
and needs of the marketplace.
• The firm is concerned with what it does best,
based on its resources and experience, rather
than with what consumers want.
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Sales Orientation
• A sales orientation assumes that more goods and
services will be purchased if aggressive sales
techniques are used and that high sales result in
high profits.
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Market Orientation
• The marketing concept states that the social and
economic justification for an organization's
existence is the satisfaction of customer wants
and needs while meeting organizational
objectives.
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Market Orientation
• The marketing concept involves:
a. Focusing on customer wants and needs so the
organization can differentiate its product(s) from
competitors' offerings
b. Integrating all the organization's activities,
including production, to satisfy these wants and
needs
c. Achieving long-term goals for the organization
by satisfying customer wants and needs legally and
responsibly.
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Societal Marketing Orientation
• An organization existences not only to satisfy
customer wants and needs and to meet
organizational goals, but also to preserve or
enhance individuals’ and society's long-term best
interests.
• This orientation extends the marketing concept to
serve three bodies: customers, the organization
itself, and society as a whole.
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Marketing Management Philosophies
Orientation Key Ideas
Production Focus on efficiency of internal operations
Focus on aggressive sales techniques and believe that

Sales high sales result in high profits
Focus on satisfying customer needs and wants

Market while meeting objectives
Focus on satisfying customer needs and

Societal wants while enhancing individual and
societal well-being
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Differences between sales and
marketing orientations
Organization’s Firm’s For Primary Tools to
Focus Business Whom? Profit Achieve
Goal?
Sales Inward Selling Everybody Maximum Primarily

Orientation goods and services sales volume promotion
Market Outward Satisfying wantsSpecific groupsCustomer Coordinated use of

Orientation and needs of people satisfaction all marketing
activities
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The Organization's Focus
• Sales-oriented firms tend to be inward-looking.
They focus on satisfying their own needs rather
than those of customers.
• Market-oriented firms derive their competitive
advantage from an external focus. Departments
in these firms coordinate their activities and focus
on satisfying customers.
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Customer Value
1. Customer value is the ratio of benefits to the
sacrifice necessary to obtain those benefits.
2. Creating customer value is a core business
strategy of many successful firms.
3. Why Marketers interested in customer value?
• Offer products that perform
• Give consumers more than they expect
• Avoid unrealistic pricing
• Give the buyer facts
• Offer organization-wide commitment in service
and after-sales support
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Customer Satisfaction
• Customer satisfaction is the feeling that a product
has met or exceeded the customer's
expectations.
• The organizational culture focuses on delighting
customers rather than on selling products.
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Building Relationships
• Relationship marketing is a strategy that entails
forging long-term partnerships with customers
and contributing to their success.
1. The Internet is an effective tool for generating
relationships with customers.
2. Customers benefit from stable relationships with
suppliers.
3. A sense of well-being occurs when one
establishes an ongoing relationship with
provider.
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CHAPTER 1 Introduction

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Fundamentals of

MKT243 Fundamentals of Marketing 1

MKT243 Fundamentals of Marketing 3

MKT243 Fundamentals of Marketing 5

MKT243 Fundamentals of Marketing 9

Needs •Physical—food, clothing, warmth, safety

Wants • Form that needs take as they are shaped by

Demands •Wants backed by buying power i.e. money

• Exchange may not take place even if all of these

Product Place Promotion Price

Production Focus on efficiency of internal operations

Focus on aggressive sales techniques and believe that

Focus on satisfying customer needs and wants

Focus on satisfying customer needs and

Sales Inward Selling Everybody Maximum Primarily

Market Outward Satisfying wantsSpecific groupsCustomer Coordinated use of

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