CHAPTER # 1: DEFINING MARKETING FOR

THE NEW REALITIES

“MARKETING MANAGEMENT” BY KOTLER AND KELLER.

15th Edition
GOOD MARKETING IS NO
ACCIDENT..!
 It is both an art and a science, and it results from
careful planning and execution using state-of-the-art
tools and techniques.
 In this book, we describe how skilful marketers are
updating classic practices and inventing new ones to
find creative, practical solutions to new marketing
realities.
 In the first chapter, we lay our foundation by reviewing
important marketing concepts, tools, frameworks,
and issues.
OUTLINE:

 The value of marketing

 The scope of marketing
 The Marketing concepts
 The new Marketing realities
 A dramatic changed marketplace
 Marketing in practice
 Company’s orientation towards marketplace
 Updating the 4Ps
1. THE VALUE OF MARKETING – PROFIT

 Without sufficient demand for products and services, other

business functions won’t matter.
 There must be a top line for there to be a bottom line.
 Thus, financial success often depends on marketing ability
 It also derives organization’s existence philosophy.
 Marketing is indistinguishable because every body is practising
marketing
 By contributing to the bottom line, successful marketing also
allows firms to more fully engage in socially responsible
activities.
1. THE VALUE OF MARKETING – PROFIT

Contribution of Marketing to Individuals and society

• Maximizing consumption: Marketers seek to stimulate
maximum satisfaction as the more customer spends, buy and
consume, they happier they and marketers become. Maximizing
consumption also means that production, employment and
wealth are maximized.
• Maximizing Customer Satisfaction: Marketer drive will seek
to increase customer’s satisfaction by fulfilling the needs and
wants of a customer. Without satisfaction, consumption may
mean nothing to society.
1. THE VALUE OF MARKETING – PROFIT

Contribution of Marketing to Individuals and society

• Maximizing choice: When a marketing system maximize the
product variety, it will also maximize customer satisfaction.
However, maximizing choice comes with higher production and
inventory cost.
• Maximizing quality of life: A marketing system could improve
the quality of life not just by increasing the quality, quantity and
availability of products, but also the quality of physical and
cultural environment.
MARKETING DECISION MAKING

• CEO(s) recognize that marketing builds:

• Strong brands and a loyal customer base,
• Intangible assets that contribute heavily to the value of a
firm.
• Many firms, even service and non-profit, now have a chief
marketing officer (CMO) – Equal footings.
• In an Internet-fuelled environment rapidly changes and
consequences multiplies.
• Marketers must choose features, prices, and markets and
• Decide how much to spend on advertising, sales, and online
and mobile marketing.
MARKETING DECISION MAKING…

• Meanwhile, the economic downturn that began

globally in 2008 and the sluggish recovery since have
brought budget cuts and intense pressure to make
every marketing dollar count.
• There is little margin for error in marketing.
• Firms must constantly move forward.
• At greatest risk are those that fail to:
• carefully monitor their customers and competitors,
• continuously improve their value offerings and marketing strategies, or
• satisfy their employees, stockholders, suppliers, and channel partners in
the process.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

• What Is Marketing?
• Marketing is about identifying and meeting human and
social needs. One of the shortest good definitions of
marketing is “meeting needs profitably.”
• Example 1:- When Google recognized that people needed to more
effectively and efficiently access information on the Internet, it created a
powerful search engine that organized and prioritized queries.
• Example 2:- When IKEA noticed that people wanted good furnishings at
substantially lower prices, it created knock-down furniture.
• These two firms demonstrated marketing savvy and turned a private or social
need into a profitable business opportunity
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

Definition of Marketing
• “The Management process responsible for identifying,
anticipating and satisfying customer requirement profitably”
– (CIM,2009)
• “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)
• “As a process by which companies create value for
customer and build strong customer relationships in order to
capture value from customers in return” – (Kotler &
Armstong, 2010)
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

Note: All three definitions emphasis marketing as a process and

activities which satisfy customer’s needs, by providing offerings of
value to them, and in return – value i.e. profit.
• Coping with these exchange processes calls for a considerable
amount of work and skill to achieving desired responses from other
parties.
• Definition of Marketing Management:
• Marketing management by Philip Kotler defines as “the
analysis, planning, implementation and control of programs
designed to bring about desired exchanges with target markets
for the purpose of achieving organizational objectives”.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

• What is Marketed?
• Marketers market 10 main types of entities:
1. Goods
2. Services
3. Events
4. Experiences
5. Persons
6. Places
7. Properties
8. Organizations
9. Information, and
10. Ideas.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

1. Goods: Tangible products that customers purchase, such as

electronics, clothing, and food.
2. Services: Intangible offerings that fulfil specific needs,
Services include the work of airlines, hotels, and accountants,
bankers, lawyers, engineers.
3. Events: time-based events, such as major trade shows, artistic
performances, and company anniversaries are promoted to
attract attendees.
4. Experiences: Emotionally engaging interactions that create
memorable moments, such as theme park visits, fine dining,
and adventure tours.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETEDS

5. Persons: Artists, musicians, CEOs, physicians, high-profile

lawyers and financiers, and other professionals often get help
from marketers.
6. Places: Cities, states, regions, and whole nations compete to
attract tourists, residents, factories, and company headquarters.
Place marketers include economic development specialists,
real estate agents, commercial banks etc.
7. Properties: Properties are intangible rights of ownership to
either real property (real estate) or financial property (stocks
and bonds). They are bought and sold, and these exchanges
require marketing. Real state/Investment companies and banks.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

8. Organizations: Museums, performing arts organizations,

corporations, and non-profits all use marketing to boost their
public images and compete for audiences and funds.
9. Information: Information is essentially what books, schools,
and universities produce, market, and distribute at a price to
parents, students, and communities. Firms make business
decisions using information supplied by organizations.
10. Ideas: Promoting concepts or ideologies to influence
opinions or behaviours, such as public health campaigns or
social movements. Example: "Don't Drink and Drive" anti-
drunk driving campaign.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

• Who Markets?
• Marketers and Prospects: A marketer is someone who seeks
a response—attention, a purchase, a vote, a donation—from
another party, called the prospect.
• If two parties are seeking to sell something to each other, we
call them both marketers
• Marketers are skilled at stimulating demand for their products,
but that’s a limited view of what they do.
• They also seek to influence the level, timing, and composition of
demand to meet the organization’s objectives.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

• Eight demand states are possible:

1. Negative demand —Consumers dislike the product and may even pay to avoid it.
2. Nonexistent demand —Consumers may be unaware of or uninterested in the product.
3. Latent demand —Consumers may share a strong need that cannot be satisfied by an
existing product.
4. Declining demand —Consumers begin to buy the product less frequently or not at all.
5. Irregular demand —Consumer purchases vary on a seasonal, monthly, weekly, daily,
or even hourly basis.
6. Full demand —Consumers are adequately buying all products put into the
marketplace.
7. Overfull demand —More consumers would like to buy the product than can be
satisfied.
8. Unwholesome demand —Consumers may be attracted to products that have
undesirable social consequences
• marketers must identify the underlying cause(s) of the demand state and
determine a plan of action to shift demand to a more desired state
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

• Markets: Traditionally, 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.
• Five basic markets and their connecting flows are shown in
Figure 1.1.
• Figure 1.2 shows how sellers and buyers are connected by four
flows.
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED
2. THE SCOPE OF MARKETING
WHAT MARKETING IS, HOW IT WORKS, WHO DOES IT, AND WHAT IS MARKETED

Key Customer Markets

• Consumer Markets: Customer who buy products for their own
consumption. They are the end user of the product.
• Business Market: Consumer who buy product for further
processing, reselling, renting, and not for their own personal
consumption.
• Government Market: Government bodies and related agencies
who buy products in order to provide services to the general
public.
• Reseller Market: Customer who buys goods to resale at a profit
margin.
• International Market: Customers in other countries, including
consumers, producers, resellers and government.
3. CORE MARKETING CONCEPTS

Needs, Wants, and Demands

• Need: A necessity essential for survival or well-being, like
food, water, or shelter. Example: A person requires food to
maintain their health.
• Want: A preference for something beyond basic needs, driven
by personal taste or culture. Example: Wanting a specific
brand of smartphone for its features.
• Desire: An intense longing for something that may not be
essential, often influenced by emotions. Example: Desiring a
luxury car for its status symbol and prestige.
3. CORE MARKETING CONCEPTS

Segmentation, Targeting, and Positioning

• Segmentation: Dividing a broad market into smaller, distinct groups
based on shared characteristics like demographics, behaviours, or
preferences. Example: A fitness company segments its market into groups
of young adults seeking weight loss and older adults focused on joint
health.
• Targeting: Selecting a specific segment as the primary audience to direct
marketing efforts and offerings. Example: The fitness company targets the
young adult segment by promoting their weight loss products through
social media and influencer collaborations.
• Positioning: Crafting a unique image and value proposition in the minds
of customers, differentiating a brand from competitors within a chosen
target segment. Example: The fitness company positions itself as the go-to
provider of personalized fitness solutions for young adults, emphasizing
convenience and measurable results
 3. CORE MARKETING CONCEPTS

Offering and Brand

• Offering: An offering refers to a product, service, or
combination of both that a company presents to customers to
satisfy their needs or wants. Example: A smartphone with
advanced features, camera capabilities, and a sleek design is an
offering in the tech market.
• Brand: A brand represents a unique identity, symbol, name, or
set of associations that distinguishes a company's offerings from
competitors, influencing customer perception and loyalty.
Example: Apple is a well-known brand associated with
innovation, quality, and a user-centric approach in the
technology industry.
 3. CORE MARKETING CONCEPTS

To reach a target market, the marketer uses three kinds of marketing channels.
• Communication Channel: A communication channel is the means used to
convey messages and information from a sender to a receiver. Example:
Social media platforms like Instagram and Twitter serve as communication
channels for companies to interact with customers and promote their
products.
• Distribution Channel: A distribution channel involves the network of
intermediaries and activities responsible for delivering products from the
producer to the consumer. Example: An electronics manufacturer might use a
distribution channel consisting of wholesalers, retailers, and online stores to
reach customers effectively.
• Service Channel: A service channel encompasses the methods through which
companies deliver post-purchase assistance, support, or maintenance to
customers. Example: An online streaming platform offers a service channel
by providing customer support to address technical issues and billing
inquiries.
 3. CORE MARKETING CONCEPTS

Paid, Owned and Earned Media

• Paid Media: Paid media refers to promotional content that a company
pays to distribute through various channels, such as advertising on
social media, search engines, or sponsored content on websites.
Example: Running a Facebook ad campaign to promote a new product.
• Owned Media: Owned media includes digital assets and platforms
that a company controls, such as its website, social media profiles, and
email lists. Example: Publishing articles on a company blog to educate
customers about industry trends.
• Earned Media: Earned media encompasses mentions, shares, or
reviews that are earned through word-of-mouth, social sharing, or
media coverage without direct payment. Example: A news article
featuring a company's innovative solution, gaining exposure and
credibility.
 3. CORE MARKETING CONCEPTS

Impression and Engagement

• Impression: An impression in marketing communication refers to
the number of times an advertisement, content, or message is
displayed or shown to a user, regardless of whether they interact
with it. It indicates the potential reach of the message. Example: If
an ad appears on a webpage and is viewed by 100 people, it
generates 100 impressions.
• Engagement: Engagement signifies the level of interaction and
involvement that users have with a marketing message or content.
It includes actions like likes, comments, shares, clicks, and other
forms of active participation. Example: A high engagement rate
indicates that a social media post prompted many users to like,
comment, and share it, showcasing its effectiveness.
 3. CORE MARKETING CONCEPTS

Value and Satisfaction

• Value: Value in marketing refers to the perceived benefits a
customer receives from a product or service in relation to its
cost. It's the worth a customer believes they're getting from the
offering. Example: A high-quality smartphone with advanced
features at a reasonable price provides good value to customers.
• Satisfaction: Satisfaction reflects the extent to which a
customer's expectations are met after experiencing a product or
service. It's a measure of how well the offering fulfils their
needs and desires. Example: A customer who purchases a
product and finds it to be reliable, user-friendly, and durable
experiences satisfaction.
 3. CORE MARKETING CONCEPTS

Supply chain, Competition and Marketing Environment

• Supply Chain: The supply chain comprises the interconnected network of
activities, processes, and entities involved in producing, distributing, and
delivering goods or services from suppliers to end consumers. It involves
sourcing, manufacturing, transportation, and logistics.
• Competition: Competition in business refers to the rivalry between
companies striving to offer similar products or services within the same
market space. It drives companies to innovate, improve quality, and
differentiate themselves to attract customers.
• Marketing Environment: The marketing environment encompasses the
external factors and influences that impact a company's marketing strategies
and decisions. This includes factors such as economic, social, technological,
political, and cultural forces that shape consumer behaviour and market
trends.
 3. CORE MARKETING CONCEPTS

Exchange, Transaction and Relationship

• Exchange: The process of giving and receiving something of
value between parties, typically involving goods, services, or
money. Example: A customer purchasing a smartphone from a
retailer in exchange for payment.
• Transaction: A specific instance of an exchange, involving a
buyer and a seller, resulting in a transfer of value. Example:
Buying a cup of coffee at a café in exchange for money.
• Relation: A broader and ongoing connection between parties
built on trust, communication, and mutual benefit. Example: A
company maintaining a long-term customer relationship through
personalized offers and support.
 ASSIGNMENT NO. 1

• he three major challenges faced by businesses today are

globalization, advances in technology, and deregulation.
Which of these affords the greatest opportunity for established
businesses? Which affords the greatest opportunities for new
businesses? Why?