CHAPTER ONE

Introduction to Marketing
Role of manager:-
Achieving Corporate Success
Brainstorming
Achieving Corporate success is easy????

What are the key factors that affects the success of

firms?

Does marketing has something to do with it?

Do you genuinely believe that marketing can make a

difference?
 The today's business environment
Technological
development
Worldwide competitive Mergers & acquisitions
environment between companies

Demanding Product life cycle

customers shortening

Employees new New Legal

profiles environment
 Introduction !
Marketing is everyone’s business. Every
person working for an organisation should
understand the importance of marketing.
† Effective marketing puts the products in
the hands of its targeted customers.
What image come to your mind when you
heard the word marketing?
 1.1 Basic concepts and definitions
What is Marketing?

“Marketing is the management process

responsible for identifying, anticipating and
satisfying consumer requirements profitably”
The Chartered Institute of Marketing(CIM)

“Marketing is the task of creating, pricing,

promoting and distributing want-satisfying
products to the target market to meet customer
needs in the changing market place for a
mutual benefit’’
American marketing association(AMA)
 Marketing is defined as a social and managerial
process by which individuals and groups obtain what they
need and want through creating, offering, and exchanging
products and services of value with other.
Philip Kotler
Marketing is the process of getting the right product to
the right people at the right place, time, and price, using
the right promotion and communication techniques and
utilizing the appropriate people to provide the customer
service associated with those product.
 Short story:
A disappointed Coca Cola salesman returns from his
Middle East assignment. A friend asked, "Why weren't
you successful with the Arabs?" The salesman
explained: "When I got posted to the Middle East, I was
very confident that I would make a good sales pitch as
Cola is virtually unknown there. But, I had a problem I
didn't know to speak Arabic. So, I planned to convey the
message through three posters...
First poster: A man lying in the hot desert sand...totally
exhausted and fainting.
Second poster: The man is drinking our Cola.
Third poster: a man is now totally refreshed.
And Then these posters were pasted all over the place. "Then
that should have worked!" said the friend. "It should have!?"
said the salesman

"But I didn't realize that Arabs read from right to

left!!“
Simple marketing system
1.2 Core concepts of marketing
Five core customer and marketplace
concepts:
 (1) Needs, Wants, and Demands;
 (2) Market offerings (products, services, and experiences);
(3) Value and satisfaction;
 (4) Exchanges and relationships; and
 (5) Markets.
1. Needs
Human needs are the basic reasons for the emergence and
existence of marketing.
 A need is a necessity or basic for human being. They are
states of felt deprivation.
Marketing Process starts when the individual comes to
know of a particular need. If this need is not satisfied it
creates a state of tension within the minds of the person.
This state will drive the people to adopt a behavior that
will help reduce the tension.
.
Marketing begins and ends with customers
2. Wants
 Human wants are the form taken by human needs as a result
of socio-cultural and individual personality they are shaped
by culture and individual personality.
Needs are general and common to all human beings whereas
wants are specific which differ between and among people.

Wants are best described in terms of objects. For example,

all people have a need for food but not all people try to
satisfy their hunger or thirsty with identical products.

Enjera is a favorite food for Ethiopians; rice is a staple food

for Indians; pourage is a favorite food for Kenyans; etc.
One fundamental question: Is
Marketing creating or/and satisfying
needs?
Needs are naturally endowed and marketers cannot
create them
Marketers but can identify them and respond to them
by developing a solution that will meet the aroused
needs
3. Demands
Demand refers to the quantity of a particular item which
customers are able to buy at a given price level.
 Human wants become demands when supported by buying
power.
 A mere interest of customers to a particular product is not
enough if are not able to afford the charged price.
 Demand management

Irregular Unwholesome Declining

• Negative demand
• Full demand
• No demand • Overfull demand
• Latent demand • Unwholesome
• Falling demand demand
• Irregular demand
Negative
 There are eight possible demand states.
1. None-existent demand: customers may be unaware of or
uninterested in the product. They neither like nor dislike the
product.
 Marketing strategy-Stimulation marketing (the company tries
to find way to associate the benefits of the product with
people’s natural needs and interests through advertisement.
2. Negative demand: customers dislike the company’s product.
 Marketing strategy- Conversional marketing (making
attitudinal adjustment by promotion, features redesigning,
lowering price, etc).
3. Declining demand: customers begin to buy the product less
frequently or not at all may be because of product obsolescence,
stiff competition, high price, etc.
 Marketing strategy- Remarketing (changing product features,
searching for new target markets, more effective
communication, etc will re-stimulate the declining demand).
4. Latent demand: customers may develop a strong need that can not
be satisfied by an existing product.
 Marketing strategy-Developmental marketing (the company
decides to measure the size of the potential market and develop a
product that satisfies the demand).
5. Irregular demand: A products demand varies by time, such as on
seasonally, monthly, weekly, daily even hourly basis.
 Marketing strategy-Synchro-marketing (the company decides to
increase price, decrease advertisement and augmented services
during peak periods and doing the reverse during slack demand
periods).
6. Full demand: customers are adequately buying all the products put
into the marketplace.
 Marketing strategy-Maintenance marketing (maintain the current
level of demand in the face of changing customers preferences and
increasing competition).
7. Over full demand: Sometimes a demand level that is
beyond an organization’s ability may arise.
Marketing strategy-De marketing (marketers facing
overfull demand decide a temporary or permanent reduction
or shift of demand).
8. Unwholesome demand: customers may be attracted to
products that have undesirable social consequences. These
products are liked some and disliked by others in the
society.
E.g. cigarettes, alcohol, hard drugs, handguns, etc.
 Marketing strategy-Destroy marketing (marketers
attach cautionary label on the package and reduce explicit,
positive and direct promotion, fear messages, price hikes,
reduce availability to get people to give it up.
4. Marketing offer
(what is marketed?)

Goods, Places,
 Services, Properties,
Experiences, Organizations
Events, Information
Persons, Ideas.
 5. Customer value and satisfaction

5. Customer value is the difference between the benefit that the

customer gains from owning and using a product and the costs of
obtaining it.
Or Value defined as a ratio between what the customer
gets and what he/she gives
 Customer satisfaction
Customer satisfaction is the customer’s feeling that a
product has met or exceeded expectations
 If the product’s perceived performance equals to customer
expectation, customers are satisfied.
 If the product’s perceived performance is greater than customer
expectation, customers are delighted.
 If the product’s perceived performance is less than customer

expectation, customers are dissatisfied.

Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the product
to others.
 Continue……
Customer value and customer satisfaction are key
building blocks for developing and managing
customer relationships.
 Studies show that a satisfied customer will tell 2-3
people about his experience with your company. A
dissatisfied consumer will share their lament with 8-
10 people and some will push that number to twenty. An
unhappy customer will become a loyal consumer if you fix his
complaint and do it quickly.
 It costs five times as much to attract a new customer than to keep
an existing one. ... 89% of companies see customer experience as
a big factor in driving customer loyalty and retention. 76% of
companies see customer lifetime value as an important concept in
their business.
6. Exchange ,transactions, and market
•Exchange is the act of obtaining a desired object from someone
by offering something in return.

Something of value

Goods, services, benefits

Supplier Customer

Money, exchange of goods

Something of value
Conditions of exchange include:
1. At least two parties must participate (the buyer and
the seller).
2. Each party must have a resource to provide in return
for the other party.
3. Each party must believe that he/she will be benefited
from the exchange.
4. The parties must be capable to communicate each
other.
5. Each party has the right to accept or reject the offer
of the counter party.
EXCHANGE TRANSACTIONS (a trade of
values between two parties) is marketing’s unit of measurement. Most involve
Consumers
money, a response, andCosts
action.& Benefits Organisations

Cash

Quench
thirst
Customer Pepsi

Fees

Education

Student University
Market, Marketer …

Market: A market is the set of actual and potential

buyers of a product.
Originally a market was a place where buyers and
sellers gathered to exchange goods (such as a village
square).
 Economists use the term to designate a collection of
buyers and sellers
Target market: is a group of customers who share
common wants and needs, and who have the
ability to purchase a particular product that the
company decided to serve them.
 Marketers and Prospects
A marketer is someone who is seeking 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, both are
marketers.
 Importance of Marketing
Marketing process brings goods and services to satisfy the
needs and wants of the people.
It helps to bring new varieties and quality goods to
consumers.
By making goods available at all places, it brings
equipment distribution.
Marketing converts latent demand into effective demand.
It gives wide employment opportunities.
It creates time, place and possession utilities to the
products.
It creates to keep the standard of living of the society.
 1.4. Marketing management concepts/
philosophies
There are five alternative concepts based on which
organizations design and carry out their marketing
strategies. These include
1. Production Concept
2. Product Concept
3. Selling Concept
4. Marketing or Relationship Marketing Concept and
5. Societal Marketing Concept.
The weight given to the interests of customers,
organization’s objectives and the society’s interests
vary in each philosophy.
 1. Production concept
Production concept holds that customers prefer
products that are highly available and affordable.
Management focuses highly on improving
production and distribution efficiency.
This philosophy works better when there is
excess demand in the market.
Again if producing the product at a small
quantity is costly and producing it in a high
volume brings the high unit production cost, this
philosophy is preferred.
 ii. Product concept
This philosophy holds that customers prefer
quality products and innovative features.
Management focuses on continuous product
quality and feature improvement.
Both production concept and product concept
lead to marketing myopia (focusing too narrowly
on their own operations and losing sight of
satisfying customer needs and building customer
relationships.
 iii. Selling concept
Assumes that customers will not buy enough of the firm’s
products unless it undertakes large-scale selling and
promotion effort.
Practiced highly for unsought/new products and when the
company faces excess unsold inventory.
Focuses on creating sales rather than building long-term
customer relationships.
Follows make and sell philosophy (inside out
perspective)-starts from the company’s existing products.
Looking for the right customers for the company’s
product
 iv. Marketing concept
Holds that achieving organizational goals
depends on knowing the needs and wants of
target markets and delivering superior value
than competitors.
It is an outside-in perspective-starts from a well
defined market
Find the right products to the right customers
Sense and respond philosophy
Considers marketing as gardening (cultivating
customers to grow as a gardener cultivates his
crops in order to reap high volume).
 Difference between Selling and Marketing
Selling Marketing
Starts and Focuses on the
Starts and focuses with the
seller existing products and needs of the buyer. Buyer is
needs the centre of the business
Emphasizes on identification
preoccupied with the seller’s
need to convert his product of a market
into cash; emphasizes on profit opportunity ,fulfilling the
views business as a ‘goods
needs of the customers.
views business as a ‘customer
producing processes’
The firm makes the product
satisfying processes.
customer determines what is
first the then decides how to
sell it and make profit. to be offered as a ‘product’
and the firm offering product
that would match the needs of
the customers.
 Selling
Emphasizes accepting the
existing technology and
reducing the cost of
production.
Seller’s motives dominate
marketing communications.
Costs determine price.
views the customer as the last
link in the business
Seller’s convenience
dominates the formulation of
the ‘marketing mix’.
Marketing
Emphasis’s on innovation of
adopting the most innovative
technology.
Marketing communications
acts as communicating the
benefits of the product
Consumer determines price.
views the customer as the
very purpose of the business.
Buyer determines the shape
of the ‘marketing mix’.
 V. Societal concept
This concept questions whether the pure marketing
concept overlooks possible conflicts between consumer
immediate wants and consumer long-run welfare.
 Societal concept is that marketing strategy should deliver
value to customers in a way that maintains or improves
both the consumers and the society’s well-being.
 In doing so, companies should balance three
considerations in setting their marketing strategies:
company objectives, consumer wants and society’s
interests. (Society) human welfare putting people before
profit , (consumers) want satisfaction, (company) profit
FIG1.4. The Considerations Underlying the
Societal Marketing
BUSINESS ORIENTATION(Marketing Mgt
Philosophies
Orientation Profit Driver Approximate Characteristics
Time Frame
Production Production Methods Up to 1940’s Improvement of production and in order
to achieve a reduction of costs and
improved efficiency.
Product Quality of Product Until 1960’s The quality of the product is paramount.
Focus on product not customer needs.

Selling Selling Methods 1950-1970’s Effective selling and promotion are the
new drivers to success.

Marketing Needs and wants of 1970 to date Focus on providing the goods and
customers services that satisfy the needs and wants
of consumers.
Further approaches to marketing
Relationship Building and keeping 1990’s to date Emphasis placed on keeping as well as
Marketing good customer winning customer strategies.
relations
Societal Benefit the society 1990’s to date Similar to marking orientation but also
Marketing concerned with the long term impact of
organisational activities on the
environment (society)
1.5 Marketing to the 21st century customer
 Customers in the last decade only used to be concerned about
quantity, quality, and price. In today’s information-driven world,
the customers have not remained merely as people buying goods or
services from a business. Along from being concerned about the
questions such as "how many", “how much”, and "what", they are
groomed smart enough to ask, "why?". Today’s customers are
hard to convince and are difficult to please too.
 Who is an Empowered Customer?
Today’s customers are empowered. Empowered customers are those
having the control to buy goods or services from a business when
and where they want it, by selecting from a vast range of available
choice. Empowered customers access the Internet and collect
information about products, dealers, and prices.
By using various digital devices, they can find out the specifications
of a product or service before arriving at buying decision. They
are smart and alert buyers who also keep high expectations. When
a business fulfills most of the expectations, the empowered
customers can be loyal to them.
 Characteristic of 21st century customers
 Customers reign supreme. They control the experience they want; they research, explore,
and share.
 Customers are ALWAYS connected. 24 hours a day, 7 days a week, on any internet-
enabled device. 97% of Americans own a smartphone today, compared to 35% in 2011
 Customers expect personal interactions. 87% of customers believe brands could deliver
more consistent experiences
 Customers compare, and compare, and compare. They look at products they’re
interested in across multiple channels and devices, and it’s likely any brand-owned
channels are the last place they look.
 Customers trust word-of-mouth over brands. 70% of consumers trust online
recommendations more than brand statements
 Customers think in terms of “I want it now.” They expect to be able to get everything
right away. 64% of customers expect real-time service
 Customers are highly opinionated. They’re ready to talk to anyone about a good or bad
experience.
 Customization. The era of mass production of goods and services is over
 Empathy. This one has been the hallmark of good customer service for centuries, and it
won’t change.
Discussion!
To serve the 21st century customer which approach is
preferred?
Either being company / product focused or being
customer focused !!

Companies better to be customer focused/centric than

company centric!

What does it mean customer centric service provision?

 Customer-centric service provision
When you hear the word ‘customer service’ what does it
make you think of?

Customer service is the support you offer for your

customers — both before and after they buy and use your
products or services — that helps them have an easy and
enjoyable experience with you. Offering good customer
service is important if you want to retain customers and
grow your business
 Continued…

Good customer service is all about improving that contact

point i.e. “moment of truth”.

It is any episode in which a customer comes into

contact with any aspect of the organisation and
gets an impression of the quality of service”
(Albrecht 1988).
 Customer focused

 Delighting the customer

 Satisfying the customer

Meeting the customer’s expectation

Exceeding the customer’s expectation

 Giving the customer what they want, not what we think they

want
what is the major cause for the customers to leave or shift
?
Customer-centric approach
A company that has customers as its main focus is known

as a customer-centric business.
It focuses on customers while designing its marketing

strategies (KOTLER, P., WONG, V., JOHN S., ARMSTRONG, G., 2005).

 Which one is advisable to a company–centric approach or

a customer - centric approach for 21st century
customers?
 In a customer - centric approach:
 Believing that I am here because of customers

 Believing that customer is a king

 A company perceives itself as a solution finder to

customers’ problems
 A company strives to get its products preferred to

competitors
 Excellence is not an act but a habit

 Characterized by good service culture

 Continued…
 Believing that I am here to serve customers instead of to sell

something
 A service provider is there till the customers get served

 The service provider is there because customers need his

services
 The service provider considers complaints as opportunities
The fundamental belief of a customer-focused organisation
“Customers are the reason for work, not an
interruption of work”.
“Service personnel are the face and voice of your
company!”
Look after the customers and the business will take care
of itself.” – Ray Kroc
“We see our customers as invited guests to a party, and
we are the hosts. It’s our job every day to make every
important aspect of the customer experience a little bit
better.”Jeff Bezos, CEO, Amazon.com
 A company–centric approach sticks to the
following

 A company worries for its profit regardless of its customers

 A company strives to get its sold to customers at any

condition
 A service provider is there till the time expected of him is

over
 A service provider is there because he is paid

 The service provider considers complaints as threats