Lecture 1: Principles of Marketing

1.1. What is marketing?

A social and managerial process by which individuals or groups obtain what
they need and want through creating and exchanging products and value
with others
1.2. Why marketing?
Marketing is a very important aspect in business since it contributes greatly
to the success of the organization. Production and distribution depend largely
on marketing. Many people think that sales and marketing are basically the
same. These two concepts are different in many aspects. Marketing covers
advertising, promotions, public relations, and sales. It is the process of
introducing and promoting the product or service into the market and
encourages sales from the buying public. Sales refer to the act of buying or
the actual transaction of customers purchasing the product or service.
1.3. Marketing & environmental forces in our society
The marketing environment consists of trading forces operating in a
marketplace over which a business has no direct control, but these forces
often gain competitive advantages over rivals that have failed to understand
the implications from a particular environmental occurrence.
A. The macro marketing environment
These forces do affect everyone in a market. The macro forces were first
identified by economists in a PEST analysis: political, economic, social and
technological factors. Marketers more commonly discuss six components
with the addition of regulatory and legal forces.
The Political environment consists of laws, regulations, and government
policies that may influence or limit various companies or organizations in the
market. The government puts limits and regulations on companies for the
good of society; ensuring that we have a free and fair market.
Economic factors have always influenced consumer purchasing. From the
time of the "Great Depression" to the time of September 11th, America has
seen how drastically the economy can be affected. It is important for

companies to watch trends in the economy to prevent losses in profits and to

stay at the top of the market.
Social or cultural changes account for people's core beliefs or values. How
people view themselves, others, organizations, society, nature, and the
universe all play a part in shaping one's culture. Companies need to take
these principles into consideration when working in the market place.
New Technology creates new markets and new opportunities for businesses.
It is important for businesses, old and young, to stay on top new technology.
Companies that do not stay up to date will soon find their products and
services outdated. They will miss all of the great opportunities and markets
that technology brings.
B. The micro marketing environment
Forces include all aspects of competition, direct rivals, new entrants,
substitute competition plus the relative power of buyers and suppliers and
the influence of an organizations many other public (employees,
shareholders, financial backers, regulatory authorities, etc).
While the macro forces impact on all players in a market, the micro forces
have a more variable impact on separate businesses trading in a particular
market. However, an understanding of macro and micro marketing
environment forces may help a business to compete more effectively against
its rivals, but in addition may enable an organization to take advantage of
emerging strategic windows and opportunities.

1.4. Core marketing concept

Needs, wants & dema nds

Merkets

Marke ti ng off ers (Products, service s & ex perie nces

Excha nge , transa cti ons & rel at io nshi ps

Value & Sat isfacti on

Needs, Wants & Demands

Needs
Wants

A state of felt deprivation

Need shaped by culture &
personality
Demands Wants backed by purchase
power
Marketing Offers
Products

Food, clothing etc

Needs food wants burger, French
fries, pizza
KFC/ McDonalds/ BFC/ Burger
King/ Wimpy

commodities offered for sale

Garments, Industrial machineries,

Stationeries
Services
Activities and benefit offers Banking,
hotel,
airline,
tax
(intangible)
preparation, repair
Informatio Useful data
Customer sales, Market research
n
(IMS data)
Experienc Direct observation of or Consulting farms
es
participation in events as a
basis of knowledge
Value & Satisfaction
Customer value
Customer
satisfaction

Product use Vs costing

Product performance Vs customers expectation

Exchange, transactions and relationships

Exchange Obtain something by offering a return
Transactio Trade of values between 2 parties

n
Relation

the approach of an organization to win and retain customers

1.5. Steps in marketing process

The Four Step Marketing Process

A. Situation Analysis
The first step is for the organization to perform a thorough analysis of its
position, with an eye toward identifying opportunities to satisfy customer
needs and wants. The organization must also analyze its own capabilities
within its operating environment.

B. Marketing Strategy
Having identified the customer needs to be addressed, the next step is to
develop a strategic plan to pursue the opportunity. Specific market
information can be obtained via market research, to allow you to select your
target market segment and best tailor your offering. The result will be a
value proposition for the target market. The marketing strategy will involve:

Segmentation

Targeting

Product positioning within the target market

Value proposition for the target market

C. Marketing Mix Decisions

Tactical decisions can be made, utilizing the 4Ps Marketing Mix (Product,
Price, Place, Promotion, People, Process, Physical Evidence).
D. Implementation and Control
Upon launching the product or service being offered, constant monitoring
should be maintained. As the market undergoes changes, adjustments can
be made to compensate. The marketing process doesnt end with product
launch i.e. Monitoring and adjusting must be a continuous process, in order
to fulfill varying consumer needs over the long term.

1.6. Marketing management orientations

Marketing orientation is defined as the implementation or completion of a
marketing concept that essentially caters to the customers. The term is
otherwise known as marketing concept or consumer focus through following
concepts:
Product concepts
A business organization primarily focuses on product quality. A company
believes that if the products offered in the market are of good quality and
high standard, customers are sure to buy and take advantage of it. The
production of these high quality products are either a response to the needs
of the customers or by pure innovation.
A good example would be mobile phone companies. Let us take Apple as an
example of a company that always makes sure their phones have a
competitive edge over the rest of the mobile phone manufacturers. They
create phones with features that attract the target market. So, in the field of
technology, Apple may be considered a technical leader.

Production Orientation
This alternative is different from product orientation in a way that productorientated businesses are concerned more on the creation and
manufacturing of as many product items as possible. A company that
focuses more on generating high volume of its products is aiming to
maximize revenue growth and profitability.

Selling concept
Sales-orientated organizations are targeted not on the customer needs and
product quality but the selling and promotion of the products to the market.
Typically, this marketing concept includes selling the companys existing and
current products along with the use of promotional methods in order to gain
a maximized profit. Businesses that seem to have a hard time selling their
available product or services are more aggressive in pushing sales, pricing,
and distribution.
Marketing concept
More efficient marketing than other competitors determining needs and
wants of target market and delivering desired satisfaction. Procter & Gamble,
Disney, Wal-Mart, Dell computer follows this faithfully.
Social marketing concept
Determining 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 consumers and the societys wellbeing. For example SMC oral saline.

1.7. Customer relationship management

The overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.

E-commerce companies want to customize the user experience

Credit card companies want to recommend good restaurants and

hotels in new cities

Phone companies want to know your friends and family

Bottom line: Companies want to be in the business of serving customers

rather than merely selling products