Chapter 1

Fundamentals of Marketing
Management

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 Chapter 1 Questions

1. Why is marketing important?

2. What is the scope of marketing?
3. What are some fundamental
marketing concepts?
4. What are the tasks necessary for
successful marketing management?

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 Why Marketing is Important?

Most business are driven by the marketing

function
Identifying needs and ensuring that organizations
are producing goods and services to fulfill those
needs
Chief Marketing Officer (CMO) position
Increasing competitiveness and rapid changing
consumer and business needs

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 What is Marketing?

Marketing is the delivery of customer satisfaction

at a profit.
The goal of marketing is:
To attract new customer by promising superior
value, and to keep current customers by
delivering satisfaction.

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 Marketing, more than any other business function, deals
with customers.
Creating customer value and satisfaction are at the very
heart of modern marketing thinking and practice.
Some people believe that only large business
organizations operating in highly developed economies
use marketing, but sound marketing is critical to the
success of every organization whether large or small,
for profit or non profit, domestic or global.

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 Marketing Defined
Many people think of marketing only as selling and advertising.
Selling and advertising are only the tip of the marketing ice-berg.
Marketing is one of three key core functions that are central to all
organizations.
Marketers act as the customers voice within the firm and marketers are
responsible for many more decisions than just advertising or sales:
Analyse industries to identify emerging trends.
Determine which national and international markets to enter or exit.
Conduct research to understand consumer behavior.
Design integrated marketing mixes products, prices, channels of
distribution, and promotion programs.
Marketing is a social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging products
and value with others.

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 To explain marketing definition, we examine the following
important terms :
Needs, wants, and demands
Products and services
Value, satisfaction and quality
Exchange, transactions, and relationships
Markets

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 Needs, Wants, and Demands
Needs:
The most basic concept underlying marketing is that of human needs.
Human needs are states of felt deprivation.
Human have many complex needs:
Physical needs for food, clothing, warmth, and safety
Social needs or belonging and affection
Individual needs for knowledge and self expression
Wants:
Want are the form taken by human needs as they are shaped by culture and individual
personality.
People have almost unlimited wants but limited resources.
They want to choose products that provide the most value and satisfaction for their
money.
Demands:
When backed by buying power, wants become demands.
Consumers view products as bundles of benefits and choose products that give them
the best bundle for their money.

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 Fundamental Marketing Concepts

Needs, wants, and Marketing channels

demands Supply chain
Target markets, Competition
positioning, and Marketing
segmentation environment
Offerings and brands Marketing planning
Value and
satisfaction

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 I want it, I need it

Five Types of Needs

Stated needs
Real needs
Unstated needs
Delight needs
Secret needs

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 Products and Services
Product:
Anything that can be offered to a market to satisfy a
need or want.
The concept of product is not limited to physical objects
anything capable of satisfying a need can be called a
product.
Services:
In addition to tangible goods, products also include
services, which are activities or benefits offered for sale
that are essentially intangible and do not result in the
ownership of anything.

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 Values, Satisfaction, and Quality
Values:
Customer value is the difference between the values the customer gains from owning
and using a product and the costs of obtaining the products.
Customers often do not judge product value and costs accurately or objectively. They
act on perceived value.
Satisfaction:
Customer satisfaction depends on a products perceived performance in delivering
value relative to a buyers expectation.
If the products performance falls short of the customers expectations, the buyer is
dissatisfied.
Quality:
Customer satisfaction is closely linked to quality.
Quality has a direct impact on product performance.
Quality can be defined as freedom from defects.
TQM programs designed to constantly improve the quality of products, services, and
marketing processes.

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 Exchange, Transactions, and Relationships

Exchange :
The act of obtaining a desired object from someone by
offering something in return
Transaction :
A trade between two parties that involves at least two
things of value, agreed upon conditions a time of
agreement, and a place of agreement.
Relationship marketing :
The process of creating, maintaining, and enhancing
strong, value laden relationships with customers and
other stakeholders

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 For an Exchange to Occur
There must be at least two parties
Each party has something that might be of value to the
other party
Each party is capable of communication and delivery
Each party is free to accept or reject the exchange offer
Each party believes it is appropriate or desirable to deal
with the other party

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 Markets

The set of all actual and potential buyers of a

product or service

Communication

Industry Products / Services Market (a

(a collection of collection of
sellers) buyers)
Money

Information

A simple marketing system

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 What is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, delivering value
to customers, and for managing
customer relationships
in ways that benefit the
organization and its stakeholders

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 The Marketing Objective

Satisfy the needs of a group of customers

better than the competition.
Distinguish from Selling or Advertising:
merely a subset of marketing actions used to satisfy
consumer needs.
The aim of marketing is to make selling superfluous
Marketing focuses on the use of all the firms
controllable influences to satisfy the customer.

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 The selling and Marketing Concepts Contrasted

Starting
Focus Means Ends
point
Selling
Factory Existing and
Profits through
products sales volume
promoting

The selling concept

Profits through
Market Customer Integrated customer
needs marketing
satisfaction

The marketing concept

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 Activities in the Marketing Process ...
Identify needs of customers that company can satisfy
Design a Product (bundle of benefits) that satisfies
those needs - better than existing products.
Promote / communicate these benefits in order to
motivate purchase
Price at the right level so that consumers are willing &
able to buy the product and the firms profit goals are met
Make the product available at the right Place so that
exchange is facilitated

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 What is Marketed?

Goods

Services
Events & Experiences

Persons

Places & Properties

Organizations
Information
Ideas

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 Marketers and Markets

A marketer is someone actively seeking one or

more prospects for an exchange of values
A prospect is willing and able to engage in the
exchange
Marketplace physical
Marketspace digital
Metamarket cluster of complementary goods
and services across diverse set of industries and
includes metamediaries

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 What is Marketing Management?

Marketing management is the

art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value

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 The Marketing Philosophy

Company Orientations
The Production-Oriented
The Product-Oriented
The Selling-Oriented
The Marketing-Oriented
The Holistic Marketing-Oriented

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 Holistic Marketing Dimensions

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 Performance Marketing

Financial
Accountability Social Initiatives
Corporate social
Social Responsibility marketing
Marketing Cause marketing
Corporate philanthropy
Corporate community
involvement
Socially responsible
business practices

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 Societal Marketing Concept

An organizations task is to determine

the needs, wants, and interests
of target markets and to deliver
the desired satisfaction
more effectively and efficiently
than competitors in a way
that preserves or enhances the
well-being of both consumer and society

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 Three Considerations Underlying The Societal Marketing

Society
(Human welfare)

Societal
marketing
concept

Consumers Company
(Want satisfaction) (Profits)

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 Key Themes of Integrated Marketing

Many different marketing activities are used

to communicate and deliver value
All marketing activities are coordinated to
maximize their joint effects

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 The Four Ps of the Marketing Mix

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 Marketing-Mix Strategy

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 Marketing Mix and the Four Cs

Customer solution

Customer cost

Convenience

Communication

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 Internal Marketing

Employees contribute to building long-term relationships

with customers
Step 1: Select employees with positive attitudes
Step 2: Train, motivate, and empower employees
Step 3: Establish standards for employee performance
Step 4: Monitor actions and reward good performance

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 Dynamic Marketing Management

The New Marketing Realities

Transformation Marketing

Marketing Management Tasks

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 The marketplace isnt what it used to be

Information technology

Globalization
Deregulation

Privatization
Competition
Convergence
Consumer resistance
Retail transformation

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 New Consumer Capabilities

A substantial increase in buying power

A wider variety of available goods and
services
A large amount of information about
practically anything
Greater ease in interacting and in placing
and receiving orders
An ability to compare notes on products and
services
An amplified voice to influence public opinion

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 New company capabilities

Internet
Research
Speed of internal information
Speed of external information
Better target marketing
Mobile marketing
Differentiated goods
Improved purchasing, recruiting, training, and
communications

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 Transformation Marketing

Transformation marketing emphasizes that

marketing management should conform and
adapt to changes of environment, so as to
realize gradual upgrades and to achieve more
effectiveness and more efficiency.

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 4 Major Marketing Patterns

Transformation marketing can be divided into

4 major marketing patterns:
transaction-driven

relationship-driven

value-driven

value network (cooperation)-driven

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 Marketing Management Tasks

Improving the Offering value

infrastructure and Shaping market
strategies of offerings
marketing Delivering value
management Communicating
Assessing market value
orientation and Creating long-term
customer value growth and value
Choosing value
Building brands

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 Cases Discussion

Marketing in China:
Chapter Case:
Amways
Transformation in Coca-Cola
China

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 Homework

Case discussion
Case 1: Amways Transformation in China
Case 2: Coca-Cola
Every student needs to prepare for the discussion. We
will need three volunteers to lead the discussion or we
can randomly choose 3 students to lead the discussion.
Every student needs to lead the discussion for at least
once.

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