CHAPTER ONE: Overview of Marketing

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.

 : is a process of solving buyer’s problem at a profit

 Marketing is more than any other business function, deals with customers.

 Marketing consists of those activities involved in the flow of goods and services from the point of
production to the point of consumption.

 Marketing is the process of building profitable customer relationships by creating value for
customers and capturing value in return.

Customer Needs, Wants, and Demands

 Needs

 States of felt deprivation of some value

 Physical—food, clothing, warmth, safety

 Social—belonging and affection

 Individual—knowledge and self-expression

 the nominal marketing problem

 Wants

 Form that needs take as they are shaped by culture and individual personality

 options provided as solutions to the felt state

• Demands

• Want backed by the willingness and purchasing power the buyer

• the real marketing problem what the marketer has to solve

• Exchange is the act of obtaining a desired object from someone by offering something in return.

• It is the life blood of marketing, i.e. with out exchange marketing can’t take place

• Markets are the set of actual and potential buyers of a product

The core concepts of Marketing include the following:

1. Needs, wants, and demands;

2. Marketing offers or Products (Entities of Marketing: goods, services, events, properties,
information, persons, places, organizations, experiences and Ideas)

3. Value and satisfaction

4. Exchanges and relationships and

5. Markets.

Marketing Offers or Products –Goods, Services, and Etc

 Marketing Offer: Is some combination of other entities offered to a market to satisfy a need or
want. Marketing offers are not limited to physical products.

 More broadly, it includes other entities, like:

1. Goods : tangible products

2. Services : Intangible products

3. Persons: Celebrity marketing is a major business. Artists, musicians, physicians, high-profile

lawyers, and other professionals.

4. Places: Cities, states, regions, and nations compete to attract tourists.

5. Organizations: Organizations actively work to build a strong, favorable image in the mind of
their publics.

6. Information: The production, packaging, and distribution of information is one of society’s

major industries

7. Experiences: By organizing several services and goods, one can create, stage, and market
experiences.

8. Events: Marketers promote time-based events, such as the Olympics, trade shows, sports events,
and artistic performances:

9. Properties: Properties are intangible rights of ownership of either real property (real estate) or
financial property (stocks and bonds).

10. Ideas: Every market offering includes a basic idea

3. Customer Value and Satisfaction

 Customer Value: Is the difference between total customer value and total customer cost.

 Value is the consumer’s estimate of the product’s overall capacity to satisfy his or her needs.

 Value = Benefit = (functional benefits + emotional benefits)

Cost ( monetary cost +time cost +energy cost+ psychic cost)

 Customer Satisfaction: Is the extent to which a product’s perceived performance matches a
buyer’s expectations.

 Satisfied customers buy again and tell others about their good experiences.

 Dissatisfied customers often switch/shift to competitors and disparage the product to others.

Customer Satisfaction

 Satisfaction is the result of the comparison of perceived (actual) performances and expectations.

 It is the extent to which a product’s perceived performance matches a buyer’s expectations.

 Depends on the product’s perceived performance relative to a buyer’s expectations.

 Performance >expectation=Delight

 Performance <expectation =Dissatisfaction

 Performance =expectation=Satisfaction

Value : benefit/cost

Capturing Value from Customers

 By creating superior customer value, the firm creates highly satisfied customers who stay loyal
and buy more.

 The Outcomes of creating customer value:

1- Customer Loyalty and Retention

2- Share of Market and Share of Customer

 3. Building Customer Equity

Customer equity is the total combined customer lifetime values of all the company’s
customers.

4. Exchanges and Transaction, Relationships

 Exchange - involves obtaining a desired product from someone by offering something in

return.

 Five conditions must be exist for exchange:

1. There are at least two parties.

2. Each party has something 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.

 Transaction: is a trade of values between two or more parties: e.g. A gives X to B and receives
Y in return.

A transaction involves several dimensions:

1. At least two things of value,

2. Agreed-upon conditions,

3. A time of agreement, and

4. A place of agreement

Marketing Management

 Marketing management is the art and science of choosing target markets and building profitable
relationships with them

– What customers will we serve?

– How can we best serve these customers?

 Marketing management is essentially demand management.

 Marketing management has the task of influencing the level, timing, and composition of
demand in a way that will help the organization achieve its objectives.

Marketing Task and Demand Management

 There are Different states of demand up on which the marketing manager has to deal by applying
different strategies. These are:

1. Negative Demand: is when the major part of the market dislikes the product and even pay price
to avoid it.

Examples:Vaccination

Market strategy ( task): Conversational marketing

- Identify (analyze) why the market- dislike the product

- Use different strategies to convince the market (buyers) and change their beliefs and attitudes.

2. No Demand: this happens when the market is unaware of or uninterested in the product of
the company.

Market strategy (task): stimulation marketing

 Release information to increase general awareness of product

 Relate the functions of the product with individual’s natural need.

3. Latent Demand (Hidden Demand)

 Happens when there is a demand for the product but the product doesn’t exist.

Market strategy: Developmental Marketing

 Measure the size of the potential market

 Develop new and commercialize the products that satisfy these needs

 Examples-demand for Electrical Car etc.

4. Decline Demand : The demand for product declines after some time.

Market strategy: Remarking /Re-stimulating

 Analyze why demand declines

 Find new target market, price reduction, applying more effective promotional packages

5. Irregular demand: demand for the product varies on certain time frame.

 This causes idle or overworked capacity

Market strategy: synchronic marketing

 It is to find ways to alter the pattern of demand

 For example Museums are under-visited during weekdays and overworked during weekends.
 6. Full demand : The organization has just the amount of demand that customer wants and
the amount that organization can supply.

 It is a state where the current level and timing of demand is equal to the desired level and timing
of demand (Demand= Supply).

 The marketing strategy is Maintain marketing and designed to maintain the current level of
demand against changing consumer preferences.

7. Over full demand: It is a state in which demand is higher than the company can or wants to
handle (Demand> Supply).

 The marketing task is called De-marketing and its task is finding ways to reduce the demand
temporarily, or permanently.

 De-marketing involves such actions as raising prices and reducing promotion and service. It
does not aim to destroy demand, but only to reduce it

8. Unwholesome Demand

 Unwholesome products such as cigarettes, alcohol, and hard drugs will attract organized effort
to destroy the demand or interest in particular product or service.

 The corresponding marketing task is known as Counter marketing.

 it is a difficult task in that the aim is to get people who like something to give it up.

 Marketing manager cope with these tasks by carrying out marketing research, planning,
implementation and control. Such as fear messages, price hikes, reduced availability.

The Different States of Demand

The state of demand levels and corresponding marketing tasks:

State of demand Marketing task Formal Name for the task

1. Negative demand Disabuse demand Conversional marketing
2. No demand Create demand Stimulation Marketing
3. Latent demand Develop demand Developmental marketing
4. Falling demand Revitalized demand Remarketing marketing
5. Irregular demand Synchronize demand Synchro-marketing
6. Full demand Maintain Maintenance marketing
7. Overfull demand Reduce demand De-marketing
8. Unwholesome Destroy demand Counter marketing
demand
 1. Production Concept

 It is the idea that consumers will favor products that are available and highly affordable.

 Therefore, management should focus on improving production and distribution efficiency.

 It is one of the oldest orientations that guides sellers.

 This can lead to marketing myopia, losing sight of the real objective (satisfying customer
needs and building customer relationships).

2. Product Concept

Consumers will favor products that offer the most in quality, performance, or innovative
features.

That the organization should therefore devote its energy to making continuous product
improvements.

Product-oriented companies often design their products with little or no customer input, trusting
that their engineers can design exceptional products . It is “make and sale” philosophy

The product concept can also lead to marketing myopia.

3. The Selling Concept

• Selling concept is the idea that consumers will not buy enough of the firm’s products unless it
undertakes a large scale selling and promotion effort
 The organization must, therefore, undertake an aggressive selling and promotion effort.
 Most firms practice the selling concept when they are overcapacity.
 It focuses on creating sales transactions rather than on building long-term & profitable
customer relationships.
4. The Marketing Concept

It is a philosophy that holds achieving organizational goals depends on knowing the needs and
wants of target markets and delivering the desired satisfactions better than competitors do.

customer focus and value are the paths to sales and profits.

 The marketing concept rests on four pillars:

1.Target market 3. Integrated marketing
2. Customer needs 4. Profitability.
 This marketing concept is customer-centered “sense and respond” philosophy.
 The job is not to find the right customers for your product, but to find the right products for
your customers.
5. The Holistic Marketing Concept
Marketers in the twenty-first century must have more complete and cohesive approach of
modern applications marketing concept.

The holistic marketing concept is based on the Development, Design, and Implementation of
marketing programs, processes.

Holistic marketing recognizes that "Everything matters" with marketing and that a broad,
integrated perspective is often necessary.

Components of Holistic marketing

1. Relationship marketing:
 The key goal of this marketing is to develop deep, enduring relationships with all people or
organizations that could directly or indirectly affect the success of the firm's marketing
activities.
 Relationship marketing has the aim of building mutually satisfying long-term relationships
with key parties
(customers, suppliers, distributors, and other marketing partners) in order to earn and retain
their business.
 Relationship marketing builds strong economic, technical, and social ties among the parties.

2. Social Responsibility Marketing

 Holistic marketing incorporates social responsibility marketing and understanding broader
concerns and the ethical, environmental, legal, and social context of marketing activities and
programs.
 Social responsibility also requires that marketers carefully consider the role that they are
playing and could play in terms of social welfare.
3. Integrated marketing:
 The marketer's task is to devise marketing activities and assemble fully integrated marketing
programs to create, communicate, and deliver value for consumers.
 Internal Marketing: Holistic marketing incorporates internal marketing, ensuring that everyone
in the organization embraces appropriate marketing principles, especially senior management.
 Internal marketing is the task of hiring, training, and motivating able employees who want to
serve customers well.
 It makes no sense to promise excellent service before the company's staff is ready to provide it.