MBA 802

FUNDAMENTAL OF MARKETING
SUMMARY HANDOUT

WHAT IS MARKETING
The lecturer asked for different views of the definition of marketing and the class came up with
the following points:
1) Interaction between buyers and sellers where sellers use selling skills to persuade buyers to
purchase
2) Identifying and meeting peoples/consumer needs
3) Promotion of a brand
4) Any activity that improves the standard of living of people
5) Process of exchange
6) Identifying human needs and producing products that meet those needs, ensuring the
products get to the intended customer.
Based on the analysis of the above point of views the lecturer was able to conceptualized that
Points 2&4 were more of macro definition of marketing - Any activity that identifies and meets
people's needs with a view of improving standard of living, This is in line with Paul Mazur of
1947 which defined marketing as delivery of a standard of living.
Apart from the macro definition, marketing has micro definition as numerous as ideologies and
scholars (Fundamentals of Business Policy and strategy by Dr Dixon Ogbechi , page 94-96).
However there are key essentials that must be inputted into any definition of marketing
• Set of activities that identify customers and society needs/wants
• Anticipating customers and societies needs/ wants
• Producing goods , services , ideas and reams that will satisfy these needs
• Ensuring that these goods , services , ideas and dreams get to the ultimate consumer
• Developing the appropriate combination of marketing elements to achieve the above

THE CORE ELEMENTS OF MARKETING

They are referred to as the 4 P- PRODUCT, PRICE, PROMOTION AND PLACE , and are
the minimum elements you need when dealing with goods . When you’re marketing activities
revolves around the 4p then you are dealing with transactional marketing, this is usually
suitable for sellers in a monopolistic market. However in marketing services and ideas and
dreams you will need additional 3P - PEOPLE, PROCESS AND PHYSICAL EVIDENCE.
In marketing of services marketers must understand their characteristics - Intangibility,
Inseparable, Non storage, Heterogeneity , Non ownership, Perishability , Non transferable and
Simultaneity . Another key issue in marketing services is trust. Hence you will need your core
elements + extended elements.
The marketing elements are essential factors of success in marketing
For Tangible goods we have the - 4 Ps ( Product , Price Promotion and Place ) - This relates to
goods
For Intangible goods we have the - 7Ps ( 4Ps + People , Process and Physical evidence) - This
relates to service and ideas .
It’s very important for marketers to understand their customers and target in order to implement
and execute the best combination of marketing elements to achieve the marketing objective.
Marketing mix refers to combination of the marketing elements in a strategic manner in order
to achieve the marketing objective. According to Reppel (2003), Marketing mix is a framework
guiding marketers to implement marketing concept or orientation, it consists of set of major
decision areas that a company needs to manage effectively in order to at least satisfy consumer
needs with the aim of achieving marketing organizational objectives

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 MARKETING ORIENTATION/ PHILOSOPHIES
These are also known as marketing concepts, marketing eras or stages in the development of
marketing .There basically 3 broad marketing orientation:
- Traditional
- Modern
- Hybrid
The traditional philosophies are 5 in number, and organizations can use any one or a
combination of any to implement and execute marketing strategies and activities. They include:
1) Production – Mass production, Quantity, all marketing efforts are on low cost of production
2) Product – Performance, Product Quality, all marketing effort are on improving quality
3) Sales and selling – It believes consumers are inert they don’t k now what they want, so all
marketing effort are on persuasiveness to buy the product. Disadvantage here is that it
guarantees only one time purchase and not repeat purchase.
4) Marketing – It is guided by 3 key principles customer sovereignty, integrated organizational
effort and profit.
5) Societal marketing- It concerns with the balance between organizational marketing
objectives and CSR.
The modern philosophies are many and are yet evolving as the marketing thinking keeps
evolving some of them include:
E-marketing, Social media marketing, Guerilla marketing , Mega marketing ( dealing with
politics and power), Digital marketing, Network marketing.

The Hybrid Orientation is a mix of the two previous components and a good example is
Relationship marketing.

For further study kindly read Dr Ogbechi textbook page 91-106 and read Chapter 5 -
Business Environment

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 TOPIC - BUSINESS ENVIRONMENT/ MARKETING ENVIRONMENT
What is the ENVIRONMENT?
This refers to any external force or factors surrounding an element, it can also be referred to as
outside influences or circumstances that affect someone or something's existence (Kazmi 1999)
It is a host of all the factors, conditions, events that are complexly linked together affecting an
organization survival.
The following are characteristics of environment
- Complexity : The business environment is made up of many factors ,events, influences arising
from different sources interacting with each other and ultimately creating new sets of factors ,
events and influences .
- Dynamic : The business environment is ever changing , always evolving and in motion, due
to the various influences operating in it.
- Multifaceted : The business environment is observed by different factors and influences that
see in different light so what can be an opportunity to one can be a threat to another.
- Far Reaching impact: Otherwise known as ripple effect. The business environment has far
reaching impact of the influences on organizations. Thus an environmental factor can impact
beyond expectations.
Organizations, Manufacturers and Marketers that focus attention only on their products and
pay little attention to the changing environment (changing needs and wants of the market place)
are in danger of one day discovering they have no customers. Kotler stated that business
organizations must monitor the key environment in which they operate in.
DIAGRAMMATIC MODEL OF ORGANIZATION ENVIRONMENT

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The marketing environment of any organization is majorly subdivided into INTERNAL
ENVIRONMENT - Strengths and Weaknesses EXTERNAL ENVIROMENT - Opportunities
and Threats. SWOT analysis is a tool for addressing the environmental factors effect on an
organization.

INTERNAL ENVIRONMENT - OVERVIEW

This consists of all factors within an organization that imparts strengths or cause weaknesses.
They represents inherent capacity or limitation of a strategic nature to an organization that may
give it advantage or disadvantage. Kazmi 1999 further identified the following as components
of internal environment:
• Organizational Resources : They include physical, human , financial and technological
resources of an organization ( 4Ms) These varies from organization to organization ,
but however represent assets of the organization that can be utilized to survive and
compete in the environment
• Organizational behaviour: This relates to the interaction and interrelationships of
individuals, groups and organization as a whole. A manifestation of various influences
that create or place a constraints in the usage of resources.
E.g. Human to Human n(lecturer and students , Staff and customers)
Human to Inhuman (Student and portal used to service the students)
Inhuman to inhuman (Automated bank transfer response process)

• Strengths /Weaknesses: Inherent capacity or limitations that create or limit the

organization causing an advantage or disadvantage of strategic nature.
• Synergy : This concept relates to the whole is more important than the component parts.
The whole is greater than the sum of its part (1+1=3) Team building and team work.
• Organizational capabilities: This refers to the ability and potential of organization to
maximize utilization of its resources, to use its strengths to overcome weaknesses in
order to exploit opportunities and face challenges of threats. It is measureable and
comparable. E.g. General management capabilities, financial capabilities, Personnel
etc.
• Distinctive competencies: These are specific abilities possessed by organization
exclusively that gives competitive advantage in a relatively large measure.
In a nut shell the internal environment, are within the control of organization and marketers,
which can be manipulated for the success of the organization. Examples are marketing
methods, product mix, organizational structure and culture etc.

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EXTERNAL ENVIRONMENT - OVERVIEW
This is made up of all factors outside the organization which provide opportunities and pose as
threats. The marketing environment consists of a microenvironment and a macro environment.
The microenvironment consists of the factors close to the company that affect its ability to
serve its customers- suppliers, marketing intermediaries, customer (consumerism). The macro
environment consists of the large forces that affect the organization—demographic, economic,
natural, technological, political, and cultural forces. The marketing external environment of an
organization is hereby conceptualised as follows:
Macro environment /Major factors of the External Environment
a) Political / Legal environment - This comprises of government influences , legislations and
laws, regulatory frameworks, government policies , even changes in government powers of the
day , all interrelate and have potential of influencing organizations, managements and
marketing decisions.
b) Economic environment - This comprises of factors such general prices in market, inflation,
interest rate , foreign exchange rates and the general economic conditions , that will overall
influence forces of demand and supply , in long run business strategies and decisions also.
c) Technological Environment - This comprises of the development in information technology
and communication around the world and how it affects businesses and their marketing
activities . Things like globalization , research and development , innovations are influences of
the technological environment.
d) Demographic environment: This is the first environmental factor to monitor because deals
with people and people make up the markets of customers and consumers. Demography is the
study of human populations in terms of size, density, location, age, gender, race, occupation,
and other statistics. The world population is growing at an explosive rate. It now exceeds 6.8
billion people and is expected to grow to more than 8 billion by the year 2030.6 The world’s
large and highly diverse population poses both opportunities and challenges. Changes in the
world demographic environment have major implications for business.
e) Socio-Cultural Environment: This comprises of the society and culture people live in grow
up in, just like demography it affects the lives and values, norms and beliefs. It includes human
relationships and the development from such relationships such as attitude towards health,
religion societal status etc.
f) Natural / Ecological Environment: This involves the natural resources that are needed as
inputs by organization/marketers or that are affected by marketing activities. Environmental
concerns have grown steadily over the past years. In many cities around the world, air and
water pollution have reached dangerous levels. World concern continues to mount about the
possibilities of global warming, and many environmentalists fear that we soon will be buried
in our own trash. Marketers should be aware of several trends in the natural environment. The
first involves growing shortages of raw materials.

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g) Competitive Environment: This involves the firms that are in competition with the
organization. The firms that market products similar to or that can be of substitute to the
organizations product or service.

Micro / Minor factors that influence the environment

These are other factors that are somewhat in the control of organizations, also known as the
task environment. They can be however manipulated to be part of the internal environment at
times. They include:
a) Suppliers - This environment relates to those that supply factors of production for
organization, based on reliability and availability. They supply input for organizations output.
However if an organization adopts a backward integration policy hence creating a subsidiary
from its suppliers then the supplier will be seen as part of organizational resources.
Activities of suppliers can have immediate and possible serious outcomes on the operations of
organizations
b) Intermediaries - These are independent organization that perform the function of moving
products and services from point of production to consumption. Marketing intermediaries are
part of organization micro environment (Wholesalers, Retailers, agents, Dealers, Distributors
etc)

Thus, today’s organization / marketers recognize the importance of working with their
intermediaries as partners rather than simply as channels through which they sell their products
and services.
c) Customers - As it has been emphasized throughout marketing management that customers
are the most important factors in the organizations micro environment. The aim of the entire
marketing management is creating value and satisfaction so as to serve target customers and
create strong relationships with them. The target market of any organization constitutes the
following types of customer markets.
- Consumer markets consist of individuals and households that buy goods and services for
personal consumption.
- Business markets buy goods and services for further processing or use in their production
processes,
- Reseller markets buy goods and services to resell at a profit.
- Government markets consist of government agencies that buy goods and services to produce
public services or transfer the goods and services to others who need them.
- International markets consist of these buyers in other countries, including consumers,
producers, resellers, and governments.

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In conclusion of understanding the marketing environment which off shoots from the business
environment that consists of internal and external forces that directly or indirectly influence
organization , Some scholars have observed, “There are three kinds of organization: those who
make things happen, those who watch things happen, and those who wonder what’s happened.”
Many organizations view the marketing environment as an uncontrollable element to which
they must react and adapt. They passively accept the marketing environment and do not try to
change it. They analyze environmental forces and design strategies that will help avoid the
threats and take advantage of the opportunities the environment provides.
Other organizations take a proactive stance toward the marketing environment. “Instead of
letting the environment define their strategy,” advises one marketing expert, “craft a strategy
that defines your environment.” Rather than assuming that strategic options are bounded by the
current environment, these firms develop strategies to change the environment.
Even more, rather than simply watching and reacting to environmental events, these firms take
aggressive actions to affect the public's and forces in their marketing environment. Such
companies hire lobbyists to influence legislation affecting their industries and stage media
events to gain favorable press coverage. They run “advertorials” (ads expressing editorial
points of view) to shape public opinion. They press lawsuits and file complaints with regulators
to keep competitors in line, and they form contractual agreements to better control their
distribution channels.
CONSUMER BEHAVIOUR
The centre of marketing is to meet on met needs through provision of goods and services and
ensuring they get to the final consumer. It has also been conceptualized as providing a standard
of living, this is seen from the macro point of view.
Consumer is at the heart of all marketing activities. Recall that the whole essence of marketing
is to meet unmet needs of consumers through provision of goods and services. These products
are provided for consumer or consumed by consumers Thus it is important to identify that the
consumer is at the heart of marketing, this makes knowledge of consumer behaviour very
important for effective and efficient marketing. The question then is what consumer behaviour
is.
Several scholars have come up with different definitions of the concept of consumer behaviour,
But from a simple point of view it can be defined as the behaviour consumers display when in
the market setting.. The behaviour that consumers display when:
- Searching for products
- Buying products
- Using Products
- Evaluating products which they fee will satisfy their needs and wants (Evaluation criteria)
- Disposing Products after been consumed

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In nutshell CB is viewed as those acts of individuals groups and organizations directly involved
in obtaining and using economic products as well as the decision processes and determinants
of the act. Though similar, consumers are unique in themselves; they have needs and wants
which are varied and diverse from one another; and they have different consumption patterns
and consumption behaviour. The marketer helps satisfy these needs and wants through product
and service offerings. For a firm to survive, compete and grow, it is essential that the marketer
identifies these needs and wants, and provides product offerings more effectively and
efficiently than other competitors. A comprehensive yet meticulous knowledge of consumers
and their consumption behaviour is essential for a firm to succeed. Consumer behaviour
explains the reasons and logic that underlie purchasing decisions and consumption patterns; it
explains the processes through which buyers make decisions. The study includes within its
purview, the interplay between cognition, affect and behaviour that goes on within a consumer
during the consumption process: selecting, using and disposing off goods and services.
RELEVANCE OF CONSUMER BEHAVIOUR
As mentioned earlier for successful, effective and efficient marketing activities it is important
that marketers must know who their consumers are and understand their behaviour in pre-
purchase situation, during purchase situation and post purchase situation.
Consumers are at the heart of marketing. Therefor e study of consumer behaviour is most
relevant as it will provide marketers with the understanding of the following:
1. How individuals groups or organization make purchase decisions as well as other
related and unrelated decisions
2. How individuals groups or organization spend their resources on consumption related
items.
3. What individuals groups or organization make purchase ( Buy )
4. Why individuals groups or organization make purchase (Buying certain products) .
5. Where individuals groups or organization make purchase (Buying certain products
from) .
6. How individuals groups or organization behave in marketing settings.
7. When individuals groups or organization make purchase decisions.

So the relevance of consumer behaviour can be seen in the understanding of the marketer as in
relation of what, why, where, when, how individuals, groups and organization on purchase
decisions. The study of consumer behaviour deals with understanding consumption patterns
and behaviour. It includes within its ambit the answers to the following: -
- ‘What’ the consumers buy: goods and services
- ‘Why’ they buy it: need and want
- ‘When’ do they buy it: time: day, week, month, year, occasions etc.
- ‘Where’ they buy it: place
- ‘How often they buy’ it: time interval
- ‘How often they use’ it: frequency of use

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 CONSUMER BEHAVIOUR MODEL- BLACK BOX MODEL

This is a model that explains the process of consumer behaviour. It identifies factors
influencing the consumer in the process of making a buying decision. The buying behaviour of
final consumers is influenced by various factors. These factors or characteristics determine
what is going on in the so-called black box of the consumer. The buyer black box is the
consumer’s head. The buying behaviour is based on stimuli, coming from the environment,
such as the 4 Ps (Marketing Mix) and other environmental factors such as the PESTEL forces
in the Macro Environment. The stimuli then go through the buyer black box, where a decision
is formed.
The black box consists of two parts. This reaction on stimuli is based on 1) the buyer’s
characteristics, as well as 2) the buyer’s decision process. What specifically is going on here
regarding the buyer’s characteristics will be discussed in more detail in this article. The buyer’s
decision process is explained here. The outcome of the thinking that takes place in the black
box are the buyer’s responses. These refer to buying attitudes and preference. Also, the
purchase behaviour is an outcome. What does the consumer buy, where, when, and in what
quantities? Finally, the relationship behaviour towards brands and companies is a result of the
things going on in the buyer black box. Thus, the black box is the central element of the
consumer buying behaviour.

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 MARKET SEGMENTATION
Market segmentation is a key strategy and excellent method for organizations to determine and
personalize their target group of consumers. A market segment is defined as a subgroup of
individuals or businesses who share characteristic(s) that lead to similar product needs. The
basic criteria considered in segmentation consists of substantiality, identifiability, accessibility
and responsiveness. Marketers tend to segment consumers based on geography, demographics,
psychographics and behaviors.

Geographic segmentation targets consumers based on their size, location or climate. This type
of segmentation is useful for businesses to react more quickly to competition as well as learn
which brands sell best depending on specific regions.
Demographic segmentation groups consumers based on demographic information such as age,
gender, income, ethnicity and family life cycle. Appealing to demographic information allows
companies to customize their marketing efforts to that specific target group which can increase
brand loyalty and lead to future purchases.
Psychographic segmentation divides consumers into target groups according to personality,
motives or lifestyles. This form of segmentation can be utilized individually or combined with
other segmentation variables. Advertisements that appeal to psychographic factors found
within target consumers tend to be more successful in generating sales.

Behavioral segmentation focuses on types of shopping and buying behaviors. Companies that
appeal to behavioural segmentation must consider whether their target consumers shop online
or at the stores, and whether they are impulsive or cautious shoppers

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STEPS IN MARKET SEGMENTATION
1. Select and Define the market
2. Identify and Choose bases for segmentation – Geographic Behavioural, Demographic
etc
3. Develop measures of segment attractiveness
4. Target a specific segment
5. Develop market segmentation strategy
6. Evaluate the segment ( In terms of effectiveness and efficiency )

PRODUCT QUALITY AND PRODUCT VALUE

The terms Quality and value are both used in describing to the worth of products, services.
However there is technical distinguishing factors and marketers and organization must
recognize this in order to make decisions that will motivate customers towards their products
and services.
Product quality is the ability of a product or service to consistently meet or exceed customer
requirements or expectation. Thus when a product fits the consumer desires it can be said to
meet quality expectation. It is referred to as the benefit from utilization of the product to
satisfaction.

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Product value is the cost of the product which is made up of monetary costs, time costs,
psychological cost energy cost. It is the worth of a product in the eyes of a customer.
The difference between the product quality and product value is best explained in terms of
product benefit and product cost. The product quality is the benefit to the customer and product
value is the cost to the customer. The diagrammatical distinction between product quality and
product value is shown in the figure below:

CUSTOMER PRECIEVED
VALUE --------The Balance between Product Quality and Product Value.

Total Customer Total Customer

Benefit Cost

Monetary Cost
Product Benefit

Time cost
Service Benefit

Energy Cost
Personal Benefit

Psychological
Image Benefit
Cost

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