DEBREBIRHAN UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
MBA PROGRAM
1ST YEAR STUDENTS
Chapter 1- An overview of marketing and marketing
management
What is marketing?
 What is Market?
What is marketing Management?
 Why marketing?
 What are the different core concepts of
marketing?
 What philosophy (Orientation) should guide a
company's marketing efforts?
 What Is Marketed?
 What is the main goal of marketing system?
Chapter 1- An overview of marketing and marketing
management
1.1 Marketing and its core concepts
What is marketing?
 Formally or informally, people and organizations engage in a
vast number of activities.
 Good marketing has become vital for success.
 Good marketing is no accident, but a result of careful
planning and execution using state-of-the-art and techniques.

 "Marketing is an organizational function and a set of

processes for creating, communicating, and delivering value
to customers and for managing customer relationships in
ways that benefit the organization and its stakeholders.“
(AMA)
"Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers/clients, partners, and society at large.“

 The definition of marketing focuses on the lifetime value

of a customer.

All the functional areas have to take an "integrated

marketing" approach and work towards the goal of
satisfying and delivering value to customers.
A good marketer is not only concerned with making
money. ( Customers and society at large).

Marketing is the process of planning and executing the

conception, pricing, promotion, and distribution (4 Ps) of
ideas, goods and services to create exchanges (with
customers) that satisfy individual and organizational
objectives.

Marketing is a societal process by which individuals and

groups obtain what they need and want through creating,
offering, and freely exchanging products and services of
value with others (Kotler).
 Marketing is the management process that identifies,
anticipates and satisfies customer requirements profitably
(The Chartered Institute of Marketing (CIM)).
 Satisfying customer needs (creating utility) through
the exchange process.

 Create a Marketing Mix (4ps):

• Product.
• Price.
• Promotion.
• Distribution (Place).
• To satisfy Target Market(s) (customers)
Read other definitions of marketing
 In general, Marketing can be defined in different ways
 Marketing as a Learning discipline.

 Marketing as a function of a company.

 Marketing as a way of doing business.

 Marketing is the delivery of customer satisfaction at a profit.

 Marketing deals with identifying and meeting human and

social needs profitably.

 The shortest definitions of marketing is "meeting needs

profitably.”
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 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.

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 Marketers act as the customers’ voice within the firm
and marketers are responsible for many more decisions
than just advertising or sales:
 Analyze 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.
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 MARKETERS' FREQUENTLY ASKED QUESTIONS
How can we spot and choose the right market
segment(s)?
How can we keep our customers loyal for longer?
How can we differentiate our offerings?
How can we tell which customers are more
important?
How should we respond to customers who buy on
price?
How can we measure the payback from
advertising, sales promotion, and public relations?
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 How can we compete against lower-cost, lower-price
competitors?
 How far can we go in customizing our offering for each
customer?
 How can we improve sales force Productivity?
 How can we grow our business?

 How can we establish multiple channels and yet manage

channel conflict?
 How can we build stronger brands?
 How can we get the other company departments to be
more customer oriented?
 How can we reduce the cost of customer acquisition?
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1.2 Why Marketing? Importance of Marketing
 Financial success often depends on marketing ability.

 Finance, operations, accounting, and other business

functions will not really matter if there is not sufficient
demand for products and services so the company can
make a profit.

 Many companies have now created a Chief Marketing

Officer, or CMO, position to put marketing on a more equal
footing with other C-level executives such as the Chief
Executive Officer (CEO) and Chief Financial Officer (CFO).
Marketing managers must make major decisions
such as
 What features to design into a new product,
 What prices to offer customers,
 Where to sell products, and
 How much to spend on advertising or sales.

 They must also make more detailed decisions such

as the exact wording or color for new packaging.

 The companies at greatest risk are those that fail to

carefully monitor their customers and competitors
and to continuously improve their value offerings.
 How many of you bought something today?
 How many have seen or heard an ad today?
 How many of you consumed something today?
 How many of you engaged in word of mouth about a
product/service today?

Reasons
 Marketing is a fundamental human activity.
- is the lifeblood of any practice.
 Marketing impact the economy, allocation of resources for
value adding activities.
 Marketing management is essential to organizational success.
 Marketing can contribute to societal well-being.
 It’s about people (consumers).
 Marketing is important to your direct sales business.
Criticisms of Marketing
 Marketing communications are not always honest
“They can sometimes play on people’s emotions
and fears and can cause them to buy things they
really don’t need.”

 It can “psychologically manipulate” consumers.

 Youth may be targeted by companies selling adult
products (e.g. alcohol).
 Marketing sells products that can be harmful. Some
ads are crude.
 Sometimes minorities are stereotyped.
 Encourages us to find meaning in things.
 What is Marketing Management?
 Marketing management is a business discipline focused on the
practical application of marketing techniques and the
management of a firm's marketing resources and activities.

• It is The art and science of choosing target markets and

getting, keeping, and growing customers through creating,
delivering, and communicating superior customer value.

 The marketing management process requires an

understanding of the following.
- The company and its mission, strategies, and resources;

- The macro environmental context in which it operates;

- Customers and their needs and wants; and

- Competitors.
 Marketing management process includes the following:
 Analysis/Audit - where are we now?

 Objectives - where do we want to be?

 Strategies - which way is best?

 Tactics - how do we get there?

 Implementation - Getting there!

 Control - Ensuring arrival

 Marketing Management Involves:
 Demand Management : The organization has a desired
level of demand for its products.

 At any point in time, there may be no demand,

adequate demand, irregular demand, or too much
demand, and marketing management must find ways
to deal with these different demand states.

 Building Profitable Customer Relationships: Beyond

designing strategies to attract new customers and create
transactions with them, companies now are striving to
retain current customers and build lasting customer
relationships.
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o Marketing mix Elements
• Four Ps
Product
Price
Low value customers
Promotion
Place
o Seven Ps (The extended marketing mix) from Service
marketing
 People Industrial or B2B
 Process marketing – Relationship
marketing
 Physical evidence
 The Four Ps
The Four Cs

Marketing
Mix

Place
Product

Convenience
Customer
Solution Price Promotion

Customer Communication
Cost
The four components of the marketing mix
Marketing Management Tasks

- Developing marketing strategies and plans

- Capturing Marketing Insights

- Connecting With Customers

- Building Strong Brands

- Shaping the Market Offerings

- Delivering Value

- Communicating Value
- Creating Long-term Growth
 What is Market?
 Market means that customers who have purchased or
want to purchase a certain product or service.

 Is a collection of buyers and sellers who transact over a

particular product or product class. (Economists Definition)

 Market
= population+ Purchasing Power + Purchasing Need
Examples:
- How to understand the market of purified water?

- What is the market of Nike?

- How to understand the Nike’s market?
 Consider the following Key Customer
Markets
Consumer Market
 The aim of buying is to consume for their own or
somebody who has something to do with in
consumer market.

Business Market
 Business buyers buy goods for their utility in
enabling them to make or resell a product to
others for the purpose of making profits.
 Global Market
 Companies selling their goods and services in the
global marketplace face additional decisions and
challenges.

Nonprofit and Government Markets

 Companies selling their goods to nonprofit
organizations such as churches, universities,
charitable organizations, or government
agencies.
 Simple Marketing System
Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
Consider what consumers have today that
they didn't have yesterday:
 A substantial increase in buying power.
 A greater variety of available goods and services.
 A great amount of information about practically
anything.

 A greater ease in interacting and placing and

receiving orders.
 An ability to compare notes on products and
services.
 What is Marketplace, Marketspace Metamarket?
Marketplace is physical, as when one goes
shopping in a store.
Marketspace is digital, as when someone
shopping on the internet.
Metamarket is a cluster of complementary
products and services that are closely related in the
minds of consumers but are spread across a diverse
set of industries.
 The automobile metamarket consists of automobile
manufacturers, new car and used car dealers, financing
companies, insurance companies, mechanics, spare parts
dealers, service shops, auto magazines, classified auto ads in
newspapers, and auto sites on the Internet.
 Five Basic Markets
Structure of Flows
Resources Resources

Money Resource Money

markets
Services,
money Taxes,
goods
Services, Taxes
money
Manufacturer Government Consumer
markets markets markets
Taxes,
goods Services

Services, Taxes,
money goods

Money Money
Intermediary
Goods, services markets Goods, services
Core Concepts of Marketing
Customer, Needs, Wants, and Demands

Product or Offering

Value, Satisfaction and Quality

Exchange and Transactions

Relationships and Networks

Marketing Channels

Supply Chain

Competition

Marketing Environment

Target Markets & Segmentation

Who is a Customer?
A customer is anyone who is in the market
looking at a product or service for attention,
acquisition, use or consumption that satisfies a
want or a need.
 Customer has needs, wants, demands and desires.

 Understanding these needs is starting point of the

entire marketing.

 These needs, wants …… arise within a framework

or an ecosystem.

 Understanding both the needs and the ecosystem is

the starting point of a long term relationship.
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 Needs, Wants and Demands
Needs:
 The most basic concept underlying marketing is that of
human needs.

 Are basic human requirements as food, air, shelter..etc

 Human needs are states of felt deprivation.

 Human have many complex needs:

– Basic needs for food, clothing, warmth, and safety
– Social needs or belonging and affection
– Individual needs for knowledge and self –
expression 32
Wants:
 Want are the form taken by human needs as they are
shaped by culture and individual personality.
• When they are directed to specific objects that
might satisfy the need.
• Ex: want to eat Hamburger
 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. 33
 Demand States and Marketing Tasks
1. Negative demand
If a major part of the market dislikes the
product and may even pay a price to avoid it.

2. No demand
 Target consumers may be unaware of or
uninterested in the product.

 Farmers may not be interested in a new farming

method, and college students may not be
interested in foreign-language courses.
3. Latent demand
 Many consumers may share a strong need that
cannot be satisfied by any existing product.
There is a strong latent demand for harmless
cigarettes, safer neighborhoods, and more fuel-
efficient cars.

4. Declining demand
 Every organization, sooner or later, faces
declining demand for one or more of its products.
 Consumers begin to buy the product less
frequently or not at all.
 Churches have seen membership decline; private
colleges have seen applications fall.
5. Irregular demand
 Many organizations face demand that varies on a
seasonal, daily, or even hourly basis, causing problems of
idle or overworked capacity.

 The marketing task, called synchromarketing, is to

find ways to alter the pattern of demand through flexible
pricing, promotion, and other incentives.
6. Full demand
 Consumers are adequately buying all products put
into the marketplace.

Organizations face full demand when they are pleased

with their volume of business.
7. Overfull demand
Some organizations face a demand level that is higher than
they can or want to handle.

8. Unwholesome demand
 Unwholesome products will attract organized efforts
to discourage their consumption.
Consumers may be attracted to products that have
undesirable social consequences.

 Unselling campaigns have been conducted against

cigarettes, alcohol, hard drugs, handguns, X- rated movies,
and large families.

 In each case, marketers must identify the underlying

cause(s) of the demand state and then determine a plan for
action to shift the demand to a more desired state.
Describe the following terms.
 Value
 Satisfaction
 Quality
 Product
 Service
 Exchange
 Transaction
 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.

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 Value = Benefits/Costs
Benefits
Functional benefits and emotional benefits
Costs
Monetary costs, Time costs, Energy costs and Psychic costs

 Value - the value or benefits the customers gain from using

the product versus the cost of obtaining the product.
 Satisfaction - Based on a comparison of performance and
expectations.
Performance > Expectations => Delight
Performance = Expectations => Satisfaction
Performance < Expectations => Dissatisfaction
Satisfaction:
• Customer satisfaction depends on a product’s perceived
performance in delivering value relative to a buyer’s
expectation.

• If the product’s performance falls short of the customer’s

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 :
 When an agreement is reached, we say that a transaction
takes place. A transaction is a trade of values between two
or more parties: A gives X to B and receives Y in return.

 Relationship marketing :
 The process of creating, maintaining, and enhancing
strong, value–laden relationships with customers and
other stakeholders 42
For exchange potential to exist, five conditions
must be satisfied:
1. There are at least two parties.
2. Each party has something that might be 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.
A transaction involves several dimensions: at least
two things of value, agreed-upon conditions, a time
of agreement, and a place of agreement.

A legal system supports and enforces compliance

on the part of the transactors.

Without a law of contracts, people would approach

transactions with some distrust.
 Product and service
Product---Anything that can be offered to a
market for attention, acquisition, use or
consumption that might satisfying a want or
need.
It includes physical objects, services, persons,
places, organizations and ideas.

Service--- any activity or benefit that one party

can offer to another that is essentially
intangible and does not result in the
ownership of anything.
 1.3 Philosophies of Marketing
What philosophy (Orientation) should guide a
company's marketing efforts?

The production concept

The product concept
The selling concept
The marketing concept
The societal marketing concept
Company Orientations Towards the Marketplace
 Consumers prefer products that are
widely available and inexpensive
Production Concept  Demand for a product is greater than
supply

 Focusing too much on one’s product

 Consumers favor products that
offer the most quality, performance,
Product Concept or innovative features.

Marketing myopia is a term coined

by Theodore Levitt to describe firms
that define themselves in terms of a
product rather than in terms of the
need that the product satisfies.
 eg. Rail transportation
  Consumers will buy products only
if the company aggressively
promotes/sells these products.
 Focus on advertising.

 The selling concept holds that

consumers and businesses, if left
Selling Concept alone, will ordinarily not buy
enough of the organization’s
products.
 The organization must, therefore,
undertake an aggressive selling and
promotion effort.

 Useful for unsought goods, i.e.,

encyclopedias, funeral plots and
Political candidates.
  Focuses on needs/ wants of target
markets & delivering value better
than competitors.

Supply for a product is greater

than demand

 Creating intense competition

among suppliers.
Marketing Concept  Company first determines what
the consumer wants, then produces
what the consumer wants, then sells
the consumer what it wants.

 The marketing concept holds that

the key to achieving its
organizational goals consists of the
company being more effective than
competitors in creating, delivering,
and communicating customer value to
its chosen target markets.
The selling and Marketing Concepts Contrasted

Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

 Satisfying customers’ short-term
needs may not be compatible with
society’s needs.
 Should a firm worry about its
customers’ short-term needs, or
consider what is best for society?
Societal Marketing Social responsibility is the belief
Concept that organizations have a
responsibility to society as a
whole.
 An organization must think of
the effects of its actions have on
society.
 Need to balance 3 items
Company profits
Customer wants
Society's interests
Three Considerations Underlying The Societal Marketing
Concept

Society
(Human welfare)

Societal
marketing
concept
Consumers Company
(Want satisfaction) (Profits)
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 The societal marketing concept holds
that the organization’s 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 consumer’s and the
society’s well-being.

What era are we in now? Why?

What’s your opinion about the five concepts?
Do you think the production concept is outdated?
 1.4 The Scope of Marketing
What are the different entities that can be marketed?
Goods- Physical goods
Services- Production of services
Experience- Market experiences

Events- Marketers promote time-based events, such as

the Olympics, trade shows, sports events, and artistic
performances.

Persons- Artists, musicians, CEOs, physicians, high-

profile lawyers and financiers, and other professionals
getting help from celebrity marketers.
Places- Cities, states, regions, and nations compete
to attract tourists, factories, company headquarters,
and new residents.

Properties - are intangible rights of ownership.

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

Information- The production, packaging, and

distribution of information is one of society’s major
industries.
Ideas- Every market offering has a basic idea at its
core.
 Companies’ orientation to marketing
The Holistic Marketing Concept
 Companies need fresh thinking about how to
operate and compete in a new marketing
environment.

 The holistic marketing concept is based on the

development, design, and implementation of
marketing programs, processes, and activities that
recognizes their breadth and inter-dependencies.
 Holistic marketing recognizes that "everything
matters" with marketing— and that a broad,
integrated perspective is often necessary.

 Four components of holistic marketing are

relationship marketing, integrated marketing, internal
marketing, and social responsibility marketing.
 Holistic marketing is thus an approach to marketing
that attempts to recognize and reconcile the scope and
complexities of marketing activities.

• The following Figure provides a schematic overview of

four broad themes characterizing holistic marketing.
 Holistic
Marketing
Dimensions

Reading Assignment
Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
Customer-Oriented Organization Chart

Customers

Front-line people

Middle management

Top
manage-
ment
Evolving Views of Marketing’s Role

Finance
Production
Production Finance
Human
resources
Marketing Human
resources Marketing

a. Marketing as an b. Marketing as a more

equal function important function
Evolving Views of Marketing’s Role

Production

Marketing Customer

c. Marketing as the d. The customer as the

major function controlling factor
Evolving Views of Marketing’s Role

Production

Marketing

Customer

e. The customer as the controlling

function and marketing as the
integrative function
 1.6 The Goal of Marketing system:
What is the main goal of marketing in
organizations?

 What do you think the main challenges of

marketing?

 Discuss in groups with practical experiences.

64
 1.6 The Goal of Marketing system:
 To attract new customer by promising superior value,
and to keep current customers by delivering
satisfaction.
 Customer retention is thus more important than
customer attraction.
 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. 65
MARKETING CHALLENGES INTO THE NEW CENTURY

 GROWTH OF NON-PROFIT MARKETING

 THE INFORMANTION TECHNOLOGY BOOM

 RAPID GLOBALIZATION

 THE CHANGING WORLD ECONOMY

 THE CALL FOR MORE ETHICS AND SOCIAL

RESPONSIBILITY.

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 Marketing debate
2. Does marketing create or satisfy needs?
Marketing has often been defined in terms of
satisfying customers’ needs and wants. Critics,
however, maintain that marketing goes beyond that
and creates needs and wants that did not exist
before. They feel marketers encourage consumers
to spend more money than they should on goods
and services they do not really need.
Take a position: Marketing shapes consumer needs
and wants versus marketing merely reflects the
needs and wants of consumers.
2. Internet Exercise You can check out the online
shopping experience of Wal-Mart on the Web by
going to the Wal-Mart home page
(www.walmart.com) and clicking on “Go Shopping.”
 THANK YOU
FOR YOUR
ATTENTION!!!
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