TOPIC 1 :INTRODUCTION TO MARKETING

OBJECTIVES
This introductory session is aimed at answering the following specific questions:
1. What is marketing?
2. What are the core concepts that underlie the discipline of marketing?
3. What are the marketing philosophies of doing business?
4. What roles does the marketing play in the different industries, in not-for-profit
organizations e.t.c?
Meaning of Marketing
The word marketing has been defined in different ways by several authors and scholars. The
following are some of the definitions that have been given:
1. American Marketing Association – A.M.A (1964)
Marketing is the performance of business activities that direct the flow of goods and
services from producers to consumers or users.
2. Stanton, William J. (7th Ed 1984)
i. Marketing is the creation and the delivery of standards of living. It involves:
➢ Finding out what consumers want.
➢ Then planning and developing a product or service that will satisfy these
wants
➢ and then determining the best way to price, promote and distribute the
products or services.
ii. That marketing is a total system of business activities designed to plan, price,
promote and distribute want-satisfying goods and services to present and potential
customers.
3. Kotler, Philip (1997)
Marketing is a social and a managerial process by which individuals and groups obtain what
they need and want through creating, offering and exchanging products of value with others.
Other meanings
➢ Marketing is the bridge between production and consumption.
➢ Marketing forms the vital link between people’s needs and means of satisfying them.

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 ➢ Marketing is an activity that satisfies human through exchange processes.
➢ Marketing is merely a civilized form of welfare in which battles are won with words,
ideas and disciplined thinking.

The above definitions have several implications

1. Marketing is a managerial process – a system definition.
2. The entire system of business activities must be market oriented or customers oriented.
Customers’ needs and wants must be recognized and satisfied effectively.
3. Marketing, as the definitions suggests, is a dynamic process-a total
Integrated process, rather than a fragmented assortment of institutions or functions.
Marketing is not any one activity, nor is it exactly the sum of several, rather, it is
the result of the interaction of many activities.
4. The marketing programme starts with the product idea and, does not end
until the customers’ needs and wants are completely satisfied. This may be some
times, after the sales are made.
5. Customers must be satisfied in order for a company to enjoy repeat business.
This implies that the success of a firm is not profitability per se, but profitability
through customer satisfaction.
6. Marketing is not limited to business. Whenever you are trying to:
➢ Persuade somebody to do something
➢ Donate to the Red Cross
➢ Save energy
➢ Vote for your candidate
➢ Reform from littering the street of Nairobi,
You are engaging in business. Marketing has a broad societal meaning. Modern business
marketing activities are, to a large extent, a consequence of societal marketing.

The core concepts of marketing

From the foregoing definitions, it is evident that the definition of marketing rests on the following
core concepts.
i. Needs, wants and demands

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 ii. Products
iii. Utility, value and satisfaction
iv. Exchange, transaction and relationships.
v. Markets
vi. Marketing and marketers.

Needs, Wants and demands.

The study of marketing begins with the understanding of human needs and wants.
Needs
A human need is a state felt deprivation of some basic satisfaction. People require food, shelter,
clothing, safety, belonging, e.t.c. for survival.
➢ These needs are not created by the society for marketers.
➢ They exist in the very nature of human biology and conditions.
Wants
Are desires for specific satisfiers as shaped by culture, personality, etc., of an individual.
➢ While people’s needs are fewer, their wants are many.
Demand
Refers to wants for specific products that are backed by an ability and willingness to buy them.
➢ Wants become demand when backed up by purchasing power.
➢ Marketers try to influence demand by making products attractive, affordable and easily
available.
Product
1. People satisfy their needs and wants with products
A product is anything that can be offered to someone to satisfy a need or want.
Products may take different forms, e.g.
➢ Physical products
➢ Persons – as service providers
➢ Places – vacation, land, etc.
➢ Activities – Physical exercise.
➢ Organization – E.g. lonely heart club
➢ Ideas – E.G family planning or safe driving

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Utility, Value and Satisfaction
Utility
Utility answers the question- “How do consumers choose among alternative products (product
choice set) in order to satisfy needs and wants?’
Utility is the overall estimate of a product’s capacity to satisfy a consumer’s needs or wants. This
is the basis on which consumers choose particular products from product choice sets.

Value
the ratio of total benefits obtained from a particular product and the total cost beared to buy the
product. It may be in terms of quality, features, prestige, uniqueness, etc. Value is often equated
with price. A product is said to be of better value if it is more for the given price. Marketers should
provide value to customers.

Satisfaction
Occurs when a product conforms to a consumer’s needs.

Exchange
Marketing emerges when people decide to satisfy their needs and wants through exchange.
Exchange is one of the four ways that people can acquire products that they need. Other ways
include:
➢ Self-production
➢ Inheritance
➢ Coercion
➢ Begging
➢ Stealing
Meaning
• Exchange is the act of obtaining a desired product from someone by offering something
else in return.
• Exchange is the defining concept underlying the discipline of marketing.
• For exchange to take place, five conditions must be satisfied.

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 ➢ There has to be at last two parties to the exchange
➢ 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 offer.
➢ Each party believes it is appropriate or desirable to deal with the other party.
If these conditions exist, there is a potential for exchange. Whether exchange actually takes place
depends upon whether the two parties can agree on the terms of exchange that will leave them both
better off than before the exchange. Exchange must be seen as a continuous process rather than an
event. Two parties are seen to be engaging in exchange of they negotiate and move towards an
agreement.

Transaction
If an agreement is reached, we say that a transaction has taken place. A transaction consists of a
tradeoff value between two parties.
It involves several dimensions:
➢ At least two things of value
➢ Agreed-upon conditions
➢ A time of agreement
➢ A place of agreement
➢ Usually a legal system arises to support or enforce compliance on the part of the parties to
the transaction.

Markets
The concept of exchange leads to the concept of market.
➢ A market consists of all the potential customers sharing a particular need or want who
might be willing and be able to engage in exchange to satisfy that need or want.
➢ The size of the market therefore depends on the number of persons who exhibit the need;
have resources that interest other and are willing to offer these resources in exchange for
what they want.
➢ Sellers constitute the industry and buyers constitute the market.

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Marketing and Marketers
Marketing consists of human activities taking place in relation to markets. Marketing means
working with marketers to actualize potential exchange for the purpose of satisfying human needs.
A marketer is someone seeking a resource from someone else and is willing to offer something of
value for exchange. The marketer can therefore be the buyer or the seller.

Task
What is the role of marketing in an organization, society and to an
individual?

MARKETING MANAGEMENT PHILOSOPHIES

INTRODUCTION
Marketers need guidance regarding their conduct in the market place. This is because conflicts are
bound to arise between the needs of the society, customers and the company. These guides are
known as the marketing principles, rules, concepts or philosophies.
There are five competing concepts that may govern the operations of companies namely;
1. The production concept
2. The product concept
3. The selling concept
4. The marketing concept and
5. The societal marketing concept. (this has evolved into what is now referred to as Holistic
Marketing concept)

THE PRODUCTION CONCEPT

This concept holds that “consumers will favor those products that are widely available and low in
cost.” Management focuses on high production efficiency and wider distribution coverage.
This concept makes sense under the following circumstances;
1. When the product is a basic necessity

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 2. The customers are low income earners
3. When the production costs are high and have to be brought down through high production
efficiency.
4. When the market is highly price-sensitive
5. When demand for the product exceeds the supply and some other means have to be used
to allocate products to the customers.

Examples of companies guided by this concept include,

1. City Council primary schools
2. City Council health services.
This concept ensures product availability to the consumers. However, product quality is
compromised.

THE PRODUCT CONCEPT

The product concept holds that “consumers favor those products that offer the most.
quality, performance and features. Marketers assume that consumers will buy those products of
high quality and shun those products of inferior quality”
Management focuses on producing high quality products and improves on them over time.
This concept may apply under the following conditions:
1. When the market is not price sensitive
2. In the case of prestige goods
3. Where the customers are well-off financially.
The concept has been criticized on the following grounds:
1. The idea of a good product is defined from the company’s end; not the consumer’s. The
concept thus leads to marketing myopia (short-sightedness). There is undue concentration
on the product rather than the needs of the customer.
2. A company may end up producing goods that may not have demand.
3. The concept ignores the needs of the society

Examples of firms practicing this concept are;

1. Those selling jewelry

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 2. Private schools and
3. Private hospitals

THE SELLING CONCEPT

This concept holds that consumers, if left alone, will ordinarily not buy enough of a company’s
products. The organization must therefore undertake aggressive selling and promotion efforts. That
is, a company must focus on hard selling. Under hard selling, consumers are not willing to buy
products easily.

Examples of products sold under this concept are;

1. Life insurance policies
2. Political campaigns
3. Fund raising
4. New products

The concept may work under the following circumstances;

1. Where the company is operating under excess capacity and wishes to fully utilize its
resources with no regards to products’ demand
2. Where a product is new in the market
3. Where the firm has adequate machinery for effective promotion.
4. Where a firm’s products are obsolete or slow moving
The selling concept has some limitations. Namely:
1. Consumers may be forced to buy products that they do not have real need for
2. It is an expensive concept, as it requires a lot of resources, both human and financial.

THE MARKETING CONCEPT

The marketing concept holds that “when what can be supplied is greater than what will be
demanded and there is intense competition, the key to achieving organizational goals lies in
determining the needs and wants of the target markets and delivering the desired satisfaction more
effectively and efficiently than competitors”. This concept has been expressed in many colorful
ways;

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 ➢ Find needs and meet them
➢ The customer is always right
➢ The customer is the king
➢ At your service
➢ Your problem is our business
➢ You are the Boss etc.

PILLARS OF THE MARKETING CONCEPT

The concept rests on five main pillars. These are:
MARKET FOCUS
The company must define the boundaries of its market. It should know those customers that
are members of their market. This can be done through a process known as segmentation.
CUSTOMER FOCUS
The company should determine the needs and wants of the customers from the customers’
point of view but not the company’s. Customers’ needs must be identified and satisfied as this
results into customers’ loyalty, which is a source of goodwill.

INTEGRATED OR COORDINATED MARKETING

When all company Departments work together to achieve consumers’ interests, the result is
integrated marketing.
It takes place at two levels;
➢ Marketing functions
The various marketing functions – advertising, marketing research, sales, branding etc.
must work together. They must be well coordinated from the customer’s point of view.
➢ Company-wide orientation
Marketing must be embraced by other departments. They must think customers.
Marketing is not a department but much of a company-wide orientation. Teamwork
must be fostered among all departments. This requires the practice of internal as well
as external marketing.

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 Whereas the latter is directed at people outside the firm, the former is the task of hiring,
training and motivating employees to serve customers well. Managers must consider
customers as the true profit centers hence adopt a modern organizational chart.
➢ PROFITABILITY
The ultimate purpose of the marketing concept is to help organizations achieve their
objectives. In the case of private firms, the major one is profit. However, they should
aim for profits through customer satisfaction.

➢ COMPETITION
The concept recognizes the existence of competition. However a firm should offer
superior customer value. It should serve customers better than competitors.

Circumstances under which companies may practice the marketing

concept.
Most companies do not embrace the marketing concept until driven to it by circumstances.
Various events forcing companies to adopt the marketing concept include:
➢ Sales decline: - When sales fall, companies panic and look for ways of increasing sales.
➢ Slow growth in sales forces some companies to search for new markets. They realize
the need for marketing skills to identify new opportunities.
➢ Changing buying patterns-
Most companies operate in markets characterized by rapidly changing customer tastes
and preferences, needs and wants. Such companies need more marketing know-how if
they are to track buyers’ changing values.
➢ Increasing competition
Complacent companies may suddenly be attacked by powerful competitor’s e.g. Kenya
Breweries

REASONS TO EMBRACE THE MAKETING CONCEPT

Marketers’ arguments
➢ The company assets have little value without the existence of customers

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 ➢ The key company task therefore is to attract and retain customers.
➢ Customers are attracted through competitive superior offerings and retained through
satisfaction
➢ Marketing task is to develop a superior offering and deliver customer satisfaction.

SOCIETAL MARKETING CONCEPT

Some people have questioned whether the marketing concept is an appropriate philosophy in the
age if:
➢ Environmental deterioration
➢ Resource shortage
➢ Neglected social services.
i.e. are companies that do the excellent job of satisfying customers’ needs necessarily getting the
bets long-run interest of consumers and society? The marketing concept sidesteps the potential
conflicts among consumers.
➢ Wants
➢ Interests and
➢ Long-run societal welfare

The societal marketing concepts hold that

“An Organization’s tasks is to determine the needs wants and interested of the target markets and
to deliver the desired satisfaction, more effectively and effectively and efficiently than competitors
in a way that preserves or enhances the consumers and the society’s well-being”
The societal marketing concepts call upon marketers to build
➢ Social and
➢ Ethical considerations into their marketing practices
They must balance the conflict criteria of
➢ Company profits
➢ Consumer needs and
➢ Public interests.

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DIFFERENCES BETWEEN THE SELLING AND MARKETING CONCEPTS

Selling Concept Marketing concept

Starting Point Factory Market
Focus Products Customers’ needs
Means Selling and promotion Coordinated Marketing
Ends Profits through sales Profit through Customer
Volume satisfaction
Time horizon Short term Long term
(oriental)

1. The selling concept takes an inside out prospective. It starts with the factory, focuses on
the company’s existing products and calls for heavy selling’s and promotion to provide
profitable sales.
2. The marketing concept takes an outside- in perspective. It starts with a well-defined market.

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