Principles of

Marketing
 Chapter One
Overview of Marketing
 1.1 Meaning and Scope of Marketing
• Marketing is a social and managerial process
by which individuals and groups obtain what
they need and want through creating and
exchanging products, services and value with
others.
 Needs, Wants and Demands
• The most basic concept underlying marketing
is that of human needs. A human need is a
state of felt deprivation. Humans have many
complex needs. These include basic physical
needs for food, clothing, warmth and safety;
social needs for belonging and affection; and
individual needs for knowledge and self-
expression.
• These needs are not invented by marketers; they
are a basic part of the human make-up. When a
need is not satisfied, a person will do one of two
things:
1. look for an object that will satisfy it; or
2. try to reduce the need. People in industrial
societies may try to find or develop objects that
will satisfy their desires. People in less developed
societies may try to reduce their desires and
satisfy them with what is available.
• Human wants are the form taken by human
needs as they are shaped by culture and
individual personality. A hungry person in
Bahrain may want a vegetable curry, mango
chutney and lassi. A hungry person in
Eindhoven may want a ham and cheese roll,
salad and a beer..
• However, they also have limited resources. Demands
are human wants that are backed by buying power.
• Product is anything that can be offered to a market
for attention, use or consumption that might satisfy a
want or need. It includes physical objects, services,
persons, places, organizations and ideas.
• Service is any activity or benefit that one party can
offer to another which is essentially intangible and
does not result in ownership of anything.
Value, Satisfaction and Quality
• Consumers usually face a broad array of products and
services that might satisfy a given need. How do they
choose among these many products? Consumers
make buying choices based on their perceptions of
the value that various products and services deliver.
The guiding concept is customer value.
• Customer value is the difference between the values
the customer gains from owning and using a product
and the costs of obtaining the product.
• Customer satisfaction is the extent to -which a
product's perceived performance matches
buyers’ expectations. If the product's
performance falls short, of expectations, the
buyer is dissatisfied. If performance matches
or exceeds expectations the buyer is satisfied,
or delighted.
• Market is set of all actual and potential
buyers of a product or service.
Exchange, Transactions and Relationships
• Marketing occurs when people decide to satisfy needs and
wants through exchange.
• Exchange is the act of obtaining a desired object from
someone by offering something in return. Exchange is only
one of many ways people can obtain a desired object. A
transaction consists of a trading of values between two
parties. In a transaction, we must be able to say that one
party gives X to another party and gets Fin return.
Relationship marketing is the process recreating, maintaining
and enhancing strong, value laden relationships with
customers and other stakeholders.
 1.2 Marketing Management Philosophies

A. Production Concept
The production concept holds that consumers will favor products
that are available and highly affordable, and that
management should therefore focus on improving
production and distribution efficiency. This concept is one of
the oldest philosophies that guide sellers. The production
concept is a useful philosophy in two types of situation. The
first occurs when the demand for a product exceeds the
supply. Here, management should look for ways to increase
production. The second situation occurs when the product's
cost is too high and improved productivity is needed to bring
it down.
B. Product Concept
• Another important concept guiding sellers, the
product concept, holds that consumers will favor
products that offer the most quality, performance
and innovative features, and that an organization
should thus devote energy to making continuous
product improvements. Some manufacturers
believe that if they can build a better mousetrap,
the world will beat a path to their door ."
• But they are often rudely shocked. Buyers may
well be looking for a better solution to a
mouse problem, but not necessarily for a
better mousetrap. The product concept also
can lead to 'marketing myopia'. For instance,
railway management once thought that users
wanted trains rather than transportation and
overlooked the growing challenge of airlines,
buses, trucks and cars.
C. Selling Concept
• Many organizations follow the selling concept, which
holds that consumers will not buy enough of the
organization's products unless it undertakes a large-
scale selling and promotion effort. The concept is
typically practiced with unsought floods - those that
buyers do not normally think of buying, such as
encyclopedias and funeral plots. These industries must
be good at tracking down prospects and convincing
them of product benefits. The selling concept is also
practiced in the non-profit area.
D. Marketing Concept
• The marketing concept holds that achieving
organizational goals depends on determining
the needs and wants of target markets and
delivering the desired satisfactions more
effectively and efficiently than competitors do.
Surprisingly, this concept is a relatively recent
business philosophy.
• The selling concept takes an inside-out perspective. It
starts with the factory, focuses on the company's existing
products and calls for heavy selling and promotion to
obtain profitable sales. It focuses on customer conquest
- getting short-term sales with little concern about who
buys or why. In contrast, the marketing concept takes an
outside-in perspective. It starts with a well-defined
market, focuses on customer needs, co-ordinates all the
marketing activities affecting customers and makes
profits by creating long-term customer relationships
based on customer value and satisfaction.
E. The Societal Marketing Concept
• The societal marketing concept holds that the
organization should determine the needs, wants
and interests of target markets. It should then
deliver the desired satisfactions more effectively
and efficiently than competitors in a way that
maintains or improves the consumer's and the
society's well-being. The societal marketing concept
is the newest of the five marketing management
philosophies..
• The societal marketing concept questions whether
the pure marketing concept is adequate in an age of
environmental problems, resource shortages,
worldwide economic problems and neglected social
services It asks if the firm that senses, serves and
satisfies individual wants is always doing what's best
for consumers and society in the long run. According
to the societal marketing concept, the pure marketing
concept overlooks possible conflicts between short-
run consumer wants and long-run consumer welfare.
Fig. Societal marketing concept diagram

Societal welfare

Societal
Marketing

Company profit

Customer want
 1.3 Task and trends of Marketing
Management
Who Markets?
Marketing managers seek to influence the level, timing,
and composition of demand to meet the organization's
objectives. Eight demand states are possible:
1. Negative demand- Consumers dislike the product and
may even pay a price to avoid it.
2. Nonexistent demand - Consumers may be unaware or
uninterested in the product.
3. Latent demand - Consumers may share a strong need
that cannot be satisfied by an existing product.
4. Declining demand - Consumers begin to buy the
product less frequently or not at all.
5. Irregular demand - Consumer purchases vary on a
seasonal, monthly, weekly, daily, or even hourly basis.
6. Full demand - Consumers are adequately buying all
products put into the marketplace.
7. Overfull demand - More consumers would like to buy
the product than can be satisfied.
8. Unwholesome demand - Consumers may be attracted
to products that have undesirable social consequences.
How Business and Marketing Are Changing
• We can say with some confidence that "the marketplace
isn't what it used to be." It is radically different as a result of
major, sometimes interlinking societal forces that have
created new behaviors, new opportunities, and new
challenges:
Changing technology: the digital revolution has created an
Information Age. The Industrial Age was characterized by
mass production and mass consumption, stores stuffed with
inventory, ads everywhere, and rampant discounting. over
electronic networks: intranet, extranets, and the Internet.
• The Information Age promises to lead to more
accurate levels of production, more targeted
communications, and more relevant pricing.
Moreover, much of today's business is carried
on over electronic networks: intranet,
extranets, and the Internet.
• Globalization: technological advances in transportation,
shipping, and communication have made it easier for
companies to market in other countries and easier for
consumers to buy products and services from marketers
in other countries.
• Deregulation: Many countries have deregulated
industries to create greater competition and growth
opportunities. In the United States, long-distance
telephone companies can now compete in local markets
and local phone companies can now offer long distance.
Similarly, electrical utilities can now enter other local
markets.
The New Marketing Landscape
• The past decade taught business firms everywhere
a humbling lesson. Domestic companies learned
that they can no longer ignore global markets and
competitors. Successful firms in mature industries
learned that they cannot overlook emerging
markets, technologies and management
approaches. Companies of every sort learned that
they cannot remain inwardly focused, ignoring the
needs of their customers.
• Privatization: Many countries have converted public
companies to private ownership and management to increase
their efficiency, such as British Airways and British Telecom in
the United Kingdom.
• Customer empowerment: Customers increasingly expect
higher quality and service and some customization. They are
more and more time-starved and want more convenience.
They perceive fewer real product differences and show less
brand loyalty. They can obtain extensive product information
from the Internet and other sources, which permit them to
shop more intelligently. They are showing greater price
sensitivity in their search for value.
Customization: The Company is able to produce
individually differentiated goods whether
ordered in person, on the phone, or online. By
going online, companies essentially enable
consumers to design their own goods. The
company also has the capacity to interact with
each customer personally, to personalize
messages, services, and the relationship.
• Heightened competition: Brand manufacturers are facing
intense competition from domestic and foreign brands, which
is resulting in rising promotion costs and shrinking profit
margins. They are being further buffeted by powerful retailers
who command limited shelf space and are putting out their
own store brands in competition with national brands.
• Industry convergence: Industry boundaries are blurring at an
incredible rate as companies are recognizing that new
opportunities lie at the intersection of two or more industries.
Pharmaceutical companies, at one time essentially chemical
companies, are now adding biogenetic research capacities in
order to formulate new drugs, new cosmetics.
• The holistic marketing concept is based on the
development, design, and implementation of marketing
programs, processes, and activities that recognizes their
breadth and interdependencies. 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.
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. The marketing program consists of
numerous decisions on value-enhancing
marketing activities to use. Marketing
activities come in all forms.
END OF CHAPTER
ONE
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