BERHAN COLLEGE

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?
 Chapter 1- An overview of marketing and marketing management

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 not an 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.“
"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):

o Product.
o Price.
o Promotion.
o Distribution (Place).
o To satisfy Target Market(s) (customers)
Please 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.” 7
 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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 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.
- Will create utility.
 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.
• About 50% of total product costs are
marketing costs.

• Critical to the success of a firm.

• Will create employment opportunities.

• About 25 to 33% of the work force hold
marketing positions.

• Marketing decisions affect the lives of

individual consumers and society as a whole.
 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 stereotype.
 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
Promotion Low value customers

Place
o Seven Ps (The extended marketing mix) from Service
marketing
 People Industrial or B2B
 Process marketing – Relationship
 Physical evidence marketing
 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 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.
Core Concepts of Marketing
Customer,
Customer, Needs,
Needs, Wants,
Wants, and
and Demands
Demands

Product
Product or
or Offering
Offering

Value,
Value, Satisfaction
Satisfaction and
and Quality
Quality

Exchange
Exchange and
and Transactions
Transactions

Relationship
Relationship Marketing
Marketing
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.
 Needs, Wants and Demands
Needs:
 The most basic concept underlying marketing is that of
human needs.

 Are basic human requirements as food, cloth,

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.
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 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-
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 market place.

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.
 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.

 A transaction is a contract or agreement between two parties

where a good or service is exchanged in return for a monetary
value whereas an exchange is a swap of a good or a service
between two parties.

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 A transaction is the provision of goods and
services in exchange for a set amount of money
between two or more firms. On the other hand,
an exchange is the trade-off of services and goods
between two parties.

 The term transaction is used in reference of the

transfer of ownership from a buyer to a seller
after monetary transactions. On the other hand,
the term exchange is used in reference to barter
trade and currency exchange rates.
 While transactions are recorded using in the
books of accounts using the set accounting
principles, an exchange does not involve the
recording of transactions.

Relationship marketing:
The process of creating, maintaining, and
enhancing strong, value–laden relationships
with customers and other stakeholders.
Receiving goods or services in Exchange Rates
return for money is a transaction
 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.
 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
  Consumers prefer products that are
widely available and inexpensive
Production
Production Concept
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
Product Concept
Concept or innovative features.

Marketing myopia is a term coined

by Theodore Levitt (1975) to describe
firms that define themselves in terms
of a product rather than in terms of
the need that the product satisfies.
 e.g. 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
Selling Concept
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
Marketing Concept
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
Societal Marketing
Concept
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?

 Do you think the production concept is outdated?
 The Scope of Marketing
 What are the different entities that can be marketed?
 Goods- Physical goods constitute the bulk of most
countries' production and marketing effort.
 Services- As economies advance, a growing
proportion of their activities is focused on the
production of services. The U.S. economy today
consists of a 70-30 services-to-goods mix.
 Experience- By orchestrating several services and
goods, a firm can create, stage, and market
experiences.
 So does the Hard Rock Cafe, where customers can
enjoy a meal or see a band in a live concert.
 Events- Marketers promote time-based events, such
as the Olympics, trade shows, sports events, and
artistic performances.

 Persons- Celebrity marketing has become a major

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

 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. In essence, products and services are platforms for
delivering some idea or benefit to satisfy a core need.
 Companies’ orientation to marketing
The Holistic Marketing Concept
 As the market has changed, so has the way the company
deals with the marketplace.
 The company orientation towards marketplace deals with
the concepts which a company may apply while targeting
a market.
 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

 Holistic
Marketing
Dimensions

Reading Assignment
 What is the main goal of marketing in
organizations?

 What do you think the main challenges of

marketing?

 Discuss in groups with practical experiences.

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 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.
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 To increase the market share of the Company, ensure
annual increase in Company's sales volume and profit
based on maximum customer orientation.

 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.
 Additional marketing Goals
 Build trust and rapport with your audience
 Attract new prospects to your marketing system

 Explore prospect pain

 Illustrate benefits
 Overcome objections

 Paint the picture of life with your product

 Attract strategic partner
 Deepen loyalty with existing customers

 Develop new business ideas

 Build your reputation with search engines
MARKETING CHALLENGES INTO THE NEW CENTURY

 GROWTH OF NONPROFIT 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
1. 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.
 THANK YOU
FOR YOUR
ATTENTION!!!
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