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COURSE TITLE : PRINCIPLES OF MARKETING

CHAPTER 1: Overview of Marketing

 Define marketing
 Identify evidence of marketing in everyday life
 Demonstrate a clear understanding of the marketing concept
 Describe the role of marketing in building and managing customer relationships
 Explain how marketing creates value for the consumer, the company, and society

CHAPTER I: AN OVERVIEW OF MARKETING

INTRODUCTION
Marketing is an ancient art and has, since the day of Adam and Eve, been practiced in one form
or the other. In the modern world, Marketing is everywhere; most of the task we do and most of
the things we handle are linked to marketing. Marketing is an activity. Marketing activities and
strategies result in making products available that satisfy customers while making profits for the
companies that offer those products. Your morning tea, your newspaper, your breakfast, the
dress you put on for the day, the vehicle you drive, the mobile in your pocket, the quick lunch
you have at the fast food joint, the PC at your desk, your internet connection, your e-mail ID
almost everything that you use and everything that is around you, has been touched by
marketing. Marketing has its imprint on them all depending on the product and the
context/experience the imprint may be visible or subtle. But it is very much there. Marketing
permeates most of your daily activities. Marketing is an omnipresent entity.

MEANING OF MARKET AND MARKETING

A market is any such person, group or organization which has existing or potential exchange
relationship. It starts with customers and ends with customers. Creation of superior customer
value and delivering high levels of customer satisfaction are at the heart of present-day
marketing. Companies today, needs to understand customer needs, study completion, develop
and offer superior value at reasonable price, and make the product available to customer at
convenient place. Only then their products will be in demand and sell consistently.

Marketing, more than any other business function, deals with customers. Creating customer
value and satisfaction are the heart of modern marketing thinking and practice. Marketing is the
delivery of customer satisfaction at a profit. The two-fold goal of marketing is to attract new
customers by promising superior value and to keep current customers by delivering satisfaction.
(Philip Kotler)

BUSINESS AIMS AT PROFIT:

1. To realize profit, a sale has to be made.
2. To make the sale, a customer has to be created.
3. To retain the customer, he has to be satisfied.
4. To satisfy the customer, his needs have to be met.
5. To meet his needs, the product should conform to the requirements of the customer.

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Often marketing is confused with selling. Selling is the process by which the salesman tries to
dispose of the product at the best possible price. Marketing is much more comprehensive and
aims to maximizing the returns to the producer, at an affordable price to the consumer.
Marketing start with production and ends with the customer finally purchasing the product.

THE MARKETING CONCEPT

The marketing concept is the strategy that firms implement to satisfy customers’ needs,
increase sales, maximize profit and beat the competition. There are 5 marketing concepts that
organizations adopt and execute. These are; (1) production concept, (2) product concept, (3)
selling concept, (4) marketing concept and (5) societal marketing concept.

1. PRODUCTION CONCEPT
The idea of production concept – “Consumers
will favor products that are available and highly
affordable”. This concept is one of the oldest
Marketing management orientations that guide
sellers.

Companies adopting this orientation run a major

risk of focusing too narrowly on their operations
and losing sight of the real objective. Most
times; the production concept can lead to marketing myopia. Marketing myopia focus only on
existing wants and lose sight of underlying customer needs. Forgetting the fact that product is
only the tool to solve consumer problem. Management focuses on improving production and
distribution efficiency. Although in some situations; the production concept is still a useful
philosophy.

Production Concept example

You see in Amazon or retail stores; the market is flooded with cheap products from china.
Everything from the cheap plastic product from China is on your cart now. The best example of
the production concept is Vivo, the Chinese smartphone brand. Their phones are available in
almost every corner of the Asian market. You can walk in any phone shop in Asia and can walk
out with the latest and greatest smartphone from Vivo.

2. PRODUCT CONCEPT
The product concept holds that the consumers will favor
products that offer the most in quality, performance and
innovative features.
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Here; under this concept, marketing strategies are focused on making continuous product
improvements. Product quality and improvement are important parts of marketing strategies,
sometimes the only part. Targeting only on the company’s products could also lead to marketing
myopia.

For example: Suppose a company makes the best quality Floppy disk. But a customer does
need a floppy disk? She or he needs something that can be used to store the data. It can be
achieved by a USB Flash drive, SD memory cards, portable hard disks, etc. So that the
company should not look to make the best floppy disk. They should focus to meet the
customer’s data storage needs.

Product Concept example

When you think of high-quality products; Apple will be one of the top ones. Their products are so
good that they set industry trends and standards. Logitech makes very high-quality computer
products such as keyboard, mouse, and webcams. These high-quality products are priced
higher but people still buy and they get almost free advertisement from independent reviews.

3. SELLING CONCEPT
The selling concept holds the idea- “consumers will not buy
enough of the firm’s products unless it undertakes a large-
scale selling and promotion effort”.

Here the management focuses on creating sales

transactions rather than on building long-term, profitable
customer relationships. In other words; The aim is to sell
what the company makes rather than making what the
market wants. Such an aggressive selling program carries
very high risks.

In selling concept the marketer assumes that customers will be coaxed into buying the product
will like it, if they don’t like it, they will possibly forget their disappointment and buy it again later.
This is usually a very poor and costly assumption. Typically, the selling concept is practiced with
unsought goods. Unsought goods are that buyers do not normally think of buying, such as
insurance or blood donations.
These industries must be good at tracking down prospects and selling them on a product’s
benefits.
Selling Concept example
Every saw an ad online or TV commercial that you almost can’t escape and hide from? The
Selling Concept is in play. Almost all companies eventually fall into this concept. “Mountain
Dew” ads are hard to miss. If people like Mountain Dew or not, that is debatable but you can
see that PepsiCo is pushing it hard using ads. Almost all soft drinks and soda drinks follow the
selling concept. These drinks have no health benefits (actually harm your health more), you can
easily replace them with water (the most available substances in the earth). And the soft drink
companies know it, and they run ads 24×7, spending millions,

4. MARKETING CONCEPT
The marketing concept holds- “achieving organizational
goals depends on knowing the needs and wants of target
markets and delivering the desired satisfactions better than
competitors do”.

Here marketing management takes a “customer first”

approach. Under the marketing concept, customer focus

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and value are the routes to achieve sales and profits. The marketing concept is a customer-
centered “sense and responds” philosophy. The job is not to find the right customers for your
product but to find the right products for your customers. The marketing concept and the selling
concepts are two extreme concepts and different from each other.

Marketing Concept example

Restaurants and startups do follow the marketing concept. They try to understand the consumer
and deliver the best product or service, which is better for the competition.
Dollar shave club is the best example. They changed the Men’s grooming market. They have
understood that people are not happy with their previous grooming products and their prices.
Where other company’s grooming products will cost hundreds to buy for just one month. Dollar
shave club charges a couple of bucks a month with higher quality products and convenience of
home delivery.

DIFFERENCE BETWEEN SELLING CONCEPT AND MARKETING CONCEPT

Commonly, these marketing and selling concepts are confusing. Marketing concept is focused
on buyer’s needs while selling is confused on the seller’s needs.
 Marketing Concept is a management orientation which holds that the key task of the
organization is to determine the needs and wants of the target markets and to adapt the
organization to delivering the desired satisfaction more effectively and efficiently than its
competitors.

 Selling Concept is a management orientation which assumes that consumer will either
buy or not buy enough of the organization’s product unless the organization makes a
substantial effort to stimulate their interest in its product.

No. The Selling Concept The Marketing Concept

1 undertakes a large-scale selling and promotion undertakes activities such as;

effort market research,

2 The Selling Concept is suitable with unsought The Marketing Concept is suitable
goods—those that buyers do not normally for almost any type of product and

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think of buying, such as insurance or blood market.

donations.

3 Focus on the selling concept starts at the Focus on the marketing concept
production level. starts at understanding the market.

4 Any company following selling concept Companies that are following the
undertakes a high-risk marketing concept require to bare
less risk and uncertainty.

5 The Selling Concept assumes – “customers Instead of making an assumption,

who are coaxed into buying the product will the marketing concept finds out
like it. Or, if they don’t like it, they will possibly what really the consumer requires
forget their disappointment and buy it again and acts accordingly to them.
later.”

6 The Selling Concept makes poor assumptions. The marketing concept works on
facts gathered by its “market and
customer first” approach.

5. SOCIETAL MARKETING CONCEPT

Societal marketing concept questions whether the pure
marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare.

The societal marketing concept holds “marketing strategy

should deliver value to customers in a way that maintains or
improves both the consumer’s and society’s well-being”. It calls
for sustainable marketing, socially and environmentally
responsible marketing that meets the present needs of
consumers and businesses while also preserving or enhancing
the ability of future generations to meet their needs.
The Societal Marketing Concept puts Human welfare on top
before profits and satisfying the wants.
The global warming panic button is pushed and a revelation is required in the way we use our
resources. So, companies are slowly either fully or partially trying to implement the societal
marketing concept.

Societal Marketing Concept example

While large companies sometimes launch programs or products that benefit society; it is hard to
find a company that is fully committed socially.
We can see Adidas doing great as they continue to support Colin Kaepernick despite pressure
from various parties. Tesla is promising a big push for green energy with electric cars and solar
roof panels/tiles.

THE MARKETING VARIABLES

They are called ‘variables’ in the sense that they apt to change, changeable or irregular.
The success of the marketing activities depends on two factors:
 Marketing mix variables
 Marketing environments variables

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1. Marketing Mix Variables – they fall under the internal environment of the firm, those that the
company can directly manipulate. It consist of the following:
a) Products – refers to the tangible commodity or intangible service that the company
offers for sale to customers.
b) Price – refers to the amount of money that the customer must part with to avail of the
use of the product.
c) Place – making the company’s product available in the right location, quantity and time
is the concern of the place variable in marketing.
d) Promotion – refers to the provision of the required information to the prospective
customers so that they are persuaded to buy.

2.Marketing Environment Variables – the marketing environment is made up of the internal

and external environment of the business. While the internal environment can be controlled, the
business has very less or no control over the external environment.
a) Internal Environment
The internal environment of the business includes all the forces and factors inside the
organization which affect its marketing operations. These components can be grouped
under the Five M’s of the business, which are:
 Men
 Money
 Machinery
 Materials
 Markets
The internal environment is under the control of the marketer and can be changed with
the changing external environment. Nevertheless, the internal marketing environment is
as important for the business as the external marketing environment. This environment
includes the sales department, marketing department, the manufacturing unit, the
human resource department, etc.

b) External Environment
The external environment constitutes factors and forces which are external to the
business and on which the marketer has little or no control. The external environment is
of two types:

i. Micro Environment
The micro-component of the external environment is also known as the task
environment. It comprises of external forces and factors that are directly related
to the business. These include suppliers, market intermediaries, customers,
partners, competitors and the public
 Suppliers include all the parties which provide resources needed by the
organization.
 Market intermediaries include parties involved in distributing the product or
service of the organization.
 Partners are all the separate entities like advertising agencies, market
research organizations, banking and insurance companies, transportation
companies, brokers, etc. which conduct business with the organization.
 Customers comprise of the target group of the organization.
 Competitors are the players in the same market who targets similar
customers as that of the organization.
 Public is made up of any other group that has an actual or potential interest
or affects the company’s ability to serve its customers.

ii. Macro Environment

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The macro component of the marketing environment is also known as the broad
environment. It constitutes the external factors and forces which affect the industry
as a whole but don’t have a direct effect on the business. The macro-environment
can be divided into 6 parts.
 Demographic Environment - The demographic environment is made up of the
people who constitute the market. It is characterized as the factual investigation
and segregation of the population according to their size, density, location, age,
gender, race, and occupation.
 Economic Environment - The economic environment constitutes factors which
influence customers’ purchasing power and spending patterns. These factors
include the GDP, GNP, interest rates, inflation, income distribution, government
funding and subsidies, and other major economic variables.
 Physical Environment - The physical environment includes the natural
environment in which the business operates. This includes the climatic
conditions, environmental change, accessibility to water and raw materials,
natural disasters, pollution etc.
 Technological Environment - The technological environment constitutes
innovation, research and development in technology, technological alternatives,
innovation inducements also technological barriers to smooth operation.
Technology is one of the biggest sources of threats and opportunities for the
organization and it is very dynamic.
 Political-Legal Environment - The political & Legal environment includes laws
and government’s policies prevailing in the country. It also includes other
pressure groups and agencies which influence or limit the working of the industry
and/or the business in the society.
 Social-Cultural Environment - The social-cultural aspect of the macro-
environment is made up of the lifestyle, values, culture, prejudice and beliefs of
the people. This differs in different regions.

ACTIVITY:

Questions:

1. How important is marketing in our current situation and today’s generation?

2. Contrast marketing activities involving the 5 marketing concept.
3. What is the most effective between marketing concept and selling concept? Explain.
4. Give an example of an organization involving the 4 marketing mix.
Example: Organization: San Miguel Brewery
Product: San Mig Light

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Price: 41pesos
Place: available any grocery store, convenience store
Promotion: TV advertisement by Kelsey Meritt (International Supermodel
and Catriona Gray (Ms. Universe 2018)

Deadline: TBA

REFERENCES

Armstrong, G., & Kotler, P. (2018) Principles of Marketing 17th Edition

Medina, R., (2007) Principles of Marketing

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