Unit 4.

1 - Introduction to Marketing - (paul Hoang 5th edition)

Unit 4.1 - Chapter 23

I- What is Marketing - Page 341

Marketing consists of all the activities(7P’S) that are designed to generate and facilitate an
exchange intended to satisfy human needs and wants profitably.
- The original P’s are the 4 p's .When talking about the 4ps the business wants to deliver
the right product at the right price at an accessible place using promotion to convince
customers to buy that product.Then 3p’s were added to market the service.

II- Marketing and its relationship with other business functions - Page 350

III- Market orientation versus product orientation - Pages 344 - 345 (Included the
following additional information below)

- Product oriented approach is usually adopted by businesses that are inward looking.A
company that has this approach doesn’t look at the customers needs and wants.They
believe if a business produces a high quality product, people will buy it. Businesses that
use this approach focus on making the product then figuring a marketing strategy to sell
it.They assume that the supply creates its own demand, because They believe that if
businesses produce innovative high quality products, this will tempt customers to buy it.
They put more emphasis on the production process rather than the customer's needs.
Some companies at the beginning used to be product oriented, when they did not face
large competition, like many high tech products,mobile phones, and internet service
companies .

- A market oriented approach is an outward looking approach.It means the business

conducts market research to see what the customer wants and then produces a product
that caters for these needs and wants. A market oriented approach always requires the
business to consult the consumers constantly to see what he wants.The product made
should be designed to fit his wishes and needs. Businesses should set a price that the
customer values. The product needs to be distributed according to his buying habits. The
promotion and media used depends on what the customers use.

Advantages of the product oriented approach

- Can succeed in industries where innovation is very important.
- Can succeed in the industry where there is a slow speed of change.
- Can succeed in business with high reputation and high customer loyalty because
whatever they produce the loyal customers will buy.
Disadvantages of product oriented approach
- It ignores the needs of the market.
- They spend a lot of money on R&D without considering consumer needs and this is very
costly but it doesn't always lead to promising results.

Advantages of the market oriented approach

- There's a high chance for the business to be successful because the business has
conducted the research therefore there is a lower risk of failure.
- The business will be in a stronger position to meet the challenges of competition.
- Firms can respond quickly to changes in the market as they have access to relevant
data and information about customers. Market orientated businesses are also more able
to anticipate changing market trends and hence prepare for such changes.
- It will increase customer satisfaction and loyalty and will widen the customer base.
- When the businesses know their customer, the businesses can be more efficient in its
use of the 4P’s

Disadvantages of market oriented approach

- It’s expensive because of the market research involved.since you have to cater for the
customer needs it is very costly because you always need to make changes to reflect
the needs of the customers.
- You are not able to always cope with the changes because of the limited budget and the
limited resources.
- It requires a business to change direction to keep up with the customers demands.If the
business is late to make changes based on the customers' needs the opportunity will be
lost.
- If the business can't keep up with the changes,the business will lose its customers
- The business doesn't have freedom to change and innovate because they always have
to follow the customers needs and wants.
- Businesses conduct surveys and market research but there is a risk in taking customers'
opinions because they don’t always do as they say.
- The market research conducted could be biased and have human and statistical bias.
- Meeting customer demands comes at an additional cost but customers aren't willing to
pay for that additional cost.
What determines whether a product is market oriented or product oriented?

- The nature of the product and the market: A business that is operating at the edge of
innovation such as pharmaceutical products needs to be more product oriented. As they
need to innovate to survive. Even electronics and mobile phones could be highly market
oriented but they still need to have product orientation to innovate and survive.
Producers of hi-tech products such as smartphones and electric vehicles tend to start off
as product oriented businesses. In mass consumer markets a market oriented approach
tends to be adopted.
- Policy decisions and the organizational culture : They are the objectives of the
company.If the objectives of the company are related to quality standards and safety
they would be product oriented.If their objective was to increase market share and
achieve customer satisfaction it would be market oriented.
- The view of those in control:If the managing director is an engineer who gives technical
quality and research more attention he'd be product oriented.If the person in control is a
marketing manager who gives market research and consumer relations more emphasis
and control, he would be market oriented.
- The nature and the size of the company: A market like the car industry can’t be product
oriented because it is very costly to start up a business where it might end up with
customers not accepting its products. Businesses that are operating in the mass market
that need huge investments need to be more market oriented. If the business is
operating in a market that doesn't need much investments to enter and operate within
the market, then it could be more product oriented.
- Competition and Barriers to entry: With high competition a business needs to be market
oriented,If the business is in a market that lacks competition whatever it would offer the
customer would have to buy as there is no other option, then it is product oriented.

The asset based/ led approach.

- A business that uses the asset led approach responds to the customer needs and
wants but over and above they take into consideration their strengths when producing a
good or a service. They take this strength and build on it, whether it might be a strength
in the product, production, technique, brand, experience, knowledge or an innovation.
For example producing new products that are related to existing products for example
Mars chocolate, and the related variety of Mars products such ice-cream, and chocolate
drinks.

Other Examples:
*Oreo uses an asset based approach. They started with original biscuits, but they didn’t stop.
They started adding new flavors, and types. Building on their product itself and brand by
introducing new flavors. People like it, they introduce it more and more.
*advertise Porsche cars, don’t advertise on TV. special magazines. Wasted advertisements
You have to know who you are going to target.
IV- The difference between commercial marketing and social marketing
- Commercial marketing is the use of marketing strategies to meet the needs and wants
of the customers in a profitable way where Ethics plays a small role.An example is the
marketing of Mcdonald's product.The aim of commercial marketing is getting the right
product to the right customer at the right time with little consideration of ethical
implementations.Main users are for profit organizations.
- Social marketing is a marketing strategy with the main purpose of bringing positive
change or behavior to the society.The users of social marketing face a big challenge
because it is difficult to change the behaviors of customers. For example, to convince
customers to stop smoking.Main users are NGO and the government.Examples are
anti-smoking campaigns.
- For profit organizations they use a mix of commercial and social marketing.They use
commercial marketing to satisfy customers need and wants profitability and use social
marketing to be socially responsible.By being socially responsible it gives u a
competitive edge.It attracts more customers and because of your USP you can charge
higher prices and the customers would still buy the product as the business is socially
responsible.

Terms to know
- Societal marketing concept assumes a company has a competitive advantage if it
applies the marketing concept in a way that helps improve society’s well being. For
example a large grocery chain store will provide part time high school student wit college
scholarships
- Cause related marketing: the integration of a non for profit organization into a for-profit
companies marketing plan. For example a car agent will donate 1$ to a cancer research
foundation for every test -drive mile. This encourages customers to test drive cars and
they may buy one
- Demarketing is a marketing strategy purposely designed to reduce demand for a
product that may have created societal problems. For example a Tobacco company
encourages customers to visit its website to find the negative impact of smoking and how
to quit smoking. Demarketing shows social concern and diffuses public scrutiny

Does social marketing require market research?

- It is very important to conduct market research because if you want to change the
behavior of the people regarding an issue you need to see their perception to be able to
change it.To change people's behavior you must discover their perception so I can take
actions that will change their behavior.
- The process of the service needs to be made easier.For example business may provide
several ways for customers to donate.
V- Market share, market growth, and market leadership Refer to pages 346 - 349

- Market Concentration Market concentration measures the degree of competition in the

market. If the top 10 firms of 200 firms have a concentration ratio of 98% this means that the 98%
of the market is controlled by these 10 companies. It is highly concentrated with low competition.

An industry with a 10 firm concentration ratio of 98%.:

This means that this market is an oligopoly.
The companies within this market are considered to be interdependent.
The firms within the oligopoly maintain a status quo pricing strategy.
They compete by a non price competition such as advertisements and providing better services.
When these companies set the same price together they are colluding which means they are
working together. To prevent price wars.

VI- Marketing objectives of profit and non for profit organizations Refer to attached notes
below

VII- How marketing strategies evolve as a response to changes in customer preferences

(what has led to the rise of marketing) Refer to attached notes below

VIII- How innovation, ethical consideration and cultural differences influence marketing
Refer to pages 350 -353
Attached notes Section VI- Marketing objectives of profit and non for profit organizations
Attached notes section VII - How marketing strategies evolve as a response to changes
in customer preferences (what has led to the rise of marketing)

Continued - next page