LECTURE WEEK 1: INTRODUCTION TO MARKETING

1.0 MARKETING DEFINITION

Marketing more than any other business function deals with customers. Marketing is managing

profitable customer relationships. The twofold goal of marketing is to attract new customers by

promising superior value and keep and grow current customers by delivering satisfaction.

What is Marketing? Many people think of marketing as only selling and advertising, meanwhile

they are only the tip of the marketing iceberg. Today marketing must be understand beyond the

old sense of making a sale but in the new sense of satisfying customer needs.

Marketing is a social and managerial process by which individuals and organizations obtain what

they need and want through creating and exchanging value with others. Marketing involves

building profitable, value laden exchange relationships with customers. Hence, we define

marketing as the process by which companies create value for customers and build strong

customer relationships in order to capture value from customers in return.

1.1 MARKETING PROCESS

The marketing process has five step models. By creating value for customers, marketers capture

value from customers in return. This five- step process forms the marketing frameworks which

are;

Understand the Design a Construct an Build profitable

Capture value
marketplace customer- integrated relationships
from customers
and customers driven marketing and create
to create profits
needs and marketing program that customer
and customer
wants strategy delivers superior delight
equity
value
Step 1: Understand the marketplace and customers need: marketing is all about creating value

for customers. So as the first step in the marketing process, the company must fully understand

consumers and the marketplace in which it operates. Five core customer and marketplace

concepts are needs, wants and demands; market offerings (product, services and experiences);

value and satisfaction; exchanges and relationships and markets.

- Needs: these are states of deprivation which include physical needs for food,

clothing, warmth, safety; social needs for belonging and affection; and individual

needs for knowledge and self- expression. Wants are the form human needs take as

they are shaped by culture and individual personality. Wants are shaped by one’s

society and are described in terms of objects that will satisfy those needs. Demands

are human wants that are backed by buying power.

- Market offerings: consumer’s needs and wants are fulfilled through market

offerings. Some combination of products, services, information or experiences

offered to a market to satisfy a need or a want. Market offerings are not limited to

physical products they also include services activities or benefits offered to sale that

are essentially intangible and do not result in the ownership of anything.

- Value and Satisfaction: these are key building blocks for developing and managing

customer relationships. Satisfied customers buy again and tell others about their good

experiences. Dissatisfied customers often switch to competitors and disparage the

product to others.

- Exchanges and Relationships: marketing occurs when people decide to satisfy

needs and wants through exchange relationships. Exchange is the act of obtaining a
 desired object from someone by offering something in return. Marketing consists of

actions taken to build and maintain desirable exchange relationships with target

audiences involving a product, service, idea or other object.

- Markets: is the set of all actual and potential buyers of a product or service. These

buyers share a particular need or want that can be satisfied through exchange

relationships.

Step 2: Design a customer- driven marketing strategy. Once it fully understands consumers and

the marketplace, marketing management can design a customer- driven marketing strategy.

Marketing management is the art and science of choosing target markets and building profitable

relationships with them. There are five alternative concepts under which organizations design

and carry out their marketing strategies; the production, product, selling, marketing and societal

marketing concepts.

- Production concept: holds that consumers will favour products that are available and

highly affordable and that the organization should therefore focus on improving

production and distribution efficiency.

- Product concept: holds that consumers will favour products that offer the most in

quality, performance and innovative features. Under this concept marketing strategy

focuses on making continuous product improvements.

- Selling concept: holds that consumers will not buy enough of the firm’s products

unless it undertakes a large- scale selling and promotion effort.

- Marketing concept: holds that achieving organizational goals depends on knowing

the needs and wants of target markets and delivering the desired satisfactions better

than competitors do.

 - Societal marketing concept: is the idea that a company’s marketing decisions should

consider consumer’s wants, the company’s requirements. Consumers’ long- run

interests and society’s long- run interests.

Step 3: Preparing an integrated marketing plan and program. These build customer relationship

by transforming the marketing strategy into action. It consists of firm’s marketing mix, the set of

marketing tools the firm uses to implement its marketing strategy.

Step 4: Building customer relationships. Customer relationship management is the overall

process of building and maintaining profitable customer relationships by delivering superior

customer value and satisfaction. Satisfied customers are more likely to be loyal customers and

give the company a larger share of their business. Customer- perceived value is the customer’s

evaluation of the difference between all the benefits and all the costs of a marketing offer to

relative to those of competing offers. Customer satisfaction is the extent to which a product’s

perceived performance matches a buyer’s expectations.

Step 5: Capturing value from customers in return is in the form of current and future sales,

market share and profits. By creating superior customer value, the firm creates highly satisfied

customers who stay loyal and buy more. This in turn means greater long- run returns for the firm.

By doing so, here are the outcomes of creating customer value;

a. Creating customer loyalty and retention

b. Growing share of customer

c. Building customer equity

d. Building the right relationship with the right customers

Evolution of marketing

Marketing has changed over the centuries, decades and years. The production centered system

systematically changed into relationship era of today and over the period; the specializations

have emerged such as sales versus marketing and advertising versus retailing. The overall

evolution of marketing has given rise to the concept of business development. Marketing has

taken the modern shape after going through various stages since last the end of 19th century. The

Production oriented practice of marketing prior to the twentieth century was conservative and

hidebound by rules-of-thumb and lack of information. Science & technology developments and

specially the development of information technology have now changed the way people live, the

way people do business and the way people sell and purchase.

Following is a short summary of the various stages of evolution of marketing.

a. Production Orientation Era

The prevailing attitude and approach of the production orientation era was -“consumers favor

products that are available and highly affordable”. The mantra for marketing success was to

“Improve production and distribution”. The rule was “availability and affordability is what the

customer wants”. The era was marked by narrow product-lines; pricing system based on the

costs of production and distribution, limited research, primary aim of the packaging was to

protect the product, minimum promotion. Advertising meant, “Promoting products with a lesser

quality”.

b. Product Orientation Era

The attitude changed slowly and approach shifted from production to product and from the

quantity to quality. The prevailing attitude of this period was that consumers favor products that
offer the most quality, performance and innovative features and the mantra for marketers was ‘A

good product will sell itself’, so does not need promotion.

c. Sales Orientation Era

The increased competition and variety of choices / options available to customers changed the

marketing approach and now the attitude was “Consumers will buy products only if the company

promotes/ sells these products”. This era indicates rise of advertising and the mantra for

marketers was “Creative advertising and selling will overcome consumers’ resistance and

convince them to buy”.

d. Marketing Orientation Era

The shift from production to product and from product to customers later manifested in the

Marketing Era which focused on the “needs and wants of the customers” and the mantra of

marketers was” ‘The consumer is king! Find a need and fill it’. The approach is shifted to

delivering satisfaction better than competitors are.

e. Relationship Marketing Orientation Era

This is the modern approach of marketing. Today’s marketer focuses on needs/ wants of target

markets and aims at delivering superior value. The mantra of a successful marketer is ‘Long-

term relationships with customers and other partners lead to successes

The following sentences summarize the above evolution of marketing.

1. Production era: ‘Cut costs. Profits will take care of themselves’.

2. Product era: ‘A good product will sell itself’.

3. Sales era: ‘Selling is laying the bait for the customer’.

4. Marketing era: ‘The customer is King!’

5. Relationship marketing era: ‘Relationship with customers determines our firm’s future’.
Role and importance of marketing

Marketing plays a crucial role in the success of any business. It involves identifying and

understanding the needs and wants of potential customers and then creating products or services

that satisfy those needs. Here are some of the roles and importance of marketing:

1. Customer identification and targeting: Marketing helps in identifying the target audience

and their needs. It enables businesses to create products or services that meet their

customers' specific needs.

2. Creating brand awareness: Marketing helps in creating brand awareness and building

brand equity. By establishing a strong brand, companies can differentiate themselves

from their competitors and create a loyal customer base.

3. Generating leads and sales: Marketing helps in generating leads and sales by creating

interest in the product or service. Through various marketing strategies, businesses can

attract potential customers and convert them into paying customers.

4. Market research: Marketing involves conducting market research to understand the

market trends, competitors, and customer preferences. This information can be used to

create better products and services that meet customer needs.

5. Building relationships with customers: Marketing helps in building relationships with

customers. By engaging with customers through various marketing channels, businesses

can create a loyal customer base and generate repeat business.

6. Driving innovation: Marketing helps in driving innovation by identifying new trends and

customer needs. This information can be used to develop new products and services that

meet changing customer preferences.