BSM210 PRINCIPLES OF MARKETING
In this lecture you will be learning about:
Introduction to the module
An overview of marketing.
UNIT 1:
INTRODUCTION AND
ORGANISATION
 Marketing definitions and scope of
marketing.
Marketing concepts and marketing
mix variables including plc.
The evolution of marketing.
AN OVERVIEW OF MARKETING
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.
Although we will explore more detailed definitions of marketing later in this unit, perhaps the simplest definition is
this one: Marketing is the delivery of customer satisfaction at a profit. The goal of marketing is to attract new
customers by promising superior value, and to keep current customers by delivering satisfaction.
Many people think that only large companies operating in highly developed economies use marketing, but some
marketing is critical to the success of every organization, whether large or small, domestic or global. In the
business sector, marketing first spread most rapidly in consumer packaged-goods companies, consumer durables
companies and industrial equipment companies.
Marketing has also become a vital component in the strategies of many non-profit organizations, such as schools,
charities, churches, hospitals, museums, performing arts groups and even police departments.
You already know a lot about marketing - it's all around you. You see the results of marketing in the abundance of
products that line the store shelves in your nearby shopping mall. You see marketing in the advertisements that fill
your TV screen, magazines, Billboards etc.
CONTINUATION
At home, at school, where you work, where you play - you are exposed to marketing in almost
everything you do. Yet, there is much more to marketing than meets the consumer's casual
eye. Behind it all is a massive network of people and activities competing for your attention
and money.
Marketing is not just merely about selling and advertising, but more to creating positive and profitable relationships! To create
these positive relationship, a marketer will first have to know what is demanded and needed by the customer with the aim to
satisfy those demands and needs.
Today marketing must be understood as a way of satisfying customer needs and wants. If a marketer understands consumer
needs, develops products that provide superior value, customer value and good prices, distributes and promotes them
effectively, these products will sell easily with needing massive promotional activities!
WHAT IS MARKETING?
What does the term marketing mean? Marketing must be understood not in the old sense of making
a sale - 'selling' - but in the new sense of satisfying customer needs. Many people think of marketing
only as selling and advertising. And no wonder, for every day we are bombarded with television
commercials, newspaper ads, direct mail and sales calls. Someone is always trying to sell us
something
Therefore, you may be surprised to learn that selling and advertising are only the tip of the
marketing iceberg. Although they are important, they are only two of many marketing functions, and
often not the most important ones. If die marketer does a good job of identifying customer needs,
develops products that provide superior value, distributes and promotes them effectively, these
goods will sell very easily
This does not mean that selling and advertising are unimportant. Rather, it means that they are part
of a larger marketing mix - a set of marketing tools that work together to affect the marketplace.
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Kotler defines marketing as a nodal and managerial process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others.
To explain this definition, the following important terms: needs, -wants and demands products; value and satisfaction;
exchange, transactions and relationships; and markets will be examined.
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
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Human wants are the form taken by human needs as they are shaped by culture and individual
personality. Wants are described in terms of objects that will satisfy needs. As a society evolves, the wants
of its members expand. As people are exposed to more objects that arouse their interest and desire,
producers try to provide more want-satisfying products and services.
People have narrow, basic needs (e.g. for food or shelter), but almost unlimited wants. However, they also
have limited resources. Thus they want to choose products that provide the most satisfaction for their
money. When backed by an ability to pay - that is, buying power - wants become demands. Consumers
view products as bundles of benefits and choose products that give them the best bundle for their money.
Android phones provide communication and easy to use while an iPhone means prestige and status.
Given their wants and resources, people demand products with the benefits that add up to the most
satisfaction.
CONTINUATION
 Products and services
People satisfy their needs and wants with products. A product is anything that can he offered to a market to satisfy
a need or want. Usually, the word product suggests a physical object, such as a car, a television set or a bar of
soap
services are activities or benefits offered for sale that are essentially intangible and do not result in the ownership
of anything. Examples are banking, airline, hotel and household appliance repair services.
 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.
CONTINUATION
Customer satisfaction depends on -A product's perceived performance in delivering value relative to a
buyer's expectations. If the product's performance falls short of the customer's expectations, the buyer is
dissatisfied. If performance matches expectations, the buyer is satisfied. If performance exceeds
expectations, the buyer is delighted. Outstanding marketing companies go out of their way to keep their
customers satisfied.
Satisfied customers make repeat purchases, and they tell others about their good experiences with the
product. The key is to match customer expectations with company performance. Smart companies aim to
delight customers by promising only what they can deliver, then delivering more than they promise.
Customer satisfaction is closely linked to quality. In recent years, many companies have adopted total
quality management (TQM) programmes, designed constantly to improve the quality of their products,
services and marketing processes. Quality has a direct impact on product performance, and hence on
customer satisfaction.
MARKETING CONCEPTS
MARKETING CONCEPTS
Marketing concepts relate to the philosophy a business use to identify and fulfil the needs of its
customers, benefiting both the customer and the company. Same philosophy cannot result in a gain to
every business, hence different businesses use different marketing concepts (also called marketing
management philosophies).
The ‘marketing concept’ proposes that in order to satisfy the organizational objectives, an organization
should anticipate the needs and wants of consumers and satisfy these more effectively than
competitors.
The five marketing concepts are:
Production concept
When the production concept was defined, a production oriented business dominated the market. This
was from the beginning of capitalism to the mid 1950’s.
CONTINUATION
During the era of the production concept, businesses were concerned primarily
with production, manufacturing, and efficiency issues. Companies that use the
production concept have the belief that customers primarily want products that are
affordable and accessible.
The production concept is based on the approach that a company can increase supply as it
decreases its costs. Moreover, the production concept highlights that a business can lower
costs via mass production.
A company oriented towards production believes in economies of scale (decreased
production cost per unit), wherein mass production can decrease cost and maximize profits.
As a whole, the production concept is oriented towards operations.
CONTINUATION
 The product concept
This concept works on an assumption that customers prefer products of
greater quality and price and availability doesn’t influence their purchase decision. And
so company develops a product of greater quality which usually turns out to be expensive.
One of the best modern examples would be IT companies, who are always improving and
updating their products, to differentiate themselves from the competition. Since the main
focus of the marketers is the product quality, they often lose or fail to appeal to customers
whose demands are driven by other factors like price, availability, usability, etc.
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The selling concept
Production and product concept both focus on production but selling concept
focuses on making an actual sale of the product. Selling concept focuses on
making every possible sale of the product, regardless of the quality of the product
or the need of the customer.
The selling concept highlights that customers would buy a company’s
products only if the company were to sell these products aggressively. This
philosophy doesn’t include building relations with the customers. This means
that repeated sales are rare, and customer satisfaction is not great.
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The marketing concept
A company that believes in the marketing concept places the consumer at the centre of
the organization. All activities are geared towards the consumer. A business, aims to
understand the needs and wants of a customer. It executes the marketing strategy
according to market research beginning from product conception to sales.
By focusing on the needs and wants of a target market, a company can deliver more value
than its competitors. The marketing concept emphasizes the “pull” strategy”. This means
that a brand is so strong that customers would always prefer your brand to others’.
CONTINUATION
 The Societal Concept
This is a relatively new marketing concept. While the societal marketing concept
highlights the needs and wants of a target market and the delivery of better value
than its competitors, it also emphasizes the importance of the well-being of
customers and society as a whole (consumer welfare or societal welfare).
The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices. They must balance and juggle the
often conflicting criteria of company profits, consumer want satisfaction, and public
interest.
MARKETING MIX ELEMENTS
The marketing mix consists of Product, Price, Place and Promotion, people, process and physical
evidence strategies that a firm uses to help them reach their objectives. These are the 7Ps of marketing
A product is an item that satisfies what a consumer demands. It is a tangible good or an intangible
service. Tangible products are those that have an independent physical existence. Typical examples of
mass-produced, tangible products are cars. The next element is price
The amount a customer pays for the product is the price. The price is very important as it determines
the company's profit and hence, survival. Adjusting the price has a profound impact on the marketing
strategy, and depending on the price elasticity of the product, often it will affect the demand and sales as
well. The marketer should set a price that complements the other elements of the marketing mix. When
setting a price, the marketer must be aware of the customer perceived value for the product.
CONTINUATION
Promotion is all of the methods of communication that a marketer may use to provide
information to different parties about the product. Promotion comprises elements such
as: advertising, public relations, personal selling and sales promotion. The next element is
place or distribution.
Distribution refers to providing the product at a place which is convenient for consumers to
access. Various strategies such as intensive distribution, selective distribution, exclusive
distribution and franchising can be used by the marketer to complement the other aspects of
the marketing mix. The next element is physical evidence.
CONTINUATION
physical evidence
shows that a service was performed, such as the
delivery packaging for the item delivered by a delivery service, or a scar left
by a surgeon. This reminds or reassures the consumer that the service took
place, positively or negatively. The next element is people
People are the employees that execute the service, chiefly concerning the
manner and skill in which they do so. The next element is process
The processes are systems
within the organization that affect the
execution of its service, such as job queuing or query handling.
THE EVOLUTION OF MARKETING
CONTINUATION
The concept of marketing has changed over time and still continues to change to this day. Marketing supposedly
evolved through classical stages as well as contemporary stages
In the Simple Trade era the focus of marketing activity was the trading of resources as well as exploration. In the mid
19th century, commodities of commerce were a staple in the economy. Everything was done by hand including the
harvesting or making of products to trade. The industrial revolution made the Simple Trade Era vanish and bring a
completely new era of marketing, the Production era. In this era, the primary driver of sales was mass production.
Manufacturing effectively and efficiently was the main concern for businesses. Businesses believed that mass
production was the marketing technique of this era. They thought that if products will be made, people will buy
them. This was a simpler time with a simple marketing conception.
The Sales era was the era of competition. Businesses could no longer easily sell their mass made products. It
increasingly became more difficult for companies to sell products to consumers. This era is where we see the
concept of marketing as it is today emerge. Companies had to aggressively promote their products and persuade
consumers in order to sell products.
CONTINUATION
Following the sales era was the relationship era. Long term relationships between consumers and companies were
a priority. This built consumer trust and loyalty, allowing them to return as regulars and keep the business successful.
Businesses preferred returning customers than customers of a single time appearance. Was this a good marketing
strategy? Definitely yes!
This era was a game changer for the marketing field. Through the internet and social media, businesses could easily
reach out and stay in contact with their clients. Communication and social media are key ideas of this era. The Social
Marketing era is where social connections with clients through various platforms of social media. Blogs,
advertisements, and other ways of reaching out to people became popular. By 2012, Twitter, Facebook, LinkedIn,
and company blogs were the reigning forms of networking and communication.
The simple trade, production, sales, relationship, social media, and other related eras are the building blocks of the
concept of marketing. Each of these eras contributed to how we perceive marketing in the present day. The concept
of marketing will continue to evolve for future marketing leaders to interpret and understand.
END OF LECTURE!!
02/09/2020
Mrs Abby N. Mumba