CHAPTER 1OVERVIEW OF MARKETING

After studying this chapter, you should be able to:

0Describe the basic marketing terms and concepts0Describe the relationship between marketing and

society0Describe the marketing environment that affects a firm’s

marketing activities 0Describe macroenvironment and microenvironment and

their effects

Learning Objectives

Chapter Overview

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Definition

0The management process responsible for identifying, anticipating, and satisfying customer requirement profitably (CIM, 2007).

0Activity, set of institutions, and processes for creating communication, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large(AMA, 2007).

0The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return (Kotler & Armstrong, 2010)

Definition to Basic Concepts

0A process and activities which meets customers’ requirements or needs either by satisfying them or by providing value to them in exchange for value to the companies.

Basic Concepts of Marketing

Market

Needs, wants, and demand

Offerings

Value and satisfaction

Marketers

Exchange, Transactions

and Relationships

Exchange Process What Pushes Customers to Take Action?

Needs are requirements for something necessary in a person’s life.

Wants are people’s needs that are moulded by culture and individual personality.

Demands are created when the buying power backs a person’s want.

Exchange ProcessWhat is offered

to fulfill needs, wants & demand?

Offerings are the benefits from the value given by marketers to fulfill the needs of the customers. It is a mix of goods, services, and experiences that one gains from an offering.

Products are need-satisfying offerings of a firm to the market for attention, acquisition, use, or consumption

Exchange ProcessHow does consumers pick a product choice?

Value is the difference between the benefit a person gained from a product and the costs incurred in obtaining the product. It is the relative worth of a product.

Satisfaction is the difference between a product’s perceived performance in delivering value relative to a buyer’s expectation before a product is purchased.

Value Benefits Gained

Cost Incurred

Exchange ProcessWho picks the product choice?

Consumer market: Customers who buy products for their own consumption. They are the end users of the product.

Business market: Customers who buy products for further processing, reselling, renting and not for their own personal consumption.

Government market: Government bodies and related agencies who buy products in order to provide services to the public.

Reseller market: Customers who buy goods to resell the goods to get profits.

International market: Customers in other countries, including consumers, producers, resellers and governments.

Exchange ProcessHow does the process occur?

An exchange is the act of returning something of value to someone who has given a desired object

A transaction is the basic unit of measurement for an exchange

A relationship is the tie between a customer and a product or a marketer, built as a result of frequent transactions

Development of Marketing Orientation

Production Product Concept

Selling Concept

Marketing Concept

Societal Marketing

Concept

Holistic Marketing

Concept

Sales versus

Marketing

Marketing Process

Identify needs of market

Develop market-oriented

marketing strategy

Develop marketing mix

(4Ps)

Develop relationship

with customers

and partners

Gain value from

customers

Marketing Environment

Marketing environment: The force that affects the ability of a marketer to conduct its marketing

activities

Microenvironment: Forces closest to the company that plays an important role on the

company’s ability to fulfill the customers’ needs (Kotler and Armstrong, 2010).

Macroenvironment : Bigger societal forces that affect the microenvironment of a company

(Kotler and Armstrong, 2010).

Marketing Environment

Microenvironment• Company• Customers• Public• Suppliers• Competitors• Intermediaries

Macroenvironment• Politics & legal• Economy• Socio culture• Technology• Natural environment

Marketing EnvironmentMicroenvironment factors

Company The internal environment of the company that is marketing the product.

It includes the different departments like finance, accounting, research and development, purchasing and top management

Customers The people who buy the products. Consumer market: Individuals who buy products to fulfill needs

in their daily life. Business market: Organizations who buy goods and services for

further processing or for use in their production process. Reseller market: Organizations that buy products and resell them

to get profits. Government market: Needs by government or the agencies for

rendering of their services. International market: Buyers in other countries, including

consumers, producers, resellers and governments.

Public Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives.

Marketing EnvironmentMicroenvironment factors

Suppliers Providers of the resources needed by the company to produce its goods and services.

Competitors Organizations that are competing with the company for the same consumers with the intention of fulfilling the same needs and wants.

Marketing intermediaries

Organizations that help the company to promote, sell and distribute its goods to final buyers

They include resellers, physical distribution firms, marketing service agencies, and financial intermediaries.

Marketing EnvironmentMacroenvironment

Political and legal The laws, regulations, and social pressure affecting marketers

Economy The economic factors that affect consumer buying and spending and affect the wealth of an area include income distribution, inflation, recession and spending patterns

Socio-culture Culture is the set of values, ideas, and attitudes that are accepted by a homogenous group of people, and transmitted or passed down over time to the next generation

Demography is the study of human population in terms of size, density, location, age, gender, race, origin, occupation and other statistics (Kotler and Armstrong, 2010)

Marketing EnvironmentMacroenvironment factors

Technology New technology changes the way we live our life and the way firms do their business

New technologies create new markets and opportunities

Natural Environment

Resources that are needed as inputs by marketers or that are affected by marketing activities include raw materials used as inputs by marketers

Depletion of natural resources are not renewable Shortages will distort future generation’s consumption

and marketing process

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END OF CHAPTER