This chapter one of Principles of marketing

1. BY LECTURER:
MAHAD MOHAMED ABDI
Course
Principles of Marketing
For the Business Management Department

2. CHAPTER ONE
AN OVERVIEW OF MARKETING AND MARKETING MANAGEMENT
After studying this chapter, you should be able to explain:
what marketing is?
Difference btw market and marketing?
Marketing and its core concepts
Philosophies of marketing
Importance of marketing
Scope of marketing
Companies‘ orientation to marketing
Goals of marketing system

3. INTRODUCTION
Business firms and non-profit organizations engage in marketing. Products marketed
included goods as well as services, ideas, people, & places. Marketing activities are
targeted at market consisting of products purchasers and also individuals and groups
that influence the success of an organization.
In a broad sense, marketing consists of all activities designed to generate or facilitate
an exchange intended to satisfy human needs.
In which one party provides to another party something of value in return for
something else of value.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging values for customers, clients, partners, and society at large.

4. WHAT IS MARKET AND MARKETING?

5. WHAT IS MARKETING?
Definition: Marketing is a process of creating, distributing, promoting, and pricing goods, services, and
ideas to facilitate satisfying exchange relationship with the customer in a dynamic environment.
The essence/core of marketing is to develop satisfying exchange from which both the customers and
marketers (organization) benefit.
Marketing involves developing and managing a products that will satisfy customer needs, wants and
making the product available in the right place, at a right price and at a right time. It involves
communicating information that will help customers in determining whether the product or service is
the right product for them, among other products/services that are available.
Product, distribution, promotion and pricing are known as the marketing mix because marketing
managers decide what type of each element to use and in what amount.

6. LEVELS OF MARKETING
 Macro marketing takes a broad view of whole
production-distribution system. It focuses on
the economic welfare of the whole society.
 Macro marketing is the social process the
directs an economy’s flow of goods and
services from producers to consumers in a
way that effectively matches supply and
demand and accomplishes the objectives of
the society.
 Every society needs macro marketing system
to help match of supply and demand, because
different producers have different objectives
and resource, likewise not all consumers share
 Micro marketing is a performance of
activities that seeks to accomplish an
organization’s objectives by
anticipating customer or client needs
and directing a flow of need satisfying
goods and services from producer to
customer or client.
 Micro marketing focuses on activities
performed by an individual
organization.
Macro Marketing and Micro Marketing

7. CORE CONCEPT OF MARKETING
Marketing core concepts are the basic elements that complete the marketing system. They are essential
in developing an effective marketing system.
Philip Kotler developed the idea for the core concepts of marketing, which allowed people to better
understand how marketing works and what its essences are.
Needs, wants, and demands
Products and services
Value, satisfaction and quality
Exchange, transactions, and relationships, and
Markets

9. NEEDS
The beginning point of marketing activities is identify the needs, wants and demand for people and organizations.
Needs:
• The most basic concept underlying marketing is that of human needs. Human have many complex needs, include
 Physiological needs for food, clothing, water, and shelter
 Social needs or belonging and affection
 Individual needs for knowledge and self – expression
Marketing and Customer Needs:
Marketing should try to anticipate and began with the potential customer needs not the production process.
Marketing should determine what goods and services are to b developed, including;
Product design
Prices or Fees should be charge
Use of middleman (if needed)
Credit and collection policies
Packaging, transportation, and storing policies
Advertising and sales policies
After the sales and installation (if necessary), and
 Customer services or warranty

10. WANT, AND DEMAND
Want:
• Want are the form taken by human needs as they are shaped by culture and individual personality.
• People have almost unlimited wants but limited resources.
• They want to choose products that provide the most value and satisfaction for their money.
Demand:
• Demand is a human want that is backed/assisted by ability and willingness to buy. Consumers may have
unlimited wants but limited resources. Thus, they should have to choose products or services that deliver the
maximum utility/usefulness and satisfaction.
• When backed by buying power (ability), a want becomes a demand. Demand can’t imply a demand when it
lacks buying ability.

11. PRODUCT, SERVICES AND EXPERIENCE
Product:
• Anything that can be offered to a market to satisfy a need or want.
• The concept of product is not limited to physical objects anything capable of
satisfying a need can be called a product.
Services:
• In addition to tangible goods, products also include services, which are
activities or benefits offered for sale that are essentially intangible. For example,
doctor’s services, banking, insurance, transportation, etc.
Experience:
Experience is something that customers get after the products and services.

12. VALUES, SATISFACTION, AND QUALITY
Values:
• Customer value is the difference between the values the customer gains from owning and using a product and the
costs of obtaining the products.
• Customers often do not judge product value and costs accurately. They act on perceived/observed value.
Satisfaction:
• Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s
expectation.
• If the product’s performance falls short of the customer’s expectations, the buyer is dissatisfied, and vice versa.
Quality:
• Customer satisfaction is closely linked to quality.
• Quality has a direct impact on product performance.
• Quality can be defined as “freedom from defects”.
• TQM programs designed to constantly improve the quality of products, services, and marketing processes.

13. EXCHANGE, TRANSACTIONS, AND RELATIONSHIPS
Exchange:
• The act of obtaining a desired object from someone by offering something in
return
Transaction:
• A trade between two parties that involves at least two things of value, agreed –
upon conditions a time of agreement, and a place of agreement.
Relationship marketing:
• The process of creating, maintaining, and enhancing strong, value –
relationships with customers and other stakeholders

14. THE IMPORTANCE OF MARKETING
Marketing is important for any business because it is what makes customers aware of
your products or services, engages them, and helps them make the buying decision.
Effective consumer engagement: Customers can be engaged by telling them what
they do not know and creating good content around your products and services, and
that is what marketing involves.
Building and maintaining reputation: The reputation of your business depends on
how it grows and what its lifespan is. This is where marketing comes across as a
way to build the brand equity of businesses. And this happens when the
expectations of the customers are met.
Building relationships between customers and business: For any business to grow,
it must build a long-lasting relationship with its customers. Marketing is based on
demographics, psychographics, and consumer behavior and therefore, gives an
understanding of what customers want.

15. CONT..
Boosting sales: Since marketing utilizes different ways to promote products or services,
it helps in increasing the likelihood of better sales. Happy customers translate into a
company’s brand ambassadors automatically.
Staying relevant: Marketing helps a business to remain relevant to the customers and in
its domain.
Making informed decisions: The basic questions that every business has are around the
how’s and why’s of producing products or delivering services. This underlines the
importance of marketing for businesses and the fact that it links a business and society.

16. MARKETING MANAGEMENT
Marketing management uses marketing tools, strategies, processes, and analyses as part of an
organization's strategic approach to developing and implementing marketing efforts.
Marketing management is the process of;
Planning
Organizing
Implementation, and
Controlling
The analysis, planning, implementation, and control of programs designed to create, build,
and maintain beneficial exchanges with target buyers for the purpose of achieving

17. CONT..
Marketing Management Involves:
 Demand Management: The organization has a desired level of demand for its products. At any point in time, There
may be no demand, adequate demand, irregular demand, or too much demand, and marketing management must
find ways to deal with these different demand states.
 Building Profitable Customer Relationships: Beyond designing strategies to attract new customers and create
transactions with them, companies now are striving to retain current customers and build lasting customer
relationships
Marketing management is important because it enables companies to:
 Focus their marketing efforts on achieving priority goals, such as increasing brand awareness or boosting revenue.
 Track results of marketing efforts, using software and automation.
 Optimize marketing campaigns to gain new customers and retain loyal ones.

18. MARKETING PHILOSOPHIES
The role that marketing plays within a company varies according to the overall
strategy and philosophy of each firm.
There are five alternative concepts under which organizations conduct their
marketing activities:
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
5. Societal marketing concepts, and
6. Holistic Marketing Concept.

19. CONT..
1: Production Concept
 This concept is the oldest of the concepts in business. It holds that
consumers will prefer products that are widely available and
affordable/inexpensive.
Thus, managers with a production concept orientation focus on high
production efficiency, low costs, and mass distribution. They believe that
customers are primarily concerned with product availability and low prices.

20. Advantage of Production Concept: Disadvantage of Production Concept:
 It ensures the availability of products.
 Fit for price-sensitive customers.
 Helps to achieve economies of scale.
 May generate employment for local people.
 Increases the sales and profit of the business.
 Fails in a competitive environment.
 Low-quality products.
 Ignores customers’ needs, wants, and preferences.
 Not so applicable today.

21. CONT..
2: Product Concept
This orientation holds that consumers will favor those products that offer
the most quality, performance, or innovative features.
Therefore, the managers with a production concept orientation focus on
and concentrate on making superior products and improving them over
time. They assume that buyers admire/like well-made products and can
appraise quality and performance.

22. CONT..
Advantage of Production Concept Disadvantage of Production Concept
 It ensures quality products.
 Best for quality-sensitive people.
 Helps to gain prestige, position, and status.
 High-income people prefer quality products.
 Helps to gain a competitive position.
 Develops curiosity in people.
 It neglects customers’ needs, wants, and
preferences.
 Its all about the seller’s choice products.
 Low-income and price-conscious people do not
prefer it.

23. CONT..
3: Selling Concept
This is another common business orientation. It believes that consumers will not buy
enough of the organization’s products unless the organization undertakes a large –
scale selling and promotion effort
Therefore, the organization must, undertake an aggressive selling and promotion
effort. It also assumes that the company has a whole battery of effective selling and
promotional tools to stimulate more buying. Most firms practice the selling concept
when they have overcapacity. Their aim is to sell what they make rather than make
what the market wants.

24. Advantage of Production Concept Disadvantage of Production Concept
 May increase sales volume and profits.
 Right for products like insurance, expensive cars,
expensive clothes, etc.
 Increases the market coverage of the business.
 Free up the stock.
 The selling concept has ignored the customer’s
consideration.
 It only focuses on short-term goal achievement.
 It does not value repeat business.
 The wrong assumption people will forget in the
long run.

25. CONT..
4: Marketing Concept
This is a business philosophy that challenges the above three business orientations. It holds
that the key to achieving its organizational goals (goals of the selling company) consists of
the company being more effective than competitors in creating, delivering, and
communicating customer value to its selected target customers.
In another word, the marketing management philosophy that believes that achieving
organizational goals depends on determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and efficiently than competitors do.
Distinctions between the Sales Concept and the Marketing Concept:
The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the
needs of the buyer.
The Sales Concept is preoccupied with the seller’s need to convert his/her product into
cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by
means of the product as a solution to the customer’s problem (needs).

26. Advantage of Production Concept Disadvantage of Production Concept
 The marketing concept helps to achieve customer
satisfaction.
 Increases repetitive buying.
 Ensures long-term success.
 Increases market share.
 Helps to build a good public image.
 Visiting customers, identifying their needs and
wants, and producing their desired products may
result in a costly process.
 Skilled and quality marketers are required.
 Also, It is time-consuming.

27. CONT..
5: Societal Marketing Concept
This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets
and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original
Marketing Concept). Additionally, it emphasis or says that this all must be done in a way that preserves or
enhances the consumer’s and the society’s well-being.
This concept rise some questions, like environmental deterioration, resource shortages, explosive population
growth, world hunger and poverty, and neglected social services or society well-being.
The marketing concept possibly sidesteps the potential conflicts among consumer wants, consumer interests,
and long-run societal welfare.
Just consider:
The fast-food industry offers tasty but unhealthy food. The burgers and similar fast foods have a high fat
content, and the restaurants promote fries and pies, two products high in sugar and fat. The products are
wrapped in convenient packaging, which leads to much waste. Such case in satisfying consumer wants, these
restaurants may be hurting consumer health and causing environmental problems.

28. Advantage of Production Concept Disadvantage of Production Concept
 Helps to achieve customer satisfaction.
 Societal marketing helps in achieving society’s
welfare.
 Supports in gaining a competitive position.
 Ensures good public image.
 Increases customer retention.
 It might be costly.
 It might be difficult to convince employees and
society about environmental marketing strategies.
 The implementation may take a long time.

29. CONT..
6: Holistic Marketing Concept.
This is the latest concept to marketing management philosophies. It is the combination of marketing
and societal marketing concepts.
The holistic marketing concept holds the belief that an organization is a system of different
interconnected units and for effective marketing results, all units should have a shared purpose to
achieve as effectively as possible.
It compares an organization with a human body, and the human body to perform well every part of
the body should work properly. Similarly, for the organization to succeed every component (i.e. all
employees, departments, business units, marketing strategies) should work properly yet collectively.
Holistic marketing emphasizes proper integration and coordination of all marketing efforts to
achieve common marketing goals.

30. Advantage of Production Concept Disadvantage of Production Concept
 Holistic marketing is effective in this present time.
 Brings coordination.
 Helps in achieving a competitive advantage.
 Better customer satisfaction.
 Goods brand value and public image.
 Helps to achieve long-term success.
 As holistic marketing is a comprehensive
marketing strategy it is difficult to implement
properly.
 It might also cost more.
 Managing people and bringing coordination
among diverse people is a challenging task.

31. SCOPE OF MARKETING

32. SCOPE OF MARKETING
1. Product design
Product design is very important element in marketing the communication needs & problems of the
consumer have to be considered before marketing a new product design.
2. Implementation of product
Once the decision is finalized about the design of the product, more focus should be there on communication
with the production department regarding the implementation of product features.
3. Pricing of Product
 Pricing is the most important aspect of the product because it only decides the major buying decision of the
consumer. So if the product is very new to the market correct & affordable pricing should be done.
4. Selection Of Layout
The layout is the place where actually the product /services will be availed, so it is essential to identify the
exact location and layout or customer convenience point.
5. Publicity of the product
 Publicity means communication about the product and services for creating awareness & demand for the
product through publicity& Advertisement.

33. CONT..
6. Distribution channel
 Distribution channel means the number of intermediator like whole-sellers, Retailers, distributors, and
agents who all are involved in the marketing channel. So business should identify what channels are available
to use and their alternatives.
7. Selling of Product
 Selling involves the actual challenge of marketing. The selling of products and services involves different
strategies like distribution through stores, salesmen, Advertisements, Exhibitions, trade fairs, etc.
8. Collecting the feedback
 Don't leave your product after a sale! After the product has been marketed and sold, it is critical to collect
feedback regarding satisfaction or dissatisfaction with the product's features, price, availability, and so on, and
to make adjustments as needed.

34. COMPANIES‘ ORIENTATION TO MARKETING
One of the fundamental concepts of any company's marketing strategy is marketing
orientation.
It is defined as a methodology that seeks to meet the needs of the target audience, without
neglecting the other market players.
Elements to take into account when it comes to marketing orientation
1. Stakeholders’ expectations
In order to apply marketing orientation it’s essential to take into account all the agents that
are part of the market, this includes;
Consumers, competitors, suppliers, government, shareholders, employees and the market in
general.
This will give you a clear picture of what’s happening and what you need to offer to solve
the problem of your audience.

35. CONT..
2. Satisfying needs
Customer satisfaction is the most priority of any business, especially one focused on marketing.
Focus on putting the customer above all else
Understand customer needs, wants and their behavior.
This will enable you to make the necessary improvements or adjustment to the quality of your product or
service.
3. Customer resources
You must make available to users all the resources that are relevant to meet and solve their needs, and
wants, include;
After-sales service,
Product user manual,
Satisfaction guarantee and much more.
4. Tools
A competitive company does not spare money on tools that allow it to research the latest market trends.
Stay ahead of any changes and you will see how users will be delighted with the service you provide.

36. REASONS TO ORIENT MY COMPANY TO MARKETING
There are many reasons why you should orient your company to marketing. Some of them are
1. You know your audience better.
One of the advantages that marketing gives you in the company is to know your target audience well.
You have to know exactly what your audience needs, when and how they need it.
2. You can predict trends
No, you won’t see the future, but with marketing you can anticipate new market behaviors and needs.
Once you detect it, you can adapt your products and services to the new requirements that users have.
3. You can adapt your products and services
Adapting your products and services is one of the keys to success in entrepreneurship.
Users’ needs are not permanent, they change according to the market situation, so you must be aware of
everything that is going on around you

37. ORIENTATION TO MARKETING BENEFITS
1. Brand identity
 When we talk about brand identity we refer to the mission, vision and all those elements that differentiate
you from other companies in the market.
2. Value proposition
 The value proposition is fundamental. It’s the speech you will give to your customers about the benefits of
your products.
The way you communicate it will influence the sales of the business in the short and medium term.
3. Brand values
 What are your brand values, what do you demonstrate to the market?
 All companies have a value that differentiates them from others and your company cannot be the exclusion.
 Coca Cola conveys happiness, Apple simplicity and quality. Similarly, you have to know what do you
convey?
4. Strategy
 Last but not least, you have to have a strategy that will help you achieve the goals you set.
 It can be campaigns or any type of action that will lead you for results. All this must be aligned with the
elements mentioned in the previous sections to meet the needs of your customer.

38. GOALS OF MARKETING SYSTEM
The purpose of marketing goals is to provide direction and motivation to your team. There is a common goal,
which gives employees a clear understanding of what the company is trying to achieve and how their efforts
contribute. So, having measurable objectives allows you to track your progress, evaluate what works, and identify
areas for improvement. Without specific goals, it can be difficult to determine whether your marketing efforts are
paying off or not.
1. Generating Leads
Leads in marketing refer to any individual or organization within your marketing reach who has interacted with
your brand way or has the potential to become a future customer.
Therefore, one of the most common marketing goals is to increase the number of leads by a certain percentage
within a specific timeframe or channel. For example, you could use content marketing to increase your lead by
20% over the next three months.

39. CONT..
2. Building Brand Awareness
 Brand awareness refers to potential leads' knowledge of your company's name, value proposition, and the factors
that set you apart from competitors. Brand awareness can be difficult to quantify, but it's a vital indicator to track
if you want to expand your reach or enter new markets.
 To increase your brand awareness for the number of people who will be exposed to your brand each month. You
could combine metrics like social media followers, search engine optimization, and others to measure to reach
brand awareness goal.
For example, if you reach 100,000 people per month, you could set a goal of reaching 130,000 people per month.
3. Increasing Website Traffic
 We mean website traffic users who visit company's website. Web traffic is measured in visits, and is a common
way to measure an online business effectiveness at attracting an audience.
 However, it's an important metric to measure if you draw a significant number of your leads through your website
content. Understanding how your traffic relates to lead and customer generation can give you a good idea of how
increasing web traffic could improve your business results.
For example, you might aim to increase website traffic by 25% over the next three months. Likewise, you could try
to increase your monthly website traffic by a certain percentage by generating a higher volume of content or
launching a regular ad campaign.

40. CONT..
4. Converting Leads into Customers
Generating more leads is a great start, but what's truly important is your lead-to-customer ratio. Average
customer conversion rates vary by industry and channel, but they can range from 2% to 10% or more.
There are a few different types of lead-to-customer goals you can set, but most companies try to improve this
ratio permanently, if possible.
For example, if your lead-to-customer ratio is currently 2%, you may set a goal to increase it to 5% over six
months by targeting leads with more personalized messaging and content. You may then want to measure how
these results change year over year, then adjust your strategy if it starts to go down again.
5. Developing Customer Loyalty
Like brand awareness, customer loyalty can be challenging to measure. But, there are multiple tools you can
use to do so. Metrics like Net Promoter Score, repurchase ratio, and customer lifecycle value are all good
ways to measure customer loyalty.
Once you've identified a metric you want to use, you can set a timeline and a means for achieving it.

41. NET PROMOTER SCORE
Net Promoter Score which is a metric used in customer experience programs. NPS measures the loyalty of
customers to a company. NPS scores are measured with a single-question survey and reported with a number
from the range -100 to +100, a higher score is desirable.
For example, if 50% of respondents are Promoters, 10% are Detractors, and 40% are passives, then, your
NPS would be 50-10=40.

42. PRODUCTION AND MARKETING
Production and marketing of goods and services are the essence/core of economic life in any society. All
organizations perform these two basic functions (production and marketing) to satisfy their commitments to
their stakeholders – the owners, the customers and the society, at large. They create a benefit that economists
call utility which is the want-satisfying power of a good or service.
Utility is the state of being useful, profitable, or beneficial. For example, he had a poor opinion of the utility of
book learning. Utility has four types named;
1: Form utility
2: Time utility
3: Place utility
4: The ownership Utility or possession utility

43. CONT..
1: Form utility
Form utility refers to how much value a consumer receives from a product or service in a way that they actually
need. Its related to production.
2: Time utility
Time utility occurs when a company provides goods and services when consumers demand or need them.
Companies must analyze how to create or maximize the time utility of their products and adjust their production
process, logistical planning of manufacturing, and delivery.
3: Place utility
Place utility refers to making goods or services available in locations that allow consumers to easily access
products and services.
4: The ownership Utility or possession utility
This utility is all about the increased usefulness created by marketing through making it possible for a consumer
to own, use, and consume a product.”

44. CONT..
Type of utility Description Responsible function
 Form utility  Conversion of raw material and components
into finished goods and services
 Production department
 Time utility  Availability of the goods and services when
customer want them.
 Marketing department
 Place utility  Availability of the goods and services where
customer want them.
 Marketing department
 The ownership Utility
or possession utility
 Ability to transfer title to goods or service
from marketer (producer) to buyer
(customer).
 Marketing department

45. WHY STUDY MARKETING?
As producers (sellers) As consumers As employees As members of the society
 Who are our customers
 What are their needs
 What are their behavior
 What products to offer
 What price to charge
 What promotion to use
 What distribution to select
 How to keep customers Satisfied
 Improve relationships and become
profitable
 Satisfy our needs
 Solve our problems
 What products to buy
 What price to pay
 What supplier to deal with
 Improve relationship and
lead quality life
 Provide us employment
 Payment to employees is
one of the highest (rewarding
jobs)
 Provides variety of jobs
 Provides career
opportunities (growth,
development)
 Lead quality life
 Provide employment to
members of the society
 Improves product
efficiency and reduces
resource depletion
 Improves quality of life
 Participates in societies
economic and social
development

46. SELF-ASSESSMENT
You should try to explain this:
what is marketing? Define and explain briefly.
List down the difference between market and marketing
What are marketing and its core concepts? explain and discuss.
What are the philosophies of marketing?
List and discuss for the importance of marketing
Tell the clearly the scope of marketing, and how they are interrelated.
What are the orientation to marketing that Companies use?
Discuss goals of marketing system, and briefly explain, and try more.

47. END OF THE CHAPTER ONE.
Thank you