This document provides an overview of marketing and marketing management. It defines marketing as the process of creating value for customers to build relationships to capture value in return. The marketing process involves understanding customers, designing strategies to satisfy them, implementing marketing programs, building relationships, and capturing value from loyal customers. Companies must manage different states of demand through various marketing approaches like stimulation, development, and maintenance. The philosophies that guide marketing strategies range from production and product-focused to customer-driven approaches like the marketing concept. Relationship marketing aims to develop long-term relationships with key stakeholders to earn business over time.

1. FACULTY OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
Course: Marketing Management
CHAPTER 1
An Overview to Marketing and Marketing Management

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Chapter objectives
• Define marketing and outline the steps in the marketing process.
• Explain the importance of understanding customers and the
marketplace and identify the five core marketplace concepts.
• Identify the key elements of a customer-driven marketing strategy
• Discuss the marketing management orientations that guide
marketing strategy.
• Discuss customer relationship management and identify strategies
for creating value for customers and capturing value from
customers in return.

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Definition of Marketing

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Marketing Defined
• Many people think of marketing only as selling and
advertising.
• Selling and advertising are only part of a larger
“marketing mix”
– a set of marketing tools that work together to satisfy
customer needs and build customer relationships
• Today, marketing must be understood not in the
old sense of making a sale—“telling and selling”—
but in the new sense of satisfying customer needs.

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Definition of Marketing
• According to Philip Kotler
– Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating and exchanging products and value with
others.
– Marketing is the process by which companies create
value for customers and build strong customer
relationships in order to capture value from customers in
return.
• According to the American Marketing Association
– Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering, and
exchanging offerings that have value for customers,
clients, partners, and society at large

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Importance of marketing

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The importance of marketing
• Marketing has helped introduce new products that have
eased or enriched people’s lives.
• Creates employment opportunity
• It can inspire enhancements in existing products as
marketers innovate to improve their position in the market
place.
• Successful marketing also allows firms to more fully engage
in socially responsible activities.

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The Marketing Process
• In the first four steps, companies work to understand
consumers, create customer value, and build strong
customer relationships.
• In the final step, companies reap the rewards of creating
superior customer value.
• By creating value for consumers, they in turn capture value
from consumers in the form of sales, profits, and long-term
customer equity.

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Step1: Understanding the Marketplace and
Customer Needs
– 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.
– We examine five core customer and marketplace
concepts:
• Needs, wants, and demands
• Market offerings (products, services, and experiences)
• Value and satisfaction
• Exchanges and relationships
• Markets.

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Needs, Wants, and Demands
• Needs:
– Needs are the basic human requirements such as for air, food,
water, clothing, and shelter. Humans also have strong needs
for recreation, education, and entertainment.
– Human needs are states of felt deprivation.
• Wants:
– Want are the form taken by human needs as they are shaped
by culture and individual personality.
– Needs become wants when directed to specific objects that
might satisfy the need.
• Demands:
– Demands are wants for specific products backed by an ability
to pay.
– Many people want a Mercedes; only a few can buy one.
– Companies must measure not only how many people want
their product, but also how many are willing and able to buy it

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Market Offerings—Products, Services, and
Experiences
• Consumers’ 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 for sale that are essentially intangible and do
not result in the ownership of anything.
– Examples include banking, airline, hotel, tax preparation,
and home repair services. More broadly, market offerings
also include other entities, such as persons, places,
organizations, information, and ideas

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Customer Value and Satisfaction
• Customer value is the difference between the values the
customer gains from owning and using a product and the
costs of obtaining the products.
• Value is primarily a combination of quality, service, and
price (qsp), called the customer value triad.
– Value perceptions increase with quality and service but
decrease with price.
• Satisfaction reflects a person’s judgment of a product’s
perceived performance in relationship to expectations.
• Customer satisfaction- The extent to which a product’s
perceived performance matches a buyer’s expectations.
• If performance falls short of expectations, the customer is
disappointed. If it matches expectations, the customer is
satisfied. If it exceeds them, the customer is delighted.

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Exchange 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.
Relationship marketing :
• The process of creating, maintaining, and
enhancing strong, value – laden relationships with
customers and other stakeholders

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Markets
• Market is the set of all actual and potential buyers of a
product or service
• Marketing involves serving a market of final consumers in
the face of competitors.
A modern marketing system

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Marketers and Prospects
• A marketer is someone who seeks a
response attention, a purchase, a vote, a
donation from another party, called the
prospect.
• If two parties are seeking to sell something
to each other, we call them both marketers

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Step 2: Designing a Customer-Driven Marketing
Strategy
• Once it fully understands consumers and the
marketplace, marketing management can design a
customer-driven marketing strategy.
• To design a winning marketing strategy, the
marketing manager must answer two important
questions:
– What customers will we serve (what’s our target
market)?
– How can we serve these customers best (what’s
our value proposition)?
• How companies differentiate and position itself in the
marketplace

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Step 3: Preparing an Integrated Marketing Plan
and Program
• The company’s marketing strategy outlines which customers
it will serve and how it will create value for these customers.
• Next, the marketer develops an integrated marketing
program that will actually deliver the intended value to
target customers.
• The marketing program builds customer relationships by
transforming the marketing strategy into action.
•
• It consists of the firm’s marketing mix, the set of marketing
tools the firm uses to implement its marketing strategy.

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Preparing an Integrated Marketing Plan and
Program
• The major marketing mix tools are classified into
four broad groups, called the four Ps of marketing:
product, price, place, and promotion.
– To deliver on its value proposition, the firm must first
create a need-satisfying market offering (product).
– It must decide how much it will charge for the offering
(price) and how it will make the offering available to
target consumers (place).
– Finally, it must communicate with target customers about
the offering and persuade them of its merits (promotion).

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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.
• It deals with all aspects of acquiring, keeping, and growing
customers.
• Relationship Building Blocks: Customer Value and
Satisfaction
– Customer-perceived value- the customer’s evaluation of the
difference between all the benefits and all the costs of a market
offering relative to those of competing offers
– Customer satisfaction-the extent to which a product’s perceived
performance matches a buyer’s expectations

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Step 5: Capturing Value from Customers
• The final step involves capturing value in return 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.
• The outcomes of creating customer value includes: customer
loyalty and retention, share of market and share of customer,
and customer equity.

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Marketing Management
• Marketing management
– Is the analysis, planning, implementation, and control of
programs designed to create, build, and maintain
beneficial exchanges with target buyers for the purpose
of achieving organizational objectives.
• It involves;
– Demand Management : The organization has a desired level of
demand for its products.
– 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.

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States of Demand
• Marketing managers in different organizations might
face any of the following states of demand.
• The marketing task is to manage demand
effectively.
Negative demand
No demand
Latent demand
Falling demand
Irregular demand
Full demand
Overfull demand
Unwholesome demand
Demand
state

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Negative Demand
This is a state in which all
or the major parts of the
society, dislikes the
product and may even pay
a price to avoid it.
Examples are
vaccination, alcoholic
employees, dental
work, and seat belts,
and gallbladder
operations.
The marketing task is to
analyze why the market
dislikes the product and
whether product redesign,
lower price, or more positive
promotion can change the
consumer attitudes.
This marketing task or
activity is known as
CONVERSIONAL
marketing which tries
to change people’s
want rather than serve
their wants.

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No demand
• This is a case where target customers may
be uninterested in or unaware to a particular
product.
• Three different categories of products are
characterized by no demand.
• First, there are those familiar products that
are perceived as having no value.
– Examples would be last week’s newspaper, and
broken pens.

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Cont…
• Second, products that have value but not in a
particular market. Examples would be snowmobiles in
areas that do not have snow and residence alarms
where there is no crime.
• Third, unfamiliar products or services which are
innovative and face a situation of no demand because
the relevant market segment has no knowledge of its
benefits.
• Examples include certain consulting services and new
software.
• This marketing task is known as STIMULATIONAL
marketing; it tries to stimulate a want for an object in
people who initially have no knowledge or interest in
the product

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Latent Demand
• Latent demand: state of demand where
many customers share a strong need for
something that does not exist in the form of
actual
• Examples the need for harmless cigarettes,
more fuel-efficient cars, etc.
• The marketing task is called
DEVELOPMENTAL marketing and its task is
to measure the size of the potential market
and trying to develop a new product or
service that would satisfy the demand.

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Declining Demand
• Sooner or later, every organization faces
falling demand for one or more of its
products.
• For example, churches have seen their
membership decline, and private colleges
have seen fewer applications.
• The marketer must find the causes of market
decline and re-stimulate demand by finding
new markets, changing product features, or
creating more effective communication and
the marketing task is REMARKETING.

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Irregular Demand
It is a state in which the timing pattern
of demand is marked by seasonal and
volatile fluctuations causing problems of
idle capacity and overworked.
For example museums are under-visited
during weekdays and overworked during
weekends.
The corresponding marketing task is
SYNCHROMARKETING, i.e., to find ways to
alter the time pattern of demand through flexible
pricing, promotion and other incentives so that it
will better match the time pattern of supply.

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Full Demand
The organization has just the amount of
demand it wants and can handle.
It is a state where the current level and
timing of demand is equal to the desired
level and timing of demand.
The marketing task is MAINTENANCE marketing
and is designed to maintain the current level of
demand against changing consumer preferences.
The organization maintains quality, and
continually measures satisfaction to make
sure it is doing a good job

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Overfull Demand
It is a state in which demand is higher than the company
can or wants to handle.
The marketing task is called DEMARKETING and its task is
finding ways to reduce the demand temporarily, or
permanently.
De-marketing involves such actions as raising prices and
reducing promotion and service.
It does not aim to destroy demand, but only to reduce it. It
calls for using normal marketing tools in reverse.

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Unwholesome Demand
Unwholesome products such as cigarettes, alcohol, and
hard drugs will attract organized effort to destroy the
demand or interest in particular product or service.
The corresponding marketing task is known as
COUNTERMARKETING it is a difficult task in that the
aim is to get people who like something to give it up.
Marketing manager cope with these tasks by carrying
out marketing research, planning, implementation and
control.

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MARKETING MANAGEMENT PHILOSOPHIES
• The role that marketing plays within a company
varies according to the overall strategy and
philosophy of each firm.
• There are different alternative concepts under
which organizations conduct their marketing
activities:
– Production concept
– Product concept
– Selling concept
– Marketing concept
– Societal marketing concepts
– The holistic marketing concepts

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Production Concept
• The production concept is the oldest concepts in
business
• Looks only to the product or service that the
company provide rather than to a customer need.
• It holds that consumers prefer products that are
widely available and inexpensive
• Managers of production-oriented businesses
concentrate on achieving high production efficiency,
low costs, and mass distribution.
• This orientation has made sense in developing
countries

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Product Concept
• The philosophy that consumers will favor products that offer
the most quality, performance, and innovative features.
• Managers in these organisations focus on making superior
products or services and improving them over time.
• Product quality and improvement are important parts of
most marketing strategies.
– However, focusing only on the company’s products can also lead to
marketing myopia.
• Marketing Myopia- focusing too narrowly on their own
operations and losing sight of the real objective—satisfying
customer needs and building customer relationships

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The Selling Concept
• The selling concept is a focus on making sales
rather than really understanding the customers.
• The selling concept suggests businesses have to
persuade or force customers to buy the
organisation’s products or services.
• The organisation must, therefore, undertake an
aggressive selling and promotion effort.
• The selling concept was practised most
aggressively with unsought products or services
and when the company have overcapacity

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The Marketing Concept
• The marketing philosophy emerged in the mid-1950s.
• Instead of a product-centred and sales oriented ‘make-
and-sell’ philosophy, business shifted to a customer-
centred, ‘sense-and- respond’ philosophy.
• The marketing task is not to find the right customers for
your products or services, but to design the right
services and products for your customers.
• The marketing concept holds that the key to achieving
organisational goals is being more effective than
competitors in creating, managing, delivering and
communicating superior customer value to your chosen
target markets.

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Factory Existing products
Selling
and promoting Profits through sales
volume
Starting point
Focus
Means
Ends
The selling concept
Market Customer needs Integrated
marketing
Profits through customer
satisfaction
The marketing concept
The selling and Marketing Concepts Contrasted

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Societal Marketing Concept
• The idea that the organization should
– Determine the needs, wants, and interests
of target markets
– Deliver the desired satisfactions more
effectively and efficiently than competitors
– In a way that maintains or improves the
consumer’s and society’s well – being.

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The Holistic Marketing Concept
• The holistic marketing concept is based on the development,
design, and implementation of marketing programs,
processes, and activities that recognize their breadth and
interdependencies.
• Holistic marketing acknowledges that everything matters in
marketing and that a broad, integrated perspective is often
necessary.
• Holistic marketing thus recognizes and reconciles the scope
and complexities of marketing activities.
• Fundamental pillars of holistic marketing:
– Relationship marketing
– Integrated marketing
– Internal marketing
– Performance marketing

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Relationship Marketing
• Relationship Marketing Increasingly, a key goal of marketing is to
develop deep, enduring relationships with people and
organizations that directly or indirectly affect the success of the
firm’s marketing activities.
• Relationship marketing aims to build mutually satisfying long-term
relationships with key constituents in order to earn and retain their
business.
• Four key constituents for relationship marketing are customers,
employees, marketing partners (channels, suppliers, distributors,
dealers, agencies), and members of the financial community
(shareholders, investors, analysts).
• The ultimate outcome of relationship marketing is a unique
company asset called a marketing network, consisting of the
company and its supporting stakeholders—customers, employees,
suppliers, distributors, retailers, and others—with whom it has
built mutually profitable business relationships.

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Integrated Marketing
• Integrated marketing occurs when the marketer devises
marketing activities and assembles marketing programs to
create, communicate, and deliver value for consumers such
that “the whole is greater than the sum of its parts.”
• Two key themes are that
– (1) many different marketing activities can create,
communicate, and deliver value and
– (2) marketers should design and implement any one
marketing activity with all other activities in mind.
• When a hospital buys an MRI machine from General
Electric’s Medical Systems division, for instance, it
expects good installation, maintenance, and training
services to go with the purchase

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Internal Marketing
• Internal marketing, is the task of hiring, training, and motivating
able employees who want to serve customers well.
• Smart marketers recognize that marketing activities within the
company can be as important—or even more important—than
those directed outside the company.
• It makes no sense to promise excellent service before the
company’s staff is ready to provide it.
• Marketing succeeds only when all departments work together to
achieve customer goals.
• When engineering designs the right products, finance furnishes
the right amount of funding, purchasing buys the right materials,
production makes the right products in the right time horizon, and
accounting measures profitability

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Performance Marketing
• Performance marketing requires understanding the
financial and nonfinancial returns to business and
society from marketing activities and programs.
• Top marketers are increasingly going beyond sales
revenue to examine the marketing scorecard and
interpret what is happening to market share,
customer loss rate, customer satisfaction, product
quality, and other measures.
• They are also considering the legal, ethical, social,
and environmental effects of marketing activities
and programs.

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