Note on Principles of Marketing I.ppt

UNIVERSITY OF ABUJA
DEPARTMENT OF BUSINESS ADMINISTRATION
FIRST SEMESTER LECTURES, 2014/2015 SESSION
Course Code: Bus 213
Course Title: Principles of Marketing I
Course Lecturer: Dr. Bello Ayuba,
FCAI, MAOM,MAIB,MNIM,MNIMN
8th February, 2015

COURSE OUTLINE
Introduction
The course principles of marketing provides a
framework for analyzing recurrent problems in
marketing. It focuses on major decisions
marketing managers face in their efforts to
harmonize the organizations’ objectives,
capabilities and resources with market place
needs and opportunities. It was designed to give
students and marketing practitioners a clear
understanding of marketing principles, strategies
and practices. Topics to be covered include:

Course Outline………………………………….
1. Framework of Marketing:
Definition of Marketing
Evolution of Marketing
Basic Concepts of Marketing and
Marketing Functions

2. Marketing Mix:
 Product; Meaning, Levels and Classifications.
 Price; Meaning, Pricing Objective and
Constraints.
 Place: meaning, influencing factors and types
of distribution intermediaries.
 Promotion; Meaning, Objectives, Needs and
Promotional Tools (Advertizing, Personal
Selling, Sales Promotion and Publicity)
including Factors Influencing Promotional Mix.

3. Marketing Management
Philosophies:
Meaning
Marketing Management Concepts &
Tools
Managerial Philosophies
Differences Between Selling and
Marketing Concepts

4. Product Life-Cycle Strategies:
Meaning of Product Life-Cycle
Stages of the Product Life-Cycle (i.e
Strategies at Introductory Stage,
Growth Stage, Maturity and Decline
Stages).

5. Marketing Environment:
Meaning of Marketing Environment,
Macro- Environmental Variables
Micro- Environmental Variables
Analysis of the Variables

6. Marketing and Society:
 Relationships Between Marketing and
Society
 Contributions of Marketing to the Society
 Societal Problems of Marketing
 Marketing Responses to Societal Criticisms
 Consumerism
 Marketing Ethics (Ethical and Un-ethical
Marketing Practices).
 Social Responsibility

7. Consumer Behaviour:
Definition of Consumer Behaviour
Factors Influencing Consumer Buying
Behaviours
Consumer Buying Decision Process
Types of Consumer Buying
Behaviours
The Buying Roles

8. Organizational Buying Behaviour:
Meaning of Organizational Buying
Characteristics of Organizational Buyer
Organizational Buying Procedures

9. Recommended Texts:
Kotler, Philip (2006), Principle of
Marketing, Prentice Hall, New York.
David, Jobber (1998), Marketing,
McGraw Hill, London.
Ayuba, Bello (2008), Marketing:
Principles and Management, Shukrah
Printers, Kaduna.

DEFINITION OF MARKETING
 Kotler (1991) defined Marketing as 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.
 Peter Drucker(1973) defined Marketing as
the whole business seen from the point of
view of its final result, customer satisfaction.
 Ryam sees marketing as a bridge between
production and consumption.

Definition of marketing Continues……..
 The American Marketing Association (1935)
asserted that, Marketing consists of those activities
involved in the flow of goods and services from
the point of production to the point of
consumption.
 The amended AMA (2004) definition thus read:
“Marketing is an organizational function and a set
of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders”.

THE BASIC CONCEPTS OF
MARKETING
Needs, Wants and Intentions Demand
Products or Services
Utility, Value and Satisfaction
Exchange Transactions and
Relationships (Market, Marketers, and
Marketing)

MARKETING FUNCTIONS
 For a marketing system to be effective, there are
three general types of functions which it must
provide.
 Exchange functions which comprise buying,
selling and pricing.
 Physical functions which comprises assembling,
transport and handling, storage, processing and
packaging, grading and standardization.
 Facilitating Functions which comprises financing
and risk bearing, market Information, demand
and supply creation, market research.

Marketing functions……………………..
 Identification of Customers Needs or Markets
 Designing the Products or Services to Satisfy the
Needs
 Communicating Information about the Products or
Services
 Making the Products or Services Available
 Applying an Appropriate Pricing Strategy
 Market Information
 Storage Function
 Financing
 Making the Necessary Service Follow-up

MARKETING MIX
 It is the term used to describe the combination of
the four inputs that constitute the core of a
company’s marketing system i.e.
 Product
 Price
 Place and
 Promotion
Some authors have extended its usefulness by
proposing a seven P’s, such as People, Process
and Physical Evidence (Kotler, 1999).

Product
 Stanton (1964) defined product as a set of
tangible and intangible attributes including
packaging, colour test, price, manufacturer’s
prestige, retailer’s prestige, as well as
manufacturers’ and retailer services which the
buyer may accept as offering wants
satisfaction.
 A product is anything offered for attention,
acquisition, use or consumption that might
satisfy a want or need. Products can be physical
objects, service, persons, organizations and
ideas.

Price
According to Marsh (1988:87), “pricing is
a very important element in the marketing
mix, as it is the only element of the
marketing mix which produces revenue.
All the other parts of the marketing mix
are cost-driven”. Price is the term being
used to describe money value of an item;
it is the term expressed in any monetary
medium whereby the exchange occurs.

Place
Place is an element of the marketing
mix which deals with how
manufacturers distribute products to
the consumers. The movement of
goods and services from the
manufacturer to the consumer is
known as distribution.

Promotion
 Promotion is any effort whose function is to
inform customers about the existence of a
product or services with a view to induce
them either to start or continue buying the
product or services.
 Promotion is one of the major forms of
marketing communications, which include
advertising, personal selling, sales promotion,
and public relations (Kotler, 1991). These are
therefore referred to as the promotional mix.

Three Levels of Product
 Core Product: Benefits. For instance the purchase
of drill is “buying holes: a hotel guest is buying
“rest and sleep”. Thus, Marketers must see
themselves as benefit providers.
 Actual or Tangible Product: This include
product features such as quality, styling, branding,
packaging, labeling etc.
 Augmented product: This consists of
installations, delivery, credit, warranty, and after
sales services. Consumers tend to see product as
complex bundles of benefits that satisfies their
needs.

Products Classification
Classification Based On Durability and Tangibility
 Non Durable Goods: These are tangible goods
that are normally consumed in one or two uses e.g.
Soap, beer and so on.
 Durable Goods: These are tangible goods that
survived many uses e.g. refrigerators, clothing,
radio, television, chairs e.t.c.
 Services: these are intangible, inseparable,
variable and perishable as a result; they normally
required more quality control, supplier credibility
and adaptability.

Products Classification Continues…..
A. Consumer Goods
 Armstrong defined consumer goods as products
bought by the final consumer for personal
consumption. It is any goods that is bought for
household use e.g. Cars, food, etc. Consumer
goods can further be subdivided into the
following:
1. Convenience Goods: consumers have adequate
knowledge, they are frequently purchased with a
minimum of effort, inexpensive and readily
available when customers need them.

 Convenience goods are further sub-divided into:
 Staple Goods: These are goods that consumers
purchase on a regular basis e.g. Toothpaste, Soap,
milk, sugar, oil etc.
 Impulse Goods: These are goods that consumers
have no intention of buying but may decide to buy
due to the impulse or how the goods are displayed.
E.g. Magazines, Newspapers, Ice-Cream etc.
 Emergency Goods: These type of goods are
purchased when a need is urgent and the cost is
usually high because of the urgency e.g. Drugs
Umbrella during rainfall.

2. Shopping Goods: Less frequently Purchased,
consumers makes comparison on quality, Price
and style in buying. E.g. Furniture, Clothing
etc. This is sub-divided into:
 Homogeneous Goods: Goods that are similar
in quality but different enough in price to
justify shopping comparisons.
 Heterogeneous Goods: - Goods that are
different with features are often more important
to the consumer than the price.

3.Specialty Goods: These are consumer goods with
unique characteristic and/or brand identification
for which a significant group of buyers is
habitually willing to make a special purchasing
effort.
4. Unsought Goods: These are consumer products
that the consumers do not know about or knows
about but does not normally think of buying. Most
major unsought goods are not known until the
consumers become aware of them through
advertising. E.g Life insurance, encyclopedias etc.

B. Industrial Products
These are those products that are purchased for
further processing or for use in conducting a
business. E.g. A car bought for business
purpose. These groups of industrial products
are:
 Materials and Parts
 Capital Items
 Suppliers and Business Services

Materials and Parts:
 Raw Materials: (wheat, cotton, livestock, fruits,
Vegetables, fish, crude oil, iron ore etc).
 Farm Products: (Juice: Chivita, five alive, Corn
beef etc) which requires assembly, grading,
storage, transportation and selling service. Their
perish ability and seasonal nature gives rise to
special marketing practices.
 Natural Products: are highly limited in supply.
They are usually very expensive and have low unit
value and require substantial transportation.

Manufactured Materials and Parts
 Components materials: which includes Iron,
Cement, Wires etc they are usually
fabricated further. Example cement in
building house
 Components parts include small motors, seat
belts, bulbs etc. These enter the finished
product completely with no further changes
in forms, as seat belts are put in Cars.

 Capital Items Capital items are long lasting goods,
they are of two groups:
 Installations: which consist of Building (factories
and offices) and fixed equipments (generators,
elevators, large Computer system, drill presses)
 Accessory Equipment: They are less expensive and
have shorter life’s than installation This consists of:
(i) Portable factory equipments and tools (e.g. hand
tools, lift trucks)
 (ii) Office equipments (e.g. Calculator, Cluck,
personal Computers desks)

3. Supplies and Business Services:-
 This is short lasting goods and services that are
equivalent to convenience goods in the industrial
field; they are usually purchased with a minimum
effort on a straight re-buy basis, they are normally
marketed through intermediaries because of their
low unit value and the great number and
geographical dispersion of customers. This
include; (i) Operating Supplies: Lubricants, coal,
writing paper, panels, stationary etc. (ii)
Maintenance and repair items (paint nail, brooms).

Pricing Objectives
The Pricing objectives of any Marketing
Company are:
Price Stability
Returns on Investment
Profit Motive
Maintain or Improve Market Share
Prevent Competition

Pricing Problems
There are several problems that are
commonly encountered which conspire to
prevent the objectives of pricing being
achieved, these include:
A given price, while acceptable in one
sector of the market, may be too high or
low elsewhere
The price may be viewed by sections of the
market as exploitative and the company
consequently seen as untrustworthy

Pricing Problems Continues……
 Price differentials across the product line may
be illogical
 The price may destabilize a previously stable
market
 The price may lead to a degree of confusion
in the market
 The price may damage or inhibit brand
loyalty
 The strategy may well lead to an increase in
buyers’ price sensitivity

Place
 Place involves those management task concerned
with making the product available and accessible to
buyers and potential buyers (Distribution).
What Is Distribution?
 Distribution is defined as the movement of products
from the point of production to the point of
consumption. It can simply be defined as the
transfer of goods from producers to consumers.
Distribution involves physical activities such as the
use of middlemen, transporting and storing of
goods in order to provide target customers with
time, place and possession utilities.

Place Continues……….
There are two aspects of Distribution:
 Physical Distribution
 Institutional Distribution
 Physical Distribution deals with the physical
transportation or movements of goods and
services from the point of the production line
to the point of use.
 Institutional Distribution deals with the
enterprises and individuals such as
wholesalers, retailers, Agents, supermarkets
and market stores.

Major Activities of Physical Distribution
 The major decisions issues involved in physical
distribution activities include:
 Inventory Control-(Control of Inventories,
Production Schedule).
 Materials Handling- (Loading and Unloading
Trucks, Conveyors and Containers, Packaging,
Labeling).
 Order Processing-(Processing Customers orders)
 Transportation- (Moving Goods to Places)
 Storage Function-(Ownership of Warehousing
Facilities)

Channels of Distribution
 The Channels of Distribution are the means
employed by manufacturers and sellers to get
their products to market and into the hands of
users. (Manufacturer ------ Wholesaler ----- Retailer --- Agent ----- Consumer).
 It is the combination of institutions which direct
the company’s product to consumers. Channels
are management tools used to move goods from
production to consumption; by which the title to
goods is transferred from seller to buyer. In
essence therefore, Channels are tools hired to do
the job of getting goods from factory or place of
production into the hands of the ultimate user.

Channels of Distribution Continues…
 There is a variety of intermediaries that may get
involved before a product gets to the final user:
 Retailers- (operate outlets trade directly)
 Wholesalers (usually specialize in particular
products.
 Distributors and Dealers: they often sell onto the
end user. They provides after-sales service.
 Franchises: Franchises are independent businesses
that operate a branded product (usually a service) in
exchange for a license fee and a share of sales.
 Agents: Operate on Commission

Functions of Distribution Channel
 Main Function: Provide a link between
production and consumption. The many key
functions are:
 Information: marketing intelligence gathering
 Promotion: communicating information about
the product or services.
 Contact: Finding and communicating with
prospective buyers
 Matching: Adjusting the offer to fit a buyer’s
needs, including grading,

Functions of Distribution Channel Continues…
 Negotiation: Reaching agreement on price,
assembling and packaging.
 Physical Distribution: Transporting and Storage
 Financing: Acquiring and using funds to cover the
cost of the distribution
 Risk Taking: Assuming some commercial risks by
operating the channel (e.g. holding stock)
 All of the above functions need to be undertaken
and of importance is who performs them and how
many levels there need to be in the distribution
channel in order to make its cost effective?

PROMOTION
Promotion is one of the basic elements of
the Marketing mix. When product is
launched newly into the market,
aggressive promotional effort has to be
embarked upon to create the awareness
in potential customers. In this lecture, we
shall attempt to evaluate the objectives of
promotion, needs for promotion,
promotional mix elements and the factors
influencing promotion.

Objectives of Promotion
The objectives of promotion are as
follows:
Behaviour Modification
Informing
Persuasion
Reminder promotion

Needs for Promotion
1.This distance between producers and consumers
2.The number of potential consumers grows daily
3.The Mobility of consumer’s from place to place.
4.The communication network between the
manufacturer, the marketing intermediary and
the potential customers.
5.The intense competition among firms.
6.Competition between individual firms within an
industry.

Needs for Promotion
7.Abundant want satisfaction. Customers are
becoming more selective in their buying
choices.
8.During period of shortages, advertising can
stress product conservation and efficient uses
of the product.
9.Promotional activities can be used to aid
consumers in “making do” and incidentally,
help build the company image.
10.Promotion is needed to maintain the high
material standard of living.

Promotional Mix
Promotional mix is communicational in
nature, they are tools normally classified
under promotion, and they are called
promo tools. This includes advertising,
personal selling, sales promotion, publicity,
packaging, sales aids (catalogues,
literatures, films), trading stamps,
premiums, free samples, coupons etc. The
four promotional tools are to be explained
as follows:

Promotional Mix
 Advertising this is any paid form of non-personal
presentation and promotion of ideas, goods or
services by an identified sponsor.
 Personal selling this involves oral presentation
in a conversation with one or more prospective
purchasers for the purpose of making sales.
 Sales promotion this is a short-term incentive to
encourage purchase or sales of a product or
service.
 Publicity this is another form of mass selling. It is
any unpaid form of non-personal presentation of
ideas, goods or services.

Advertising
 P. Kotler defined advertising as any paid form
of non-personal presentation and promotion of
ideas, goods and services through mass media
such as newspapers, magazines, television or
radio by an identified sponsor. Before
advertisement is carried out the following
decisions must be made:
 1. If the organization is going to make use of
an advertising agency or performing the
entire function internally and the criteria by
which such an agency would be selected.

Advertising
1. How much the organization is going to spend
on advertising that will reflect a percentage of
anticipated sales?
2. The organization should also decide on when
the advertising budget should be spent. If it
should be spent evenly in the year or when
sales are normally lowest.
3. The media at which the organization will use to
advertise in reaching its targeted customers, as
well as decisions on how to select the various
media organizations for the advert placement.

Reasons for Advertising
1.To create awareness, customer interest or desire.
2.To boost sales.
3.To build brand loyalty (or to maintain it at the
existing level).
4.To launch a new product.
5.To change customer attitudes – perhaps trying to
move a product more “up market” or to dispel
some widely held perceptions about the product.
6.To support the activities of the distribution
channel (e.g. supporting a “pull” strategy).

Reasons for Advertising
7.To build the company or brand image.
8.To remind and reassure customers
9.To offset competitor advertising – business may
defend market share by responding to
competitors’ campaigns with their own
advertising.
10.To boost public standing: companies can boost
their public standing with advertisements that
link them with generally approved campaigns.
11.To support the sales force.

Factors Influencing Promotional Mix.
Four factors that should be taken into
account in deciding on the promotional
mix are:
Funds Available
The nature of the market
The nature of the product and
The stages of the product life cycle.

MARKETING MANAGEMENT
Introduction
 Marketing management provides the
framework for analyzing recurrent problems in
marketing. It focuses on the major decisions
marketing managers and top management faces
in their efforts to harmonize the organizations
objectives, capabilities and resource with market
place needs and opportunities. It is
comprehensive as it gives clear guide to
managers on how to carry out strategic, tactical
and administrative marketing.

Marketing Management Continues……..
 Marketing management is crucial to the survival
of any marketing organization in today’s
competitive business world. As organizations
continues to expand, through market penetration,
product development, market development and
diversification, coordination of efforts becomes
more complex and strategic and thus, managers
find marketing management which involves
proper analysis, planning, implementation and
control of programs as an important ingredient
for the success of any marketing activity.

What Is Marketing Management?
 America marketing association (1985) defines
marketing management as “the process of
planning and executing the conception, pricing,
promotion and distribution of ideas, goods and
services to create exchanges that satisfy
individual and organizational objectives.
 P. Kotler (1991) defines marketing management
as “the analysis, planning, implementation and
control of programs designed to bring about
desired exchange with target markets for the
purpose of achieving organizational objectives.

IMPORTANCE OF MARKETING MANAGEMENT
The importance of marketing management can never
be over emphasized as it’s:
 Provides the understanding you need about the
economic structure of your industry.
 Helps in identifying segments within your market.
 Identify the marketing strategy, which best fits,
your company.
 Identifying your target market.
 Helps in conducting marketing research

Importance of Marketing Management
 Understand your competitors and their products
 Develop new products
 Establish environment-scanning mechanism
 Understand your coy strength and weakness.
 Audit your customer’s experience of your brand
 Develop marketing strategies for your products
 Create a sustainable competitive advantage.
 Understand where you want your brands to be in
the future, and write marketing Plans.
 Setup feedback system

MARKETING MANAGEMENT
PHILOSOPHIES
 Marketing management philosophy is a
consumer oriented philosophy aimed at
identifying and satisfying the consumer’s
needs and wants more efficiently and
effectively in a manner that organizational
goals are achieved. There are six competing
concepts under which an organization
conducts marketing activities. This
philosophy revolves around the following
concepts;

Marketing Management Philosophies
1.The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept

MARKETING ENVIRONMENT
Introduction
 This lecture deals with how marketing managers
respond to environmental changes in the marketing
environment. Marketers take the major
responsibility of identifying significant changes in
the environment. Marketers must be trend trackers
and opportunity seekers. A company or
organization’s marketing environment consists of
the actors and forces outside marketing that affect
marketing management’s ability to develop and
maintain successful transactions with its target
customers.

Marketing Environment Continues…..
 The marketing environment consists of a micro
environment and a macro environment:
 The Micro – environment of an organization can
best be understood as comprising all those other
organizations and individuals who directly or
indirectly affect the activities of the organization.
 The Macro- environment comprises general trends
and forces which may not immediately affect the
relationships that a company has with its customers,
suppliers and intermediaries, but sooner or later,
macro environmental changes will alter the nature of
these relationships.

External Environmental Factors
1. Demographic Environment
2. Economic Environment
3. Socio-cultural Environment
4. Political Environment
5. Technological Environment
6. Competitive Environment
7. International Environment

MARKETING AND SOCIETY
Introduction
 Marketing relied heavily on the society for its
success post while the society also owes its
quality of life to marketing. Generally,
marketing makes demands on the society and
the society makes demand on marketing. In
this lecture, we shall identify the underlying
relationships between marketing and society,
and the contribution of marketing to the
society, as well as the unethical marketing
practices.

Marketing and Society Continues…..
Environmental Relationship
 Marketing operates in an environment that is
external to the firm; it reacts to its environment and
is, in turn, acted upon by it. The environmental
relationships include those with customers,
employees, government, vendors, and the society as
a whole. External relationships form the basis of
the societal issues confronting marketing. Firms
marketing relationship to its external environment
has a significant effect on the degree of success it
achieves. Marketers must always find new ways to
deal with social issues facing marketing.

Contributions of Marketing to the Society:
 Improvement on the standard of living
 Massive production of Ys to meet societal demand
 Specialization of skills
 Creation of job opportunities
 Promotion of Social causes
 Growth of Gross National Product (GNP)
 Improvement of bilateral relationship between
different countries through international trade.
 Education of the consumers in the society.

Societal Problems of Marketing:
In the course of achieving societal need
(satisfaction), some unwanted output and
activities are generated consciously or
unconsciously. All the unwanted output poses
a serious problem to the society.
 Encouragement of materialism
 Environmental pollution
 Problems of implementing marketing mix

Marketing Ethics
 Shelby D. Hunt (1986) defines marketing ethics
as both the study of moral evaluation of
marketing and the standard applied in judgment
of marketing decisions, behavior and
instructions as morally right or wrong.
 O. C. Ferrell defines it as the study of right and
wrong with respect to marketing policies,
practices and systems. That it comprises
principles and standards that guide appropriate
conduct in organization.

Unethical Marketing Practices
 Un-ethical marketing practices are the kind of
practices that are deceptive, exploitative and
dangerous to human life. Unethical marketing
also means criticisms of marketing. The
various social criticism of marketing can be
classified into those alleged to hurt individual
consumers, society as a whole and other
business firms. The Areas of un-ethical
Marketing practices in Nigeria Include:

Areas of Un-ethical Practices:
 Un-ethical Marketing Practices Related to
Product
Price
Distribution
Promotion

ORGANIZATIONAL BUYER BEHAVIOR
 Introduction
 Business organizations not only sell, but they also
buy vast quantities of raw materials, manufactured
parts, installations, accessory equipment’s supplies
and business services.
 Government agencies and institutions alike also
buy one product, service or the other, in this topic,
we are going to consider business organizations and
government and institutions as another segment of
buyers - the organizational buyer. The mode of
buying by these institutions will also be analyzed.

Meaning of Organisational Buyer Behaviour
 While there are more households consumers than
organizational buyers, there are a considerable
number of people making buying decisions for their
organizations. However, there is a vast amount of
organizational buying that must be done in order
they ultimately reach the household consumers.
 Organizational buying has been defined as
decision-making process by which formal
organizations establish the need to purchase
products and services and identify, evaluate and
choose among alternative brands and suppliers.

CHARACTERISTIC OF INDUSTRIAL MARKET
 Fewer Buyers
 Larger Buyers
 Close Supplier - Customer Relationship
 Geographic concentration of buyers.
 Derived demand
 Inelastic demand
 Fluctuating demand
 Several Buying Influences

TYPES OF ORGANISATIONAL BUYERS
 There are three different types of organizational
buyers, these are:
1.The industrial market also called producer or
commercial market.
2.The seller or institutional market and
3.The government Market.

Note on Principles of Marketing I.ppt

Recommended

Recommended

More Related Content

Similar to Note on Principles of Marketing I.ppt

Similar to Note on Principles of Marketing I.ppt (20)

More from etebarkhmichale

More from etebarkhmichale (20)

Recently uploaded

Recently uploaded (20)

Note on Principles of Marketing I.ppt