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Principles of Marketing Chapter 1

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Principles of Marketing Chapter 1

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Principles of Marketing Chapter 1

  1. 1. OVERVIEW OF MARKETING:AN INTRODUCTION Principles of Marketing 1
  2. 2. Chapter Objectives At the end of the chapter, the student is expected to: Explain the meaning of Marketing; Describe the stages of Marketing thought; Understand the behavioral concepts relevant to Marketing; Discuss the goals of Marketing; Describe the traditional approaches to marketing; and Identify and explain contemporary marketing approaches. 2
  3. 3. Introduction Marketing started in the early part of the twentieth century (between 1900 and 1910) out of questions and issues neglected by its mother science, economics. In the early years of study and teaching of trade practices, the word “marketing” was not used. Instead, “trade,” “commerce,” and “distribution” were the common operations of the area to which the term “marketing” is identified today. 3
  4. 4. 1 - 4 Stages of Marketing Thought  1900-1910 Period of Discovery. In the early years, teachers of marketing sought facts about the distributive trades. The concept of “marketing” occurred, thus, the terminology was given to it.  1910-1920 Period of Conceptualization. Many marketing concepts were initially developed. Its concepts were classified, and terms were defined.  1920-1930 Period of Integration. Principles of marketing were postulated, and the general body of thought was integrated for the first time.  Paul W. Ivey was the first to use as a book title Principle of Marketing, although others and previously used “principles” in connection with advertising, retailing and credit granting.4
  5. 5. Stages of Marketing Thought 1930-1940 Period of Development. Specialized areas of marketing continued to be developed, hypothetical assumptions were verified and quantified, and some new approaches to the explanation of marketing knowledge. 1940-1950 Period of Reappraisal. The concept and traditional explanation of marketing was reappraised in terms of new needs for marketing knowledge. 1950-1960 Period of Reconception. Traditional approaches to the study of marketing were supplemented by increasing emphasis upon managerial decision making, the societal aspects of marketing, and quantitative marketing analysis. 5
  6. 6. Stages of Marketing Thought 1960-1970 Period of Differentiation. As marketing expanded, new concepts took on substantial identity as significant components of the total structure of thought. 1970 Period of Socialization. Social issues and marketing became much more important. It is the influence not of society upon marketing, but of marketing upon society that became a focus of interest. 6
  7. 7. What Is Marketing? Simple Definition: Marketing is managing profitable customer relationships. Goals: 1. Attract new customers by promising superior value. 2. Keep and grow current customers by delivering satisfaction. 7
  8. 8. Marketing Defined 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. OLD View of Marketing: Making a Sale – “Telling & Selling” New View of Marketing: Satisfying customer needs NEW View of Marketing: Satisfying Customer Needs 8
  9. 9. Marketing as One of the Functions in Business Organization A simple business organization consists of the following functions: 1) finance and accounting, 2) human resource management, 3) production and materials management, and 4) marketing 9
  10. 10. Functions in Management The different functions of managers in a business organization are as follows: planning, organizing, staffing, directing/supervising, and evaluating of personnel, plans and programs in the different departments of the company. 10
  11. 11. Marketing as a Management Function Marketing is a part of four key management functions – Marketing, Production, Finance, and Human Resource 11
  12. 12. Behavioral Concepts Marketing Thought From anthropology (Community in entirety) Culture Subculture Comparative approach Climate for business Market Research Culture restraints Word association Communication Retailing structures From Sociology (individuals in relation to other individuals) Social class Social differentiation Status crystallization Reference groups Informal groups Social role The family Individuals Institutions Market segments Social class awareness New product acceptance Shopping behavior Communication Leisure Groups, product, brands Aspirations References Status conflict Personal influence Decision making Life cycle Behavioral Concepts Relevant to Marketing 12
  13. 13. From Psychology (Centers on the individual)  Motivation  Drives  Cognitive dissonance  Achievement  Affiliations  Hierarchy of motives  Perception  Orientation  Scope  Thresholds  Perceptual function  Mechanics of vision  Time  Selective perception  Classical and operant learning  Serial learning  “Insight”  Learning of concepts  Attitudes  Motivation  Risk reduction  Ego  Self-image  Concept generalization  Brand choice From Political Science Power groups Values Trade associations Public policy Behavioral Concepts Relevant to Marketing 13
  14. 14. Goals of Marketing The four goals of a marketing system: maximize consumption, maximize consumer satisfaction, maximize choice, and maximize life quality (Kotler 2000) 14
  15. 15. 3Cs Key Objectives 1. Customers To satisfy the needs, wants and expectations of target customers. 2. Competition To outperform competition. 3. Company To ensure corporate health and profit. Marketing: The Strategic 3Cs Concept 15
  16. 16. Contemporary Marketing Approaches With the maturation of marketing thought, approaches to the analysis of marketing were advanced. The following are some of the approaches and concepts in marketing: 1) marketing mix; 2) conceptual approach; 3) systems or holistic approach; 4) marketing management; 5) macro-marketing; 6) social marketing; and 7) comparative marketing. (Llanes and Jurado: 1980)16
  17. 17. The Marketing Mix The marketing mix developed by E. Jerome McCarthy (McCarthy 1975:44) consists of 4Ps – product, price, place, and promotion – all of which influence buyer’s decision and responses. Each Ps relates to and is dependent on every other Ps. The Ps are controllable variables that a company may use in mapping a successful marketing strategy. Below is the formula for marketing success (Schwartz 1977:67): 17
  18. 18. Product (desirable) Promotion (Effective) Price (affordable) Place (Availability) Consumer Consumer Below is the formula for marketing success (Schwartz 1977:67) 18
  19. 19. Conceptual Approach This approach studies ideas of marketing rather than the activities of marketing. Its emphasis is on theoretical analysis and development of new concepts whether of consumer, products, marketing institution, functions, processes, or policies. The concept of marketing is more important than the definition of marketing. The conceptual approach is recognized when marketing is defined to bring out various ideas for which “marketing stands.” 19
  20. 20. Systems (Holistic) Approach A system is a set of interacting or interdependent groups coordinated to form a unified whole and organized to accomplish a set of goals (Markin 1979:28). Thus, marketing is perceived as whole, interdependent units, the marketing process conceptualized as “flows” and the marketing structure as “systems” (Bartels 1976:202). 20
  21. 21. Marketing Management This concept is a managerial approach to marketing. It emphasizes marketing management as a decision making process and how decision makers, specifically the marketing manager, handles specific marketing problems and situations. Marketing activities and strategies are evaluated and developed to achieve specific management objectives. The approach establishes the position of the “marketing manager” as a top- level position in a company’s organization. 21
  22. 22. 1 - 22 Macro Marketing Approach Macro Marketing is the study of marketing activities, institutions, and processes from the national (societal) perspective. It looks at the aggregate flow of goods and services in an economy to determine if it benefits the society in terms of its resource consumption and environmental effects. 22
  23. 23. Social Marketing Kotler and Andreason – Social Marketing as “differing from other areas of marketing only with respect to the objectives of the marketer and his or her organization. Seeks to influence social behaviors not the benefit the marketer, but to benefit the target audience and the general society. 23
  24. 24. Comparative Marketing Focus on the systematic study of similarities and differences between national marketing systems across time, space and sectors for the purpose of theory-building and theory. 24

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