PM Ch 1 An overview of Marketing & Marketing Management.pptx

DILLA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
COURCE TITLE: (MGMT 2121)
Credit Hour -3
CHAPTER ONE: An Overview of Marketing and Marketing
Management
Instructor-Aklilu M. (MBA)
2018
1
By Instructor Aklilu M.

Chapter 1: An over view of Marketing and
Marketing Management
Contents
1.1.Meaning & Scope of Marketing
1.1.1. What is Marketing
1.2.Core Marketing Concepts
1.3.Marketing Management Philosophies
1.4.Importance of Marketing
1.5. The goals of marketing System
1.6. Marketing Management Tasks
By Instructor Aklilu M. 3

Learning Objectives
After completing this chapter the student will be able to:
• Define what marketing is.
• Recognize the core concept of marketing.
• Identify the difference between need, want,& demand.
• Discuss the different philosophies of marketing
• Understand the Importance of Marketing
• Explain the goals of marketing System
• Understand the role of marketing management in the
organizations.
By InstructorAklilu M. 4

1.1.Meaning and Scope of Marketing
• Today, marketing must be understood not in the old
sense making is a sale. – “Telling and selling” – but in
the new sense it is satisfying customer needs.
• Marketing, more than any other business functions,
deals with customer.
• Understanding, creating, communicating and
delivering customer value and satisfaction are at the
very heart of modern marketing thinking and practice.
• Marketing is part of all of our lives and touches us in
some way every day.
By Aklilu M. 5

An over view of Marketing …. (cont’d…)
• Marketing functions not only deal with the production
and distribution of products and services, but also it
concerned with ethical and social responsibility
functions found in the domestic and global
environment.
• Marketing must be aware and respond to changes.
• Marketing deals with identifying and meeting human
and social needs .
• Concerning customers, the two goal of marketing is to:
i) attract new customers by promising superior value &
ii) keep current customers by delivering satisfaction.
6

An over view of Marketing (cont’d…)
1.1.1.What is Marketing
• One of the shortest definition of marketing is
“meeting needs profitably. ”
Philip kotler & Kevin Lane Keller.
• “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.”
American Marketing Association (AMA)

An over view of Marketing …. (cont’d…)
(cont’d…)
• “ Marketing is a social (managerial) process by which
individuals and groups obtain what they need and want
through creating, offering, and freely exchanging
products and services of value with others. ”
Philip kotler
• To explain this definition, we will examine the
following core concepts of marketing.
– Needs, Wants and Demands
– Marketing offers (Products, Services, idea etc)
– Value and satisfaction
– Exchange and transaction
– Relationships marketing , and
– Markets
8

9
1.2.Core concepts of Marketing
Value and
satisfaction
Needs, wants, and
demands.
Exchanges, transaction
and relationships
Markets
Core concepts
of marketing
Products (goods,
services, idea etc.)
Fig.1) Core concepts of marketing
1. Needs, wants and demands
The starting point for discipline of marketing lies in
human needs and wants.

Core concepts of Marketing(cont’d…)
 Distinguish among needs, wants, and demands.
• NEEDS: are the most basic concepts underlying
marketing. Need is a state of felt, deprivation of the
basic human requirements such as food, air, water,
clothing and shelter.
 Human needs can be categorized as follows:
a)Basic needs: it is physical needs for food, water,
clothing, and shelter safety.
b)Social needs: is belonging and affection (belonging -to
be a member of a group or organization)&(affection- a
feeling of living and caring about some one or
something)
c)Individual needs: needs for knowledge & self-
expression
By
Instructor
Aklilu
M.
10

 WANTS: - wants are desires / wishes/ for specific
satisfiers of the needs. E.g. When you get thirsty you
may want soft drinks instead of water.
• A human want is the form that a human need takes
as shaped by culture and individual personality.
 DEMAND: demands are wants for specific
products that are backed up by ability & willingness
to buy them. Wants becomes demands when backed
up by purchasing power.
• Companies must measure not only how many people
want their product but, more important, how many
would actually be willing and able to buy it.

 Need – food ( is a must )
 Want – Injera, Pizza, Burger ( translation of a need as
per our experience )
 Demand – Injera (translation of a want as per our
willingness and ability to buy )
Desire – Have Injera in a five star hotel
 Customer is anyone who is in the market looking
at a product or service for attention, acquisition,
use or consumption that satisfies a want or a need.
 Therefore, customer has needs, wants, demands
and desires. Understanding these needs is starting
point of marketing.
By
Instructor
Aklilu
M.
12

2.Marketing offers (products , services, ideas etc.)
• A product is any offering / supply/ that can satisfy a need
or want.
• It is known as a solution to customers’ problem.
• A product can be anything that can be offered to a
market for attention, acquisition, use, or consumption,
and that might satisfy a need or want.
• Offer:- Presenting something for acceptance or rejection.
To attempt to give somebody something that may be
taken or refused, usually something desirable.
• Marketing offer:-some combination of products,
services, information or experiences offered to a
market to satisfy a need or want.
By
Instructor
Aklilu
M.
13

 A product is any physical, tangible, and functional
characteristics of a good or service.
 However, in today's market, a product can be:-
– Person (soccer players)
– Organization (private firms)
– Ideas (business plans or project proposal)
– Places (leased land)
– Objects /items/
– Services (medication or barber) or mixes of these
elements.
• In general Marketing offers include:-Goods ,Services,
Events, Experiences , Personalities, Place,
Organizations, Properties, Ideas and concepts.
14

• Many sellers give more attention to their specific
products they offer than to the benefits and
experiences produced by these products.
• They focus only on existing wants and lose sight of
under lying customer needs, These sellers suffer
from “marketing myopia.”
• Marketing myopia is a short sighted view of
marketing, which focuses on the product itself
rather than the customers benefit and the
challenges presented by other products.
15

Core concepts of Marketing(cont’d…
3. Value and Satisfaction
• Value is the consumer’s estimate /expectations /
of the product’s overall capacity to satisfy his or
her needs.
• According to Derose, Value is the satisfaction of
consumer’s requirements at the lowest possible
cost of acquisition, ownership, and use.
• Value is a measure of the usefulness of a product.
• In general , Value can be defined as a ratio
between what the consumer “gets” and what he
“ gives. ”
• The offering will be successful if it delivers value
and satisfaction to the target market.

. Core concepts of Marketing(cont’d…
• Value can be seen as a combination of quality, service,
& price (QSP), called the customer value triad.
• Value increases with quality & services,& decrease
with price.
•The customer gets benefits from value and assumes costs.
•The benefits include
•functional benefits (FB) &
•emotional benefits(EB).
•The cost includes:-
•Monetary cost(MC) ,
•Time cost(TC),
• Energy cost(EC) and
•Psychic cost(PC).
By
Instructor
Aklilu
M.
17

• Thus value is given by the formula
Value = Benefit = FB + EB
• Cost MC +TC +EC +PC
• Functional benefit: - is the perceived utility acquired.
E.g. The functional benefit of any automobile is to
provide a transportation service.
•The functional benefits of cosmetics is to increase ones
personal attractiveness.
• Consumer Emotion:- Emotion is the state of felling that
you experience it through social feelings & thought.
E.g. Fear makes you to get away from the danger.
Love leads you to reach out to another people
If you angry it is difficult to restrain yourselves.
By
Instructor
Aklilu
M.
18

• Some common experienced emotions are love, joy,
surprise, anger & sadness.
 Emotional benefit is the feeling derived from a choice,
within a consumer.
• Monetary cost: the amount of money invested to get the
product/service.
• Time cost: the amount of time lost by the customer.
• Energy cost: the amount of the energy you lost to find
the product.
• Psychic cost: the chance of the product will not fit the
individual’s self- concept/ mental satisfaction/.
By
Instructor
Aklilu
M.
19

• Ways of Marketers increase customers value: -
– Raise benefit (B)
–Reduce cost ( C)
–Raise benefits and reduce costs ( B & C)
–Raise benefits by more than the raise in costs. (B >C)
–Lower benefits by less than the reduction in costs(B < C)
• Customer satisfaction depends on a product’s perceived
performance in delivering value relative to a buyer’s
expectation about a product performance.’
4. Exchange and Transaction
There is Four ways a person can obtain a product.
By
Instructor
Aklilu
M.
20

Core concepts of Marketing(cont’d
•Self- production ,Coercion ,Begging & Exchanging
a) Self-production: - is getting a product with out having
interaction/ relationship with anybody. In this case there is
no market. E.g. Hunting, fishing, gathering fruit for
consumption purpose.
b)Coercion /burglary/theft/: is getting a product by the use
of force, in this case there is no market. E.g. Stealing
c) Begging:-is getting a product politely from some body or
other party with out giving anything in return no market
d)Exchange: is the core concepts of market it involves
obtaining a desired product from someone by
offering/giving something in return.
By
Instructor
Aklilu
M.
21

• Marketing occurs when people decide to satisfy needs and
wants through exchange.
• Exchange is the act /process/ of obtaining a desired
product from other party by giving something in return.
• Conditions for exchange
– There are at least two parties
– Each party has something that might be value to the
other party.
– Each party is capable of communication & delivery.
– Each party is free to accept/reject the exchange offer.
– Each party believes it is appropriate or desirable to
deal with the other party.
• This is the sense in which exchange is described as a
value- creating process.
By
Instructor
Aklilu
M.
22

• Transaction: Exchange must be seen as a process than
an event.
• Two parties said to be engaged in exchange if they are
negotiating and moving toward in agreement.
• If an agreement is reached, we say that a transaction
takes place.
• The transaction is the basic unit of exchange.
• Transaction consists of a trade value between two
parties. We must be able to say “A” gave x to “B”&
received Y.
• A transaction can be a monetary transaction or a
barter transaction.

• A transaction (a trade of values between two parties)
is marketing’s unit of measurement.
• Conditions to involve Transaction:- there must be
– At least two things of value
– Agreed up on condition
– A time of agreement
– A place of agreement
• A monetary transaction involves money.
• A barter transaction involves commodity.
• Transaction marketing is part of a larger idea called
relationship market.

5. Relationships and Network
• Relationship marketing is the practice of building long-
term relations with key parties such as customers,
suppliers, dealers, and distributors in order to retain
their long-term business activities.
• Marketers try to build up long- term, trusting “win –
win” relation ships with them.
• This is accomplished by promising and delivering high
quality of goods, services, and fair prices to the other
party over time.
• Relationship marketing results in strong economic,
technical and social ties, among the parties. It build a
unique company asset called marketing network.
• A marketing network consists of the company and its
supporting stakeholders.
By
Instructor
Aklilu
M.
25

6. Markets
• The concept of exchange and relationships lead to
the concept of a market.
• A market is the set of actual and potential buyers of
a product.
• Traditionally, a “market” was a physical place
where buyers and sellers gathered to buy and sell
goods.

1.2.Marketing Management Philosophies
• There are 5 alternative concepts under which
organizations conduct their marketing activities.
• These concept include:-
– The production concept, The product concept , The
selling concept ,The marketing concept , and
Societal marketing concept
1. The production concept
• It holds that consumers will favor products that are
available and highly affordable (able to buy).
• Therefore, management should focus on improving
production and distribution efficiency.
• Production oriented marketers assume that consumers
are primarily interested in product availability and low
prices.

Philosophies of marketing(cont’d…)
• The production concept is useful: -
–when demand for a product exceeds the supply (D>S)
In this case the management should look for ways to
increase production. Large scale production at lower cost.
–when the product’s cost is too high and improved
productivity is needed to bring it down.
– when a company wants to expand its market.
– In developing countries, where consumers are more
interested in obtaining the product than its features/ quality.
• Although useful in some situation, the production concept
can lead to marketing myopia. Companies adopting this
orientation run on focusing too narrowly on their own
operations and losing sight of the real objective satisfying
customers’ needs.
By
Instructor
Aklilu
M.
28

2. The product concept
• The product concept holds that consumers will favor
products that offer the most in quality, performance,
and innovative features. Refers to producing good
quality and high performance product.
• Thus, an organization should make continuous product
improvements.
• Under this concept, managers assume that buyers will
favor well-made products and appraise product
quality and a performance.
• Product oriented companies often design their products
with little or no consumer input, this leads to marketing
myopia (a short sighted view of marketing which
focuses on the product itself rather than the customers
benefits).
By
Instructor
Aklilu
M.
29

Philosophies of marketing (cont’d…)
3. The selling concept
The selling concept holds that consumers and businesses
will not buy enough of the organization’s products
unless it undertakes a selling in large-scaled
promotion effort (advertising, personal selling, public
and sales person). Refers to sell what you have produced.
• The organization must therefore, undertake an
aggressive selling and promotional effort.
• This concept assumes that consumers usually show
buying inertia (a feeling of not to buy) and must
persuaded into buying.
• It also assumes the company (sellers) has effective
selling and promotional tools (advertising, salesperson,
personal selling and public relations) to stimulate more
buying.
By
Instructor
Aklilu
M.
30

• The common features of the selling concept:-
–It is typically practiced with unsought goods (goods
that buyers normally do not think of buying, such as
insurance, encyclopedias etc)
–To be successful with this concept, the organization
must be good at finding prospects and selling them on
product benefit.
– 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 or
customers need.
–Such marketing carries high risk. It focuses on
creating sales transaction rather than on building
long- term relationships and also customers set
low satisfaction.

4. The marketing concept
• The marketing concept emerged in the mid – 1950.
• Instead of a product-centered, (make and sell)
philosophy, the marketing concept shifts to a
customer- centered, (sense and respond) philosophy.
• The marketing concept holds that achieving
organizational goals depends on knowing the needs
and wants of target markets and delivering the
desired satisfactions more effectively and efficiently
than competitors do.
• The company should be more effective than its
competitors in creating, delivering, and
communicating customer value to its chosen markets.
• By Instructor Aklilu M. 32

• The marketing concept has been expressed in
many colorful ways:-
– Meeting needs profitably
– Find wants and fill them
– Love the customers, not the product.
• The marketing concept based on four pillars
(principles)
– Target market
– Customer needs
– Integrated marketing and
– Profitability

A. Target market: -
• A set of buyers sharing common need or
characteristics that the company decides to serve or a
group of customers (people or organizations) for
whom a seller designs a particular marketing mix
(product, place, promotion and price).
• Then companies do best when they choose their target
markets carefully and prepare tailored (designed)
marketing programs.
B. Customer needs: -
The key to professional marketing is to understand
their customers’ real needs and meet them better than
any competitor can do.
By InstructorAklilu M.
34

• Why is it important to satisfy a customer?
• Because a company’s sales each period comes from
two groups. New customers and Repeat customers.
• It is more costly to attract new customers than to
retain current customers.
• Therefore, customers retention is more critical than
customer attraction.
• The key to customer retention is customer satisfaction.
• A satisfied customer;
– Stays loyal longer (for along period of time)
– Buys more as the company introduces new products
and up grades
35

– Takes favorably about the company and its products
– Pays less attention to competing brands and is less
sensitive to price. Thus, a company would be wise to
check on customer satisfaction.
C. Integrated marketing
• Integrated marketing results when all of the company’s
departments work together to serve the customers.
• Company’s departments are: R & D, Sales, logistics
/distribution, Purchasing ,Accounting , Manufacturing ,
Finance , Marketing , Public relations etc.
By InstructorAklilu M.
36

• Integrated marketing takes place on two levels.
• First, the various marketing functions (sales force,
advertising, customer service, product mgt, marketing
research) must work together.
• Second, marketing must be embraced (included) by
the other departments; they must also “think
customers".
• External marketing: - is marketing directed at people
out side the company.
• Internal marketing: - is the task of hiring, training,
motivating employees who want to serve customers
well.

D. Profitability
• The ultimate purpose of the marketing
concept is to help organizations to achieve
their objectives. In the case of private firms,
the major objective is long- term profitability,
in the case of not- profit and public
organizations; it is surviving and attracting
enough funds to perform useful works.
• Contrast Between the sales concept and the
marketing concept. (By Theodore Levitt)

Starting point Focus Means Ends
Factor
(Sellers) Product
Selling and
Promoting
Profits through
sales volume
The marketing concept
Target Marketing
(Buyers)
Customer
needs
Integrated
Marketing
Profits through
customer satisfaction
•N.B:-Selling focuses on the needs of the seller
• Marketing focuses on the needs of the buyer
• Selling is preoccupied with seller’s need to convert
his product into cash.
• Marketing is preoccupied with the idea of satisfying
the needs of the customer by means of the product .
The sales concept
39

5. The societal marketing concept
• A revised version of the marketing concept concerned
– with customers & other people directly affected by
its operations,
– with tomorrow and also the long term.
– the organizations task to determine the needs,
wants, and interests of target markets and
– delivering the desired satisfaction more
effectively and efficiently than competitors to
enhances the consumer’s & the society’s well-being.
• It calls up on marketers to build social and ethical
considerations in to their marketing practices.

• They must balance the often-conflicting criteria of
company profits, consumer want satisfaction, and
public interest.
• The marketing concept and a company’s social
responsibility are compatible if mgt strives over
the long ran to:-
– Satisfy the wants of its product buying
customers
– Meet the societal needs of others affected by
the firm’s activities.
– Achieve the company’s performance
objectives.

1.3.Importance of Marketing
• Marketing is a very important aspect in business since it
contributes greatly to the success of the organization.
Production & distribution depends largely on marketing.
• Marketing covers advertizing, promotion, public relation
and sales.
• So marketing have the following importance
–Marketing promotes product awareness to the public
–Marketing builds company reputation
–Marketing helps boost product sales
–Marketing helps boost product sales and revenue growth
whatever your business selling;
–Marketing generate sales once the public learns about
the product through TV, Radio, Newspaper online
advertisement and other forms of Marketing. 42

1.4.The goals of marketing System
• Marketing is not a one time activity it is a continuous
process and affects different parties with different
interests. The marketing system generally has 4 goals.
1.Maximizing consumption- marketing stimulates
maximum demand. Maximum consumption intern
maximize production, employment and wealth.
2.Maximizing Satisfaction-Owning one product gives
sense when it maximized satisfaction to customers, by
creating and providing quality &variety products.
3. Maximizing choices- provides varieties. As a result the
consumer will find products that fit to their exact test.
4.Maximizing life quality—the participation of marketing
system in environmental protection maximize the
quality of life of consumer.
By
Instructor
Aklilu
M.
43

1.5.Marketing Management Tasks
• Marketing Management refers to management of
activities relating to marketing. It include planning,
organizing, staffing, directing & controlling function.
• Strategic marketing management is concerned with how
the firm will create value for the customer
It asks two main questions:
 What is the organization’s main activity at a particular
time? – Customer Value
 What are its primary goals and how will these be
achieved? – how will this value be delivered
By
Instructor
Aklilu
M.
44

Marketing Management (cont’d…)
 Strategic marketing management Consists of 4 steps:
– Analyzing marketing environment/opportunities
– Selecting target market
– Developing marketing-mix, and
– Implementation & control .
 Strategic Planning:- is the managerial process of
creating and maintaining a fit between the
organization’s objectives and resources and developing
market opportunities.
 It is also called Strategic Management Process.
 Strategic marketing planning begins with the analysis
of marketing environment.
 This include Internal Environment Analysis and
External Environment Analysis.

1.5.1. Internal and External Environment Analysis
Strength, Weakness, Opportunities and Threats
(SWOT) analyses is a useful way of summarizing the
company's internal and external marketing
environment.
• It help to show where there is a good fit between an
organization’s strength and opportunities, and where
there are threats, which may expose areas of
weakness.
• SWOT is a strategic planning tool to evaluate the
strength, weakness, opportunities and threats in
business organization.
46

The aim of SWOT analysis is:-
 to identify the key internal &external forces that
are important to achieving the objective, Strategy
position,& direction of a company or business.
 to understand and making-decision for all sorts
of situations in business and organizations.
It is Used for business planning, strategic planning,
competitor evaluation , marketing , product
development and research and
It enables proactive thinking, rather than relying
on reactive or instinctive reactions.
47

Strength:-A firm’s strengthens are its resources &
capabilities.
• Resources are the firm’s specific assets useful for
creating a cost or differentiate advantage.
• Capabilities refer to the firm’s ability to utilize its
resources effectively.
• These competencies enable innovation, efficiency,
quality, and customer responsiveness.
• Examples of a firm’s strength can be:
– Strong brand names, Good reputations
– Cost advantage , Product innovation
– Right products, quality and reliability.
– Better product life and durability.
– Direct delivery capability 48

 Weakness
• Is a limitation of in resources, skills, and capabilities
that seriously impedes effective performance.
• Examples:-
– Lack of patent protection, A weak of brand name
– High cost structure , Poor reputation among
customers
– gaps in range for certain sectors, and Limited
budget.
 Opportunities
• Is a major favorable situation in the firm’s environment.
The external environmental analysis may reveal certain
new opportunities for profit and growth.
49

 Examples of Opportunities
– An unfulfilled customer need , Arrival of new
technologies , Removal of international trade barriers ,
New specialist applications could develop new
products, Local competitors have poor products and
Profit margins will be good.
 Threats:- are a major unfavorable situation in the firm’s
environment. It is a key impediment to the firm’s current
or future position. Examples of threats include:-
– Shifts in customer tastes away from the firm’s products,
– Emergence of substitute products ,New regulations,
Increased trade barriers, Legislation could impact,
Environmental effects that favor larger competitors,
distribution risk and seasonal market demand 50

• Marketers must consider how proposed
programs will affect the environment as well
as how the environment will affect the
programs.
• Consequently, one of the most important but
increasingly difficult parts of a marketing
managers job is
– monitoring the environment
– predicting how it might change
– developing marketing strategies and
– suiting plans to environmental conditions.
51

52
The Strategic-Planning, Implementation, and Control
Process

53
Business
Mission
Statement
Objectives
Situation
or SWOT
Analysis
Implementation
Evaluation, Control
Target Market
Strategy
Marketing Strategy
Product
Promotion
Place/Distribution
Price
Marketing Mix

Principle of Marketing
By Aklilu M. 54
Work SMART Not Hard !!!

PM Ch 1 An overview of Marketing & Marketing Management.pptx

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