Module 1: Introduction to Marketing Management 1

MODULE 1
Introduction to Marketing Management

Learning Outcomes:
At the end of this module, students will be able to:
 define marketing management
 discuss the concepts and importance of marketing management
 explain the nature and importance of service marketing
 identify characteristics of service marketing
INTRODUCTION

If you ask the average person “What is Marketing?” he or she might respond in one of the
following ways:

 Marketing is sales or advertising

 Marketers make people buy stuff they don’t need and can’t afford.
 Marketers are the people who call you while you’re trying to eat dinner.

These comments are probably all deserved, we have to own up to the fact that our
profession, like any other, has its unsavory members. This module overviews marketing
concepts and terms, beginning with marketing and its vital role in today’s corporation.

“Marketing is an exchange between a firm and its customers”.

What is Marketing?

Market is derived from the Latin word “Marcatus” meaning goods or trade or a place
where business is conducted.
Marketing has been defined in various ways:

 Marketing is defined as a ‘business activity planned at satisfying to a

reasonable extent, consumer or customer needs and wants, generally through
an exchange process’.
 Marketing is a social & managerial process by which individuals & groups
obtain what they need & want through creating, offering, & exchanging
products of value with others.
 In a narrower business context, marketing involves building profitable, value –
laden exchange relationships with customers.
 Marketing as the process by which companies create value for customers &
build strong customer relationships in order to capture value from customers in
return.

What is Marketing Management?

 Philip Kotler - is an American marketing author, consultant,

professor and was named as the Father of Modern Marketing. He
defines Marketing as Social & Managerial process by which
Individuals & Groups obtain what they Need and Want through
Creating, Offering and Exchanging products of the Value other”.

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 Peter Drucker - an Austrian-born American management

consultant, educator, and author defines Marketing as a social
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. For a managerial definition,
marketing has often been described as “the art of
selling products.
 The American Marketing Association (AMA) -
Marketing is the process of planning and executing the
conception, pricing, promotion, & distribution of ideas,
goods, & services to create exchanges that satisfy
individual and organizational goals.

The Marketing Process Model

“Create value for customers & build Customer relationship”

Evolution of Marketing

The foundations of marketing in America were laid in Colonial times, when the settlers
traded among themselves & with the Native Americans. Some settlers became retailers,
wholesalers, & itinerant peddlers. However, large-scale marketing in the U.S. did not
begin to take shape until the Industrial Revolution in the latter part of the 1800s. Since
then, marketing has evolved through 3 successive stages of development:
Three Stages of Marketing Evolution

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Three Stages of Marketing Evolution

1. Product – Orientation Stage

Similar to production orientation, the product orientation of marketing focuses

solely on the product a company intends to sell. This orientation was popular during
the 1950s and into the 1960s. A firm employing a product orientation is chiefly
concerned with the quality of its product. A firm such as this would assume that as
long as its product was of a high standard, people would buy and consume the
product. This approach stresses the research and development of products and the
continuous evolution during their life cycles, in order to maintain the attention of
potential customers. Under the product orientation, management focuses on
developing high quality products which can be sold at the right price, but with
insufficient attention to what it is that customers really need and want.

The main task of an organization utilizing the product orientation approach is to

continue improving quality and reducing costs as key factors in the fight to maintain
and attract customers.

Adopting the product orientation can be advantageous to a company, due to the

fact that the cost of determining consumer preferences and the development of new
products and services are minimized or eliminated because consumers are in some
way captive. As soon as a competing company can offer a product more oriented to
the satisfaction of customers’ needs and desires, the companies undertaking product
orientation will lose most if not all of its market share.

2. Sales – Orientation Stage

A firm using a sales orientation focuses primarily on the selling and promotion of
a particular product. The successful management of the relationship between the
company and its customers defines the act of sales or selling. It creates value for
customers. Emphasis is not placed on determining new consumer desires, as such.
In today’s realm of marketing, selling has developed into a holistic business
system required to effectively develop, manage, enable, and execute a mutually
beneficial, interpersonal exchange of goods and services for equitable value. In other
words, the importance of selling makes it indispensable to modern business, and it
has subsequently evolved into a complex system. Effective selling requires a systems
approach, at minimum involving roles that sell, enable selling, and develop sales
capabilities.
3. Market – Orientation Stage

Marketing orientation is a business model that focuses on delivering products

designed according to customer desires, needs, and requirements, in addition to
product functionality and production efficiency.
Competitive analysis is also a significant component of market orientation.
Generally, companies gather this information using market research, consumer
surveys, and focus groups with prospective customers to identify needs, preferences,
as well as competitor strengths and weaknesses. Since its introduction, marketing
orientation has been reformulated and repackaged under numerous names including
customer orientation, marketing philosophy, and customer intimacy.
Components which define a marketing orientated organization includes, (a)
Customer orientation, (b) Competition orientation, (c) Interfunctional coordination. The
most important focus in a market-orientated business is the customer. One of the
primary goals of marketing-oriented or customer-oriented businesses is long-term
profitability. Nevertheless, organizations that follow a marketing orientation model
realize that delivering superior customer value through product innovation, as well as
products and services tailored to customer needs, directly correlates with generating
revenue.

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Importance of Marketing

Marketing Concepts

This is a business philosophy that challenges the above three business

orientations. Its central tenets crystallized in the 1950s. 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. The marketing
concept rests on four pillars: target market, customer needs, integrated marketing
and profitability.
Core Concepts of Marketing
1. Needs, Wants and Demands

Most basic or core concept of fundamental marketing is that of human

needs, wants and demands. These are explaining below.
A. Needs - identifying of unfulfilled needs is the pre-condition of making
successful of marketing activities. Marketers try to satisfy the needs of
customers. Human needs are the one kind of deprivation of one thing of basic
satisfaction. For example, food, clothing, warmth, safety, shelter etc.

B. Wants - are the options of satisfying needs that shaped by culture and
individual personality. Human beings must require food but what type of food
they will take that is depended on cultural and social of individually. One
person may like a burger but another person might like rich food. Maximum
satisfaction of customers need depends on the quality of a product.

C. Demands – is the ability and willingness of consumers to buy the products.

In demand, there is a vital relation with time. Not all wants are transfer into
demand. The wants become demand when the wants are supported by ability
and willingness to buy. Need is a one kind of wish, want is a selected process
of need and the selected thing when it fulfill the ability and willingness then it
became the demand.

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2. Marketing Offerings

Marketing Offering is that making ensuring of consumers’ satisfaction.

Marketing offer is one kind of offer that marketer makes as per requirements
of a consumer. The marker tries to offer standard product that satisfy the need
of a consumer in terms of quality, quantity, price etc. Marketing offering can
be ‘tangible’ or intangible’. The marketing offering is explaining below.

A. Products - is a thing that give the satisfaction of customers. It is provided

the satisfaction of physical and psychological both. Actual, product features
are color, branding, packaging, labeling etc. There are two kinds of product is
available that are tangible and intangible. Marketing consider product benefits
and services. Therefore, product is very important for marketing offering
because marketing offering is fully dependent on product.

B. Services - all kinds of things that are offered to a market to satisfy human
needs or human wants or consumers that is called Services. Service is a work
or benefit that is given to one party to other party. Service is intangible. For
example, service of doctor, lawyer, mason, tailor, hotel service, training
service, security service, entertainment service, beauty parlor service etc.

C. Experiences - is acquired real knowledge about anything. Experience is

to do, to see, to feel something by acquired knowledge or skilled. The
company wants his experience to do better in future. By using experience
company ordered to manager to make marketing process. Experience in
marketing has an experimental value. Normally in business, experience is
very important. A company provides more facility or increase salary or gives
promotion of manager or other employee only for experience.
3. Value and Satisfaction

Value and satisfaction is very important on marketing core concept. They

are explained below in details.

A. Value - is the capacity of a product or service. Normally value is determined

by the level of satisfaction of customers.

B. Satisfaction - is like a desire of mind that cannot be measured or it cannot

be quantified. Actual, the purpose of marketing is the satisfaction of customers
by creating value of a product and make a long-term relationship to
customers. The satisfaction of customer is also depended on quality of the
product or the quality of the service provided.
4. Exchanges and Relationships
Exchange and relationship is always very important in core concept of
marketing. Exchanges and relationships are explained in below in details.

A. Exchanges - is very basic concept of marketing. In fact, another name of

marketing is exchange. It is one kind of activity that creates value and this
value is provided to other party. In exchange money is always needed.
Without money the exchange process is not possible. Every company,
products are exchange for money. Marketers provide product, service and
idea to the customers in exchange of money.
B. Relationship Marketing - Customer is the king in the business. If you
want to grow up your business, you have to create a good relationship to
customer. It is a form of marketing developed from direct response
marketing campaigns that emphasizes customer retention and satisfaction
rather than sales transactions.

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5. Market

Marketing follows market. Market is a set of present and future buyer. Market
is a place where buyers and sellers are come in touch with detailed information
about what sellers are offer and what buyers are ready to buy. Some people do
not say that in market a place should stay. But a market is where different types
of transactions happen that is also call market. In market, the goods flow from the
sellers to the buyers and money flow from buyer to reach sellers to complete the
exchange.

What is Service Marketing?

Service marketing is marketing based on relationship and value. It may be

used to market a service or a product. With the increasing prominence of services
in the global economy, service marketing has become a subject that needs to be
studied separately. Marketing services is different from marketing goods because
of the unique characteristics of services namely, intangibility, heterogeneity,
perishabil-ity and inseparability.

In most countries, services add more economic value than agriculture, raw
materials and manu-facturing combined. In developed economies, employment is
dominated by service jobs and most new job growth comes from services.
The American Marketing Association, defines services as activities, benefits,
or satisfactions that are offered for sale or provided with sale of goods to the
customer, that is, pre-sale and after-sales services. Berry states, ‘while a product
is an object, devise or physical thing, a service is a deed, performance, or an
effort’.
Characteristics of Service Marketing
1. Intangibility

A physical product is visible and concrete. Services are intangible.

The service cannot be touched or viewed, so it is difficult for clients to tell
in advance what they will be get-ting. For example, banks promote the
sale of credit cards by emphasizing the conveniences and advantages
derived from possessing a credit card.

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2. Inseparability

Personal services cannot be separated from the individual. Services

are created and consumed simultaneously. The service is being produced
at the same time that the client is receiving it; for example, during an online
search or a legal consultation. Dentist, musicians, dancers, etc. create
and offer services at the same time.
3. Heterogeneity (or variability)

Services involve people, and people are all different. There is a strong
possibility that the same enquiry would be answered slightly differently by
different people (or even by the same person at different times). It is
important to minimize the differences in performance (through training,
standard setting and quality assurance). The quality of services offered
by firms can never be standardized.
4. Perishability

Services have a high degree of perishability. Unused capacity cannot

be stored for future use. If services are not used today, it is lost forever.
For example, spare seats in an aeroplane cannot be transferred to the
next flight. Similarly, empty rooms in five-star hotels and credits not
utilized are examples of services leading to economic losses. As services
are activities performed for simultaneous consumption, they perish unless
consumed.
5. Changing demand

The demand for services has wide fluctuations and may be seasonal.
Demand for tourism is seasonal, other services such as demand for public
transport, cricket field and golf courses have fluctuations in demand.
6. Pricing of services
Quality of services cannot be standardized. The pricing of services is
usually determined on the basis of demand and competition. For example,
room rents in tourist spots fluctuate as per demand and season and many
of the service providers give off-season discounts.
7. Direct channel

Usually, services are directly provided to the customer. The customer

goes directly to the service provider to get services such as bank, hotel,
doctor, and so on. A wider market is reached through franchising such as
McDonald’s and Monginis.
Problems in Marketing Services:

1. A service cannot be demonstrated.

2. Sale, production and consumption of services takes place
simultaneously.
3. A service cannot be stored. It cannot be produced in anticipation of
demand.
4. Services cannot be protected through patents.
5. Services cannot be separated from the service provider.
6. Services are not standardized and are inconsistent.
7. Service providers appointing franchisees may face problems of quality
of services.

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8. The customer perception of service quality is more directly linked to

the morale, motivation and skill of the frontline staff of any service
organization.
Importance of Service Marketing
In most industrialized economies, expenditure on services is growing due to:

a. Advances in technology that has led to more sophisticated products that

require more services.
b. Growth of per capita income has given rise to a greater percentage of
income being spent on luxuries such as restaurants, overseas holidays,
etc.,
c. A trend towards outsourcing means that manufacturers are buying
services that are outside the firm’s core expertise (warehousing, catering).
d. Deregulation has increased level of competition in certain service
industries like telecom.
e. Due to growth in per capita income, people are buying more goods, which
has contributed to making retailing an important service.

THE MARKETING FRAMEWORK

5Cs STP 4Ps

Customer Segmentation Product

Company Price
Targeting
Context
Place
Collaborators
Positioning
Promotion
Competitors

Self-Help: You can also refer to the source below to help you further
understand the lesson

References:
Iacobucci, Dawn (2012), Marketing Management 2nd Edition, C & E
Publishing, Inc., 839 EDSA, South Triangle, Quezon City, Philippines

Kotler, Philip (2010) Marketing Management 9th Edition & Principles of

Marketing 11th Edition

ASSESSMENT TASK
Multiple Choices: Read each item carefully. Write the letter of your answer on the space
provided before the number.
_____1. What is the most basic concept of essential marketing?
A. Needs C. Demand
B. Wants D. All of the above
_____ 2. What is the ultimate aim of the marketing?
A. To provide more business to the company
B. To provide more profit
C. To provide more staff
D. To provide more production

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_____ 3. Which of the following statements about marketing is true?

A. Marketing is only about communication.
B. Marketing is frequently described as the “art of selling products”.
C. Marketing and selling are the same.
D. Marketing efforts aim at getting, keeping, and growing customers.

_____ 4. It can be ‘tangible’ or intangible’. What is it?

A. Values and Satisfaction C. Relationship Marketing
B. Exchange of Goods for Money D. Marketing Offerings
_____ 5. Where do satisfaction of customer depends on?
A. quality of the product provided C. salary
B. attitude of the food controller D. time and place
_____ 6. It has been reformulated and repackaged under various names including customer
orientation, marketing philosophy, and customer intimacy. What is it?
A. Marketing Concept C. Sales Orientation
B. Marketing Orientation D. Service Marketing
_____ 7. Which of the following businesses would be characterized as a pure service?
A. Farming C. Mining
B. Insurance D. None of these
_____ 8. Services are characterized by all of the following characteristics, EXCEPT ONE.
A. Intangibility C. Homogeneity
B. Direct channel D. Perishability
_____ 9. What is the unique service characteristic that deals specifically with the inability to
inventory services?
A. Intangibility C. Variability
B. Inseparability D. Perishability
_____ 10. Is the attained real knowledge about anything, what is it?
A. Product C. Experience
B. Services D. Relationship

In a Nutshell!
In this part, you will be required to draw conclusion, perspective, argument, and idea.

“Why is Marketing Important?”

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MM101 – Marketing Management