PRINCIPLES OF MARKETING

CHAPTER ONE
1. An overview of Marketing and
Marketing management

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 At the end of this chapter students are expected
to:
• Define what marketing and marketing
management is
• Recognize the core concept of marketing
• Discuss the different philosophies of marketing
mgt
• Understand the objectives of marketing in
organizations
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 1.1 Marketing and its core concepts
What is Marketing?
• Marketing is the economic process by which
goods and services are exchanged between the
producer and the consumer and their values
can be determined in terms of money price.

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Marketing definition and concept Cont’d…

• According to Philip Kotler, Marketing is 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.
• Marketing is about understanding customers needs and finding
ways to provide products or services which meet customers
demand.
• Marketing is a ways of deliver customer satisfaction at profit.
How?
By:- 1)attracting new customers by promising better value
2) keep current customers
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 1.1.1 Core concepts of Marketing

Needs, wants & demands

Needs
 A state of felt deprivation or deficiency
 Basic human requirements
 Needs are natural, all human beings have the same type
of need irrespective of their culture, economic and other
conditions.
 All human beings have need for food, for clothing, for
sheltering .
Wants
• need for specific want that satisfying product
(e.g food hamburger , injera ) 5
 Demands
• It is Human wants that are backed or supported
by buying power.
• In marketing the marketers should identify the
needs and wants of consumers and customers
need to have money to buy or not.
Marketing offers
• It is a Combinations of products( goods,
services, information , idea or experiences)
that offered to a market to satisfy a need or
wants of consumers.
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 Product (Goods, Services, and Ideas)
• People satisfy their needs and wants with products.
• A product is any thing that can be offered to market to
satisfy a need or want.
• The concept of product is not limited to physical
objects but also it includes intangible goods such as ,
service(s), and idea(s) which may be activities or
benefits to customers.

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Value and satisfaction
• Consumers usually face a broad collection of
products and services that might satisfy a given need.
• Customer value is the difference between the value
of customer gains from owning and using a product
and the costs of obtaining the product.
• Customer Satisfaction depends on a product’s
perceived performance in delivering value relative to
buyer expectations.

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 Exchange:
• Marketing occurs when people decide to satisfy
needs and wants through exchange.
• Exchange is the act of obtaining a desired product
from someone by offering something in return.
• It is only one of the ways that people can obtain what
they need.
• A person may get what he needs by begging others,
hunting, robbing etc but this is not considered as
exchange.

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Markets
 It is place (virtual or physical) where buyers
and sellers meet each other.
 The concept of exchange leads to the concept
of a market.
• The place of potential and actual buyers of
products .

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 Marketing Management
What is marketing management ?
 Marketing management is the practice of planning and
executing the notion of pricing ,promotion and
distribution of products and services to create
exchange that satisfies individuals and organizational
goals.
 In light with this ,marketing manager is the one who
responsible for all the activities in the marketing system
and there by increasing the demand(acceptability ) of
the company products in the market.

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• That is why some times marketing
management is considered as demand
management .
• In demand management marketers must deal
with different demand states ranging from no
demand to too much demand.

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 Demand States and Their Respective
Marketing managers Tasks:-
Negative demand
• A market is in a state of negative demand if a major
part of the market dislikes the product and may
even pay a price to avoid it.
• The marketing task is to analyze why the market
dislikes the product and then try to change the
attitude of customers.
• This kind of marketing strategy is referred to as
Conversion marketing as it involve changing
attitude.
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 No demand
• Target consumer may be unaware of or
uninterested to use the product.
• The marketing task is to find ways to connect
the benefits of the product with the person's
natural needs and interests.
• This kind of marketing strategy is called
Simulative marketing

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 Latent or Hidden demand
• Consumers may share a strong need that cannot
be satisfied by and existing product.
Ex There is a strong latent demand for harmless
cigarettes and more fuel-efficient cars.
• The marketing task is to measure the size of the
potential market and develop effective goods
and services that would satisfy the demand
• The marketing strategy is called
developmental marketing
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 Declining demand
• Every organization, sooner or later, faces declining
demand for one or more of its products, Churches
have seen their memberships decline, and private
colleges have seen their applications fall.
• The marketer must analyze the causes of market
decline and determine whether demand can be re
stimulated by finding new target markets,
changing the products features, or developing
more effective communication.
• The marketing task is to reverse the declining demand
through creative remarking strategy of the product.
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 Irregular demand
• Many organizations face demand that varies
on a seasonal, daily, or even hourly basis,
causing problems of idle or overworked
capacity. Ex. Museums are under visited on
weekdays and overcrowded on weekends.
• The marketing task, called syncro-marketing,
is to find ways to after the same pattern of
demand through flexible pricing,
promotion, and other incentives.
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 Full demand
• Organizations face full demand when they are
satisfied with their volume of business.
• The marketing task is to maintain the current level
of demand in the face of changing consumer
preferences and increasing competition.
• The organization must maintain or improve its
quality and continually measure consumer
satisfaction to make sure it is doing a good job
through the so called maintenance marketing
strategy .
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 Over full demand
• Some organizations face a demand level that is
higher than they can or want to handle.
• The marketing task, called demarkating ,
requires finding ways to reduce the demand
temporarily or permanently.

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Unwholesome demand
• Unwholesome products will attract put
together effects to discourage their
consumption.
• The marketing task is to find out ways by
which the company can handle with such
actions. The marketing strategy is called
counter marketing

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 1.2. MARKETING MANAGEMENT
philosophies
• There are five competing concepts under which
organization conduct marketing activities.
A. Production concept
• This concept is one of the oldest in the business ,
holds that consumers will favor products that are
widely available and highly affordable in the
market. Therefore, organization should focus on
improving production efficiency ,low costs and
mass distribution.
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The production concept is still a useful
philosophy in two types of situations.
• The first occurs when the demand for a
product exceeds the supply. Here, the
marketers should look for ways to increase
production.
• The second situation occurs when the
product’s cost is too high and improved
productivity is needed to bring it down.
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 B. Product Concept
• Other business are guided by product concept , which
holds that consumers favor those products that offer
the most quality ,performance , or innovative features
. The managers of the organizations focus on making
superior products and improving them over time .
• It lead to marketing myopia. “Management’s failure to
recognize the scope of its business”.
• Future growth is endangered when management is
product oriented rather than customer oriented.”

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 Marketing philosophies cont’d
C. The Selling concept
• Many companies follow the selling concept, which
holds that consumers will not buy enough of the
firm’s products unless it undertakes a large-scale
selling and promotion effort.
• The concept is typically practiced with unsought
goods – that buyers do not normally think of buying,
such as insurance or blood donations.
• In the selling concept the firm aim is to sell what they
make rather than make what the market wants.
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 Marketing philosophies cont’d…
D . The marketing concept
• The marketing concept holds that the key to
achieving organizational goals depends on
knowing the needs and wants of target markets
and delivering the desired satisfactions better
than competitors do.
• Instead of a product-centered “make and sell”
philosophy, the marketing concept is a
customer-centered “sense and respond”
philosophy.
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 Marketing philosophies cont’d…
• The marketing concept takes an outside-in
perspective.
• The marketing concept rests on four (4) pillars :-
1. Target market 2. customer needs 3. integrates
all the marketing activities that affect customers
and
4. profitability .

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 Marketing philosophies cont’d…
• The selling concept takes an inside-out(from
factory to market) perspective.
• It starts with the factory, focuses on the
company’s existing products, and calls for
heavy selling and promotion to obtain
profitable sales.

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 Marketing philosophies cont’d…

• In contrast, the marketing concept takes an outside-

in perspective(from well defined market need to
factory) . The marketing concept starts with a well-
defined market, focuses on customer needs, and
integrates all the marketing activities that affect
customers.
• In turn, it yields profits by creating lasting
relationships with the right customers based on
customer value and satisfaction.
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 Marketing philosophies cont’d…
Practically, marketing concept philosophy rests on
the following core concepts:
1. Customer needs and satisfaction
(identification of customers need and wants)
2. Market segmentation, targeting and
positioning
3. Marketing Mix Elements
4. Integrated marketing (Inter and Intra
departmental coordination)
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 Marketing philosophies cont’d…

E. The Societal Marketing Concept

• The Societal marketing concept questions whether
the pure marketing concept overlooks possible
conflicts between consumer short-run wants and
consumer long-run welfare/ benefits.
• The societal marketing concept holds that
marketing strategy should deliver value to
customers in a way that maintains or improves both
the consumer’s and the society’s
well-being/happiness .
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1.3 Scope of Marketing
• It is seen as the task of creating, promoting &
delivering goods & services to consumers &
businesses through R&D, communication ,
distribution, pricing and service
• Marketers are skilled in motivating demand for
company’s products; they are responsible for
demand management.

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What can be marketed? Marketing people are
involved in marketing with different product
types .
This includes :-
• Goods
• Services
• Experiences
• Events, Information
• and others
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 1.4 Objectives of Marketing
The marketing system generally has four main
goals.
• Maximizing consumption- marketing
stimulate maximum demand.
• Maximum consumption put in the ground
maximize production, employment and
wealth.

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• Maximizing Satisfaction :- Owning one product
gives sense when it maximized satisfaction to
customer. Marketing systems maximize satisfaction
by creating and providing –quality products , variety
products , reasonable price and others .
• Maximizing choice:-marketing system provides
varieties. As a result the consumer will find products
that fit to their exact test.
• Maximizing life quality—the participation of
marketing system in environmental protection
maximize the quality of life of consumer.
• As a result of this the life style consumers leads to
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