CHAPTER FIVE

MARKETING
 Chapter Objectives
By the end of this chapter , students will be able to:
• Define marketing concepts
• Analyze marketing philosophies
• Describe the role of marketing in achieving the goals of a
business enterprise
• Assist in conducting marketing research
• Make competitive analysis of the level
• Implement marketing intelligence in their organization
• Apply the various marketing mixes and strategies in their
businesses
• Understand and implement selling and customer service
skills
 5.1 Meaning and Definitions of Marketing
Marketing has been defined in various ways. The
definitions that serve our purpose best are as follows:
• Marketing is a social and managerial process by which
an individual or group obtain what they need and want
through creating, offering and exchanging of product of
values with others (Philip Kotler,2012).
• Marketing is the total business activity designed to
plan, price, promote and distribute want satisfying
products to target market to achieve organizational goal
(William J.Stanton, 1984).
• Marketing is the creation and delivery of standard of
living to society (Paul. Mazor, 2005).
 Cont…
• Marketing management is the process of
planning and executing, the conception, pricing,
promoting and distributing of ideas, goods and
services to create an exchange that satisfy
individual or group objectives (American
marketing Association, 2015).
 Cont…
• The above definitions of marketing reset on the
following core concepts:
 Needs , wants and demands
 Products (Goods, Services and Idea), value, cost and
satisfaction
 Exchange and transaction
 Relationship and Networks
 Market
 Marketers and prospects
 Cont…
Marketing answers the following questions:
 Who are my customers?
 What are my customer’s needs and wants?
 How can I satisfy my customers’?
 How do I make a profit as I satisfy my customers?
 Who are your customers?
Your customers are the people or other businesses
that want your products/ services and are willing to
pay for them. They include;
• People who are buying from you now.
• People you hope will buy from you in the future.
• People who stopped buying from you but you
hope to get them back.
 5.2 Core Concepts of Marketing

1. Need: - Human Need is a state of deprivation of

some basic satisfaction. People require food,
clothing, shelter, safety and belonging and esteem.
2. Wants: - Wants are desires for specific satisfiers
of needs. Human wants are continually shaped
and reshaped by social forces and institutions
including churches, schools, families and business
cooperation. Eg. A person needs food but wants
spaghetti
 Cont…
3.Demands:-Demands are wants for specific
products that are backed by ability and
willingness to buy them. Wants become demand
when supported by purchasing power.
Demand = willingness + ability to buy
4.Product:-is anything that can be offered to satisfy
a need or want. Products broadly classify as
tangibility and intangibility features.
5.Value:-is the consumer’s estimate of the products
overall capacity to satisfy his or her needs.
 Cont…
6. Cost:-is the amount of money that are going to be
expended or already incurred to acquire a product.
7.Exchange:-is the act of obtaining a desired product
from someone by offering something in return.
8.Transaction:-is the trade of values between two
parties.
9.Market:-consists of all the potential customers
sharing a particular need or want who might be
willing and able to engage in exchange to satisfy
their need or want.
 5.3 Importance of Marketing

• The kinds of utility that marketing provides in the

process are as follows:
1. Form Utility: is associated primarily with
production- the physical or chemical changes that
make a product more valuable. When timber is
made into furniture, form utility is created.
2. Place Utility: exists when a product is readily
accessible to potential customers. So physically
moving the products to a store near the customers
add to its value.
 Cont…
3. Time Utility: means having a product
available when you want it.
4. Information Utility: Information utility is
created by informing prospective buyers that a
product exists. Image utility is a special type
of information utility. It is the emotional or
psychological values that a person attaches to
a product or brand
 Cont.
5. Possession Utility: Possession utility is created
when a customer buys the product-that is,
ownership is transferred to the buyer.
 5.4 Marketing Philosophies
There are six competing concepts under which
organizations can choose to conduct their
marketing activities: namely,
1. the production concepts
2. the product concept
3. the selling/sales concept
4. the marketing concept
5. the societal marketing concept
6. the Relationship Marketing Concept
 1. The Production Concept
• The production concept is one of the oldest
concepts in business.
• The production concept holds that consumers will
favor products that are widely available and low in
cost.
• Managers of production-oriented organization
concentrate on achieving high production
efficiency and wide distribution.
• The assumption that consumers are primarily
interested in product availability and low price
holds in at least two situations.
 2. The Product Concept
• The product concept holds that consumers
will favor those products that offer the most
quality, performance or innovative features.
• Managers in product oriented organization
focus their energy on making superior
products and improving them over time.
• In such situation, customers are ready to
pay high prices for product extra features.
 3. The Selling Concept
• The selling concept holds that consumers, if left
alone, will ordinarily not buy enough of the
organization product.
• The organization must therefore undertake an
aggressive selling and promotion effort.
• The selling concept is practiced more
aggressively with unsought goods, those goods
that buyers normally do not think of buying,
such as insurance, encyclopedia, and funeral
plots.
4. The Marketing Concept
• The marketing concept holds that the key to
achieving organizational goals consists of being
more effective than competitors in integrating
marketing activities toward determining and
satisfying the needs and wants of target markets.
• The marketing concept has been expressed in many
colorful ways:
 “Meeting needs profitably”
 “Find wants and fills them”
 “Love the customers, not the product etc.”
 Point of Selling Marketing
Difference

Starting point Factory Market place

Focus Existing product Customer need

Means Selling and promotion Integrated marketing

End Profit through Volume Profit through

satisfaction
 5. The Societal Marketing Concept
• This concept holds that the organization should
determine the needs, wants and interests of
target markets.
• It should then deliver the desired satisfactions
more effectively and efficiently than competitors
in a way that maintains or improves the
consumers and the society’s well-being.
 6. Relationship Marketing
• Relationship marketing is the practice of
building long term satisfying relations with key
parties-customers, suppliers, distributors- in
order to retain their long term preferences and
business.
• The ultimate outcome of relationship marketing
is the building of a unique company asset
called a marketing network.
Production  Consumers favor products that are available and highly
affordable
 Improve production and distribution
 ‘Availability and affordability is what the customer wants’
Product  Consumers favor products that offer the most quality,
performance and innovative features
 ‘A good product will sell itself’
Sales  Consumers will buy products only if the company
promotes/ sells these products
 ‘Creative advertising and selling will overcome
consumers’ resistance and convince them to buy’
Marketing  Focuses on needs/ wants of target markets and delivering
satisfaction better than competitors
 ‘The consumer is king! Find a need and fill it’
Relationship  Focuses on needs/ wants of target markets and delivering
marketing superior value
 ‘Long-term relationships with customers and other partners lead
to success’
 5.5 Marketing Information Systems
• Every firm must organize the flow of information
to its marketing managers.
• Companies are studying their manager’s
information needs and designing marketing
information system to meet these needs.
• A marketing information system consists of
people, equipment and procedure to gather, sort,
analyze, evaluate and distribute needed timely
and accurate information to marketing decision
makers.
 Cont…
• The role of the information system is to assess
the manager’s information needs, develop the
needed information, and distribute the
information is a timely fashion to the marketing
managers.
• The needed information is developed through
internal company records, marketing
intelligence activities, marketing research, and
marketing decision support analysis.
 Cont…
5.5.1 Marketing Research
• Marketing research is the systematic and
objective identification, collection, analysis,
and dissemination of information for the
purpose of assisting management in decision
making related to the identification and
solution of problems and opportunities in
marketing.
5.5.1.1 The Role Of Marketing Research In Decision Making
There are three Functional Roles of Marketing
Research. These are:
• Descriptive Function - the gathering and
presentation of statements of fact.
• Diagnostic (analytical) Function - The explanation
of data.
• Predictive Function - Specification of how to use
the descriptive and diagnostic research to predict
the result of a planned marketing decision.
 5.5.1.2 Marketing Research Components
Marketing researchers deal with many aspects of a
market including the following:
• Market size: is the number or value of units sold
to a market in a given period.
• Market Share: is a specific corporation’s share
of the market size out of the whole market of a
product or products of the same purpose.
• Brand equity research – this research is
conducted to know how favorably consumers
view the brand.
 Cont…
• Market penetration: is a marketing strategy
which is used to know when a company
enters/penetrates a market with current products to
get better market share by lowering the price of a
product.
• Buyer decision processes research –used to
determine what motivates people to buy and what
decision-making process they use.
 5.5.1.3 Customer Satisfaction Research
• In this type of research there are different types of research that are
used to assess about customers.
 Distribution channel audits

 Marketing effectiveness and analytics

 Mystery Consumer or Mystery shopping

 Positioning research

 Price elasticity testing

 Sales forecasting

 Segmentation research
 5.5.1.4 Marketing Research Process

• Since research is a process which consists of a number of

steps to be accomplished in a logical and systematic manner
marketing research consists of the following related phases:

Step 1: Define the research purpose or objectives

Step 2: Research Design Formulation

Step 3: Gather secondary data

Step 4.Gather Primary Data

Step 5: Data Processing and Analysis

Step 6: Report Preparations and Presentation

 5.5.2 Marketing Intelligence

• Market intelligence is the systematic process of

gathering, analyzing, supplying and applying
information (both qualitative and quantitative)
about the external market environment.
• Intelligence is evaluated information.
 Cont…

• Marketing intelligence is used to determine:

 Current and future market needs,
 Changes in the business environment that may
affect the size and nature of the market in the
future.
 Environment that may affect the size and nature
of the market in the future.
 5.5.2.1 The Importance of Marketing Intelligence

Marketing intelligence provides the following

benefits;
• Market and customer orientation – promote external
focus.
• Identification of new opportunities.
• Smart segmentation.
 Cont…

• Early warning of competitor moves.

• Minimizing investment risks.
• Quicker, more efficient and cost-effective
information.
 5.5.2.2 Ways to Undertake Marketing Intelligence

• Unfocused scanning: Any information that may be

useful is gathered without any specific purpose in

mind.

• Semi-focused scanning: no specific purpose. The

manager is not in search of particular pieces of

information that he/she is actively searching but

does narrow the range of media that is scanned.

 Cont…
• Informal search: - limited and unstructured
attempt to obtain information for a specific
purpose.
• Formal search: - this is a purposeful search for
information in some systematic way.
Marketing intelligence is carried out by the
manager him/herself rather than a professional
 5.5.3 Competitive Analysis
• Competitive analysis refers to determining the
strengths and weaknesses of competitors and
designing ways to take opportunities or tackle
threats posed by competitors.
 5.5.3.1 Uses of Competitive Analysis
 Competitive analysis is important for
businesses since it has the advantages stated as
follow:
• It helps management understand its
competitive advantages/ disadvantages relative
to competitors.
• It generates understanding of competitors’
past, present (and most importantly) future
strategies.
 Cont…
• It provides an informed basis to develop strategies to
achieve competitive advantage in the future (e.g. how
will competitors respond to a new product or pricing
strategy?)
• It helps forecast the returns that may be made from future
investments.
• Competitive analysis is a method of gathering data about
competitors from different sources.
• It should answer the following questions:
 Who are your competitors?
 Cont…
 What customer needs and preferences are you competing to
meet?
 What are the similarities and differences between their
products/services and yours?
 What are the strengths and weaknesses of each of their
products and services?
 How do their prices compared to yours? How are they doing
overall?
 How do you plan to compete?
 5.5.3.2 Steps of Competitive Analysis

1) Identify your competitors

2) Gather information about competitors
3) Gathering Information on Competitors
4) Analysing the Competition
5) Develop a decision(pricing, promotion,….
 Cont…
 The goal of your competitive analysis is to
identify and expand upon your competitive
advantage.

 To make your competitive analysis effective,

transfer the weaknesses of your competitors into
potential strengths for your business
5.6 The Marketing-Mix and Marketing Strategies

• These are marketing variables that the marketing

manager can manipulate as controllable variables.
They include product, pricing, place (channel) and
promotion.

1. Product: refers to goods/services produced for

sale, the product /service should relate to the
needs and wants of the customers.
 Cont…
 Some important questions you need to ask
yourself include:
• What products/services do I sell?
• Why did I decide to sell these products?
• Do I have the products customers want?
• Do any of my products not sell well?
• Do I stock products that do not sell well?
 Cont…
• Always listen to what your customers like and don’t
like.
• When their needs change, change your products and
services to satisfy the new needs.
• Do more market research in order to provide those
products or services and increase your sales.
• If your product is not selling well, think of new ideas
like finding new customers.
 Cont.
2. Pricing: refers to the process of setting a price for
a product/service. Your prices must be low enough to
attract customers to buy and high enough to earn your
business a profit. To set your price you need to:
• Know your costs.

• Know how much customers are willing to pay.

• Know your competitors price.

• Know how to make your prices more attractive

 Cont…
3. Place: means the different ways of getting
your products or services to your customers. It
is also referred to as distribution. You can
distribute your products to your customers
through:
• Selling directly to the consumers of the
products.
• Retail distribution and wholesale distribution.
 Cont.
4. Promotion: Refers informing your customers of your
products and services and attracting them to buy them.
Promotion includes advertising, sales promotion, publicity
(non-paid promotion) and personal selling.
• Ensure you maintain attractive displays.
• Let customers try new products.
• Have competitions.
• Give demonstrations.
• Sell complementary products (products that go together)
 5.6.2 What Is Marketing Strategy?

• A marketing strategy is a process that can allow

an organization to concentrate its limited resources
on the greatest opportunities to increase sales and
achieve a sustainable competitive advantage.
• Marketing strategy is a method of focusing an
organization's energies and resources on a course of
action which can lead to increased sales and
dominance of a targeted market.
 Cont…
• A marketing strategy combines product
development, promotion, distribution, pricing,
relationship management and other elements;
identifies the firm's marketing goals, and
explains how they will be achieved, ideally
within a stated timeframe.
 1. Pricing Strategy

• Price Skimming: this is a type of marketing strategy

that firms use by charging the highest possible price
that buyers who most desire the product will pay.
• Penetration Pricing: In this strategy, prices of
products are reduced compared to competitors’
price for the same product to penetrate into
markets and to increase sales.
 Cont…
• Cost-plus pricing: Any amount that is above
unit cost may be considered.
• Mark-up pricing: A certain percentage of the
selling price is added to unit cost.

• Competition Oriented Pricing: Considers

competitors prices primarily; but the market type
matters.
 2. Promotion Strategies
• Promotional strategy is choosing a target
market and formulating the most
appropriate promotion mix to influence it.
• An organization’s promotional strategy can
consist:
• Advertising: It is any paid form of non-personal,
one-way, mass communication about an
 Cont…
• Personal selling: This is the two-way flow of
communication between a buyer and seller, often in
a face to face encounter, designed to influence a
person’s or group’s purchase decision.
• Sales promotion: This promotion type involves
short term incentives of value such as discounts,
free samples, and prizes to be offered to arouse
interest of customers in buying the good/service.
 Cont…
• Public relations: Public relation is a form of
communication that seeks to change the
perceptions of customers, shareholders,
suppliers, employees and other publics about a
company and its products.
 3. Distribution Strategies
• A successful product or service means nothing unless
the benefit of such a service can be communicated
clearly to the target market.

• For product-focused companies, establishing the most

appropriate distribution strategies is a major key to
success, defined as maximizing sales and profits.
 Cont….
• Channels are used to improve exchange efficiency. It
is divided into Direct and Indirect channels.

• Direct channels: In this type of channel, producers

and end users directly interact.
• Indirect channels: In this type of channel
intermediaries are inserted between seller and buyer.
Intermediaries include Merchant Wholesalers,
retailers, dealers, agents, brokers; and manufacturer’s
branches and offices.
Factors should be considered to select the best
channel of distribution
• Company Factors: financial, human and technological
capabilities of a company to do its business activities.
• Market Characteristics: Geography, market density,
market size, target market
• Product Attributes: perishability, value and sophistication
of the product
• Environmental Forces: those forces that affect the
business like competition, technology and culture.
 5.7 Selling and Customer Service
• Many employees have unclear understanding of what customer
service really is.
• There are indications everywhere that there are customer service
problems that demand solutions.
• How service providers do their jobs, how fast and accurately they
process paper works, how successfully they pursue accounts, and how
effective they are in taking the next step to develop customer loyalty,
will determine an organization's success in serving customers.
• Customer service is what happens between the customer determining
his/her needs and receiving the desired benefits.
 5.7.1 The Concept of Service

• Service refers to any activity undertaken to fulfil

customer’s needs.

• It is any act or performance that one party can offer

to another that is essentially intangible and does not
result in the ownership of anything.

• Its production may or may not be tied to a physical

product.
 Features of services
 Intangibility: shows that pure services cannot be
defined in terms of the physical dimensions or
the customer cannot see or feel them before
purchase.

 Inseparability: refers that production and

consumption of services are inseparable/
simultaneously; the 'sale' occurs just before
 Cont.
 Variability : Services are highly variable, because
they depend on who provides them, and when and
where they are provided.
 Perishability: services are produced and
consumed at the same point and are totally
unpreserved right after use.
 5.7.2 The Concept of Customer

• Customer is a person or organization that buys

a product or service either for use or for resale.
• Customers can be internal (e.g. member of the
organization) or external (customers coming
from outside).
5.7.3 Strategic Activities needed for Quality Customer Service Delivery

1. Establishing a clear customer service strategy.

2. Ensuring that correct people are in place, with the
correct skills to deliver outstanding personal service.
3. Establishing clear material service delivery
processes.
4. Improving in terms of process improvement, quality
monitoring and recovery continuously.
5. Participatory Management.
 5.8.4 Customer Handling and Satisfaction

• Customer handling and satisfaction is a key for

successful organizations. Managers and employees
should work hand-in-hand to improve their service
delivery programs.
• Existing customers must be satisfied with the
existing service. Existing customers are also means
of potential customers.
 Cont…
• Poor service/defective service is the causes of loss and
bankruptcy for many organizations.
• Organizations invest huge cost to increase market share
by using advertisement or different sales promotion
techniques. But the first most important principle here is
not losing a single customer.
• Retaining existing customers, however, requires
systematic handling. You have to make customer
 Cont.
• In addition to retaining existing customers, originations
should also strive to increase the number of customers.
• Organizations could possibly increase their market share
by getting new customers.
• Attracting new customers is directly related to keeping
existing customers satisfied.
• the major reasons to lose customers are: Poor service,
Poor quality and Rude behaviour.
 Cont…
 Considering Customers as an Invaluable Asset: The
value of one customer is infinite, and you cannot
possibly calculate it. your most precious asset is your
customer.
• We think of the immediate profit and ignore the future
profits expected over the lifetime of the customer.
• Reducing Customer Complaints: Every single
complaint should be treated as an opportunity to improve
the quality of your products and services. A complaining
customer is a very fair person.
 Cont.
• Consider also the following research findings
about customer satisfaction:

 91% of customers who have major complaints

decide they will never come back. But if the
complaint is resolved quickly, 82% of them will
return.
 Cont….
 Quick complaint resolution drops customer defection rate
from 91% to 18%. It is better to have a complaining
customer than no customer at all. It pays to resolve
complaints quickly.

 There is no investment like investment in customer

satisfaction.

 Treat the cost of satisfying a customer as an investment

rather than as an expense.
 Cont…
• Place Yourself in The Customer’s Shoes: You
have the right to choose your customers but not the
luxury to compromise on your level of service.
• Get rid of the unwanted customer but do it with
tact. Part with the unwanted customer with a smile
and a handshake. Place yourself in the customer’s
shoes. ‘Do unto your customer as you would have
done unto you’.