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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
Lesson ­ 4
Lesson overview and learning objectives:
In last Lesson the focus of discussion was core concepts of the marketing and the increasingly
important role of the marketing process in the ever-changing domestic and global business
environment Today we will be covering following topics:
A. MARKETING
IN
HISTORICAL
PERSPECTIVE
AND
EVOLUTION OF MARKETING
The marketing concept is a matter of increased marketing activity, but it also implies better
marketing programs and implementation efforts.  In addition, the internal market in every
company (marketing your company and products to and with the employees of the company) has
become as challenging as the external marketplace due to diversity and many other social/cultural
issues.
What image comes to mind when you hear the word "marketing"? Some people think of
advertisements or brochures, while others think of public relations (for instance, arranging for
clients to appear on TV talk shows). The truth is, all of these--and many more things--make up
the field of marketing. Marketing as "planning and executing the strategy involved in moving a
good or service from producer to consumer."
With this definition in mind, it's apparent that marketing and many other business activities are
related in some ways. In simplified terms, marketers and others help move goods and services
through the creation and production process; at that point, marketers help move the goods and
services to consumers. But the connection goes even further: Marketing can have a significant
impact on all areas of the business and vice versa. Lets discuss some Marketing Basics In
introductory marketing you learned some basics--first the four P's, and then the six P's:
 Product--What are you selling? (It might be a product or a service.)
 Price--What is your pricing strategy?
 Place or distribution--How are you distributing your product to get it into the
marketplace?
 Promotion--How are you telling consumers in your target group about your
product?
 Positioning--What place do you want your product to hold in the consumer's
mind?
Personal relationships--How are you building relationships with your target consumers?
Marketing management is the conscious effort to achieve desired exchange outcomes with target
markets. The marketer's basic skill lies in influencing the level, timing, and composition of demand
for a product, service, organization, place, person, idea or some form of information.
There are several factors that participated role to evolution of marketing like:
1. Changes in Consumer Behavior
There have been many major marketing shifts during the last few decades that have shaped
marketing in the 21st century. There is a view among professional marketers that there is no longer
the substantial product loyalty that existed over the last few decades. Product and brand loyalty,
many argue, has been replaced by something more akin to a consumer decision that is based on the
absence of a better product or service. In addition, there are major changes in the way customers
look at market offerings. During the 1980s customers were optimistic, and in the early 1990s they
were pessimistic. Later in the 1990s, consumers appeared rather optimistic, but still cautious at
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Principles of Marketing ­ MGT301
VU
times. The following chart demonstrates some of the major shifts that have occurred to the
present:
Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the
consumer, the marketing strategies of the 21st century will use the four "4 Cs" as added critical
marketing variables:
1. Care: It has replaced service in importance. Marketers must really care about the
way they treat customers, meaning that customers are really everything.
2. Choice: Marketers need to reassess the diversity and breadth of their offerings into
a manageable good-better-best selection.
3. Community: Even national marketers must be affiliated, attached to neighborhoods
wherever they operate stores.
4. Challenge: The task of dealing with the ongoing reality of demographic change.
2. End of the Mass Market
During the late 1990s, we witnessed the death of the concept of mass market. Regardless, some
marketers continue to argue that database marketing will never replace mass marketing for most
products. The view is that communicating with users by e-mail, Web site, mail, telephone, or fax
will never become cost-efficient enough to justify the return. However, the success of the Internet
provides considerable evidence that one-to-one marketing is and will be appropriate for many
packaged goods and other high- and low-involvement products that in the past sold almost
exclusively with brand advertising.
Through the 1970s, only high-end retailers and personal-service firms could afford to practice one-
to-one marketing. For the most part, they did it the old-fashioned way with personal selling and
index-card files.
During the 1990s, bookstore chains, supermarkets, warehouse clubs, and even restaurants began to
track individual purchase transactions to build their "share of the customer." Many of these
programs now run on Personal Computers platforms or workstation environments much more
powerful than the most capable mainframes of the 1970s. It is possible today to track 5 or 6
million customers for the same real cost as tracking a single customer in 1950. With Internet-based
databases and remote access, this capability literally has exploded in the last few years.
The situation will become even more interesting as one-to-one marketing becomes even
increasingly pervasive. With an increasingly powerful array of much more efficient, individually
interactive vehicles, the options are virtually unlimited, including on-site interactivity, Web site
connections, fax-response, e-mail, and interactive television.
Most households today either have direct Internet access, or with TV sets that also provide real-
time interactivity through the Internet. We are closing rapidly on the time where individuals will
interact with their television and/or computer simply by speaking to it. Via various Web sites,
computers work for us to enable us to remember transactions and preferences and find just the
right entertainment, information, products, and services.  Likewise, online capabilities enable
providers to anticipate what a consumer might want today or in the future. Unfortunately, the
system has been slower to protect consumers from commercial intrusions that they may not find
relevant or interesting.
The increasing level of market definition and refinement (and resulting opportunities for
marketers) is possible through the massive social, economic, and technological changes of the past
three decades. Some of the important demographic shifts have been:
 Increasing diversity of the population. The United States has always been an immigrant
nation. However, large numbers of immigrants from Latin America and Asia have
increased the proportion of minorities in the country to one in three, up from one
in five in 1980. This diversity is even more noticeable in the younger market.
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Principles of Marketing ­ MGT301
VU
Changing family and living patterns. There has been a substantial rise in the divorce rate,
cohabitation, non-marital births, and increased female participation in the labor
force. In addition, married couples with one earner make up only 15 percent of all
households. Dual-earner households have become much more common--the
additional income is often necessary for the family to pay their bills. Thus, older
have replaced the stereotypical family of the 1950s, working parents with much less
time available.
 Emergence of a new children's market. Minorities are over-represented in the younger
age brackets due to the higher fertility and the younger population structure of
many recent immigrants. The result is that one in three children in the United
States is black, Hispanic, or Asian. In addition, nearly all of today's children grow
up in a world of divorce and working mothers. Many are doing the family shopping
and have tremendous influence over household purchases. In addition, they may
simply know more than their elders about products involving new technology such
as computers.
 Income and education increases are two other important demographic factors impacting
the marketing management arena. Generally, income increases with age, as people
are promoted and reach their peak earning years, and the level of education
generally has increased over the last few decades. Family units today often have
higher incomes because they may have two earners. Accordingly, there is an
increased need for products and services because they likely have children and are
homeowners.
In sum, the need for market analysis and marketing decision-making, and managers to perform
those tasks has never been greater. But, as the course will demonstrate, the complexities of, and
analytical tools required for, these activities have never been greater. Be prepared for a challenging
experience.
3. Marketing Management Philosophies:
There are several alternative philosophies that can guide organizations in their efforts to carry out
their marketing goal(s). Marketing efforts should
be guided by a marketing philosophy. Decisions
SOCIETAL
PRODUCT
about the weight, given the interests of the
MARKETING
CONCEPT
organization, customers, and society need to be
CONCEPT
made by marketing managers. There are five
alternative concepts under which organizations
conduct their marketing activities.
KEY
MARKETING
a. The Production Concept
PHILOSOPHIES
The production concept holds that consumers will
MMARKETIING
ARKET NG
favor products that are available ad highly
PRODUCTION
CCONCEPT
ONCEPT
affordable  and  that  management  should,
CONCEPT
therefore, focus on improving production and
distribution efficiency. This is one of the oldest
SELLING
CONCEPT
philosophies that guide sellers. The production
concept is useful when:
1). Demand for a product exceeds the supply.
2). The product's cost is too high and improved productivity is needed to bring it down.
The risk with this concept is in focusing too narrowly company operations. The production
concept holds that consumers will favor products that are affordable and available, and therefore
management's major task is to improve production and distribution efficiency and bring down
prices.
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Principles of Marketing ­ MGT301
VU
b.
The Product Concept
The product concept holds that consumers favor quality products that are reasonably priced, and
therefore little promotional effort is required. The selling concept holds that consumers will not
buy enough of the company's products unless they are stimulated through a substantial selling and
promotion effort. The product concept states that consumers will favor products that offer the most
quality, performance, and features, and that the organization should, therefore, devote its energy to
making continuous product improvements. The product concept can also lead to "marketing
myopia," the failure to see the challenges being presented by other products.
c.
The Selling Concept
Many organizations follow the selling concept. The selling concept is the idea that consumers will not
buy enough of the organization's products unless the organization undertakes a large-scale selling
and promotion effort.
1).
This concept is typically practiced with unsought goods (those that buyers do not normally
think of buying e.g. insurance policies).
2).
To be successful with this concept, the organization must be good at tracking down the
interested buyer and selling them on product benefits.
3).
Industries that use this concept usually have overcapacity. Their aim is to sell what they
make rather than make what will sell in the market.
4).
There are not only high risks with this approach but low satisfaction by customers.
d.
The Marketing Concept
The marketing concept holds that achieving organizational goals depends on determining the needs
and wants of target markets and delivering the desired satisfactions more effectively and efficiently
than competitors do. The marketing and selling concepts are often confused.  The primary
differences are:
1). The selling concept takes an "inside-out" perspective (focuses on existing products and
uses heavy promotion and selling efforts).
2). The marketing concept takes an "outside-in" perspective (focuses on needs, values, and
satisfactions). Many companies claim to adopt the marketing concept but really do not unless they
commit to market-focused and customer-driven philosophies:
 Customer-driven companies research current customers to learn about their desires, gather
new product and service ideas, and test proposed product improvements.
 Such customer-driven marketing usually works well when there exists a clear need and
when customers know what they want.
 When customers do not know what they want, marketers can try customer driving
marketing--understanding customer needs even better than customers themselves do, and
creating products and services that will meet existing and latent needs now and in the
future.
e.
The Societal Marketing Concept
The societal marketing 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 consumer's and the society's
well being.
1). The societal marketing concept is the newest of the marketing philosophies.
2). It questions whether the pure marketing concept is adequate given the wide variety of
societal problems and ills.
3). According to the societal marketing concept, the pure marketing concept overlooks
possible conflicts between short-run consumer wants and long- run consumer welfare.
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Principles of Marketing ­ MGT301
VU
4). The societal concept calls upon marketers to balance three considerations in setting their
marketing policies:
a). Company profits.
b). Customer wants.
c). Society's interests.
5). It has become good business to consider and think of society's interests when the
organization makes marketing decisions.
4. Evolving Views of Marketing's Role:
Finance
As expressed in figures initially the Marketing was considered    Production  Finance
Production
to play equal function as other departments of the
Human
resources
organization. But with the passage of times and growing
Marketing resumans
H
Marketing
ource
importance of the customers marketing department attained
more importance and
b. Marketing as a more
attained the central
a. Marketing as an
important function
equal function
part
in
the
ion
Production
organization.
ct
du
ro
Afterwards the customer is now the main actor that is
P
Marketing
Customer
controlling almost all functions and efforts of the
M
e
c
ar
marketing department, because the success of any
an
ke
in
tin
F
g
organization in today's competitive era depends upon the
level
of
c. Marketing as the
d. The customer as the
major function
controlling factor
satisfaction
provided by
P ro d u c tio n
the company. Nowadays the marketing department is
M arketin g
acting,  as  integration  department  to  provide
C ustom er
integration among the functions performed by the
ce
an
company and customer is acting as controlling factor
n
Fi
in the organization
e. T h e cu sto m er as th e c o n tro llin g
fu n c tio n a n d m ark eting as th e
in teg ra tive fu n ctio n
21
Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE