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CHAPTER ONE: UNDERSTANDING MARKETING MANAGEMENT

Introduction
In today’s competitive environment a lot of emphasis is laid on the marketing. We find every
organization carrying out a lot of marketing activities. So, it is important for you to understand
what a market, marketing, marketing management are and how it is different from other discipline.
Marketing thinking starts with the fact of human needs and wants.
1.1 Definition of Marketing
Marketing is managing markets to bring about profitable customer relationships. However,
creating these relationships takes work. Sellers must search for buyers, identify their needs, design
good marketing offers, set prices, promote, store and deliver them.
Marketing is a social and managerial process by which individuals and groups obtain what they
need and want through creating, offering and exchanging value freely with others. (Kotler)
Marketing can be defined as the process by which companies create value for customers and build
strong customer relationships in order to capture value from customer in return. Simply marketing
is managing profitable customer relationships.
American Marketing Association defined marketing as the following
Marketing is the process of planning and executing the conception, pricing, promotion, and
distribution of products to create exchanges that satisfy individuals and organizational goals.
Marketing is asocial process involving the activities necessary to individuals and organizations to
obtain what they need and want through exchanges with others and to develop ongoing exchange
relationships.
1.2 Marketing Management (Demand Management)
Marketing Management is a process of planning, organizing, directing and controlling the
activities of product planning, pricing; promotion and distribution of products to create exchange
that satisfy individuals and organizational needs.
Marketing Management is the process of analyzing and controlling programs involving the
conception, pricing, promotion, and distribution of products designed to create and maintain
beneficial exchanges with target markets for the purpose of achieving organizational objectives.
Marketing Management is an art and science of choosing target markets and building profitable
relationships with them, then it involves getting, keeping and growing customers through creating,
delivering and communications superior customer value.

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Marketing Management is a business discipline focused on the practical application of marketing
techniques and the management of firms marketing resources and activities. Marketing managers
are often responsible for influencing the level, timing, and composition of customers demand in a
manner that will achieve the company’s objective. How to manage the demand of customer? See
demand under core concepts of marketing.
1.3 Core Concepts of Marketing
1. Needs, Wants, and Demands
The starting point for the discipline of marketing lies in human needs and wants. It is important to
distinguish among needs, wants, and demands.
Needs: Human needs are the most basic concept underlying marketing. Human need is a state of
felt deprivation of the basic human requirements such as food, air, water, clothing and shelter.
Marketers do not create needs but, they influence the demand by making the appropriate, attractive,
affordable and easily available product to target customers. The following are basic issues about
human needs related to marketing. Humans beings have many complex needs such as:-
A. Basic needs: - needs for food, clothing, shelter, and safety.
B. Social needs: - needs for belonging and affections.
C. Individual needs: - needs for knowledge and self- expression.
Wants: Wants are desires for specific satisfiers of deepest needs. People need food, air, water,
clothing, and shelter to survive. Beyond this, people have a strong desire for recreation, education
and other services. They have strong preferences for particular versions of basic goods and
services. A human want is the form that a human need takes as shaped by culture and individual
personality. In short, wants are shaped by ones society and reshaped continually by social forces
and institution such as families, schools, business corporations and churches.
Demands: Demands are wants for specific products that are backed up by an ability and
willingness to buy product. Wants become demands when backed up by purchasing power.
Companies must therefore, measure not only how many people want their product but, more
important, how many would actually be willing and able to buy it.
Demand States and Marketing tasks
Marketing is typically seen as the task of creating, promoting, and delivering goods and services to
consumers and businesses. Marketers are skilled in stimulating demand for company’s products,
but this is too limited a view of the tasks of marketers performs. Marketing managers seek to

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influence the level, timing, and composition of demand to meet the organizations’ objective. There
are eight different states of demand and the corresponding tasks facing manager.
1. Negative demand: The market is in a state of negative demand if a major part of the market
dislikes the product and may even pay of price to avoid it. Marketing task: The marketing task is
to analyze why the market dislikes product and a marketer must redesign, lower prices, and use
positive promotion to change beliefs and attitudes of customers.
2. No demand: No demand occurs when target markets unaware or uninterested in the product.
Marketing task: Marketing task is to find ways to connect the benefits of the product with
people’s natural needs and states.
3. Latent demand: Latent demand occurs when market share a strong need that cannot satisfy by
any existing product. For example there is a strong latent demand for harmless cigarettes, safer
neighborhoods, and more fuel efficient cars. Marketing task: The marketing task is to measure
the size of the potential market and develop goods and services to satisfy the demand.
4. Declining demand: Declining demand implies a substantial drop in the demand for products.
Marketing task: The marketer must analyze the causes of the decline demand and determine
whether the demand can be re- stimulated by new target markets, by changing product features, or
by effective communications. Then, the marketing task must be reverse declining demand through
creative remarketing
5. Irregular demand: Irregular demand occurred when organizations face demand that varies on a
seasonal, daily, or even hourly. For example museums are under visited on weekdays and
overcrowded on weekends. Marketing task: The marketing task, called “synchro marketing”, is
to find ways to adjust the pattern of demand through flexible pricing, promotion, and other
incentives.
6. Full Demand: Organizations face full demand when they are pleased with their volume of
business. Marketing task: The marketing task is to maintain the current level of demand in the
face of changing consumer preferences and increasing competition. Then, the organization must
maintain or improve its quality and continually measure consumer satisfaction.
7. Overfull demand: Some organization faces a demand level that is higher than they can handle.
Marketing task: The marketing, called “de-marketing” requires finding ways to reduce demand
temporarily or permanently. De-marketing seeks to discourage overall demand by the use of raising

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prices, and reduce promotion and service. Selective de-marketing consists of trying to reduce
demand from those parts of the market that are less profitable.
8. Unwholesome Demand: Unwholesome products will attract organized efforts to discourage
their consumption. Un-selling campaigns have been conducted against cigarettes, alcohol, hard
drugs, and handguns, X -rated movies, etc.
Marketing task: The marketing task is to get people who like something to give it up, using such
tools as fear messages, price hikes, and reduced availability.
2. Products: A product is anything that can be offered to a market for attention, acquisition, use, or
consumption, and that might satisfy a need & want. A product is also known as a solution to
customers’ problem. The concept of product is also a broad that it doesn’t include only goods and
services. Marketing people are involved in marketing ten types of entities.
Goods: - it is any tangible product that can be touch and seen.
Services: - as economies advance a growing proportion of their activities are focused on the
production of services.
Experience: By orchestrating several services and goods, one can create stage and market
experiences.
Events: - marketers promote time-based events such as Olympics, tradeshows, sports, events and
artistic performances.
Persons: - celerity marketing has become a major business. Example includes; artists, musicians,
CEOs (chief executive officers), physicians, high profile lawyers, and fanciers.
Places: - cites, states, regions, and nations compete to attract tourists, factories, company head
quarters, and new residents.
Properties: - Intangible rights of ownership of either real property or real estate or financial
property (stocks and bonds)
Organization: - Actively work to build a strong favorable image in the mind of their publics. For
example, Phillips advertises with the tagline, “let us make things Better.” Universities, museums
boost their public images to compete more successfully for advances and funds.
Information:-The production, packaging, and distribution of information are a major industry in a
given society. Marketers of information may include school, and universities, publishers of
encyclopedias, nonfiction books, and specialized magazines, makers of CDs, and internet web
sites.

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Ideas: - Every market offering has a basic idea at its core concept. Products and services are
platforms for delivering some idea or benefit to satisfy a core need.
3. Value and satisfaction: Value is the satisfaction of customer’s requirements at the lowest
possible cost of acquisition, ownership, and use (according to Derose). Value is a measure of the
usefulness of a product. Value is also can be defined as a ratio between what the customer gets and
what he gives. The concept of value is highly related with utility, prices, satisfaction, and profit.
Value=Benefit = Functional benefit + Emotional benefit
Cost monetary costs + Time costs + Energy Costs + psychic cost
The marketer can increase the value of the customer offering in several ways:
 Raise benefits
 Reduce costs
 Raise benefits and reduce costs
 Raise benefits by more than the raise in costs
 Lower benefits by less than the reduction in costs.
Customer satisfaction depends on a product perceived performance in delivering value relative to
a buyer’s expectation about a product performance. Customer oriented thinking requires the
company to define customer needs from the customers’ point of view. Why is it important to
satisfy a customer? It is more costly to attract new customers than to retain current customers.
Therefore, customer retention is more critical than customer attraction.
A satisfied customer is:-
 Stays loyal longer.
 Buys more as the company introduces new products and upgrades.
 Talks favorably about the company and its products.
 Pays less attention to competing brands and is less sensitive to price.
 offers product /service ideas to the company
 Cost less to serve than new customers because transactions are take place on routine bases.
4. Exchange and Transaction
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 of value in return.

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Conditions for exchange: -
1. There are at least two parties.
2. Each party must has something that might be of value to the other party.
3. Each party is capable of communication and delivery.
4. Each party is free to accept or reject the exchange offer.
5. Each party believes it is appropriate or desirable to deal with the other party.
If these conditions exist there is potential for exchange, whether exchange actually takes place
depends on whether the two parties can agree on terms of the exchange that will leave them better
off before the exchange. This is the sense in which exchange is described as a value-creating
process that is; exchange normally leaves both parties better than before the exchange
Transaction: Exchange must be seen as a process than an event whereas a transaction is
marketing’s unit of measurement. Two parties are 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 transactions are the basic unit of exchange. Transaction consists of a trade of value
between two parties. We must be able to say: “A” gave X to “B” and 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. Most transaction involves:-
1. At least two things of value
2. Agreed up on condition
3. A time of agreement and
4. A place of agreement
Usually, a legal system arises to support and enforce compliances on the part of the
transaction.
5. Relationship Marketing: Relationship marketing is concerned with the long-term and not
merely to sell a product or service to a customer one time. The goal is to have a satisfied customer
and establish an ongoing, personal, and long-term relationship with him or her. .
6. Markets: The concepts of exchange and relationships lead to the concept of a market.
Originally, a market place was a place where buyers and sellers gathered to exchange goods.
A market is the set of actual and potential buyers of a product.
1.4. Orientations towards the Market Place (Philosophies of marketing)

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Marketing management is described as carrying out tasks to achieve desired exchanges with target
markets. There are five competing concepts under which organizations can choose to conduct their
marketing activities.
1. The production Concept: It is one of the oldest concepts in business. It holds that consumers
will favor products that are widely available and highly affordable. The manager of production
oriented businesses concentrate on achieving high production efficiency, low costs, and mass
distribution. Production oriented marketers assume that consumers are primarily interested in
product availability and low prices. Firms that follow this philosophy focus on manufacturing
products that are relatively easy to produce. Since the focus is on production efficiencies, this
means the firm has to "sell" the product after manufacturing it. The production concept is useful:-
 When demand for a product exceeds the supply
 When the products cost is too high
 Where consumers are more interested in obtaining the product than its features.
 When a company wants to expand its market
2. Product Concept: It holds that consumers will favor products that offer the most quality,
performance, and innovative features. Thus, an organization should assign energy to making
continuous product improvements. Product concept focusing too much on one’s product and
trying to make it the best-performing product in the market through improvements can also be
risky. The product concept can lead to marketing myopia (a shortsighted view of marketing
which focuses on the product itself rather than the customers benefits and the challenges
presented by other products.) Marketing myopia (by Theodore Levitt to) describes firms that
define themselves in terms of a product rather than in terms of the need that the product satisfies.
For example, the public does not want rail transportation; it wants fast, inexpensive, and
convenient transportation.
3. Selling concept: Many organizations follow the selling concept, which holds that consumers
will not buy enough of the organization’s products if not it, undertakes a large scale of selling and
promotion effort. Firms that follow this philosophy focus on "pushing" the product using
advertising and promotion. A firm that promotes a product heavily after it is manufactured is in
risk of creating a dissatisfied customer
Characteristics of this concept

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 This concept is typically practiced with unwanted goods (goods that buyers do not normally
think of buying such as encyclopedias or insurance)
 To be successful with this concept, the organization must be good at tracking down prospects
and selling them on product benefits.
4. The Marketing Concept: 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
The Major differences between selling concept and marketing concept
Selling occurs only after a product is produced. By contrast, marketing starts long before a
company has a product. Marketing is the research that managers undertake to assess needs,
measure their extent, and determine whether a profitable opportunity exists. Marketing continues
throughout the product's life, trying to find new customers and keep current customers by
improving product appeal and performance, learning from product sales results, and managing
repeat performance.
5. 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 superior value to customers in a way that
maintains or improves the consumer's and the society's wellbeing. The societal marketing concept
is the most recent of the five marketing philosophies.
1.5. Customer Development Stages
1. Suspect: -is everyone who might buy the product or who think or imagine in his mind.
2. Prospect-is people who have a strong potential interest in the product and the ability to pay for
it.
3. First time customers-are qualified prospects who are converted into trying the product for the
first time.
4. Repeat customers – are satisfied first time customers converted into repeat purchase?
5. Client-are people whom the company treats very specially and which goods or services are
provided and sold.
6. Members: –are clients who join the membership program that offer a whole set of benefits or
somebody belonging to a particular group.

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7. Advocates: - are customers who recommend the company and its products and services to
others or customers who support or speaks in favor of about the company’s product.
8. Partners: - are customers who work closely with company and who owns part of a company or
who share the asset, risk, profit etc.