CHAPTER 5: MARKETING

5.1 INTRODUCTION

Business firms and non-profit organizations engage in marketing. Products marketed include
goods as well as services, ideas, people, & places. Marketing activities are targeted at market
consisting of product purchasers who may be individuals and groups that influence the success of
an organization.

The foundation of marketing is exchange. In which one party provides to another party
something of value in return for something else of value. In a broad sense, marketing consists of
all activities designed to generate or facilitate an exchange intended to satisfy human needs. The
concept of market is very important in marketing. The American marketing Association defines a
market as “The aggregate demand of the potential buyers for a product or services “. Philip
Kotler defines “A market as an area of potential exchanges”. Thus, a market is a group of buyers
and sellers interested in negotiating the terms of purchase/sale for goods or services.

5.2 Meaning and Definitions of Marketing

Marketing activities are targeted at market consisting of product purchasers and also individuals
and groups that influence the success of an organization. Marketing has been defined in various
ways. The definitions that serve our purpose best are as follows:

1. 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).
2. Marketing is the total business activity designed to plan, price, promote and distribute
want satisfying products to target market to achieve organizational goal (William
[Link], 1984).
3. Marketing is the creation and delivery of standard of living to society (Paul. Mazor,
2005).

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 4. 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).
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; and marketers and prospects.

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.

What are my customer’s needs and wants?

An important point to note is that customers want to look at different products so that they can
choose what they like best. Some customers want a different design and others want high quality
and are willing to pay extra for that.

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How can I satisfy my customers?

You need to do everything to find out who your customers are and what they need and want in
order to satisfy them improve your sales and make a profit. You need to find out;

 Products/services your customers want.

 Price your customers are willing to pay.
 Location of your business in-order to reach your customers (Place).
 Promotion to use to inform your customers and attract them to buy your products or
services.
5.3 Core Concepts of Marketing

5.3.1 Needs, Wants and Demand

A person at any given time has a need. This need arises out of physical or psychological
imbalances. Marketing starts with human needs and wants. People need food, air, water, clothing
and shelter to survive. Beyond this, people have a strong desire for recreation, education and
other services. Let see terms related with this as follow:

 Need: - Human Need is a state of deprivation of some basic satisfaction.

People require food, clothing, shelter, safety and belonging and esteem.
 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
 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.
Companies must therefore measure not only how many people want their product but,
more importantly how many would actually be willing and able to buy it.
 Product: - is anything that can be offered to satisfy a need or want. Products broadly
classify as tangibility and intangibility features.

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  Value: - is the consumer’s estimate of the products overall capacity to satisfy
his or her needs.
 According to DeRose, value is “the satisfaction of customer requirement at the lowest
cost of acquisition, ownership and use”.
 Cost: - is the amount of money that is going to be expended or already incurred to
acquire a product.
 Exchange: - is the act of obtaining a desired product from someone by offering
something in return.
 Transaction: - is the trade of values between two parties.
 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.

5.4 Importance of Marketing

On the average, about 50 cents of each dollar we spend as consumers goes to cover marketing
costs. The money pays for designing the products to meet our needs, making products readily
available when and where we want them, and informing us about producers. These activities add
want satisfying ability or what is called utility, to products.

A customer purchases a product because it provides satisfaction. That something that makes a
product capable of satisfying want is its utility. And it is through marketing that much of a
products utility is created. Then potential buyers must be informed about the products existence
and the benefits it offers through various forms of promotion.

The kinds of utility that marketing provides in the process are as follows:

1. Form Utility: 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. This is production, not marketing. However, marketing research may aid in decision
making regarding product design, color, quantities produced, or some other aspect of a product.
All of these things contribute to the product’s form utility.

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2. Place Utility: 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.
3. Time Utility: Time utility means having a product available when you want it. Having a
product available when we want it is very convenient but it means that the retailer must
anticipate our desires and maintain an inventory. Thus, there are costs involved in providing time
utility.
4. Information Utility: Information utility is created by informing prospective buyers that a
product exists. Unless you know a product exists and where you can get it, the product has no
value. Advertising that describes a sales person answering a customer questions about the
durability of a product creates information utility. 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
because of its reputation or social standing.
5. Possession Utility: Possession utility is created when a customer buys the product-that is,
ownership is transferred to the buyer. Thus, for a person to consume and enjoy the product, a
transaction must take place. This occurs when you exchange your money for a product.

5.5 Marketing Philosophies

Large-scale marketing activities in the world did not take shape until the industrial revolution is
the latter part of the 1800s. Clearly, marketing activities should be carried out under a well-
thought out philosophy of efficient, effective and socially responsible marketing. There are five
competing concepts under which organizations can choose to conduct their marketing activities:

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.

The first is where the demand for a product exceeds supply, as in many developing countries.

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Here consumers are more interested in obtaining the product that in its fine points, and supplies
will concentrate on finding ways to increase production.

The second situation is where the product’s cost is high and has to decrease to expand the
market.

2. The Product Concept

Other businesses are guided by 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. Under the concept, mangers assume that buyers admire well-made
products and can appraise product quality and performance. In such situation, customers are
ready to pay high prices for product extra features. Product-oriented companies often design their
products with little or no customer input. They trust that their engineers will know how to design
or improve the product. A good product will sell itself’

3. The Selling Concept/Sales 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. This concept assumes that consumers typically show buying inertia or
resistance and must be coaxed into buying. It also assumes that the company has made available
a whole battery of effective selling and promotion tools to stimulate more buying.

The selling concept is practiced more aggressively with unsought goods, those goods that
buyers normally do not think of buying, such as insurance, and encyclopedia. Most firms
practice the selling concept when they have over capacity. Their aim is to sell what they make
rather than make what the market wants. Selling is laying the bait for the customer’

4. The Marketing Concept

The marketing concept is a business philosophy that challenges the three concepts we just
discussed. Its central tents crystallized in the mid-1950s.

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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 customer is King!

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.”

Table 5.1 Selling and Marketing Concept Contrasted

Point of Difference Selling Marketing

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

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 consumers and the
society’s well-being.

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 The societal marketing concept holds that the organization’s task is to determine the needs,
want, and interests of target markets and to deliver the desired satisfactions more effectively
and efficiently than competitors in a way that preserves or enhances the consumers and the
society’s wellbeing.

The societal marketing concept questions whether the pure marketing concept is adequate in an
age of environmental problems, resource shortages, rapid population growth, worldwide
economic problems, and neglected social services. According to the societal marketing concept,
the pure marketing concept overlooks possible conflicts between short-run consumer wants and
long run consumer welfare.

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. In this case, customer experience rather than customer
satisfaction is the most critical component in relationship marketing. Relationship with
customers determine our firm’s future’

5.6 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. The marketing information system is illustrated as fig 5.1 below:

Figure 5.1 Marketing information systems

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The marketing managers to carry-out their analysis, planning, implementation, and control
responsibilities, they need information about development in the marketing environment. 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.

5.6.1 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. Thus, systematic
planning is required at all the stages of the marketing research process. The procedures followed
at each stage are methodologically sound, well documented, and, as much as possible, planned in
advance. It uses the scientific method in that data are collected and analyzed to test prior thinking
or hypotheses.

Marketing research is objective. It attempts to provide accurate, impartial information.

Accordingly, marketing research involves the identification, collection, analysis, and
dissemination of information.

[Link] The Role (Significance) 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.

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 [Link] Marketing Research Components

Marketing researchers deal with many aspects of a market including the following:

 Market size: this deals with the number or value of units sold to a market in a given
period.

 Market Share: this one is about a specific corporation’s share of the market size out of
the whole market of a product or products of the same purpose.
 Market penetration: this 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.
 Brand equity research : this research is conducted to know how favorably
Consumers view the brand.
 Buyer decision processes research: this part of marketing research activity is used to
determine what motivates people to buy and what decision-making process they use.

5.6.2 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.

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.

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[Link] The Importance of Marketing Intelligence

Marketing intelligence provides the following benefits;

 Market and customer orientation – promote external focus.

 Identification of new opportunities.
 Smart segmentation.
 Early warning of competitor moves.
 Minimizing investment risks.
 Quicker, more efficient and cost-effective information.
5.6.3 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.

[Link] 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.
 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.

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Competitive analysis is a method of gathering data about competitors from different sources.

It should answer the following questions:

 Who are your competitors?

 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? Offer better quality services? Lower prices?
More Support? Easier access to services? How are you uniquely suited to
compete with them?
 Is there a service that customers or clients want that your competitors do not
supply?
5.7 The Marketing Mix and Marketing Strategies

5.7.1 The 4 P’s Of Marketing/The Marketing Mix

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.
Some important questions you need to ask yourself include:
a) What products/services do I sell?
b) Why did I decide to sell these products?
c) Do I have the products customers want?
d) Do any of my products not sell well?
e) Do I stock products that do not sell well?

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  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.
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
3. Place: means the different ways of getting your products or services to your customers. It is
also referred to as distribution. If your business is not located near your customers, you must find
ways to get your products/services to where it is easy for customers to buy. You can distribute
your products to your customers through:
• Selling directly to the consumers of the products.
• Retail distribution and wholesale distribution.
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. Use advertising to make customers more interested in buying
your products or services. Some useful ways of advertising include signs, boards, posters,
handouts, business cards, pricelists, photos and newspapers.
You can use sales promotion (short term incentives) to make customers buy more when they
come to your business, you could also:

 Ensure you maintain attractive display

 Let customers try new products.
 Have competitions.
 Give demonstrations.
 Sell complementary products (products that go together)

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5.8 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. It is because of
these reasons that customer service delivery improvement programs fail in some instances.

Customer service is what happens between the customer determining his/her needs and receiving
the desired benefits. However, most service providers do not appropriately understand what
service delivery really means. For this reason, many organizations fail to improve the level of
their customer service delivery.

5.8.1 The Concept of Service

Service refers to any activity undertaken to fulfill 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. Distinctive
features of services include intangibility, inseparability, variability, and Perishability as opposed
to goods.

The feature of intangibility shows that pure services cannot be defined in terms of the physical
dimensions; or the customer cannot see or feel them before purchase. The concept of
inseparability, on the other hand, refers that production and consumption of services are
inseparable; the 'sale' occurs just before both.

There are also features of variability and perishability associated in service. Services are highly
variable, because they depend on who provides them, and when and where they are provided. In
addition to this, services are produced and consumed at the same point, and are totally perishable
right after use. Service cannot be reproduced as a concert object and it can vary from one
moment to the next. Based on this concept, service is characterized as; situational, difficult to
measure, subjective and influenced by the service provider.

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Service is situational in the sense that what is good for one customer one day may be perceived
differently by the same customer another day. There is also difficulty associated in measurement
of service. This is because the higher one sets expectation by delivering service, the more the
customers expect the next time they deal with the service provider.

Service is also subjective in the sense that an acceptable service for one customer may not be
equally or totally acceptable by another customer. Finally, service is influenced by the service
provider. If the service provider sets expectations effectively, the customer will probably be
satisfied.

5.8.2 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). A thorough understanding of the concept of customer service enables organizations to
provide quality service by using proper service management approaches.

5.8.3 Strategic Activities needed for Quality Customer Service Delivery

Organizations should identify important strategic activities to ensure consistent, efficient and
excellent customer service delivery using continuous improvement philosophy. Especially, the
following specific areas should be considered:-

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.

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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. What is expected from successful service providers in this regard are the
following.

Poor service/defective service is the causes of loss and bankruptcy for many organizations. Many
organizations, especially business organizations worried about the reduction of sales or
profitability due to lost customers/ or gradual reduction of customers. 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 satisfaction your religion. Understand the importance of satisfying existing customers.
Usually, organizations tried to increase sales by a much larger percentage than what they had
planned, because of sales lost due to defecting customers.

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.

Also take into account that the major reasons to lose customers are:-

o Poor service,
o Poor quality and
o Rude behavior.

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