PRINCIPLES AND
PRACTICES OF
MARKETING
IC 124
Lesson 1
AN OVERVIEW OF MARKETING
Objectives
■ Understand the importance of Marketing
■ Identified the different concepts in Marketing
■ Explained the different Marketing mix and its importance
Why Study Marketing?
What is Marketing
■ Marketing may be defined as exchange activities conducted by individuals or
organizations for the purpose of satisfying human wants with the view of
accomplishing individual or organizational objectives.
■ Is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large. (American Marketing Association)
Basic Marketing Terms:
Exchange
- This term refers to the trade of things or service of value between buyer
and seller.
Human Needs
- This term refers to thing or service that is required by a human being for
health and well-being of his body and mind.
Human Want
- When a person has an unfulfilled need and he is aware of an object that
will best satisfy the need.
Objective
- The desired result of an activity is called objective. Example is profit
which is desired by the business person.
The Marketing Concept Versus the Other Concepts
Marketing Concept – Under this concept, the firm defines its target market and
determine the needs, wants, and values of the market. The firm then adapts a
strategy to satisfy those needs and wants more effectively and efficiently than its
competitors.
1st Step
THE TARGET
FIRM MARKET
3rd Step
2nd Step
PRODUCT
PRICE
PLACE
PROMOTION
The Product Concept – Companies adapting this concept attempt
to find interested buyers after producing the product.
1st Step PRODUCT
THE
FIRM
2 nd
Step
PROSPECTIVE
CUSTOMERS
The Product Concept
The Selling Concept – Under this concept, the firm produces the product then adapts a
selling strategy designed to convince a group of perceived customers.
p
1st Ste PRODUCT
THE
FIRM
2 nd
Ste
p
3rd Step
SELLING PROSPECTED
METHOD CUSTOMERS
The Selling Concept
Superiority of the Marketing Concept
The marketing concept has been proven to be more effective and efficient than
the other concepts.
Companies utilizing the product concept is always at risk of finding inexistent or
insufficient demand for their products. When this happens, these companies will not be
able to generate revenues from sales.
A little better is the company influenced by the selling concept. This company
will build a strong sales unit and to some extent will be able to achieve a certain level of
sales.
The product-oriented and the selling-oriented firms will find it hard to reach
the sales level of marketing-oriented companies which gathers information to
determine the following:
1. What products or services are expected by the customers?
2. At what price are the customers willing wo buy such products or services?
3. At what place do they expect to find the products or services they want?
4. What kind of promotion will likely persuade them to buy?
Marketing Strategy and the
Marketing Concept
In the effort to make profits, the formulation of a strategy is necessary. To
attain a certain level of sales, the adaptation of a marketing strategy is required.
After identifying the target market, the firm will have to gather answers to
the four questions on what the target market wants.
When Does Marketing Occur?
For Marketing to occur, four factors are necessary:
1. The presence of at least two parties with unsatisfied needs;
2. The desire and ability of the parties to be satisfied;
3. The existence of a way for parties to communicate; and
4. Each party has something to exchange.
The Way of Profit
Determine
Determine Determin
Select the what the
what the e what
target target
firm can the firm
market market
do wants
wants
Implement Formulate
Marketing Marketing
PROFITS Strategy Strategy
The Marketing Variables
In and out of the firm, there are factors that the firm must reckon with its
attempt to achieve its marketing objective. These are regarded as “variables”
because they are apt to change, are changeable, or irregular.
The variables are of two types:
1. The marketing mix variables; and
2. The marketing environment variables.
The Marketing Mix
The marketing mix variables are parts of the internal environment the firm
created and as such, the firm can directly manipulate them in pursuance of a sound
marketing strategy. The may consist of the following variables: 1) The product;
2) The Price; 3) The Place; 4) The Promotion.
The Product
- The tangible commodity or the intangible service that the business firm
offers for sale to prospective customers is referred to as “the product”.
The Price
- The amount of money paid by the customer to the selling firm so the
customer can use the product is called “the price”. The price is set to attract
prospective customers to buy. Considerations regarding retail and wholesale prices,
discounts and allowances.
The Place
- When the firm wants to emphasize the place variable, it makes the
company’s products available in the location and time required by buyers.
The Promotion. The provision of required information to prospective customers so
that they are persuaded to buy is called promotion. It involves any or all of the
following types: 1) Personal selling; 2) Mass selling; and 3) Sales promotion.
Personal Selling involves the use of the services of salesmen to influence t
he buyer’s purchasing decision. This approach requires face-to-face
contact between the firm’s salesman and the prospective customer.
Mass Selling involves the simultaneous persuading of large numbers of
prospects to buy the company’s products.
Sales Promotion refers to promotion activities other than personal selling,
advertising, and publicity. Coupons, raffle stubs, and free samples
are some of the ways used in sales promotion.
The Marketing Environment Variables
Part of the external environment of the firm is the marketing environment
consisting of variables confronting the firm. The company has a little or no control
over these variables consisting of the following: 1) Social Forces; 2) Economic
Forces 3) Technological Forces; 4) Competitive Forces 5) Regulatory
Forces.
Social Forces
This is an important factor that affects marketing strategy. It includes the
following 1) the characteristics of the people; 2) its income; and 3) its values.
1. The characteristics of people may be derived through demographics
which provide information on where people are their numbers, age, sex,
income and occupation. As these characteristics are subject to change,
marketing strategy must adapt.
2. The income of the people provides clue as to what they can afford and
as such, adjustments had to be made on various marketing activities
affected.
3. Culture is a social force which must be considered by marketers. It
consists of the set of values, ideas, and attitudes of a group of people and
are transmitted from one generation to another.
Economic Forces
Certain forces in the economy affects marketing. Inflation and recession
are two important macroeconomic conditions that marketers must consider in
making decisions.
Inflation reduces the purchasing power of consumers and so they would
limit their spending to necessities. During recession, unemployment tends to rise
reducing the number of consumers with the ability to spend.
Employment however, is not an assurance that consumers will have
sufficient ability to purchase some types of goods. Before a consumer decides on
buying luxury items, he has to consider first necessities like food and clothing.
Technological Forces
In addition to other concerns, marketers must also reckon with
technological forces. Developments in existing technology can make some products
obsolete and it makes marketing more challenging.
Another point of concern is the use of computers in marketing. Advances in
computer technology provide firms with opportunities to increase sales. Apart from
new and traditional means of selling, the growth of trading in the internet provides
marketers with opportunities to increase sales.
Some of the marketing activities where technology can be useful are the
following:
1. Generation of Marketing information in retail establishments through
computers. An example is the instant production of data concerning current
total sales per product.
2. Development of new products. When a new technology is invented, the
manufacture of a new product becomes a possibility.
3. Understanding the consumer. Modern technology can now provide information
on consumer preferences in a matter of seconds making it easier for marketers
to make decisions quickly.
Competitive Forces
Most business firms are confronted with competitors and they have to
manage their marketing activities effectively and efficiently if they are to survive
and grow. In designing the firm’s marketing strategy, it must consider its current
and potential competitors.
Firms may be situated in any of the basic forms of competition which are
as follows: 1) Pure Competition; 2) Monopolistic Competition; 3) Oligopoly; and
4) Monopoly.
Pure Competition
A market situation where there are many competitors offering for sale identical
products or services.
Pure competition is characterized by the following:
1. The firm sells similar products like rice or vegetables.
2. It is easy for prospective sellers to engage in selling and for prospective
buyers to engage in buying.
3. There are many buyers and sellers who fully know the market.
Under pure competition, the price of the product is determined by the market
and not by any individual buyer or seller. As such, price cannot be manipulated by any
seller to improve his competitive position.
Monopolistic Competition
Exists when there are many sellers (but less than those in pure
competition) in a particular market competing with each other. The differences
between the products and services sold are small.
In monopolistic competition, manufacturers often promote certain features
of their products, then charge higher prices.
Oligopoly
A market situation where a few firms compete in a given industry. The
products sold are homogenous or identical like gasoline, steel, automobiles, cement
and cigarettes.
Prices are set by the oligopolist in collusion with one another. Individual price-
setting is counterproductive as competitors can retaliate and this will affect their
individual profits including the initiator’s. If the oligopolist wants higher profits, it
must set a price mutually agreed upon by the players in the industry.
Monopoly
It exists when there is only a single seller in a particular market. Monopolies
include firms that supply electricity and water. The government regulates the prices of
some monopolies like public utility companies.
Some companies, however, become monopolies when they develop new
technology and seek the protection of patent laws. A drug manufacturer, for instance,
may have invented a new drug through research. For a certain period, the firm will
enjoy the status of a monopoly if it registers its invention with the patent office.
Regulatory Forces
Government institutions are entities that constrain, direct, and influence decisions that the
business firms have to make including those concerning marketing. The laws enacted by
the national government and local ordinances by provincial and municipal governments are
those that restrict business activities.
The restrictions are designed for the following purposes:
1. To protect the consumers from unsafe products and unfair trade practices; and
2. To ensure business competition and fair trade practices.
An example is the prohibition on the sale of “pirated” CDs, VCDs, and DVDs which
is actually a measure to protect the rights of copyright holders.
Exercise
Base from the discussions, explain the table below.
The relevance of the Marketing Mix in Various Competitive Situations
Competitive Situation Relevance of Marketing Mix
Pure Competition Irrelevant
Monopolistic Competition Most Relevant
Oligopoly Slightly Relevant
Monopoly Irrelevant
THE END
“ Don’t find customers for your products, find products for
your customers ”
- Seth Godin