Principles of Marketing Chapter 1

OVERVIEW OF MARKETING: AN INTRODUCTION

Principles of Marketing

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Chapter Objectives

At the end of the chapter, the student is expected to:

Explain the meaning of Marketing;Describe the stages of Marketing thought;Understand the behavioral concepts relevant to

Marketing;Discuss the goals of Marketing;Describe the traditional approaches to marketing;

andIdentify and explain contemporary marketing

approaches.

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Introduction

Marketing started in the early part of the twentieth century (between 1900 and 1910) out of questions and issues neglected by its mother science, economics.

In the early years of study and teaching of trade practices, the word “marketing” was not used. Instead, “trade,” “commerce,” and “distribution” were the common operations of the area to which the term “marketing” is identified today.

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Stages of Marketing Thought

1900-1910 Period of Discovery. In the early years, teachers of marketing sought facts about the distributive trades. The concept of “marketing” occurred, thus, the terminology was given to it.

1910-1920 Period of Conceptualization. Many marketing concepts were initially developed. Its concepts were classified, and terms were defined.

1920-1930 Period of Integration. Principles of marketing were postulated, and the general body of thought was integrated for the first time.

Paul W. Ivey was the first to use as a book title Principle of Marketing, although others and previously used “principles” in connection with advertising, retailing and credit granting.

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Stages of Marketing Thought1930-1940 Period of Development. Specialized

areas of marketing continued to be developed, hypothetical assumptions were verified and quantified, and some new approaches to the explanation of marketing knowledge.

1940-1950 Period of Reappraisal. The concept and traditional explanation of marketing was reappraised in terms of new needs for marketing knowledge.

1950-1960 Period of Reconception. Traditional approaches to the study of marketing were supplemented by increasing emphasis upon managerial decision making, the societal aspects of marketing, and quantitative marketing analysis.

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Stages of Marketing Thought

1960-1970 Period of Differentiation. As marketing expanded, new concepts took on substantial identity as significant components of the total structure of thought.

1970 Period of Socialization. Social issues and marketing became much more important. It is the influence not of society upon marketing, but of marketing upon society that became a focus of interest.

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What Is Marketing?

Simple Definition: Marketing is managing profitable customer relationships.

Goals: 1. Attract new customers by

promising superior value. 2. Keep and grow current customers

by delivering satisfaction.

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Marketing DefinedA social and managerial process by

which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

OLD Viewof Marketing:

Making a Sale –“Telling & Selling”

New View of Marketing:

Satisfying customer needs

NEW View of Marketing:

Satisfying Customer Needs

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Marketing as One of the Functions in Business

Organization

A simple business organization consists of the following functions:

1) finance and accounting, 2) human resource management, 3) production and materials

management, and 4) marketing

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Functions in Management

The different functions of managers in a business organization are as follows:

planning, organizing, staffing, directing/supervising, and evaluating of personnel, plans and programs

in the different departments of the company.

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Marketing as a Management Function

Marketing is a part of four key management functions –

Marketing, Production, Finance, and Human Resource

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Behavioral Concepts Marketing Thought

From anthropology (Community in entirety)

CultureSubculture

Comparative approachClimate for businessMarket ResearchCulture restraintsWord associationCommunicationRetailing structures

From Sociology (individuals in relation to other individuals)

Social classSocial differentiationStatus crystallizationReference groupsInformal groupsSocial roleThe familyIndividualsInstitutions

Market segmentsSocial class awarenessNew product acceptanceShopping behaviorCommunicationLeisureGroups, product, brandsAspirationsReferencesStatus conflictPersonal influenceDecision makingLife cycle

Behavioral Concepts Relevant to Marketing

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From Psychology (Centers on the individual)

Motivation Drives Cognitive dissonance Achievement Affiliations Hierarchy of motives Perception Orientation Scope Thresholds Perceptual function Mechanics of vision Time Selective perception Classical and operant

learning Serial learning “Insight” Learning of concepts Attitudes

Motivation Risk reduction Ego Self-image Concept generalization Brand choice

From Political Science Power groupsValues

Trade associationsPublic policy

Behavioral Concepts Relevant to Marketing

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Goals of Marketing

The four goals of a marketing system:

maximize consumption, maximize consumer satisfaction, maximize choice, and maximize life quality (Kotler 2000)

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3Cs Key Objectives

1. Customers To satisfy the needs, wants and expectations of target customers.

2. Competition To outperform competition.

3. Company To ensure corporate health and profit.

Marketing: The Strategic 3Cs Concept

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Contemporary Marketing Approaches

With the maturation of marketing thought, approaches to the

analysis of marketing were advanced.

The following are some of the approaches and concepts inmarketing: 1) marketing mix; 2) conceptual approach; 3) systems or holistic approach; 4) marketing management; 5) macro-marketing; 6) social marketing; and 7) comparative marketing. (Llanes and Jurado: 1980)

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The Marketing MixThe marketing mix developed by E. Jerome

McCarthy (McCarthy 1975:44) consists of 4Ps – product, price, place, and promotion – all of which influence buyer’s decision and responses.

Each Ps relates to and is dependent on every other Ps.

The Ps are controllable variables that a company may use in mapping a successful marketing strategy. Below is the formula for marketing success (Schwartz 1977:67):

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Product(desirable)

Promotion(Effective)

Price(affordable)

Place(Availability)

ConsumerConsumer

Below is the formula for marketing success

(Schwartz 1977:67)

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Conceptual ApproachThis approach studies ideas of marketing

rather than the activities of marketing.

Its emphasis is on theoretical analysis and development of new concepts whether of consumer, products, marketing institution, functions, processes, or policies.

The concept of marketing is more important than the definition of marketing.

The conceptual approach is recognized when marketing is defined to bring out various ideas for which “marketing stands.”19

Systems (Holistic) Approach

A system is a set of interacting or interdependent groups coordinated to form a unified whole and organized to accomplish a set of goals (Markin 1979:28).

Thus, marketing is perceived as whole, interdependent units, the marketing process conceptualized as “flows” and the marketing structure as “systems” (Bartels 1976:202).

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Marketing ManagementThis concept is a managerial approach to

marketing.

It emphasizes marketing management as a decision making process and how decision makers, specifically the marketing manager, handles specific marketing problems and situations.

Marketing activities and strategies are evaluated and developed to achieve specific management objectives.

The approach establishes the position of the

“marketing manager” as a top- level position in a company’s organization. 21

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Macro Marketing Approach

Macro Marketing is the study of marketing activities, institutions, and processes from the national (societal) perspective.

It looks at the aggregate flow of goods and services in an economy to determine if it benefits the society in terms of its resource consumption and environmental effects.

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Social MarketingKotler and Andreason – Social Marketing as “differing from other areas of marketing only with respect to the objectives of the marketer and his or her organization.

Seeks to influence social behaviors not the benefit the marketer, but to benefit the target audience and the general society.

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Comparative MarketingFocus on the systematic study of similarities and differences between national marketing systems across time, space and sectors for the purpose of theory-building and theory.

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