Ccm 105 Principles of Marketing

CCM 105 PRINCIPLES OF MARKETING

1. Overview Of Marketing

a) Definition

The simplest definition of marketing: Marketing is managing profitable customer relationships.

Philip Kotler, the father of marketing says, Marketing can also be defined as a societal process by which individuals and groups obtain what they need and want through creating, offering, and, freely exchanging products and services of value with others. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering value.

Peter Drucker, a leading management theorist, puts it this way:

‘There will always, one can assume be need for some selling. But the main of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product/service available.

The American Marketing Association offers the following definition: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

Marketing comprises all activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling.

b) Evolution of marketing

The study of the history of marketing as an academic field emerged only recently. The publication in 1976 of the book The History of Marketing Thought, by Robert Bartels marks a turning-point in marketing thought. Since then, academics specializing in marketing decided to imitate economics, distinguishing theory and practice.

Two different fields of study emerged:

1. the history of marketing thought, giving theoretical accounts

2. marketing history, focusing on the history of marketing practice

History of marketing thought

The history of marketing thought deals with the evolution of theories in the field of marketing, from the ancient world to contemporary days[update]. Marketing historians agree that the discipline branched out of applied economics at the turn of the twentieth century, though some argue that scholars in the ancient and medieval ages had already studied marketing ideas.

Robert Bartels in The History of Marketing Thought categorized the development of marketing theory decade by decade from the beginning of the 20th century thus:

· 1900s: discovery of basic concepts and their exploration

· 1910s: conceptualization, classification and definition of terms

· 1920s: integration on the basis of principles

· 1930s: development of specialization and variation in theory

· 1940s: reappraisal in the light of new demands and a more scientific approach

· 1950s: re-conceptualization in the light of managerialism, social development and quantitative approaches

· 1960s: differentiation on bases such as managerialism, holism, environmentalism, systems, and internationalism

· 1970s: socialization; the adaptation of marketing to social change

With the growth in importance of marketing departments and their associated marketing managers, the field has become ripe for the propagation of management fads which do not always lend themselves to Periodization.

Birth of marketing ideas

In pre-modern economies, the predominance of small enterprises (peddlers, stalls) and/or natural regional monopolies militated against the recognition of marketing as a separate field of expertise. Changes in the patterns and intensity of economic activity, as well as the rise of economics as a science, particularly in the 19th century, paved the way for studies of marketing.

The growth in size and scope of national and international economies in the course of the Industrial revolution led eventually to a transcendence of ad hoc retailing and advertising innovations and eventually to systematization. Marketing emerged as a separate technical field only in the late 19th century.

Traditional schools

Traditional authorities on marketing concentrated on products and on the sale and purchase of goods and services. They paid little attention to areas like after-sales service, and devoted even less attention to social responsibility or to social accountability.

Modern schools

Marketing historians like Eric Shaw and Barton A. Weitz point to the publication of Wroe Alderson's book, Marketing Behavior and Executive Action (1957), as a break-point in the history of marketing thought, moving from the macro functions-institutions-commodities approach to a micromarketing management paradigm; marketing began to incorporate other fields of knowledge besides economics, notably behavioral science, becoming a multidisciplinary field. For some scholars, Alderson's book marks the beginning of the Marketing Management Era.

Unlike economists, marketers have difficulty in organizing the different theories in their discipline into schools-of-thought. However, some marketing historians like Jagdish Sheth have tried to identify the main concepts behind the work of scholars in the field, grouping their ideas into "marketing schools" such as the following:

· The Managerial school emerged during the late 1950s and became arguably the predominant and most influential school of thought in the field.

· The Consumer/buyer behavior school, which dominated the academic field in the second half of the twentieth century (apart from the Managerial school), features theories emerging from behavioral science.

· The Social exchange school, which focuses on exchange as the fundamental concept of marketing.

Marketing history

Much of traditional marketing practice prior to the twentieth century remained hidebound by rules-of-thumb and lack of information.

Information technology, especially since the mid-twentieth century, has given the marketers new channels of communication as well as enhanced means of aggregating and analyzing marketing data.

Specializations have emerged (especially sales versus marketing and advertising versus retailing) and re-combined (business development) over the years.

Timeline of innovation

· 1450: Gutenberg's metal movable type, leading eventually to mass-production of flyers and brochures

· 1730s: emergence of magazines (a future vector of niche marketing)

· 1836: first paid advertising in a newspaper (in France)

· 1839: posters on private property banned in London

· 1864: earliest recorded use of the telegraph for mass unsolicited spam

· 1867: earliest recorded billboard rentals

· 1880s: early examples of trademarks as branding

· 1905: the University of Pennsylvania offered a course in "The Marketing of Products"[6]

· 1908: Harvard Business School opens

· 1922: radio advertising commences

· 1940s: electronic computers developed

· 1941: first recorded use of television advertising

· 1950s: systematization of telemarketing

· 1970s: E-commerce invented

· 1980s: development of database marketing as precursor to Customer Relationship Management (CRM).

· 1980s: emergence of relationship marketing

· 1980s: emergence of computer-oriented spam

· 1984: introduction of guerrilla marketing

· 1985: desktop publishing democratizes the production of print-advertising

1991: Integrated marketing communications (IMC) gains academic status

· 1990s CRM and IMC (in various guises and names) gain dominance in promotions and marketing planning.

· 1995-2001: the Dot-com bubble temporarily re-defines the future of marketing

· 1996: identification of viral marketingMARKETING CONCEPTS

There are five core marketing concepts:

a. Needs, wants and demands

Needs

The basic concept underlying marketing is the human needs. Human needs are states of deprivation. They include:

· Physical needs-food, clothing, warmth and safety.

· Social needs-for belonging and affection.

· Individual needs-for knowledge and self-expression.

These needs were not created by marketers; they are a basic part of the human DNA.

Wants

Wants are the form human needs take as they are shaped by culture and individual. For example a Kenyan Urbanite needs food but wants a burger from Galitos fast food outlet. Wants are shaped by one’s society and are described in terms of objects that will satisfy needs.

Demands

Demands are wants that are backed by purchasing/buying power. People demand products with benefits that add up to the most value and satisfaction.

Outstanding companies go to greater lengths to learn about and understand their customers’ needs, wants and demands. They conduct consumer research and analyze mountains of customer data.

b. Marketing Offers

This mans a combination of products, services, information or experiences offered to a market to satisfy a need or want. Marketing offers also include services, activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything.

Marketing offers also include other entities-such persons, places, organizations, information and ideas. Smart marketers look beyond the attributes of the products (marketing myopia) and services they sell and they create brand meaning and brand experiences for consumers. For example Nike is more than just shoes; it’s what the shoes do for you and where they take you.

c. Value and satisfaction

Customer value and satisfaction are the key building blocks for developing and managing customer relationships. Consumers make choices based on their perceptions of the value and satisfaction that various products and services deliver. Customers form expectations about the value of various marketing offers and buy according .Satisfied customers buy again and tell others of their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.

d. Exchanges, transactions and relationships

An exchange is the act of obtaining a desired object from someone by offering something in return.

Whereas exchange is the core concept of marketing, a transaction in turn is marketing’s unit of measurement.

A transaction consists of a trade of values between two parties. For example you pay at Nakumatt sh.20000 and a get a Samsung flat-screen TV.

Marketing consists of actions taken to build and maintain desirable relationships with target audiences involving a product, service, idea or other objects. Beyond simply attracting new customers and creating transactions, the goal is to retain customers and social relationship by consistently delivering superior value.

e. Markets

A market is a set of actual and potential buyers of a product .These buyers share a particular need or want that can be satisfied through an exchange relationship. The size of the market depends on the number of people who exhibit the need, have resources to engage in exchange and are willing to exchange these resources for what they want.

ROLE OF MARKETING IN SOCIETY

a) Creating value for customers

The marketing department starts by researching consumer needs, wants and managing marketing information to gain a full understanding of the market place.

Good marketing companies know they cannot serve all customers in every way and need to focus their resources on the customers they can serve best and most profitably.

b) Championing More Ethics and Social Responsibility

Marketers are reasoning their relationships with social values and responsibilities. With the worldwide consumerism and environmentalism movements, today’s markets are being called upon to take greater responsibility for social and environmental impact of their actions. More forward looking companies are readily accepting their responsibilities to the world around them .They take socially responsible actions as opportunities to do well by doing well.

c) Growth of not for-- Profit Marketing

In recent years, marketing has become a major part of the strategies of many not-for-profit organizations such as colleges, hospitals, museums and even churches. Churches facing competition and shrinking numbers, have increasingly borrowed marketing tools and tactics from companies selling worldlier goods. Many are tailoring their core product-religion-to needs of specific demographic groups.

Similarly private colleges facing declining enrollment and rising costs are using marketing to compete for students and funds.

d) Creation of new Lifestyles in the New Digital Age

Using today’s vastly more powerful computers, marketers are able to create detailed database and use them to target customers with offer designed to meet in their specific needs and buying patterns. Technology together with marketing has brought a new communication and advertising tools-ranging from cell phones, CD ROMS and interactive TV to video kiosks at airports and shopping malls. Through e-commerce, customers can learn about, design, order and pay for products and services-without leaving home. This has brought about a culture of convenience, express delivery and home deliveries.

MARKETING ENVIRONMENT

Former McDonald’s CEO, Jim Cantalupo, summed the marketing environment up his way

“Ray Kroc (52 years old salesman of milk-shake mixing machines bought in 1955 a string of 7 restaurants owned by Richard and Maurice McDonald-today (2006) –more than 31,000 restaurants worldwide serving 47 million customers per day, raking up sales of more than $50 B annually) used to say he didn’t know what we would be selling in the year 2000, but whatever it was, we would be selling the most of it. He recognized early on that the consumer needs change and we want to change with it.”

Marketing environment are the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.

As we move into the 21st Century, both consumers and marketers wonder what the future holds as the future holds as the environment continues to change rapidly.

The marketing environment is made up of the microenvironment and macro environment.

A. MICRO-ENVIRONMENT

The microenvironment consists of actors close to the company that affects its ability to serve its customers-these include the company, suppliers, marketing intermediaries, customer markets, competitors and publics.

Marketing management’s job is to build relationships with customers by crating customer value and satisfaction. For marketing Managers to succeed, they need to build relationships with other company departments, suppliers, marketing intermediaries, customer markets, competitors, and publics.

ACTORS IN THE MICRO-ENVIRONMENT

a. THE COMPANY

In designing marketing plans, the marketing management takes into account groups such as top management ,finance, research and Development(R&D),purchasing&Logistics,operations and accounting.

Top management sets the company’s mission, objectives, broad strategies and policies. Marketing managers make decisions within these strategies and plans. Marketing managers must work closely with other departments. Finance is concerned with finding and using funds to carry out marketing plan. The R&D department focuses on designing safe and attractive products. Purchasing worries about getting suppliers and materials whereas operations are responsible for producing and distributing the desired quality and quantity of products.

Accounting has to measures revenues and costs to help marketing know how well it is achieving its objectives.

Under the marketing concept all of these functions must ‘think Customer!’

b. SUPPLIERS

Suppliers form an important link in the company’s overall customer value delivery system .They provide the resources needed by the company to produce goods and services. Suppliers’ problems can seriously affect marketing. Marketing Managers must watch supply availability-supply shortages or delays, labor strikes and other events, can cost sales in the short-run and damage customer satisfaction in the long-run.

Marketing Managers also monitor the price trends of their key inputs-rising trends of their increases that can harm the company’s sales volumes.