,Maria Gómez – IBE Marketing I 2022/2023
TOPIC 1
INTRODUCTION AND BASIC CONCEPTS IN MARKETING
MARKETING MANAGEMENT
We can have two types of decisions in marketing:
STRATEGIC DECISIONS (1-4): They are the most important decisions. The real
ones consist in defining the market and knowing the different characteristics to apply to
each segment. For instance, a strategic decision about market segmentation and
positioning strategies (2) means that, as markets are heterogeneous, we’ll try to separate
them into homogeneous ones. As for position, we’ll adapt the offer of our company (a
particular product) to the market we’ll deal with.
TACTIC DECISIONS (5-8): We may also know them as pricing strategies even
though price strategies are only a part of tactic decisions. Tactic decisions would not be
applied unless strategic decisions are taken before. Inside tactic decisions, we face the
4Ps which are product, pricing, promotion and placement. In the case of promotion (7),
we should not only focus on sales promotions as discounts but other concepts as a
whole.
DEFINITION FOR MARKET
Economic definition of market
The market is a place, but not necessarily physical, where the sellers can meet up with the
buyers to exchange goods and services. It is a potential place for a transaction to take place.
Win-win situation.
Marketing definition for market
The way that marketing interprets the market is different. In this case, it is a group of
consumers/organizations that share a need/wish that needs to be satisfied with the product or
service that the firms offer. Hence, the buyers must have the resources to purchase the product
and the transaction must be permitted by law and other regulations.
Nevertheless, there can be another definition: The group of consumers and organizations that
are interested in the product, have the resources to purchase the product and are permitted by
law and other regulations to acquire the product. Both of these three words are filters:
Interested: we need some needs the consumers have so they WANT to buy a particular
product or service.
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,Maria Gómez – IBE Marketing I 2022/2023
Resources: we have to take into account the willingness to pay or the purchasing power
of each consumer or group of consumers. This way, we will apply one strategy or
another.
Permitted: it has to be legally allowed.
WHAT IS MARKETING?
Marketing (Kotler definition): It is a social and managerial process by which individuals and
groups obtain what they need and want through creating, offering, and exchanging products of
value with others.
Group of consumers that share a need or wish that can be satisfied with the products or
services offered by the firm
The group of consumers and organizations that is interested in the product, has the
resources to purchase the product and is permitted by law and other regulations to
acquire the product.
Need: a basic requirement that an individual wishes to satisfy. For instance, a person may need
to be warm in the street in January and this need creates the wish to buy a jacket.
One of the main critiques that marketing receives is that some people believe that marketing
creates needs, which is a basic requirement that an individual wishes to satisfy. It is important
to note that marketing does not create needs because needs already exist. Hence, marketing
helps firms to influence the consumers’ preferences and it is based on the markets so that
consumers are free to choose whatever product they prefer. Moreover, it creates Unethical
campaigns, lies to the consumer…
Example: Do we need a Coke or an Audi car?
Defenders of marketing say that needs are there. It is true that the need to get an Audi is a need
to go to one place or another; just transportation. So, even this problem could be solved by
going by public transport, if the consumer has the money, he is free to choose to buy a luxury
car instead of a cheap one or go with public transport. Marketers say that consumers are free to
do whatever they desire.
Marketing philosophy:
Basic needs already exist.
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, Maria Gómez – IBE Marketing I 2022/2023
Consumers are free to choose (Markets). They can satisfy their needs with basic
products but they can choose to spend more money on a more sophisticated good.
Marketing influences preferences (wants)! Of course, you can drink water, but if you
can choose to drink coke, you’ll do it. This is a product with some characteristics that
make you enjoy it more. So, marketers do not create needs, but influence wants.
MASLOW’S THEORY: “HIERARCHY OF NEEDS”
Apart from satisfying our first needs, marketers may
awaken our least first needs such as confidence or respect
for others.
That is, maybe having an iPhone shows respect towards
people and power. The same applies to having a chauffeur instead of going in your car.
A product is anything that can be offered to satisfy a need or a want and it is susceptible to be
exchanged. They need to have tangibility and durability. We can make the following
distinctions:
A product is durable when it can provide a service to
a consumer during a certain period. When buying a
durable product, the consumer is facing uncertainty because they do not know for sure if the
product will end up being durable or not (need for warranties).
Reparability is the perception the consumer has of the product about the easiness to repair it.
Consumer surplus: a monetary utility which corresponds to the difference between the value
the consumer is willing to pay and the price it pays (net value in marketing).
VALUE (economic definition)
Every time there is a product whose production and delivery costs (lower bound) are lower than
the market value (willingness to pay by a consumer (upper bound)), both the firm and the
consumer can be strictly better off by exchanging. The surplus (market value – cost) is shared
by both parties.
Value added to the economy:
Firm surplus: PROFITS
Consumer surplus: Net value, UTILITY (monetary)
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