Marketing Management Summary of
Fundamentals of Marketing – Pre-Master UvA
Chapter 1 – Marketing Principles and Society
What is marketing?
Defining Definition
institution/aut
hor
CIM The management process responsible for identifying,
anticipating, and satisfying customer requirements
profitably.
(Chartered Institute of Marketing, 2015: 2)
AMA Marketing 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, 2017)
A French Marketing is the adaptation strategy of organizations
perspective to competitive markets so that they can influence the
behaviour of the customer segments on which they
depend, through an offering whose perceived value is
durably superior to that of competitors. In the
commercial sector, the role of marketing is to create
economic value for the company by creating value as
perceived by customers.
- The concept of marketing has changed over the years, from
including only transactional concepts such as pricing, promotion,
and distribution, to encompassing relationship concepts as well,
such as the importance of customer trust, risk, commitment,
and co-creation
Market orientation
- Lies at heart of marketing developing a market orientation makes
organizations more profitable in both the long and short runs
- may be imperative for survival in service firms and the source
of competitive advantage in manufacturing firms
- developing a market orientation is not the same as developing a
marketing orientation
- refers to ‘the organization-wide generation of market
intelligence pertaining to current and future customer
needs, dissemination of the intelligence across the
departments, and organization-wide responsiveness to it.
- So, a market orientation not only involves marketing, but also
requires a focus on:
, customer orientation, which is concerned with creating
superior value by continuously developing and redeveloping
offerings to meet customer needs
competitor orientation, which requires an organization to
develop an understanding of its competitors’ short-term strengths
and weaknesses, and its own long-term capabilities and
strategies
interfunctional coordination, which requires all functions of an
organization to work together for long-term profit growth
A Brief History of Marketing
Marketing developed in a four-stage sequence, as follows:
1. Production period, 1890s–1920s—The period was characterized by
a focus in the firm on physical production and supply, where
demand exceeded supply, there was little competition, and the
range of products was limited. This phase came after the Industrial
Revolution.
2. Sales period, 1920s–50s—The second period was characterized by
a focus in the firm on personal selling supported by market
research and advertising. This phase took place after the First
World War.
3. Marketing period, 1950s–80s—Next came a more advanced focus
in the firm on the customer’s needs. This phase came after the
Second World War.
4. Societal marketing period, 1980s–present day—Marketing then
came to be characterized by a stronger focus on social and ethical
concerns in marketing in the firm and recognition that not-for-
profits could also undertake marketing. This phase took place during
the ‘information revolution’ of the late 20th century
Marketing developed as a result of the influence of its practitioners, as well
as developments in related disciplines, including the areas of industrial
economics, psychology, sociology, and anthropology, as follows:
Industrial economics influences—Our knowledge of the matching
of supply and demand, within industries, owes much to the
development of microeconomics. For instance, the economic
concepts of ‘perfect competition’ and the ‘matching of supply and
demand’ underlie the marketing concept, particularly in relation to
the concepts of the price at which offerings are sold and the quantity
distributed. Theories of income distribution, scale of operation,
monopoly, competition, and finance all derive from economics,
although the influence of economics over marketing is declining
Psychological influences—Our knowledge of consumer behaviour
derives principally from psychology, especially in the early days,
motivation research in relation to consumer attitudes, perceptions,
motivations, and information processing, and our understanding of
persuasion, consumer personality, and customer satisfaction
Sociological influences—Knowledge of how groups of people
behave derives from sociology, with insights into areas such as how
, people from similar gender and age groups behave (demographics),
how people in different social positions within society behave (class),
why we do things in the way that we do (motivation), general ways
that groups behave (customs), and culture. Our understanding of
what society thinks as a whole (i.e. public opinion), how
communications pass through opinion leaders, and how we influence
people in the way that they think and to adopt our perspective (e.g.
propaganda research) have all informed marketing practice.
Anthropological influences—Our debt to social anthropology
increases as we use qualitative approaches such as ethnography,
netnography, and observation in researching consumer
behaviour, particularly the behaviour of subgroups and cultures
(such as tweenagers, haul girls).
The Principal Principles of Marketing
- Marketing involves a series of highly complex interactions
between individuals, organizations, society, and government it is
difficult to develop general principles that apply to all contexts
- we can make at least some law-like generalizations (Leone & Schultz
(1980)):
1. Advertising has a direct and positive influence on total
industry (market) sales: all advertising done at industry level serves
to increase sales within that industry.
2. Selective advertising has a direct and positive influence on
individual company (brand) sales: advertising undertaken by a
company tends to increase the sales of the particular brand for
which it was spent.
3. The elasticity of selective advertising on company (brand) sales is
low (inelastic): for frequently purchased goods, advertising has only
a very limited effect in raising sales.
4. Increasing store shelf space (display) has a positive impact on
sales of non-staple grocery items, such as products bought on
impulse (e.g. ice cream, chocolate bars) rather than those that are
planned purchases, which are less important, but perhaps more
luxurious, types of good (e.g. desserts, certain types of cooking
sauces). For impulse goods, the more shelf space you give an item,
the more likely you are to sell it.
, 5. Distribution, defined
by the number of
outlets, has a positive
influence on
company sales
(market share): setting
up more retail
locations has a positive
influence on sales.
Marketing as Exchange
- Two-way exchange
process
- Not solely about
marketing organization
but also customer
inputs
o specify how we
might satisfy
their needs, because marketers cannot read their minds
must then pay for the offering
- mid 1970s: marketing centred on exchange process between sellers
and buyers & associated supply chain intermediaries economic
and social exchange relationships
- two-way (dyadic) exchanges
The Marketing Mix and the 4Ps
- Product—for example the offering and how it meets customers’
needs, its packaging, and its labelling
- Place (distribution)—for example the way in which the offering
meets customers’ needs
- Price—for example the cost to the customer and the cost plus profit
to the seller
- Promotion—for example how the offering’s benefits and features
are conveyed to the potential buyer
The Extended Marketing Mix
- Extension to include difference in service and goods context:
Physical evidence—The aim here is to emphasize that the tangible
components of services are strategically important: potential
university students, for example, might assess whether or not they
want to attend a university and a particular course by requesting a
copy of brochures or by visiting the campus to assess the
servicescape for themselves.
Process—This aims to emphasize the importance of the service
delivery. When processes are standardized, it is easier to manage
