1
SUMMIT INSTITUTE OF PROFESSIONALS
LEADERSHIP AND MANAGEMENT
CPA ADVANCED LEVEL
TOPIC: MARKETING
Definition of Marketing
Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through creating and
exchanging products and value with others.”
Core marketingterms
1. Needs – The basic concept underlying marketing is that of human needs. Needs comprise of those things that human beings
feel they cannot do without e.g. food, clothing, shelter, safety, educationetc.
2. Wants – Are forms of human needs that improve on their well-being but which they can do without.
3. Demand –Demand is the quantity of a commodity that consumers are willing and able to buy at a given price over a given time
period other factors held constant.
4. Product – Is anything that can be offered to satisfy needs or wants. It can be tangible or intangible.
5. Market – A constituency of potential customers sharing particular needs or wants and who might be willing and able to
engage in exchange to satisfythatneed or want.
6. Marketing offer – Is a combination of products or service presented to the market to satisfy a need or awant.
7. Value and Satisfaction – Value is the ability of a commodity to satisfy human wants. It also referred to as quality or utility.
8. Exchange – Is the act of obtaining a desired object from someone by offering something in return.
9. Transaction – An exchange of values between two or more parties, where either partygains.
10. Marketing Management – Is the art and science of choosing target markets and building relationships withthem.
Marketing management orientations
These are alternative concepts and philosophies under which organization conduct their marketing activities .the orientations determine the
approach of managers to marketing. They include;
1. Production concept- This concept holds that consumers will prefer products that are widely available and inexpensive. Managers of
production oriented business concentrate on achieving high production efficiency, low cost and mass distribution. This orientation
makes sense in developing countries where consumers are more interested in obtaining the product those qualities. The production
orientation is however criticized in that it is quite impersonal to consumers.
2. Product concept- This concept holds that consumers will favor products that offer the best quality, best performance or best product
features. Managers guided by this concept focus on making superior products and improving them over time. They assume that
consumers admire well made products and have the capacity to appraise quality and performance.
3. Selling concept- This holds that consumers and businesses, if left alone will ordinarily not buy enough of the organizations product.
The organization must therefore undertake an aggressive selling and promotion effort. Managers with this orientation assume that
consumers typically refuse to buy and hence must be forced to buy. Managers should be aim at selling what they make rather than
what the market wants. This orientation is common for non-profit making organizations and when the firm has excess capacity. The
limitation of this approach is that forcing customers to buy may change the image of the organization and its products
4. Marketing concept- This is a business philosophy that challenges the above three concepts. It holds that the key to achieving the
organizations marketing goals is the company being more competitive than its rivals in creating delivering and communication of
customers’ value to its target market. It requires establishment of what the customer needs through market research, producing
what is needed by the customer and delivering it when it is needed. It also involves maintenance of good customer relations.The
marketing concept rests on four pillars
i) Target market- Companies do best when they choose their target markets carefully and prepare tailored
marketing programs or strategies
ii) Customer needs- Customer retention is more critical than customer attraction. The key to customer retention is
customer satisfaction. A satisfied customer:
• Talks favorably to others about the company and its products
• Buys again
1
, 2
• Pays less attention to competing brands/products and advertising
• Buys other products that the company adds to its line.
Today marketing aims to delight the customer i.e. going beyond meeting the mere expectations of the customer.
iii) Integrated Marketing- When all the company departments work together to serve the customers interests, the
result is integrated marketing. Integrated marketing takes place on two levels
• The various marketing functions e.g. advertising, personal selling, customer service, product management,
marketing research etc. must work together. All marketing functions must be concentrated from the
customer’s point of view.
• Marketing must be embraced by the other departments. They must also think about customers to foster
teamwork among all departments. The company carries out internal marketing as well as external
marketing.
iv) Profitability - The ultimate purpose of the marketing concept is to help organizations achieve their objectives. Profitability
should be the bench-mark or the ultimate arbiter of success.
5. Societalmarketing concept- This concept goes beyond marketing. It holds that the organizations task is to determine the needs, the
interests of the target market and to deliver the desired satisfaction more effectively and efficiently than competition in a manner
that preserves and enhances the society’s well-being. This concept therefore calls upon marketers to build social and ethical
considerations in their marketing practices. Managers with sociable orientation try to balance between the often conflicting criteria
of company profits, consumer satisfaction, public interest and social responsibility. The societal marketing concept calls upon
marketers to balance three considerations in settling their marketing policies i.e. company profit, consumer wants or needs and
society interests.
The MarketingMix
The marketing mix is a combination of controllable, tactical marketing tools that a firm blends to produce the response it wants in the
target market. The marketing mixes consist of everything the firm can do to influence the demand for its product. The many possibilities
can be collected into four groups of variables also known as the “four Ps” of marketing mix i.e. product, price, place and promotion.
Theconventional4 P‟s ofmarketinghavesince beenexpanded to 7 P‟s as:
Marketing Mix Description
Product The goods and services on offer and their quality, feature, and design.
Price That which consumers are willing to pay to get a unit of the product or services
Place The distribution methodology of the products or service to the market place or target
market
Promotion The selling activity used to motivate the customers and entice them to buy more of
the product
People People are the human beings who drive product or service delivery
Process The framework that is followed in the marketing and delivery of products and services
Physical evidence The tangible elements of services, ideas or any other intangible products put on offer
Customer Relationship Marketing(CRM).
CRM is defined as the overall process of building and maintaining profitable ties between organizations and customers by delivering superior
customer values and satisfaction.Overtime, relationship marketing has grown and replaced transactional marketing as summarized in the table
below.
Transactionalmarketing Relationship marketing
(One waycommunication) (Two way communication)
• Focus on a singlesale • Focus on customerretention
• Product features oriented • Orientation on productbenefits
• Short timescale • Longtimescale
• Little customerservice • High customer service
• Limited customercommitment • High customer commitment
• Moderate customer contact • High customer contact
• Quality is the concern ofproduction • Quality is the concern ofall
CRM therefore involves attracting, retaining and growing customers.
Basic Tenets of CRM
To effectively manage customer relationship, marketers normally employ the following three approaches:
, 3
1. Customer Value andSatisfaction-
Customerperceivedvalueisthecustomer’sevaluationofthedifferencebetweenthebenefitsandcosts of a marketing offer relative to
those of the competing offers. Whereas the customer may not be accurate in judging the cost and values, they would always
want to maximize their benefits at minimum cost.Customer satisfaction refers to a products perceived performance as
compared to the buyers‟ expectation. If the products performance falls short of expectation the customer is dissatisfied and
vice versa. Smart companies aim at delighting customers by exceeding theirexpectation.
Satisfied customers produce several benefits to the company including
(a) They are less pricesensitive.
(b) They spread a favourable word of mouth to others about thecompany
(c) They remain loyal for a longertime.
(d) They buy a wider range ofproducts
(e) They cost less to service as they are familiar with the product and businessdesign
(f) They exhibit strong Lifetime Customer Value(LCV)
2. Customer loyalty andretention- For successful CRM marketers must work to create customer loyalty. A loyal customer is one
who buys the company’s brand and no other.
3. Growing share ofcustomers- Marketers are pre-occupied by the want to increase their share of customers i.e. the share they
get of the customers purchasing in their productcategories.To increase share of customers,
(a) Firms can offer greater variety to currentcustomers
(b) Train employees to cross sell - Cross selling means getting more business from current customers of one product by
selling them additional offering e.g. offering a customer who comes to buy a suit, a shirt, tie, a belt andshoes.
Types of markets
Consumer markets
Consumer markets refer to all the individuals and households that buy goods and services for personal consumption. Consumer behavior is
normally a response to stimuli. These are various types of stimuli that will determine the behaviour of consumer. They include:
• Market stimuli i.e. price, product, place and promotion.
• Environmental stimuli including economic, political, technological, and social factors.
• Buyer characteristics including personal psychological
Buying decision process
• The buyer recognizes the need or a problem triggered by a stimulus
• The consumer searches for information relating the product from various sources
• Consumer evaluates the alternative by comparing the products so as to form preferences
• The consumer finally decides to buy the product having been satisfied that the product is right.
• After purchasing and using the product the consumer may experience satisfaction or dissatisfaction
Industrial markets/business markets
The General Characteristics of the Business Markets
• Has fewer buyers innumber
• Has larger buyers in terms of quantitydemanded
• Has close suppliers to buyerrelationship
• Has geographical concentration ofbuyers
• Buying is derived demanddependent
• Inelastic demand: not affected by pricemuch
• Fluctuatingdemand
• Professional purchasing
• Has several buyinginfluences
• Direct purchasing: not via intermediaries
• Possibility of purchasereciprocity
Business buying procedure in business markets
• Determination of requirements by users
3
SUMMIT INSTITUTE OF PROFESSIONALS
LEADERSHIP AND MANAGEMENT
CPA ADVANCED LEVEL
TOPIC: MARKETING
Definition of Marketing
Marketing is a social and managerial process whereby individuals and groups obtain what they need and want through creating and
exchanging products and value with others.”
Core marketingterms
1. Needs – The basic concept underlying marketing is that of human needs. Needs comprise of those things that human beings
feel they cannot do without e.g. food, clothing, shelter, safety, educationetc.
2. Wants – Are forms of human needs that improve on their well-being but which they can do without.
3. Demand –Demand is the quantity of a commodity that consumers are willing and able to buy at a given price over a given time
period other factors held constant.
4. Product – Is anything that can be offered to satisfy needs or wants. It can be tangible or intangible.
5. Market – A constituency of potential customers sharing particular needs or wants and who might be willing and able to
engage in exchange to satisfythatneed or want.
6. Marketing offer – Is a combination of products or service presented to the market to satisfy a need or awant.
7. Value and Satisfaction – Value is the ability of a commodity to satisfy human wants. It also referred to as quality or utility.
8. Exchange – Is the act of obtaining a desired object from someone by offering something in return.
9. Transaction – An exchange of values between two or more parties, where either partygains.
10. Marketing Management – Is the art and science of choosing target markets and building relationships withthem.
Marketing management orientations
These are alternative concepts and philosophies under which organization conduct their marketing activities .the orientations determine the
approach of managers to marketing. They include;
1. Production concept- This concept holds that consumers will prefer products that are widely available and inexpensive. Managers of
production oriented business concentrate on achieving high production efficiency, low cost and mass distribution. This orientation
makes sense in developing countries where consumers are more interested in obtaining the product those qualities. The production
orientation is however criticized in that it is quite impersonal to consumers.
2. Product concept- This concept holds that consumers will favor products that offer the best quality, best performance or best product
features. Managers guided by this concept focus on making superior products and improving them over time. They assume that
consumers admire well made products and have the capacity to appraise quality and performance.
3. Selling concept- This holds that consumers and businesses, if left alone will ordinarily not buy enough of the organizations product.
The organization must therefore undertake an aggressive selling and promotion effort. Managers with this orientation assume that
consumers typically refuse to buy and hence must be forced to buy. Managers should be aim at selling what they make rather than
what the market wants. This orientation is common for non-profit making organizations and when the firm has excess capacity. The
limitation of this approach is that forcing customers to buy may change the image of the organization and its products
4. Marketing concept- This is a business philosophy that challenges the above three concepts. It holds that the key to achieving the
organizations marketing goals is the company being more competitive than its rivals in creating delivering and communication of
customers’ value to its target market. It requires establishment of what the customer needs through market research, producing
what is needed by the customer and delivering it when it is needed. It also involves maintenance of good customer relations.The
marketing concept rests on four pillars
i) Target market- Companies do best when they choose their target markets carefully and prepare tailored
marketing programs or strategies
ii) Customer needs- Customer retention is more critical than customer attraction. The key to customer retention is
customer satisfaction. A satisfied customer:
• Talks favorably to others about the company and its products
• Buys again
1
, 2
• Pays less attention to competing brands/products and advertising
• Buys other products that the company adds to its line.
Today marketing aims to delight the customer i.e. going beyond meeting the mere expectations of the customer.
iii) Integrated Marketing- When all the company departments work together to serve the customers interests, the
result is integrated marketing. Integrated marketing takes place on two levels
• The various marketing functions e.g. advertising, personal selling, customer service, product management,
marketing research etc. must work together. All marketing functions must be concentrated from the
customer’s point of view.
• Marketing must be embraced by the other departments. They must also think about customers to foster
teamwork among all departments. The company carries out internal marketing as well as external
marketing.
iv) Profitability - The ultimate purpose of the marketing concept is to help organizations achieve their objectives. Profitability
should be the bench-mark or the ultimate arbiter of success.
5. Societalmarketing concept- This concept goes beyond marketing. It holds that the organizations task is to determine the needs, the
interests of the target market and to deliver the desired satisfaction more effectively and efficiently than competition in a manner
that preserves and enhances the society’s well-being. This concept therefore calls upon marketers to build social and ethical
considerations in their marketing practices. Managers with sociable orientation try to balance between the often conflicting criteria
of company profits, consumer satisfaction, public interest and social responsibility. The societal marketing concept calls upon
marketers to balance three considerations in settling their marketing policies i.e. company profit, consumer wants or needs and
society interests.
The MarketingMix
The marketing mix is a combination of controllable, tactical marketing tools that a firm blends to produce the response it wants in the
target market. The marketing mixes consist of everything the firm can do to influence the demand for its product. The many possibilities
can be collected into four groups of variables also known as the “four Ps” of marketing mix i.e. product, price, place and promotion.
Theconventional4 P‟s ofmarketinghavesince beenexpanded to 7 P‟s as:
Marketing Mix Description
Product The goods and services on offer and their quality, feature, and design.
Price That which consumers are willing to pay to get a unit of the product or services
Place The distribution methodology of the products or service to the market place or target
market
Promotion The selling activity used to motivate the customers and entice them to buy more of
the product
People People are the human beings who drive product or service delivery
Process The framework that is followed in the marketing and delivery of products and services
Physical evidence The tangible elements of services, ideas or any other intangible products put on offer
Customer Relationship Marketing(CRM).
CRM is defined as the overall process of building and maintaining profitable ties between organizations and customers by delivering superior
customer values and satisfaction.Overtime, relationship marketing has grown and replaced transactional marketing as summarized in the table
below.
Transactionalmarketing Relationship marketing
(One waycommunication) (Two way communication)
• Focus on a singlesale • Focus on customerretention
• Product features oriented • Orientation on productbenefits
• Short timescale • Longtimescale
• Little customerservice • High customer service
• Limited customercommitment • High customer commitment
• Moderate customer contact • High customer contact
• Quality is the concern ofproduction • Quality is the concern ofall
CRM therefore involves attracting, retaining and growing customers.
Basic Tenets of CRM
To effectively manage customer relationship, marketers normally employ the following three approaches:
, 3
1. Customer Value andSatisfaction-
Customerperceivedvalueisthecustomer’sevaluationofthedifferencebetweenthebenefitsandcosts of a marketing offer relative to
those of the competing offers. Whereas the customer may not be accurate in judging the cost and values, they would always
want to maximize their benefits at minimum cost.Customer satisfaction refers to a products perceived performance as
compared to the buyers‟ expectation. If the products performance falls short of expectation the customer is dissatisfied and
vice versa. Smart companies aim at delighting customers by exceeding theirexpectation.
Satisfied customers produce several benefits to the company including
(a) They are less pricesensitive.
(b) They spread a favourable word of mouth to others about thecompany
(c) They remain loyal for a longertime.
(d) They buy a wider range ofproducts
(e) They cost less to service as they are familiar with the product and businessdesign
(f) They exhibit strong Lifetime Customer Value(LCV)
2. Customer loyalty andretention- For successful CRM marketers must work to create customer loyalty. A loyal customer is one
who buys the company’s brand and no other.
3. Growing share ofcustomers- Marketers are pre-occupied by the want to increase their share of customers i.e. the share they
get of the customers purchasing in their productcategories.To increase share of customers,
(a) Firms can offer greater variety to currentcustomers
(b) Train employees to cross sell - Cross selling means getting more business from current customers of one product by
selling them additional offering e.g. offering a customer who comes to buy a suit, a shirt, tie, a belt andshoes.
Types of markets
Consumer markets
Consumer markets refer to all the individuals and households that buy goods and services for personal consumption. Consumer behavior is
normally a response to stimuli. These are various types of stimuli that will determine the behaviour of consumer. They include:
• Market stimuli i.e. price, product, place and promotion.
• Environmental stimuli including economic, political, technological, and social factors.
• Buyer characteristics including personal psychological
Buying decision process
• The buyer recognizes the need or a problem triggered by a stimulus
• The consumer searches for information relating the product from various sources
• Consumer evaluates the alternative by comparing the products so as to form preferences
• The consumer finally decides to buy the product having been satisfied that the product is right.
• After purchasing and using the product the consumer may experience satisfaction or dissatisfaction
Industrial markets/business markets
The General Characteristics of the Business Markets
• Has fewer buyers innumber
• Has larger buyers in terms of quantitydemanded
• Has close suppliers to buyerrelationship
• Has geographical concentration ofbuyers
• Buying is derived demanddependent
• Inelastic demand: not affected by pricemuch
• Fluctuatingdemand
• Professional purchasing
• Has several buyinginfluences
• Direct purchasing: not via intermediaries
• Possibility of purchasereciprocity
Business buying procedure in business markets
• Determination of requirements by users
3
