principle of Marketing

CHAPTER ONE
1. NATURE AND SCOPE OF MARKETING
1.1. Basic concepts of marketing.
1. Customer Needs, Wants, and Demands
• The most basic concept underlying marketing is that of
human needs.
• They include basic physical needs for food, clothing, warmth,
and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression.
• Wants are the form human needs take as they are shaped by
culture and individual personality.
•Demands: Wants backed by buying power
2. Market Offerings—Products, Services, and
Experiences.
• Consumers’ needs and wants are fulfilled through
market offerings some combination of products,
services, information, or experiences offered to a
market to satisfy a need or a want.
• Market offerings are not limited to physical
products.
• They also include services activities or intangible
and do not result in the ownership of anything.
 2.1 The Scope of Marketing
 Marketing people are involved in marketing 10
types of entities: goods, services, experiences,
events, persons, places, properties, organizations,
information, and ideas.
 Goods: Physical goods constitute the bulk of most
countries’ production and marketing effort.
eg. The United States produces and markets billions of
physical goods.
 Services: As economies advance, a growing
proportion of their activities are focused on the
production of services.
 Services include airlines, hotels, and maintenance and repair
people, as well as professionals such as accountants,
lawyers, engineers, and doctors.
 Experiences: by orchestrating several services and goods,
one can create, stage, and market experiences.
 Events: Marketers promote time-based events, such as the
Olympics, trade shows, sports events, and artistic
performances.
 Persons: Celebrity marketing has become a major business.
Artists, musicians, CEOs, Physicians, high-profile lawyers
and financiers.
 Places: Cities, states, regions, and nations compete to attract
tourists, factories, company headquarters, and new residents
 Properties: Properties are intangible rights of
ownership of either real property (real estate) or
financial property (stocks and bonds).
 . Organizations: Organizations actively work to build a
strong, favorable image in the mind of their publics.
 .Information: The production, packaging, and
distribution of information are one of society’s major
industries.
 . Ideas: Every market offering has a basic idea at its
core. In essence, products and services are platforms for
delivering some idea or benefit to satisfy need.
3. Customer Value and Satisfaction
• Value defined as a ratio between what the customer gets
and what he/she gives.
• The customer gets benefits and assumes costs
Based on this equation, the marketer can increase the
value of the customer offering by
1. Raising Benefits,
2. Reducing Costs,
3. Raising Benefits and Reducing Costs,
4. Raising Benefits By More Than The Raise In Costs
 4. Exchange, Transactions and Relationships
• Exchange is the act of obtaining a desired object from
someone by offering something in return.
• Exchange is only one of many ways people can obtain a
desired object.
• Exchange is the core concept of marketing. For an
exchange to take place, several conditions must be satisfied.
- At least two parties must participate.
- Each must have something of value to offer the other.
- Each party must also want to deal with the other party and
- Each must be free to accept or reject the other’s offer.
- Finally, each party must be able to communicate and
deliver. - These conditions simply make exchange possible.
 Transaction is a trade between two parties that involves
at least two things of value, agreed-upon conditions, a time
of agreement and a place of agreement.
 Whereas exchange is the core concept of marketing,
transaction is marketing’s unit of measurement.
 A transaction also involves:
 At least two things of value,
 Agreed upon condition,
 A time of agreement, and
 A place of agreement.
 5. Markets.
 Traditionally, a “market” was a physical place where
buyers and sellers gathered to buy and sell goods.
 Economists describe a marketas a collection of buyers
and sellers who transact over a particular product or
product class (such as the housing market or the grain
market).

Figure.1.1. a simple marketing system.

There are five types of customer markets.
1. Consumer markets consist of individuals and
households that buy goods and services for personal
consumption.
2. Business/industrial markets buy goods and services
for further processing or for use in their production
process.
3. Reseller markets buy goods and services to resell at
a profit.
4. Government markets : are made up of government
agencies that buy goods and services to produce
public services or transfer the goods and services to
others who need them.
6. Marketing
 The concept of markets finally brings us full
circle to the concept of marketing.
 Marketing means managing markets to bring
about exchanges and relationships for the
purpose of creating value and satisfying
needs and wants.
 Modern marketing system is characterized
by the company and competitors sending
their respective products and messages to the
consumers either directly or indirectly through
 1.2. Definitions of marketing
• The two most widely used definitions of marketing are
these:
1. Marketing is the management process which
identifies, anticipates, anfd supplies customer
requirements efficiently and proitably. (UK Chartered
Institute of Marketing).
2.Marketing is the process of planning and executing the
conception, pricing, promotion and distribution of ideas,
goods and services to create exchange and satisfy
individual and organizational objectives.(American
• The Chartered Institute of Marketing (CIM) definition
has been criticized because it takes profit as being the
only outcome of marketing,
• Whereas marketing approaches and techniques are
widely used by organizations such as charities and
government departments which do not have profit as
their goal.
1.3 Evolution and Philosophies of Marketing
 The Evolution of Marketing
 The development of marketing is an evolutionary
process. It has got four stages of development.
1.The production era.
• It was a stage where the emphasis of marketing was
 High demands, low competition, and absence of
consumer research characterized this stage.
 Therefore, marketing was devoted to increasing
production and physical distribution of products to
satisfy the high demand.
2.Sales era: Once a company was able to maximize its
production capabilities, it hired a sales force to sell its
inventory.
• When the company developed its products, consumer
needs received little consideration.
• The role of advertising and the sales force was to
make the desires of consumers fit the attributes of the
products being manufactured.
3.The Marketing Department Era:
 it was an era that occurred when research was used
to determine consumer needs.
 As competition grew, supply began to exceed
demand.
 A firm could not prosper without input from
marketing. As a result, marketing department was
created.
The marketing department conducted consumer
research and advised management on how to
design, price, distribute, and promote products.
4.The Marketing company era:
• This integrates consumer research and analysis
into all company efforts.
• Competition gets intense and sophisticated.
• Company efforts are integrated and frequently
evaluated.
1.4 Marketing management
• Marketing management is defined as the analysis,
planning, implementation, and control of
programs designed to create, build, and maintains
beneficial exchanges with target buyers for the
purpose of achieving organizational objectives
1.4.1. Company Orientations toward the Marketplace
• Marketing management is the conscious effort to
achieve desired exchange outcomes with target
markets.
There five competing concepts under which
organizations conduct marketing activities:
production concept, product concept, selling concept,
marketing concept, and societal marketing concept.
1.The Production Concept
• consumers prefer products that are widely available
and inexpensive.
• Managers of production-oriented businesses
concentrate on achieving high production efficiency,
2.The Product Concept
 onsumers favor those products that offer the most
quality, performance, or innovative features.
 Managers in these organizations focus on making
superior products and improving them over time,
assuming that buyers can appraise quality and
performance.
3.The Selling Concept
• Holds that consumers and businesses, if left alone,
will ordinarily not buy enough of the organization’s
products.
• The selling concept is practiced most aggressively
with unsought goods that buyers normally do not
4.The Marketing Concept
• The marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than its competitors in creating, delivering, and
communicating customer value to its chosen target
markets.
• Holds achieving organizational goals consists of the
company being more effective than its competitors in
creating, delivering, and communicating customer value
to its chosen target markets.
1.6. Marketing Tasks
1.6.1 Building Customer Relationship
• Customer relationship management is the overall process of
building and maintaining profitable customer relationships by
delivering superior customer value and satisfaction.
• It deals with all aspects of acquiring, keeping, and growing
customers.
• Customer Value: Attracting and retaining customers can be a
difficult task.
• Customers often face a bewildering array of products and services
from which to choose.
• Customer Satisfaction: Customer satisfaction depends on the
product’s perceived performance relative to a buyer’s expectations.
1.6. 2. Demand Management
• Marketing managers in different organizations might face any of the
following states of demand.
1. Negative demand: This is a state in which all or the major parts of
the society, dislikes the product and may even pay a price to avoid it.
Examples: are vaccination, alcoholic employees, dental work, and
seat belts. This marketing task or activity is known as
CONVERSIONAL .
2. No demand: This is a case where target customers may be
uninterested in or indifferent to a particular product.
• This marketing task is known as STIMULATIONAL marketing
For example, farmers may not know about a new farming method.
3. Latent demand: Consumers have a want that is not satisfied by
any existing product or service.
• This state of demand where many customers share a strong need
for something that does not exist in the form of actual product.
• The marketing task is called DEVELOPMENTAL marketing.
• 4. Falling demand:
• every organization faces falling demand for one or more of its
products.
• For example, churches have seen their membership decline, and
private colleges have seen fewer applications.
• marketing task is REMARKETING.
5. Irregular demand: It is a state in which the timing
pattern of demand is marked by seasonal and volatile
fluctuations causing problems of idle capacity and
overworked.
• For example museums are under-visited during weekdays
and overworked during weekends.
• The corresponding marketing task is
SYNCHROMARKETING,
6. Full demand: The organization has just the amount of
demand it wants and can handle.
• It is a state where the current level and timing of demand
is equal to the desired level and timing of demand.T
• he marketing task is MAINTENANCE marketing
7. Overfull demand: It is a state in which demand is
higher than the company can or wants to handle.
• Unwholesome-Some demand:
• Unwholesome products such as cigarettes, alcohol,
and hard drugs will attract organized effort to
destroy the demand or interest in particular product
or service.
• The marketing task is called DEMARKETING
 CHAPTER 2
2. Marketing environment
2.1.The Microenvironment and macroenvironment
• The marketing environment consists of a microenvironment and a
macroenvironment.
• The microenvironment consists of the actors close to the
company that affect its ability to engage and serve its customers
—the company, suppliers, marketing intermediaries, competitors,
publics, and customers.
• The macroenvironment consists of the larger societal forces that
affect the microenvironment—demographic, economic, natural,
technological, political, and cultural forces.
2.1.1 The Microenvironment
• Marketing builds profitable relationships with customers by
creating customer value and satisfaction.
• However, marketing managers cannot do this alone.
1. The company
• In designing marketing plans, marketing management
takes other company groups into account—groups
such as top management, finance, research and
development (R&D), information technology,
purchasing, operations, human resources, and
accounting.
• All of these interrelated groups form the internal
environment.
• Top management—including the company’s top
marketers—sets the company’s mission, objectives,
broad strategies, and policies.
• Marketing managers make decisions within these
2.suppliers
• Suppliers provide the resources needed to produce
its goods and services. Marketing managers must
watch supply availability and costs.
• Supply shortages or delays, natural disasters, and
other events can cost sales in the short run and
damage customer satisfaction in the long run.
• Rising supply costs may force price increases that
can reduce sales volume.
• Most marketers today treat their suppliers as
partners in creating and delivering customer value.
3.Marketing intermediaries
help the company promote, sell, and distribute its
products to final buyers.
• They include resellers, physical distribution firms,
marketing services agencies, and financial
intermediaries.
• Resellers are distribution channel firms that help the
company find customers or make sales to them.
These include wholesalers and retailers that buy and
resell merchandise.
• Physical distribution firms help the company stock
and move goods from their points of origin to their
destinations.
• Marketing services agencies are the marketing research
firms, advertising agencies, media firms, and marketing
consulting firms that help the company target and promote
its products to the right markets.
• Financial intermediaries include banks, credit companies,
insurance companies, and other businesses that help finance
transactions or insure against the risks associated with the
buying and selling of goods.
4. Competitors
• The marketing concept states that, to be successful, a
company must provide greater customer value and
satisfaction than its competitors do.
• Thus, beyond simply adapting to the needs of target
consumers, marketers must gain strategic advantage by
positioning their offerings strongly against competitors’
5. Publics
• A public is any group that has an actual or potential interest in
or impact on an organization’s ability to achieve its objectives.
• We can identify seven types of publics:
– Financial publics. This group influences the company’s
ability to obtain funds. Banks, investment analysts, and
stockholders are the major financial publics.
– Media publics. This group carries news, features, editorial
opinions, and other content. It includes television stations,
newspapers, magazines, and blogs and other social media.
– Government publics. Management must take government
developments into account.
– Marketers must often consult the company’s lawyers on
issues of product safety, truth in advertising, and other
matters.
• Citizen-action publics. A company’s marketing decisions may
be questioned by consumer organizations, environmental
groups, advocacy groups, and others. The company’s public
relations department can help it stay in touch with consumer
and citizen groups.
• Internal publics. This group includes workers, managers,
volunteers, and the board of directors. Large companies use
newsletters and other means to inform and motivate their
internal publics.
• General public. A company needs to be concerned about the
general public’s attitude toward its products and activities. The
marketplace’s image of the company affects its buying
behavior.
• Local publics. This group includes local community residents
and organizations. Large companies usually work to become
responsible members of the local communities in which they
6. Customers

• Customers are the most important actors in the company’s

microenvironment. The aim of the entire value delivery
network is to engage target customers and create strong
relationships with them.
• The company might target any or all of five types of
customer markets.
• Consumer markets consist of individuals and households
that buy goods and services for personal consumption.
• Business markets buy goods and services for further
processing or use in their production processes.

• Reseller markets buy goods and services to resell at a profit.

• Government markets consist of government agencies that
buy goods and services to produce public services or transfer
2.1.2. The Macroenvironment
• The company and all the other actors operate in a
larger macroenvironment of forces that shape
opportunities and pose threats to the company.
• Companies that understand and adapt well to their
environments can thrive. Those that don’t can face
difficult times.
1.The Demographic Environment
• Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other characteristics.
• The demographic environment is of major interest
to marketers because it involves people, and people
ultimately make up markets.
• Changes in the global demographic environment
have major implications for business.
• Thus, marketers keep a close eye on demographic
trends and developments in their markets.
• The Changing Age Structure of the Population
• Geographic Shifts in Population
2. The Economic Environment
• Markets require buying power as well as people.
• The economic environment consists of economic factors
that affect consumer purchasing power and spending
patterns.
• Marketers should pay attention to and forecast the
movements of key economic variables such as income,
cost of living, and savings and borrowing patterns.
3. The Natural Environment
• The natural environment involves the physical
environment and the natural resources that are needed as
inputs by marketers
• At the most basic level, unexpected happenings in the
physical environment—anything from weather and
natural disasters to health crises such as the global
COVID-19 pandemic—can affect companies and their
marketing strategies.
• For unpredictable disruptions, companies must react
quickly and decisively.
• Environmental sustainability means meeting present
needs without compromising the ability of future
generations to meet their needs.
4. The Technological Environment
• The technological environment is perhaps the most
dramatic force reshaping our world.
• Technology has enabled such wonders as antibiotics, air
travel, the internet, smartphones, artificial intelligence, and
driverless cars.
• The technological environment changes rapidly, creating new
markets and opportunities.
• However, every new technology replaces an older technology.
• Transistors hurt the vacuum-tube industry, digital
photography hurt the film business, and digital downloads
and streaming have hurt the DVD and book businesses.
5. The Political and Social Environment
• Marketing decisions are strongly affected by developments in
the political environment.
• The political environment consists of laws, government
agencies, and pressure groups that influence or limit various
organizations and individuals in a given society.
6.The Cultural Environment
• The cultural environment consists of institutions and
other forces that affect a society’s basic values,
perceptions, preferences, and behaviors.
• People grow up in a particular society that shapes their
basic beliefs and values.
• They absorb a worldview that defines their relationships
with others.
• The following cultural characteristics can affect
marketing decision making.
• The Persistence of Cultural Values. These beliefs shape
more specific attitudes and behaviors found in everyday
life. Core beliefs and values are passed on from parents to
children and are reinforced by schools, businesses,
• Secondary beliefs and values are more open to change.
• Shifts in Secondary Cultural Values like People’s Views of
Themselves, People’s Views of Oathers, People’s Views of
Organizations, People’s Views of Society, People’s Views of
Nature.
2.2.Responding to the Marketing Environment
• Someone once observed, “There are three kinds of companies:
those who make things happen, those who watch things
happen, and those who wonder what’s happened.”
• Many companies view the marketing environment as an
uncontrollable element to which they must react and adapt.
They passively accept the marketing environment and do not
try to change it.
• They analyze environmental forces and design strategies that
will help the company avoid the threats and take advantage of
the opportunities the environment provides.
• Other companies take a proactive stance toward the
marketing environment.
• Rather than assuming that strategic options are
bounded by the current environment, these firms
develop strategies to change the environment.
• Marketing management cannot always control
environmental forces.
• In many cases, it must settle for simply watching
and reacting to the environment.
• Whenever possible, smart marketing managers take
a proactive rather than reactive approach to the
marketing environment.
 Chapter Three:
Understanding The Market
• A market is the set of actual and potential buyers of a
product or service.
• The buyers share a particular need or want that can be
satisfied through exchange relationships.
3.1. Consumer Markets and Buyer Behavior
• Consumer buyer behavior refers to the buying behavior
of final consumers—individuals and households that buy
goods and services for personal consumption.
• These final consumers combine to make up the consumer
market.
• Consumers within a country and across the world vary
tremendously in age, income, education levels, and tastes.
• Model of Consumer Behavior
3.1.1.Characteristics Affecting Consumer Behavior
• Consumer purchases are influenced strongly by
cultural, social, personal and psychological
characteristics.
• For the most part, marketers cannot control such
factors, but they must take them into account.
1. Cultural Factors:
• Cultural factors exert the broadest and deepest influence
on consumer behavior.
a. Culture
• Cultureis the most basic cause of a person's wants and
behavior. Human behavior is largely learned.
• Growing up in a society, a child learns basic values,
perceptions, wants and behaviors from the family and
other important institutions.
b. Subculture
• Each culture contains smaller subcultures or groups of
people with shared value systems based on common life
experiences and situations.
• Subcultures include nationalities, religions, racial groups
c. Social Class
 Social classes are society's relatively permanent and
ordered divisions whose members share similar
values, interests and behaviors.
2.Social Factors
 A consumer's behavior is also influenced
by social factors, such as the consumer's
small groups, family, and social roles and
status.
 Because these social factors can strongly
affect consumer responses.
• A consumer's behavior influenced by social factors,
such as the consumer's small groups, family, and
social roles and status.
a. Group.
• Groups influence a person's behavior.
• Groups that have a direct influence and to which a
person belongs are called membership groups.
• These include formal interaction organizations like
religious groups, professional associations and trade
unions.
• groups with whom there is regular but informal
interaction - such as family, friends, neighbors and
fellow workers.
Reference groups are groups that serve as direct
(face-to-face) or indirect points of comparison.
• Reference groups influence a person in at least
three ways.
• They expose the person to new behaviors and
lifestyles.
• They influence the person's attitudes and self-
concept because he/she wants to 'fit in'.
• They also create pressures to conform that may
affect the person's product and brand choices.
b. Family
• The family is the most important membership group
and consumer buying unit in society.
• Marketers are interested in how various family
members influence the purchase of products and
services.
• Family member involvement can vary widely by
product category and by stage in the buying process.
• Buying roles have changed over time with evolving
consumer lifestyles.
 iii. Roles and Status
• A person belongs to many groups - family, clubs,
and organizations.
• The person's position in each group can be defined
in terms of both role and status.
• Role is the activities a person is expected to
perform according to the people around him or her.
• Status is the general esteem given to a role by
society.
• People usually choose products appropriate to their
roles and status.
3. Personal Factors
• A buyer's decisions are also influenced by personal
characteristics such as the buyer's age and life-cycle
stage, occupation, economic situation, lifestyle, and
personality and self-concept.
a. Occupation
• A person’s occupation affects the goods and services
they buy. Segmenting and targeting consumers by
occupation can reveal some interesting opportunities.
b. Age and Life Stage
• People change the goods and services they buy over
their lifetimes. Tastes in food, clothes, furniture, and
recreation are often age related.
 c. Economic Situation
• People’s economic situations affect the wheres and
whats of their shopping.
• Marketers watch trends in spending, personal
income, savings, and interest rates.
• Many companies have enhanced customer value by
redesigning, repositioning, and repricing their
offerings.
d. Environmental Situation
• Environmental circumstances can affect consumer
attitudes and buying behaviors.
• People’s physical, technological, and health
circumstances will impact what products they buy,
 e. Lifestyle
• People coming from the same subculture, economic
group, and occupation may have quite different
lifestyles.
• Lifestyle is a person’s pattern of living as expressed
in his or her psychographics.
f. Personality and Self-Concept
• Personality refers to the unique psychological
characteristics that distinguish a person or group.
• Personality is usually described in terms of traits
such as self-confidence, dominance, sociability,
autonomy, defensiveness, adaptability, and
aggressiveness.
4. Psychological Factors
• A person's buying choices are further influenced by
four important psychological factors: motivation,
perception, learning, beliefs and attitudes.
a. Perception
• Perception is the process by which people select,
organize, and interpret information to form a
meaningful picture of the world.
• People can form different perceptions of the same
stimulus because of three perceptual processes:
selective attention, selective distortion, and selective
retention.
b. Learning
• Learning describes changes in an individual’s behavior
arising from experience.
• Learning theorists hold that most human behavior is
learned.
• Learning occurs through the interplay of drives,
stimuli, cues, responses, and reinforcement.
• Beliefs and Attitudes
• Through doing and learning, people acquire beliefs and
attitudes. These, in turn, influence their buying
behavior. A belief is a descriptive thought that a person
holds about something.
• Beliefs may be based on real knowledge, opinion, or
faith and may or may not carry an emotional charge.
• Attitude describes a person’s relatively consistent
evaluations, feelings, and tendencies toward an
object or idea.
 Types of Buying Decision Behavior
• The following Shows types of consumer buying
behavior based on the degree of buyer involvement
and the degree of differences among brands.
1.Complex Buying Behavior
• Consumers undertake when they are highly
involved in a purchase and perceive significant
differences among brands, or when the product is
expensive, risky, purchased infrequently and
highly self-expressive.
• Marketers need to differentiate their brand's
features, perhaps by describing the brand's
benefits using print media with long copy.
2. Dissonance-Reducing Buying Behavior
• Occurs when consumers are highly involved with
an expensive, infrequent or risky purchase, but
see little difference among brands.
• perceived brand differences are not large, buyers
may shop around to learn what is available, but
 3. Habitual Buying Behavior
• Habitual buying behavior occurs under conditions of
low consumer involvement and little significant
brand difference.
• For example, take salt. Consumers have little
involvement in this product category - they simply
go to the store and reach for a brand.
• For example, take salt. Consumers have little
involvement in this product category - they simply
go to the store and reach for a brand.
4.Variety-Seeking Buying Behavior
• Consumers undertake variety-seeking buying
behavior in situations characterized by low
consumer involvement, but significant perceived
brand differences.
• In such cases, consumers often do a lot of brand
switching. Brand switching occurs for the sake of
variety rather than because of dissatisfaction.
3.1.2.The Buyer Decision Process
(