CHAPTER 5

Chapter Contents
5.1 INTRODUCTION
5.2 Meaning and Definitions of Marketing
5.3 Core Concepts of Marketing
5.4 Importance of Marketing
5.5 Marketing Philosophies
5.6 Marketing Information Systems
5.7 The Marketing Mix and Marketing Strategies
5.8 Selling and of Customer Service
 Chapter Objectives
By the end of this Chapter learners will be able to:
 Define marketing concepts.
 Analyze marketing philosophies.
 Describe the role of marketing in achieving the goals of a
business enterprise.
 Assist in conducting marketing research.
 Make competitive analysis of the level,
 Implement marketing intelligence in their organization,
 Apply the various marketing mixes and strategies in their
businesses.
 Understand and implement selling and customer service
skills.
 5.1 INTRODUCTION
 The concept of market is very important in marketing.

 The American marketing Association defines a market

as “The aggregate demand of the potential buyers for
product or services “.

 Philip Kotler defines “A market as an area of potential

exchanges”.
 Thus, a market is a group of buyers and sellers
interested in negotiating the terms of purchase/sale
for goods or services.
 5.2 Meaning and Definitions of Marketing

 Marketing is a social and managerial process by which an

individual or group obtain what they need and want through
creating, offering and exchanging of product of values with
others (Philip Kotler,2012)

 Is the total business activity designed to plan, price, promote

and distribute want satisfying products to target market to
achieve organizational goal (William J.Stanton, 1984).

 Is the creation and delivery of standard of living to society

(Paul. Mazor, 2005).
 Meaning and Definitions of Marketing…

 Marketing management is the process of planning and

executing, the conception, pricing, promoting and
distributing of ideas, goods and services to create an
exchange that satisfy individual or group objectives
(American marketing Association, 2015).

Generally, Marketing
 is the effort to identify and satisfy customers’ needs and
wants.
 It involves finding out who your customers are, what
they need and want, the prices, the level of competition.
 It involves the knowledge and all the processes you
undertake to sell your product.
 Meaning and Definitions of Marketing…

 The above definitions of marketing reset on the following

core concepts:
 needs, wants and demands;
 products (Goods, Services and Idea),
 value,
 cost and satisfaction:
 exchange and transaction;
 Relationship and Networks;
 market; and marketers and prospects.
 Marketing answers the following questions:
 Who are my customers?
 What are my customer’s needs and wants?
 How can I satisfy my customers’?
 How do I make a profit as I satisfy my customers?
 5.3 Core Concepts of Marketing
 Marketing starts with human needs and wants. People
need food, air, water, clothing and shelter to survive.

 Beyond this, people have a strong desire for recreation,

education and other services.

 Let see terms related with this as follow:

 Need
 Human Need is a state of deprivation of some basic
satisfaction.
 People require food, clothing, shelter, safety and
belonging and esteem.
 Core Concepts of Marketing…
 Wants
 Wants are desires for specific satisfiers of needs.
 Human wants are continually shaped and reshaped by social
forces and institutions including churches, schools, families and
business cooperation.
Eg. A person needs food but wants spaghetti

 Demands
 Demands are wants for specific products that are backed by
ability and willingness to buy them.
 Wants become demand when supported by purchasing power.
 Companies must therefore measure not only how many people
want their product but, more importantly how many would
actually be willing and able to buy it.
 Core Concepts of Marketing…
 Product
 It is anything that can be offered to satisfy a need or
want. Products broadly classify as tangibility and
intangibility features.
 Value
 It is the consumer’s estimate of the products overall
capacity to satisfy his or her needs.
 According to DeRose, value is “the satisfaction of
customer requirement at the lowest cost of
acquisition, ownership and use”.
 Cost
 It is the amount of money that are going to be
expended or already incurred to acquire a product.
 Core Concepts of Marketing…
 Exchange
 It is the act of obtaining a desired product from
someone by offering something in return.

 Transaction
 It is the trade of values between two parties.

 Market
 consists of all the potential customers sharing a
particular need or want who might be willing and able
to engage in exchange to satisfy their need or want.
 5.4 Importance of Marketing

 The money pays for designing the products to meet

our needs, making products readily available when
and where we want them, and informing us about
producers are the activities add want satisfying
ability is called utility, to products.
 Importance of Marketing…
 The kinds of utility that marketing provides in the
process are as follows:

1. Form Utility:
 Is associated primarily with production- the physical or
chemical changes that make a product more valuable.
 When timber is made into furniture, form utility is
created. This is production, not marketing.
 However, marketing research may aid in decision making
regarding product design, color, quantities produced, or
some other aspect of a product.
 Importance of Marketing…
2. Place Utility:
 Exists when a product is readily accessible to potential
customers.
 So physically moving the products to a store near the
customers add to its value.

3. Time Utility:
 Means having a product available when you want it.
 Having a product available when we want it is very
convenient but it means that the retailer must anticipate
our desires and maintain an inventory.
 Thus, there are costs involved in providing time utility.
 Importance of Marketing…

4. Information Utility:
 Is created by informing prospective buyers that a product
exists.
 Unless you know a product exists and where you can get
it, the product has no value.
 Advertising that describes a sales person answering a
customer questions about the durability of a product
creates information utility.
 Image utility is a special type of information utility.
 It is the emotional or psychological values that a person
attaches to a product or brand because of its reputation or
social standing.
 Importance of Marketing…
5. Possession Utility:
 Is created when a customer buys the product-that is,
ownership is transferred to the buyer.
 Thus, for a person to consume and enjoy the product, a
transaction must take place.
 This occurs when you exchange your money for a
product.
 5.5 Marketing Philosophies
 Large-scale marketing activities in the world did not take
shape until the industrial revolution is the latter part of the
1800s.
 Clearly, marketing activities should be carried out under a well-
thought out philosophy of efficient, effective and socially
responsible marketing.

 There are six competing concepts under which organizations

can choose to conduct their marketing activities: namely,
1. Production concepts,
 It is one of the oldest concepts in business. The concept holds
that consumers will favor products that are widely available
and low in cost.
 Managers focus on achieving high production efficiency and
 Marketing Philosophies…
2. Product concept,
 The concept holds that consumers will favor those products
that offer the most quality, performance or innovative
features.
 Managers in product oriented organization focus their energy
on making superior products and improving them over time.
3. Selling/sales concept,
 The selling concept holds that consumers, if left alone, will
ordinarily not buy enough of the organization product.
 The organization must therefore undertake an aggressive
selling and promotion effort.
 Marketing Philosophies…
4. Marketing concept,
 The concept holds that the key to achieving organizational goals
consists of being more effective than competitors in integrating
marketing activities toward determining and satisfying the needs
and wants of target markets.
5. Societal marketing concept
 The societal marketing concept holds that the organization should
determine the needs, wants and interests of target markets.
 It should then deliver the desired satisfactions more effectively and
efficiently than competitors in a way that maintains or improves
the consumers and the society’s well-being.
6. Relationship Marketing Concept.
 It is the practice of building long term satisfying relations with key
parties-customers, suppliers, distributors- in order to retain their
long term preferences and business. The ultimate outcome is the
building of a unique company asset called a marketing network.
 5.6 Marketing Information Systems
 Every firm must organize the flow of information to its
marketing managers.

 Companies are studying their manager’s information

needs and designing marketing information system to
meet these needs.

 A marketing information system consists of people,

equipment and procedure to gather, sort, analyze,
evaluate and distribute needed timely and accurate
information to marketing decision makers
 Marketing information systems…
 The marketing managers to carry-out their analysis,
planning, implementation, and control responsibilities, they
need information about development in the marketing
environment.

The role of the information system is

 to assess the manager’s information needs,
 develop the needed information, and
 distribute the information is a timely fashion to the
marketing managers.
 The needed information is developed through internal
company records, marketing intelligence activities,
marketing research, and marketing decision support
analysis
 Marketing information systems…
5.6.1 Marketing Research
 Marketing research is the systematic and objective and it attempts
to provide accurate, impartial information.

 It involves the identification, collection, analysis, and dissemination

of information for the purpose of assisting management in decision
making related to the identification and solution of problems and
opportunities in marketing.

 Thus, systematic planning is required at all the stages of the

marketing research process.

 The procedures followed at each stage are methodologically sound,

well documented, and, as much as possible, planned in advance.
 It uses the scientific method in that data are collected and analyzed
to test prior thinking or hypotheses.
 Marketing information systems…
5.6.1.1 The Role (Significance) Of Marketing Research In
Decision Making
There are three Functional Roles of Marketing Research.
These are:
 Descriptive Function - the gathering and presentation
of statements of fact.
 Diagnostic (analytical) Function - The explanation of
data.
 Predictive Function - Specification of how to use the
descriptive and diagnostic research to predict the
result of a planned marketing decision
 Marketing information systems…
5.6.1.2 Marketing Research Components
Market size:
 this deals with the number or value of units sold to a
market in a given period.
Market Share:
 focus on a specific corporation’s share of the market size
out of the whole market of a product or products of the
same purpose.
Market penetration:
 this is a marketing strategy which is used to know when a
company enters/penetrates a market with current products
to get better market share by lowering the price of a
product.
 Marketing information systems…

Brand equity research –

 this conducted to know how favorably consumers view
the brand.
Buyer decision processes research –
 this part of marketing research activity is used to
determine what motivates people to buy and what
decision-making process they use.
 Marketing information systems…
5.6.1.3 Customer Satisfaction Research
 In this type of research there are different types of
research that are used to assess about customers.

 Distribution channel audits

 Marketing effectiveness and analytics
 Mystery Consumer or Mystery shopping
 Positioning research
 Price elasticity testing
 Sales forecasting
 Segmentation research
 Test marketing
 Marketing information systems…
5.6.1.4 Marketing Research Process
Step 1: Define the research purpose or objectives
The following questions help to establish objectives:
 Where potential customers buy the product?
 Why they purchase there?
 What is the size of the market? How much of it can your
business capture?
 How does your business compare with competitors?
 The impact of promotion on customers.
 What types of products are desired by potential
customers?
 Marketing information systems…
Step 2: Research Design Formulation
 More formally, formulating the research design involves
the following steps:
 Study period and place determination.
 Qualitative data collection methods.
 Methods of collecting quantitative data (survey,
observation, and experimentation).
 Definition of the information needed.
 Questionnaire design.
 Measurement and scaling procedures.
 Sampling process and sample size.
 Plan of data analysis.
 Marketing information systems…
Step 3: Gather at this stage secondary data,
 A data which is originally collected by others for their
own purpose, but such data can be used by the
researcher when it is relevant to the current study.
Secondary data:
 Is less expensive.
 Can be acquired within or outside the venture.
 But, may be out-dated and less valid.
 Marketing information systems…
Step 4.Gather Primary Data
Primary data collection techniques can be categorized
as;
 Observational techniques
 Experimentation
 Survey techniques

The following are examples of survey techniques.

A. Mail questionnaires
B. Telephone interviews
C. Personal interviews
 Marketing information systems…

Step 5: Data Processing and Analysis

 Data processing includes the editing, coding,
transcription, and verification of data.
 And data analysis, guided by the plan of data analysis,
gives meaning to the data that have been collected.
 Research results should be evaluated and interpreted
in response to the research objectives.
 Marketing information systems…
Step 6: Report Preparations and Presentation
 At the end the research results will be written in a report
form and presented to the concerned parties.
The report includes:
 The specific research questions identified,
 Describes the research approach,
 The research design,
 The data collection methods, and sampling procedures,
 The data processing and analysis procedures,
 The major findings and suggestions for actions.
 In addition, an oral presentation should be made to
management using tables, figures, and graphs to enhance
clarity and impact.
 Marketing information systems…
5.6.2 Marketing Intelligence
 is the systematic process of gathering, analyzing,
supplying and applying information (both qualitative and
quantitative) about the external market environment.
 Intelligence is evaluated information.

Marketing intelligence is used to determine:

 Current and future market needs,
 Changes in the business environment that may affect the
size and nature of the market in the future.
 Environment that may affect the size and nature of the
market in the future.
 Marketing information systems…

5.6.2.1 The Importance of Marketing Intelligence

 Market and customer orientation – promote external
focus.
 Identification of new opportunities.
 Smart segmentation.
 Early warning of competitor moves.
 Minimizing investment risks.
 Quicker, more efficient and cost-effective
information.
 Marketing information systems…
5.6.2.2 Ways to Undertake Marketing Intelligence
I. Unfocused scanning: Any information that may be useful
is gathered without any specific purpose in mind.
II. Semi-focused scanning: The manager is not in search of
particular pieces of information that he/she is actively
searching but does narrow the range of media that is
scanned.
III. Informal search- limited and unstructured attempt to
obtain information for a specific purpose.
IV. Formal search - th is is a purposeful search for information
in some systematic way.

 Marketing intelligence is carried out by the manager

him/herself rather than a professional researcher.
 Scope of the search in this case is likely to be narrow and far
 Marketing information systems…
5.6.3 Competitive Analysis
 refers to determining the strengths and weaknesses of
competitors and designing ways to take opportunities or tackle
threats posed by competitors.

5.6.3.1 Uses of Competitive Analysis

 It helps management understand its competitive advantages/
disadvantages relative to competitors.
 It generates understanding of competitors’ past, present (and
most importantly) future strategies.
 It provides an informed basis to develop strategies to achieve
competitive advantage in the future (e.g. how will
competitors respond to a new product or pricing strategy?)
 It helps forecast the returns that may be made from future
investments.
 Marketing information systems…
 Competitive analysis is a method of gathering data about
competitors from different sources.

 It should answer the following questions:

 Who are your competitors?
 What customer needs and preferences are you competing to meet?
 What are the similarities and differences between their
products/services and yours?
 What are the strengths and weaknesses of each of their products
and services?
 How do their prices compared to yours? How are they doing overall?
 How do you plan to compete? Offer better quality services? Lower
prices? More support? Easier access to services? How are you
uniquely suited to compete with them?
 Marketing information systems…

5.6.3.3 Steps of Competitive Analysis

1. Identify your competitors:
2. Gather information about competitors:
3. Gathering Information on Competitors
4. Analyzing the Competition
5. Develop a pricing
 5.7 The Marketing Mix and Marketing
Strategies
5.7.1 The 4 P’s Of Marketing/The Marketing Mix
 These are marketing variables that the marketing
manager can manipulate as controllable variables.
 They include product, pricing, place (channel) and
promotion.

1. Product:
 Refers to goods/services produced for sale, the
product /service should relate to the needs and wants of
the customers.
 Marketing Mix and Marketing Strategies …
 Some important questions you need to ask yourself include:
a) What products/services do I sell?
b) Why did I decide to sell these products?
c) Do I have the products customers want?
d) Do any of my products not sell well?
e) Do I stock products that do not sell well?

 Always listen to what your customers like and don’t like. When
their needs change, change your products and services to satisfy
the new needs.
 Do more market research in order to provide those products or
services and increase your sales.
 If your product is not selling well, think of new ideas like finding
new customers.
 Marketing Mix and Marketing Strategies …

2. Pricing:
 Refers to the process of setting a price for a
product/service.
 Your prices must be low enough to attract customers to buy
and high enough to earn your business a profit.
To set your price you need to:
 Know your costs.
 Know how much customers are willing to pay.
 Know your competitors price.
 Know how to make your prices more attractive
 Marketing Mix and Marketing Strategies …

3. Place:
 Means the different ways of getting your products or
services to your customers. It is also referred to as
distribution.
 If your business is not located near your customers, you
must find ways to get your products/services to where it
is easy for customers to buy.
 You can distribute your products to your customers
through:
 Selling directly to the consumers of the products.
 Retail distribution and wholesale distribution.
 Marketing Mix and Marketing Strategies …

4. Promotion:
 Refers informing your customers of your products and
services and attracting them to buy them.
 Promotion includes advertising, sales promotion,
publicity (non-paid promotion) and personal selling.
 Use advertising to make Some useful ways of
advertising include signs, boards, posters, handouts,
business cards, pricelists, photos and newspapers.
 Marketing Mix and Marketing Strategies …

5.7.2 What Is Marketing Strategy?

 is a process that can allow an organization to
concentrate its limited resources on the greatest
opportunities to increase sales and achieve a
sustainable competitive advantage.
 Marketing strategy is a method of focusing an
organization's energies and resources on a course of
action which can lead to increased sales and
dominance of a targeted market.
 Marketing Mix and Marketing Strategies …

 A marketing strategy combines product development,

promotion, distribution, pricing, relationship management
and other elements;
 identifies the firm's marketing goals, and explains how they
will be achieved, ideally within a stated timeframe.

 Marketing strategy determines the choice of target market

segments, positioning, marketing mix, and allocation of
resources.
 It is effective when it is an integral component of the overall
firm strategy, defining how the organization will successfully
engage customers, prospects, and competitors in the market
arena
 Marketing Mix and Marketing Strategies …
1. Pricing Strategy
 Price is the value placed on what is exchanged.
 Something of value is exchanged for satisfaction and
utility, includes tangible (functional) and intangible
(prestige) factors.
 Price is often the only element the marketer can change
quickly in response to demand shifts.

It relates directly to total revenue TR = Price * Quantity

Profit = TR – TC
Where, TR=Total Revenue, TC=Total Cost
 Marketing Mix and Marketing Strategies …

 Pricing strategies are subject to incredibly complex environmental and

competitive forces.
 A company sets no single price, but rather a pricing structure that
covers different items in its line.
 This pricing structure changes through time as products pass through
their life cycles.
 To come up with this situations marketers use dynamic pricing
strategies.

 The following are some of pricing strategies mostly applicable in the

real world scenario.
1) Price Skimming: this is a type of marketing strategy that firms use by
charging the highest possible price that buyers who most desire the
product will pay.
 Marketing Mix and Marketing Strategies …
• 2. Penetration Pricing:In this strategy, prices of products
are reduced compared to competitors’ price for the same
product to penetrate into markets and to increase sales.
• 3. Cost-plus pricing: Any amount that is above unit cost
may be considered.
• 4. Mark-up pricing :A certain percentage of the selling
price is added to unit cost.
• 5. Competition Oriented Pricing:Considers competitors
prices primarily; but the market type matters.
• 6. Odd-even pricing:This is Psychological
pricing method based on the belief that
certain prices or price ranges are more appealing
to buyers. This method involves setting a price
The Marketing Mix and Marketing Strategies…
2. Promotion Strategies
 Promotion is the communication of the company and its
products to customers.
 Promotional strategy is choosing a target market and
formulating the most appropriate promotion mix to
influence it.
An organization’s promotional strategy can consist:
I. Advertising
II. Personal selling
III. Public relations
IV. Sales promotion
The Marketing Mix and Marketing Strategies…
3. Distribution Strategies
 A successful product or service means nothing unless
the benefit of such a service can be communicated
clearly to the target market.
 For product-focused companies, establishing the most
appropriate distribution strategies is a major key to
success, defined as maximizing sales and profits.
 Unfortunately, many of these companies often fail to
establish or maintain the most effective distribution
strategies.
The Marketing Mix and Marketing Strategies…
Problems that researchers identified include:
 Unwillingness to establish different distribution channels for
different products,
 Fear of utilizing multiple channels, especially including direct
or semi-direct sales, due to concerns about erosion of
distributor loyalty or inter-channel cannibalization
 Failure to periodically re-visit and update distribution
strategies.
 Lack of creativity, and
 Resistance to change.

 Marketing Channels are individuals/organizations involved in

the process of making the product available for use or
consumption by consumers
The Marketing Mix and Marketing Strategies…
 Channels are used to improve exchange efficiency. It is
divided into Direct and Indirect channels.

 Direct channels: In this type of channel, producers and

end users directly interact.
 Indirect channels: In this type of channel
intermediaries are inserted between seller and buyer.
Intermediaries include Merchant Wholesalers,
retailers, dealers, agents, brokers; and manufacturer’s
branches and offices.
 The Marketing Mix and Marketing
Strategies…
 The following factors should be considered to select the
best channel under the condition of using best
distribution strategy.
 Company Factors: financial, human and technological
capabilities of a company to do its business activities.
 Market Characteristics: Geography, market density,
market size, target market
 Product Attributes: perishability, value and sophistication
of the product
 Environmental Forces: those forces that affect the
business like competition, technology and culture
 5.8 Selling and of Customer Service
5.8.1 The Concept of Service
 Service refers to any activity undertaken to fulfill customer’s
needs.
 It is any act or performance that one party can offer to
another.
 Its production may or may not be tied to a physical product.
Distinctive features of services include intangibility,
inseparability, variability, and perishability as opposed to
goods.
 it is characterized as; situational, difficult to measure,
subjective and influenced by the service provider.
 Finally, service is influenced by the service provider. If the
service provider sets expectations effectively, the customer
will probably be satisfied.
 Selling and of Customer Service…

5.8.2 The Concept of Customer

 Customer is a person or organization that buys a
product or service either for use or for resale.
 Customers can be internal (e.g. member of the
organization) or external (customers coming from
outside).

 A thorough understanding of the concept of customer

service enables organizations to provide quality service
by using proper service management approaches
 Selling and of Customer Service…
• 5.8.3 Strategic Activities needed for Quality Customer Service
Delivery
 Organizations should identify important strategic activities to
ensure consistent, efficient and excellent customer service
delivery using continuous improvement philosophy.

 Especially, the following specific areas should be considered:

1. Establishing a clear customer service strategy.
2. Ensuring that correct people are in place, with the correct skills
to deliver outstanding personal service.
3. Establishing clear material service delivery processes.
4. Improving in terms of process improvement, quality monitoring
and recovery continuously.
5. Participatory Management.
 Selling and of Customer Service…
5.8.4 Customer Handling and Satisfaction
 Is a key for successful organizations. Managers and
employees should work hand-in-hand to improve
their service delivery programs.
 Existing customers must be satisfied with the
existing service.

 Existing customers are also means of potential

customers.
 Selling and of Customer Service…
What is expected from successful service providers in
this regard are the following.
 Poor/defective service is the causes of loss and
bankruptcy for many organizations.
 Many business organizations worried about the
reduction of sales or profitability due to lost
customers/ or gradual reduction of customers.
 Organizations invest huge cost to increase market
share by using advertisement or different sales
promotion techniques.
 But the first most important principle here is not losing
a single customer.
 Selling and of Customer Service…
 Retaining existing customers, originations should also
strive to increase the number of customers.
 The consequence of poor customer handling,
therefore, is losing existing customers.
 Also take into account that the major reasons to lose
customers are:
o Poor service,
o Poor quality and
o Rude behaviour.
 Selling and of Customer Service…
Consider also the following research findings about customer
satisfaction:
 91% of customers who have major complaints decide they will
never come back. But if the complaint is resolved quickly, 82% of
them will return.
 Quick complaint resolution drops customer defection rate from
91% to 18%. It is better to have a complaining customer than no
customer at all.

 There is no investment like investment in customer satisfaction.

 Treat the cost of satisfying a customer as an investment rather
than as an expense. You will get unmatched returns through
referrals, repeat purchases decreased operational costs and
increased profits.
 In the customer’s benefit lies our benefit.
 Selling and of Customer Service…

5.8.4.3 Place Yourself in The Customer’s Shoes

 You have the right to choose your customers but not the
luxury to compromise on your level of service.

 Get rid of the unwanted customer but do it with tact.

 Part with the unwanted customer with a smile and a

handshake.

 Place yourself in the customer’s shoes. ‘Do unto your

customer as you would have done unto you’.