Principles of Marketing: Key Concepts

Principles of Marketing Definition

• Marketing is creating, distributing, promoting, and pricing goods, services, and ideas.
• It aims to facilitate satisfying exchange relationships with customers in a dynamic environment.
• It is a communication form between entities and their customers, with the goal of selling a product or service.
• Communicating the value of the product or service is a priority.

Marketing Concept

• Firms analyze customer needs and make decisions to satisfy them better than competitors in the marketing concept.
• Most firms have adopted this concept
• In 1776, Adam Smith wrote in The Wealth of Nations that producer needs should be secondary to consumer needs.
• There are two key elements: Production and Sales

Marketing Concept Elements

• Production focuses on the ability to produce the product and whether enough can be produced.
• Sales address whether the product can be sold and if it can be charged enough

Nature and Scope of Marketing

• Marketing is an economic function and a system of interacting business activities.
• It is a managerial function that organizes and directs business activities, facilitating the movement of goods from producers to consumers.
• Identifying customer needs through market research is part of marketing.
• Marketing is a philosophy based on customer orientation and satisfaction.
• Dual objectives include profit-making and consumer satisfaction.

Importance of Marketing

• Marketing helps in the transfer, exchange, and movement of goods.
• It makes goods and services available through intermediaries like wholesalers and retailers.
• It benefits both producers and consumers.
• Marketing raises and maintains the community's standard of living thanks to modern techniques.
• Techniques have allowed even poorer sections of society to attain a reasonable level of living due to large-scale production and lower prices.
• Marketing creates employment as it is a complex mechanism involving activities like buying, selling, financing, transport, warehousing, etc.
• Different activities in marketing are performed by individuals and bodies.
• Marketing acts as a source of income and revenue, with profits reinvested for future earnings.
• A firm's survival depends on the effectiveness of its marketing function.
• Marketing serves as a basis for making decisions related to production, distribution, and other business aspects.
• Marketing reduces the complexities of the producer-consumer link to decide what to produce and sell.
• Marketing acts as a source of new ideas and changes in tastes and preferences.
• It measures new demand patterns to produce and make available goods accordingly.
• Marketing helps in the development of an economy, as it is the kingpin that sets the economy revolving.
• Scientifically organized marketing can strengthen and stabilize the economy.

Essential Features of Marketing

• There are four essential features: Need and Want, creating a marketing offer, customer value, and exchange mechanism

Marketing - Needs and Wants

• Marketing is the process of fulfilling the needs and wants of consumers.
• Needs are similar among people, but wants differ.
• Hunger is a need, but wanting Momo or Thukpa to satisfy it is a want.
• Sellers identify consumer needs and how to satisfy them.

Marketing - Creating a Marketing Offer

• Involves providing complete product and service information: name, type, price, size, availability.
• A good market offer always considers customer needs and priorities.

Marketing- Customer Value

• Buyers analyze cost vs satisfaction before buying. Purchase occurs if satisfaction outweighs cost.
• Sellers should manufacture products considering this customer tendency.
• Neglecting this aspect can lead to lagging in competition.

Marketing - Exchange Mechanism

• Exchange is essential in marketing because its literal meaning is exchanging things.
• The two sides are the buyer and seller.
• Marketing involves an exchange where the seller gives goods/services, and the buyer gives money or something equivalent

Corporate and Marketing Objectives

• Corporate objectives affect the entire organization and include missions, visions, and company objectives.
• Marketing objectives are sub-parts of the corporate objectives.
• Aiming to capture 30% of the Bhutanese food market for vegan products is an example of corporate objective with marketing awareness campaigns.

Objectives of Marketing

• Major objectives of marketing management include creating demand, customer satisfaction, market share, profit generation, and creating goodwill
• The primary purpose of marketing management is to achieve business goals.
• A business aims to earn reasonable profits by meeting customer needs.

Objectives of Marketing in Detail

• The first objective is to create demand through various means by identifying consumer preferences and tastes.
• Goods and services are produced to satisfy customer needs and to inform them of utility.
• The marketing manager must study customer demands before offering products or services.
• Modern customer-oriented marketing prioritizes customer satisfaction, beginning and ending with the customer.
• Every business aims to increase its market share, i.e. the ratio of its sales to the total sales in the economy.
• The marketing department generates revenue for the business via sales.
• It must earn sufficient profits to survive the market and facilitate growth/diversification.
• Building a firm's public image is another objective that can be reached by providing quality products at reasonable prices and creating a positive impact.
• Initiatives such as sales promotions, advertising, high quality, reasonable prices, and convenient distribution outlets raise goodwill

Understanding Needs, Wants, and Demands

• Needs: States of deprivation are physical, social, or individual
• Physical needs are for food, clothing, shelter, safety, and water.
• Social needs involve belonging and affection.
• Individual needs are knowledge and self-expression.
• Wants: Products desired by customers but are not essential for survival.
• Demands exists when a customer is willing and able to buy a need or want.

Marketing Environment

• Includes internal factors (employees, customers, shareholders, retailers, & distributors)

External Factors

• Political, legal, social, technological, and economic conditions surround the business and influence its marketing operations.
• Some factors are controllable, while others are not, requiring business operations to adapt.
• Firms must understand their marketing environment to overcome negative impacts

Internal Environment

• A section of the marketing environment includes all factors within the organization affecting business operations.
• Include labor, inventory, company policy, logistics, budget and capital assets.
• Factors affect marketing decisions and customer relationships.
• These are controllable by the firm.

Micro Environment

• Includes factors closely associated with business operations and its functioning, these are customers, employees and suppliers.
• Includes Retailers & distributors, shareholders and competitors.

External Micro Environment

• Includes Government and General Public
• These factors are somewhat controllable.
• Customers want fulfillment of their needs, so each marketing strategy focuses on understanding and fulfilling these customers needs.
• Employees are a key business component, and success depends on their quality.
• Training & Development is crucial for imparting marketing skills.
• Suppliers provide the materials for finished goods, making them vital to the organization.
• It's crucial to identify and choose the best suppliers in the market.

Retailers And Distributors

• Channel partners determine the success of marketing operations and offer customer suggestions.
• Close watch on competitors allows a company to design market strategy.
• Returns to shareholders should be kept in mind.

Government and General Public

• Departments make policies influencing marketing strategies.
• A company must track these policies and adjust programs accordingly, like pricing, credit, education, and housing policies, etc.
• Businesses have a social responsibility and activities should ensure social welfare.

Macro Environment

• Macro Marketing Environment: Factors are outside the company's control.
• Factors include social, economic, technological forces, and political and legal influences.
• Political & Legal Factors
• Changes in political parties lead to changes in trade, taxes, duties, codes, practices, market regulations, etc.
• Firms must comply with changes to avoid penalties.
• Every business operates in the economy and is impacted by phases it undergoes.
• In a recession, marketing practices differ from inflation periods.

Social and Technological Factors

• Businesses must follow marketing practices that do not harm people.
• Companies should invest in public welfare through public conveniences, parks, sponsoring education, etc.
• Firms must stay updated to precisely meet customer needs as technology advances.
• The marketing environment plays a crucial role in business operations and must be regularly reviewed to avoid difficulty.

Marketing Process

• Defined by the American Marketing Association involving creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society.
• Core activities include creating, communicating, delivering, exchanging.
• Creating involves collaborating with suppliers and customers to create valuable offerings.
• Communicating involves broadly describing offerings and learning from customers.
• Delivering is about optimizing value to customers.
• Exchanging is trading value for offerings.

Marketing Mix

• Often referred to as the "Four P's"
• This includes Product, Price and Place
• Promotion
• The product (or service) that the customer obtains
• Price is how much the customer pays for the product,
• Place is hoe the product is distributed to the customer
• Promotion is how the customer is found and persuaded to buy the product

Marketing Ethics

• Marketing ethics are judgements as a right or wrong action and means a standard by which a marketing should be judged.
• When an organization behaves ethically, customers develop more positive attitudes about the firm, its products, and its services.

Principles of Ethical Marketing

• Honesty is a cornerstone of behavior that avoids attempts to mislead.
• Transparency maintains open companies operations particularly regarding the way employees are treated.
• Responsibility is a business' obligation to provide a reliable product or service and support social causes, environmental protection, etc.
• Fairness commits to fair prices, better wages, and sustainable development.
• If an organization behaves ethically, customers develop positive attitudes about the firm, products, and services.
• Ethical behavior creates value and trust and builds a good public image.