Principles of marketing: Chapter 1 - Introduction to Marketing

TS Nguyễn Minh Đức

PRINCIPLES OF
MARKETING
Dr. NGUYEN MINH DUC
NONG LAM UNIVERSITY HCM CITY

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Marketing
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Introduction to Marketing

The Marketing Environment
Strategic and Marketing Planning
Market Segmentation, Targeting and Positioning
Product Concept
Pricing Products
Place (Distribution Channel)
Promotion

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Chapter 1.
Introduction to Marketing

Strategic Marketing & Customer Service

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Introduction
v Marketing, more than any other business function,
deals with customers.
v Understanding, creating, communicating, and delivering
customer value and satisfaction are at the very heart of
modern marketing thinking and practice.
v The twofold goal of marketing is:
v 1. To attract new customers by promising superior value
and
v 2. To keep current customers by delivering satisfaction.

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Introduction
v The highly successful companies know that
if they take care of their customers, market
share and profits will follow.

v This course will give you a more complete
and formal introduction to the basic
concepts and practices of today’s marketing.

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Introduction
v What does the term “Marketing” mean?
v Many people think of “Marketing” only as
selling and advertising.
v However, selling and advertising are only
two of many marketing functions and are
often not the most important ones.

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Introduction
v Marketing starts long before a company has a product.
v Marketing is the homework that managers undertake to
assess needs, measure their extent and intensity, and
determine whether a profitable opportunity exists.
v Marketing continues throughout the product’s life,
trying to find new customers and keep current
customers by improving product appeal and
performance, learning from product sales results, and
managing repeat performance.

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Introduction
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If the marketer does a good job of:
-understanding consumer needs,
-develops products that provide superior value, and
-prices,
-distributes, and
-promotes them effectively,

these products will sell very easily.

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Definition of Marketing
v “Marketing is the process of planning, and executing
the conception, pricing, promotion, and distribution
of ideas, goods, and services to create exchanges
that satisfy individual and organizational objectives.”
---The American Marketing Association
(www.ama.org)
v “Marketing is the delivery of customer satisfaction at
a profit.”
---Kotler & Armstrong

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Definition of Marketing
v “Marketing is the process of determining
customer wants and needs and then
providing the goods and services that meet
or exceed expectations.”
i.e Marketing is a process of exchanging
ideas, goods, and services to maximize
customer satisfaction.

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What is Marketing?
v “Marketing is the management process which
identifies, anticipates and satisfies customer needs
profitably.”
------- Chartered Institute of Marketing (CIM)
v Perhaps the simplest definition is this one:

“Marketing is the delivery of customer satisfaction at
a profit.”
v The Marketing function manages an organization’s
relationships with its customers.

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What is Marketing?
v Marketing covers not only selling activities,
advertising and sales promotions, but also
other activities and functions such as
product design, production, production
control quality control, after-sales service
and credit for customers.
i.e Marketing can be seen as creating the
environment in which selling will take place.

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The Marketing Functions
v 1. Market Research:
=>Finding markets, identifying consumers,
determining consumer needs and wants, and
forecasting demand.
v 2. Product Planning:
=>Designing and developing products, packaging,
branding, labeling, modeling
v 3. Pricing:
=>Set a price structure, maintaining and modifying,
monitoring competitors’ pricing and cost
structure, pricing strategies.
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The Marketing Functions
v 4. Promotion:
=>Advertising, sales promotion, personal selling,
publicity, public relation.
v 5. Physical Distribution:
=>Transportation, warehousing, storage, channel,
coverage.
v 6. Follow-up:
=>After sales service, feedback information.
v 7. Facilitating:
=>Financing, insurance, sponsorship.

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The Marketing Concept and Philosophies
v There are some basic approaches to
marketing, i.e Organizations have different
orientations towards the customers.
v The most notable options are as follows:
1. Production Concept (Production Orientation)
2. Product Concept (Product Orientation)
3. Selling Concept (Sales Orientation)
4. Marketing Concept (Marketing Orientation)
5. Societal Marketing Concept

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The Marketing Concept and Philosophies
1. Production Concept (Production Orientation)
“The philosophy that consumers will favor products that
are available and highly affordable and that
management should therefore focus on improving
production and distribution.” – (Kotler & Armstrong)
i.e Management selects products that are economical to
produce relative to production costs and resource
availabilities, and then sets up a Marketing Department
to distribute the goods.
It is assumed that customers will want to purchase wellconstructed mass-produced items that are made
available to them at low costs.

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The Marketing Concept and Philosophies
1. Production Concept (Production Orientation)
Is the oldest concept/philosophy started in Great

Britain during the industrial revolution (16th century)
In this concept, manufacturers and marketers regard
that consumers prefer goods and services that are
widely available.
They tend to mass produce and target them to the
whole market.
The price set is often low as the manufacturers are able
to enjoy economies of scale.

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The Marketing Concept and Philosophies
1. Production Concept (Production Orientation)
=>The Production Concept holds that consumers will
prefer products that are widely available and
inexpensive.
This orientation makes sense in developing countries,
where consumers are more interested in obtaining
the product than in its features.
Example: Tissue paper, Rice, Newspaper, Daily needs
products.

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The Marketing Concept and Philosophy
2. Product Concept (Product Orientation)
v “The idea that consumers will favor products that
offer the most quality, performance, and innovative
features and that the organization should therefore
devote its energy to making continuous product
improvements.” – (Kotler & Armstrong)
v The Product features Orientation presupposes that
all a firm needs to do is offer for sale high-quality
sound-value products with many attractive features,
provide effective after-sales service, and then the
goods will ‘sell themselves’.

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The Marketing Concept and Philosophy
2. Product Concept (Product Orientation)
v The Product Concept believes that if it can make a
good quality product, then customers will inevitably
buy it with a minimum of marketing effort by the firm.

v The firm will probably concentrate on product
developments and improvements.
v -Manufacturer and marketer regards that they are
certain customers that prefer branded/prestige
goods and services.
v -Prices are normally set high as to reflect the quality
of the goods and services.
v -Tendency to focus on high income
segments/people/buyers.
v Examples: BMW, Mercedes cars, Rolex watch.
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The Marketing Concept and Philosophies
3. Selling Concept (Sales Orientation)
v “The idea that consumers will not buy enough of the
organization’s products unless the organization
undertakes a large-scale selling and promotion
effort.” ---(Kotler & Armstrong)

v Is to regard marketing as the function of finding
customers for goods which the firm has already
decided to supply.
v Here, there is much emphasis on face-to-face
customer contact, price cutting, heavy advertising
and sales promotions.

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The Marketing Concept and Philosophies
3. Selling Concept (Sales Orientation)
v The dominant of this concept is that people will not
buy until they are persuaded to buy by positive
selling.
v Thus, the focus of attention is more on the skills of
selling, than on the needs of the buyer.
v For example, several life-insurance companies have
adopted this approach over the years.
v This attitude implies a belief that potential customers
are by nature sales-resistant and have to be
persuaded to buy (or buy more), so that the task of
the firm is to develop a strong sales department,
with well-trained salesmen.
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The Marketing Concept and Philosophies
3. Selling Concept (Sales Orientation)
v Manufacturers and marketers act
aggressively to promote and sell their goods
and services.
v If they do not act aggressively, customers
would not be interested to know and even
buy their goods and services.
v Examples: Insurance, cosmetics, etc.

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The Marketing Concept and Philosophies
4. Marketing Concept (Marketing Orientation)
Alternatively, the firm might seek to:
v evaluate market opportunities before production,
v assess potential demand for the good,
v determine the product characteristics desired by consumers,
v predict the prices consumers are willing to pay, and then

v supply goods corresponding to the needs and wants of target
markets more effectively than competitors.
Businesses adopting this approach are said to apply the
“Marketing Concept”.
Adherence to the marketing concept means the firm conceives
and develops products that satisfy consumer wants.

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The Marketing Concept and Philosophies
4. Marketing Concept (Marketing Orientation)
“The marketing management philosophy which holds
that achieving organizational goals depends on
determining the needs and wants of target markets
and delivering the desired satisfactions more
effectively and efficiently than competitors do.” –
(Kotler & Armstrong)
i.e the key task of the organization is to determine the

needs, wants and values of a target market and to
adapt the organization to delivering the desired
satisfactions more effectively and efficiently than its
competitors.

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The Marketing Concept and Philosophies
v 4. Marketing Concept (Marketing Orientation)
In other words, customer needs are considered
of paramount importance.
Since technology, markets, the economy,
social attitudes, fashions, the law are all
constantly changing, customer needs are
likely to change too.

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The Marketing Concept and Philosophies
4. Marketing Concept (Marketing Orientation)
v The marketing concept believes that changing needs must be
identified, and products adapted and developed to satisfy them.
v Only in this way can a supplier hope to operate successfully
and profitably.
v A market orientated organization is one which focuses on the
needs of its customers.
v Its primary concern is to find out what its customers needs and
wants are so as to meet them with the highest level of customer
satisfaction.
v In this situation, production responds to the demands of
marketing rather than the other way round.

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The Marketing Concept and Philosophies
4. Marketing Concept (Marketing Orientation)
v Marketers and manufacturers regard customers as
‘king or VIP.
v Tendency to focus on customers’ needs and wants
and satisfaction.
v Normally conducts research as to identify the market
needs and wants and finally offer the right goods
and services to the right target market at the right
price.

Example of market-oriented attitudes can be found in
motorcar manufacturing. I.e Everything we do is
driven by you.

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The Marketing Concept and Philosophies
5. Societal Marketing Concept
v “The idea that the organization should
determine the needs, wants, and interests of
target markets and deliver the desired
satisfactions more effectively and efficiently
than do competitors in a way that maintains
or improves the consumer’s and society’s
well being.” –(Kotler & Armstrong)

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The Marketing Concept and Philosophies
5. Societal Marketing Concept
v The latest concept
v Goes beyond customer satisfaction
v Tendency to focus on societies’ well-being beside
customer’s satisfaction and profit.
v Firms normally fulfill their social obligations to
society through charities and sponsorship of
education, financial assistance, recycling campaign,
etc.

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