Introduction to Marketing – SS1 Marketing Lesson Note (First Term)

Marketing is the process of communicating the value of a product or service to customers and creating their interest in it.

Behavioural objectives

By the end of the lesson, students should be able to:

1. define marketing;
2. explain how marketing differs from selling;
3. state the common terms used in marketing;
4. explain what quality means in marketing;
5. list and explain the goals of the marketing system.

Why is marketing important to business?

Marketing is a basic function of every business because every business exists to satisfy the needs and wants of society.

• Customer focus: marketing treats business in terms of customers’ needs and their satisfaction.
• Relationships: it builds strong customer relationships that create value for customers and companies.
• Wide use: a salesperson selling washing machines is marketing, and so is a doctor treating a patient.
• Public campaigns: a government asking people to take their children for polio drops is also marketing an idea.
• Small firms: small business owners traditionally gave marketing less attention than accountancy, production and selling.
• Change in attitude: training programmes, enterprise development and the push for competitiveness now give marketing high priority among small business owners.

What is marketing?

Marketing is the process of communicating the value of a product or service to customers.

• Company view: it is the process by which companies create customer interest in products or services.
• Integrated process: companies use it to build strong customer relationships and create value for customers and for themselves.
• American Marketing Association: marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.
• Social view: it is a societal process by which individuals and groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others.

How does marketing differ from selling?

Marketing is thinking about business in terms of customers’ needs and their satisfaction, while selling is the technique of getting people to exchange cash for a product.

What is marketing?

• It develops a demand for a product or service that meets the customer’s needs.
• It treats the whole business as one tightly integrated effort to identify, create, arouse and satisfy customers’ needs.

What is selling?

• It concerns itself with the tricks and techniques of getting people to part with their cash.
• It is not concerned with the value of the exchange.

Comparison of marketing and selling

What terms are used in marketing?

There are seven common terms used in marketing: needs, wants, demand, product, exchange, transaction and market.

1. Needs: basic human requirements that motivate a person to take action.
2. Wants: things you wish to have that rank below your needs.
3. Demand: the want for a specific product backed by an ability to pay.
4. Product: the goods and services a marketer or seller offers to the buyer.
5. Exchange: the act of obtaining a needed object by offering something in return.
6. Transaction: an exchange between two things of value on agreed conditions, at an agreed time and place.
7. Market: a place or arrangement where buyers and sellers meet to exchange goods and services.

What are needs?

• Needs are essential to you whatever your financial situation.
• You take care of them first, before other things you can do without.

What are wants?

• A car is a want when compared with your child’s school fees or educational savings.
• You can live without a car, but a child’s education is vital and cannot be compromised.

What is demand?

• A want becomes demand only when the person can pay for it.
• A wish for a car without the money to buy it is a want, not demand.

What is exchange?

• Exchange creates value because it leaves both parties better off.
• This is called a win-win situation.

What is a transaction?

• A transaction is a completed exchange with agreed conditions, time and place.
• For a successful transaction, the marketer should understand what each party expects.

What is a market?

• A market is where trading of goods takes place, such as a marketplace or a street market.
• Buyers and sellers gather information there and carry out exchanges.
• It functions so that the satisfaction of buyers and sellers during a transaction is ensured.

What is quality in marketing?

Quality in marketing is the totality of features and characteristics of a product that bear on its ability to satisfy the needs of the customer.

• Features: the collection of features and characteristics that help a product meet given requirements.
• Performance: how well a product performs and satisfies consumers’ needs and wants.
• Buyer’s standard: the features of a product that meet the standards and expectations of the buyer.

What are the goals of the marketing system?

There are four goals of the marketing system according to Kotler and Armstrong (1987): maximise consumption, maximise consumer satisfaction, maximise choice and maximise life quality.

1. Maximise consumption.
2. Maximise consumer satisfaction.
3. Maximise choice.
4. Maximise life quality.

What does maximise consumption mean?

• Many business executives believe marketing should stimulate consumption.
• Maximum consumption creates maximum production, employment and wealth.
• The assumption is that the more people consume, the happier they are.

What does maximise consumer satisfaction mean?

This goal aims at consumer satisfaction rather than consumption alone, but measuring satisfaction raises three problems.

1. No total measure: nobody has figured out how to measure the total satisfaction created by a particular product marketing activity.
2. Goods and bads: the satisfaction from the “goods” of a product must be offset by the “bad”, such as pollution and environmental damage.
3. Status goods: the satisfaction from certain goods depends on only a few other people having them.

What does maximise choice mean?

• The system should maximise product variety and consumer choice.
• Consumers can then find goods that exactly satisfy their tastes.
• They can maximise their lifestyles and therefore their satisfaction.

What does maximise life quality mean?

• The system should improve the quality of life, including the quantity, availability and cost of goods.
• It should also improve the quality of the physical environment and the cultural environment.
• A marketing system is judged by the direct consumer satisfaction it creates.
• It is also judged by its impact on the physical and cultural environment.

Evaluation

1. Define marketing.
2. State two differences between marketing and selling.
3. Distinguish between needs and wants, with an example of each.
4. What is demand?
5. List the goals of the marketing system according to Kotler and Armstrong (1987).

Assignment

Explain the terms exchange and transaction, then describe three problems associated with measuring consumer satisfaction.