Quarter 3 Week 1-2: Principles, Goals, Approaches

Objectives

1. Define and understand marketing;

2. Illustrate the utility concept of marketing;

3. Identify the characteristics of a marketing organization; and

4. Describe the traditional approaches to marketing.

What is Marketing

In July 2013, the American Marketing Association approved its latest definition of marketing as “ 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.”

Has included and benefited non- profit institutions like education and health care providers.

It has also emphasized that the responsibility of a business goes beyond the survival of the firm; the betterment of society should also be taken into account.

The production and selling of goods and services are the main functions of marketing in most organizations.

These functions take on the supple and demand function that is essential in the discipline of economics. With selling as one of the core functions, it can be said that marketing takes its roots from economics.

Marketing is supported by other disciplines. Psychology and sociology explain how consumers make purchase decisions. Mathematics is used for marketing research, while Information Technology is used for the promotion and distribution of goods and services.

Marketing is critical to the success of any business. However, its importance and extent depend on the perspective of the owner, the size of the business, and the kind of products or services being offered.

Utility Concept of Marketing

Utility is the power of a good or service to satisfy a particular need or want of a consumer. It also refers to the benefit or value that consumers derive from acquiring and using a good or service.

4 Kinds of utility:

1.1 Form Utility – refers to the conversion of raw materials into products that suit the preferences of consumers so they do not have to create their desired products themselves.

Example: a clothing company like Bench or Levi’s

- uses fabric, buttons, zippers, and other accessories to produce garments so the consumers need not assemble the materials.

 1.2 Task Utility – refers to offering services which consumers may not be capable of doing or may not like to do themselves.

- a woman may go to a salon to get a haircut because she does not want to do it herself.

The marketer should be able to communicate well with the consumers so that he/she can identify and consolidate their preferences and ensure that the product or service meets their expectations.

2. Place Utility – refers to the availability of the product or service at accessible locations. Marketers devise ways to provide value through availability

- Delivery services, online shopping, etc.

3. Time Utility – refers to the satisfaction derived by customers in availing products or services on time.

4. Possession Utility – refers to ensuring that consumers have full possession of the product or service at the right time, so this overlaps with time and place utilities. Marketers facilitate this utility through fast payment  processing and delivery.

Marketing Terms

Marketer – is a person who identifies the goods and services needed or wanted by customers and markets them

Customer –a person or a business that buys goods or avails of services produced or offered by a firm.

Consumer – refers to a person who acquires goods or services for direct use and has no intention of reselling them or using them to create another good or service

TRADITIONAL APPROACHES TO MARKETING

There are three (3) traditional approaches in marketing that focus less on the customer’s needs and wants and more on other factors such as production, product, and sales.

Production Concept

It starts with the production process and ensures that the firm produces high quality goods. Then the next task is to find people who will buy the products. The idea of this approach is that consumers favor companies that produce high- quality yet affordable goods, so it is necessary to maintain efficiency in production and distribution.

Henry Ford’s motor company pioneered the mass production of cars. During the 20th century, automobiles were new in the market and many people were wary of riding and even operating these vehicles. But through improved production and extensive marketing campaign, the Ford motor company was able to convince consumers to buy automobiles.

Product Concept

This approach believes that a product should be of high quality, excellent performance, and innovative features. Manufacturers who use this approach emphasize the importance of innovation as the key to business success.

Sales Concept
Production techniques became more elaborate and sophisticated in the 1950s. High-quality products and services continue to be provided but companies had difficulty selling them to customers. Buyers were unwilling to purchase goods and avail of services that they thought were not essential, especially when companies were not exerting extra effort to promote these goods and services.

This convinced companies to employ a sales force to persuade customers to buy. Personal selling, then, became the name of the game. The salesforce had to entice consumers to purchase goods and services.
Sales personnel use the art of persuasion to influence the purchase decisions of customers. In this approach, marketing becomes synonymous with selling. People do not recognize all the other activities of marketing except selling. Insurance agents, for example, have to provide potential customers with sufficient information to persuade them to get an insurance plan.

The height of the popularity of salesmen was in the 60s and 70s. The salesman of vacuum cleaners like Electrolux came knocking on every door. Carrying with him a bag of dirt, he demonstrated how good and effective his vacuum works. 

Meanwhile, in the absence of the Internet, salesmen of the encyclopedia sold a set for students. At that time, owning an encyclopedia was an advantage. Students no longer needed to go out of the house and do their research for their assignments in public libraries or their schools. These salesmen would later return to their customers and sell them the updated edition of the encyclopedia.

Marketing Terms

Personal selling is a promotional tool where in a salesperson uses selling techniques and sales skills to persuade a customer to purchase a good or avail a service, and build a personal relationship with the customer.

CONTEMPORARY MARKETING APPROACHES

1. Marketing Concept

- challenges the traditional approaches of marketing

Marketers take the responsibility of knowing the client first and eventually developing goods or services based on what the client needs or wants, thus leading to long- term profitability.

- emerged when a shift from a seller’s market to a buyer’s market took place.

Seller’s market is an economic situation where there are many buyers for a limited number of goods and services available in the market

Buyer’s market means that there are more products and services than consumers who are willing to buy them, which results in low prices.

The marketing concept also promotes an organizational orientation with the objective of achieving customer satisfaction and organizational success.

2. Societal Marketing Concept 

- this concept is defined as a marketing philosophy that merges profitability with corporate social responsibility.

- in producing goods or services, the company considers consumer needs and wants, its stakeholders (employees, suppliers, owners) and more importantly, the long –term interests of society.

3. Relationship Marketing Concept 

- this concept focuses on establishing lasting relationships with customers and suppliers. This relationship creates customer and supplier loyalty which results in successful organizational performance in the long run.

It is used to attract repeat business consistently.

repeat business  means that every new customer must be a returning customer. 

4. Social Marketing

- this concept aims to sell ideas and behaviors or tranform negative habits or attitudes into positive ones for the benefit of individuals or society as a whole. It is mostly used by non- profit organizations to endorse their advocacies, raise awareness on critical issues, and ask for financial support for their projects.

The primary focus of social marketing is for the people to learn specific values and think and act for the greater good rather than enticing them to purchase something.

Aims to offer quality products and services while considering the interests of society.

GOALS OF MARKETING

1. Building Brand Awareness

Marketing primarily influences what ideas and message the product or service is trying to project in the minds of the consumers and how the consumers can relate to the brand.

It increases the retention of the brand and the product to the minds of the consumers, thus results in brand awareness.

2. Supporting High Sales Lead Volume

Marketing activities are intended to support high sales lead volume. Many of these activities such as extensive promotion, entice customers to buy product or avail of the service.

3. Establishing Thought Leadership

The term thought leader was first coined by Joel Kutzman in Strategy + Business Magazine in 1994. He defined it as a person who has “new important ideas that are worth sharing and that have real application.” These fresh ideas can be in the form of a new product or a new method. To be a thought leader, a person should be an expert in the issues that affect the industry.

Today, though leadership is used in marketing to tap the expertise of people who can provide the best answers to customers’ most challenging questions about the product or service using formats that customers would like to see and use.

4. Boosting sales

Marketing greatly helps in boosting sales. For example. A customer who thinks of buying a new dress may be attracted to style and quality, and a good sales talk from a salesperson will further encourage her to buy. In short, production and marketing efforts go hand in hand in increasing sales.

5. Increasing Brand Engagement

The ultimate goal of marketing is to build and maintain lasting relationships with customers. In doing so, the company can generate profits, develop a loyal customer base, and further strengthen the brand.

When customers identify the brand, they form an emotional attachment to it. When the brand meets the expectations of customers, it means sales and profit for the company. 

Effective brand management is evident when customers feel guilty about switching to another brand.

Marketing Terms

Brand  is a symbol, logo, a word or set of words, or a combination of these elements that a company uses to distinguish its products or services from others

Brand  awareness  is the extent to which a brand is recognized by potential customers and is correctly associated with a particular product or service.

Sales lead  is a potential customer who is interested in the product or service.

lead  Volume  is the number of sales leads that will ultimately be converted into customers.

Thought leadership  is a technique that uses expertise of people who can provide the best answers to customers’ most challenging questions about the product or service.