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MGT 101

CENTRAL BICOL STATE UNIVERSITY OF AGRICULTURE

S/Y 2016-2017

PRINCIPLES OF MARKETING

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Grading System 20% - Midterm Exam

20% - Final Exam

60% - Class Standing

Class Standing:

5%- Attendance

15% - Project

15% - Recitation

25% - Quizzes

CHAPTER 1

OVERVIEW OF MARKETING: An Introduction

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CHAPTER OBJECTIVES At the end of the chapter you should be able to:

1. Explain the meaning of marketing.

2. Describe the stages of marketing thought.

3. Discuss the goals of marketing

4. Describe the traditional approaches to marketing

5. Identify and explain contemporary marketing approaches

Stages of Marketing Thought Developmental stages of marketing thoughts in its 50

years classified: 1900-1910 Period of Discovery

Teachers of marketing sought facts about the distributive trades. The marketing theory was borrowed from economics, which thus resulted to distribution, world trade, and commodity markets -> “Marketing”

1910-1920 Period of Conceptualization Many marketing concepts was developed and classified. Terms were

defined.

1920-1930 Period of Integration Principles of Marketing were postulated. The general body of thought

was integrated for the first time.

Paul W. Ivey was the first to use “Principles of Marketing” as a book title.

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1930 -1940 Specialized areas of marketing continued to be developed,

hypothetical assumptions were verified and quantified, and some new approaches were developed to explanation of marketing knowledge.

The scientific aspects of the subject were considered.

1940 -1950 Period of Reappraisal The concept and traditional explanation of marketing was reappraised

in terms of current needs for marketing knowledge. The scientific aspects if the subject were considered.

1950 – 1960 Period of Reconcepcion Traditional approaches to the study of marketing were supplemented

by increasing emphasis on managerial decision making, the societal aspects of marketing, and quantitative marketing analysis. Concepts borrowed in the field of Management

1960 – 1970 Period of Differentiation Marketing expanded, new concepts took on

substantial identity as significant components of the total structure of thought.

1970 Period of Socialization Social issues and marketing became much more

important. It is the influence not of society upon marketing, but of marketing upon society that became a focus of interest.

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What is MARKETING? A human activity responsible for managing the demand structure

of need-satisfying goods and services in order to facilitate satisfactorily, the exchange process at a reasonable profit, for present and potential customers.

A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others.

An expanded and broader view of marketing integrating the different approaches to marketing is this definition:

What is Marketing Simply put:

Marketing is the delivery of customer satisfaction at a profit.

Goals:

attract new customers by promising superior value and keep and grow current customers by delivering satisfaction.

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Bliss Perry’s Summary of the Behavioral Concepts Relevant to Marketing

Behavioral Concept Marketing Thought

From anthropology (community in entirety)

Culture Subculture

Comparative approach Climate for business Market research Culture restraints Word association Communication Retailing structures

From Sociology (individuals in relation to other individuals)

Social class Social differentiation Status crystallization Reference groups Social role The family Individuals Institutions

Market segments Social class awareness New product acceptance Shopping behavior Communication Leisure Groups, products, brands Aspirations Status conflict Personal influence Decision making Life cycle

Bliss Perry’s Summary of the Behavioral Concepts Relevant to Marketing

Behavioral Concept Marketing Thought

From Psychology (centres of the individual)

Motivation Drives Cognitive dissonance Achievement Affiliations Hierarchy of motives Perception Orientation Scope Thresholds Perceptual function Mechanics of vision Time Selective perception Classical and operant learning Serial learning “Insight” Learning of concepts Attitudes

Motivation Risk reduction Ego Self-image Concept generalization Brand choice

From Political Science Power groups Values

Trade association Public policy

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Marketing as Management Function A simple business organization consists of the following

functions:

Finance and accounting

Human resource management

Production and materials management

Marketing

Management

Marketing Production Finance Human

Resource

MARKETING and PRODUCTION

Products manufactured or service delivered to customers must be consistent with customer specifications. This means that production should only produce products that will satisfy customers’ needs and wants.

MARKETING and HUMAN RESOURCE

The marketing strategy by itself cannot produce good results, say, meeting target sales, profit, and market share. A company needs good people to implement these strategies. A marketing plan is useless if the people who execute the plan are not committed to the idea.

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MARKETING and FINANCE

One of the common conflicts in a company involves sales and finance. Marketers and finance people should coordinate their functions to successfully achieve company objectives.

ASSIGNMENT: 1. What are the goals of Marketing.

2. What are the contemporary Marketing approaches.

3. Clip or photocopy (3) three current print advertisements.

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GOALS OF MARKETING Maximize consumption

Maximize consumer satisfaction

Maximize choice

Maximize life quality

MARKETING: The Strategic 3C’s Concept The interacting components in marketing are the company

and the market. Marketing is the interfacing of a company and its target market.

Company Market

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Two Interacting Components of Market

Customer Competition

Strategic 3Cs of Marketing

Company

Customers

Competition

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Key objectives of the 3Cs of marketing are as follows

Customers – satisfy the needs, wants, and expectation of target customers.

Competition – to outperform competition

Company – to ensure corporate health and profit

The 3 must be attained to be called “marketing oriented”.

Its outputs are called: key result areas (KRA)

Outputs: sales, market share, and profit

Input and Output of Marketing

Sales

CUSTOMERS

COMPETITION

Market Shares

COMPANY

Profit

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Key Result Areas: 1. Sales results from satisfying customers’ needs and wants.

2. Market shares are an effect from outperforming competition.

3. Profit comes from having excess of sales over cost and expenses in earning market shares.

CONTEMPORARY MARKETING APPROACHES Marketing Mix

Conceptual Approach

Systems, or holistic approach

Marketing management

Macro-marketing

Social marketing

Comparative marketing

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Marketing Mix Developed by E. Jerome McCarthy

Consists of 4Ps

Product

Price

Place

Promotion

It influences buyer’s decision and responses.

Each P relates and is dependent on every other P’s.

Controllable variables that a company may use in mapping a successful marketing strategy.

Formula of a marketing success:

Desirable Product + Effective Promotion of demand Stimulation + Acceptable Price +

Availability in the right Places = Marketing Success

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To be effective each P should focus on the consumer

Consumer

Product (Desirable)

Price (Affordable)

Place (Availability)

Promotion (Effective)

Product Product – anything marketed to satisfy a want or a need. It may

be a person, a place, an organization, an idea or a good offered to a target market.

A bundle of attributes (features, functions, benefits and uses) that exists for the purpose of exchange to satisfy both the customers and the organizational objective. Good – tangible physical entity you can touch. Service – the application of human and mechanical efforts to people

or objects to provide intangible benefits to customers. Ideas – concepts, philosophies, images and issues.

Target Market – set of buyers who share common needs or characteristics that company decides to serve. Develop first the right product that will satisfy customer needs

because how potential customers view the product will affect the development of other Ps.

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Place Place – considers all the functions, problems, and institutions

involved in getting the right product to target market. It also refers to the channel of distribution that marketers work in and through to move goods from manufacturers to consumers.

To satisfy customers, products must be available at the right time and in convenient locations.

Example: through stores, mail order catalogues, and web site ordering

Promotion Promotion – advertising, sales promotion, public relations,

personal telling, direct marketing.

Concerned with communication tool used to persuade and influence the target and potential market about the right product that will be sold in the right place at the right price.

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Price Price – factors like competition, existing practice on mark

ups, discounts and terms of sale, product appeal, and legal restrictions must ne considered

Relates to decisions and actions associated with establishing pricing objectives and policies and determining product prices.

A product is developed to satisfy the target customer.

Then a way (place) is found to reach the target market.

Promotion informs the target market about the availability of the product.

Then the price is established based on expected customers and reaction to the total offering.

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Conceptual Approach Studies the ideas of marketing rather than the activities of

marketing

Emphasis: theoretical analysis and development of new concepts whether of consumer, products, marketing, institution, functions, processes or policies.

Seeks to improve marketing and provide means of solving marketing problems through research, logical analysis, and innovative thought.

Views all management decisions to be market oriented, with the consumer or the customer as the end or object of all business effort. (it starts and ends with the customers)

To implement marketing concept:

The company strives to determine what buyers want and uses his information to develop satisfying products.

It focuses on customer analysis, competitor analysis, and integration of the organization’s resources to provide customer value and satisfaction as well as long term profit.

The company must continue to alter, adapt and develop products to keep pace with the customers changing desires and preferences.

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Company organization applying the marketing concept

President

VP Finance VP Human Resource

VP Marketing

Sales

Marketing Research

Production Manager

Promotions Manager

Customer Service

VP Production

Systems (Holistic) Approach System – set of interacting groups coordinated to form a

unified whole and organized to accomplish a set of goals.

System approach – marketing is perceived as a whole, interdependent units, the marketing process conceptualized as “flows” and the marketing structure as “systems”.

Marketing is explained as the complex interrelationship of the 4Ps and also as the interaction of marketing institutions, price, and functions to management and gov’t control.

Marketing System – the set of important institutions and flows that connect an organization to its markets.

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Main actors and forces in modern marketing system

Suppliers

Company (Marketer)

Competitors

Marketing Intermediaries

End-user market

Marketing Management A Managerial approach to Marketing

The process of planning, organizing, implementation, and controlling marketing activities designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.

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Importance of money in our global economy Marketing consumes a sizeable portion of buyer’s dollars

Marketing is used in not-for-profit organizations

Marketing is important to business

Marketing fuels our global economy

Marketing knowledge enhances consumer awareness

Marketing connects people through technology

Closing Quiz: 1. What is marketing? (2)

2. What is the focus of all marketing activities? And why? (2)

3. What are the four variables of marketing mix? (4)

4. Give examples of each variables. (4)

5. Why is marketing important to our society? (2)

6. Why should you study marketing? (2)

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Marketing applications: Assignment 1. Identify several businesses in your area that have not

adopted the marketing concept. What characteristics of these organizations indicate non-acceptance of the marketing concept?

2. Choose a particular product/service and identify possible target markets for each. Example:

Nestle Koko Crunch

Coke zero

Bigg’s diner

Chapter 2

Customer Relationship

Customer Service

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Buying behaviour – decision processes and acts of people involved in buying and using products.

Consumer buying behavior – the buying behavior of ultimate customers, those who purchase products for personal or household use and not for business purposes.

Why study buying behavior? Buyer’s reaction to a company’s marketing strategy have a

great impact on the company’s success

For creating marketing mix, the company needs to understand what influences on where, when and how consumers buy.

To predict how the consumers respond to a marketing strategy

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Level of involvement Level of involvement – degree of interest on a product and

the importance the individual places on this product.

High involvement – visible to others (clothing, furniture, motorcycles) and that are expensive

Low involvement – those that are less expensive and have less associated social risk.

Enduring involvement – person’s interest is ongoing and long term

Situational involvement – temporary and dynamic, and results from particular set of circumstance.

consumer problem solving types Routinized response behavior (habitual response behavior) –

used by consumer when buying frequented purchased, low-cost items needing very little search-and-decision effort.

Low-involvement products

Limited problem solving – when buying products occasionally or when they need to obtain information about an unfamiliar brand in a familiar product category.

Extended problem solving – when purchasing an unfamiliar, expensive and infrequently bought products

High-involvement products

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Impulse buying – no conscious planning but results forma powerful urge to buy something immediately

What kind of consumer problem solving would most accurately describe the following purchase?

School shoes

Plasma television

Milk

Dining set

Bag

The consumer buying process

Problem Recognition

Information Search

Evaluation of

Alternatives Purchase

Post purchase

Evaluation

SITUATIONAL INFLUENCES • Physical Surroundings • Social Surroundings • Time • Purchase Reason • Buyer’s mood & Condition

PSYCHOLOGICAL INFLUENCES • Perception • Motives • Learning • Attitudes • Personality & Self-concept • Lifestyles

SOCIAL INFLUENCES

Culture and subcultures

SOCIAL INFLUENCES

• Roles • Family • Reference groups &

Opinion Leaders • Social Classes • Culture and subcultures

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1. Problem Recognition Occurs when a buyer becomes aware of a difference between

desired state and an actual condition.

Marketers use sales personnel, advertising and packaging to help trigger recognition of such needs or problems.

2. Information search Searches for product information that will help resolve the

problem or satisfy the need.

Internal Search – search own memories for information about the product

External Search- outside sources; may focus on communication with friends/ relatives, comparison of available brands and prices, market dominated sources and/or public sources

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3. Evaluation of alternatives Consideration set (evoked set) - a group of brands that a

buyer views as possible alternatives

To assess the products in consideration set the buyer uses evaluative criteria

Evaluative criteria – objective (e.g. energy rating) and subjective (such as style)characteristics that are important to a buyer

4. Purchase Consumer chooses the product to be bought.

Selection – based on the outcome of the evaluation stage and on other dimensions.

Product availability may influence which product is purchased.

Buyers pick the seller

Other factors that has influence in this phase: price, term of sale, warranties, maintenance agreement, installation and credit arrangements, etc.

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5. Post purchase evaluation Evaluation of product to ascertain if its actual performance

meets expected levels

Outcome: Satisfaction or Dissatisfaction

Cognitive dissonance – buyer’s doubts shortly after a purchase about whether the decision was the right one.

Usually arises after buying a high-involvement product that lacks some of the desirable features of competing brands.

Buyer may attempt to return the product or seek positive information about it to justify choosing it.

Marketer needs to reduce this by having salesperson contact recent buyer to make sure they are satisfied.

Situational Influences Result from circumstances, time and location that affect the

consumer buying decision process 5 categories:

1. Physical surroundings – location, store atmosphere, aromas, sounds, lighting, weather, and other factors in the physical surroundings.

2. Social surroundings – include characteristics and interactions of others, such as friends, relatives, salespeople and other customers, who are present when a purchase decision is being made.

3. Time perspective – amount of time required to become knowledgeable about a product, to search for it, or to buy for it, also influences the buying decision

4. Reason for purchase – what should the product accomplish and for whom.

5. Buyer’s momentary mood and condition -

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Psychological Influences Perception motives, learning, attitudes, personality and self-

concept and lifestyles

Perception – process of selecting, organizing, and interpreting information inputs to produce meaning.

Information inputs – sensations received through sight, taste, hearing, smell and touch.

Selective exposure – individuals selects which input will reach awareness

Selective distortion – changing or twisting currently received information This happens when a person receives information inconsistent with

his or her personal feelings or beliefs

Lessens the effect of advertisement

Selective retention – a person remembers inputs that support personal feelings, and beliefs and forgets inputs that do not.

Closure – occurs when a person mentally fills in missing elements in a pattern or statement. (organize and integrate new information with what is already stored in memory)

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Motives – internal energising force that directs a person’s activities towards satisfying needs or achieving goals.

Patronage motives – motives that influence where a person purchases products on a regular basis.

Learning – changes in an individual thought processes and behavior caused by information and experience

Attitude – an individual’s enduring evaluation of feelings about and behavioral tendencies towards an object or idea.

Attitude scale – means of measuring consumer attitudes by gauging the intensity of individual’s reaction to adjectives, phrases or sentences about an object.

Personality - set of internal traits and distinct behavioural tendencies that result in consistent patterns of behavior in certain situation

Self concepts – or self image/ a person’s view or perception of himself or herself

Lifestyles – an individual’s pattern of living expressed through activities, interests or opinions.

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Social influence Role – actions and activities that a person in a particular

position is supposed to perform based on expectations of the individual and surrounding people

Family members

Parents teach children how to cope with problems including those dealing with purchase decisions

consumer socialization - process through which a person acquires the knowledge and skills to function as a consumer.

Reference groups- any group that positively or negatively affect a person’s values, attitudes or behavior. (reference group influence

Families, work-related groups, sporting clubs, organizations, etc.

Opinion leader – a reference group member who provides information about a specific sphere that interests reference group participants. (considered well- informed)

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Social classes Open group of individuals with similar social rank

Culture and subculture Culture- accumulation of values, knowledge beliefs, customs,

objects and concepts of a society

Subculture – a group of individuals whose characteristics values and behavior patterns are similar, but differ from those of the surrounding culture.

Usually based on geographic locations, demographic characteristics such as age, religion, race, and ethnicity.