1.0 INTRODUCTION
In this course, we are principally concerned with management and exchange
and the process between a firm and its customers. A firm offers a product or a
service to the potential customer who has a need
for it. The marketing process
matches the firm’s offer and the customer’s need in such a way that both
benefit one in terms of profit and the other in terms of need satisfaction.
Different people with different objectives would opt to learn
marketing. However, marketing, as you will soon see, is important whether you
are in the marketing function or any other function of a business. Besides, marketing
is a very exciting field. It requires creativity for success.
Thus, you have embarked on the study of an exciting subject which
can also increase your creativity. This course has been designed primarily to
develop your awareness of the marketing orientation. It is assumed that such
knowledge about marketing decisions and process will not only improve your
personal competence but will also help in attaining your organization’s objectives.
The first note introduces the definitions of marketing and goes on to describe
the various marketing decisions .
2.0 OBJECTIVES
At the end of this note, you should be able to:
·
define the term marketing
·
outline the concepts of needs, wants and demands
·
discuss the importance of marketing
·
list the functions of marketing in economic development.
3.0 MAIN CONTENT
3.1 Definitions of Marketing
The term ‘Marketing’ has been defined in many ways by different authorities.
It is useful to pause for a while and consult some of these definitions:
(a) Marketing consists of the performance of business activities
that direct the flow of goods and services from producer to consumer or user
(American Marketing Association).
(b) Marketing is the management function that organizes and directs all business activities involved
in assessing and converting consumer purchasing power into effective demand for
a specific product or service, and in moving it to the final consumer or user so
as to achieve the profit target or other objectives set by the company (British
Institute of Marketing).
(c) Marketing is a social process by which individuals and groups obtain
what they need and want through creating and exchanging products and value with
others (Kotler, 1984).
(d) Marketing is a total system of business activities designed to
plan, price, promote and distribute want-satisfying goods and services to
present and potential customers (Stanton, 1964).
(e) Marketing is the business function that identifies customers’ needs
and wants, determines which target markets the organization can serve best, and
designs appropriate products, services, and programmes to serve these markets
(Kotler and Armstrong, 1996).
(f) Marketing is the business process by which products are
matched with markets and through which transfer of ownership is effected (Cundiff
and Still, 1964).
These definitions are better explained through the examination of
the following terms: needs, wants, demands, products, exchange, and some others.
3.2 Basic Concepts Underlying Marketing
3.2.1 Needs
The most basic concept underlying marketing is that of human
needs. Human needs are states of felt deprivation. These needs include basic physical
needs for food, clothing, shelter and safety; social needs for belonging and
affection; and individual needs for knowledge and selfexpression. The needs are
in-built in human nature itself. It is not invented by marketers. That is, they
naturally exist in the composition of human biology and human condition. When
the needs are not satisfied, a person will try to reduce the need or look for
an object that will satisfy it.
3.2.2 Wants
Human wants are desires for specific satisfaction of deeper needs.
For example, a man in the village needs rain and food and wants fertilizer. Also,
a man may want yam, rice, body cream, a bag, a wrist-watch, etc. but needs money.
Human needs may be few, but their wants are numerous. These wants are
continually shaped and re-shaped by social forces and institutions such as
families, church, schools and business corporations. Marketers do not create
needs; needs pre-exist in marketing. Marketers, along with other operatives in
society, influence wants. They suggest and inform consumers about certain
products and persuade them to purchase, stressing the benefits of such
products.
3.2.3 Demands
People have almost unlimited wants but limited resources. They
want to choose products that provide the most value and satisfaction for their money.
When backed by purchasing power, wants become demand. That is, demand want for
specific products that backed up by an ability and willingness to buy
them. For example, many desire a car such as Mercedes Benz, Toyota, BMW, Honda,
etc. but only a few are really willing and able to buy one. It is therefore
important for marketing executives to measure not only how many people want
their company’s products, but also measure how many of them would actually be
willing and able to buy them.
3.2.4 Products
People normally satisfy their wants and needs with products
offered in the market. Broadly, a product can be defined as anything that can
be offered to someone to satisfy a need or want. Specifically, a product can be
defined as an object, service, activity, person, place, organization or idea.
It should be noted that people do not buy physical objects for their own sake.
For example, a lipstick is bought to supply service (beautify); toothpaste for
whiter teeth – prevent germs or give fresh breath or sex appeal. The marketer’s
job is to sell the service packages built into physical products. If one
critically looks at physical products, one realizes that their importance lies
not so much in owning them as in using them to satisfy our wants. For example,
we do not buy a bed just to admire it, but because it aids resting better.
3.2.5 Exchange
Marketing takes place when people decide to satisfy needs and
wants through exchange. Exchange is therefore the act of obtaining a desired object
from someone by offering something in return. Exchange is only one of the many
ways people can obtain a desired object. For example, hungry people can find
food by hunting, fishing or gathering fruits. They could offer money, another
food or a service in return for food. Marketing focuses on this last option. As
a means of satisfying needs, exchange has much in its favor, people do not have
to depend on others, nor must they possess the skills to produce every
necessity for themselves. They can concentrate on making things they are good
at in exchange for the needed items made by others. Thus, exchange allows a society
to produce much more than it would.
However, Kotler (1984) states that for exchange to take place, it
must satisfy five conditions, namely:
(i) There are at least two parties.
(ii) Each party has something that might be of value to the other party.
(iii) Each party is capable of communication and delivery.
(iv) Each party is free to accept or reject the offer.
(v) Each party believes it is appropriate or desirable to deal
with the other party.
These five conditions make exchange possible. Whether exchange actually
takes place, however depends on the parties coming to an agreement. It is often
concluded that the act of exchange has left both of them better off, or at
least not worse off. Hence, exchange creates value just as production creates
value. It gives people more consumption possibilities.
3.2.6 Relationship Marketing
Relationship marketing is a process of creating, maintaining and enhancing
strong value-laden relationships with customers and other stockholders.
3.2.7 Markets
A market is defined as a set of all actual and potential buyers of
a product and service. These buyers share particular needs or wants that can be
satisfied through exchange. The size of a market depends on the need of people
with common needs and has resources to engage in exchange, and is willing to offer
these resources in exchange for what they want. Originally, the term ‘market’
stood for the place where buyers and sellers gathered to exchange their goods,
such as a village square. However, Economists often use the term to refer to a
collection of buyers and sellers who transact in a particular product class,
such as clothing market electronic market, cattle market, etc.
3.2.8 Marketers
A marketer is someone seeking a resource from someone else and willing
to offer something of value in exchange. A marketer could be a buyer and a
seller. For example, Mr. X sells TV to Mr. Y or Mr. X produces TV sets in XYZ
Company which he bought for personal use.
3.3 Approaches to the Study of Marketing
You should understand right from the onset that the contents of
the course are to be worked at and understood step by step and not to be read
like a novel. The best way is to read a note quickly in order to see the
general run of the content and then to re-read it carefully, making sure that
the content is understood step by step. You should be prepared at this stage to
spend a very longer quality time on some notes that may look difficult. A paper
and pencil are necessary. Ensure that you make necessary notes and summaries
where necessary for future references.
3.4 The Evolution of
Marketing
Marketing develops as
the society and its economic activities develop. The need for marketing arises
and grows as the society moves from an economy of Agriculture and
self-sufficiency to an economy built around division of labor,
industrialization and urbanization.
In during agrarian economy, the people largely self-sufficient –
they grew their own food, produce their own clothes, built their own houses, etc.
There was no marketing, because there was no exchange. However, as time went
on, the concept of division of labor began to evolve. People began to produce
more than they needed of some items. And whenever people make more than they
wanted, the foundation was laid for trade, and trade (exchange) is the heart of
marketing.
At first, the exchange process was a simple one. The emphasis was largely
on the production of basic needs which usually was in short supply. Little or
no attention was devoted to marketing, and exchange was very local.
Then came the era of marketing, when some producers began to manufacture
their goods in large quantities in anticipation of future demands. At this
juncture, it can be stated that marketing evolved in the united States as a
by-product of the industrial revolution. Therefore, up to 1910, the American
economy was very low. It was characterized by shortages of economic resources
(goods). The middlemen were very strong. The main problem was that of
production and distribution. Modern marketing came of age after the World War I
and II when surplus and overproduction became an important part of the economic
activities. In 1929 (the manufacturing era), there was manufacturing of goods
and services, but below the expected demand. The main concern was to produce
enough to meet the demands hand.
Between 1930 and the 1940s
(sales era/depression era), there was enough production of consumer goods and
services. The major problem in hand was that of marketing distribution. The
concern was to design the most effective channel of distribution among the
various alternatives.
Between 1940 and the 1950s (war era), all efforts were geared
towards the production of war equipment at the expense of consumer goods. When
the war came to an end, there were shortages of consumer goods. Hence, efforts were
geared towards the production of consumer goods. During these periods, various
authors came up with different theories such as Professor Joe Robinson, who
wrote on monopolistic economy. His assumption was that if a company can produce
an item in such a way that the marginal returns will offset its price
from the marginal costs, and the markets are segmented equally, then such
company would be able to maximize her profits. Later, people became interested
in this theory.
There was another author named Wanded Smith. He wrote an article
on ‘Why people must segment their markets and differentiate their products’.
His argument was based on the fact that various companies use different
machines for the production of war equipment. Besides, consumer purchasing
power and tastes are not the same.
During this period, the marketing concept evolved. ‘Marketing
concept’ is a business philosophy that states what the consumers want – satisfaction
- is the economic and social justification for a firm’s existence. It is a
managerial philosophy for performing business activities, which sees the entire
business activities as a note to be planned, and mobilized to produce goods and
services to satisfy consumers’ needs in such a way as to enhance the profit of
the firm.
1960s (Marketing Control Era)
This is the period when the marketing department became well known
and so much important in the U. S. A. One of the authors of the time, Peter
Drunker states that marketing department is so complex that it can’t be handled
by a single individual. The attention at this period was directed toward
markets. Also, consumerism came up due to the failure of the marketing concept.
Consumerism is an organized movement of citizens and government to strengthen
the rights and power of buyers in relation to sellers. Consumerists seek to
increase the amount of consumer information, education and protection. 1980’s to-Date (Societal Era) During
this period, communication has turned the whole world into a global village.
Effort was on how to satisfy the society needs, and consumers became conscious
of their rights.
3.5 Functions of Marketing
The functions of
marketing can be classified into three: namely merchandising function, physical
distribution and auxiliary function.
(A) Merchandising Function
1 Product Planning and Development
Product planning starts with idea generation, idea screening and development
of a prototype product. It also takes into consideration the purchasing power
of the consumers, taste and market segmentation. Research and
development is established for the analyses of ideas generated.
2 Standardisation and Grading This is concerned with
setting certain standards/levels to accomplish the produced goods. This is
carried out by the production department and regulated by some government agencies,
such as Standards Organization of Nigeria. For example, Sprite is 30 cl, Coke
is 35 cl, etc.
3 Buying and Assembling Here, we are concerned with the
marketing institutions that purchase goods or services at cheaper prices in
order to resell at minimum prices to the end-users. These marketing
institutions include the wholesalers, retailers and agents.
4 Selling This is concerned with selling of the finished
goods to the end users either through the manufacturers or the marketing
channels. In order to get the attention of their target consumers, they embark
on various promotional strategies, such as discounts, promo tools, bundle
sales, bonuses, etc.
(B) Physical Distribution
1 Storage Storing of goods to meet future demands and for time and other utilities.
2 Transportation The movement of goods from the manufacturer down to the target
consumers. This includes material handling, warehousing, etc.
(C) Auxiliary Function
1 Marketing Finance That is, allowing credits to customers and as well as obtaining credit
from customers, such as Banks, individuals, etc.
2 Risk-Bearing Risk
means ‘uncertainty’. Entering into a business entails risks, such as loss of
items, road attack, weather risk, etc.
3 Market Information Gathering necessary information about the markets, the target consumers
in terms of their purchasing power, taste, color, choices, competition, and
their products.
3.6 The Role of Marketing
·
The first and foremost role is that it stimulates potential
aggregate demand and thus, enlarges the size of the market. You might ask, how
does it help in the economic growth of a country? The answer is that through
stimulation of demand people are motivated to work harder and earn additional
money (income) to buy the various ideas, goods and services being marketed. An additional
advantage which accrues in the above context is that it accelerates the process
of monetizing the economy, which in turn facilitates the transfer of investible
resources.
·
Another important role which marketing plays is that it helps in the
discovery of entrepreneurial talent. Peter Drucker, a celebrated writer in the
field of Management, makes this point very succinctly when he observes that
marketing is a multiplier of managers and entrepreneurs.
·
It helps in sustaining and improving the existing levels of employment.
You may ask, how does it happen? The answer is that when a country advances
economically, it takes more and more people to distribute goods and
proportionately a lesser number to make them. That is, from the employment
point of view, production becomes relatively less significant than marketing
and the related services of transportation, finance, communication, insurance,
etc. which spring around it.
4.0 CONCLUSION
In this note, you have learned about the term ‘marketing’, its
functions and roles in the socio-economic development of a nation. You also learned
some basic terms which are regarded as the basic concepts underlying marketing.
5.0 SUMMARY
Although marketing cannot operate in isolation of other sectors of
the economy, marketing plays an important role in any economic development,
since goods by themselves cannot get to the target users except through
marketing institutions. Stages of marketing era were examined in order to
appreciate the role of marketing in nation building.
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