INTRODUCTION TO MARKETING

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 organisation’s objectives. The first unit introduces the definitions of marketing and goes on to describe the various marketing decisions.

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2.0 OBJECTIVES

At the end of this unit, 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:

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).
Marketing is the management function that organises 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).
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).
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).
Marketing is the business function that identifies customers’ needs and wants, determines which target markets the organisation can serve best, and designs appropriate products, services, and programmes to serve these markets (Kotler and Armstrong, 1996).
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.

Basic Concepts Underlying Marketing

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 self- expression. 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.

SELF-ASSESSMENT EXERCISE

Before you proceed further, what do you understand by the term marketing?

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.

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.

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, organisation 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 realises 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.

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 favour, 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.

Relationship Marketing

Relationship marketing is a process of creating, maintaining and
enhancing strong value-laden relationships with customers and other stockholders.

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.

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.

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 unit 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 units that may look difficult. A paper and pencil are necessary. Ensure that you make necessary notes and summaries where necessary for future references.

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 labour, 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 labour 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 characterised 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 maximise 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 unit to be
planned, and mobilised 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 organised 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.

Functions of Marketing

The functions of marketing can be classified into three: namely merchandising function, physical distribution and auxiliary function.

Merchandising Function

Product Planning and Developmen 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.
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 Organisation of Nigeria. For example, Sprite is 30 cl, Coke is 35 cl, etc.
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.
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.

Physical Distribution

Storage Storing of goods to meet future demands and for time and other utilities.
Transportation The movement of goods from the manufacturer down to the target consumers. This includes material handling, warehousing, etc.

Auxiliary Function

Marketing Finance That is, allowing credits to customers and as well as credit from customers, such as Banks, individuals, etc.
Risk-Bearing Risk means ‘uncertainty’. Entering into a business entails such as loss of items, road attack, weather risk, etc.

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.

CONCLUSION

In this unit, 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.

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.

TUTOR-MARKED ASSIGNMENT

With the aid of examples, differentiate between ‘needs’ and ‘wants’.
Itemise the importance of marketing in an economy.