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Mark Kenneth Sy

Overview of Marketing: An Introduction


Marketing started in the early part of the twentieth century (Between 1900 and 1910) out
of questions and issues neglected by its mother science economics.
In the early years of study and teaching of trade practices, the word marketing was not
used. Instead, trade, commerce and distribution were the common operation of the
area to which the term marketing is identified today.
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. understanding the behavioral concepts relevant to marketing
4. discuss the goals of marketing
5. describe the traditional approaches to marketing
6. identify and explain contemporary marketing approaches
Instrumental in stating and identifying marketing as a new business operation were
Ralph Starr Butler and Arch W. Shaw. In attempting to find a name to identify the world
field of selling and everything that the promoter of a product has to do prior to his
actual use of salesman and advertising, Butler came upon the phrase marketing
method.
Butler described marketing as more than selling, channels, advertising, or the
operations of wholesale or retail firms. Marketing is a business operation of
coordination, planning, the binding force of the various factors in trade that may be
considered by the distributor who wishes to develop his business strategy with care.
Shaws concept of marketing was more scholastic. While assisting in the reorganization
of the Harvard Business School, Shaw discovered his interest in the application of
scientific management principles to distribution of problems. He identified three basic
operations in business: production, distribution, and facilitating functions or
administration. He then conceived marketing as matter in motion,: a theory credited to
Bohn-Bawert. This concept states that business is concerned with motion of one sort of
another specifically, motion changing form called production, or motion changing
place and ownership called distribution. The motion of distribution includes financing,
credit and collection, purchasing, employment, and accounting.
Stages of Marketing Thought
The developmental stages of marketing thoughts in its 50 years may be classified as
follows.

1900 1910
Period of Discovery
In the early years, 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. The concept of marketing came into being and
the business activity was thus named.
1910-1920
Period of Conceptualization
Many marketing concepts were being developed. These concepts were classified and
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 although other
authors had used principles in the relation to advertising, retailing, and credit granting.
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 appraised in terms of current
needs for the marketing knowledge. The scientific aspects of the subject were
considered.
1950-1960
Period of Reconception
Traditional approach to the study of marketing were supplemented by increasing
emphasis on managerial decision making, the societal aspects of marketing, and
quantitative marketing analysis. Many new concepts, some borrowed from the field of
management and from other social sciences, were introduced into marketing.
1960-1970
Period of Differentiation
As marketing expanded, new concepts took on substantial identity as significant
components of the total structure of thought, Among them were such elements as
managerialism, Holism, Environmentalism, systems, and internationalism.

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 focus of interest.
What is marketing? The discussion in the different approaches to the study of marketing
point to multi-dimensional factors that affect marketing, making it difficult to give a
complete concept of marketing in one definition. Through time, the following definitions
of marketing have been given:
A human activity responsible for managing the demand structure of need-satisfying
goods and series in order to facilitate satisfactorily, the exchange process at a
reasonable profit, or present and potential customers
A social and managerial process whereby individuals and groups obtain what they
need and want through creating a exchanging products and value with others.
An expanded and broader view of marketing integrating the different approaches to
marketing is this definition:
A social and managerial process for managing the demand structure of needs,
wants and satisfying products and services in order to effectively facilitate the
exchange process and values with the others at a reasonable profit, for present and
potential customers.

Figure1-1: What is Marketing (Person Technology Center, 2004)


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.

Marketing as One the Functions in Business Organization


A simple business organization consists of the following function:
1. finance and accounting
2. human resource management
3. product and materials management

4. marketing
Functions in Management
The different function of managers in a business organization are as follows: planning
organizing, staffing, directing supervising, and evaluating of personnel, plans and
programs in the different departments of company.
Marketing as a Management function
Marketing is a part of four-key management functions: marketing, production, finance,
and human resource.
Figure 1-2 : Management Function
Management
Marketing

Production

Finance

Human Resource

There is no distinction between marketing and business because marketing is a


companys profit center while the reset is cost center. Peter Drucker (1954), legendary
management guru, noted that marketing is not really a separate management function
but rather the whole business seen from the customers point of view.
What is the relationship between marketing and each of the other management
functions? Let us take a look at each one.

Figure 1-3: Marketing as Center of the Management Functions


Marketing

MARKETING

Marketing and Production


Products manufactured or supplied to costumers must be consistent with the customer
specifications. This means that production should only produce products that will satisfy
customers needs and wants.
Marketing and Human Resource
The marketing strategy y 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. Organization is a source of competitive advantage.
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
objective. Go (2001) mentioned that the wealth conversion principles results to
irreconcilable differences between marketing and finance.
Wealth Conversion Principle. Business firms need cash to operate. For a company to
create wealth or profit, it must have a good and cheap source of funds. These funds
must then be used to buy inventories at a lower price. The inventories are then sold at
higher price and cash is collected from each sales transaction. Buying creates inventory
while selling most often creates receivables since not all sales can be transacted on a
pure cash money basis. (Josiah)
Behavioral Concept Relevant to Marketing
As an area of study, marketing has been enriched and broadened by concepts from
related disciplines such as economics, management, accounting, and the behavioral
sciences, The interdisciplinary approach is important if one considers the possibility that
the study of marketing may become a science. (Llanes)
Marketing may be a science if seen as a definitive area of knowledge and its
application. In this sense, it would be one of the social sciences, viewed in broader
perspective, marketing, along with economics, the behavioral sciences, and other
studies, would be a discipline of social sciences or as a science of society (Bartels
1976, 185). Thus, through interdiscipline, marketing is conceived as a broad economic
function and as a social institution, not merely as a business activity.

Table 1-1 summarizes the behavioral concepts relevant to marketing and the marketing
thoughts, which came out of these concepts.
Table 1-1: Bliss Perrys Summary of the Behavioral Concepts Relevant to Marketing
(Bartel 1976, 196-197)
Behavioral Concept
Marketing Thought
From anthropology
Culture
Comparative Approach
(community in entirety)
Subculture
Climate for business
Market research
Culture restraints
Word Association
Communication
Retailing Structures
From sociology
Social class
Market segments
(Individuals in relation to Social differentiation
Social Class awareness
other individuals)
Status crystallization
New Product
Reference Groups
acceptance
Informal group
Shopping behavior
Social role
Leisure
The family
Groups, products,
Individuals
brands
Institutions
Aspirations
References
Status conflicts
Personal influence
Decision Making
Life Cycle
From Psychology
Motivation
Motivation
(center on the
Drives
Risk reduction
individual)
Cognitive dissonance
Ego
Achievement
Self Image
Affiliations
Concept generalization
Hierarchy of motives
Brand choice
Perception
Orientation
Scope
Threshold
Perceptual function
Mechanism of vision
Time
Selective perception
Classical and operant
learning
Serial Learning
insight

Learning concepts
Attitudes
Power groups
Values

From political science

Trade association
Public Policy

Goals of Marketing
The four goals of marketing system: maximize consumption, maximize consumer
satisfaction, maximize choice, and maximize life quality. (Kotler 2000)
Marketing: The Strategic 3Cs Concept
The two interacting components in marketing are the company and the market.
Marketing is the interfacing of a company and its target market. (Josiah)
Figure 1-4: Two Interacting Components of Marketing
Company

Market

The company and its market are equally important. It is marketing that gives fulfillment
to both components. Marketing people should balance between the companys
requirements for profit and desired market share.
The market is composed of two other interacting components: the customers and
competition. The overriding objective of the company is not just to satisfy the needs and
want of its customers. It has to be profitable and better than its competitor. Otherwise,
the competitor could win the customer because it is able to satisfy them. (Go 2001).
Figure 1-5: Two Interacting Components of a Market
Customer

Competitor

Combining the three interacting and equally important components of marketing will
produce the strategic 3Cs of marketing (Go 201 19-20).
Figure 1-6: The Strategic 3Cs of Marketing
Customers
Company
Competition

The key objective of the 3Cs of marketing is as follows:


1. Customers
To satisfy the needs, wants, and expectations of target customers
2. Competition
To outperform competition
3. Company
To ensure corporate health and profit
The key objective of each of the 3Cs of marketing must be attained to be called
Marketing oriented. The output of customers, competition, and company is collectively
called key result areas (KRS), These outputs are sales, market shares, and profit (Go
2001).
Figure 1-7: Input and Output of Marketing
Sales
Customers

Company

Competitor

Profit

Market Shares

Key Result Areas


Sales result from satisfying customers needs and wants
Market shares are an effect from outperforming competition
Profit comes from having excess of sales over cost and expenses in earning market
shares
Contemporary Marketing Approaches
With the maturation of marketing thought, approaches to the analysis of marketing were
advanced. The following are some of the approaches and concepts in marketing: (1)
marketing mix, (2) conceptual approach, (3) systems or holistic approach, (4) Marketing
Management, (5) macro-marketing, (6) social marketing, and (7) comparative marketing

(Llanes and Jurado 1980)


The Marketing Mix
The marketing mix developed by E. Jerome McCarthy (McCarthy 1975:44) consists of
4Ps product price, place, and promotion all of which influence buyers decision and
responses. Each P relates to and is dependent on every other Ps. The Ps are controlled
variables that a company may use in mapping a successful marketing strategy. Below is
the formula for marketing success (Schwartz 1977:67):
Therefore, for a marketing program to achieve successful result, each P must be
executed effectively, each should be focused on the consumer as shown in Figure 1-8:
Figure 1-8: The Marketing Mix
Product
(Desirable)
Promotion
(Effective)

Consumer

Price
(Affordable)

Place
(Availability)
A product is anything marketed to satisfy a want or a need. It may be a person, a place,
and organization, an idea or a good offered to a target market. For Example, Mobile
Phone, MP3, Donut, Coffee, body and soap.
A Target Market consist of a set of buyers who share common needs or characteristics
that the company decides to serve (Kotler 2003, 255). Thus, the companys concern is
how to develop the right product that will satisfy customers needs. Hence, product
needs to satisfy the customer first before the other mixes because how potential
customers view the product affects the development of other Ps.
Place considers all the functions, problems, and institution involved in getting the right
product to the target market. Place also refers to the channel of distribution that
marketers work in and through to move goods from manufacturers to the consumers.
Promotion includes advertising, sales promotions, public relations, personal selling,
and direct marketing. It is concerned with any 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 place.
In setting the price, factors like competition, existing practices on markups, discounts
and terms of sale, product appeal, and legal restrictions must be considered.
The elements of the marketing mix are interdependent; hence any decision about the

4Ps must be made at the same time. The marketing mix thought follows some
sequence (McCarthy and Shapiro 1975,80):
A product is developed to satisfy the target customers. Then a way (place) is
fond to reach the target market. Promotion informs the target market about the
availability of the product. Then the price is established based on expected customs and
reaction to the total offering.
Conceptual Approach
This approach studies the ideas of marketing rather than the activities of marketing, Its
emphasis is on theoretical analysis and development of new concepts whether of
consumer, products, marketing institution, functions, process or policies. The concept of
marketing is more important than the definition of marketing. The conceptual approach
is recognized when marketing is defined to bring out various ideas for which marketing
stands.
Conceptualization is viewed as a means of advancing the understanding of marketing
as a tool aiding analysis and logic, and facilitating communication of ideas (Bartels
1976,230).
Thus, the conceptualists seek ways to improve marketing, and provide means of solving
marketing problems through research, logical analysis and innovative thought.
The approach is viewed in two-ways, as a marketing concept and as a concept in
marketing.
The marketing concept views all management decision to be market oriented, within the
consumer or the customer as the end or object of all business effort, The counterpart for
this approach was the Consumer is King concept. While this consumer concept before
is mainly in selling and on the retail level, the new application of marketing concept
has been adopted by manufacturers as well ( Bartels 1976,228).

Figure 1-9: Company Organization Applying the Marketing Concept

President

VP Finance
Production

VP Human Resource

VP Marketing

VP

Sales
Marketing Research
Product Manager
Promotions Managers
Customers Service

Systems (Holistic) Approach


A system is a set of interaction or interdependent groups coordinated to form a
unified whole and organized to accomplish a set of goals (Markin 1979,28), Thus
marketing is perceived as whole, interdependent units, the marketing process
conceptualized as flows and the marketing structure as systems (Bartels 1976,202).
The system approach is based on the understanding that activities or process are
interdependent to other activities or processes. It is a holistic or unified view of
marketing. Marketing is explained as the complex interrelations of the 4P and also as
the interaction of marketing institution, price, and functions to management and
government control.
A marketing system is viewed as a set of important institution and flows that connect
an organization to its markets. The system consist of: 1) the suppliers, 2) the company,
3) the competitors, 4) marketing intermediaries, 5) end-user market, and 6) the
environment, in the usual situation, marketing involves serving a market of end users in
the face of competitors. The company and the competitor send their prduct and
messages to the consumers either directly or through marketing intermediaries to end
user. All of the actors in the system are affected by major environmental forces (e.g.
demographic, economic, physical, technological, political-legal, social-cultural).
(Armstrong 2003, 15)
Figure 1-10: Main Actors and Forces and Forces in a Modern Marketing System
Company
(Marketer)
Marketing

End-User

Suppliers
Market

Intermediaries
Competitors

According to Kotler (2003), Marketers must connect effectively with customers others in
the company and external partners in the face of major environmental forces. A
companys marketing environment consist of the actors and forces outside marketing
that affect marketing managements ability to develop and maintain successful
relationships with its target customers. The marketing environment offers both
opportunities and threats. Successful companies now the vital importance of constantly
watching and adapting to the changing environment.
The micro environment consists of forces close to the company that affect its ability to
serve its customers the company, suppliers, marketing channels firms, customer
markets, competitors, and demographic, economic, natural, technological, political and
cultural forces.
Marketing Management
This concept is a managerial approach to marketing. It emphasizes marketing
management as a decision making process and how decision makers, specifically the
marketing managers, handle specific marketing problems and situations, marketing
activities and strategies are evaluated and developed to achieve specific management
objective. The approach establishes the position of the marketing manager as a toplevel position in a companys organization.
Marketing Management is defined as the analysis, planning, implementation, and
control of programs designed to create, build, and maintain beneficial exchanges with
target buyers for the purpose of achieving organizational objectives.
The bottom line is that effective marketing can take many forms. There will be a
constant tension between the formulated side of marketing and the creative side. It is
easier to learn he formulated side of marketing.
CLEARING POINT
Many people think of marketing only as selling and advertising.
1. Marketing is no longer telling and selling
2. Marketings new sense is concerned with satisfying customers needs
The term selling is interpreted as Marketing that we have to clarify to avoid
misunderstanding.
Many think of marketing as selling. This is partly True, as selling which is one of the
promotion mix integrated marketing communication, is only a part of the total marketing
program. Marketing is a comprehensive term, which embrace selling, distribution,

communication, and more into an integrated dynamic marketing system.


Another point we would clarify are the following questions:
Is marketing a business? Marketing is a new discipline set of activities separate
from but closely related to business activities.
Is marketing economics? Because marketing is a new discipline, some distinct set
of activities separates from but closely related to economic activities. (Markin
1974,21)
Economics deals with allocation and exchange processes upon the creation and
distribution of utilities. Utilities relate to values or things of worth that are presumed to be
of value and worth, the capacity of things to satisfy peoples wants. The creation of
these utilities provides the close kinship between economics and marketing. (Llanes
and Jurado 1982,21).
Chapter Summary
Marketing is part of our lives and touches us in some way everyday. To be successful
each company that deals with customers on a daily basis must not be customer-driven,
but customer-obsessed. The best way to achieve this objective is to develop a sound
marketing function within the organization. Marketing is defined as a social and
managerial process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others.
From its mother science economics, marketing has emerged as a distinct action
discipline enriched by borrowing s from related disciplines such as management,
accounting, political science, and the behavioral sciences. The history and stages of
marketing thought are surveyed to the point to the growth and development of
marketing. (Llanes and Jurado 1982)
Both the traditional and contemporary approaches to the study of marketing are
presented. The traditional approaches are: commodity or product, institutional, and
function. The new approaches are; (1) marketing mix, (2) conceptual, (3) systems or
holistic, (4) managerial, (5) Macro-micro, (6) social marketing, (7) comparative
marketing. The approaches to marketing prove the multi-dimensional factors that must
be looked into in understanding marketing. (Llanes and Jurado 1982).
Marketing is a key factor in business success. The marketing function not only deals
with the production and distribution of products and services, but it is also concerned
with the ethical and social responsibility functions found in the domestic and global
environment. Marketing and its core concepts the exchange relationship, a brief
description of marketing management, the five major philosophies of marketing to the
information technology boom and the Internet, and connections with the world around
us are just a few of the topics presented in this introductory chapter.

PERSONAL SUMMARY:
Marketing is a relatively young discipline. Some, however, argue that it has been around
for a long time.
Trade and payment in money, goods and services has been around for many thousands
of years.
Barter or counter trade is becoming popular in business again.
Some marketing tools such as advertising have been around for hundreds and even
thousands of years. The Ancient Greeks used advertising for commercial purposes. The
traders hired 'criers' to promote their products. Their advertising propositions were
sometimes surprisingly similar to today's television advertisements. But none of the
ancient brands lasted the test of time. Few brands last a century let alone a millennium
or two.
Change has been constant throughout the history of marketing. Markets change
constantly. The only certainty is change. Everything changes - customers grow old,
develop new tastes, new values, earn different amounts , prioritize 'new' needs,
competitors emerge, laws and regulations change, and technology sends out shock
waves of change. Nothing stays the same.
The world and marketing are changing. They will continue to change. Today's winners
may be tomorrow's losers.

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