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Principles of Marketing: Basic Concepts and Fundamentals

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Seth is a freelance writer with eight years of experience writing about marketing.

principlesofmarketingpart1basicconceptsandfundamentals

What Is Marketing?

"Marketing consists of all the activities of individuals and organizations designed to identify, anticipate, and mutually satisfy the needs of all parties involved in the exchange."

Marketing cannot take place unless some sort of exchange occurs. One party must exchange a product or service with another party for some form of payment. This is the exchange process and is the central focus of all marketing activities.

Marketing Utilities

Four marketing utilities, which are the capacities of the product offering to satisfy the needs of a customer, are enhanced when exchange occurs.

These include:

  1. Form Utility: The product is produced, or modified for the customer. An example of this might be a car manufacturer designing their car so that a driver will be able to plug in his I-pod or other devices.
  2. Time Utility: The consumer's ability to buy the product when he or she wants to buy the product. A grocer may store certain amounts of certain foods until the prime season they are bought. It is ensuring customers will have access to the food when they most desire them.
  3. Place Utility: This describes when a consumer is able to buy the product at a location that is convenient for them. The best example of this is online sales. Home is the most convenient location for a consumer.
  4. Possession Utility: Ownership of the product is transferred from the marketer to the buyer. An example is getting a loan and then buying a car. This is concerned with the ease of transferability for the consumer.

The Marketing Management Concepts

There are four marketing management concepts that companies will utilize in their marketing objectives. All of these aim to achieve profits and objectives, but the focus and means by which they do so will differ. They will typically follow one of these four major concepts:

  1. Product Concept: This management orientation says that if you build a quality product and set a reasonable price, very little marketing effort is needed to sell it. The product generates the demand "build it, and they will come"
  2. Selling Concept: This management orientation says that consumers will not normally buy enough of a product unless it is aggressively promoted to them.
  3. Marketing Concept: This management orientation says the major purpose of an organization is to identify consumer needs and then adapt the organization in a way that will satisfy the customer's needs more effectively and efficiently than the competition. (i.e. Chain restaurants may alter their menu in different countries)
  4. Societal Concept: This management orientation focuses on satisfying consumer's needs and demonstrating long-running concern for societal welfare in order to achieve company objectives and attend to its responsibilities for society. The idea is to find a balance between social welfare, consumer needs, and company profits.
ConceptFocusMeansEnds

1. Product

Products

Quality product, reasonable price, little marketing effort

Achieve profits or objectives by products generating consumer demand

2. Selling

Products

Aggressive advertising and selling efforts

Achieve profits or objectives by generating sales volume

3. Marketing

Customer needs

Integrated marketing

Achieve profits or objectives through customer satisfaction

4. Societal-Marketing

Customer satisfaction and long run public welfare

Constant search for better products in terms of appeal and benefit

Satisfy organizational goals and responsibilities for society

Traditional vs. Integrated Marketing

To understand the fundamentals of marketing, it is important to understand two different approaches used when a company chooses to introduce a new product. Here we see traditional and integrated marketing.

There are typically 5 different departments directly involved with the product during creation and launch: Development, Engineering, Production, Marketing, and Distribution.

If a company opts to use a traditional approach, all of these departments work as separate entities. For example, development will draw up a product and then pass it along to engineering to create it. Engineering will then pass it along to production mass produce it. They will afterwards pass it to marketing, who will eventually move the product to distribution for a product launch.

If a firm opts to utilize an integrated marketing approach, all of the departments work together as a single unit. Engineering will not begin a product without ensuring that production has the capabilities to produce it. Development will check with marketing to ensure the product is in line with the company image and approach. Basically, every department will at some point integrate their work with all other departments in the process.

Clearly, integrated marketing is the better approach. While it may take longer to launch a product, the likelihood of success is greater. The traditional approach leaves much room for interdepartmental conflicting interests and is therefore regarded as an outdated approach in marketing. It all too often ignores the consumer's needs. The integrated marketing approach helps a business work collectively as one unit.

Perceived Value and Satisfaction

A customer's perceived value is equal to the benefits derived divided by the costs.

Value = Benefits/Costs

Further, benefits can include functional and emotional benefits. Costs may include monetary costs, time costs, energy costs, and psychic costs.

So,

Value =

Functional benefits + emotional benefits / monetary cost + time cost + energy cost + psychic costs


Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing a product's performance in relation to the person's expectations of performance.

Most expectations are derived from past buying experiences, friends, the marketer, peers, competitors, and promises of performance.

It is also important to keep in mind that a person is twice as likely to tell others about a negative product or experience than they are about a good product or positive experience. Dissatisfied customers can also have a negative impact on employee morale.

The Marketing Mix: The Four P's

There are four marketing mix variables that are associated with a product. These must be taken into consideration when making any decisions regarding marketing activities. These are often known as the "Four P's" in marketing. Note that these should only be identified after a target market is selected. All marketing mix variables are controllable, internal factors. These include:

  1. Product: This variable described all factors relating to the actual product visible to the consumer. These may include things such as quality, features, options, style, packaging, brand, sizes, labels, variety, and warranties.
  2. Price: The price variable includes not only the list price, but all other pricing factors associated with a product. These may include discounts, allowances, payment options and periods, and credit terms. All of these are related to the final, whole price of the product.
  3. Place: Place deals with all distribution and location aspects of a product. How and what are the products available to consumers? These may include assortments, channels, coverage areas, locations, and inventories.
  4. Promotion: Promotion is any and all efforts by a company to make publicize a product and make the consumer aware of it. Efforts might include advertising, personal selling, sales, public relations, or internet activities.

The marketing mix should only be determined after a target market is determined.

Target market = The group or groups of customers for which the marketer will direct attention. This group is determined after thorough segmentation and analysis of the market. (more on segmentation in part 2)

External Factors

While the marketing mix consists of factors that are controllable by a company, there are numerous external factors that must be taken into consideration when scanning the environment the product or service is marketed in. The company can do nothing about these in the long run, but can react to them in the short run. They will certainly impact what the marketer can do.

External Factors (Uncontrollable)

  • Demographic environment: The features of a country that can be statistically described
  • Economic environment: The financial and economic conditions in a country will determine demand for any and all products.
  • Competitive environment: The intensity of competition in the market the business is in cannot be controlled.
  • Physical environment: Availability, use, and disposal of natural resources
  • Technological environment: Determines how the marketing should be done. What medium should be used?
  • Political and legal environment: Laws and restrictions may be set by various government agencies in regard to competition, consumer protection, or societal welfare.
  • Social/Cultural environment: What is acceptable in what culture may not be acceptable in another.
  • Company related environment: Goals and objectives of top Gethsemane and company as a whole

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2012 Sethughes

Comments

Kirk Musick MS MBA from Miami Beach, FL on August 16, 2020:

Enjoyed the update.. Was on here 7 years ago visiting the same link.. great job..

Priya on July 20, 2020:

Nice mam I will prepared my knowledge very good nice

John sharmy on December 25, 2019:

very easy to read points are straight forward

Anas on November 30, 2019:

What is a location based marketing

Abush Abraham on October 26, 2019:

Mlakimie

Ibnu Rasikh on October 03, 2019:

thanks bro

Dr.G,Venugopalan on August 18, 2019:

Very clinical and adaptable to modern trend of marketing

Nikky on April 07, 2019:

Hmm....kudos too u infact this is amazing .....its very helpful

daddytall on March 26, 2019:

this is perhaps a very great work for helping student like me. endless thanks

bunmi on February 05, 2019:

so helpful thank you

Arun Mandokhot on October 30, 2018:

worth studying material

anonymous on October 05, 2018:

What is the definition of service?

moze on September 17, 2018:

how are the concepts used?

mark on September 10, 2018:

self explanatory. THANKS

mithlesh kumar on June 22, 2018:

good management notes

............ thank you.

Oyama Billy Sotiya on May 17, 2018:

Awesome work...very helpful

kagiri on April 06, 2018:

so helpful

Neeli Venkata Ramana on March 17, 2018:

Satisfied.But I think that the ordinary people want simple defining of concepts.

Edmon Bartolome on January 23, 2018:

Very helpful for a starting marketer like me. Thank you.

Najeeb ullah on January 11, 2018:

Thanks for the wonderful explanations.....

Youngie on October 17, 2017:

amazing

bwalya on October 14, 2017:

good work

Sunil Kumar Gupta on May 21, 2017:

Gr3at h3lpful process

minni on May 08, 2017:

great work. keep it up. !!

Amaram, Mathias. N on April 22, 2017:

Useful contents. I've just learnt. Thanks for this piece.

Hajra Arif on February 12, 2017:

Amazing concepts of marketing it gives basics about all the marketing,

Hamis on January 12, 2017:

Thanks Hub, I have loved the article

kriti on December 25, 2016:

great content. thanks for sharing

Hayatullah Amirzai on December 24, 2016:

Great explaination

TACHU DERICK TANGA on October 21, 2016:

It is so simplified and easy to understand. THANKS

Asad, on May 25, 2016:

Simple and easy to understand.

many thanks.

mymunnisa on May 15, 2016:

very useful article !

raheel on December 13, 2014:

i am having my major in marketing , i am having my interview right after 5 min. . Thanx u , it made me review all basic concepts of marketing.

http://digitalmarketingdegreesinmichigan2014.blogspot.com on November 11, 2014:

Great content! Thanks for sharing!

Kuldeep Kumar on August 21, 2014:

very useful article, but I think new innovative ideas are always required to compete with yourself not others.

Kuldeep Kumar

http://butterflyrealty.in/

Kevin Trusty from Joliet, IL on April 15, 2014:

Excellent piece here!

PriceGong from Israel on January 09, 2014:

Great hub Seth, very nicely detailed and explained.

Kirk Musick from Christiansburg, Virginia on August 08, 2013:

Great content, will be reading the other parts! Thanks for the read-

Sethughes (author) on July 09, 2012:

Thanks! I am a marketing student and I have to refresh myself with this stuff all the time. Thanks again

Peter V from At the Beach in Florida on July 09, 2012:

Good hub, I remember learning the 4 p's back in college. i always enjoyed my marketing classes. Voted up!

Sethughes (author) on June 24, 2012:

Thanks, I have a few. I was considering creating a hub that contained a collection of graphs, charts, diagrams, and some in depth examples to aid in learning some of the more complicated concepts. It may take me a little while but I should have that up relatively soon. Glad to help.

hscchemistry from Sydney, Australia on June 23, 2012:

Nice hub - do you have any diagrams/graphs to go with any of this information and any large-scale applications? I have no background in marketing but it looks great :)

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