CATHERINE ARVIE TERRANO

BSA 1-19

ASSIGNMENT
PROF. PATRIARCA

Historical Background of Marketing

It is hard for many to believe, but when compared to economics, production and operations, accounting and other
business areas, marketing is a relatively young discipline having emerged in the early 1900s. Prior to this time most
issues that are now commonly associated with marketing were either assumed to fall within basic concepts of
economics (e.g., price setting was viewed as a simple supply/demand issue), advertising (well developed by 1900),
or in most cases, simply not yet explored (e.g., customer purchase behavior, importance of distribution partners).
Led by marketing scholars from several major universities, the development of marketing was in large part
motivated by the need to dissect in greater detail relationships and behaviors that existed between sellers and
buyers. In particular, the study of marketing led sellers to recognize that adopting certain strategies and tactics
could significantly benefit the seller/buyer relationship. In the old days of marketing (before the 1950s) this often
meant identifying strategies and tactics for simply selling more products and services with little regard for what
customers really wanted. Often this meant companies embraced a sell-as-much-as-we-can philosophy with little
concern for building relationships for the long term.
But starting in the 1950s, companies began to see that old ways of selling were wearing thin with customers. As
competition grew stiffer across most industries, organizations looked to the buyer side of the transaction for ways
to improve. What they found was an emerging philosophy suggesting that the key factor in successful marketing is
understanding the needs of customers. This now famous Marketing Concept suggests marketing decisions should
flow from FIRST knowing the customer and what they want. Only then should an organization initiate the process
of developing and marketing products and services.
The marketing concept continues to be at the root of most marketing efforts, though the concept does have its
own problems (e.g., doesnt help much with marketing new technologies) a discussion of which is beyond the
scope of this tutorial. But overall, marketers have learned they can no longer limit their marketing effort to just
getting customers to purchase more. They must have an in-depth understanding of who their customers are and
what they want.
Definition of Terms
Marketing is the process of communicating the value of a product to customers, for the purpose of selling that
product (goods or services). Another simple definition of "marketing" is "managing profitable customer
relationships".
Market is an area or arena in which commercial dealings are conducted.
Branding is the promoting of a product or service by identifying it with a particular brand.
Label is the information attached to or on a product for the purpose of naming it and describing its use, its
dangers, its ingredients, its manufacturer, and the like.
Package is the container used to protect, promote, transport, and/or identify a product. The package may vary
from a plastic band wrap to a steel or wooden box or drum. It may be primary (contains the product), secondary
(contains one or more primary packages), or tertiary (contains one or more secondary packages).
Elements of Marketing
Buyer is any person who contracts to acquire an asset in return for some form of consideration.
Seller is a person or entity who sells a thing or property in exchange for other property (often money).
Goods are products, or more specifically, products that economists feel satisfies a market need.

Marketing Concept
1. Production Concept
Those companies who believe in this philosophy think that if the goods/services are cheap and they can be made
available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in reducing the cost of
production and strengthening their distribution system. In order to reduce the cost of production and to bring it
down to the minimum level, these companies indulge in large scale production.
This helps them in effecting the economics of the large scale production. Consequently, the cost of production per
unit is reduced.
The utility of this philosophy is apparent only when demand exceeds supply. Its greatest drawback is that it is not
always necessary that the customer every time purchases the cheap and easily available goods or services.
2. Product Concept
Those companies who believe in this philosophy are of the opinion that if the quality of goods or services is of good
standard, the customers can be easily attracted. The basis of this thinking is that the customers get attracted
towards the products of good quality. On the basis of this philosophy or idea these companies direct their
marketing efforts to increasing the quality of their product.
It is a firm belief of the followers of the product concept that the customers get attracted to the products of good
quality. This is not the absolute truth because it is not the only basis of buying goods.
The customers do take care of the price of the products, its availability, etc. A good quality product and high price
can upset the budget of a customer. Therefore, it can be said that only the quality of the product is not the only
way to the success of marketing.
3. Selling Concept
Those companies who believe in this concept think that leaving alone the customers will not help. Instead there is
a need to attract the customers towards them. They think that goods are not bought but they have to be sold.
The basis of this thinking is that the customers can be attracted. Keeping in view this concept these companies
concentrate their marketing efforts towards educating and attracting the customers. In such a case their main
thinking is selling what you have.
This concept offers the idea that by repeated efforts one can sell-anything to the customers. This may be right for
some time, but you cannot do it for a long-time. If you succeed in enticing the customer once, he cannot be won
over every time.
On the contrary, he will work for damaging your reputation. Therefore, it can be asserted that this philosophy
offers only a short-term advantage and is not for long-term gains.
4. Marketing Concept
Those companies who believe in this concept are of the opinion that success can be achieved only through
consumer satisfaction. The basis of this thinking is that only those goods/service should be made available which
the consumers want or desire and not the things which you can do.
In other words, they do not sell what they can make but they make what they can sell. Keeping in mind this idea,
these companies direct their marketing efforts to achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be earned on a long-term basis. The
drawback of this concept is that no attention is paid to social welfare.
5. Societal Marketing Concept
This concept stresses not only the customer satisfaction but also gives importance to Consumer Welfare/Societal
Welfare. This concept is almost a step further than the marketing concept. Under this concept, it is believed that
mere satisfaction of the consumers would not help and the welfare of the whole society has to be kept in mind.
For example, if a company produces a vehicle which consumes less petrol but spreads pollution, it will result in
only consumer satisfaction and not the social welfare.

Primarily two elements are included under social welfare-high-level of human life and pollution free atmosphere.
Therefore, the companies believing in this concept direct all their marketing efforts towards the achievement of
consumer satisfaction and social welfare.
In short, it can be said that this is the latest concept of marketing. The companies adopting this concept can
achieve long-term profit.

Marketing Environment
The marketing environment surrounds and impacts upon the organization. There are three key elements to the
marketing environment which are the internal environment, the microenvironment and the macroenvironment.
Why are they important? Well marketers build both internal and external relationships. Marketers aim to
deliver value to satisfied customers, so we need to assess and evaluate our internal business/corporate
environment and our external environment which is subdivided into micro and macro.
Macro Environment
The macroenvironment is less controllable. The macro environment consists of much larger all-encompassing
influences (which impact the microenvironment) from the broader global society. Here we would consider culture,
political issues, technology, the natural environment, economic issues and demographic factors amongst others.
Again for Walmart the wider global macro environment will certainly impact its business, and many of these
factors are pretty much uncontrollable. Walmart trades mainly in the United States but also in international
markets. For example in the United Kingdom, Walmart trades as Asda. Walmart would need to take into account
local customs and practices in the United Kingdom such as bank holidays and other local festivals. In the United
Kingdom 2012 saw the 60th anniversary of Queen Elizabeth IIs reign which was a national celebration.
The United States and Europe experience different economic cycles, so trading in terms of interest rates needs to
be considered. Also remember that Walmart can sell firearms in the United States which are illegal under local
English law. There are many other macroeconomic influences such as governments and other publics, economic
indicators such as inflation and exchange rates, and the level nature of the local technology in different countries.
There are powerful influencers such as war (in Afghanistan for example) and natural disasters (such as the
Japanese Fukushima Daiichi nuclear disaster) which inevitably would influence the business and would be out of its
control.
To summarize, controllable factors tend to be included in your internal environment and your microenvironment.
On the other hand less controllable factors tend to be in relation to your macro environment. Why not list your
own controllable versus uncontrollable factors for a business of your choice?
Internal Environment
The internal environment has already been touched upon by other lessons on marketing teacher. For example, the
lessons on internal marketing and also on the functions within an organization give a good starting point to look at
our internal environment. A useful tool for quickly auditing your internal environment is known as the Five Ms
which are Men, Money, Machinery, Materials and Markets. Here is a really quick example using British Airways.
Looking internally at men, British Airways employees, pilots, engineers, cabin crew, marketing managers, etc.
Money is invested in the business by shareholders and banks for example. Machinery would include its aircraft but
also access to air bridges and buses to ferry passengers from the terminal to the aircraft. Materials for a service
business like British Airways would be aircraft fuel called kerosene (although if we were making aircraft materials
would include aluminum, wiring, glass, fabric, and so on). Finally markets which we know can be both internal and
external. Some might include a sixth M, which is minutes, since time is a valuable internal resource.
Micro Environment
The microenvironment is made from individuals and organizations that are close to the company and directly
impact the customer experience. Examples would include the company itself, its suppliers, other marketing input
from agencies, the markets and segments in which your business trades, your competition and also those around
you (which public relations would call publics) who are not paying customers but still have an interest in your
business. The Micro environment is relatively controllable since the actions of the business may influence such
stakeholders.

Walmarts Micro environment would be very much focused on immediate local issues. It would consider how to
recruit, retain and extend products and services to customers. It would pay close attention to the actions and
reactions of direct competitors. Walmart would build and nurture close relationships with key suppliers. The
business would need to communicate and liaise with its publics such as neighbours which are close to its stores, or
other road users. There will be other intermediaries as well including advertising agencies and trade unions
amongst others.

Consumer Behavior
The study of consumers helps firms and organizations improve their marketing strategies by understanding issues
such as how

The psychology of how consumers think, feel, reason, and select between different alternatives (e.g.,
brands, products, and retailers);
The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs,
media);
The behavior of consumers while shopping or making other marketing decisions;
Limitations in consumer knowledge or information processing abilities influence decisions and marketing
outcome;
How consumer motivation and decision strategies differ between products that differ in their level of
importance or interest that they entail for the consumer; and
How marketers can adapt and improve their marketing campaigns and marketing strategies to more
effectively reach the consumer.

One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the consumer and society." Although it is not necessary to memorize
this definition, it brings up some useful points:

Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of
clothes a person wears) or an organization (people on the job make decisions as to which products the
firm should use).
Consumer behavior involves the use and disposal of products as well as the study of how they are
purchased. Product use is often of great interest to the marketer, because this may influence how a
product is best positioned or how we can encourage increased consumption. Since many environmental
problems result from product disposal (e.g., motor oil being sent into sewage systems to save the
recycling fee, or garbage piling up at landfills) this is also an area of interest.
Consumer behavior involves services and ideas as well as tangible products.
The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of
high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national
health and economy.

There are four main applications of consumer behavior:

The most obvious is for marketing strategyi.e., for making better marketing campaigns. For example,
by understanding that consumers are more receptive to food advertising when they are hungry, we learn
to schedule snack advertisements late in the afternoon. By understanding that new products are usually
initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the
population, we learn that (1) companies that introduce new products must be well financed so that they

can stay afloat until their products become a commercial success and (2) it is important to please initial
customers, since they will in turn influence many subsequent customers brand choices.
A second application is public policy. In the 1980s, Accutane, a near miracle cure for acne, was
introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women.
Although physicians were instructed to warn their female patients of this, a number still became pregnant
while taking the drug. To get consumers attention, the Federal Drug Administration (FDA) took the step
of requiring that very graphic pictures of deformed babies be shown on the medicine containers.
Social marketing involves getting ideas across to consumers rather than selling something. Marty
Fishbein, a marketing professor, went on sabbatical to work for the Centers for Disease Control trying to
reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously,
would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also
determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a
result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the
cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic.
As a final benefit, studying consumer behavior should make us better consumers. Common sense
suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less
per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by
buying the larger quantity. In other words, in this case, knowing this fact will sensitize you to the need to
check the unit cost labels to determine if you are really getting a bargain.

There are several units in the market that can be analyzed. Our main thrust in this course is the consumer.
However, we will also need to analyze our own firms strengths and weaknesses and those of competing firms.
Suppose, for example, that we make a product aimed at older consumers, a growing segment. A competing firm
that targets babies, a shrinking market, is likely to consider repositioning toward our market. To assess a
competing firms potential threat, we need to examine its assets (e.g., technology, patents, market knowledge, and
awareness of its brands) against pressures it faces from the market. Finally, we need to assess conditions (the
marketing environment). For example, although we may have developed a product that offers great appeal for
consumers, a recession may cut demand dramatically.