Essentials of Marketing

Essentials of marketing

Contents

1. Basic Concepts

2. Non-profit marketing

3. Evolution of the marketing concept

4. Competition

1. Basic Concepts
First of all, what we shall define marketing as the process starting with planning and executing
the conception of ideas, pricing and promotion of the product or of the services and ending with
distribution of ideas, goods and services. All of this in the purpose of making exchanges that
satisfies individual and organizational goals. A basic question arises: what is an exchange? An
exchange is the process in which two or more parties voluntarily agree to provide something of
value to each other in a market, that represents individuals and organizations with the ability to
purchase the particular good or service that they desire.
In a market we find organizational buyers, individual consumers or both. The first ones are the
intermediary consumers that purchase goods and services with the purpose of producing
something else that will be sold afterwards. Examples of organizational buyers are the rental
services that buy cars, fast-food shops that buy animal products, furniture industry that buys
timber and so on. The other party we find in the market are the consumers that are individuals
who buy goods and services for themselves or household. These are also called final
consumers and for them all of the above mentioned processes are made for, because the final
consumers do not produce other goods and services.
We defined marketing and how it works at the basis, but what is its purpose? Success in
marketing is through the customers, which are consumers with needs and desires. The needs are
the things they require to survive as individuals and organizations, while the desires are what
customers would like to have, so that their lives would be more pleasant and their activities
easier to carry out.
In a market there is at least one seller and one buyer, but in todays world, there is a large
number of sellers and an even larger number of buyers in the average market. More buyers mean
more competition. So how do sellers try to get a better place in the heart of the customer, so that
their product or service is bought and not its rivals? Through marketing is the answer. Marketers

have long cared about the quality of their goods and services sold, because through quality is the
surest path in winning the competition. Through this interest in quality, the total quality
management (TQM) was born. TQM is an organization-wide commitment to satisfy customers
by improving continuously every process involved in delivering goods or services. This consists
in improvement and anticipation of defects, so that the correcting process is done before the
customer buys and uses the goods or services provided by the company.
Anticipation without knowledge is nothing, so marketers serve as the link between the
organization and the customers, through identification of the correct consumer, learning their
wants and needs and communicating them how the products and services of the organization can
help them meet those needs. If the product and services have a high quality, the customers will
be satisfied and will be back for more; but if the quality is doubtful or lesser than other sellers in
the market, the customer will look for another company. To prevent the bad scenario, TQM is
practiced and its effects are felt through improved sales and profits on the long run.

As explained above, marketing is more than just sales and advertising. An enlarged definition of
marketing encompasses eight basic core functions: buying, selling, transporting, storing,
standardization & grading, risk taking and securing marketing information. A single company is
not needed to perform all of this functions, because other parties are handling some of the
functions.
The exchange functions, - buying and selling - are for ensuring that the right products are
available to meet customers needs and desires and making him aware of this. Transportation and
storing of goods represent physical distribution functions, that also include the control of
inventory levels and processing received orders. The facilitation functions like standardization
and grading help marketers know what to provide and help customers make purchase decisions
or the purchase itself. Also, the grading function ensures that the products meet the quality
required through quality control. The risk taking is found in the development and offering for
sale products that customers have not yet committed to buying.

2. Non-profit marketing
Marketing is not only for products and services. It is a process that can be used in a non-profit
purpose, too. The non-profit marketing can be applied to persons, locations, ideas and
organizations. Person marketing is the process of making a person public and very known. This
type of marketing is often used in election campaign and even afterwards, to solidify ones
position. Place marketing is for tourism mainly, but it is also used to create a favorable reaction
related to an area that can be for sale. When a concept needs publicity or an ideal needs to be
promoted, we have idea marketing. Related to this marketing, there are many anti-drugs, antidiscrimination issues promoted.
The most important non-profit marketing is the organization marketing that is design to attract
new members, volunteers, participants or attract a favorable public opinion on the organization.
3. Evolution of the marketing concept
Production Era. Throughout the ages, since the Industrial Revolution, organizations found more
and more ways to automate the industry, leading to a mass-production of about any product. At
the beginning of this century, organizations realized that through quantity, alone, they will not
gain the competitive advantage over their rivals, so they started focusing on quality and
improvement of the produced goods and offered services. Until the next era, organizations
operated on a sellers market and improvement was not a priority.
Sales Era. Progressively, the quantity produced exceeded the quantity demanded and a buyers
market was created. Because the population had many products and services to choose from, to
keep the competitive advantage, organizations were focusing highly on the improvement of their
products and services. This type of market kept until the 1950s.
Marketing Era. While simple sales became inefficient, well targeted products brought more and
more profit. Many organizations realized that producing goods and offering services that they

offered before are not so profitable anymore. Needs and desires have changed and the customers
wanted something else. To find out what customers want, a marketing concept has been
adopted, trying to identify the target customer and his or her specific needs and desires. This
marketing concept states that marketing departments are needed in the organization, so that
through research, advertising and the core functions of marketing, if done in the interest of the
consumer, the sales are more profitable and the resources are better spent.
Quality-driven Marketing. In the last decades that have passed, globalization became a known
concept that is applied to many organizations that spread across the globe. To achieve such a
dominant position, the organization must be quality-driven and always in touch with the
customer. Also, TQM is an important process that can be found in all international organizations,
always improving the products, so that no correction is needed. Finding ourselves in the
marketing era, organizations are working for an emphasis on the quality and customer value that
is so important to the organization welfare.
4. Competition
Depending on how competition between organizations is held, four main types can be named
and exemplified. The types are: pure competition, monopolistic competition, oligopoly and
monopoly.
Pure competition is the most advertised type of competition, for giving the idea of fairness. In
this type, in the market we can find sellers and buyers, the sellers compete on the basis or price
and quality, while buyers, evaluating the options, buy from the most profitable place. Pure
competition is more of a concept than realistic market, because it is hard to always keep the
better prepared companies from out-smarting the others and gaining advantages. Through this
advantages, the smarter companies create oligopoly.
Monopolistic competition is when on the market are many sellers of the same product and each
seller has a small market share. Today, monopolistic competition is the most common type found
in our economy. Having many products that serve the same need or desire, the customer cannot
have a specific company from which to always buy, so the organizations loose profit through the
lack of sales. To differentiate themselves from the rest of the producers of the same type of
product, marketers work hard to create a more attractive advertise than the others. This is the

type of competition where powerful brands lead the market and create an tendency to oligopoly,
but through regulations, monopolistic competition is kept more or less constant.
Oligopoly is one of the feared types of competition, because the few sellers that produce similar
products control the market. In this market, small competitors are quickly eliminated or bought
by the larger company. A characteristic of this market is the starting price of goods and services
offered: always high. The main reason is that the companies, not having many rivals, they can
agree themselves on different aspects of the market, like resources, target consumers, advertising
and others, so that together, they lead the market and imposing what price they prefer, without
the fear of losing profit. A very recent and great example was the rising price of fuel. The real
reason or the rising price was not the near-depletion state of the petrol pumping stations, but an
oligopoly that decided that they want more profit.
Last, but not least, monopoly, the most dangerous type of economy in the face of liberty, is the
case in which a company won the oligopoly competition and eliminated its competitors, or an
organization that discovered a new niche market, never explored before, and for the moment,
they have a monopoly. Usually, monopolies never last long in a democratic nation, because the
government usually breaks the company into smaller units, to disband the company and create
competition in that market.
Companies are always in competition with their rivals, as they try to gain advantages. To outsmart the competitors, the company must always be prepared to face the competitive forces.
Basic rivalry is the most known type of the competitive forces. It appears between two or more
companies that sell similar products and always trying to undermine the other. First of all, any
company must know who its rivals are and how dangerous to their profit they can be. If that
information is known, the company must know the strengths and weaknesses and the marketing
strategies of the rivals, so that they can act accordingly.
Threat of new entrants is always a great problem for any company, however large or small the
company is. Though dangerous to many, new entrants are not frequent in all markets. Each
market has its own entry barrier and if not for a substantial budget, companies may not enter
markets like the car market, fuel market, weapon industry and other industries that require large
sums invested. The threat of new entrants is higher in markets where the entry barrier is cheaper.

Power of the suppliers. Without supply, there is no product, so suppliers must be kept close and
loyal, so that the prices to be low. Usually, in the resource market, suppliers have an oligopolistic
market and can represent a threat to different industries if the oligopolistic suppliers decide to
raise the price of their resources. Known between the suppliers is the idea of buying a firm once
supplied, entering that market with an already prepared firm.
Power of the buyers. The same can happen in reverse: the buyer has the power over its
supplier. In this case, buyers are fewer and suppliers are forced to set lower prices, because of
their competitors or because the buyer forces them at the threat of not buying at all. If the buyer
has a large enough sum, it can buy the supplier, relieving itself of this aspect.

Exercise 1
Manufacturing Firms
Fill in all the gaps:

airplanes
and
appliances
assemble
components
efficiently
finished
firms
For
in
large
manufacturers
manufacturing
of
to
trades
work

Manufacturing firms produce a wide range

producers of

products. Large manufacturers include

, cars, computers, and furniture. Many manufacturing

only parts rather than complete,

construct

products. These suppliers are usually smaller

firms, which supply parts and components

final products for market to consumers.

larger firms. The larger firms then

example, suppliers provide many of the

in personal computers, automobiles, and home

the

or end products. These larger end-product

for marketing

distributing the products. The advantages that

being able to

and inexpensively control any parts of

known as economies

certain types of

to large firms that create

are often also responsible

businesses have in

production process are

scale. But small manufacturing firms may

best for producing

products. Smaller end-product firms are common

industry and among artisan

the food

such as custom cabinetry.

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Exercise 2-Globalisation 1
Gap-fill exercise
Fill in all the gaps

a
allowing
and
become
blessing
firms
in
more
National
opportunities
savers
tasks
this
whatever
with

integrated
to
view

For good or ill, globalisation has

the economic buzz-word of the 1990s.

economies are undoubtedly becoming steadily more

investment

financial capital increase. Consumers are buying

growing number of

than ever before

Whether all of

now operate across national borders, and

is for good or ill is

are investing more

topic of heated debate. One, positive

, with the potential to boost productivity

standards everywhere. This is because

is

living

globally integrated economy can lead to

better division of labour between countries,

firms

foreign goods, a

far-flung places.

that globalisation is an unmixed

intensive

as cross-border flows of trade,

low-wage countries to specialise in labour-

while high-wage countries use workers in

exploit bigger economies of scale. And

productive ways. It will allow

globalisation, capital can be shifted

to

country offers the most productive investment

financing projects

, not trapped at home

poor returns.

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Exercise 3-Globalisation 2
Gap-fill exercise
Fill in all the gaps

1997
about
and
barriers
before
benefits
bottom
costs
cross-border
European
integration
is
low-wage
Mexico
more
one
own
push
that
That
the
There
to
view
Critics of globalisation take a gloomier

. They predict that increased competition from

developing countries will destroy jobs and

economies.

will be a "race to the

down wages in today's rich

" as countries reduce wages, taxes, welfare

and environmental controls to make themselves

compete will erode

critics also worry

as in the

"competitive". Pressure to

ability of governments to set their

the increased power of financial markets

currency crises of 1992 and 1993,

economic policies. The

cause economic havoc,

in 1994-95 and South-East Asia in

Despite much loose talk about

"new" global economy, today's international economic

is not unprecedented. The 50 years

flows of goods, capital and people.

driven by reductions in trade

development of railways

a resumption of

the first world war saw large

period of globalisation, like the present

and by sharp falls in transport

, was

, thanks to the

steamships. The present surge of globalisation

in a way

previous trend.

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Exercise 4-Business Operations: Marketing

Gap-fill exercise
Fill in all the gaps

and

as

be

potential

research

services

the

their

time

to

Marketing is the process of identifying

goods and services that consumers need

want and providing those goods and

at the right price, place, and

develop marketing strategies by conducting

to determine what products and services

customers think they would like to

able to purchase. Firms also promote

products and services through such techniques

which serve

. Businesses

advertising and personalised sales,

inform potential customers and motivate them

purchase.

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Exercise 5-Business 1
Gap-fill exercise
Fill in all the gaps

and

are
hospitals
revenues
Royal

include
nonprofit
operating
providing
seek
service
the
they
to

Business is an organized approach to

want. The word business also refers

services. Most businesses seek to make

customers with the goods and services

an organization that provides these goods

profit-that is, they aim to achieve

that

exceed the costs of operating

business. Prominent examples of for-profit businesses

Mitsubishi Group, General Motors Corporation, and

some businesses only

nonprofits, these businesses

to earn enough to cover their

costs. Commonly called

primarily nongovernmental service providers. Examples of

businesses include such organizations as social

advocacy groups, and many

Dutch/Shell Group. However,

agencies, foundations,

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Exercise 6-Business 2
Gap-fill exercise
Fill in all the gaps

and

as
need

companies
companionship
economies
In
industrial
people
primarily
provide
such
the
worth

Business plays a vital role in

life and culture of countries with

postindustrial (service- and information-based) free-market

States.

free-market systems, prices and wages are

and

such as in the United

determined by competition,

not by governments.

services

trillion

the United States, for example, many

buy and sell goods and

their primary occupations. In 1996 American

of goods and services annually. Businesses

consumers want or

sold in excess of $7.5

just about anything

, including basic necessities such as food

such as whirlpool baths

caring for children and finding

housing, luxuries

wide-screen televisions, and even personal services

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as