Big picture
Marketing is not just selling. It begins before a product is made, by finding out what customers need, and continues after the sale, through service and relationships. Its goal is to create exchanges that satisfy both the customer and the business.
A marketer controls four tools, the marketing mix or 4Ps: Product, Price, Place and Promotion. This chapter is long and heavily tested with case studies, so learn the many lists through examples.
Learning goals
Explain the concepts of market, marketer and marketing, and the functions of marketing.
Explain the five marketing philosophies and distinguish marketing from selling.
Explain the elements of the marketing mix.
Explain product classification, branding, packaging and labelling.
Explain the factors affecting price determination.
Explain channels of distribution, the factors affecting their choice, and components of physical distribution.
Explain the elements of the promotion mix: advertising, personal selling, sales promotion and public relations.
Core ideas
1. Concept and functions of marketing
Market: traditionally a place where buyers and sellers meet; in marketing, the set of actual and potential buyers of a product.
Marketer: the person or organisation that takes the initiative in the exchange process.
Marketing: a social process by which individuals and groups obtain what they need and want by creating, offering and freely exchanging products and services of value with others. Its key features are needs and wants, a creating of a market offering, customer value, and the exchange mechanism.
Functions of marketing
Function | Example |
|---|---|
Gathering and analysing market information | Surveys on what customers want in a smartphone |
Marketing planning | Setting targets to raise market share and the plan to reach them |
Product designing and development | Designing a compact, energy-efficient air cooler |
Standardisation and grading | Grading rice by grain size and quality |
Packaging and labelling | Tamper-proof packs with product information |
Branding | Giving the product a distinctive name and logo |
Customer support services | After-sales service, handling complaints, credit |
Pricing of products | Deciding a price that customers accept and covers costs |
Promotion | Advertising, personal selling, sales promotion |
Physical distribution | Moving goods to where customers can buy them |
Transportation | Choosing road, rail or air to move goods |
Storage or warehousing | Holding stock to meet demand smoothly |
2. Marketing philosophies
Philosophy | Main focus | Means | End |
|---|---|---|---|
Production concept | Quantity of products | Availability and affordability | Profit through volume |
Product concept | Quality of products | Product improvements | Profit through quality |
Selling concept | Existing products | Selling and aggressive promotion | Profit through sales volume |
Marketing concept | Customer needs | Integrated marketing | Profit through customer satisfaction |
Societal marketing concept | Customer needs and society's wellbeing | Integrated marketing | Profit with customer satisfaction and social welfare |
Example of societal marketing: a beverage company reduces sugar, uses recyclable bottles and avoids advertising to children.
Marketing and selling compared
Basis | Selling | Marketing |
|---|---|---|
Scope | Part of marketing | Wider; includes selling and much more |
Focus | Transfer of title of goods | Satisfying customer needs |
Emphasis | The product and the seller's needs | The customer and their needs |
Starting and ending point | Starts after production, ends with the sale | Starts before production, continues after the sale |
Approach | Pushes what is produced | Produces what customers want |
3. Product
A product is anything of value offered to a market to satisfy a need: goods, services or ideas.
Classification of consumer products
Type | Features | Example |
|---|---|---|
Convenience products | Bought frequently, with little effort; low price; widely available | Toothpaste, bread, soap |
Shopping products | Bought after comparing quality, price and style; less frequent; higher price | Clothes, furniture, mobile phones |
Specialty products | Unique features; buyers make special efforts to get them; high price; limited outlets | Designer watches, high-end cameras |
Industrial products are used to produce other products: raw materials, machines, components and supplies.
4. Branding
Term | Meaning | Example |
|---|---|---|
Brand | A name, term, sign, symbol or design, or a combination, that identifies a seller's products and differentiates them | The overall identity |
Brand name | The part of a brand that can be spoken | A company's product name |
Brand mark | The part that can be recognised but not spoken: a symbol, design or colour | A logo |
Trademark | A brand or part of a brand given legal protection, so others can't use it | A registered logo and name |
Advantages to marketers: helps differentiate products; helps in advertising and display; allows different pricing; eases introduction of new products under an existing brand. Advantages to customers: easy identification; assurance of quality; status symbol.
A good brand name should be short, easy to pronounce, spell and remember; suggest the product's benefits; be distinctive; be adaptable to packing; be versatile for new products; and be capable of legal registration.
5. Packaging and labelling
Levels of packaging
Level | Meaning | Example |
|---|---|---|
Primary package | Immediate container of the product | The tube of toothpaste |
Secondary package | Additional layer, thrown away when the product is used | The cardboard box around the tube |
Transportation package | Packaging for storage and transport | A carton of 50 toothpaste boxes |
Functions of packaging: product identification; product protection (from spoilage, breakage, leakage); facilitating use (easy to open and carry); product promotion (an attractive pack attracts buyers).
Importance: rising standards of health and sanitation; self-service outlets where the pack must "sell itself"; innovation opportunity; product differentiation.
Labelling provides information on the package. Functions of a label: describes the product and its contents; identifies the product or brand; grades the product (for example, by quality); helps in promotion; provides information required by law (such as the maximum retail price, weight, date of manufacture and expiry, and the statutory warning on cigarettes).
6. Price
Price is the amount paid by a customer for a product. Factors affecting price determination:
Factor | Example |
|---|---|
Product cost | Price must cover fixed, variable and semi-variable costs in the long run |
Utility and demand | Customers pay up to the utility they derive; more inelastic demand allows a higher price |
Extent of competition | In a competitive market, prices are kept close to competitors' |
Government and legal regulations | The government controls prices of essential medicines |
Pricing objectives | Profit maximisation, market share leadership, surviving competition, attaining product quality leadership |
Marketing methods used | Distribution system, quality of salespeople, advertising, packaging and credit affect pricing |
7. Place: physical distribution
Channels of distribution are the routes through which goods move from producer to consumer.
Channel | Route | Example |
|---|---|---|
Zero level (direct) | Manufacturer → Consumer | Selling through the company's own website, door-to-door or own outlets |
One level | Manufacturer → Retailer → Consumer | Cars sold through dealers |
Two level | Manufacturer → Wholesaler → Retailer → Consumer | Soap, soft drinks |
Three level | Manufacturer → Agent → Wholesaler → Retailer → Consumer | Products with very wide distribution |
Factors determining the choice of channels
Product-related: perishable and technical products need short channels; low-value, standardised products use longer ones.
Company characteristics: a financially strong company can use direct or short channels and control them.
Competitive factors: the channels used by competitors.
Market factors: size of the market, geographical concentration, quantity bought (large orders to direct channels).
Environmental factors: economic conditions and legal constraints (in a depression, shorter, cheaper channels).
Components of physical distribution
Component | Meaning |
|---|---|
Order processing | Accurate and quick handling of orders |
Transportation | Moving goods from production to sale |
Warehousing | Storing goods until they are needed |
Inventory control | Deciding the right level of stock |
8. Promotion
The promotion mix is the combination of tools used to inform and persuade customers.
Advertising is an impersonal form of communication paid for by an identified sponsor.
Merits | Limitations |
|---|---|
Reaches a mass audience | Less forceful than personal selling |
Enhances customer satisfaction and confidence | Lack of feedback |
Expressiveness through art, colour and sound | Inflexible; one message for all |
Economical per person reached | Low effectiveness when there are many advertisements |
Objections to advertising and their answers
Objection | Counter-argument |
|---|---|
Adds to cost | Increases demand and allows economies of scale, which can lower cost per unit |
Undermines social values (encourages materialism) | It informs buyers of products; the choice is theirs |
Confuses buyers | Comparison gives buyers more information to make a rational choice |
Encourages sale of inferior products | Quality is relative; advertising cannot make a poor product succeed for long |
Some advertisements are in bad taste | Bad taste differs from person to person; regulation addresses offensive ads |
Personal selling is the oral presentation of a product to prospective buyers, face to face. It is flexible, gives direct feedback, builds relationships and suits technical or expensive products. Importance: to businessmen it is an effective promotional tool and builds relationships; to customers it gives information and advice; to society it creates jobs and careers.
Sales promotion means short-term incentives to encourage immediate purchase.
Technique | Example |
|---|---|
Rebate | Selling at a reduced price to clear excess stock |
Discount | 30% off on a festive sale |
Refund | Refunding part of the price on proof of purchase |
Product combination | A free mug with a jar of coffee |
Quantity gift | 20% extra in the same pack |
Instant draw and assigned gift | Scratch card with an instant gift |
Lucky draw | A draw among buyers for a car |
Usable benefit | Free cinema tickets with a purchase above a value |
Full finance at 0% | Pay in instalments with no interest |
Sampling | Free samples of a new shampoo |
Contests | Quizzes or games for customers |
Public relations (PR) builds and maintains a favourable image of the organisation with the public. Its role includes press relations, product publicity, corporate communication, lobbying, and counselling management on public issues. It helps launch new products, reposition mature ones, and protect the image in a crisis.
A reliable approach to case-based questions
If the case says the company "produces what customers want", it is the marketing concept; if it adds social wellbeing, societal marketing; if it pushes existing stock with aggressive promotion, selling concept.
For product cases, decide: frequent and cheap (convenience), compared before buying (shopping), unique and sought after (specialty).
For price cases, find the factor: costs, demand, competition, government, objectives or marketing methods.
For channels, count the middlemen: none (zero), retailer only (one), wholesaler and retailer (two), agent too (three).
For promotion, decide: paid and impersonal (advertising), face to face (personal selling), short-term incentive (sales promotion), image building (public relations).
Connections that matter
Consumer protection sets the legal limits within which marketing must operate.
Business environment shapes customer needs and the marketing response.
Financial management decides how much can be spent on marketing.
Common mistakes
Equating marketing with selling.
Confusing brand name and brand mark. The name is spoken; the mark is a symbol.
Calling secondary packaging the transportation package.
Treating sales promotion as long-term. It gives short-term incentives.
Counting the manufacturer as a level in the channel. Levels count intermediaries.
Revision checklist
I can explain marketing and its functions.
I can compare the five marketing philosophies and marketing with selling.
I can classify products and explain branding, packaging and labelling.
I can explain factors affecting price.
I can explain channels of distribution, factors in their choice and components of physical distribution.
I can explain all four elements of the promotion mix, including objections to advertising.