Understanding Marketing Concepts and Their Importance

Posted on Nov 23, 2024 in Economy

T.1: Concept

Marketing: is a human activity whose purpose is to satisfy the needs and desires of human beings through exchange processes. Desires: willingness to meet a need. Requirements: substance or lack of something, common to all human beings. Claims: formulation conditional expresses a desire for resources and marketing stimuli received. Products: any material, service, or idea that has value to consumers or users and can satisfy a need. Value and satisfaction: expectation derived from products less value + values. Exchange: the act of communicating with others to get something that has value and is useful, also offering something useful in return. Transaction: exchange of values between two or more parties. Relations: seeking mutual trust with customers, distributors, suppliers, and competitors. Markets: a set of potential and actual consumers who share a desire and might be willing to settle through the value exchange.

Marketing Guidelines:

  • 1) A production: no influence may affect marketing offers.
  • 2) The product: the degree of competition increases as the balance between supply and demand is higher: marketing is not selling what you have, but producing what you want to sell, new products, better quality.
  • 3) In sales: do not buy enough products to organize, weak demand, aggressive trade instruments.
  • 4) Marketing: analysis of consumer wishes and demands, target definition, consumer orientation, coordination of marketing, profitability.
  • 5) Social objectives are achieved more effectively if they tend to increase social welfare.
  • 6) If the other departments of the company do not have a real market orientation, a true marketing orientation cannot be established.

The Role of Marketing in the Organization: The function supplies the market with commercial products of the organization, but should not be seen as the last stage in the entrepreneurial process; it should be the first to develop. You must identify the needs and wants of the market or report them to the organization so it can provide an adequate supply. The business function must be the one connecting the organization with the market.

1) Analysis of the trading system: examining the component elements: market environment, demand, segmentation, consumer behavior, information systems. 2) Design of marketing strategies: the 4Ps: product, price, distribution, and communication; the combination of these concepts is the marketing mix, each of these components has relative importance depending on the context. 3) Addressing the marketing process: to realize the object of marketing for both the customer and the organization, analysis of the situation: “organization-planning-execution-control.”

Challenges of Marketing: Develop ideas in a changing environment, as the development of information theory, since new technology provides new changes to understand and reach customers, the globalization of the economy with increased marketing products, and increasing social responsibility of organizations.

T.2: Microenvironment of Marketing:

  • 1. The organization itself: other departments that make up the organization.
  • 2. Suppliers: start the channel, as the origin of the products reaching the consumer is based on their resources.
  • 3. Intermediaries: help the organization to promote, sell, and distribute its products to end-buyers.
  • 3.1 Distribution companies: they help the organization link the production of goods and services with the use or consumption of the recipient thereof.
  • 3.2 Marketing Services Agencies: market research companies, advertising, media.
  • 3.3 Financial intermediaries: banks, insurance companies, credit companies that help finance transactions or insure risks.
  • 4. Interest Groups: groups that have an actual or potential impact on the ability of the organization to achieve its objectives.
  • 5. Clients: should be the focus of the organization, as the individual is the fundamental integral of all marketing activities.
  • 6. Competition: most of the time we find direct competition, but we must also identify our potential competitors, which can be caused by: expansive market, product expansion, backward integration, and forward.

Macro Marketing: It occupies a position farthest from the scope of the company. For marketing, different aspects must be taken into account:

  • 1) Demographic: collect all the constraints on the population.
  • 2) Economic conditions: reflect the effects that affect the purchasing power of consumers and their spending patterns.
  • 3) Sociocultural conditions: norms concerning attitudes and habits common in the social environment that influence individual behavior, family, and organizational.
  • 4) Technological conditions: technological changes offer many opportunities for innovation in supply and marketing organizations of products.
  • 5) Political conditions: constraints to market access.
  • 6) Ecological conditions: social awareness in recent years.

Demand: physical or monetary amount sold in one place and in a given period. From the point of view of marketing, it is the ability of a potential market to react to specific stimuli and marketing efforts, limited by environmental conditions. There are different dimensions of analysis of the application:

  • A) Temporal: the long-term or short-term.
  • B) Product: demand for branded lines of business and global.
  • C) Purchaser: individual, segment, total market, or primary and derived.
  • D) Space: limitations or extensions of products.

Determinants of Demand Factors:

  • 1) Environmental: environmental elements of organizations and purchasers that are beyond the direct control of organizations.
  • 2) Competition: taking into account all organizations competing for each type of product-market share-demand relationship as a whole and the global market for a type or class of product.
  • 3) Buyers: key factor for knowledge, estimation, and forecasting any type of demand: individual needs, tastes, personal situation, geography, and temporal distribution of shopping capability and performance.
  • 4) Marketing.
  • 5) The organization: organizational structure, strengths and weaknesses; information systems, management style, objectives.

Estimation and Demand

T.3: The Market: A group of individuals or organizations that need a good or service, want or can buy, and have the capacity to do so. The overall market behavior is manifested and measured by demand. The market has limitations that must be well understood: physical, according to the consumer and characteristics of product use.

Types of Markets and Characteristics: There are many classifications, but we will focus on the classification of markets according to the application: two major types:

  • 1. Consumer Market: composed of all persons who claim the products to meet their needs or those of family units to which they belong; main features: high range of products and brands, large stocks, high turnover of products, high sensitivity of demand, high investment in communication; persuasive tools of mass communication enhance the generation of technological advances. Within this group are:
    • A) Intermediate Consumption Markets: cease upon use, characteristics: tangible products, and shortly from one thing to another, the process of buying has low decision implication, higher stock rotation; become important distribution brands, long distribution channels; low prices and sensitivity to their variation.
    • B) Durable Consumer Markets: long-term characteristics: tangible products, long periods between purchases; the purchasing decision process has high involvement, more importance is given to manufacturer trademarks, lower turnover of stock, short channels of distribution.
    • C) Service Markets: characteristics: the offer has a tangible character; simultaneity in the provision and consumption, does not transfer title to the service offered; channels are used direct or short, are very similar to the offer, are perishable, there is no perception of price.
  • 2. Organizational Markets: characterized by: short and direct channel, very narrow channel, high sales, low utilization of mass communication tools, negotiations are complex, the purchase decision process is complex. Three types of sub-markets: A) Industrial, B) Governmental Markets, C) Foreign Intermediaries.

Market Segmentation: Over time, the strategic vision of the market has gone through several stages:

  • 1) Mass Marketing: production, mass distribution, and promotion of a product for all buyers.
  • 2) Marketing a Varied Product: offer different products with different characteristics.
  • 3) Marketing of Target Audience: identify the most important market segments and focus on one or more of them.

We have to follow a few steps before implementing a business strategy of an organization:

  • A) Market Segmentation: the art of dividing a market into different groups of consumers who may require combinations of different marketing mixes.
  • B) Target Definition: requires assessing the attractiveness of each segment/group and selecting that group or groups of market participants who are thought to be winning through the offer.
  • C) Positioning the Offer: to decide which position is desired to reach in the minds of customers.

Concept of Division: DIVISION market process into homogeneous subgroups in order to carry out a different marketing strategy for each.

Segmentation Utility: provides benefits: it highlights existing business opportunities, helps establish priorities, facilitates the adjustment of product offerings to specific needs, and facilitates the analysis of the competition.

Segmentation Requirements: For effective segmentation, segments must fulfill some requirements: they must be identifiable, accessible, substantial, different, possible to serve, and defensible.

Segmentation Criteria: classifying the final consumers, consumer markets, or industrial markets can be done based on the characteristics of consumers or products.

Target Definition: to define the target audience, the organization should focus primarily on three factors: market size and growth, structural market attractiveness, and objectives and resources of the organization. Additionally, to assess the effect of profitability, the following must be taken into account: competition, potential market penetrators, substitutes, and the bargaining power of consumers and suppliers.

Application of Segmentation: Once different market segments are determined, organizations must decide how many will attend and how they will do so.

1) Types of Strategies: Once the target audience is chosen, the organization must select the type of strategy it will use:

  • A) Undifferentiated: addressing the whole market with the same marketing strategy.
  • B) Differentiated: designing a specific strategy for each target audience segment selected, which can incur large costs.
  • C) Concentrated: focus on a segment that is able to maintain its comparative advantage.

2) Use of Trade Instruments:

  • By Product Segmentation: Most frequent type, offering similar products or different to see different brands.
  • Segmentation by Price: usually targets the company of the product when there is no difference in price.
  • By Distribution Segmentation: Through the locks to give dealers more prestige to the product.
  • Segmentation for Communication: Through advertising.