Introduction to Marketing
What marketing is (Kotler, CIM, AMA, social marketing), marketing vs selling and the iceberg, why marketing matters, its core concepts (needs, wants, demand states, offerings, value, satisfaction, exchange, markets) and its objectives.
1What is marketing?
Everyday life is a package of goods and services, and the value they bring is created through marketing. Good marketing is no accident: it comes from well-planned, well-executed marketing-mix strategies.
These include product planning, pricing, promotion, middlemen (wholesalers, retailers), warehousing and transportation. All of these together are "marketing".
Definitions to memorise
| Source | Definition |
|---|---|
| Philip Kotler ("father of marketing") | "Meeting needs profitably": identifying and meeting human and social needs |
| Chartered Institute of Marketing (CIM, UK, 2001) | "The management process responsible for identifying, anticipating and satisfying customer requirements profitably" |
| American Marketing Association (AMA) | "The activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large" |
- Attract new customers by promising superior value.
- Keep and grow current customers by delivering satisfaction.
First win the first customer, then the next, and keep them through satisfaction.
Value: hedonic vs utilitarian
The AMA definition stresses value, not "product" or "service".
| Type | Meaning | BMW example |
|---|---|---|
| Utilitarian value | The core functional benefit | Transport from A to B |
| Hedonic value | Something beyond function: pleasure, prestige, esteem | Prestige and self-esteem of owning a BMW |
Social marketing
Social marketing applies marketing concepts (with other approaches) to influence behaviours that benefit individuals and communities for the greater social good. It integrates research, best practice, theory, audience and partnership insight to deliver competition-sensitive, segmented social-change programmes that are effective, efficient, equitable and sustainable.
Examples: anti-smoking campaigns, road-safety campaigns, dengue-prevention campaigns.
2Marketing vs selling — the iceberg
The old view: marketing = selling ("telling and selling"). Wrong. Selling is just one part of marketing.
🧊 The iceberg theory
- Above water (visible tip): selling and advertising.
- Below water (hidden "homework"): selecting target markets, understanding needs and wants, designing the value and the product, pricing, making products available in stores, displays, inventory and more.
Peter Drucker (1973)
"The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself."
In other words, the aim of marketing is to make selling superfluous (unnecessary).
| Selling | Marketing | |
|---|---|---|
| Starting point | The product (the factory) | The customer's needs (the market) |
| Focus | Pushing existing products, getting the sale | Understanding and satisfying needs |
| Scope | Part of marketing (tip of the iceberg) | Whole business, from research to after-sales |
| Time horizon | Short-term sales volume | Long-term relationships and profit through satisfaction |
3Why marketing matters
- Seller's market → buyer's market: today's customers are better informed, compare products more, and have fast-changing needs in a tech-savvy world.
- Profit mostly comes from successful sales, and marketing informs, attracts and convinces people to value your offer.
- Even an amazing product won't sell if nobody knows it exists or understands its value.
Marketing has three faces
| As… | Meaning | Aim |
|---|---|---|
| A business philosophy | Marketing is the whole business seen from the customer's point of view (Drucker). It must permeate every area of the firm: "Business success is determined not by the product but by the customer" | Effectiveness (doing the right things) |
| A function (marketing management) | A functional area of management: analysis, planning, implementation, control | Efficiency: maximum output for minimum input |
| A skill | Market sensing ability and market relating ability (below) | Competitive advantage |
🔭 Market sensing ability
Understanding customers, the market and environmental trends ahead of competitors, and anticipating how customers will respond to your actions.
🤝 Market relating ability
Maintaining and enhancing customer relationships: negotiation, inter-functional coordination, conflict management, effective communication, teamwork, mutual commitment.
4Core concepts of marketing
a) Needs & wants
| Concept | Meaning | Example |
|---|---|---|
| Need | A state of felt deprivation | Physical (food, clothing, shelter, safety), social (belonging, affection), individual (learning, knowledge, self-expression) |
| Want | The form a need takes, shaped by culture and individual personality: the object that satisfies the need | Thirst (need) → water, king coconut or a soft drink (want) |
b) Demand
Demand = wants backed by the ability and willingness to buy (want + buying power). Marketing managers try to influence the level, timing and composition of demand.
| Demand state | Meaning |
|---|---|
| Negative | Consumers dislike it and may pay to avoid it |
| Nonexistent | Consumers are unaware or uninterested |
| Latent | A strong need that no existing product satisfies |
| Declining | Consumers buy less often or not at all |
| Irregular | Varies seasonally, monthly, weekly, daily or hourly |
| Full | Consumers adequately buy everything offered |
| Overfull | More want to buy than can be satisfied |
| Unwholesome | Attraction to products with undesirable social consequences |
c) Offerings
Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. These are generally called products:
- physical goods (soap)
- services (banking)
- events (a cricket match)
- experiences (a theme park)
- persons (a celebrity)
- places (Sigiriya, Ella)
- properties (a house)
- organisations (a university)
- information (a book)
- ideas (road safety)
d) Customer perceived value & satisfaction
Armstrong & Kotler: customer perceived value is the customer's evaluation of the difference between all the benefits and all the costs of an offer relative to competing offers. Perceptions are subjective: customers don't judge value and cost objectively.
Satisfaction depends on perceived performance relative to expectations:
- Performance < expectations → dissatisfied (low satisfaction)
- Performance ≥ expectations → satisfied (high satisfaction)
- Performance ≫ expectations → delighted. Some firms deliberately aim to DELIGHT.
Satisfaction often leads to customer loyalty.
e) Exchange
Exchange is the act of obtaining a desired product from someone by offering something in return. Five conditions must hold:
- There are at least two parties.
- Each party has something of value to the other.
- Each can communicate and deliver.
- Each is free to accept or reject the offer.
- Each believes it is appropriate or desirable to deal with the other.
f) Markets
Economists define a market as a collection of buyers and sellers who transact over a product or product class.
| Market | Role |
|---|---|
| Resource market | Supplies manufacturers with raw materials, labour and money |
| Manufacturer market | Turns resources into goods and services and sells them to intermediaries or end consumers |
| Intermediary market | Bridges manufacturer and customer, reduces the number of transactions, creates utilities (time, place, possession) |
| Consumer market | Consumers sell their labour for money and buy goods and services |
| Government market | Collects taxes, buys from other markets, provides public services |
| Marketer's view | A market = all potential customers sharing a need or want who are willing and able to exchange to satisfy it |
5Objectives of marketing
| Objective | Explanation |
|---|---|
| (a) Provide customer satisfaction | Everything begins by identifying customer requirements; product, price and distribution are planned around them |
| (b) Increase demand | Advertising and promotion create extra demand; satisfied customers bring new ones (you love a gel pen, rebuy it and tell friends) |
| (c) Provide better-quality products | Keep upgrading expertise and technology, or competition will phase you out |
| (d) Create goodwill | A positive public image builds brand loyalty and acceptance of new products |
| (e) Generate profitable sales volume | The ultimate goal: the right products at affordable prices, convenient places and times lead to revenue and profit |
Typical questions:
- Define marketing (quote Kotler, CIM or AMA)
- Distinguish marketing and selling using the iceberg and Drucker
- Explain why marketing is important (philosophy, function, skill)
- Explain the core concepts with real examples, especially the 8 demand states and customer perceived value
- List the objectives of marketing
Use Sri Lankan examples where you can.
6Quiz 01: model answer
From Week 02/Quiz 01.docx in the Marketing folder.
Question: Select an organisation (local or international) you're interested in, see how it applies marketing in its business, and check whether it really addresses the marketing concepts and the objectives of marketing.
What the model answer covers:
- Select the organisation (local or international)
- Research its marketing function and current campaigns, both traditional and online, along with its marketing objectives
- Explain how these objectives and efforts support the organisation's overall strategy
- The strengths of its marketing effort
- Its positive outcomes
- Any failures of its marketing function
7Quick revision sheet
| Concept | Remember it as |
|---|---|
| Kotler | "Meeting needs profitably" |
| CIM | Identify, anticipate, satisfy customer requirements profitably |
| AMA | Create, communicate, deliver, exchange offerings with value |
| 2 goals | Attract new customers (value) · keep and grow existing ones (satisfaction) |
| Value types | Utilitarian (function) vs hedonic (prestige): BMW |
| Iceberg | Selling and advertising = tip; homework below |
| Drucker | Make selling superfluous |
| Three faces | Philosophy (effectiveness) · function (efficiency) · skill (sensing + relating) |
| Need → want → demand | Deprivation → culturally shaped object → want + buying power |
| 8 demand states | Negative, nonexistent, latent, declining, irregular, full, overfull, unwholesome |
| Value | Perceived benefits − perceived sacrifice |
| Satisfaction | Performance vs expectations; delight = exceed |
| Exchange | 2+ parties, value, communicate, free choice, appropriate |
| Markets | Resource, manufacturer, intermediary, consumer, government, marketer's view |
| Objectives | Satisfaction, demand, quality, goodwill, profitable sales |
?Self-check quiz
11 questions on this week. Answer them all, then press Check my answers. Your best and latest scores are saved and shown on the subject page.