1 0 OVERVIEW OF MARKETING 1 1 INTRODUCTION

1. 0 OVERVIEW OF MARKETING 1. 1 INTRODUCTION Dr O. K Mbura

1. 1 INTRODUCTION AND OVERVIEW Most people think that marketing is buying, selling or advertising: They are most visible items. Marketing is wider and includes: (i) Find out what consumer wants (ii) Develop a product to satisfy that want (iii) Price, distribute and promote that product.

1. 1 INTRODUCTION AND OVERVIEW It is on these bases that marketing is considered as based on ‘satisfying customer needs’. If the marketer understands consumer needs, develops products and services that provide superior customer value and price, distributes and promotes them effectively, these products will sell easily.

1. 1 INTRODUCTION AND OVERVIEW MARKETING: has been defined in various ways: Kotler (2008: 5) defines Marketing as a social and managerial process, by which individual and organizations obtain what they need and want through creating and exchanging value with others.

1. 1. 1 Requirements for Marketing to occur • • • At least four factors are required: (i) Two or more parties with unsatisfied needs Suppose you had unmet need a desire for a diet sugar free, soft-drink that tasted like coca-cola but you didn’t yet know that Diet coke existed. Also unknown to you that diet coke were available in a nearest supermarket. On the other hand, a seller of Diet coke needs someone to buy. Hence two parties have unmet needs.

1. 1. 1 Requirements for Marketing to occur (ii) Desire and ability to satisfy these needs • Both you and the supermarket owner want to satisfy these unmet needs. • You have the money to buy the item and the seller has the desire and ability to sell Diet Coke.

1. 1. 1 Requirements for Marketing to occur (iii) A way for the parties to communicate • The Marketing transaction of buying the Diet Coke will never occur unless you know the product exists and its location. • Similarly, the storeowner won’t sell diet coke unless there is a market or potential consumer near the supermarket who is likely to buy. • When an advertisement is seen on the newspaper the communication barrier between the seller and the buyer is overcome.

1. 1. 1 Requirements for Marketing to occur (iv) Something of value to exchange • Marketing occurs when the transaction takes place and both the buyer and seller exchange something of value e. g. money exchanged for supermarkets diet coke. • Both of you have gained something and also given up something but you are both better off because you have each satisfied your unmet needs. • This exchange process is central to marketing.

1. 1. 1 Requirements for Marketing to occur Marketing could thus be defined as human activity directed at satisfying needs and wants through the exchange process.

1. 2 Scope of Marketing management 1. 2. 1 Marketing entities (i) Physical goods: A Physical good is a real physical thing that we can touch. Most of what is produced is in the form of goods. E. g. products as cars, hairdryers, TV sets, machines, shoes etc. (ii) Services: Services are intangible activities, benefits or satisfactions provided by an organization to consumers in exchange for money.

1. 2 Scope of Marketing management (iii)Experiences: • A marketer can create, stage and market experiences. • It takes the form of paying visit to reputable places. E. g. marketing of climbing the Mount Kilimanjaro (iv) Events: • Marketers may also promote time- based events such as World cup, Company anniversaries, Olympics, major trade shows such as Dar Es Salaam International Trade Fair (DITF).

1. 2 Scope of Marketing management (v) Persons: • This has to do with celebrity marketing. Artists, Musicians, CEOs, Physicians, high profile lawyers, financiers etc often get help from celebrity marketers. • In some cases people may market themselves and have ‘self branding’.

1. 2 Scope of Marketing management (vi)Places: • Places such as cities, regions and even countries: to attract tourists, investments and new residents. • Tanzania has invested a lot in marketing the country as a tourists and having suitable climate for investment. • The 3 rd phase and 4 th presidents of the Country have promoted the country as having suitable climate for the same.

1. 2 Scope of Marketing management (vii) Properties: Properties are intangible rights of ownership of either real property (such as real estate) or financial property (such as sale of shares). Properties are bought and sold and this requires marketing. Investment companies, brokers and banks are involved in marketing to investors.

1. 2 Scope of Marketing management (viii)Organizations: • Organizations actively work to build strong, favourable image and building of corporate identity in the minds of their target publics. • Universities, museums and performing arts all use marketing to boost their public images and to compete for audiences and funds.

1. 2 Scope of Marketing management (ix) Information: • Information can be produced and marketed as a product. This is what schools and universities produce and distribute at a price to parents, students and communities, computers, CDs are bought and sold for information. • The visit to internet is also for information.

1. 2 Scope of Marketing management (x) Ideas • Every market offering includes a basic idea. • An idea may take the form of philosophies, lessons or advice. • Often ideas are included with a good or service. • Thus we may buy a book (a good) that provides ideas on how to loose weight. Ideas such as avoid fatty food, exercise daily etc are often promoted by social marketers.

1. 2 Scope of Marketing management 1. 2. 2 States of demand corresponding marketing tasks Marketing management can be defined as the analysis, planning, implementation and control of programs designed to create build and maintain beneficial exchanges and relationships with target markets for the purpose of achieving organizational objectives.

1. 2. 2 States of demand corresponding marketing tasks • • Marketing Management takes place when at least one party to a potential exchange gives thought to objectives and means of achieving desired responses from other parties It thus involves setting objectives and develop strategies for producing satisfactory results to the target markets. The work of the marketing Managers is thus to manage programs. Their job is to analyze, plan and implement program that will produce a desired level and mix of transactions with target markets.

1. 2 Scope of Marketing management • 1. 2. 2 States of demand corresponding marketing tasks • • Marketing Management has the task of influencing the level, timing and composition of demand in a way that will help the organization achieve its objectives. Simply put, Marketing Management is demand management. The organization forms an idea of a desired level of transactions with a target market. At times the actual, demand level may be below, equal to or above the desired level.

1. 2 Scope of Marketing management Eight distinguishable tasks that results from various states of demand exist. These provide challenges facing marketers in their marketing endeavors. (i) Conversional Marketing This grows out of the state of negative demand. Negative demand is a state in which all or most of the important segments of the potential market dislike the product even to the extent of being prepared to pay a price to avoid it.

1. 2 Scope of Marketing management • • Vegetarians feel negative demand for meats of all kinds. People have a negative demand for vaccinations, dental work, vasectomies etc. Employers also feel negative demand on alcoholic employees. Muslims dislike poke and tell others in their community not to like it. The Marketing task is to analyse why the Market dislikes the product and whether a marketing program through product redesign, lower prices and more positive promotion can change the market beliefs and attitudes thus cause demand to rise from negative to positive and eventually equal the positive supply level.

1. 2 Scope of Marketing management (ii) Stimulation Marketing • This arises out of no demand state: no demand is a state in which all or important segments of a potential market are unaware, uninterested in or indifferent to a product. • Examples: • Youth markets with pensions • Boats in areas where no water • Burglar alarms in areas where there is no crime • Students with foreign language courses • Political buttons right after an election • Farmers may not be interested in using new farming method

1. 2 Scope of Marketing management • • • The task of converting no demand into positive demand is called stimulation Marketing. It involves finding ways to connect the benefits of the product with the person’s natural needs and interests. For example, alternative use of boats (such as using it to mix ingredients of making flower bread) could be sought and promoted.

1. 2 Scope of Marketing management (iii) Developmental Marketing • Developmental marketing is associated with a state known as latent demand. • A state of latent demand exists when a substantial number of people share a strong desire for something that doesn't exist in the form of an actual product or service. • There is strong latent demand for unharmful cigarettes, more fuel-efficient cars, and good television programs, unpolluted major cities and underground train, free of charge current accounts, HIV curing medicine etc. • The CRDB (1996) Bank in Tanzania introduced Jumbo Account for children out of demand.

1. 2 Scope of Marketing management The process of effectively converting latent demand to actual demand is that of developmental marketing. The marketing task is to measure the size of the potential market and develop effective goods and services that would satisfy the demand.

1. 2 Scope of Marketing management (iv) Remarketing • All kinds of products, services, places or organizations and ideas eventually experience declining or faltering demand. • Faltering demands is a state in which the demand for a product or service is less than its former level and where further decline is expected in the absence of remedial efforts to revise the target market, product and/or marketing effort.

1. 2 Scope of Marketing management • • Churches and private colleges have seen their membership declining. Life Insurance products and the consumption of more fatty food are also declining in Tanzania. The Marketing task is re-marketing and it involves analyzing the causes of Market decline and determines whether demand can be re-stimulated through finding new target markets, changing the product features or developing more effective communication

1. 2 Scope of Marketing management (v) Synchromarketing • Many organizations face demand that varies on a seasonal, daily or even hourly basis causing problems of storage, capacity usage, physical distribution etc. • Synchromarketing arises out of this irregular demand state. • The irregular demand is a state in which the current timing pattern of demand is marked by seasonal or volatile fluctuations that departs from the timing pattern of supply. • It aims to discourage use when demand is at its strongest and encouraging use when demand is at its weakest.

1. 2 Scope of Marketing management • • E. g. Museums are under-visited during the weekdays and overcrowded during weekends. In mass transit most of the equipment is idle during the off hours and is in insufficient supply during the peak hours. The more use of electricity during day times versus nigh time The more use of mobile phones during the day time than night time.

1. 2 Scope of Marketing management • • • The marketing task is called synchromarketing. This is because the effort is to bring demand supply into better synchronization. It involves altering the time pattern of demand through flexible pricing, promotion and other incentives. It is known that electricity charge and mobile phone charges vary with time. Night time it is cheaper than day time. At times 'Daladala' transport charge different price at different times.

1. 2 Scope of Marketing management (vi) Maintenance Marketing • This grows out of state of full demand. • Full demand is a state in which the current level and timing of demand is at a desired level. • A market demand is subject to two erosive forces. One force is changing needs and tastes in the market place. This may arise because of changing market preferences. • The other force is active competition. When a product is doing well competitors quickly move in and attempt to attract away some of the demand.

1. 2 Scope of Marketing management The task of a marketer facing full demand is maintenance marketing. It calls for maintaining the current level of demand in the face of changing consumer preferences and increasing competition. The organization must keep up its quality and continually measure consumer satisfaction to make sure it is doing a good job.

1. 2 Scope of Marketing management (vii) Demarketing: • This arises out of overfull demand. • Overfull demand is a state in which demand exceeds the level at which the marketer feels able or motivated to supply it. • The problem may be due to temporary shortages as when products themselves facing unexpected rise and fall of demand or unexpected interruptions of supply.

1. 2 Scope of Marketing management • • The problem could also be due to chronic overpopularity e. g. where you have too many motorists using a single well-built road. The impact is to weaken its structure. National parks are terribly overcrowded in the summer time. The task of reducing overful demand is called demarketing. It deals with attempts to discourage customers in general or certain class of customers in particular on either a temporary or permanent basis. Prices may be raised and product quality, service, promotion and convenience reduced.

1. 2 Scope of Marketing management (viii) Countermarketing: • This grows out of unwholesome demand. Unwholesome demand is a state in which any demand is felt to be excessive because of undesirable qualities of the product. • Unselling campaigns have been conducted against cigarettes, alcohol, hand guns, xrated movies, large families and hard drugs.

1. 2 Scope of Marketing management • • • The task of trying to destroy the demand for something is called countermarketing or unselling. The product may be the organizations own product which it wishes to phase out, a competitors product or third party's product which is regarded as socially undesirable. It involves ending promotions, raising price or use of legal restrictions.

1. 3 key Marketing Concepts • • • (i) Market segmentation and Target markets By market segmentation it means dividing and profiling distinct group of buyers who might prefer or require varying product and service mixes. Market segments can be identified by examining geographic, demographic, psychographic and behavioral differences among buyers.

1. 3 key Marketing Concepts • • In order to satisfy consumer needs, the organization must concentrate its efforts on certain needs of a specific group of potential consumers. This is the organizations target market. This is the one or more specific groups/segments of potential consumers towards which the organization will direct its marketing program. Target market is preceded by market segmentation

1. 3 key Marketing Concepts (ii) Marketplace, market space and metamarket • Market covers the various groupings of customers. • Businesspeople talk about need markets (the diet seeking market), product markets (the computer market), demographics market (The ladies market), the geographic market (The Kenyans market). • The marketplace is physical as when goes to shopping in a store. • Marketspace is digital as when one goes shopping on the internet.

1. 3 key Marketing Concepts • • • Metamarket describes a cluster of complimentary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. In Tanzania the wedding market is growing rapidly. Its metamarket consist of master of ceremony, trumpet, caterer, musicians, decorators, photographers, video shooters etc. In purchasing this service a buyer will get involved in many parts of this metamarket. This has created opportunity for metamediaries to assist buyers to move smoothly to these groups. It is not uncommon for some master of ceremonies to act as metamediaries

1. 3 key Marketing Concepts (iii) Needs, wants and demand • The marketer has to understand the customers needs, wants and demand. • Needs are the basic human. People need food shelter, clothing and shelter to survive. • People also have strong need for recreation, education and entertainment. • These needs become Wants when they are directed to specific objects that might satisfy the need. A Tanzanian may need food but may want ‘Steer’s chips’. • Wants are shaped by one’s society. • Demands are wants for specific products backed by an ability to pay. Many people want Nokia mobile handset but few people can afford.

1. 3 key Marketing Concepts (iv) Offering, Brand, Value and satisfaction • Value proposition is set of benefits offered to customers to satisfy their needs. • The intangible value proposition is made physical by an offering. • An offering is a combination of products, services, information and experiences. • Brand is an offering from a known source. • The offering will be successful if it delivers value and satisfactions to target buyers.

1. 3 key Marketing Concepts • • • The buyer chooses between different offerings on the basis of what is perceived to deliver the most value. Value is seen as a combination of quality, service and price (QSP). Value increases with quality and service and decreases with price. Value has been translated into a ration between what a customer gets and what he/she gives. The customer gets the benefits and assumes costs. The benefits include functional benefits and emotional benefits. The costs include monetary costs, time costs, energy costs and psychic costs.

1. 3 key Marketing Concepts The business can increase the value of the customer offering in several ways: Raise benefits Reduce costs Raise benefits and reduce costs Raise benefits by more than the raise in costs Lower benefits by less than the reduction in costs.

1. 3 key Marketing Concepts (v) Relationship marketing • • Relationship marketing aims at building mutually satisfying long term relations with key parties such as customers, suppliers, distributors etc in order to earn and retain business. Marketers achieve this by promising and delivering high quality products and services at fair prices to the other parties overtime.

1. 3 key Marketing Concepts (vi) Competition • Includes all the actual and potential rival offerings and substitutes that a buyer might consider. There are 4 levels of competition: (a) Brand competition • involves companies offering similar products and services to the same customers at similar prices. • A mobile phone company like Tigo sees its competitors as all companies that sell the same services: Vodacom, Air Tel, Zentel etc,

(b) Industry competition • A company sees its competitors as all companies making the same product or class of products. • A car manufacturing company might be producing products that compete with all automobiles.

1. 3 key Marketing Concepts (c) Form competition • A company sees its competitors as all companies manufacturing products that supply the same service. • A particular car brand such as Honda might see its competitors as all car manufacturers as well as manufacturers of motorcycles, bicycles and trucks. (d) Generic competition • A company sees its competitors as all companies that compete for the same customers’ money. • A company competes with all those that sell other products such as durables, real estates, food etc

1. 3 key Marketing Concepts (vii) Integrated marketing • Integrated marketing is a concept that advocate that all the companies should work together to serve the customer’s interest. • All employees ought to be trained and motivated to develop the customer mindset. • Integrated marketing takes place at the levels of the marketing functions and among other departments.

1. 3 key Marketing Concepts (viii) Marketing Mix Having selected the target market the firm must take steps to satisfy their needs. This may be done by pulling a combination of four variables; often called 4 p’s which implies. • product • price • place (Distribution) • promotion

1. 3 key Marketing Concepts • • • The four variables lead to marketing mix. Marketing mix is the set of controllable variable that the firm can use to influence the buyer’s responses. Recently a 5 th P has been introduced. This is PRECISSION

1. 3 key Marketing Concepts (a) Product: • A product is everything that one receives in an exchange including all tangible and intangible attributes and expected benefits. • A product may be a good, service or idea. A good is a real physical thing that we can touch. • A service these are intangible activities, benefits or satisfactions provided by an organization to consumers in exchange for money. • An idea may take the form of philosophies, lessons or advice. Often ideas are included with a good or service. Thus we may buy a book (a good) that provides ideas on how to loose weight.

1. 3 key Marketing Concepts A product decision involves the following: • Quality • Features • Options • Style • Brand name • Packing • Sizes • Services All these may be altered in order to satisfy consumer needs.

1. 3 key Marketing Concepts (b) Price is the amount of money that customer have to pay for the product. Organizations have to decide on the following: • Discounts • Allowances • Payment period • Credit terms

1. 3 key Marketing Concepts Price is an important variable because: • Consumers are concerned about the value obtained in an exchange • It can be used as a competitive tool • It can be used to establish the product’s image

1. 3 key Marketing Concepts (c) Distribution (Place) • Distribution involves various activities that the company undertakes to make the product available to target consumers. Various decisions are made here: • Channels to be used • Coverage • Locations • Inventory • Transport

1. 3 key Marketing Concepts (d) Promotion • This stands for various activities that the company undertakes to communicate its products’ merits and to persuade customers to buy them. Activities involved include the following: • Advertising • Personal Selling • Sales Promotion • Publicity

1. 3 key Marketing Concepts (e) Precision This has to do with how efficiency and effectively can the other 4 Ps be delivered Today Customers expect more precision from business because the world has become much more precise partly because people are more informed through high tech.

1. 3 key Marketing Concepts Customers become more impatient with inaccuracies, delays and imprecision. The more efficient and effective this can be done the higher the chance to win competitors The purpose of the 5 p is to make sure that each of the first 4 ps operate at their maximum efficiency and lowest costs. E. g coca cola has declared the age of precision marketing Retailers are becoming more precise in terms of what they need in their stores to serves customers.

1. 3 key Marketing Concepts (ix) Marketing Environment • Marketing divisions do not occur in vacuum. They are affected by a number of environmental forces namely “uncontrollable”. • These unlike the 5 Ps are largely beyond the control of the Marketing department and its organizations. • The uncontrollable may serve as an accelerator or brake on marketing. • The environmental factors include Legal, Political, Economic, Social, Technological and competitive environments (LEPEST $ Co)

1. 4 Marketing Management Philosophies 6 competing concepts. (i) Production Concept • This is the oldest concept guiding Sellers. • The production concept holds that consumers will favour those products that are widely available and low in cost. • Management in production oriented organizations concentrate on achieving high production efficiency and wide distribution coverage. •

1. 4 Marketing Management Philosophies The assumption that consumer is primarily interested in product available and low price holds in at least two types of situations: • Where the demand>supply • Where the product’s cost is high and has to be brought down through increased productivity to expand the market. • When a company wants to expand the market • Management task is to improve efficiency in production and distribution.

1. 4 Marketing Management Philosophies (ii) The Product Concept • The product concept holds that consumers will favour those products that offers the most quality performance and features. • Management focuses their energy on making good products and improving them overtime. • These managers assume that buyers admire well made products and are willing to pay more for product “extras”. • Many of these managers are caught up in a love affair with their product and fail to appreciate that market may be moving in a different direction. • The quality may be higher than what customers would wish to tolerate parting with their money.

1. 4 Marketing Management Philosophies (iii) The selling Concept • The selling concept holds that consumers, is left alone will ordinarily not buy enough of the organizations products. • To succeed, the organization must invest in aggressive promotion effort. • The concept assumes that consumers typically show buying inertia or resistance and have to be coaxed into buying more, and that

1. 4 Marketing Management Philosophies • • • the company has available a whole array of effective selling and promotion tools to stimulates more buying. It also assumes that if customers do not buy will not say bad things about the product. It is applicable most aggressively with “unsought goods” -those goods that buyers normally do not think of buying such as insurance and funeral plots. It is also practiced by non profit area such as fund raisers and political parties where a political party sells its candidate to voters.

1. 4 Marketing Management Philosophies (iv) The Marketing Concept • This emerged from 1950’s and challenged preceding concepts. • The marketing concept holds that the key to achieving goals consists in identifying or anticipating the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.

1. 4 Marketing Management Philosophies The underlying premises of the marketing concept: • The organization conceives of its mission in terms of satisfying a defined set of want of a defined group of customers. • The organization recognizes that satisfying wants requires an attractive program of Market research to learn of these wants. • The organization believes that doing a good job of satisfying customers’ wins their loyalty, repeat business and favorable word of mouth; all of these being crucial in satisfying the organizations goals.

1. 4 Marketing Management Philosophies Marketing concept has been expressed in many ways: • Meeting needs profitably • Find wants and fill them • Love the customer, not the product • You are the boss • Putting people first • Partners for profit

1. 4 Marketing Management Philosophies Differences between selling and marketing concept • Selling focuses on the needs of the seller whereas marketing focuses on the needs of the buyer • Selling is preoccupied with the sellers need to convert his product into cash, marketing with the idea of satisfying the needs of the customers by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.

1. 4 Marketing Management Philosophies (v) Societal Marketing Concept • The societal marketing concept holds, that the organizations task is to determine the needs wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in away that preserves and enhance the consumer and society’s well being. • Other related terms to societal marketing include humanistic marketing and ecological marketing.

1. 4 Marketing Management Philosophies Societal marketing calls to build social and ethical considerations into their marketing practices. It calls for marketers to balance three considerations in setting the marketing policies, namely company profits, consumer want satisfaction and society interest.

1. 4 Marketing Management Philosophies (vi) The Customer Concept • This is a concept that propounds that the key to achieving organization objectives consist of shaping the company’s offer and messages to meeting the interest of the individuals. • The companies collect information on each customer past transactions, demographics, and psychographics and media and distribution preferences. • In the bank sector of Tanzania a need to pay attention to the needs of individual customers especially corporate customers is generally important as switching of any one of those customers could shake the bank.