MKT100- Principles of Marketing
Professor: Joanne McNeish
Chapter 1: Overview of Marketing
The Canadian Marketing Association states “Marketing is a set of business practices designed to plan for and present an
organization’s products or services in ways that build effective customer relationships.”
Core Aspects of Marketing:
Marketing Plan: a written document composed of an analysis of the current marketing situation, opportunities and threats
for the firm, marketing objectives and strategy specified in terms of the four Ps, action programs, and projected or pro
forma income (and other financial) statements.
Firms develop a marketing plan that specifies the marketing activities for a specific period of time. The marketing plan is
broken down into various components- how the product or service will be conceived or designed, how much it should
cost, where and how it will be promoted, and how it will get to the consumer. In exchange the buyer and seller should be
satisfied with the value they obtained from the transaction.
Marketing is about satisfying customer needs and wants
Need: a person feeling physiologically deprived of basic necessities, such as food, clothing, shelter, and safety.
Want: the particular way in which a person chooses to satisfy a need, which is shaped by a person’s knowledge, culture
Market: refers to the groups of people who need or want a company’s products or services and have the ability and
willingness to buy them.
Marketers divide the market into subgroups or segments of people to whom they are interested in marketing their
products, services, or ideas. For example: even though the marketplace for toothpaste users may include most of
the people in the world, the markers of Crest could divide the market into adolescent, adult, and senior users, or
perhaps into wine and coffee drinkers, people with sensitive gums, and denture users.
Target market: the customer segment or group to whom the firm is interested in selling its products and services.
Marketing entails value exchange
Marketing is about an exchange- the trade of things of value between the buyer and the seller so that each is better off as
a result. When you purchase the new Justin Bieber album on iTunes, they can use the information you provided to
facilitates a future exchange and solidify a relationship with you- additional value for both you and iTunes. Also, when you
purchase a new album, you are engaging in a marketing exchange. You get the songs, and the exchange partners get
money and information about you.
Marketing requires Product, Price, Place, and Promotion Decisions.
Marketing Mix: Product, price, place, and promotion decision- the controllable set of activities that a firm uses to respond
to the wants of its target markets.
Product: Creating Value (product/ service, brand, size, quality, features, packaging, warranty)
Goods are items that you can physically touch. Roots clothing, Molson Canadian beer, Kraft dinner, and countless other
products are examples of goods.
Unlike goods, services are intangible customer benefits that are produced by people or machines and cannot be
separated from the producer. Air travel, banking, insurance, beauty treatments and entertainment are all services.
Many offerings represent a combination of goods and services. When you go to Hakim Optical, for example, you can have
you eyes examined (service) and purchase new contact lenses (good). If you enjoy Taylor Swift’s music, you can attend
one of her concerts, which can be provided only at a particular time and place. At the concert, you can purchase one of
her CDs- a tangible good that provides you with a combination of a good and a service. Ideas include thoughts, opinions, philosophies, and intellectual concepts that also can be marketed. Groups promoting
bicycle safety go to schools, give talks, and sponsor bike helmet poster contests for the members of their primary target
Price: Transacting Value (List price, discounts, allowances, costs, payment period, credit terms)
Price is everything that the buyer gives up in exchange for a product; money, energy, and time are examples.
Place: Delivering Value (Marketing channels, distribution intensity, locations, supply chain, logistics)
Place describes all the activities necessary to get the product from the manufacturer or producer to the right customer,
when the customer wants it. Place decisions are concerned with developing an efficient system for merchandise to be
distributed in the right quantities, to the right locations, and at the times in the most efficient way in order to minimize
system wide costs while satisfying the service levels required by their customers. Without a strong and efficient
distribution system, merchandise isn’t available when or where customers want it. They are disappointed, and sales and
Promotion: Communicating Value (Advertising, sales promotion, personal selling, public relations, direct marketing,
Even the best products and services will go unsold if marketers cannot communicate their value to customers. Countless
Internet companies failed in the 1990s, at least partly because they did not communicate successfully with their
customers. Some such firms had great products at very fair prices, but when customers could not find them on the
internet; the companies failed. Promotion is communication by a marketer that informs, persuades, and reminds potential
buyers about the product or service to influence their opinions or elicit a response. Promotion generally can enhance a
product or service’s value, as happened for Parasuco jeans. The company’s provocative advertising has helped create an
image for that says more than, “wear this product and look good.” Rather, the promotion sells youth, style, and sex
Marketing is shaped by forces and players within the firm
A company’s marketing activities are shaped by factors that are both internal to the firm and external to the firm. The
consumer is the center if all marketing activities, and offering the best possible value will attract customers to products and
keep them loyal. For marketers to deliver the best value to their customers, they must leverage the full potential of their
internal capabilities; work effectively with their partners (suppliers, distributors, and other intermediaries, such as financial
institutions, advertising agencies, and research firms); and constantly evaluate respond to the competitive environment.
Marketing is shaped by forces and players external to the firm
External forces such as cultural, demographic, social, technological, economic, and political and legal changes shape a
company’s marketing activities. Two current social trends that are reshaping the marketing activities of most firms are
concerns about the environment and obesity. In response to these concerns, marketers are beginning to use more
environmentally friendly packaging for their products; some companies are even using alternative materials in the
products themselves. Food retailers are responding to demographic changes in Canada’s population composition.
Because the proportion of Chinese and South Asian people in Canada is on the rise and is forecasted to increase in the
next decade, many food retailers have developed products and services that cater specifically to the needs of these
groups. Sobey’s FreshCo store format demonstrates a prime example of a retailer trying to reach out and serve these
Canadians. The store’s layout, merchandise, level of service, and prices cater specifically to the needs of this segment of
the Canadian demographic.
Marketing can be performed by both individuals and organizations
Marketing intermediaries, such as retailers, accumulate merchandise from producers in large amounts and then sell it to
you in smaller amounts. The process in which business sell to consumers is known as:
B2C (business-to-consumer) marketing
Whereas the process of selling merchandise or services from one business to another is called:
B2B (business-to-business) marketing Some companies, such as GE (General Electric), are engaged in both B2B and B2C marketing at the same time.
However, with the advent of various auction sites, such as eBay and Kijiji, and payment sites, such as PayPal, consumers
have started marketing their products and services to other consumers, which requires a third category in which
consumers sell to other consumers:
C2C (consumer-to-consumer) marketing
Social media: the use of internet tools to easily and quickly create and share content to foster dialogue, social
relationships, and personal identities.
Marketing Occurs in Many Settings
Marketing is not only useful in countries with well-developed economies. It can also jump-start the economies of less
developed countries by actually putting buyers and sellers together to create new markets. A piece of a Piece of Africa, for
example, buys art from African artists and, through its website, makes that art available to customers all over the world,
thereby creating a market that otherwise would not exist.
Marketing Helps Create Value
As we have examined marketing practices over the years, we have observed four different marketing orientations or
philosophies: product orientation, sales orientation, market orientation and value-based orientation
Product Orientation: product-oriented companies focus on developing and distributing innovative products with little
concern about whether the products best satisfy customers’ needs. Companies with a product orientation generally start
out by thinking about the product they want to build; they try selling the product after it is developed rather than starting
with an understanding of the customers’ needs and then developing a product to satisfy those needs.
Sales Orientation: Companies that have a sales orientation basically view marketing as a selling function where
companies try to sell as many of their products as possible rather than focus on making products customers really want.
They tend to focus on making a sale or on each transaction rather than building long-term customer relationships. They
believe that if a customer tries their products, they will like them.
Market Orientation: These companies start out by focusing on what consumers want and need before they design, make,
or attempt to sell their products and services. They believe hat customers have choice and make purchase decisions
based on several factors, including quality, convenience, and price. The customer is king.
Value-Based Orientation: Most successful firms today are market orientated. That means they have gone beyond a
production or sales orientation and attempt to discover and satisfy their customers’ needs and wants. Value reflects the
relationship of benefits to costs, or what the consumer gets for what he or she gives. Every value-based marketing firm
must implement its strategy according to what its customers value. These values may include speed, convenience, size,
accuracy, price, cost-savings, or user-friendliness. Value does not need to be inexpensively (Subway’s 5 dollar foot-long),
the value is in the eye of the beholder.
What Is Value-Based Marketing?
Value-Based Marketing focuses on providing customers with benefits that far exceed the cost (money, time, effort) of
acquiring and using a product or service while providing a reasonable return to the firm.
How Firms Become Value-Driven
Firms become value-driven by focusing on three activities
1. Sharing Information: Marketers share information about customers and competitors that has been collected
through customer relationship management, and integrate it across the firm’s various departments. Fashion
designers for Zara, the Spain-based fashion retailer, collect purchase information and research customer trends to
determine what their customers will want to wear in the next few weeks. They share this information with other
departments to forecast sales and coordinate deliveries.
2. Balancing Benefits and Costs: Value-oriented marketers constantly measure the benefits that customers perceive
against the cost of their offering. In this task, they use available customer data to find opportunities in which they
can better satisfy their customers’ needs and in turn develop long-term loyalties.
3. Building Relationships with Customers: - A transactional orientation regards the buyer-seller relationship as a series of individual transactions, so
anything that happened before or after the transaction is of little importance. For example, used-car sales
typically are based on a transactional approach; the seller wants to get the highest price for the car, the buyer
wants to get the lowest price, and neither expects to do business with the other again.
- A relational orientation, in contrast is basked on the philosophy that buyers and sellers should develop a long-
term relationship. According to this idea, the lifetime profitability of the relationship matters, not how much
money is made during each transaction.
- Customer relationship management (CRM): a business philosophy and set of strategies, programs, and
systems that focus on identifying and building loyalty among the firm’s most valued customers. Firms that
employ CRM systematically collect information about their customers’ needs and then use that information to
target their best customers with the products, services, and special promotions that appear most important to
Why is Marketing Important?
Marketing Expands Firms’ Global Presence
Understanding customers is critical. Without the knowledge that can be gained by analyzing new customers’ needs and
wants on a segment-by-segment, region-by-region basis- is one of marketing’s main tasks- it would be difficult for a firm to
Marketing is Pervasive Across the Supply Chain
Supply Chain: the group of firms and set of techniques and approaches firms use to make and deliver a given set of
goods and services.
Firms typically do not work in isolation. Manufacturers buy raw materials and components from suppliers, which they sell
to retailers or other businesses after they have turned the materials into their products. Every times materials or products
are bought or sold; they are transported to a different location, which sometimes requires that they be stored in a
warehouse operated by yet another organization. Excellent supply chains effectively and efficiently integrate their supply
chain partners- suppliers, manufacturers, warehouses, stores, and transportation intermediaries- to produce and distribute
goods in the right quantities to the right locations, and at the right time.
Often, some supply chain participants take a transactional orientation in which each link in the chain is out for its own best
interest. Manufacturers, for example, want the highest price, whereas retailers want to buy the product at the lowest cost.
Supply chain members do not enjoy any cooperation or coordination. But for the supply chain to provide significant value
to the ultimate customer, the parties must establish long-term relationships with one another and cooperate to share data,
make joint forecasts, and coordinate shipments. Effectively managing supply chain relationships often has a huge impact
on a firm’s ability to satisfy the consumer, which results in increased profitability for all parties.
Marketing Makes Life Easier
Marketers provide you, as a consumer, with product and service choices, as well as information about those choice, to
ensure that your needs are met. They balance the product or service offering with a price that makes you comfortable with
your purchase. After the sale, they provide reasonable guarantees and return policies. Marketing’s responsibility also
include offering pleasant and convenient places for you to shop, appropriate opening hours for you to shop, products and
services in the form you want, and purchase options. These are often referred to as time, place, form, and ownership
Marketing Provides Career Opportunities
Marketing also offers a host of career opportunities that require a variety of skills. These can consist of creative still or
Marketing Enriches Society
Firms have come to realize that good corporate citizenship through socially responsible actions should be a priority
because it will help their bottom line in the long run.
Marketing Can Be Entrepreneurial Whereas marketing plays a major role in the success of large corporations, it also is at the center of the successes of
numerous new ventures initiated by entrepreneurs, or people who organize, operate, and assume the risk of a business
venture. Key to the success of many such entrepreneurs in that they launch ventures that aim to satisfy unfilled needs.
Some examples of successful ventures (and their founders) that understood their customers and added value include:
- Research In Motion (Mike Lazaridis)
- The Oprah Winfrey Show and other ventures (Oprah Winfrey)
Chapter 2: Developing a Marketing Plan and Marketing Strategies
Levels of Strategic Planning in Corporations
Strategic planning in most organizations occurs on at least two levels, the corporate level and the functional level.
Corporate level planning is done by the company’s top management and focuses on the overall direction of the entire
company. Senior managers decide on the business of the company, define the company’s mission or vision, and set
objectives or goals for the company. Corporate level planning focuses on the long-term direction of the company, which is
updated regularly to respond to changes in the business environment. Companies have different departments, finance,
human resources, etc. The marketing function develops marketing plans for the company’s various products, brands, and
markets. These plans could take the form of annual plans or three to five-year plans.
In addition to corporate and finctional level strategic planning, large companies that operate severl business lines may see
each of their strategic business units (SBUs) develop strategic plans for their products and the markets they serve.
SBU: is a division of the company that can be managed somewhat independently from other divisions since it markets a
specific set of products to a clearly defined group of customers. For example, Disney has four business units- media
networks, parks and resorts, studio entertainment, and consumer products- that focuses on different customer segments
with different products.
LEVELS OF PLANNING SCOPE DURATION STRATEGIC FOCUS
Corporate planning Entire Firm Long-term (5 years) Define the company’s
mission, set company’s
goals, and establish the
Strategic business unit Single SBU withing the firm Medium to long-term (3-5 Set goals and establish
(SBU)/ Division planning years) portfolio of products and (applies only to large firms markets for the business
with more than one distinct unit
line of business)
Funtional planning (e.g Product portfolio, single Short-term to medium term Develop marketing plans for
marketing planning) product, brand, or market (1-3 years) specific products, brands,
The Marketing Plan
A marketing plan is a written document composed of an analysis of the current marketing situation, opportunities and
threats for the firm, marketing objectives, and strategy specified in terms of the four Ps, action program and projected or
pro forma income (and other financial) statements.
The three major phases of the marketing plan are:
1. Planning Phase: where marketing executives and other top managers define the mission and objectives of the
business, and evaluate the situation by assessing how various players, both inside and outside the organization,
affect the firm’s potential for success.
2. Implementation Phase: where marketing managers identify and evaluate different opportunities by engaging in a
process known as segmentation, targeting, and positioning. They then develop and implement the marketing mix
by using the four Ps.
3. Control Phase: the part of the strategic marketing planning process when managers evaluate the performance of
the marketing strategy and take any necessary corrective actions.
Step 1: Define the Business Mission and Objectives
The mission statement, a broad description of a firm’s objectives and the scope of activities it plans to undertake, attempts
to answer two main questions: What type of business are we? And what do we need to do to accomplish our goals and
objectives? Another key goal or objective often embedded in a mission statement is how the firm is building a sustainable
The Heart and Stroke Foundation, Tim Horton’s, and Disney are all three very different organizations, but for all three,
marketing holds the primary responsibility of enhancing the value of the company’s products for its customers and other
constituents, whether or not the company pursues profit.
Step 2: Conduct a Situation Analysis
After developing its mission, a firm next must