Marketing Concepts Explained: Strategies, Definitions, and Functions

This report delves into the core concepts of marketing, exploring five distinct philosophies: production, product, selling, marketing, and societal marketing. It defines each concept, highlighting their key characteristics, advantages, and disadvantages. The report also provides a comprehensive definition of marketing, tracing its evolution and emphasizing the importance of customer value. Furthermore, it outlines the universal functions of marketing, including selling, transportation, sorting, standardization, financing, and risk-taking, explaining how these functions facilitate the exchange between producers and consumers. The importance of marketing is discussed, emphasizing its role in overcoming separations and discrepancies that hinder the exchange process. Finally, the report outlines the steps involved in the marketing process, emphasizing the creation of customer value and building strong customer relationships.

Specialization: Sales & Marketing
Chapter one
Introduction to marketing
Marketing concepts
5 Marketing Concepts Explained with Examples
The marketing concept is the strategy that firms implement to satisfy customers needs, increase sales,
maximize profit and beat the competition. There are five marketing concepts that organizations adopt and
execute. Marketing is a department of management that tries to design strategies that will build profitable
relationships with target consumers. But what philosophy is the best for a company in setting marketing
strategies? There are five alternative concepts under which organizations design and carry out their
marketing strategies.
5 Marketing Concepts
1- Production Concept,
2- Product Concept,
3- Selling Concept,
4- Marketing Concept,
1
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
5- Societal Marketing Concept.
These concepts are described below;
Production Concept
The idea of production concept – “Consumers will favor products that are available and highly
affordable”. This concept is one of the oldest Marketing management orientations that guide sellers.
Companies adopting this orientation run a major risk of focusing too narrowly on their own operations
and losing sight of the real objective.
Most times; the production concept can lead to marketing myopia. Management focuses on improving
production and distribution efficiency.
Although; in some situations; the production concept is still a useful philosophy.
Product Concept
The product concept holds that the consumers will favor products that offer the most in quality,
performance and innovative features.
Here; under this concept,
2
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Marketing strategies are focused on making continuous product improvements.
Product quality and improvement are important parts of marketing strategies, sometimes the only part.
Targeting only on the company’s products could also lead to marketing myopia.
Selling Concept
The selling concept holds the idea- “consumers will not buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion effort”.
Here the management focuses on creating sales transactions rather than on building long-term, profitable
customer relationships.
Marketing Concept
The marketing concept holds- “achieving organizational goals depends on knowing the needs and wants
of target markets and delivering the desired satisfactions better than competitors do”.
Here marketing management takes a “customer first” approach.
Under the marketing concept, customer focus and value are the routes to achieve sales and profits. The
marketing concept is a customer-centered “sense and responds” philosophy. The job is not to find the
right customers for your product but to find the right products for your customers. The marketing concept
and the selling concepts are two extreme concepts and totally different from each other.
Difference between Selling Concept and Marketing Concept
3
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
No. The Selling Concept The Marketing Concept
1 undertakes a large-scale selling and
promotion effort
undertakes activities such as; market
research,
2 The Selling Concept is suitable with
unsought goods—those that buyers do not
normally think of buying, such as insurance
or blood donations.
The Marketing Concept is suitable for
almost any type of product and market.
3 Focus of the selling concept starts at the
production level.
Focus of the marketing concept starts at
understanding the market.
4 Any company following selling concept
undertakes a high-risk
Companies that are following the
marketing concept requires to bare less
risk and uncertainty.
5 The Selling Concept assumes –“customers
who are coaxed into buying the product
will like it. Or, if they don’t like it, they will
possibly forget their disappointment and
buy it again later.”
Instead of making an assumption, The
marketing concept finds out what really
the consumer requires and acts
accordingly to them.
6 The Selling Concept makes poor
assumptions.
Marketing concept works on facts
gathered by its “market and customer
first” approach.
Societal Marketing Concept
4
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Societal marketing concept questions whether the pure marketing concept overlooks possible conflicts
between consumer short-run wants and consumer long-run welfare.
The societal marketing concept holds “marketing strategy should deliver value to customers in a way that
maintains or improves both the consumer’s and society’s well-being”.
It calls for sustainable marketing, socially and environmentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.
The Societal Marketing Concept puts the Human welfare on top before profits and satisfying the wants.
The global warming panic button is pushed and a revelation is required in the way we use our resources.
So companies are slowly either fully or partially trying to implement the societal marketing concept.
Marketing Definition, Functions, Importance, Process
Marketing; a tricky topic to define and frame in. the Marketing studies or field has rapidly moved and
reached a very high level but still defining is into some fixed variables is just impossible.
Marketing is the part of the management process which responsible for identifying, anticipating and
satisfying customer requirements profitably.
Let’s try to understand the definition of marketing and also get a sense of its importance, reach, and
radius in business, corporations, organizations and in your life.
The AMA (American Marketing Association) is a prestigious and influential organization not just in the
USA but also in the international arena. The definition of marketing in 1964 was-
The process of planning and executing the conception, pricing, promotion, and distribution of
goods, services, and ideas to create exchanges that satisfy individual and organizational objectives.
It was until AMA approved and punished another on 2004;
Marketing is an organizational function and a set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.
5
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
In October 2007, they published a new one;
Marketing is 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.
In the first definition of AMA “create exchanges that satisfy individual and organizational objectives”
indicates that marketing is there for creating exchanges for the involved parties to serve their purpose.
They totally forgot about me and you; the customer’s benefit or value. They also somehow put a
boundary to the marketing functions; “process of planning and executing the conception, pricing,
promotion, and distribution of goods, services, and ideas”.
In the second definition; they include us-the customers’ value but “in ways that benefit the organization
and its stakeholders”. Here they showed the Extend of the marketing activities; “function and a set of
processes for creating, communicating, and delivering value”.
The third definition of marketing by AMA is to me the most precise one or the closet on. Well, they put
values of customers and society at equals to the organization’s objectives. Also, they put it in front and
regarded it is as the main force behind the marketing activates. See the third change come very quick.
And it is rightly so. Businesses have found out that it is customers who are the only reason for the
success, not the large capital or the product/service they produce. For some of them, it had to be found in
a hard way.
We can say that marketing is all about delivering customer value and the businesses should be too.
Businesses in trying to get customers attention and marketing include all those activates.
And at the end, we are defining marketing like this- Every action of an organization; either orbits
around, depends on, forced by the activates that marketing makes to communicate with customers for
indicating product’s or service’s value to them.
Marketing Functions The universal functions of marketing are buying, selling, transporting, sorting,
standardization and grading, financing, risk taking and market information.
The Selling The selling function involves promoting the product. It includes the use of personal selling,
advertising, and other mass selling methods.
The Transportation The transporting function. means the movement of goods from one place to another.
The Sorting The sorting function means involves holding goods until customers need.
6
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
The Standardization and Grading The standardization and grading involve sorting products according
to size and quality. This makes buying and selling easier because it reduces the need for inspection and
sampling.
Financing Financing provides the necessary cash and credit to produce, transport, store, promote, sell and
buy products.
Risk Taking It involves bearing the uncertainties that are part of the marketing process. A firm can never
be sure that customers will want to buy its products can also be damaged, stolen or outdated.
Who Performs Marketing Functions?
Marketing functions are all part of the marketing process and must be done by someone.
None of them eliminated. In a planned economy, some of the functions may be performed by government
agencies. Others may be left to individual producers and consumers. In marketing directed economy,
marketing functions are performed by producers, consumers and a variety of marketing specialists.
Importance of Marketing. Why Marketing is Important?
Effective Marketing is difficult because producers and consumers are separated in several ways. The
exchange between producers and consumers is hampered by spatial separation of ownership exchange of
further complicated by discrepancies of quality and discrepancies of assortment between producers and
Consumers. Marketing facilitates production and consumption in different ways. The goals of marketing
are depicted below:
Spatial Separation Producers and consumers are separated geographically. Producers tend to cluster
together by industry. In a few concentrated locations, while consumers are located in many scattered
locations. Marketing needed to overcome the spatial separation.
Separation in Time Consumers may not want to consume goods at the time they are produced and time
may be required to transport goods from producer to’ customer.
To overcome the separation in time marketing aids closely.
Separation of Information Producers do not know who needs, what, when, where and at what price
consumers don’t know what is available from whom, where, when and at what price. The marketing
system is necessary to overcome that type of separation of information.
7
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Separation in Values Producers value goods and services in terms of cost and competitive prices.
Consumers value goods and services in terms of utility and ability to pay. To overcome the separation in
values marketing facilitate?-.
Separation of Ownership Producers hold title to goods and services which they themselves do not want
to consume. Consumers want to consume, goods and services which they do not own. The marketing
function is necessary to overcome the separation of ownership.
Discrepancies of Quantity Producers prefer to produce and sell in large quantities. Consumer ’ prefer to
buy and consume h small quantities. Marketing needed to overcome discripancies of quantity.
Discrepancies of Assortment Producers specialize in producing a narrow assortment of goods and ‘
services. Consumers need a broad assortment. The goal of marketing function is also to overcome the
discrepancies of assortment.
The goals of marketing from the social foundation according to Philip Kotler and Gar/ Armstrong
are; Maximize Consumption. Maximize Consumer Satisfaction. Maximize Choice. Maximize Quality
Living.
Role of Marketing in Economic Development
Main purpose of markets and middlemen is to make exchange easier and allow greater time for
production, consumption and other activities including recreation. Effective marketing system is
necessary for economic development. Improved marketing may be the key to growth in less-developed
nations. Without an effective marketing system, the less developed nations may not be able to escape the
“vicious circle of poverty”. Many people in these nations can’t leave their subsistence way of life to
produce for the market because there are no buyers for what they produce. And there are no buyers
because everyone else is producing for their own needs. As a result, distribution systems and middlemen
do not develop. Breaking this vicious circle of poverty may require major changes in the in-efficient
marketing systems that are typical in less- developed nations. Without an effective marketing system,
people can’t leave their subsistence way of life. Marketing means delivering the goods and services that
customers want and need. It means getting products to them at the right time, in the right place and at a
price they’re willing to pay. So, effective marketing is needed to link producers and consumers.
Steps in Marketing Process Marketing as the process by which companies create value for customers
and building strong customer relationships in order to capture value from customers in return.
5 step process of the marketing framework wherein value is created for customers and marketers
capture value from customers in return.
8
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Step 1: Understanding The Marketplace And Customer Needs And Wants
It is important to understand customer needs, wants and demands in order to build want- satisfying market
offerings and building value-laden customer relationships. This increases long-term customer equity for
the firm.
Needs – States of felt deprivation: They include the physical need for basic necessities like food, clothing,
shelter, warmth, safety and individual needs for knowledge and self-expression. These need§_cannot be
created by the marketers as they are a basic part of human markup.
Wants – The forms human needs take as shaped by culture and individual personality.
Wants are shaped by one’s society and are described in terms of objects that will satisfy needs.
Step 2: Designing A Customer-Driven Marketing Strategy
Focus areas for designing a marketing strategy:
Selecting customers to serve -defining the target market
Deciding how to serve customers in the best way – choosing a value proposition
Selecting customers to serve: The company first decides whom it will serve and divides the market into
segments of the customer. Then it goes after specific sections of the market or its target market.
They target customers based on their level, timing, and nature of demand.
Choosing a value proposition They decide how it will serve their customer that is how it will
differentiate and position itself in the market. A brand’s value proposition is the set of values and benefits
that it promises to deliver its customer. Companies need to design strong value propositions to give them
the greatest advantage in their target markets.
5 alternative concepts for designing a customer-driven marketing strategy, are;
Production concept: Consumers will favor products that are available and highly affordable. Management
should focus on improving production and distribution efficiency.
Product concept: Consumers will favor products that offer most in quality, performance and innovative
features. Focus on making continuous product improvements.
Selling concept: Consumers will not buy enough of the firm’s products unless it undertakes a large-scale
selling and promotion effort. It is typically practiced with unsought goods that the company needs to sell
9
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
and generally results in aggressive selling practices. The company sells what it makes rather than what the
market wants.
Marketing concept: Organizational goals are achieved by knowing the needs and wants of the target
markets and delivering the desired satisfactions better than competitors do.
Societal concept: Marketing strategy should deliver value to customers in such a way that improves both
customers as wells as society’s well being and long-run interests.
Step 3: Constructing an integrated marketing plan that delivers superior value
The company’s marketing strategy outlines which customers the company will serve and how it will
create value for these customers. Then the marketer develops integrated marketing plans that will actually
the intended value to target customers.
It consists of the firms marketing mix (4Ps), the set of marketing tools the firm uses to implement its
marketing strategy. The marketing program builds customer relationships by transforming the marketing
strategy into action. For this, it needs to blend all of these marketing tools into a comprehensive integrated
marketing program that communicates and delivers the expected value to the customers.
Step 4: Build Profitable Relationships
Customer relationship management is the overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.
The aim of customer relationship management is to produce high customer equity, the total combined
customer lifetime values of all of the company’s customers.
The key to building lasting relationships is the creation of superior customer value and satisfaction.
Companies today not only want to acquire profitable relationships but also to build relationships that will
increase their share of customer -the portion of the customers purchasing that a company gets in its
product categories.
5: Capturing Value From Customers
The ultimate aim of customer relationship management is to produce high Customer equity – total
combined lifetime values of all of the company’s current and potential customers. More loyal the
company’s profitable customers, higher are the customer equity. Customer equity may even be a better
way to measure the company’s performance than market share or current sales.
10
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Marketers cannot create customer value and build customer relationships by themselves. They need to
work closely with other company departments and with partners outside the firm. In addition to being
good at customer relationship management, they also need to be good at partner relationship
management.
Marketing strategy:
What Is A Marketing Strategy? A marketing strategy is all of a company’s marketing goals and
objectives combined into a single comprehensive plan. Business executives draw a successful marketing
strategy from market research. They also focus on the right product mix so that they can get the most
profit. Put simply; a marketing strategy is a strategy designed to promote a good or service and make a
profit. In this context, the word ‘good‘ means the same as ‘product.’ A good marketing strategy helps
companies identify their best customers. It also helps them understand consumers’ needs. With a good
strategy, it is possible to implement the most effective marketing methods.
Definition of marketing strategy: “An organization’s strategy that combines all of its marketing goals
into one comprehensive plan.” “A good marketing strategy should be drawn from market research and
focus on the right product mix in order to achieve the maximum profit potential and sustain the business.”
Creating a marketing strategy :
STP in marketing stands for Segmentation, Targeting, and Positioning.
 Segmentation
In marketing we want to identify potential customers and convince them to buy. We also are interested in
convincing past customers to be repeat customers. We do this by providing products and services they
need and want. It’s all about making the right people aware of our value proposition. Everyone is unique
but we also tend to have interests in common with others. We want to identify those commonalities in the
most refined and granular ways possible. These are called niches. We use segmentation to identify niches
with specific needs and desires that we can articulate clearly. In mature markets we use segmentation to
find new customers. Segmentation allows us to focus our messaging and deliver it more effectively.
Marketing messages should be designed to address and inform each segment of the benefits and features
that are most relevant to that segment. This is a different approach from mass marketing where one size
fits all for all customer types. This approach is more efficient and affective, as it delivers the right mix to
the right group of people, rather than a spray-and-pray shotgun approach.
11
Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Markets can be sliced and diced based on any variable, as long as it’s clearly definable and measurable.
Here are some examples:
Demographics This is the most well known way of classifying people into groups. It can be done by:
geography, age, gender, income, education, ethnicity, marital status, profession or occupation.
Demographics explain ‘who’ your buyer is.
Psychographics Psychographics delve into ‘why’ your customer makes a purchase. This is a way of
classifying behavior based on personality and emotional traits linked to purchasing decisions.
Psychographics include: attitudes, lifestyle, hobbies, personality and leadership traits and attitudes toward
risk. Gather data to help form psychographic profiles for your typical customers through interviews,
surveys, questionnaires, customer data and feedback. This is the kind of information that Facebook
gathers based on “likes”. Create archetypes of your customer segments based on their psychographic
profile. You can purchase and access massive troves of data on the interests and attitudes of potential
customers from Internet, web and mobile sources. We will explore this more when we discuss analytics
tools and sources later in the book.
Lifestyle Lifestyle refers to non-work time endeavors like hobbies, recreational activities, entertainment,
vacations, and other. Keywords and search terms used in such tools as Google Adwords can help you
locate and address potential customers by their lifestyle interests and preferences. More on this later when
we get into digital marketing. An effective way to research these behavioral niches is Reddit, where like-
minded people create subReddits about a given interest or hobby. The information that gets shared can be
very valuable in understanding customer segments.
Belief and Values This refers to Religious, political, nationalistic and cultural beliefs and values. Social
media platforms like Facebook are Twitter good sources.
Life Stages People change and prefer different activities and have different interests based on their age. A
twenty something falls into different categories than a 60 year old. Life Stages is the benchmarking of
people’s lives at different chronological stages. Check out the book “Passages” for a great primer on this
approach.
Geography This is where you locate people by country, region, area, zip codes, metropolitan or rural
location, climate or mountains etc.
Language With translation tools freely available like Google and Bing we can think about targeting
language groups relatively easily.
12
Prepared By : Dr. Samar Sabra