THE CORE CONCEPTS OF MARKETING
[Adapted from Principles of Marketing, 8/E, Kotler & Armstrong]

Marketing involves managing markets to bring about exchanges and to develop relationships for the purpose of identifying and satisfying needs and wants. The marketing system is characterized by an industry’s firms sending their respective products, services, and messages to customers through marketing intermediaries to end users. Environmental forces strongly influence the marketing system. To help us understand marketing it is important to know the core concepts of marketing.

I.

Needs, Wants, Demands

A.  Individual needs are the most basic concept underlying marketing. A need is a state of felt
     deprivation, a condition requiring relief.

     1.  People have many complex needs.
          a. Basic, physical needs for food, clothing, shelter, and safety.
          b. Social needs for belonging and affection.
          c. Personal needs for knowledge and self-expression.
     2.  These needs are a basic part of an individual’s makeup.

B.  Another core concept is individual wants. A want is the form a need takes as shaped by culture
     and individual personality. For example: the need is for food, the want is for a salty snack.

C.  Demands are wants backed by buying power.

     1. Since people have almost unlimited want but limited resources, they want to choose
         products that provide the most satisfaction for their money.
     2. Wants become demands when backed by buying power.
     3. Consumers view products as bundles of benefits and choose products that give them the
         the best bundle for their money

D.  Outstanding marketing companies go to great lengths to learn about and understand their
      customers’ needs, wants, and demands.

E. The insightful company strives to stay close to the customer.

II.

Products and Services

A.  A product is anything than can be offered to a market for attention, acquisition, use,
     consumption or experience and that might satisfy a need or want.

     1. The concept of a product is not limited to physical objects and can include persons, places,
         organizations, activities, and ideas.
     2. Be careful about paying attention to the product and not the benefit being offered for the
         customer’s satisfaction, i.e., translated product features into customer benefits.
     3. Services are activities or benefits offered for sale that are essentially intangible and do not
         result in the ownership of anything. For example: banking, hotel accommodations,
        automobile maintenance, and home repair.
     4. “Marketing myopia” is shortsightedness caused by, among other things, losing sight of
         underlying customer needs by focusing only on existing wants. It is forgetting that a product
         is nothing more than a means to solve a consumer problem, i.e., giving more attention to the
         products itself than to the benefits and experiences produced by the product. 

III.

Value and Satisfaction

A.  Customer value is the difference between the benefits that the customer gains from owning
      and using a product and the costs of obtaining the product, relative to those of competing
      offers. Customers typically do not judge product values and costs accurately and act on
      perceived value.

B.  Customer satisfaction depends on a product’s perceived performance in delivering value
      relative to a buyer’s expectations. If performance meets or exceeds expectations, the buyer is
      happy. It is important for the marketer to set a realistic level of customer expectations.     

IV.

Exchanges and Relationships

A.  Marketing happens when people decide to satisfy needs and wants through exchange.
      Exchange is the act of obtaining a desired product or service from someone by offering
      something in return.
     
      1. Exchange is consummated by a transaction, i.e., a trade of values between two parties, in
           line with agreed-upon conditions such as those dealing with payment and terms of
          agreement.
      2. The seller attempts to bring about a response to its offering.

B.  Marketers need to build long-term relationships with customers, intermediaries, and suppliers.
    
      1.  The goal is to develop a marketing network that permits mutually profitable and enduring
          relationships between and among all parties involved with the network.
     2.  Value-laden and satisfaction-producing efforts are key for the marketing network.
     3.  Delivering superior customer value and satisfaction represents the foundation of customer
          relationship management.

V.

Markets

A.  Exchange through relationships involves the concept of a market. A market is the complete set
      of actual and potential buyers of a product or service.

B.  Economists use the term to designate a collection of buyers and sellers who transact in a
     particular product class, such as the antiques market, the housing market, the construction
     equipment  market, or the sporting goods market.

C.  Markets must be managed, using the marketing mix and all the tools and activities needed to
     build and maintain profitable customer relationships.