Principles of Marketing – Core Concepts & Approaches

Product Classification

  • Four common bases: according to use, differentiation, durability, and type

Needs, Wants & Demands

  • Needs – physiological essentials for survival
  • Wants – psychological desires that improve life condition
  • Demands – wants backed by willingness & ability to pay

Market & Demand Metrics

  • Market – customers with willingness and purchasing power
  • Market Demand – total demand of all potential customers in a given period & area
  • Measuring demand
    • Primary Demand – interest in product category
    • Selective Demand – interest in a specific brand

Types of Demand

  1. Negative – product disliked despite benefits (e.g., insurance)
  2. Unwholesome – harmful product strongly desired (e.g., cigarettes)
  3. Potential – no current demand, but capable market exists
  4. Latent – demand realized later after purchase
  5. Declining – demand falling over time (e.g., CDs)
  6. Irregular – fluctuating demand (seasonal goods)
  7. Full – demand matches firm’s supply capacity
  8. Overfull – demand exceeds supply (e.g., vaccines during shortages)

Utility, Value & Satisfaction

  • Utility – total satisfaction from consuming a product
  • Value – importance a customer assigns; varies with needs & means
  • Satisfaction – degree to which expectations are met
  • Customer-Perceived Value (CPV): CPV=Perceived Benefits−Perceived Costs\text{CPV}=\text{Perceived Benefits}-\text{Perceived Costs}
    • Higher CPV ⇒ stronger purchase likelihood

Customer Value Proposition (CVP)

  • Total value a firm promises in exchange for payment
  • Must clearly exceed competitor offerings to convince buyers

Competition, Market Share & Leader

  • Competition – rivalry among firms for revenue, profit & share
  • Market Share formula: Market Share=Company Annual RevenueIndustry Annual Revenue×100\text{Market Share}=\frac{\text{Company Annual Revenue}}{\text{Industry Annual Revenue}}\times100
  • Market Leader – firm with the largest share

Traditional Marketing Approaches

  • Production Concept – focus on low cost & wide availability
  • Product Concept – emphasize high quality & constant improvement
  • Selling Concept – aggressive promotion to sell what is made

Contemporary Marketing Approaches

  • Marketing Concept – start with customer needs; deliver superior value
  • Relationship Marketing – build long-term, data-driven customer relationships
  • Societal Marketing – deliver value while protecting consumer well-being & the environment