Principles of Marketing - Lent Term 2026 Lecture Notes

Historical Context of Marketing

  • Development Phases in Marketing:

    • Product Orientation (1950s): Post-WWII excess demand, a seller's market with mass production to meet basic needs.

    • Sales Orientation (1960s-1970s): Shift to buyer's market due to oversupply, leading to market segmentation principles.

    • Competition Orientation (1980s): Emphasis on unique selling propositions (USPs) and competitive advantages.

    • Market Orientation (1990s): Increased focus on consumer behavior and rapid environmental changes.

    • Relationship Orientation (2000s): Recognition of consumers as active participants due to new communication options.

    • Digital Orientation (2010s): Technological advancements and the digitalization of business processes.

Challenges for Modern Marketing:

  • Information overload for consumers.

  • Advertisements only engaged for an average of two seconds.

  • Resulting in difficulty distinguishing products in saturated markets, leading to perceived similarity among brands.

Trends in Marketing according to Faith Popcorn's Trendbank:

  • Egonomics: A desire for individuality in a mass society.

  • Fantasy Adventure: Trends driving consumers towards adventure-seeking.

  • Down-Aging: Nostalgia for comfort items from childhood.

Marketing Definitions Over Time

  • Kropff (1957): Marketing as the creation of harmony between production and sales.

  • Meffert (1974): Marketing as the planning, coordination, and control of company activities targeting markets.

  • American Marketing Association (1985): Marketing as the process of planning, executing, and exchanging offerings valued by customers.

  • American Marketing Association (2017): Modern definition encompassing a broader societal value perspective.

Marketing Tasks Overview

Market-Related Tasks:

  • Identify latent needs and create/exploit new markets.

Company-Related Tasks:

  • Conduct internal marketing to enhance brand identity.

Social Responsibilities:

  • Ensure ethical marketing practices, avoiding discriminatory advertisements.

Environmental Consciousness:

  • Address issues such as greenwashing within marketing strategies.

The Relevance of Marketing

  • Marketing plays a crucial role across the value chain of a company. (Porter, M.E., 1985)

Marketing Disciplines:

  • Different marketing disciplines depend on the type of product/offering:

    • Consumer Goods Marketing: Addresses products like food and energy.

    • Services Marketing: Involves various services like consulting, banking, etc.

    • Capital Goods Marketing: Deals with raw materials and equipment used in production.

Stages of Marketing Management Process

  1. Situational Analysis

  2. Marketing Goals

  3. Marketing Strategies

  4. Marketing Instruments

  5. Marketing Mix

  6. Implementation of the Marketing Concept

  7. Marketing Controlling (Include target market determination, market segmentation, market research, etc.)

Consumer Behaviour

  • Understanding consumer behavior is fundamental to effective marketing.

    • Marketing begins and revolves around customers. Insights into consumer needs, desires, mental processes, and influencing factors are crucial.

    Key attributes influencing purchasing behavior include:

    • Heterogeneity: Diverse motivations.

    • Incomplete Information: Personal interpretations lead to cognitive distortions.

    • Competing Values: Behavior shaped by differing beliefs.

    • Complex Needs: A mix of rational and hedonistic desires.

Marketing as Behavioral Science:

  • Focus on influencing consumer behavior through marketing activities.

  • Acknowledge that consumers often do not make purely rational decisions.

The S-R Model of Consumer Behavior

  • The Stimulus-Response (S-R) model outlines that a stimulus from the environment influences consumer response:

    • Stimuli examples: Price, product name, advertising sounds, peer influence, emotional states.

    • Responses: Purchase decisions, brand assessments, store visits.

The S-O-R Model

  • Extends the S-R model by including internal cognitive and emotional processes within the organism:

    • Importance of unobservable factors like interest, emotions, and attitudes on consumer response.

Marketing Insights from Behavioral Economics

Key Insights:

  1. Framing: The way problems are presented affects decision-making.

  2. Relativity: Decisions depend on present alternatives.

  3. Heuristics: People rely on simple rules instead of detailed analysis.

Examples:

  • Framing: Describing a product as “90% fat-free” vs. “1% germs survive.”

  • Relativity: Choosing popcorn sizes based on the context of comparison in a cinema.

Availability Heuristic:

  • Describes the tendency to overestimate event probabilities based on memory availability (e.g., media coverage of plane accidents).

Prospect Theory (Kahneman, 2002):

  • Discusses behaviors of value perception based on gain-loss scenarios and reference dependency.

    • Assesses how much a given amount is perceived differently when compared with a reference point.

    • Illustrates loss aversion (losses weigh heavier than equivalent gains).

Influence of Two Systems on Decision Making

  • System 1 (Fast thinking): Emotional and automatic, often leading to the final decisions.

  • System 2 (Slow thinking): Analytical and rational, often employed to justify decisions made by System 1.

  • Decision-making is influenced by prior experiences, emotions, and unconscious behavioral patterns.

    • Examples include using authority figures for credibility, understanding social proof, and perceptions of scarcity to drive choices. The psychological principles applied in marketing recognize these underlying behavioral tendencies.