Modul DPM10013 Principle of Marketing

MODULE DPM10013
PRINCIPLE OF MARKETING

First Series

HEATHER VALARIE BENILUS

1

MODULE DPM10013
PRINCIPLE OF MARKETING

First Series

HEATHER VALARIE BENILUS

2

Published by:

Politeknik Kota Kinabalu,
No.4, Jalan Politeknik,
KKIP Barat, Kota Kinabalu Industrial Park,
88460, Kota Kinabalu,
Sabah, Malaysia
Copyright@Politeknik Kota Kinabalu, Sabah, Malaysia 2021
First Edition Oktober 2021
Perpustakaan Negara Malaysia Cataloguing-in-Publication data
All right reserved. No part of this publication may be reproduced, stored in a retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or
otherwise without the prior permission of the .

3 Page 5
Page 11
Contents Page16
Page 20
TABLE OF CONTENT
Chapter 1

Overview of Marketing

Chapter 2

Marketing Environment

Chapter 3

Consumer and Business Market

Chapter 4

Marker Segmentation, Targeting and Positioning

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PREFACE

This module will help the Semester 1 students of Diploma Pemasaran (DPR) and Diploma
Rangkaian Bekalan dan Logistik (DLS) in Commerce Department to learn this subject. This
module too suitable for them to read before attending the lecture to get an overview in
their lesson

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CHAPTER 1
TOPIC: OVERVIEW OF MARKETING
1. Explain marketing

In illustration:
The twofold goal of marketing is to attract new customers by promising superior value and to
keep and grow current customers by delivering satisfaction.
Marketing is not merely about selling and advertising, but more to creating a positive &
profitable relationships!
In order to have that profitable relationships, we as marketers will first have to know what is
demanded & needed by consumers before creating an offering which match their requirements
and earn their returns!

2. Discuss the marketing philosophies

Production Concept

o The idea that consumers will favor products that are available and highly affordable.
o Therefore, the organization should therefore focus on improving production and

distribution efficiency.
o Example would be;

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Product concept
o Make & sell concept.
o The idea that consumers will favor products that offer the most quality,
performance and the features.
o Therefore, organization needs to continuously put their extra effort in improving
products.
o Example would be

Selling Concept
o The idea that consumers will not buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion effort.
o Typically practiced with unsought goods – those that buyers do not normally think of
buying.
o Example would be;

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Marketing concept
o Customer-centered concept – finding the right product for customers instead of
finding customers for our products.
o This concept holds that achieving organizational goals depends on knowing the
needs and wants of target markets and delivering the desired satisfactions better
than competitors do.
o Example would be McDonald,Perodua, Unilever

Societal Marketing Concept
o The idea that a company’s marketing decisions should consider consumers’
wants, the company’s requirements, consumers’ long-run interest, and
society’s long-run interests.
o Focuses on need/ wants of the target markets and delivering superior value

o Example would be The Body Shop, McDonald

3. Discuss core marketing concept

Needs, wants and demand

o Needs are basic part of human makeup. Human needs are states of felt deprivation
Human needs foods and shelter to stay alive

o Wants are people’s needs that are molded by culture and individual personality.
Malaysian want an air-conditioned house because of its hot weather

o Demand is created when buying power baked a person’s want (exist when a person is
able and willing to buy). Demands are constantly changing.
An air-conditioned house is a demand, when its owner install a/few air-condition in his
house

Market offerings – products, services & experiences.
o Market offerings are some combination of products, services, information, or
experiences offered to a market to satisfy their need or want.
o Market offerings are not limited to physical products, they also include services and
other entities.

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Customer Value & Satisfaction

o Customers form expectations about the value & satisfaction that various market offerings
will deliver & buy accordingly.

o Satisfied customers will buy again & tell other about their good experiences.
o Dissatisfied customers switch to other competitors & disparage the product to others.
o Marketers must set the right level of expectations.
o If they set expectations too low, they may satisfy those who buy but fail to attract enough

buyer.
o If they raise expectations too high, buyer will be disappointed.
o Customer value & customer satisfaction are key building blocks for developing & managing

customer relationships.

Exchanges & Relationships

Exchanges

o Marketing occurs when people decide to satisfy needs & wants through exchange
relationships.

o Exchange is the act of obtaining a desired object from someone by offering something in
return.

o In terms of marketing, exchange occurs when a marketer seek consumer’s feedback to a
market offering he introduced.

o Five conditions must exist for an exchange to occur are:
✓ There are at least two parties
✓ Each party has something that may be of value to the other party
✓ Each party is capable of communication and delivery
✓ Each party is free to accept or reject the other party’s offer
✓ Each party believes it is appropriate or desirable to deal with the other party.

Relationships

o A transaction is a one-time exchange between two parties.
o However, if the parties are involved in repeated transactions, relationship may be built up

as a result of frequent transactions.
o Relationship is the tie between a customer and its product or the producer of the product.
o Marketers want to build strong relationships by consistently delivering superior customer

value

Market

o Market is a set of all actual and potential buyers of a product or service.
o A market contains the following customers:

a. Consumer market: Customers who buy products for their own consumption.
They are the end users of the product.

b. Business market: Customer who buy products for further processing,
reselling, renting and not for own personal consumption.

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c. Government market: Government bodies and related agencies who buy
products in order to provide services to the public.

d. Reseller market: Customers who buy goods to resell the goods to get
profits.

e. International market: Customers in other countries, including consumers,
producers, resellers and governments.

4. Discuss ethics in Marketing

o Marketing ethics is an area of applied ethics which deals with the moral principles behind
the operation and regulation of marketing

o Marketing ethics is an area of application that involves moral principles behind operation
and regulation of marketing

o Therefore, it is a process through which companies generate customer interest in
products/services, create value for stakeholders and build strong customer relationships

o Role of marketing ethics
✓ All marketing communications share the common standard of truth.
✓ Marketing professionals abide by the highest standard of personal ethics.
✓ Advertising is clearly distinguished from news and entertainment content.
✓ Marketers should be transparent about who they pay to endorse their products.
✓ Consumers should be treated fairly based on the nature of the product and the
nature of the consumer (e.g., marketing to children).
✓ The privacy of the consumer should never be compromised.
✓ Marketers must comply with regulations and standards established by governmental
and professional organizations.
✓ Ethics should be discussed openly and honestly during all marketing decisions.

5. Discuss Social Responsibility

o Social responsibility is the obligation of an organization’s management towards the
welfare and interests of the society in which it operates

o Corporate Social Responsibility is an ethical management concept where companies aim
to integrate social, economic and environmental concerns along with the consideration
of human rights into their business operations.

o Social responsibility in marketing involves focusing efforts on attracting consumers who
want to make a positive difference with their purchases. Many companies have adopted
socially responsible elements in their marketing strategies as a means to help a
community via beneficial services and products

o Role Social Responsibility
✓ to advance a specific cause that benefits society
✓ to enhance a brand’s ability
✓ to create and maintain a positive image in the consumer marketplace
✓ to create a long-term financial gain and increases in value
✓

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✓ to get positive feelings that related to social approval and self-respect by
customers

✓ to form connections between company and communities

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CHAPTER 2
TOPIC: MARKETING ENVIROMENT

1. Explain Marketing Environment
The actors and forces outside marketing that affect marketing management’s ability to
build and maintain successful relationships with target customers.
Illustration:

2. The Company Microenvironment
Defined as “the players that are close to the company” that affect its ability to serve its
customers – the company, suppliers, marketing intermediaries, customer markets,
competitors and publics are considered as a company’s microenvironment. This elements are
controllable by the company.

The company
o In designing marketing plans, marketing management takes other company group into
account. They are top management, finance, R&D, purchasing, operation and accounting.
o Top management sets the company’s mission, objectives, broad strategies and policies for the
company. All the department as above should work together in order to achieve the company
objective – to provide superior customer value and relationships.

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Suppliers

o Suppliers provide the resources or output needed in producing goods and services.
Therefore, marketers must watch supply availability and costs.

o Supply shortages or delays, will seriously affect marketing. In order to avoid such
circumstances, marketers should treat their suppliers as partners in creating and delivering
customer value.

Marketing Intermediaries

o Intermediaries are firms that help the company to promote, sell and distribute its goods to
final buyers. They include:
✓ Resellers: They are distribution channel firms that help the company find customers
& make sales to them. These include wholesalers and retailers who buy and resell
merchandise.
✓ Physical Distribution Firms: Help the company to stock and move goods from their
points of origin to their destinations. Example would be, warehouses and
transportation company
✓ Marketing Services Agencies: Marketing research firms, advertising agencies, media
firms & marketing consulting firms that help the company target & promote its
products to the right markets.
✓ Financial Intermediaries: Financial intermediaries are institutions such as bank, credit
companies and insurance companies. These institutions help finance transactions or
insure against the risks associated with the buying and selling of goods.

Competitors

o Competitors are companies with similar offerings in the same marketplace.
o To be successful, a company must provide greater customer value and satisfaction than its

competitors do.
o Company must gain strategic advantage by positioning their offerings strongly against

competitors’ offerings in the minds of consumers.

Publics

o Public is any group that has an actual or potential interest in or impact in an organization’s
ability to achieve its objectives.

o There are SEVEN (7) types of publics:
✓ Financial public: Influence the company’s ability to obtain fund. Example would be,
banks, investment houses.
✓ Government public: Affect the company by passing legislations and laws that put
restriction on the company’s actions. Example would be Public municipality, FINAS,
and other government bodies.
✓ Media public: This group carries news, feature and editorial opinion that may
influence customers’ opinion towards the business. Example would be, Newspapers,
magazines and television station

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✓ Citizen-action public: Include environmental group and minority group that can
questioned the actions of the company and put them in the public spotlight. Example
would be, Consumer organizations.

✓ Local public: Neighborhood and community organizations that will question a
company impact on the local area and the level of responsibility of their action.

✓ General public: Can greatly affect the company as any changes in their attitude will
affect the company. It consists population at large

✓ Internal public: Consists of those who employed within the organization and deal
with the organization and construction of the company’s product. When employees
feel good about their company, this positive attitude spills over to external public.

3. The company Microenvironment
Defined as “the actors close to the company” that affect its ability to serve its customers –
the company, suppliers, marketing intermediaries, customer markets, competitors and
publics are considered as a company’s microenvironment.
This type of environment can’t be control by the company. The company either adapt or avoid
this environment.

Demographic Environment

o The study of human populations in terms of size, density, location, age, gender, race,
occupation and other statistics.

o Demographic is one of the most important elements in marketing macroenviroment because
it involves people and people make-up markets.

o Marketers will depend on this factor to produce or improve the products as these factors will
influence the buying behaviors

o Example would be, Prudential, Toyota (Asia and Europe region), Prudential,

Economic Environment

o Factors that will affect consumer buying power and spending patterns.
o Changing in income poses influences on how consumers spend their money.
o In illustration, if consumer’s income increases, they will buy luxurious goods more, spending

on convenience products will decrease at the same time. And vice versa if the income
decreasing
o Changing in consumer spending pattern also influences on how consumers spend their
money.
o Example 1: With the increase awareness on healthy living, consumers tend to spend more on
health products and services than other things.
o Example 2: People prefer to buy bundle product than ala-carte to save budget. Hence, Mcd
and KFC has its own value meal

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Natural Environment

o Natural resources are the elements that are needed as input by the marketers or the elements
that are affected by marketing activities.

o Marketers should be aware of several trends in the natural environment.
✓ Shortages of mineral

Shortages of mineral resources will affect the prices of the products.
Example would be, Toyota introduces its hybrid car as the oil become shortages in the future

✓ Increased pollution
Government will intervene if the production activities endangered the environment.
Example, government promotes no plastics bags days because plastic is known as a non-
biodegradable material which can be hardly be disposed. Marketers invent the cart for the
consumer market for their convenience

✓ Increased government intervention
Happens in natural resource management.
Example would be, limiting logging activities may reduce timber supply. Hence, the cement
industries began to growth

Technological Environment

o Forces that create new technologies, creating new product and market opportunities.
o The R&D used in production activities can be considered as one of the technological efforts

as the process will improvise the product.
o Technology may help a company to increase its productivity, thus company should pay a close

attention to the technology as this element will help them to flourish.
o If a business doesn’t pay a close attention to technology, they may be left behind.
o Example would be, internet and online shopping

Political and Social Environment

o Refer to laws, government agencies & pressure groups that influence and limit various
organizations & individuals in a given society.

o Marketers should be aware of the law and legislation imposed by the government, agencies
and regulating bodies.

o This element could give good or bad influences to the marketers.
o E.g. Government imposes the usage of helmets. This regularity increased the demand for

helmets.

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Cultural Environment

o Institutions & other forces that affect society’s basic values, perceptions, preferences, and
behaviors.

o Marketers should be aware with the cultural values of their target market.
o Some persistent values like core values cannot be changed while secondary can be changed.
o Core beliefs are passed on from parents to children. E.g. everyone should get married.
o Secondary beliefs are more open to changes. E.g. everyone should get married in early age

tend to change nowadays, people are no longer engaged in marriage at younger age.

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CHAPTER 3
TOPIC: CONSUMER AND BUSINESS MARKET

1. Explain consumer and business market

Illustration
Amin buy a shampoo to wash his hair (Consumer Market)
Ahmad buys a dozen shampoo to wash his customers in his saloon (Business Market)

Consumer Market
Consumer Market can be defined as all individuals and households who buy or acquire goods and
services for personal consumption. They are the final users or the end users of products. They buy
things to cater to their physical demands of living. They also purchase to indicate & express their:

✓ Roles in society
✓ Personalities
✓ Attitudes and opinions
✓ Values they hold
✓ Wealth
There are FIVE (5) stages in buyer decision process

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i. Need recognition
The buying process starts with need recognition – the buyer recognizes a problem or a need.
A need can be triggered by;
“Internal stimuli” (a person’s normal needs) i.e. hunger or thirst.
“External stimuli” (a person’s wants) i.e. an advertisement might get you thinking about
buying a new car.
Example: Nina would like to buy a laptop because her old laptop is outdated (Internal Stimuli)
and she need a new one to attend er online lecture (External Stimuli)

ii. Information search
After discovering a need, consumer is often motivated to search for more information.
Once a person decided in need of a new car, that person will probably pay more attention to
car ads, searching for info in the net or even discuss about cars with people around him.
Consumers obtain ideas from several sources;
✓ Personal sources (family & friends)
✓ Commercial sources (advertisement, salespeople, packaging)
✓ Public sources (mass media, peer reviews)
Example: In order to get information about laptop, she will ask her best friend (Personal), go
to PC Fair and ask the salesperson (Commercial Sources) and review the unboxing from the
Youtube (Mass Media)

iii. Evaluation of alternatives
The stage of the buyer decision process in which the consumer uses information to evaluate
alternative brands in the choice set.
Consumers will compare several products based on certain attributes they most fond of.
Example: Nina has two laptop that she would like to buy. She then compares the laptops in
terms of quality, price, design and so on

iv. Purchase decision
The buyer’s decision about which brand to purchase.
Consumer’s purchase decision will be to buy the most preferred brand.
But purchase can be interrupted by two factors;
✓ Attitude of others – if someone important to you thinks you should buy a cheaper
car, the chances for you to buy a more expensive car are reduced.
✓ Unexpected situational factors – economic downturn may change your purchase
decision in a blink!
Example: Nina bought laptop B even though she prefers laptop A because her mother’s advice
(Attitude of others) and her car need to be fix (Unexpected situational factors)

v. Post-purchase behaviour
Consumers take further action after purchase, based on their satisfaction or dissatisfaction.
Customer satisfaction is crucial as it’s a key to building profitable relationships with
customers. Satisfied customers will buy again & pay less attention to competing products.
Marketers should aim to delight customers, not just selling products to them.
Dissatisfied customers on the other hand will spread bad word of mouth which will damage
company’s reputation.
But most unhappy customers never tell the company about their problems, therefore
company must find ways to measure customers satisfaction.
One of the ways to know customer’s satisfaction is by encouraging them to complain.

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Business Market
Business buyer behavior refers to the buying behavior of the organizations that buy goods and
services for use in production of other products and services that are sold, rented, or supplied to
others. Also included are retailing and wholesaling firms that acquire goods to resell or rent to others
for profit.
Business buying process is the process where business buyers determine which products and services
are needed to purchase, and then find, evaluate, and choose among alternative brands
The characteristics of business market

Market Structure and Demand

Fewer and larger buyers

Geographic concentration

Derived demand

•BuIynerealnadssetlilecr dependency
demand

• Fluctuating
demand

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The business buying process include;

i. General need description describes the characteristics and quantity of the needed item
ii. Product specification describes the technical criteria
iii. Value analysis is an approach to cost reduction where components are studied to determine

if they can be redesigned, standardized, or made with less costly methods of production
iv. Supplier search involves compiling a list of qualified suppliers
v. Proposal solicitation is the process of requesting proposals from qualified suppliers
vi. Supplier selection is the process when the buying center creates a list of desired supplier

attributes and negotiates with preferred suppliers for favorable terms and conditions
vii. Order-routine specifications is the final order with the chosen supplier and lists all of the

specifications and terms of the purchase
viii. Performance review involves a critique of supplier performance to the purchase terms

2. Examine the characteristics between consumer market and business market

Characteristics Business market Consumer market

Demand Organizational Individual
More direct More indirect
Distribution More professional More Personal
structure More complex and formalized Simpler and informal

Nature of Yes No
Greater Lesser
buying unit

Type of
decisions and
decision
process

Use of
reciprocity

Use of leasing

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CHAPTER 4
TOPIC: MARKET SEGMENTATION, TARGETING AND POSITIONING

1. Explain market segmentation
Market segmentation is based on the recognition that every market consists of potential
buyers with different needs, and different buying behaviour.
These different customers’ attitudes may be grouped into segments and a different marketing
approach will be taken by an organization for each market segment
Recognition of segmentation will enable a company to adopt the proper approach in selling
to a given group of potential customers
Definition:
Dividing a market into distinct groups of buyers who might require separate products
or marketing mixes

SEGMENTATION

WOMEN MEN

Benefit of segmentation

✓ More precise definition of the market in terms of customer needs
✓ Better analysis of competition
✓ Rapid response to meet changing market demand
✓ Efficient resource allocation
✓ More precise marketing objectives

There are four bases of segmentation;

Geographic segmentation

✓ process of dividing the market into different geographical units such as nations,
states, regions, countries, cities or neighborhood

✓ The company can decide to operate; in all area but pay attention to variations in
geographical needs and preferences or in one or few geographical areas

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Demographic segmentation

✓ The most popular way marketers identify market segments and target market
✓ Divided into on the basis of demographic variables such as age, gender, family,

religion, race, nationality, education and occupation
✓ Consumer wants and needs are often closely associated with demographic variables

Psychographic segmentation

✓ Social class (upper, middle and lower) – has a strong influence on a person’s
preference in cars, clothes, home furnishing, leisure activities, reading habits and
retailers

✓ Lifestyle – uses people’s attitudes, interest and opinions to group them into lifestyle
(people’s interest in various products is influences by their lifestyle, and in fact, the
goods they consume express their lifestyle.

✓ Personality – the person’s distinguishing psychological characteristics that lead to
relatively consistent and enduring response to his or her own environment

Behavioural segmentation

✓ Also known as product-related segmentation
✓ Buyers are divided into groups based on their knowledge, attitudes or response to

an actual product or its attributes
✓ Commonly involves some aspects of the product use. They are;

a) Occasion – segmented according to the number of times or occasion the use
of a product

b) Benefit sought – the major benefits that people look for in the product
c) Buyer readiness stage – some people are not aware of the product, some are

aware, informed, interested, have desire and may intend to buy
d) User status – segmented into non-user, ex-user, potential user, 1st time user,

and regular user of a product
e) Usage rate – the amount of product used – light, medium and heavy user
f) Loyalty status- consumer who stick to or loyal to using acertain brand and

flavor
g) Attitudes – classes into enthusiastic, positive, indifferent, negative and

hostile

Criteria to an Effective Segmentation

✓ Measurable
the variables such as the size of the market, customers’ purchasing power and their
demographic profile must be easily measurable

✓ Accessible
the group in the market segment must be easily reached and served. This can be achieved
through effective advertising programs and extensive distribution strategy

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✓ Substantial
The segment market chosen should be big or large enough so that the company can obtain
large sales and make as much profit as possible

✓ Differentiable
The segments are conceptually distinguishable and respond differently to marketing mix
elements and programs.

✓ Actionable
Companies need to design effective marketing programs to attract and serve the segment

2. Explain market targeting
In market targeting, producers identify market segments, select any one of them and
create products tailored to each group
Define market targeting
The process of evaluating each segment’s attractiveness and selecting one or more of the
market segments to enter

Market A Market C
(TARGET)

Market B
(TARGET)

In market targeting, marketers need to decide on;

How many segments to cover

How to identify the best segment

The marketing management of a company may choose one of the following coverage/ alternatives in
market targeting. They are;

Undifferentiated marketing

✓ Produce a single product and hope to get as many customers as possible to buy it (ignore
segmentation entirely).

✓ One product for all
✓ Example would be;15 years ago, Coca – Cola was only produced in a glass bottle and with

only one flavour

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Concentrated marketing (Niche marketing)
✓ Organizations directing its marketing efforts towards a single market through one marketing
✓ Advantages:
It allows firm to specialize
It allows firms with restricted resources to compete with many large organizations
✓ Example would be; Sports channels like STAR Sports, ESPN, STAR Cricket, and Fox target a
niche of sports lovers

Differentiated marketing
✓ Firms direct its marketing efforts at two or more segments by developing a marketing mix
for each selected segment
✓ Typical market segmentation
✓ Advantages:
A marketing firm’s policy can usually increase its sales in a total market by focusing on more
than one segment because the firm’s marketing mixes are being aimed at more people
A firm with excess production capacity may find this policy advantageous because the sales
of products to additional segment may absorb excess capacity

3. Explain market positioning
A strategy of formulating a competitive positioning for the product and a detailed marketing
mix.
A product’s position is the way the product is defined by consumers on important attributes
–the place the product occupies in the consumers’ mind relative to the competing products.

TARGET
MARKET A
(BLUE)
TARGET
MARKET B
(RED)
TARGET
MARKET C
(YELLOW)

There are several ways that a company can position its product;
✓ Product attributes
Stressed on the product attributes, features or customer benefit
Example would be; Softlan(for its softness when used in fabric), Energizer (long
lasting battery consumption)
✓ Benefit offer

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Stressed on the product’s benefit
Example would be; UNITAR (Online learning University)
✓ Usage occasion
Stressed on when to promote a product
Example would be; JAKEL (Festive Season), Pallas (back to school)
✓ Against competitor
A product can be positioned directly against a competitor
Example would be; Air Asia and Firefly, Celcom and Digi

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References

Kotler, P., & Armstrong, G. (2018). Principles of Marketing (13th ed.). Pearson
Kotler, P., Keller, K.L., Ang, S.H., Tan, C.T & Leong, S.M. (2008). Marketing
Management: An Asian Perspective (5th ed.). Pearson.
Yusniza Kamarulzaman & Nor Khalida Abu (2017). Principles of Marketing
(3rd ed.). Oxford Fajar.