Introduction to the Elements of Marketing

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INTRODUCTION TO THE ELEMENTS
OF MARKETING
by Professor Larry Isaacson
Marketing is the process of planning and carrying out exchanges between buyers and sellers. Planning and implementing such exchanges is not always simple, but it is generally based on the use of just a few basic marketing concepts. The purpose of this introductory note is briefly to define and describe these concepts and suggest ways to use them to solve marketing problems and plan marketing programs. Many of the concepts are intuitively obvious once stated. But the development and refining of these concepts represents a great deal of effort on the part of many marketing theorists and practitioners over the past several decades. Learning to use the concepts well is not just a matter of memorizing definitions or applications made by others. Rather, it requires trial and error experience. They need to be discussed, applied to case situations in the classroom, and then applied to real world problems. This complex learning process is necessary because there are no precise rules for combining and using the basic concepts. With this in mind let's turn to the seven key sets of concepts that drive good marketing programs: 1. The Marketing Concept and Marketing as Exchange.

2. Market Segmentation, Targeting and Positioning.
3. Purchase Processes and the Marketing Mix.
4. The Product Life Cycle and Market Share.
5. Contribution and Breakeven Analysis as Measures of Plans and Results. 6. Consumer Behavior and Market Research as the Basis for Marketing Action. 7. Marketing Management and Product Management.

The remainder of this note explores the definition and application of these key concepts. 1. The Marketing Concept and the Concept of Marketing as Exchange. The marketing concept states that it is generally better, easier and more profitable to understand consumers and meet wants and needs than to persuade or coerce consumers – industrial or individual – to buy something they don’t really want, simply because you can make or market it. There is sometimes a period of shortage – a "seller's market" – in which customers must accept what sellers offer. But most of the time the world is a "buyer’s market" in which you must give customers what they want. At times they may not know what they want – until it is offered. That provides opportunity to define and offer new products that, in effect, create demand. Reflecting the marketing concept, the basic way in which goods and services are allocated in a free society is through free exchange among individuals and organizations. Each party freely decides what to offer and what to accept in return. No one controls either supply or demand. Every buyer and seller competes to offer money, goods or services in exchange for the resources of others. Prices reflect this freedom. Most exchanges involve more than just swapping money for an object or a service. They also involve developing relationships and trust. Trust develops over time as each party concludes that they are making an exchange with a reliable person or organization; that the quality of the goods and services can be relied upon; that the price and terms of the exchange are reasonable and competitive; that the availability, location, and logistics connected with the exchange are acceptable; and that a more favorable exchange with another exchange partner is not readily available – at least not without significant additional search cost. The need to be satisfied on each of these issues creates opportunity for creative marketing efforts. Many exchanges also involve more parties than just the two people or teams that make the fina1 deal. Consumers seek the advice of friends, family, experts, or retailers. Purchasing agents seek the inputs of engineers and other managers. It is important to understand each of these intermediate exchanges and to take it into account in designing a marketing program. The marketing concept and the concept of free...
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