This document is a lecture on principles of marketing given by Professor Paul Marx at the University of Siegen. It covers the evolution of marketing concepts from the early 20th century focus on production and distribution through developments like segmentation, relationship marketing, and strategic marketing tools. It traces how marketing grew from a sales function to an integrated management process and philosophy across companies in responding to changing technological, social, and economic conditions.

1. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen
WIRTSCHAFTSWISSENSCHAFTEN
WIRTSCHAFTSINFORMATIK | WIRTSCHAFTSRECHT
Juniorprofessur für Betriebswirtschaftslehre, insb. Marketing
Jun.-Prof. Dr. Paul Marx | Universität Siegen
MARKETING
PRINCIPLES OF
1
LECTURE. THEME 1: INTRODUCTION TO MARKETING
SUMMER SEMESTER 2014
JUN.-PROF. DR. PAUL MARX

2. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 2
1. Introduction to Marketing
contents
- Definition of marketing
- Evolution of the concept of marketing
- Scope of marketing
- Application domain of marketing concepts
- Determining the relevant market

3. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 3
Marketing:
what is it all about?

4. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING: THE WORD
4
mar･ket･ing [ˈmɑːkɪtɪŋ]
noun
A non-finite verb form (gerund) of
to mar･ket [‘ma:rkit]
verb ( markets, marketing , marketed ) [ with obj. ]
Verbalised substantive of
mar･ket [‘ma:rkit]
noun
mar･ket･ing
!
Activities in the market

5. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Marketing is the process by which companies createcustomer interest in products or services. It generatesthe strategy that underlies sales techniques, businesscommunication, and business development. It is anintegrated process through which companies buildstrong customer relationships and create value fortheir customers and for themselves.” — Wikipedia
DEFINITION OF MARKETING
Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 5
“Marketing is not only much broader than selling; it is
not a specialized activity at all. It encompasses the
entire business. It is the whole business seen from the
point of view of the final result, that is, from the
customer’s point of view. Concern and responsibility for
marketing must therefore permeate all areas of the
enterprise.” –Peter Drucker
“Marketing is the social process by which individualsand groups obtain what they need and want throughcreating and exchanging products and value withothers.” — Philip Kotler
“Marketing is the process whereby society, to supply its
consumption needs, evolves distributive systems
composed of participants, who, interacting under
constraints – technical (economic) and ethical (social) –
create the transactions or flows which resolve market
separations and result in exchange and consumption.”
– Bartles
“Marketing is any contact that your business has withanyone who isn’t a part of your business. Marketing isalso the truth made fascinating. Marketing is the art ofgetting people to change their minds. Marketing is anopportunity for you to earn profits with your business, achance to cooperate with other businesses in yourcommunity or your industry and a process of buildinglasting relationships.” — Jay Conrad Levinson
“Marketing is getting someone who has a need to
know, like and trust you.” — Jon Jantsch (of Duct Tape
Marketing fame)
“Marketing is “The management process responsible
for identifying, anticipating and satisfying customer
requirements profitably.” — The Chartered Institute of
Marketing
“Marketing is the process of anticipating, managing,
and satisfying the demand for products, services, and
ideas.” — Wharton School, University of Pennsylvania
“Marketing is everything.”
— Regis McKenna

6. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING: THE OFFICIAL DEFINITION BY AMA
6
Marketing !
is the activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings
that have value for customers, clients,
partners, and society at large.
American Marketing Association (AMA), est. in 2007
Source: http://www.marketingpower.com/aboutama/pages/definitionofmarketing.aspx

7. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING: THE OFFICIAL DEFINITION BY AMA
7
Source: http://www.marketingpower.com/Community/ARC/Pages/Additional/Definition/default.aspx

8. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 8
Evolution of Marketing:
how the main marketing concepts emerged?

9. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
EVOLUTION OF MARKETING
9
“In building our new temple of knowledge we bury the foundations of
the old with scarcely a thought as to their ability to support the new
edifice. If we are wrong then, surely, the whole structure is liable to
topple about our ears.”
!
“… in creating our vision of the future perhaps what we need most
of all is a greater awareness of our past”
Michael J. Baker (1995): The Future of Marketing

10. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
THE BEGINNING OF THE 20TH CENTURY
Wertheim department store in Berlin 1897
10
Assembly line workers 1900
“Inventions”:
Trademarks
Advertising
Focus:
Production
Distribution
Situation:
Seller’s market
Price
competition
Technological, demographic, political and regulatory, social, economic,
and cultural factors
technological progress, industrialization
rapid population growth (almost tripled over 100 years),
concentration of the population in fast-growing urban areas
transport infrastructure development (rail, motor, waterways)
!
Market trends
seller’s market (excess demand)
mass production
leveraging economies of scale
improved product turnaround time
production-oriented approach with focus on production methods
marketing as a distribution function
avg.costs
production output
X1
Xopt

11. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
1950–1960S
11
“Inventions”:
Marketing mix
Push- & Pull-
Strategy
Focus:
Product
Sales
Consumer
Situation:
Market
saturation
Buyer’s market
Technological, demographic, political and regulatory, social,
economic, and cultural factors
reconstruction after World War II: German Economic Miracle
middle-class society: mass consumption as life style
baby-boom (a family with children as a society model)
immigration wave (refugees from the east, migrant workers)
Market trends
market saturation → Buyer’s market (excess supply)
marketing as a “bottleneck managing function”
sales orientation and product orientation (in terms of quality)
systematization of sales instruments through the so called
“4P’s”: product, price, promotion, place (a.k.a. “marketing
mix”)
1969: the first marketing chair in Germany (Meffert)
companies set up marketing departments

12. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKET AS A BOTTLENECK FOR AN ENTERPRISE
(IN THE TRANSITION FROM SELLER’S TO BUYER’S MARKET)
12
Criteria Seller’s market Buyer’s market
Stage of economic
development
Deficit economy Affluent society
Supply – Demand
relation
Demand > Supply
Consumers more active than suppliers
Supply > Demand
Suppliers more active than consumers
Bottleneck areas
of an enterprise
Procurement and/or production Sales, i. e. customers
Key focus of company’s efforts
Rational expansion of procurement and
production capacities,
(physical) distribution of goods
Stimulation of demand and creation of
preferences for the company’s offering
Source: based on Zentes/Swoboda 2001,p. 261.
FROM TO
TRANSITION
MARKETING = BOTTLENECK MANAGING FUNCTION

13. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
PUSH VS. PULL
(ADVERTISING) STRATEGY
13
PullPush
Producer
Retailer
Consumer
Producer
Retailer
Consumer

14. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING MIX (4 P’S)
14
Pricing policy:
Pricing (price of cost coverage,
penetration, skimming, etc.)
Recommended retail /
wholesale prices
Discounts / cash discounts, etc.
Seasonality
Bundling
Price discrimination
…
Distribution policy:
Distribution channels
Market coverage (full, selective,
exclusive)
Inventory / Logistics / Transport
Order processing
Returns handling
...
Communications policy:
Promotion strategy (push, pull,
etc.)
Advertising channels
Personal selling & sales force
Sales promotions
Public relations & publicity
Marketing communications budget
...
Marketing Mix ≈
!
Determining and finding the right
balance between marketing tools
Product policy:
Functionality / customer needs
Marking: trademarks / labels /
quality seals
Quality / properties / style
Safety
Packaging
Guarantee / service
Assortment / program /
accessories
...
marketing manager = “mixer of ingredients”

15. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Inventions”:
Segmentation
Consumer
behavior
Focus:
Marketing =
management
function
Situation:
Market
saturation
Buyer’s market
Technological, demographic, political and regulatory, social,
economic, and cultural factors
decline in the birth rate
inflation, zero growth
recessions following the oil crises of 1973, 1979
criticism of excessive consumption (esp. Erich Fromm,
Herbert Marcuse)
Market trends
enterprises with no or an underdeveloped marketing
function were on the losing side after both oil crises
procurement marketing
transition from selling to marketing concept
marketing as an integrated mindset,
marketing management
1970S
15
Sonntagsfahrverbot in Nov-Dez 1973

16. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 16
easter island - 1722
• population of 2000
• 64 square miles
• 1,400 miles from the
nearest inhabitable place
• 2,000 miles from the
nearest continent
no trees
200 giant statues
30ft high
80 tons
how? the original
settlers arrived
in massive canoes
the island they found was
covered in trees
survive thrive
finite
resources
3. you can’t survive
1. too much
of this...
2. this all
disappears...
there are over 700 unfinished
statues on easter island
they kept making them right
until the trees ran out...
Source: Willshire, John V. (2012): Make Things People Want or Make People Want Things?
PROCUREMENT MARKETING

17. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
ENHANCED UNDERSTANDING OF MARKETING
17
company customerssuppliers
procurement
marketing
sales
marketing

18. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
POSSIBLE ATTITUDES IN EXCHANGE PROCESSES WITH CUSTOMERS
18
product & production
orientation
maximizing production output
marketing
orientation
business philosophy
that promotes a consumer-oriented mindset
across the entire company
sales
orientation
selling and promotion

19. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
SALES MARKETING VS. MARKETING ORIENTATION
19
sales
orientation
MeansMain focus Goals
firm’s
products
driving
sales
selling and
promotion
consumers’
needs and wants
customer
satisfaction
integrated
marketing efforts
Source: based on Kotler, P. (1982): Marketing-Management, 4. edition., Stuttgart, p.34.
marketing
orientation

20. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
SALES MARKETING VS. MARKETING ORIENTATION
20
„Selling focuses on the needs of the seller, marketing on the
needs of the buyer. Selling is preoccupied with the seller’s
need to convert the product into cash, marketing with the
idea of satisfying the needs of the customer by means of the
product and the whole cluster of things associated with
creating, delivering, and, finally, consuming it.“
!
Theodore Levitt

21. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING BECOMES A MANAGEMENT FUNCTION
21
Personal
Produktion
Marketing
BeschaffungF&E
Finanzierung
Marketing as an equal
functional unit
Marketing silo

22. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Inventions”:
SWOT & portfolio
analysis,
Complaint-Mngmt
Focus:
Competition,
Stakeholder
Situation:
Market
saturation,
Buyer’s market
Technological, demographic, political and regulatory, social,
economic, and cultural factors
changed consumer and environmental behavior
competitive pressure, esp. from Japan
developments in telecommunication technology
Market trends
global corporations
triad market (US, EU, Japan)
fight for survival in the long-run
→ advanced consideration of corporate environment
→ focus on competition
→ strategic marketing
→ relationship marketing
buzzwords: competitive advantage, positioning,
stakeholder, complaint management
1980S
22

23. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
TRANSACTION MARKETING VS. RELATIONSHIP MARKETING
23
Source: based on Bruhn (2001), S. 12.
criteria transaction marketing relationship marketing
time frame short-term long-term
marketing object product and/or service
product and/or service
AND
consumer
marketing objective customer acquisition
customer acquisition
customer retention & loyalty
customer recovery
marketing strategy presentation of products and services maintaining dialogue with the customer
performance indicators
profit
margin of profit
turnover
costs
additionally:
customer contribution margin
customer value
FROM TO
TRANSITION

24. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
REACH OF THE MARKETING CONCEPT
24
company
!
!
employees
customerssuppliers
other
exchange
partner
Procurement
Marketing
sales
marketing
corporate social
responsibility
internal
marketing
competitive
environment
society

25. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
TOOLS OF STRATEGIC MARKETING
(AN INCOMPLETE OVERVIEW)
25
these tools will be considered in detail
… a little bit later
Toshiba
Toshiba new
Compaq
Sanyo AST exec.
TI
IBM
Dell
Distinctiveness
(Attribute 1)
Elegance
(Attribute 2)
Factor 1
(Design)
Factor 2
PRODUCT LIFE CYCLE
SWOT & PORTFOLIO ANALYSIS

26. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
THE HYPE CYCLE
(ADOPTION OF NEW TECHNOLOGY)
26
time
visibility
technology
trigger
peak of inflated
expectations
trough of
disillusionment
slope of enlightenm
ent
plateau of productivity
Source: Fenn, Jackie and Mark Time (2008): “Understanding Gartner's Hype Cycles”, Harvard Business Press

27. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Inventions”:
Multy-Channel-Mkg.
CSR
SEO,SEM
Long Tail
Focus:
Environment,
Networking,
eCommerce
Situation:
Paradoxical
competition,
Power of
consumers
Technological, demographic, political and regulatory, social,
economic, and cultural factors
rapid progress in microchip and information technology
elimination of borders and single currency in EU
globalization
Market trends
migration of business to online channels
almost absolute transparency in the market
hyper, i.e., paradoxical competition
“the next provider is just a click away”
consumer → prosumer
orientation on consumer behavior
micro segmentation / customization
marketing = market-oriented philosophy of doing business
1990S–2000S
27

28. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
LONG TAIL
28
#ofunitssold
products
Source: based on Anderson (2004), “The Long Tail”
shelf space
1.500
Games
65.000
movies
75.000
movies & TV shows
720.000
Apps
28.000.000
songs
30.000.000 songs
2.500.000
books
“Businesses with distribution power can sell a
greater volume of otherwise hard to find items
at small volumes than of popular items at large
volumes”
Anderson 2004

29. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
Personal
Produktion
Marketing
BeschaffungF&E
Finanzierung
MARKETING BECOMES A PHILOSOPHY OF CUSTOMER DRIVEN MANAGEMENT
29
Focus on the customer
Source: based on Kotler/Bliemel (2001),p. 43
Kunde
Personal
Produktion
Finanzierung
Beschaffung
F&E
M
A
R
K E
T
I
N
G
Production
Finance
Procurem
ent
HR
R&D
Customer
Marketing as an equal
management unit

30. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Marketing is so basic that it cannot be
considered a separate function… It is the
whole business seen from the point of view of
its final result, that is, from the customer’s point
of view”
Peter Drucker
MARKETING BECOMES A PHILOSOPHY OF CUSTOMER DRIVEN MANAGEMENT
30
“Marketing ist die bewusst marktorientierte
Führung des gesamten Unternehmens”
Heribert Meffert
Kunde
Personal
Produktion
Finanzierung
Beschaffung
F&E
M
A
R
K E
T
I
N
G
Production
Finance
Procurem
ent
HR
R&D
Customer
Focus on the customer
* Marketing means deliberate market-oriented
corporate governance

31. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Inventions”:
Social-Media-Mkg.
Recommender
systems,
Big Data
Focus:
!
?
Technological, demographic, political and regulatory, social,
economic, and cultural factors
progress in mobile and data processing technologies
migration of social activities to online social networks
!
Market trends
increasing market complexity and market dynamics
“glassy” (transparent) consumers
customization and personalization of services
(re-)targeting at the individual level
information overload
2010S
31
https://history.google.com/history/
Situation:
Paradoxical
competition,
Power of
consumers

32. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
OF MARKETING
32

33. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
1950s
distribution
function
1960s
bottleneck
management
1970s
management
function
1980s
strategic
marketing
1990s
market-oriented
management
concept
2000s
multioptional
cross-linked
relationship m.
2010s
social media
marketing;
big data era
focus
time
EVOLUTION OF MARKETING
AN OVERVIEW
33
Enterprise
Consumer
Trade
Competition
Environment
Networks
?
Seller’smarket,massproduction
focus:advertising
marketsaturation→buyer’smarket
salesandcustomerorientation
Informationtechnology→
hyper/paradoxicalcompetition
consumerbehavior
Continuing stagnation of markets;
Changed environmental view and consumer behavior
long-term orientation on all market participants
functionalview
ofmarketing
Source:basedonMeffert(1994)

34. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 34
Modern Marketing:
how do we understand it now?

35. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
APPROACHES TO UNDERSTANDING MODERN MARKETING
35
Marketing as a mindset / philosophy
consequent alignment of all managerial decisions with consumers’ needs and
wants
!
Marketing as a management concept
set of methods and instruments to support effective decision-making
!
Marketing as a social technology
coherent use of marketing tools to create consumer preferences and
competitive advantages

36. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
DIFFERENTIATION OF MARKETING
36
by objects
consumer goods marketing
capital goods marketing
services marketing
media marketing
by problem areas
international marketing
relationship marketing
social media marketing
by type of entities
commercial marketing
non-commercial marketing
education marketing
Examples

37. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING SYSTEM
37
analysis
consumer behavior,
market research
development of strategies,
definition of goals,
implementation,
monitoring of performance
strategic marketing
instruments
products, innovation, brands,
pricing, advertising,
distribution
FUNCTIONS CONCEPTS

38. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
“Girls fall in love with what they hear. Boys fall
in love with what they see. That's why girls
wear make up; and boys lie.”
House M.D.
quoting Wiz Khalifa
DEFINITION OF MARKETING BY AMA
38
Marketing !
is the activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings
that have value for customers, clients,
partners, and society at large.
American Marketing Association (AMA), est. in 2007
Source: http://www.marketingpower.com/aboutama/pages/definitionofmarketing.aspx

39. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
THE ESSENCE OF MARKETING
39
primary objective of marketing:
create value for customers
!
marketing involves an exchange and enduring
relationships between buyers and sellers or
between other parties
marketing has an impact on the firm, its
suppliers, its customers, and others affected
by the firm’s choices
processes involved include:
creating, communicating, delivering, and
exchanging offerings
RELEVANT FOR EXAM
Companies
are
not
in
business
to
create
things
!
but
they
are
in
business
to
create
customers

40. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING: A VERY PARSIMONIOUS SUMMARY
Value & Quality
Satisfaction
Profit
Consumer

41. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
MARKETING: A VERY PARSIMONIOUS SUMMARY
Value & Quality
Satisfaction
Profit
Needs
Wants
Preferences
Utility function
Attitudes
Intentions
Motives
Involvement
Beliefs
Emotions
Lifestyle
Habits
Buying behavior
...
Trust & Loyalty
Consumer
Consumers
Producers
Suppliers
Middlemen
Resellers
Brokers
Retailers
Shareholders
Society
…

42. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
THE ESSENCE OF MARKETING
42

43. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 43
MARKETing
what is my target market?
determining market boundaries and structure

44. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
WHAT IS MARKET?
44
“Marketing means deliberate
market-oriented corporate
governance”
Heribert Meffert
Marketing as “market-oriented
management of the entire
company” requires an
understanding of what a market is.

45. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
WHAT IS MARKET?
45
Market
is any structure that allows buyers
and sellers to exchange any type of
goods, services and information.
In terms of Marketing:
A market is made up of all actual
and potential buyers and sellers
of mutually substitutable goods.
There are two roles in markets, buyers and
sellers.
The market facilitates trade and enables the
distribution and allocation of resources in a
society.
Markets allow any tradable item to be
evaluated and priced.

46. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing”
(1) At least two parties are involved
(2) Each party must possess something
that has value for the other
(3) Each party must communicate with
the other and be able to transfer
the object of exchange
(4) Each party must be able to accept
or reject the offer
EXCHANGE IN TERMS OF MARKETING
46
Market!
is any structure that allows buyers
and sellers to exchange any type of
goods, services and information.
“Marketing is a human activity directed at
satisfying needs and wants through
an exchange process.”
Philip Kotler

47. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
RELEVANT MARKET
47
Market structuring
Defining the relevant market
from a provider’s perspective
!
Partitioning the Market
market
strategy
budget
consumers product
competitors
marketing mix
The definition of
the relevant market
impacts ALL
managerial
decisions
Defining groups of substitute product and/or
potential competitors
Reducing heterogeneity of possible relevant exchange
processes between customers and providers

48. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
RELEVANT MARKET
48
fruit market (total): 5%
banana market: 50%
Market Share of Chiquita

49. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”
RELEVANT MARKET
49
“We used to believe that we were active in
the biscuits market. Biscuits, however, are not
a market at all, but rather they are a product.
Actually, we are active in the market for food
that is not eaten from a plate.”
!
Werner Bahlsen (1987)
Markets do not exist objectively; rather, a market depends on
a company’s design and concept of it
“Markets are created by companies”

50. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
POSSIBLE OBJECTS FOR DEFINING THE RELEVANT MARKET
50
Provider: Definition of the market by groups of providers
eg., chemical market as the market served by chemical companies
Products: Definition of the market by certain product groups
eg., the market for long-distance traveling
Needs: Definition of the market by certain customer needs
eg., the market for entertainment and leisure activities
Buyer: Definition of the market by certain customer groups
eg., the market of affluent private customers, business travelers

51. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
DEFINING THE RELEVANT MARKET
51
product
What type of products and/or services do we
offer? What needs they satisfy? What benefits
they provide?
geography
Does the market have local, regional, national
or international boundaries?
time
Is the market limited in time? Are there time
boundaries? Is there seasonality?
When defining the boundaries of the relevant market,
the following market dimensions must should be considered:

52. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
objective vs
subjective
DEFINING THE RELEVANT MARKET
52
product
What type of products and/or services do we
offer? What needs they satisfy? What benefits
they provide?
When defining the boundaries of the relevant market,
the following market dimensions must should be considered:

53. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
Product-
based market
partitioning
BENEFIT-ORIENTED VS. PRODUCT-ORIENTED MARKET PARTITIONING
53
Transport
Document processing
Education
...
Product-oriented
market partitioning
Railways
Software
Books
Smartphones
Benefit-oriented
market partitioning
Market for...
Market for...
Market for...
Market for...

54. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 54
Product-
based market
partitioning
CASE EXAMPLE: PRODUCT-BASED MARKET PARTITIONING FOR DIET COKE
Diet Coke
Pepsi Light
Club Cola
Light
Low calorie cola
Orange
sodas
Lemon
sodas
Apple juice
Mineral
waterBeer
Milk
Soft Drinks
Beverages

55. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
CASE EXAMPLE: PRODUCT-BASED MARKET PARTITIONING FOR DIET COKE
Product-
based market
partitioning

56. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
eg.:
- in summer: football tickets, Cola, children’s
chewing gum, less TV;
- length of the product life cycle, technological
transformations, positioning and repositioning
DEFINING THE RELEVANT MARKET
56
product
What type of products and/or services do we
offer?
time
Is the market limited in time? Are there time
boundaries? Is there seasonality?
When defining the boundaries of the relevant market,
the following market dimensions must should be considered:

57. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
DEFINING THE RELEVANT MARKET
57
product
Welche Art von Leistungen werden im Markt
angeboten?
time Ist der Markt zeitlich begrenzt?
When defining the boundaries of the relevant market,
the following market dimensions must should be considered:
geography
Does the market have local, regional, national
or international boundaries?
local, regional, national, international, global, …
BUT! two products are substitutes only when they both
are available for consumers
market barriers
Economic (eg., transport costs)
Protectionist trade barriers
(eg., import and export restrictions, country-
specific technical norms -> adaptation,
customer behavior a-la „buy Britisch“)

58. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”
DEFINING THE RELEVANT MARKET
58
product
What type of products and/or services do we
offer? What needs they satisfy? What benefits
they provide?
geography
Does the market have local, regional, national
or international boundaries?
time
Is the market limited in time? Are there time
boundaries? Is there seasonality?
When defining the boundaries of the relevant market,
the following market dimensions must should be considered: