Introduction to Marketing

Meaning of Market

Chapter-1

Market is a geographical region or a place which facilitates interaction & exchange between Buyers & Sellers. It can be an actual or conceptual place, where in forces of demand & supply operates.

Types of Markets
On geographic or area basis 1. Local market 2. National market 3. International market or Global market On Economic basis 1. Perfect market 2. Imperfect market On the basis of Business 1. Wholesale market 2. Retail market On the basis of Customer type 1. Consumer market 2. Business market or Industrial market

Meaning of Marketing
Marketing refers to all activities to identify, satisfy and keep the customer. Marketing Activities are: marketing research, promotions, distribution and ensuring customer satisfaction.

Definition of Marketing
According to Philip Kotler, Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products and services.

Nature of Marketing
i) Marketing as a process
Marketing is a process that marketing manager executes. This process usually involves four phases: a) Analysis: Markets must be understood and this understanding flows from analysis. Marketing managers spend weeks analyzing their markets before they undertake the development of marketing plans for influencing those markets. b) Planning: Once a market is understood, marketing programs and events must be designed for influencing the market's customers and consumers, and even the firm's competitors. c) Execution: The marketing events are executed in the markets: advertisements are run, prices are set, sales calls are made, etc. d) Monitoring: Markets are not static entities and thus must be monitored at all times. After events execute, they need to be evaluated. The planning assumptions upon which the upcoming events are based must be continually tested; they are not longer true then the events may need modification.

ii) Managing the Marketing Mix

Marketing managers can control or influence four aspects of the firm's output: its products, prices, promotions and the places that all of these are offered. a) Product: Product involves the design of the physical product along with its packaging and warranties, the positioning of that product in terms of the benefits it delivers and the development of the product's brand identify.

b) Price: Pricing strategies and tactics must be determined for the product, and then followed to set prices for all the sizes and variants of the product. The result is usually a price schedule that includes the regular price, volume discounts, payment terms, seasonal prices, introductory prices, etc. c) Promotion: It is generally not true that consumers will beat a path to your door if you have a superior product; they must be told about it and induced to buy it ... thus the need for promotion. Promotion includes personal selling, advertising, sales promotions, and public relations. d) Place: Marketing managers are involved in decisions about where the product is offered to the consumer in terms of the channels of distribution.

iii) Marketing is Collaboration

The nature of marketing requires marketing managers and professionals to work together on all aspects of marketing. It is common for the marketing manager to be at the centre of a set of activities being worked on by people within the company such as sales force, promotion manager, product development teams, etc., and outside the company advertising agencies, consultants, marketing research firms, etc. Thus marketing managers must spend considerable time in consultation and collaboration with other people.

Scope of Marketing
Marketing people are involved in marketing 10 types of entities: i) Goods: Physical goods constitute the bulk of most countries production and marketing effort. The India produces and markets thousands of physical goods, from eggs to steel to hair dryers. In developing nations, goods particularly food, commodities, clothing, and housing are the mainstay of the economy. ii) Services: As economies advance, a growing proportion of their activities are focused on the production of services. Services include airlines, hotels, and maintenance and repair people, as well as professionals such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and services. iii) Experiences: By organizing several services and goods, one can create, stage, and market experiences. Wonder La, Walt Disney Worlds Magic Kingdom is an experience; so is the Hard Rock Cafe. iv) Events: Marketers promote time-based events, such as the Olympics, trade shows, sports events, and artistic performances. v) Persons: Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals draw help from celebrity marketers. vi) Places: Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and new residents. Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. vii) Properties: Properties are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by real estate agents (for real estate) and investment companies and banks (for securities). viii) Organizations: Organizations actively work to build a strong, favourable image in the mind of their publics. Philips, the Dutch electronics company, advertises with the tag line, Lets Make Things Better. The Body Shop and Ben & Jerrys also gain attention by promoting social causes. Universities, museums, and performing arts organizations boost their public images to compete more successfully for audiences and funds. ix) Information: The production, packaging, and distribution of information are one of societys major industries. Among the marketers of information are schools and universities; publishers of encyclopaedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites. x) Ideas: Every market offering has a basic idea at its core. In essence, products and services are platforms for delivering some idea or benefit to satisfy a core need.

Elements of Marketing
1. Needs: A Human need is a state of self deprivation of some basic satisfaction. People require food, clothing, shelter, safety and a few other things for survival. 2. Wants: Wants are specific satisfier of these deeper needs e.g. an individual needs food and wants Cake. 3. Demand: Demands are wants for specific products that are backed by an ability and willingness to buy. Wants become demands when supported by purchasing power e.g. many people want a Mercedes, but only if your ability and willing to purchase. 4. Utility: It is expected satisfaction from the product. 5. Exchange: It is an act of obtaining a desired product from someone by offering something in return. A product is anything that can be offered to satisfy a need or want.

Importance of Marketing
Marketing is a very important aspect in business since it contributes greatly to the success of the organization. The importance of marketing can be summarised as follows: i) Importance of Marketing for the organisation ii) Importance of Marketing for the customer iii) Importance of Marketing for the society iv) Importance of Marketing for economic development v) Importance of Marketing for developed economics vi) Importance of Marketing for developing economics vi) Importance of Marketing for underdeveloped economics

Objectives of Marketing
The basic objective of marketing is to satisfy of the customers. The overall objectives can be summarized as: 1. To plan and develop the product on the basis of known customer demand. 2. To increase profits and goodwill of the enterprise. 3. To organize, direct and control all marketing activities. 4. To inform the customers and society about the markets. 5. To enable the successful distribution. 6. To supply necessary information for marketing decisions.

Approaches to the study of marketing and economic development

1. Commodity Approach This approach studies marketing on commodity basis. The marketing situation of each product is studied with regards to its sources of supply, marketing organization and policies, involvement of the middlemen, to the extent of the market. This approach is also called as Descriptive Approach. 2. Institutional Approach In this approach description and analysis of the different institutions engaged in marketing are undertaken. Here we study not the products but the producers, wholesalers, agents, retailers, transporters, storing institutions etc. Different institutions serve as separate cells of the marketing body. 3. Functional Approach This approach splits down the field of marketing into separate functions. These specific functions are buying, selling, transportation, storage, standardization, grading, financing, risk-taking and marketing research, etc. 4. Managerial Approach In this approach the focus of marketing study is on the decision making process involved in the performance of marketing functions at the level of the firm. The study involves discussions of important concepts like devising alternatives strategies, analyzing their relative importance, determining the strength and weakness of the company, techniques and methods of problem solving.

5. Legal and Societal Approach This approach is very narrow as it concentrates only one aspect, i.e. the effect of transfer of the title in a legal way. In India this aspect has particular significance. There are many enactments passed in India which regulate and control the marketing activities e.g. Sales of Goods Act, Contract Act, Consumer protection Act etc. 4. Systems Approach A system is a set of interacting or interdependent components or groups coordinating to form unified whole and organized marketing activities, to accomplish a set of objectives. In the model of system approach are included: (i) Input (ii) Processing (iii) Outputs (iv) Objective (v) Feedback. A firm's marketing system is the set of significant institutions and flows that connect an organization to its market. System approach in marketing includes objectives, inputs, processing and outputs. Objectives consists profit, matching products with market, etc. Inputs consists capital, raw materials, physical assets, human resource, information, machines - technologies and in general marketing mix elements. Processing consists product planning and development, pricing, distribution and promotion. And output consists products, services, profit, customers satisfaction, social responsibility, goal integration, etc. Besides these, system approach also includes feedback which provides information to redesign inputs and processing. Systems approach to marketing has many benefits such as synergistic effect, marketing effectiveness, environmental adaptation, etc. Traditional concept Traditional concept of marketing includes the activities which are involved in the physical transfer and ownership of goods from part and parcel of marketing. In other words, Marketing is concerned with handling and transportation of goods from the point of production to the point of consumption. Modern concept of marketing Modern concept of marketing discuss the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. It includes production oriented marketing, sales oriented marketing, customer oriented marketing and social oriented marketing.

Functions of Marketing
1. The Merchandising functions The Merchandising functions can be divided into buying, assembling and selling. (i) Buying: A manufacturer has to buy raw materials for production; a wholesaler has to buy goods to be sold to the consumer. Buying involves transfer of ownership of goods from seller to the buyer. (ii) Assembling: Assembling means creation and maintenance of the stock of goods, purchased from different sources. (iii) Selling: The concept selling is to find buyers to whom goods can be sold at a price satisfactory to the seller. At all stages of marketing, it is necessary for someone to sell. 2. Physical distribution functions This function relates to the process of transporting the goods from the place of seller to the place of buyer and includes two main functions: (i) Transportation: Marketing system requires an economical and effective transportation system. A good system of transportation increases the value of goods by the creation of place of utility. (ii) Storage and Warehousing: Storage refers to the holding and preservation of goods until they are despatched to the consumers. Warehouse is a storage structure constructed for the protection of the quality and quantity of the stored produce. The need for a warehouse arises due to the time gap between production and consumption of products.

3. Facilitating functions (i) Financing: It is very difficult to carry on marketing activities smoothly without the availability of adequate and inexpensive finance. Commercial Banks, Co-operative credit Societies and government agencies arrange for short-term finance, medium term finance and long term finance to facilitate marketing. (ii) Risk-Bearing: Marketing of goods involves innumerable risks due to theft, distortion accidents etc. The most important factor responsible for the risk is fluctuation in prices. The other factor, competition in the market, change in habits of the consumers, natural calamities etc. (iii) Standardization: A standard is a measure that is generally recognized as model for comparison. Standards are determined on the basis of color, weight, quality and other factors of a product. (iv) Pricing: Price policy of the concern directly affects the profit element. In determining price policy, several factors are to be borne in mind such as cost of the product competitors prices, marketing policies, government policy, or customary or convenient pricing. (v) Branding: Branding is the management process by which a product is branded. It is a general term covering various activities such as giving a brand name to a product, designing a brand mark and establishing and popularizing it. (vi) Advertising: Advertising is any paid form of non-personal communication of ideas, goods or services by business firms identified in the advertising message intended to lead to a sale immediately or eventually. (vii) Packaging: A good package is the representation of the artistic combination of the designers creative skills and the product and marketing and sales knowledge of the manufacturers management team. (viii) Marketing Research: Marketing requires information such as the number of consumers, their locations, purchasing power, product and brand preferences, tastes, habits and so on. Marketing research is a systematic method of problem analysis, model building and fact finding for the purpose of improved decision making and control in the marketing of goods and services.

Meaning of Marketing Management

Marketing Management is the activity of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.

Principles of Marketing Management

Marketing management includes those activities by which management is able to satisfy customers with a view to earn profits. The main principles of marketing management are as follows: (i) Sound Planning: Planning is of paramount importance both for an organization and an economy. Sound plans are essential to effective marketing, because they serve as guides to all marketing functions. (ii) Effective Organization: The marketing manager has to organize its division on the basis of modern principles of the organization. He should clearly understand the duties and functions of the personnel engaged in the responsible task. (iii) Proper Directions: The management executive issues necessary directions to his subordinate and coordinate all the activities under different departments. (iv) Decision Making: All the activities of marketing decisions are directed towards achieving the overall goals of the management. A market needs to take careful decisions. (v) Motivation: The success of an executive can be judged by his ability to motive the staff under him to maximize its efforts to achieve the target the enterprises. (vi) Research and Development: Change in the tastes, preferences of the consumers takes place all time. The marketing manager has to study and carry on research and adopt the product in conformity to the preferences of the final consumers.

Distinguish between selling and marketing Sl. No.

1. 2. 3. 4. 5. 6.

Selling

Marketing

Selling focuses on the needs of the seller Marketing focuses on the needs of the buyer. Selling is preoccupied with the sellers Marketing is preoccupied with the need to convert his product into cash idea of satisfying the needs of the customer The main aim of selling is to earn profit Marketing aims at earning profit through sales volume through customer satisfaction Management is sales volume oriented Management is profit oriented Cost determines price. Consumer determine price, price determined cost. Views business as a goods producing Views business as consumer process. satisfying process.

Distinguish between traditional concept and modern concept of marketing Sl. No.
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Traditional Concepts

Modern Concepts

The production concept is one of the The modern marketing concept also oldest and traditional concepts of known as the customer-oriented marketing guiding sellers. concept is a business philosophy that challenges the previous concepts. This concept holds that consumer will favour those products that offer the most quality, performance or innovative features. The modern concept holds that the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. competitors. The marketing concept takes a takes outside-in perspective. It starts with a well defined market, focuses on customer needs, coordinates all the activities that will affect customers and produces profits through creating customer satisfaction.

2.

3.

The traditional selling concept takes an inside-out perspective. It starts with the factory, focuses on the companys existing products and calls for heavy selling and promoting to produce profitable sales.

4.

Under traditional concepts buyer Under modern concepts seller should should be careful. be careful.