1 - What is marketing?

Today, Marketing must be understood not in the old sense of making a

sale- “telling and selling”- but in the new sense of satisfying customer
needs. If the marketer does a good job of understanding consumer needs;
develops products of superior value; and prices, distributes, and promotes
them effectively, these products will sell very easily. Thus, selling and
advertising are only a part of a larger “marketing mix” – a set of marketing
tools that work together to satisfy customer needs and build customer
relationships.

The American Marketing Association offers the following formal definition,

“Marketing is an organizational function and a set of function and a set of

processes for creating, communicating and delivering value to customers
and for managing customer relationships in ways that benefit the
organization and its stake holders”.

Broadly defined, marketing is a social and a managerial process by which

individuals and groups obtain what they need and want through creating
and exchanging value with others. In a narrower business context,
marketing involves building profitable, value-laden relationships with
customers. Hence, we define marketing as the process by which
companies create value for customers and build strong customer
relationships in order to capture value from customers in return.

In the words of Philip Kotler and Kevin L. Keller, “Marketing deals with
identifying and meeting human and social needs. One of the shortest
definitions of marketing is “meeting needs profitably””.

As we have understood what marketing is all about, we also must

understand that along with creating customers, marketing should also be
done to maintain the present customers. The twofold goal of marketing is to

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attract new customers by promising superior value and to keep and grow
current customers by delivering satisfaction.

2 - Marketing Management

Coping with exchange processes calls for a considerable amount of work

and skill. Marketing management takes place when at least one party to a
potential exchange thinks about the means of achieving desired responses
from other parties.

Marketing management can be defined as the art and science of choosing

target markets and getting, keeping and growing customers through
creating, delivering and communicating superior customer value.

We can distinguish between a social and managerial definition of

marketing. A definition shows the role marketing plays in society. One
marketer said that marketing’s role is to “deliver a higher standard of living”.
We understand that Marketing is a societal process by which individuals
and groups obtain what they need and want through creating, offering and
freely exchanging products and services of value with others. For a
managerial definition, marketing has often been described as “the art of
selling products”. But selling is just the tip of the marketing iceberg. Peter
Drucker, a leading management theorist, puts it this way:

There will always, one can assume, be need for selling. But the aim of
marketing is to make selling superfluous. The aim of marketing is to know
and understand the customer so well that the product or service fits him
and sells itself. Ideally, marketing should result in a customer who is ready
to buy. All that should be needed then is to make the product or service
available.

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When Sony designed its Play Station, when Gillette launched its Mach III
razor, Toyota introduced its Lexus automobile; these manufacturers were
swamped with orders because they had designed the “right” product based
on careful marketing homework.

3 - Market

The concept of exchange and relationships lead to the concept of a market.

A market is a set of actual and potential buyers of a product. These buyers
share a particular need or want that can be satisfied through exchange
relationships.

Every human being has needs. When the basic needs of a person are
fulfilled, their wants arise. These wants become the demands of a
consumer for a marketer. These demands are fulfilled through products.
Products in modern times are not limited to just physical objects. Products
can be:

1) Services (e.g.: hotels, insurance agencies)

2) Person (e.g.: Amitabh Bachchan, Shahrukh Khan)
3) Place (e.g.: Mauritius, Malaysia)
4) Organization (e.g.: Being Human)
5) Idea (e.g.: causes, support groups)
6) Events (e.g.: IPL)

These products are a bundle of utilities. These products perform the

functions of providing utilities and giving pleasure to the customer. Now,
these products can be obtained by the customers with the help of a
monetary exchange transaction in a market which is a collection of all the
potential buyers who have the income and the interest to buy a particular
product.
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 A simple marketing system

4 – MARKETING STRATEGY
Marketing strategy is a method of focusing an organization's energies and
resources on a course of action which can lead to increased sales and
dominance of a targeted market niche. A marketing strategy combines
product development, promotion, distribution, pricing, relationship
management and other elements; identifies the firm's marketing goals, and
explains how they will be achieved, ideally within a stated timeframe.
Marketing strategy determines the choice of target market segments,
positioning, marketing mix, and allocation of resources. It is most effective
when it is an integral component of overall firm strategy, defining how the
organization will successfully engage customers, prospects, and
competitors in the market arena with the help of corporate strategies,
corporate missions, and corporate goals. As the customer constitutes the
source of a company's revenue, marketing strategy is closely linked with
sales. A key component of marketing strategy is often to keep marketing in
line with a company's overarching mission statement.

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5 - MARKETING TASKS

A marketer is someone who seeks a response (attention, a purchase, a

vote, a donation) from another party, called the prospect. If two parties are
seeking to sell something to each other, we call them both marketers.

Marketers are skilled in stimulating demand for a company’s products, but

this is too limited a view to the tasks they perform. Just as production and
logistics professionals are responsible for supply management, marketers
are responsible for demand management. Marketing managers seek to
influence the level, timing and composition of demand to meet the
organization’s objectives. Eight demand states are possible:

1) Negative demands – Consumers dislike the product and may even

pay a price to avoid it. Here, the job of the marketer would be to
2) Nonexistent demands – Consumers may be unaware or uninterested
in the product. Here, the marketer’s task would be to promote his
product in a more rigorous manner to make people aware of the
benefits of the product.
3) Latent Demands – consumers may share a strong need that cannot
be satisfied by an existing product.
4) Declining demands – consumers begin to buy the product less
frequently or not at all. Here, a marketer’s job would be to do some
creative remarketing of his product.
5) Irregular demands – consumer purchases vary on a seasonal,
monthly, weekly, daily or even hourly basis.
6) Full demands – consumers are adequately buying all the products put
into the marketplace. Here, the marketer’s job would be to deliver the
products and measure customer satisfaction.
7) Overfull demands – More consumers would like to buy the product
than can be satisfied. Here, the marketer’s task would be to remarket
his own product just to bring the demand in control. He could do so
by increasing the price of his product.

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8) Unwholesome demands – Consumers may be attracted to products
that have undesirable social consequences. In such a case, a
marketer’s job requires him to put a stipulation on acquiring and
owning his products.

In each case, marketers must identify the underlying cause(s) of the

demand state and then determine a plan for action to shift the demand
to a more desired state.

6 - KEY CUSTOMER MARKETS

Consider the following key customer markets: consumer, business,

global and non-profit.

Consumer markets: Companies selling mass consumer goods and

services such as soft drinks, cosmetics, air travel and athletic shoes and
equipment spend a great deal of time trying to establish a superior brand
image. Much of a brand’s strength depends upon developing a superior
product and packaging, ensuring its availability, and backing it with
engaging communications and reliable service.

Business markets: A Business market segment is a group of people or

organizations sharing one or more characteristics that cause them to
have similar product and/or service needs. A true market segment
meets all of the following criteria: it is distinct from other segments
(different segments have different needs), it is homogeneous within the
segment (exhibits common needs); it responds similarly to a market
stimulus, and it can be reached by a market intervention. The term is
also used when consumers with identical product and/or service needs
are divided up into groups so they can be charged different amounts.

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These can broadly be viewed as 'positive' and 'negative' applications of
the same idea, splitting up the market into smaller groups.

Global markets: Companies selling goods and services in the global

marketplace face additional decisions and challenges. They must decide
which countries to enter; how to enter each country (as an exporter,
licenser, joint venture partner, contract manufacturer or solo
manufacturer); how to adapt their product and service features to each
country; how to price their products in different countries; and how to
adapt their communications to fit different cultures. These decisions
must be made in the face of different requirements for buying,
negotiating, owning and disposing of property; different culture,
language and legal and political systems and a currency that might
fluctuate in value.

Nonprofit markets: Companies selling their goods to nonprofit

organizations such as churches, universities, charitable organizations or
government agencies need to price carefully because these
organizations have limited purchasing power. Lower prices affect the
features and quality that the seller can build into the offering. Much
government purchasing calls for bids, with the lowest bid being favored,
in the absence of extenuating factors.

7 - MARKETING PHILOSOPHIES
The marketing concept and philosophy is one of the simplest ideas in
marketing, and at the same time, it is also one of the most important
marketing philosophies. At its very core are the customer and his or her
satisfaction. The marketing concept and philosophy states that the
organization should strive to satisfy its customers' wants and needs
while meeting the organization's goals. In simple terms, "the customer is
king".

The implication of the marketing concept is very important for

management. It is not something that the marketing department

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 administers, nor is it the sole domain of the marketing department.
Rather, it is adopted by the entire organization. From top management
to the lowest levels and across all departments of the organization, it is a
philosophy or way of doing business. The customers' needs, wants, and
satisfaction should always be foremost in every manager and
employees' mind. Wal-Mart's motto of "satisfaction guaranteed" is an
example of the marketing concept. Whether the Wal-Mart employee is
an accountant or a cashier, the customer is always first.

As simple as the philosophy sounds, the concept is not very old in the
evolution of marketing thought. However, it is at the end of a succession of
business philosophies that cover centuries. To gain a better understanding
of the thought leading to the marketing concept, the history and evolution of
the marketing concept and philosophy are examined first. Next, the
marketing concept and philosophy and some misconceptions about it are
discussed.

7.1 - EVOLUTION OF THE MARKETING CONCEPT AND PHILOSOPHY

The marketing concept and philosophy evolved as the last of three major
philosophies of marketing. These three philosophies are the product,
selling, and marketing philosophies. Even though each philosophy has a
particular time when it was dominant, a philosophy did not die with the end
of its era of dominance. In fact, all three philosophies are being used today.

7.2 - PRODUCT CONCEPT

The product philosophy was the dominant marketing philosophy prior to the
Industrial Revolution and continued to the 1920s. The product philosophy
holds that the organization knows its product better than anyone or any
organization. The company knows what will work in designing and
producing the product and what will not work. For example, the company
may decide to emphasize the low cost or high quality of their products. This
confidence in their ability is not a radical concept, but the confidence leads

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to the consumer being overlooked. Since the organization has the great
knowledge and skill in making the product, the organization also assumes it
knows what is best for the consumer.

This philosophy of only relying on the organization's skill and desires for the
product did not lead to poor sales. In much of the product philosophy era,
organizations were able to sell all of the products that they made. The
success of the product philosophy era is due mostly to the time and level of
technology in which it was dominant. The product era spanned both the
pre-Industrial Revolution era and much of the time after the Industrial
Revolution.

The period before the Industrial Revolution was the time when most goods
were made by hand. The production was very slow and few goods could be
produced. However, there was also a demand for those goods, and the
slow production could not fill the demand in many cases. The importance
for management of this shortage was that very little marketing was needed.

One of the many stories about Henry Ford illustrates the classic example of
the product philosophy in use after the Industrial Revolution. Henry Ford
pioneered mass production techniques in the automobile industry. With the
techniques, he offered cars at affordable prices to the general public.
Before this time, cars were handmade, and only the very wealthy could
afford them. The public enthusiastically purchased all the Model T Fords
that the company could produce. The evidence that the product philosophy
was alive and well in Ford Motor Company came in Henry Ford's famous
reaction to consumer requests for more color options. He was said to have
responded that "you can have any color car you want as long as it is black."
Realizing that different colors would increase the cost of production and
price of the Model T's, Henry Ford, using the product philosophy, decided
that lower prices were best for the public.

7.3 - SELLING CONCEPT

The selling era has the shortest period of dominance of the three
philosophies. It began to be dominant around 1930 and stayed in
widespread use until about 1950. The selling philosophy holds that an

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organization can sell any product it produces with the use of marketing
techniques, such as advertising and personal selling. Organizations could
create marketing departments that would be concerned with selling the
goods, and the rest of the organization could be left to concentrate on
producing the goods.

The reason for the emergence of the selling philosophy was the ever-rising
number of goods available after the Industrial Revolution. Organizations
became progressively more efficient in production, which increased the
volume of goods. With the increased supply, competition also entered
production. These two events eventually led to the end of product
shortages and the creation of surpluses. It was because of the surpluses
that organizations turned to the use of advertising and personal selling to
reduce their inventories and sell their goods. The selling philosophy also
enabled part of the organization to keep focusing on the product, via the
product philosophy. In addition, the selling philosophy held that a sales or
marketing department could sell whatever the company produced.

The Ford Motor Company is also a good example of the selling philosophy
and why this philosophy does not work in many instances. Ford produced
and sold the Model T for many years. During its production, the automobile
market attracted more competition. Not only did the competition begin to
offer cars in other colors, the styling of the competition was viewed as
modern and the Model T became considered as old-fashioned. Henry
Ford's sons were aware of the changes in the automobile market and tried
to convince their father to adapt. However, Henry Ford was sure that his
standardized low-price automobile was what the public needed.
Consequently, Ford turned to marketing techniques to sell the Model T. It
continued to sell, but its market share began to drop. Eventually, even
Henry Ford had to recognize consumer desires and introduce a new model.

The selling philosophy assumes that a well-trained and motivated sales

force can sell any product. However, more companies began to realize that
it is easier to sell a product that the customer wants, than to sell a product
the customer does not want. When many companies began to realize this

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fact, the selling era gave way to the marketing era of the marketing concept
and philosophy.

7.4 - MARKETING CONCEPT

The marketing era started to dominate around 1950, and it continues to the
present. The marketing concept recognizes that the company's knowledge
and skill in designing products may not always be meeting the needs of
customers. It also recognizes that even a good sales department cannot
sell every product that does not meet consumers' needs. When customers
have many choices, they will choose the one that best meets their needs.

The selling and marketing concepts contrasted

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Besides the product, selling and marketing philosophies, two more
philosophies have to be taken into consideration:

7.5 – PRODUCT CONCEPT

The product concept holds that consumers will favor products that offer the
most in quality, performance and innovative features. Under this concept,
marketing strategy focuses on making continuous product improvements.
Some manufacturers believe that if they can build a better mousetrap, the
world will beat a path to their door. But they are often rudely shocked.
Buyers may well be looking a better solution to a mouse problem but not
necessarily for a better mousetrap.

Thus, the product concept also can lead to a marketing myopia. For
instance, railroad management once thought that users wanted trains
rather than transportation and overlooked the growing challenges of
airlines, buses, trucks and automobiles.

7.6 – SOCIETAL CONCEPT

The societal marketing concept questions whether the pure marketing

concept overlooks possible conflicts between consumer short run wants
and consumer long run welfare. The societal marketing concept holds that
marketing strategy should deliver value to customers in a way that
maintains or improves both the consumer’s and the society’s well being.

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 Three conditions underlying the societal marketing concept

7.7 - MARKET CONCEPT AND PHILOSOPHY

The marketing concept and philosophy states that the organization should
strive to satisfy its customers' wants and needs while meeting the
organization's goals. The best way to meet the organization's goals is also
by meeting customer needs and wants. The marketing concept's emphasis
is to understand the customers before designing and producing a product
for them. With the customer's wants and needs incorporated into the design
and manufacture of the product, sales and profit goals are far more likely to
be met.

With the customer's satisfaction the key to the organization, the need to
understand the customer is critical. Marketing research techniques have
been developed just for that purpose. Smaller organizations may keep
close to their customers by simply talking with them. Larger corporations
have established methods in place to keep in touch with their customers,
be it consumer panels, focus groups, or third-party research studies.
Whatever the method, the desire is to know the customers so the

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organization can better serve them and not lose sight of their needs and
wants.

The idea of keeping close to the organization's customers seems simple. In

reality, it is very easy to forget the customer's needs and wants. Sometimes
the management is so involved with the product that their own desires and
wants begin to take dominance, even though they have adopted the
marketing concept.

Yet it is easy for managers to forget the marketing concept and philosophy.
For example, many years ago—before there was a Subway on every
corner—a college student opened a small submarine sandwich shop near
his university's campus. The sub shop was an immediate success. By
using the marketing concept, the young entrepreneur had recognized an
unmet need in the student population and opened a business that met that
need.

Unfortunately, the story does not end at this point. The sub shop was so
successful that it began to outgrow its original location after about three
years. The shop moved to a larger location with more parking spaces, also
near the university. At the new sub shop, waiters in tuxedos met the
students and seated them at tables with tablecloths. Besides the traditional
subs, the shop now served full meals and had a bar. Within a few months
the sub shop was out of business. The owner of the shop had become so
involved with his business vision that he forgot the customers' needs and
wants. They did not want an upscale restaurant—there were other
restaurants in the area that met that need, they just wanted a quick sub
sandwich. By losing sight of the customers' wants and needs, the owner of
the sub shop lost his successful business.

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 8 - MARKETING MIX

The marketing mix is probably the most famous marketing term. Its
elements are the basic, tactical components of a marketing plan. Also
known as the Four P's, the marketing mix elements are price, place,
product, and promotion.

The marketing mix is generally accepted as the use and specification of

the 'four Ps' describing the strategy position of a product in the
marketplace. The 'marketing mix' is a set of controllable, tactical
marketing tools that work together to achieve company's objectives. One
version of the marketing mix originated in 1948 when James Colleton
said that a marketing decision should be a result of something similar to
a recipe. This version was used in 1953 when Neil Borden, in his
American Marketing Association presidential address, took the recipe
idea one step further and coined the term "marketing-mix". A prominent
marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960,
which has seen wide use. The four Ps concepts are explained in most
marketing textbooks and classes.

Elements of the marketing mix are often referred to as 'the four Ps':

PRODUCT

The first element in the marketing mix is the product. A product is any
combination of goods and services offered to satisfy the needs and wants
of consumers. Thus, a product is anything tangible or intangible that can be
offered for purchase or use by consumers. A tangible product is one that
consumers can actually touch, such as a computer. An intangible product is
a service that cannot be touched, such as computer repair, income tax
preparation, or an office call. Other examples of products include places
and ideas. For example, the state tourism department in New Hampshire
might promote New Hampshire as a great place to visit and by doing so
stimulate the economy. Cities also promote themselves as great places to
live and work. For example, the slogan touted by the Chamber of
Commerce in San Bernardino, California, is "It's a great day in San

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Bernardino." The idea of wearing seat belts has been promoted as a way of
saving lives, as has the idea of recycling to help reduce the amount of
garbage placed in landfills.

Typically, a product is divided into three basic levels. The first level is often
called the core product, what the consumer actually buys in terms of
benefits. For example, consumers don't just buy trucks. Rather, consumers
buy the benefit that trucks offer, like being able to get around in deep snow
in the winter. Next is the second level, or actual product, that is built around
the core product. The actual product consists of the brand name, features,
packaging, parts, and styling. These components provided the benefits to
consumers that they seek at the first level. The final, or third, level of the
product is the augmented component. The augmented component includes
additional services and benefits that surround the first two levels of the
product. Examples of augmented product components are technical
assistance in operating the product and service agreements.

Products are classified by how long they can be used—durability—and

their tangibility. Products that can be used repeatedly over a long period of
time are called durable goods. Examples of durable goods include
automobiles, furniture, and houses. By contrast, goods that are normally
used or consumed quickly are called nondurable goods. Some examples of
nondurable goods are food, soap, and soft drinks. In addition, services are
activities and benefits that are also involved in the exchange process but
are intangible because they cannot be held or touched. Examples of
intangible services included eye exams and automobile repair.

Another way to categorize products is by their users. Products are

classified as either consumer or industrial goods. Consumer goods are
purchased by final consumers for their personal consumption. Final
consumers are sometimes called end users. The shopping patterns of
consumers are also used to classify products. Products sold to the final
consumer are arranged as follows: convenience, shopping, specialty, and
unsought goods. Convenience goods are products and services that
consumers buy frequently and with little effort. Most convenience goods are
easily obtainable and low-priced, items such as bread, candy, milk, and
shampoo. Convenience goods can be further divided into staple, impulse,
and emergency goods. Staple goods are products, such as bread and milk,
that consumers buy on a consistent basis. Impulse goods like candy and
magazines are products that require little planning or search effort because

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they are normally available in many places. Emergency goods are bought
when consumers have a pressing need. An example of an emergency
good would be a shovel during the first snowstorm of the winter.

Shopping goods are those products that consumers compare during the
selection and purchase process. Typically, factors such as price, quality,
style, and suitability are used as bases of comparison. With shopping
goods, consumers usually take considerable time and effort in gathering
information and making comparisons among products. Major appliances
such as refrigerators and televisions are typical shopping goods. Shopping
goods are further divided into uniform and no uniform categories. Uniform
shopping goods are those goods that are similar in quality but differ in
price. Consumers will try to justify price differences by focusing on product
features. No uniform goods are those goods that differ in both quality and
price.

Specialty goods are products with distinctive characteristics or brand

identification for which consumers expend exceptional buying effort.
Specialty goods include specific brands and types of products. Typically,
buyers do not compare specialty goods with other similar products because
the products are unique. Unsought goods are those products or services
that consumers are not readily aware of or do not normally consider buying.
Life insurance policies and burial plots are examples of unsought goods.
Often, unsought goods require considerable promotional efforts on the part
of the seller in order to attract the interest of consumers.

Industrial goods are those products used in the production of other goods.
Examples of industrial goods include accessory equipment, component
parts, installations, operating supplies, raw materials, and services.
Accessory equipment refers to movable items and small office equipment
items that never become part of a final product. Office furniture and fax
machines are examples of accessory equipment. Component parts are
products that are turned into a component of the final product that does not
require further processing. Component parts are frequently custom-made
for the final product of which they will become a part. For example, a
computer chip could be produced by one manufacturer for use in
computers of other manufacturers. Installations are capital goods that are
usually very expensive but have a long useful life. Trucks, power
generators, and mainframe computers are examples of installations.
Operating supplies are similar to accessory equipment in that they do not

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become part of the finished product. Operating supplies include items
necessary to maintain and operate the overall firm, such as cleaners, file
folders, paper, and pens. Raw materials are goods sold in their original
form before being processed for use in other products. Crops, crude oil,
iron ore, and logs are examples of raw materials in need of further
processing before being used in products. The last category of industrial
goods is services. Organizations sometimes require the use of services,
just as individuals do. Examples of services sought by organizations
include maintenance and repair and legal counsel.

PRICE

The second element in marketing mix is price. Price is simply the amount of
money that consumers are willing to pay for a product or service. In earlier
times, the price was determined through a barter process between sellers
and purchasers. In modern times, pricing methods and strategies have
taken a number of forms.

Pricing new products and pricing existing products require the use of
different strategies. For example, when pricing a new product, businesses
can use either market-penetration pricing or a price-skimming strategy. A
market-penetration pricing strategy involves establishing a low product
price to attract a large number of customers. By contrast, a price-skimming
strategy is used when a high price is established in order to recover the
cost of a new product development as quickly as possible. Manufacturers
of computers, videocassette recorders, and other technical items with high
development costs frequently use a price-skimming strategy.

Pricing objectives are established as a subset of an organization's overall

objectives. As a component of the overall business objectives, pricing
objectives usually take one of four forms: profitability, volume, meeting the
competition, and prestige. Profitability pricing objectives mean that the firm
focuses mainly on maximizing its profit. Under profitability objectives, a
company increases its prices so that additional revenue equals the
increase in product production costs. Using volume pricing objectives, a
company aims to maximize sales volume within a given specific profit
margin. The focus of volume pricing objectives is on increasing sales rather
than on an immediate increase in profits. Meeting the price level of

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competitors is another pricing strategy. With a meeting-the-competition
pricing strategy, the focus is less on price and more on nonprice
competition items such as location and service. With prestige pricing,
products are priced high and consumers purchase them as status symbols.

In addition to the four basic pricing strategies, there are five price-
adjustment strategies: discount pricing and allowances, discriminatory
pricing, geographical pricing, promotional pricing, and psychological
pricing. Discount pricing and allowances include cash discounts, functional
discounts, seasonal discounts, trade-in allowances, and promotional
allowances. Discriminatory pricing occurs when companies sell products or
services at two or more prices. These price differences may be based on
variables such as age of the customer, location of sale, organization
membership, time of day, or season. Geographical pricing is based on the
location of the customers. Products may be priced differently in distinct
regions of a target area because of demand differences. Promotional
pricing happens when a company temporarily prices products below the list
price or below cost. Products priced below cost are sometimes called loss
leaders. The goal of promotional pricing is to increase short-term sales.
Psychological pricing considers prices by looking at the psychological
aspects of price. For example, consumers frequently perceive a
relationship between product price and product quality.

PROMOTION

Promotion is the third element in the marketing mix. Promotion is a

communication process that takes place between a business and its
various publics. Publics are those individuals and organizations that have
an interest in what the business produces and offers for sale. Thus, in order
to be effective, businesses need to plan promotional activities with the
communication process in mind. The elements of the communication
process are: sender, encoding, message, media, decoding, receiver,
feedback, and noise. The sender refers to the business that is sending a
promotional message to a potential customer. Encoding involves putting a
message or promotional activity into some form. Symbols are formed to
represent the message. The sender transmits these symbols through some
form of media. Media are methods the sender uses to transmit the
message to the receiver. Decoding is the process by which the receiver

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translates the meaning of the symbols sent by the sender into a form that
can be understood. The receiver is the intended recipient of the message.
Feedback occurs when the receiver communicates back to the sender.
Noise is anything that interferes with the communication process.

There are four basic promotion tools: advertising, sales promotion, public
relations, and personal selling. Each promotion tool has its own unique
characteristics and function. For instance, advertising is described as paid,
non personal communication by an organization using various media to
reach its various publics. The purpose of advertising is to inform or
persuade a targeted audience to purchase a product or service, visit a
location, or adopt an idea. Advertising is also classified as to its intended
purpose. The purpose of product advertising is to secure the purchase of
the product by consumers. The purpose of institutional advertising is to
promote the image or philosophy of a company. Advertising can be further
divided into six subcategories: pioneering, competitive, comparative,
advocacy, reminder, and cooperative advertising. Pioneering advertising
aims to develop primary demand for the product or product category.
Competitive advertising seeks to develop demand for a specific product or
service. Comparative advertising seeks to contrast one product or service
with another. Advocacy advertising is an organizational approach designed
to support socially responsible activities, causes, or messages such as
helping feed the homeless. Reminder advertising seeks to keep a product
or company name in the mind of consumers by its repetitive nature.
Cooperative advertising occurs when wholesalers and retailers work with
product manufacturers to produce a single advertising campaign and share
the costs. Advantages of advertising include the ability to reach a large
group or audience at a relatively low cost per individual contacted. Further,
advertising allows organizations to control the message, which means the
message can be adapted to either a mass or a specific target audience.
Disadvantages of advertising include difficulty in measuring results and the
inability to close sales because there is no personal contact between the
organization and consumers.

The second promotional tool is sales promotion. Sales promotions are

short-term incentives used to encourage consumers to purchase a product
or service. There are three basic categories of sales promotion: consumer,
trade, and business. Consumer promotion tools include such items as free
samples, coupons, rebates, price packs, premiums, patronage rewards,
point-of-purchase coupons, contests, sweepstakes, and games. Trade-

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promotion tools include discounts and allowances directed at wholesalers
and retailers. Business-promotion tools include conventions and trade
shows. Sales promotion has several advantages over other promotional
tools in that it can produce a more immediate consumer response, attract
more attention and create product awareness, measure the results, and
increase short-term sales.

Public relations is the third promotional tool. An organization builds positive

public relations with various groups by obtaining favorable publicity,
establishing a good corporate image, and handling or heading off
unfavorable rumors, stories, and events. Organizations have at their
disposal a variety of tools, such as press releases, product publicity, official
communications, lobbying, and counseling to develop image. Public
relations tools are effective in developing a positive attitude toward the
organization and can enhance the credibility of a product. Public relations
activities have the drawback that they may not provide an accurate
measure of their influence on sales as they are not directly involved with
specific marketing goals.

The last promotional tool is personal selling. Personal selling involves an

interpersonal influence and information-exchange process. There are
seven general steps in the personal selling process: prospecting and
qualifying, pre-approach, approach, presentation and demonstration,
handling objections, closing, and follow-up. Personal selling does provide a
measurement of effectiveness because a more immediate response is
received by the salesperson from the customer. Another advantage of
personal selling is that salespeople can shape the information presented to
fit the needs of the customer. Disadvantages are the high cost per contact
and dependence on the ability of the salesperson.

For a promotion to be effective, organizations should blend all four

promotion tools together in order to achieve the promotional mix. The
promotional mix can be influenced by a number of factors, including the
product itself, the product life-cycle stage, and budget. Within the
promotional mix there are two promotional strategies: pull and push. Pull
strategy occurs when the manufacturer tries to establish final consumer
demand and thus pull the product through the wholesalers and retailers.
Advertising and sales promotion are most frequently used in a pulling
strategy. Pushing strategy, in contrast, occurs when a seller tries to

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develop demand through incentives to wholesalers and retailers, who in
turn place the product in front of consumers.

PLACE

The fourth element of the marketing mix is place. Place refers to having the
right product, in the right location, at the right time to be purchased by
consumers. This proper placement of products is done through middle
people called the channel of distribution. The channel of distribution is
comprised of interdependent manufacturers, wholesalers, and retailers.
These groups are involved with making a product or service available for
use or consumption. Each participant in the channel of distribution is
concerned with three basic utilities: time, place, and possession. Time
utility refers to having a product available at the time that will satisfy the
needs of consumers. Place utility occurs when a firm provides satisfaction
by locating products where they can be easily acquired by consumers. The
last utility is possession utility, which means that wholesalers and retailers
in the channel of distribution provide services to consumers with as few
obstacles as possible.

Channels of distribution operate by one of two methods: conventional

distribution or a vertical marketing system. In the conventional distribution
channel, there can be one or more independent product manufacturers,
wholesalers, and retailers in a channel. The vertical marketing system
requires that producers, wholesalers, and retailers to work together to avoid
channel conflicts.

How manufacturers store, handle, and move products to customers at the

right time and at the right place is referred to as physical distribution. In
considering physical distribution, manufacturers need to review issues such
as distribution objectives, product transportation, and product warehousing.
Choosing the mode of transportation requires an understanding of each
possible method: rail, truck, water, pipeline, and air. Rail transportation is
typically used to ship farm products, minerals, sand, chemicals, and auto
mobiles. Truck transportation is most suitable for transporting clothing,
food, books, computers, and paper goods. Water transportation is good for
oil, grain, sand, gravel, metallic ores, coal, and other heavy items. Pipeline
transportation is best when shipping products such as oil or chemicals. Air

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transport works best when moving technical instruments, perishable
products, and important documents.

Another issue of concern to manufacturers is the level of product

distribution. Normally manufacturers select from one of three levels of
distribution: intensive, selective, or exclusive. Intensive distribution occurs
when manufacturers distribute products through all wholesalers or retailers
that want to offer their products. Selective distribution occurs when
manufacturers distribute products through a limited, select number of
wholesalers and retailers. Under exclusive distribution, only a single
wholesaler or retailer is allowed to sell the product in a specific geographic
area.

8.1 - Extended marketing mix

There have been attempts to develop an 'extended marketing mix' to better

accommodate specific aspects of marketing.

For example, in the 1970s, Nickels and Jolson suggested the inclusion of
packaging.

In the 1980s Kotler proposed public opinion and political power and
Booms and Bitner included three additional 'Ps' to accommodate trends
towards a service or knowledge based economy:

People – all people who directly or indirectly influence the perceived value
of the product or service, including knowledge workers, employees,
management and consumers.

Process – procedures, mechanisms and flow of activities which lead to an

exchange of value.

Physical evidence – the direct sensory experience of a product or service

that allows a customer to measure whether he or she has received value.
Examples might include the way a customer is treated by a staff member,
or the length of time a customer has to wait, or a cover letter from an

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insurance company, or the environment in which a product or service is
delivered.

8.2 - Four Cs

The Four Ps is also being replaced by the Four Cs model, consisting of

consumer, cost, convenience, and communication. The Four Cs model is
more consumer-oriented and fits better in the movement from mass
marketing to niche marketing. The product part of the Four Ps model is
replaced by consumer or consumer models, shifting the focus to satisfying
the consumer. Another C replacement for Product is Capability. By defining
offerings as individual capabilities that when combined and focused to a
specific industry, creates a custom solution rather than pigeon-holing a
customer into a product. Pricing is replaced by cost, reflecting the reality of
the total cost of ownership. Many factors affect cost, including but not
limited to the customers cost to change or implement the new product or
service and the customers cost for not selecting a competitors capability.
Placement is replaced by the convenience function. With the rise of internet
and hybrid models of purchasing, place is no longer relevant. Convenience
takes into account the ease to buy a product, find a product, find
information about a product, and several other considerations. Finally, the
promotions feature is replaced by communication. Communications
represents a broader focus than simply promotions. Communications can
include advertising, public relations, personal selling, viral advertising, and
any form of communication between the firm and the consumer.

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 The marketing mix

9 – Business Environment

The business environment is a marketing term and refers to all of the

forces outside of marketing that affect marketing management’s ability to
build and maintain successful relationships with target customers. The
business environment consists of both the macro environment and the
microenvironment.

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9.1 - Microenvironment

The microenvironment refers to the forces that are close to the company
and affect its ability to serve its customers. It includes the company itself,
its suppliers, marketing intermediaries, customer markets, competitors, and
publics.

The company aspect of microenvironment refers to the internal

environment of the company. This includes all departments, such as
management, finance, research and development, purchasing, operations
and accounting. Each of these departments has an impact on marketing
decisions. For example, research and development have input as to the
features a product can perform and accounting approves the financial side
of marketing plans and budgets.

The suppliers of a company are also an important aspect of the

microenvironment because even the slightest delay in receiving supplies
can result in customer dissatisfaction. Marketing managers must watch
supply availability and other trends dealing with suppliers to ensure that
product will be delivered to customers in the time frame required in order to
maintain a strong customer relationship.

Marketing intermediaries refers to resellers, physical distribution firms,

marketing services agencies, and financial intermediaries. These are the
people that help the company promote, sell, and distribute its products to
final buyers. Resellers are those that hold and sell the company’s product.
They match the distribution to the customers and include places such as
Wal-Mart, Target, and Best Buy. Physical distribution firms are places such
as warehouses that store and transport the company’s product from its
origin to its destination. Marketing services agencies are companies that
offer services such as conducting marketing research, advertising, and
consulting. Financial intermediaries are institutions such as banks, credit
companies and insurance companies.

Another aspect of microenvironment is the customers. There are different

types of customer markets including consumer markets, business markets,
government markets, international markets, and reseller markets. The

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consumer market is made up of individuals who buy goods and services for
their own personal use or use in their household. Business markets include
those that buy goods and services for use in producing their own products
to sell. This is different from the reseller market which includes businesses
that purchase goods to resell as is for a profit. These are the same
companies mentioned as market intermediaries. The government market
consists of government agencies that buy goods to produce public services
or transfer goods to others who need them. International markets include
buyers in other countries and includes customers from the previous
categories.

Competitors are also a factor in the microenvironment and include

companies with similar offerings for goods and services. To remain
competitive a company must consider who their biggest competitors are
while considering its own size and position in the industry. The company
should develop a strategic advantage over their competitors.

The final aspect of the microenvironment is publics, which is any group that
has an interest in or impact on the organization’s ability to meet its goals.
For example, financial publics can hinder a company’s ability to obtain
funds affecting the level of credit a company has. Media publics include
newspapers and magazines that can publish articles of interest regarding
the company and editorials that may influence customers’ opinions.
Government publics can affect the company by passing legislation and
laws that put restrictions on the company’s actions. Citizen-action publics
include environmental groups and minority groups and can question the
actions of a company and put them in the public spotlight. Local publics are
neighborhood and community organizations and will also question a
company’s impact on the local area and the level of responsibility of their
actions. The general public can greatly affect the company as any change
in their attitude, whether positive or negative, can cause sales to go up or
down because the general public is often the company’s customer base.
And finally, the internal publics include all those who are employed within
the company and deal with the organization and construction of the
company’s product.

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 The elements of microenvironment

9.2 – Macro environment

The macro environment refers to all forces that are part of the larger
society and affect the microenvironment. It includes concepts such as
demography, economy, natural forces, technology, politics, and culture.

Demography refers to studying human populations in terms of size, density,

location, age, gender, race, and occupation. This is a very important factor
to study for marketers and helps to divide the population into market
segments and target markets. An example of demography is classifying

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groups of people according to the year they were born. These
classifications can be referred to as baby boomers, who are born between
1946 and 1964, generation X, who are born between 1965 and 1976, and
generation Y, who are born between 1977 and 1994. Each classification
has different characteristics and causes they find important. This can be
beneficial to a marketer as they can decide who their product would benefit
most and tailor their marketing plan to attract that segment. Demography
covers many aspects that are important to marketers including family
dynamics, geographic shifts, work force changes, and levels of diversity in
any given area.

Another aspect of the macro environment is the economic environment.

This refers to the purchasing power of potential customers and the ways in
which people spend their money. Within this area are two different
economies, subsistence and industrialized. Subsistence economies are
based more in agriculture and consume their own industrial output.
Industrial economies have markets that are diverse and carry many
different types of goods. Each is important to the marketer because each
has a highly different spending pattern as well as different distribution of
wealth.

The natural environment is another important factor of the macro

environment. This includes the natural resources that a company uses as
inputs and affects their marketing activities. The concern in this area is the
increased pollution, shortages of raw materials and increased
governmental intervention. As raw materials become increasingly scarcer,
the ability to create a company’s product gets much harder. Also, pollution
can go as far as negatively affecting a company’s reputation if they are
known for damaging the environment. The last concern, government
intervention can make it increasingly harder for a company to fulfill their
goals as requirements get more stringent.

The technological environment is perhaps one of the fastest changing

factors in the macro environment. This includes all developments from
antibiotics and surgery to nuclear missiles and chemical weapons to
automobiles and credit cards. As these markets develop it can create new

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markets and new uses for products. It also requires a company to stay
ahead of others and update their own technology as it becomes outdated.
They must stay informed of trends so they can be part of the next big thing,
rather than becoming outdated and suffering the consequences financially.

The political environment includes all laws, government agencies, and

groups that influence or limit other organizations and individuals within a
society. It is important for marketers to be aware of these restrictions as
they can be complex. Some products are regulated by both state and
federal laws. There are even restrictions for some products as to who the
target market may be, for example, cigarettes should not be marketed to
younger children. There are also many restrictions on subliminal messages
and monopolies. As laws and regulations change often, this is a very
important aspect for a marketer to monitor.

The final aspect of the macro environment is the cultural environment,

which consists of institutions and basic values and beliefs of a group of
people. The values can also be further categorized into core beliefs, which
passed on from generation to generation and very difficult to change, and
secondary beliefs, which tend to be easier to influence. As a marketer, it is
important to know the difference between the two and to focus your
marketing campaign to reflect the values of a target audience.

When dealing with the marketing environment it is important for a company

to become proactive. By doing so, they can create the kind of environment
that they will prosper in and can become more efficient by marketing in
areas with the greatest customer potential. It is important to place equal
emphasis on both the macro and microenvironment and to react
accordingly to changes within them.

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The elements of macro environment

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