UNIT-1 FUNDAMENTALS OF MARKETING:

Meaning of Marketing:

Marketing are activities of a company associated with buying and selling a product or service. It
includes advertising, selling and delivering products to people. People who work in marketing
departments of companies try to get the attention of target audiences by using slogans, packaging
design, celebrity endorsements and general media exposure.

Definition of Marketing
Dr.Philip Kotler, the S.C. Johnson & Son Distinguished Professor of International Marketing at
Northwestern University's Kellogg School of Management, is widely regarded as the Father of
Modern Marketing. He trained as an economist at the University of Chicago, learning from the
legendary Milton Friedman. He was born on 27 May 1931 in Chicago.

Dr. Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering
value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and
desires.

The following definitions were approved by the American Marketing Association Board of
Directors, “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” (Approved July 2013).

The perspectives on marketing:

Marketing perspectives has so many different definitions and foundations. It has evolved over
time into so many different layers. Practitioners perceive marketing to be a process of planning
and implementing the development and distribution of goods to fulfill and produce revenue.
Companies perceive marketing to include functional activities which can grow a company.

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Different perspectives on marketing:

The rare concept of marketing dates back to ancient times. However the perspective of
marketing varies from different cycles. ... Marketing is defined as the theory and practice of
identifying the needs/ wants and leveraging distribution of goods and services in a competitive
society.

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Definition of Marketing Concept

The marketing concept is a business idea, which states that the company’s success lies in
becoming more effective than the rivals, in producing, delivering and communicating greater
customer value to the target market.

It relies on four elements, i.e. target market, integrated marketing, customer needs and
profitability. The concept begins with the specific market, stresses on customer needs,
coordinates activities that influence customers and reaps profit by satisfying customers.

Definition of Selling Concept

The selling concept holds that if businesses and consumers are left isolated, then the consumers
are not going to buy ample products manufactured by the company. The concept can be applied
belligerently, in the case of goods are not sought, i.e. the goods which the customer don’t think
of purchasing and also when the firm is operating at more than 100% capacity, the firm aims at
selling what they produce, but not what the market demands.

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Basis for Comparison Selling Concept Marketing Concept
Meaning Selling concept is a business Marketing concept is a
notion, which states that if business orientation which
consumers and businesses talks about accomplishing
remain unattended, then there organizational goals by
will not be ample sale of becoming better than others in
organization's product. providing customer
satisfaction.
Associated with Compelling consumer's mind Services towards consumer's
towards goods and services. mind.
Starting point Factory Target Market
Focuses on Product Customer needs
Perspective Inside-out Outside-in
Essence Transfer of title and Satisfaction of consumers
possession
Business Planning Short term Long term

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Orientation Volume oriented Profit oriented
Means Heavy selling and promotion Integrated marketing
Price Cost of Production Market determined

Various factors affecting marketing function.

The environmental factors that are affecting marketing function can be classified into:

1) Internal environment and

2) External environment

Internal Environment of Marketing:

This refers to factors existing within a marketing firm. They are also called as controllable
factors, because the company has control over these factors:

a) It can alter or modify factors as its personnel, physical facilities, organization and function
means, such as marketing mix, to suit the environment.

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There are many internal factors that influence the marketing function, they are:

Top Management: The organizational structure, Board of Director, professionalization of

management. Factors like the amount of support the top management enjoys from different
levels of employees, shareholders and Board of Directors have important influence on the
marketing decisions and their implementation.

Finance and Accounting: Accounting refers to measure of revenue and costs to help the
marketing and to know how well it is achieving its objectives. Finance refers to funding and
using funds to carry out the marketing plan. Financial factors are financial policies, financial
position and capital structure.

Research and Development: Research and Development refers to designing the product safe
and attractive. They are technological capabilities, determine a company ability to innovate and
compete.

Manufacturing: It is responsible for producing the desired quality and quantity of products.
Factors which influence the competitiveness of a firm are production capacity technology and
efficiency of the productive apparatus, distribution logistics etc.,

Purchasing: Purchasing refers to procurement of goods and services from some external
agencies. It is the strategic activity of the business.

Company Image and Brand Equity: The image of the company refers in raising finance,
forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or
sales contract, launching new products etc.

In organization, the marketing resources like organization for marketing, quality of marketing,
brand equity and distribution network have direct bearing on marketing efficiency. They are
important for new product introduction and brand extension, etc.

External Environment of Marketing.

External factors are beyond the control of a firm; its success depends to a large extent on its
adaptability to the environment.
The external marketing environment consists of:

 Micro environment and

 Macro environment,

a) Micro environment: The environmental factors that are in its proximity. The factors
influence the company’s non-capacity to produce and serve the market. The factors are:

1) Suppliers: The suppliers to a firm can also alter its competitive position and marketing
capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and capital.
According to Michael Porter, the relationship between suppliers and the firm epitomizes a power

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equation between them. This equation is based on the industry condition and the extent to which
each of them is dependent on the other.

The bargaining power of the supplier gets maximized in the following situations:

a) The seller firm is a monopoly or an oligopoly firm.

b) The supplier is not obliged to contend with other substitute products for sale to the buyer
group.

c) The buyer is not an important customer.

d) The suppliers’ product is an important input to the buyer’s business and finished product.

e) The supplier poses a real threat of forward integration.

2) Market Intermediaries: Every producer has to have a number of intermediaries for

promoting, selling and distributing the goods and service to ultimate consumers. These
intermediaries may be individual or business firms. These intermediaries are middleman
(wholesalers, retailers, agent’s etc.), distributing agency market service agencies and financial
institutions.

3) Customers: The customers may be classified as:

1) Ultimate customers: These customers may be individual and householders.

2) Industrial customers: These customers are organization which buys goods and services for
producing other goods and services for the purpose of other earning profits or fulfilling other
objectives.

3) Resellers: They are the intermediaries who purchase goods with a view to resell them at a
profit. They can be wholesalers, retailers, distributors, etc.

4) Government and other non-profit customers: These customers purchase goods and services
to those for whom they are produced, for their consumption in most of the cases.

5) International customers: These customers are individual and organizations of other

countries who buy goods and services either for consumption or for industrial use. Such buyers
may be consumers, producers, resellers, and governments.

6) Competitors: Competitors are those who sell the goods and services of the same and similar
description, in the same market. Apart from competition on price, there are like product
differentiation. Therefore, it is necessary to build an efficient system of marketing. This will
bring confidence and better results.

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7) Public: It is duty of the company to satisfy the people at large along with its competitors and
the consumers. It is necessary for future growth. The action of the company does influence the
other groups forming the general public for the company. A public is defined as ‘any group that
has an actual or potential interest in or impact on a company’s ability to achieve its objective.’
Public relations are certainly a broad marketing operation which must be fully taken care of.

Macro Environment:   

Macro environment factors act external to the company and are quite uncontrollable. These
factors do not affect the marketing ability of the concern directly but indirectly the influence
marketing decisions of the company.

These are the macro environmental factors that affect the company’s marketing decisions:

a) Demographic Forces: Here, the marketer monitor the population because people forms
markets. Marketers are keenly interested in the size and growth rate of population in different
cities, regions, and nations; age distribution and ethnic mix; educational levels; households
patterns; and regional characteristics and movements.

b) Economic Factors: The economic environment consists of macro-level factors related to

means of production and distribution that have an impact on the business of an organization.

c) Physical Forces: Components of physical forces are earth’s natural renewal and non-renewal

resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non-
renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components
quite often change the level and type of resources available to a marketer for his production.

d) Technological Factors: The technological environment consists of factors related to

knowledge applied, and the materials and machines used in the production of goods and services
that have an impact on the business of an organization.

e) Political and Legal Forces: Developments in political and legal field greatly affect the
marketing decisions. sound marketing decision cannot be taken without taking into account, the
government agencies, political party in power and in opposition their ideologies,
pressure groups, and laws of the land. These variables create tremendous pressures on marketing
management. Laws affect production capacity, capability, product design, pricing and
promotion. Government in almost all the country intervenes in marketing process irrespective of
their political ideologies.

f) Social and Cultural Forces: This concept has crept into marketing literature as an alternative
to the marketing concept. The social forces attempt to make the marketing socially responsible. It
means that the business firms should take a lead in eliminating socially harmful products and
produce only what is beneficial to the society. These are numbers of pressure groups in the
society who impose restrictions on the marketing process.

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EVOLUTION TO GLOBAL MARKETING

Global marketing is not a revolutionary shift, it is an evolutionary process. While the following
does not apply to all companies, it does apply to most companies that begin as domestic-only
companies.

1. Domestic marketing

A marketing restricted to the political boundaries of a country, is called "Domestic Marketing".

A company marketing only within its national boundaries only has to consider domestic
competition. Even if that competition includes companies from foreign markets, it still only has
to focus on the competition that exists in its home market. Products and services are developed
for customers in the home market without thought of how the product or service could be used in
other markets. All marketing decisions are made at headquarters.

2. Export marketing

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Export marketing is the practice by which a company sells products or services to a foreign
country. Products are produced or distributed from the company's home country to buyers in
international locations

3. International marketing

If the exporting departments are becoming successful but the costs of doing business from
headquarters plus time differences, language barriers, and cultural ignorance are hindering the
company’s competitiveness in the foreign market, then offices could be built in the foreign
countries. Sometimes companies buy firms in the foreign countries to take advantage of
relationships, storefronts, factories, and personnel already in place.

4. Multinational marketing

Multinational marketing is the process of advertising and selling products and services to
customers around the world. It is sometimes called global marketing because it allows
companies, even smaller-sized ones, to expand into new markets via the Internet, international
distribution and competitive pricing.

5. Global marketing

Global marketing is more than simply selling a product internationally. Rather, it includes the
whole process of planning, producing, placing, and promoting a company’s products in a
worldwide market. Large businesses often have offices in the foreign countries they market to;
but with the expansion of the Internet, even small companies can reach customers throughout the
world

ELEMENTS OF THE GLOBAL MARKETING MIX

The ―Four P’S of marketing: product, price, place and promotion are all affected as a company
moves through the five evolutionary phases to become a global company. Ultimately, at the
global marketing level, a company trying to speak with one voice is faced with many challenges
when creating a worldwide marketing plan. Unless a company holds the same position against its
competition in all markets (market leader, low cost, etc.) it is impossible to launch identical
marketing plans worldwide.

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 1. Product

A global company is one that can create a single product and only have to tweak elements for
different markets. For example, Coca-Cola uses two formulas (one with sugar, one with corn
syrup) for all markets. The product packaging in every country incorporates the contour bottle
design and the dynamic ribbon in some way, shapes, or form. However, the bottle or can also
includes the country’s native language and is the same size as other beverage bottles or cans in
that same country.

2. Price

Price will always vary from market to market. Price is affected by many variables: cost of
product development (produced locally or imported), cost of ingredients, cost of delivery
(transportation, tariffs, etc.), and much more. Additionally, the products position in relation to
the competition influences the ultimate profit margin. Whether this product is considered the
high-end, expensive choice, the economical, low-cost choice, or something in-between helps
determine the price point.

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 3. Place

How the product is distributed is also a country-by-country decision influenced by how the
competition is being offered to the target market. Using Coca-Cola as an example again, not all
cultures use vending machines. In the United States, beverages are sold by the pallet via
warehouse stores. In India, this is not an option. Placement decisions must also consider the
products position in the market place. For example, a high-end product would not want to be
distributed via a dollar store in the United States. Conversely, a product promoted as the low-cost
option in France would find limited success in a pricey boutique.

4. Promotion

After product research, development and creation, promotion (specifically advertising) is

generally the largest line item in a global company’s marketing budget. At this stage of a
company’s development, integrated marketing is the goal. The global corporation seeks to reduce
costs, minimize redundancies in personnel and work, maximize speed of implementation, and to
speak with one voice. If the goal of a global company is to send the same message worldwide,
then delivering that message in a relevant, engaging, and cost-effective way is the challenge.

Effective global advertising techniques do exist. The key is testing advertising ideas using a
marketing research system proven to provide results that can be compared across countries. The
ability to identify which elements or moments of an advertisement are contributing to that
success is how economies of scale are maximized. Market research measures such as flow of
attention, flow of emotion and branding moments provide insights into what is working in an
advertisement in any country because the measures are based on visual, not verbal, elements of
the advertisement.

Advantages

1. The advantages of global market we can introduce our product by using advertizing

2. Economies of scale in production and distribution

3. Consistency in brand image

4. Uniformity of marketing practices

5. Helps to establish relationships outside of the "political arena"

6. Benefits of e-Marketing over traditional marketing

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Disadvantages

1. Differences in consumer needs, wants, and usage patterns for products Differences in
consumer response to marketing mix elements
2. Differences in brand and product development and the competitive environment
3. Differences in the legal environment, some of which may conflict with those of the home
market 
4. Differences in the institutions available, some of which may call for the creation of entirely
new ones (e.g. infrastructure) 
5. Differences in administrative procedures and product placement in the market.

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