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    Marketing Management Unit-1 TP

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    Introduction to Marketing (Unit 1) UNIT 1 Introduction to Marketing EE Learning Objectives This unit gives an overview to marketing management. After studying this unit one would be able to: + Understand the basic concepts and role of marketing and its management. * Describe the core concepts of marketing, * Understand the value delivery process * Understand consumer buying behaviour. 1.1.1. Introduction In a narrow view, marketing is an activity of selling and purchasing of goods or services. But, the nature and scope of marketing is a much wider perspective. Along with the fulfilment of needs and wants related to the sale and purchase of goods and services, it encompasses the entire process of customer. satisfaction. Hence, the process involves identification of consumers’ néeds and wants and fulfilling it to the extent till the customers are pleased and contented, With the changing marketing environment, the taste and preferences of the customers are also changing. Therefore, marketing also considers the changing requirements of the consumers apart from providing them with basic products or services. In totality, marketing comprises of all activities like producing, interacting, distributing and_—_ exchanging roducts/services which offer value to the customers. According to William J. Stanton, “Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want- satisfying products and services to the present and potential customers”. According to Cundiff and Still, “Marketing is the business process by which products are matched with the market and through which the transfers of ownership are affected” According to American Marketing Association (new definition), “Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders” 1.1.2. Nature of Marketing ‘The nature of marketing is as follows: 1) Marketing is an Integrated Process: Instead of being a sole activity, marketing is .a cohesive process of numerous allied activities. The integration of different activities makes it distinct from other features of marketing. It ‘comprises of functions related to planning and control. Marketing also serves the social needs of society by satisfying the consumers’ needs and wants. 2) Marketing is Customer-oriented: Customer is the centre of focus for all activities related to marketing. The existence of marketing is to identify and satisfy the needs and wants of present consumers and future prospects. 3) Marketing is a System: Marketing functions as @ system in which several sub-systems are involved. In marketing, society acts as a source of input and these inputs are processed into outputs which are further provided to the society. 4) Marketing is Creative: Time, place and Possession utilities are created by marketing. The creation of time utility is done by conserving products for future use, 2 ‘», By delivering products to places where they are Renuinely required, creates place utility. While, Possession utility is created by transferring [Products and services from producer to customer. ‘However, in all these marketing activities the Tost important factor is the exchange process between buyer and seller. 5) Marketing is Goal-oriented: The goal-oriented characteristic of marketing is considered the ‘most significant. It provides benefits to both, i buyer and seller. They share mutual benefits by fulfilling the customers’ needs and eaming profits from customers through sale of products and services. 6) Marketing is Universal: Marketing is not limited to business activities. It plays a key role in other organisations also. In social and other organisations, marketing is used to promote programmes and initiatives such as adult education, family planning, public harmony, environmental protection, national integration, etc. This form of marketing is © known as social marketing. 7) Marketing is a Science as well as an Art: ‘Marketing is closely related to social and behavioural sciences, though it has developed ‘Law, Sociology, Information Technology, etc. ‘The marketing conditions also depend upon the factors affecting the target market such as ‘political environment, philosophy, demographic ‘environment, statistics, mathematics, etc. ) Marketing is an Exchange Activity: ‘Marketing is an on-going and dynamic practice. “Therefore, it involves exchange of technology, ideas, services and information. This commercial exchange activity helps the ‘marketers to produce better and quality products and services for customers. MBA Pint Semener (Manageent Marketing) AKTY .ds and wants of the 1, identifying the nee me, en de le ectively than the competitors using relevant marketing mix. Scope of Marketing = ‘The major driving force of marketing is to achieve the organisational goals by harmonising activities aoe cirbelp to attain custome satisfaction. Therefore, ivxeting, bas wide scope in relation with its iiversal activities. The scope of marketing i described below: 1) Analysing ‘ 1.1.3. .. This is neces ooaall the best possible way. Finally, production of goods and services is carried out ‘on the basis of consumer preferences. 2) Analysing Consumer Behaviour: An effectual analysis of consumer behaviour is essential to identify the pattem of consumer buying. This enables the marketers to segment and target the market. 3) Product Planning and Development: The ‘marketing process initiates with idea generation and ends up with product development. Product planning involves numerous activities such as branding, packaging and product line | decisions. 4) Pricing Decisions: Product pricing is also defined by marketers. The pricing policy varies from product to product. Different factors like marketing goals, stage of product life cycle, competition level, etc., are considered for Designing of an effective distribution channel for improved sales and profit is also an important scope of marketing. The study of distribution channels helps to cater large number of customers at low distribution cost. 6) Promotion: Marketing is also responsible for promoting products of an organisation. Marketers use different techniques like advertising, sales promotion, personal selling, etc, An appropriate promotion mix is designed t0 achieve marketing objectives, 7) Company Analysis: In marketing, company analysis is carried out by evaluating the cost ‘Structure and company's resources. The actual Position of the company is estimated on the basis Of its competitors. Marketers can also determine the profit eared through different product offerings across different customer segments Introduction to Marketing (Unit!) with the help of accounting department. Another technique of company analysis can be brand auditing. This highlights the market potential of a brand in the market. 8) Competitor Analysis: This analysis is done to determine the strengths and weaknesses of various competitors in the market. A detailed evaluation of competitors’ sources of profits, competencies, resources, cost structure, and differentiation and positioning strategies is done to figure out the most competitive organisation. 1.1.4. Core Concepts of Marketing The first step in the process of marketing is the determination of consumer needs and demands Today, consumer is the king of the market. The significant change in the demand-supply condition is ‘one major reason behind consumerism. Unlike earlier times, the demand for a product is less than its market supply. Marketers use different tactics t0 retain and satisfy their customers in this competitive market. The core concepts related to marketing, considered as its elements are given below: Core Concepts of Marketing Neads, Wants and Demands ‘Goods- Services Continuum Products LY Customer Value ‘Exchange and Transactions Relationship Marketing & Networks ae Marketers 11. Needs, Wants and Demands The three basic elements of marketing i.e., needs, wants and demands are the major factors of consumer motivation to buy a product. The desire of consumer to satisfy his needs and wants, gives a kick start to the marketing activities. Needs refer to the basic necessities of human beings related to their inherent characters. The need fulfilment criterion depends upon the cultural and Social environment of the society. For example, shelter is the basic need of an individual, as one cannot reside on roadside or on footpaths. Wants refer to the desires for particular things which are unified with the needs of the individual, For example, for fulfilling the need of shelter, a person may desire of a house in a clean locality. In comparison with the needs, individuals “have ‘numerous wants. ‘These wants are constantly re-created dug to: the influence of social institutions and factors. In. the present scenario, individuals have boundless wants but the resources to fulfil those wants are scarce. ‘Therefore, consumers wish to spend their money only on those products which ensure maximum yalue and satisfaction. Demands are those definite wants for any product(s) which are supported by the willingness and ability to buy them. The purchasing power of the consumers converts their wants into demands. In marketing, a marketer is more interested to know about the ‘consumers having the purchasing power rather than those who only desire to have a product. For example, a person may desire of a penthouse by the seaside, but due to low purchasing power his demand remains ineffective. 1.1.4.2. Goods-Services Continuum In general, organisational products are a composition of goods and services. According to the goods- services continuum in figure given below, some products may have either tangible (e.g, salt) or intangible (e.g., teaching) characteristics. However, there are some products which provide both goods and services at the same time, like travelling via airplane. The position of product on the continuum enables the marketer to spot potential opportunities. ‘At the tangible (pure goods) end of the continuum, only those goods are positioned which are not related to services. At the intangible (pure services) end of the continuum, only those services are positioned which have no association with physical products. ‘The middle portion of both the ends consists of the products which have combined characteristics of both goods and services, eg, goods like air- conditioners also require services like installation and delivery, besides being a product in itself. Alll the three positions involved in goods-services continuum, are described below: 1) Goods Dominated Products: These types of products are tangible in nature and are complemented with supporting services. For example, one month warranty or toll-free services are mainly offered by the company to increase the value of the product. The strategy of associating the supporting services with the main product is called ‘embodying’, The term embodying is used by IT industry, where companies use this strategy to enter. into international market which is flooded with low- cost products having inappropriate user- guidance, Marketing) AKTU. (MBA First Semester (Management. ices combine to form /, both goods and services & ase a Eauipment-Based “ rap meat in middle of the continuum, as they Somplete product. For example, rests Roods (e.g. expensive crockery) and serving’ (eg, skilled manpower). ‘cate of cn) Tangitity Desree of ntangbilty a Degree of Tangibtity expected to yield Satisfaction of benefits to the buyer”, In marketing, product is anything tangible or i Sheit legal and tax intangible. © eee NuCN ia. cdtered pe ‘work. fitness trainers have a consumption in order to Satisfy consumer needs, grat business in mostly all cities. Even People : hire professional dog walkers for their pets For example, in m: + Product is brought Material an @ finished good, 1.1.4.3. Products r di Product is anything that is offered for sale, It is a in the market to satisty Customer needs and w. ile. i Rbeass where a thing is produced as a result ot ‘growth, mans: While in retailing, Products are known as “merchandise labour, thought, or activity. A product can be mayeie, Spice cx oven an tec, W fony be The level of customer Satisfaction Produced immediately or gradually. It may asa'bee can (y ‘i for a product derived on several bases ike Prot resultant of mental efforts or an unconscious effort quantity, brand name, such as seasonal fruits, by-products, ete. “Sage, Warranty, serviee “ATANY, Packaging, ete, AFAMty, service Introduction to Marketing (Unit 1) 1.1.4.4. Utility In economics, utility is an important concept which is related to marketing. The term utility is a measure of absolute desirability, or consumption, or satisfaction towards a particular product. It explains the ability of goods or services to satisfy the needs and wants of the consumers. The measure of utility helps to identify the increase or decrease in the level of utility. It may also be used to explain the economic behaviour in the form of number of attempts required to increase a product’s utility. The basis of exchange process comprises of products and/or services and marketing of these products and/or services. Both these elements combine to generate utility. There are four types of utilities, viz., form, time, place and ownership, where the ‘form utility’ of goods or services is created by the production process and marketing process is responsible for the remaining three, Richard Buskirk has introduced four types of utilities that describe marketing as an activity. They are as follows: 1) Form Utility: The process of product planning and development combines to create form utility. This involves various stages from converting the raw material to the development of a finished product. Finally, the form defines the utility of the product. 2) Time Utility: Time utility occurs when the product is made available to cater the consumer's demand at his/her time of desire. This can be made possible when the goods manufactured are delivered through proper channels at right time to the final destination. 3) Place Utility: Availability of a product at right place, keeping in mind the convenience of the customer, creates place utility. This can be done by providing the product at the place, where it is required the most by using different channels of distribution. 4) Ownership Utility: When a seller legally transfers his ownership over products to the buyer through a sales operation, ownership utility is created. The products remain liable to the producer, retailer or seller until it is purchased by someone else. 1.1.4.5. Customer Value Value refers to the worth or usefulness of goods or services. The best definition of value from consumer's perspective is the difference between a potential customer's evaluation of the benefits and 15 costs of one product in comparison to others. The value can be generated only when product and user come together. Therefore, the level of value ‘generated is determined in terms of high satisfaction, satisfaction or dissatisfaction. It also affects the customer decision-making and long-term relationship with the organisation. Value is a much broader concept than the price of a product. The characteristics of value are multi- dimensional and it offers products of high quality, low price and excellent service experience to specific target markets. All the elements such as price, quality, service, company’s image and intangible factors help to define company’s value proposition In general, the product benefits can be evaluated on the basis of customer's satisfaction and competitor's offerings. By using the formula given below, value can be calculated: Customer Perceived Value = Benefits Derivingfrom a Product (Cost of Acquiring the Product From the above equation, it can be concluded that the value from a product is only created, when the perceived benefits are more than the actual cost of the product. Another crucial factor for value creation is that the value of firm's product should also be more than the competitor's product. Applying this equation has proved beneficial to marketers. Now, they know the two significant approaches which are most desirable to survive in any market. The first approach is to increase the perceived benefits and the other one is to lower the cost of product. Following the two approaches, it is widely preferable to focus ‘on providing highly perceived benefits rather than ‘competing on prices. Enhanced customer value is the only way through which marketing concept can be implemented. The marketing concept is all about customer satisfaction and this can be achieved by creating and delivering customer value. It can be further said that, customer value is the crux of marketing. 1.1.4.6. Cost, Satisfaction and Quality In general, cost is the amount paid to buy or obtain goods or services. In marketing, cost is the estimated price of the product which is paid to satisfy one's needs at the lowest possible cost of ownership or usefulness. Satisfaction is an attitude towards a particular product or service after its consumption. A consumer feels satisfied when his/her needs meet their expectations. Customer satisfaction is the central focus of all marketers. It is very essential for marketers adopt customer-focused and market-oriented approach to reach theis goal, ie., Customer satisfactior n. It also helps to predict the future buying intentions of the consumers, when a customer feel Fav uming a particular product, then he/ she shares his/her experience with others, also known positive Wordtof-mouth, Whereas, an unsatisfied cestomer ‘Who wants to switch ‘Over to another product will also. Share his/her experience, which is known as negative Reeofimouth. ‘The widely used approach by ining the factors causing the is disconfirmation pattern, the difference between pre. Purchase expectation Is satisfied after and post-purchase perception, According to Peters and Olson, ‘Pre-purchase Pere, TO ADRIES abou rmnticipetcd Performance of the product; _post-purchase Sonsumer’s thoughts about how well the product Performed.’ In other words, Post- Porchace

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