Nature, Importance and

Scope of Marketing
LEARNING OBJECTIVES
After studying this chapter you will learn:
1.1 Meaning of Marketing
1.2 Key Concepts of Marketing
1.3 Nature of Marketing
1.4 Importance of Marketing
1.5 Scope of Marketing
Summary
Test Questions

TERM 'MARKETING has been derived from the word 'market'. In common
language, a market is used to refer to the place where buyers and sellers
meet to exchange products and services for money. But in reality, market means
all the buyers and sellers. Buyers and sellers may buy and sell on telephone,
internet and other nmethods without meeting each other. According to Philip
Kotler. tA market is the set of all actual and potential buyerS of a product.)
Markets are of several types. On the basis of geographical area, markets
may be classified as local. regional, national and international. According to the
volume of trade, markets can be wholesale market and retail market. On the
basis of subject-matter, there can be commodity market, capital market and
money market.
Marketing is impossible without buyers and sellers.(Buyers or customers
are the individuals and organizations who seek to satisfy their needs and Wants.
They buy products and services for the satisfaction of their needs.Sellers or
 1.4 PRINCIPLES OF MARKETING

WErketers are individuals and organisations who want to sell products and
SerVices which provide satisfaction. For example, Hindustan Unilever which sells
Luk, Surf, Fair &Lovely and other products is a marketer.

1.1 Meaning of Marketing

Some popular definitions of marketing are given below :

"Marketing includes all activities involved in the creation of place, time and possession utilities."
-Converse, Hugey and Mitchell
Marketing is that phase of business activity through which human wants are satisfied by exchange
of goods and services." -J.F. Pyle
and through which
"Marketing is the business process by which products are matched with market -Cundiff and Still
transfers of ownership are effected"
"Marketing is the process of discovering and translating consumer needs and wants into products
and services, creating demand for these products and services and then in turn expanding this
demand" -H.L. Hansen
Marketing is a social and managerial 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." -Philip Kotler
"Marketing is atotal system of interacting business activities designed to plan, price, promote and
distribute want satisfying products to target markets to achieve organisational objectives."
-W.J. Stanton
"Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and organisational
objectives."
-American Marketing Association

The definition by Converse and others indicates that marketing creates

several types of utilities for consumers. Pyle's definition stresses upon satisfaction
of human wants and exchange of goods and services. Cundiff and Still have
given a customer oriented definition. Matching products with the market means
discovering the requirements of potential customers and supplying the products
which meet these requirements. Transferring ownership implies exchange of
products for money. The customer oriented marketing has given rise to a new
philosophy in business called 'marketing concept'. According to this concept
marketing is an integrated process of identification, assessment and satisfaction
of humnan wants.
Hansen's definition highlights four major dimensions of marketing: (i)
marketing is a process (ii) discovering consumner wants, (iii) converting wants
into products and services, and (iv) creating and expanding demand. Kotler's
definition points out that marketing is a managerial process that must be oriented
towards the needs of consumers. Value in this definition means providing benefits
NATURE, IMPORTANCE AND SCOPE OF MARKETING 1.5

worth their cost. Kotler's also highlights the socal aspeet of marketing. Stanton
has given a systenns oriented definition having several inplications. First.
marketing is a integrated process consisting of many inter-related activities.
Secondly, the entire system of business activitics should be cuIstomer oriented.
Thirdly. marketing begins with the recognition of customer wants and ends only
after the wants are satisfied. Fourthly. the purpose of marketing is to achieve
long-term objectives of business.
The detinition by the American Marketing Association stresses upon
marketing planning. identifies the four major elements-conception (product).
pricing. promotion and distribution of marketing mix, and suggests goal
achievement for both buyers and sellers.

1.2 Key Concepts of Marketing

The basic concepts on which marketing is based are explained below :
1. Needs, Wants and Demands. Marketing begins with human needs and
wants. Needs are feelings of deprivation of some satisfaction. People need food.
air, water, clothing and shelter to survive.(These needs exist in the very nature
of human biology and marketers do not create them. Wants are desires for
satisfaction of needs. Human needs are few but wants are many. Human wants
are continually shaped and reshaped by families, schools and colleges, social
institutions and forces and business firms. Demands are wants for specific
products/services. They are backed by the ability and willingness to buy. Wants
which are supported by purchasing power become demands. Marketers influence
wants and demarnd by making products attractive, affordable and easily available
to the target group of consumers. For example, marketers might promote the
idea that a certain brand of ball pen (e.g., Parker) would satisfy the need for
social status.
2. Products (Goods, Services and Ideas). A product means anything that
can be offered to satisfy a need or want. A product or offering may consist of
three components--physical goods, services and ideas. For example, a fast food
restaurant supplies goods (hamburgers, soft drinks), services (seating and air
to
conditioning), and an idea (save time). The job of a marketer is not just
describe physical features but to sell the benefits built into physical products.
customer's need
Firms which concentrate on the physical product instead of the
have a short-sighted view of marketing.
3. Value, Cost and Satisfaction. BENEFITS IN AN AIRLINE
Value means the customer's estimate of the Asafe, punctual and reliable air service.
product's overall capacity to satisfy his/her Clean aeroplanes.
needs. Cost is the price which the customer Friendly and efficient service.
pays for the product. Consumers choose a Clear and upto date information.
product which will give highest satisfaction when
A fair and satisfactory response
at a given cost. They compare various things go wrong.
benefits of alternative products. The product
 PRINCIPLES OF MARKETING
1.6
selected.
maximum value per unit of money paid is
provide
at 1S estimated to Benefits from a product
Customer perceived value = acquiring the product
Cost of
add to their well
evaluate how much a product / service
Customers also
competitive products and services.
being in comparison with P
of obtaining a
is a value
4. Exchange and Transactions. EXChange u
desired product from someone by offering something inparties better off. Two
normally leaves both the
creating process because it
when they are negotiating and moving towards
exchange, agreement is reached. Thus,
parties are engaged in takes place when the
an agreement. A transaction transaction is an event. The main characteristics
exchange is a process whereas two things of value, agreed upon conditions, a
least system which enforces
of a transaction are: at agreement, and a legal
of
time of agreement. a place
compliance on the part of both the parties.
Goods and Services

Customer
Supplier

Money

FIGURE 1.1:A Simple Exchange Process.

Relationships and Networks. Relationship marketing refers to the

5. relationships with customers, distributors
process of building long-term satisfying
social ties among the key parties
and suppliers. It reaults in strong economic and
business transactions.
thereby reducing timne and costs involved in
someone who seeks one or
6. Marketers and Prospects. A marketer is
He/she is seeking a
more prospects who might engage in exchange of values. to buy something, A
response from the other party, either to sell something or
Needs, Wants and Demands

Marketers and Prospects Products and Services

Exchange, Transactions Value, Cost

and Relationships and satisfaction

FIGURE 1.2: Key Marketing Concepts.

NATURE, IMPORTANCE AND SCOPE OF MARKETING 1.7

prospect is someone who is identified by the marketer as potentially willing and

able to engage in exchange of values. Generally. the marketer plays a more
active role than the prospect. When both the parties actively seek an exchange.
both of them are marketers.
7. Markets. The term 'marketing' has been derived from the word market.
Market is generally understood as the place orinvolving
geographical area where buyers
transfer of ownership of
and sellers meet and enter into transactions
is "an
goods, services, securities, etc. In the words of Clark and Clark, market
area in which the forces leading to exchange of title to a particular product
to travel."
operate, and towards which and from which actual goods tend
which facilitates and
Market also comprises the organisation or institution
market is "any
regulates exchange of goods and services. According to Jevons,
carry on any extensive
body of persons who are in intimate business relation and
transaction in any commodity."2

1.3 Nature of Marketing

definitions reveal the following characteristics of marketing :
These Marketing is not a single activity.
Integrated Process.
1. Marketing is an several interrelated activities. The
interaction
coordination of Marketing is
It is rather a to marketing.
different activities gives a unique character functions of planning and
between far as it involves the
in so concerned with the satisfaction
a managerial process process as it is
control. Marketing also a social
of human needs. satisfy
Customer-oriented. Marketing exists to identify and
2. Marketing is consumers. It starts and ends with the
and potential
the wants of presentis the focus of all marketing activities.
Consumer. Customer several sub
System. Marketing is a system comprising drawn from
3. Marketing is a (information about customers) are
inputs satisfaction) which
systems. Under marketing into outputs (want
society (supra-system) and converted
the Marketing operates within
are supplied to
the society. Environment.
a Part of Total economic, social, legal,
4. Marketing is which comprises
environment influence
total environment the
the framework of and other forces.
Changes in
process as it keeps on
international dynamic
political,
activities. Marketing is, therefore, a
marketing
adjusting to the changing
environment.
creates time, place and possession
Marketing is Creative. Marketing goods for use in future. Place
5. preserving needed most.
utility is created by where they are
utilities. Time
by carrying goods to places
translerring products and services from
utility is created possession utility by
Marketing creates
14.
: Principles of Marketing. p.
and F.E. Clark
1. RD. Clark Theory of Political Economy. p. 54.
2. M. Jevons :
 1.8 PRINCIPLES OF MARKETING

producer to customer. Exchange process between buyer and seller is the essential
element in marketing.
6. Marketing is Goal-oriented. Marketing seeks to achieve benefits for
both buyer and seller. It results in a mutually beneflcial relationship
by satisfying wants of customers and by generating revenue for the seller.
Satisfying human wants is
7. Marketing is an Art as well as a Science. knowledge and
an art requiring continuous practice. It involves application isofa science in the
skills to create utilities for both buyer and seller. Marketing from economiCs,
borrowed
sense that it contains an organised body of knowledge
Marketing is,
psychology. sociology, anthropology, law and other disciplines.
therefore, inter-disciplinary in nature.
buyers and
8. Marketing is Wider than Market. Market implies potential only the buyers and
sellers of a product or service. Marketing consists of not
sellers but all institutions and activities involved in planning, pricing, promoting
and distributing want satisfying products and services.
9. Marketing is Pervasive. Marketing is required in business as well as
marketing is
in social and other organisations. In non-business organisations,
family planning,
necessary for spreading socially useful ideas and programmes of environmental
adult education, communal harmony, national integration,
protection, etc. Such marketing is called social marketing.
The main objectives of marketing are as follows :
marketing
(a) Consumer Satisfaction. The first and foremost objective of
identification and
is to satisfy human wants. Marketing begins with the
understanding of needs of customers. Then products and services which are
useful to customners are created and exchanged for money. After the goods are
sold, after-sale service is provided wherever necessary to satisfy customers.
(b) Organisational Integration. Marketing integrates all activities and parts
of the enterprise to focus on customer needs and preferences. Customer-oriented
philosophy is adopted by all departments to build and maintain mutually
beneficial relationships with customers.
(c) Proftability. Marketing aims at earning profits by creating and satisfying
Customers. When an enterprise serves customners better than its competitors it
earns more profits.
(d) Social Service. Another objective of marketing is to serve the society
by improving standard of living, generating employment, boosting economic
growth, etc. Marketing can carry out social change and can help by providing
environment friendly products and services.

1.4 Importance of Marketing

Marketing is important for the well-being of business as well as the society.
According to Peter F. Drucker, "Marketing is the distinguishing and unique
NATURE, IMPORTANCE AND SCOPE OF MARKETINC 1.9

feature of business. A business is set anart from all other human

by the fact that it mnarkets a product or a service. It is in organisati10n5
marketing that we
satisfy individual and social values, needs and wants, be it through producing
goods, supplying services, fostering innovation for creating satisfaction.
The importance of marketing can be iudged from the following points:
1. Foundation of Business. Marketing is the focal point of all business
activities. The end of all production is consumption and the success ola business
enterprise depends on efficient marketing, Manufacturing, finance. personnel
and other activities of business revolve around marketing. Marketing has become
vital for the survival and growth of business due to large-scale production,
changing technology, and sophisticated tastes and preferences of customers.
Marketing helps to synchronise production with consumption)
2. Source of Revenue. Marketing is the only source of generating revenue
for business. Other activities of business such as manufacturing. finance.
research and development and personnel incur expenditure. Marketing provides
funds for all other departments by generating revenue. Efficient marketing creates
demand and enlarges the market so that more revenue is earned for meeting
costs. Marketing helps to reduce costs through optimum utilisation of
resources.

3. Satisfaction of Customers' Needs. Marketing satisfies human needs

and determines the pattern of consumption. It helps in assessing customer
wants and facilitates transfer of ownership of goods. Marketing creates time.
place and possession utilities. Modern marketing begins and ends with
customers.
4. Higher Standard of Living. Marketing helps in improving the standard
of living by providing new and better varieties of goods to people. It brings to
their knowledge new products and their uses. It brings about improvements in
the quality of life of the common man. It helps to make goods available at low
prices.
5. Gainful Employment. Marketing creates jobs for a large number of
people. Millions of people are employed in the transportation, warehousing.
advertising, selling and distribution operations., Marketing also offers rewarding
jobs by increasing the scale of production. Marketing accelerates banking.
activities.
research, insurance and other economic
that keeps an
6 Development of the Nation. Marketing is the kingpin about rise
ecohomy moving ahead. It increases the national income by bringing untapped
in consumption, production and investment. It mobilises unknown and
resources. Marketing facilitates fuller utilisation of production capacity and other
and other sectors of
assets. It helps in the integration of industry, agriculture entrepreneurial and
the economy. Marketing contributes to the development of
Drucker, The neglect of
managerial talent in the country. According to Peter E keeps economy
an
marketing is one of the main factors which
underdeveloped."
 PRINCIPLES OF MARKETING

1.10
made on the
Making. AI business decisions are information
. Basis for Decision requirements. Marketing provides to
Dasis of market
conditions and
firms decide what to produce, how
basis of which Marketing is beneficial
and knowledge on the and how much to produce.
Produce, when to produce facilitates transfer and exchange of goods
and consumers as it know the needs of consumers. It makes
to both producers the producers to
and services. Itenables Marketing is helpful in deciding
known to consumers.
he goods and servicesand policies for business.
appropriate strategies
Foundation of
Business

Source of
Revenue
Development
of Nation IMPORTANCE OF
MARKETING
Generation of
Higher Living Employment
Standards

Customer
Satisfaction

FIGURE 1.3: Role of Marketing

The end of all production is consumption. Butare there are widespread gaps
as under.
between production and consumption. These gaps
consumers.
1. Space : Huge geographical distances separate producers and
lots and
Goods must be assembled. transported and broken down into small
grades of different quality before they are distributed to the consumers. Marketing
performs these functions and thereby creates place utility.
2. Time : There is a long time interval between production and consumption.
During this interval, investment (financing), storage and insurance of goods are
required. Marketing creates time utility by performing these functions.
3. Knowledge : Often producers and consuners are unknown to each other.
Marketing brings products and services to the knowledge of consumers through
advertising and personal selling. Knowledge utility is created by bridging gaps
in perception of producers and consumers.
4. Ownership : Transfer of ownership of products from producer to consumer.
requires payments in money, customer contact and termination of sale. Marketing
creates exchange utility by performing these functions.
NATURE, IMPORTANCE AND SCOPE OF MARKETING 1.11

5. Value : Value means the price of a product or service. It bridges the gap
between the cost of production and the customer's ability and desire to pay.
Marketing bridges this gap through pricing and terms of sale.
TABLE 1.1: Role of Marketing in Bridging Gaps
Utilities Created
Gaps Marketing functions
Space Assembly, transportation, distribution Place utility
Time utility
Time Storage, Financing and risk taking
Knowledge Advertising, personal selling Knowledge utility
Ownership Banking, negotiations Exchange utility
Pricing, terms of sale
Possession utility
Value
and provides the much needed
Marketing generates revenue for business
enterprise.
funds for all other departmnents and activities of an
business because it keeps the
Marketing is said to be the eyes and ears of
environment and informs of changes in the
business in close contact with its Marketing is essential for the very survival
wants and preferences of customers. has to
growth of business. Business aims at profit. To realise profit, a sale
customer.
and customer has to be created. To create
the
be made. To make the sale, a customer, his needs have to be met. To
mneet
satisfied. To satisfy the
he must be essential.
customer's needs, marketing is the
equally important at the macro level. It contributes to
Marketing is ways :
and social development of a nation in the following
economic services
Cost: A nation's income is composed of goods and
1. Reduction In
efficiency of marketing reduces the
increase in the
which money can buy. Any prices to consumers. These in turn help to improve
cost of distribution and lesser per unit by
people. Marketing also helps to reduce cost
the real income of and production.
increasing the volume of sales Marketing contributes to national income
Income:
2. Increase In National new products and
services to satisfy
firms create and sell use of the country's
and wealth. Business they make productive
to do s0,
human wants. In orderexploitation of national resources generates income and
latent resources. Fuller developing
developed countries is more advanced than in
wealth. Marketing in increase exports and foreign exchange earnings
COuntries. Marketing also helps to
of a nation.
Generation: Marketing generates employment. A large
of
3. Emnployment gainfully employed in the distribution and marketing
number of people are addition, marketing generates employnent by increasing
products and services. In
volumes.
production and trade standard of
Standard of Living: Marketing helps to improve and better
4. Higher bringing new
By increasing per capita income and by the quality of life in
living of people. tO consumers,
marketing raises
products and services
 1.12 PRINCIPLES OF MARKETING

Society. It is marketing, which has converted yesterday's luxuries into today's

necessities.
3. Entrepreneurial Development: In a developing country like India,
marketing is all the more important. It helps to make fuller utilisation of untapped
assets and energies. Marketing contributes to the development of entrepreneurial of
and managerial talent. Development of marketing leads to the integration
agriculture, industry and other sectors of the economy. Efficient marketing is
an engine of growth in developing countries. non-Government
6. Social Welfare: Marketing enables the Government and
organisations to eliminate social evils like insanitation, illiteracy, drinking,
that family
gambling. dowry system, racism, etc. It is through social marketingprograrmmes
planning. pollution control, AIDS awareness and other socially useful
have achieved a reasonable degree of success.

1.5 Scope of Marketing

The scope of marketing is very wide comprising all the activities performed to
make products and services available to consumers for satisfying their wants.
The main functions involved in marketing are as under
1. Contractual : Searching for buyers and sellers.
2.Merchandising : The fitting of goods to market requirements.
3.Pricing:The selection of price to induce customers to accept the
goods.
4.Propaganda : The creation of customers.
5.Physical distribution : The transporting and storing of goods.
6.Termination : The end of the marketing process.
1. The Contractual Function. It implies the process of searching out the
buyers. It involves fnding outthe potential buyers, where they are located and
how they could be reached. Further activities involved are : selecting a proper
distribution channel, choosing appropriate media to reach the customers, and
discovering consumer needs. From the point of view of the buyer, this function
consists in fnding the most suitable source for the goods.
2. The Merchandising Function. This is a function that involves the
coordination of selling with production. It includes the process of selecting the
product to be produced and stocked with necessary emphasis on the size,
appearance, form, quantities to be bought, time of purchase or production, etc.
(The term is most precisely defined as product planning.) This function helps
tomake an adjustment of merchandise produced or offered for sale to customer
demand.
3. The Pricing Function. Pricing function is mainly based on economic
values of a product to be bought or sold. Pricing is very important and should
be given a greater role.
 MATURE, IMPORTANCE AND SCOPE OF MARKETING 1.13

Aproduct is finally approved by the consumers only if the price /s acceptable

to them. This makes it necessary on the part of scllers to evaluate the possible
prices 1or the products even before the products are brought to markets. In
spite o1 past experience and most scientific approach. pricing function proves
to be difficult. A perfect price cannot be reasoned out.
4. The Propaganda Function. This function conprises all methods used
by the sellers to influence and induce the buyers to buy their products. Normally.
it would include all advertising and personal selling activities. These activities
aim at increasing sales.
5. The Physical Distribution Function. This function relates to
transportation and storage activities which have been discussed earlier.
6. The Termination Function, This function is the final link in the process
of marketing. where the seller and the buyer arrive at an agreenent. Three
essentials are settled at this stage: the Quality, the Quantity and the Price of
the product to be exchanged. Since these elements are subject to negotiation.
the process is also termed as the Negotiation Function'. It is remarked that the
termination function is the consummative act for which all other functions have
has to
been preparatory.' This function includes a series of jobs a seller
contemplate to complete the whole of mnarketing process. They include
determination of terms of sale, delivery dates, credit arrangements, the guarantees
marketing does not
and service policies. However, it should be remembered that remains a
end with the payment for and the acceptance of goods. There often
also to ensure
moral and legal obligation on the part of the seller that he has
satisfaction of consumers,
Marketing is involved in all of the following:
marketing efforts
(i) Goods: Physical goods constitute the bulk of
marketing of services gains
(iü) Services: As an economy grows,
significance.
(iüi) Events: Marketing is involved in time based events such as olympics,
performances.
film festivals, book fair, trade shows and artistic
a big business. Film Stars,
(iv) Persons: Celebrity marketing has becomecelebrity marketing.
Sports starts, politicians, CEOs all need
religious places, etc. need
(v) Places: Hill stations, monuments,
marketing.
a major business.
(vi) Properties: Real estate marketing has become
organisations hire professionals to
(vii) Organisations: Business and other schools and colleges also do the
build gOod public image. Universities,
samc.
cancer awareness, blood donation,
(viii) Ideas: Family planning, adult literacy,
etc. are ideas marketed.
or orchestrating gods and
(ix) Experiences: These are marketed by
services.
 PRINCIPLES OF MARKETING

1.14

SUMMARY distribute want

designed to plan, price, promote and
total system
eaning : Marketing is a for target markets. and ideas), (ii) Values
satisfying products and services Products (Goods, services
Needs, wants and demands, (ii) Relationships and networks (vi) Marketers
Key Concepts : (i) (v)
satisfaction, (iv) Exchange and transactions,
Cost and Markets. environment, creative, goal
and Prospects, and (vii) system, part of
integrated, customer-oriented
Nature: Marketing is pervasive. Satisfaction of customers
oriented, art as well as science, business, (i) Source of revenue (iii)
of Development of the nation,
Importance : (i) Foundation employment, (vi)
Higher standards of living, (v) Gainful
needs, (iv)
(vii) Basis for decision-making. knowledge, ownership and value. function, (iv) Propaganda
gaps of space, time,
Marketing fills function, (iii) Pricing
function, (i) Merchandising
Scope : (i) Contractualdistribution function.
function, (vi) Termination
function, (v) Physical
TEST QUESTIONS

explain its nature.

1. Define marketing and business". In the light of this statement, explain
foundation of
2. "Marketing is the marketing.
the importance of
concepts of marketing. customer".
3. Discuss in brief the key definition of business purpose: to create a
4. There is only one valid
role of marketing.
Explain, bringing out clearly thedelivery of standard of living". In the light of this
creation and
5. "Marketing is the marketing.
statement, describe the importance of development". Discuss the role of marketing
of economic
6. "Marketing is the multiplier like India.
in a developing country marketing". Do you agree? Give reasons
in support
types of organizations need
7. "All
of your answer.
merely selling". Examine this statement and discuss the nature
8. "Marketing 'is not (DU, 2007)
and scope of marketing. (DU. 2010]
consumer needs". Elucidate.
9. "Marketing involves satisfaction of
Management? What are the important functions
10. What do you mean by Marketing
of globalisation.
to be preformed by marketing manager in the era
is the marketing concept?
11. Distinguish between 'Market' and Marketing'. What
responsibilities of a marketing
12. Define marketing. What are the tasks and
manager?
has travelled a long distance since the
13. "The managerial orientation in marketingDiscuss.
emergence of modern industrialization".
14. Explain the scope of marketing.
15. Explain the role of marketing in business.
16. Explain the objectives of marketing
17. Distinguish between:
(a) Market and Marketing.
(b) Consumer and customer.