MODULE 5

INTRODUCTION TO MARKETING CONCEPT OF MARKETING

Marketing is a very important function in every business and is an essential part of any
organization. It is becoming very crucial in the present environment of competition, changes in the
technology, consumer likes and dislikes.

Marketing is an art of selling a product to a consumer, a buyer. The process of sale and purchase is
called as a transaction. Place where the transaction takes place is known as Market.

In olden times sales or purchase was being performed through a method of Barter System. Things
were
exchanged for items. As the requirements of people are increasing day by day, the barter system is
replaced with a common mode known as Currency (Money).

Every country has his own currency and its purchase power is different depending upon the country’s
economy and self-sufficiency. Methods, systems of marketing have been changed a sea change since
the man has found the importance of marketing and competition in the market.

Marketing of any product directly depends upon the requirements of the market variable which is
known as Demand and Supply.
If demand is very high and supply is less - Selling a product is no problems at all.
If supply exceeds the demand – in such a case it becomes much more difficult to sell.

Under the condition, when the supply is more and it is difficult to sell, marketing skills and
individual
/ organizational strategies will start playing the role. Hence selling a product / service to other needy
is a part of skills of a marketing personnel.

Definition of Marketing:
1.) It is defined as “the management process through which goods and services move from concept
to the customer. It includes the coordination of four elements called the 4 P’s of Marketing.,
Product,
Price, Place and Promotional strategy.”

1. Identification, selection, and development of a Product

2. Determination of its price
3. Selection of a distribution channel to reach the customer’s place and
4. development and implementation of promotional strategy.

2.) “Marketing is an activity, or set of institutions, and process for creating, communicating and
exchanging offerings that have value for customers, clients, partners, and society at large.”
3) 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.
It defines, measures and quantifies the size of the identified market and the profit potential
It pinpoints which segments the company is capable of servicing best and it designs and promotes
the appropriate products and services”.
5) Marketing is traditionally the means by which an organization communicates to, connects
with, and engages its target audience to convey the value of and ultimately sell its
products and services”

6) Marketing includes research, targeting, communications (advertising and direct mail) and
often public relations.

7) Marketing is an ongoing communications exchange with customers in a way that educates,

informs and builds a relationship over time.

8) Marketing is how you tell the market, creating the right product, creating desire for product
and letting the right people know you have it.

10) Marketing is an act of developing and engaging relationship with every single human being
that shows an interest in you and your product.

FUNCTIONS OF MARKETING
Marketing is related to the exchange of goods and services. Through its medium the goods and
services are brought to the place of consumption. This satisfies the needs of the customers. The
following activities are undertaken in respect of the exchange of goods and services:

1. Gathering and Analyzing Market Information:

Gathering and analyzing market information is an important function of marketing. Under it, an effort
is made to understand the consumer thoroughly in the following ways:

(a) What do the consumers want?

(b) In what quantity?
(c) At what price?
(d) When do they want it?
(e) What kind of advertisement do they like?
(f) Where do they want it?

2. Marketing Planning:
In order to achieve the objectives of an organization with regard to its marketing, the marketeer
chalks
out his marketing plan.

This objective the marketer has to prepare a plan in respect of the level of production and
promotion efforts. It will also be decided as to who will do what, when and how.
3. Product Designing and Development:
Product designing plays an important role in product selling. The company whose product is better
nd attractively designed sells more than the product of a company whose design happens to be
weak and unattractive.

It is important to remember that it is not sufficient to prepare a design in respect of a product, but it is
more important to develop it continuously.

4. Standardization and Grading:

Standardization refers to determining of standard regarding size, quality, design, weight, colour, raw
material to be used, etc., in respect of a particular product. By doing so, it is ascertained that the
given
product will have some peculiarities.

5. Packaging and Labelling:

Packaging aims at avoiding breakage, damage, destruction, etc., of the goods during transit and
storage. Packaging facilitates handling, lifting, conveying of the goods. Many a time, customers
demand goods in different quantities. It necessitates special packaging. Packing material includes
bottles, canister, plastic bags, tin or wooden boxes, jute bags etc.is a slip which is found on the
product itself or on the package providing all the information regarding the product and its
producer. This can either be in the form of a cover or a seal.
6. Branding:
Every producer/seller wants that his product should have special identity in the market. In order to
realize his wish he has to give a name to his product which has to be distinct from other competitors.

Giving of distinct name to one’s product is called branding. Thus, the objective of branding is to show
that the products of a given company are different from that of the competitors, so that it has its own
identity.

7. Customer Support Service:

Customer is the king of market. Therefore, it is one of the chief functions of marketer to offer every
possible help to the customers. A marketer offers primarily the following services to the customers:

(i) After-sales-services
(ii) Handling customers’ complaints
(iii) Technical services
(iv) Credit facilities
(v) Maintenance services

8. Pricing of Products:
It is the most important function of a marketing manager to fix price of a product. The price of a
product is affected by its cost, rate of profit, price of competing product, policy of the government,
etc.
The price of a product should be fixed in a manner that it should not appear to be too high and at the
same time it should earn enough profit for the organization.

9. Promotion:
Promotion means informing the consumers about the products of the company and encouraging
them to buy these products. There are four methods of promotion: (i) Advertising, (ii) Personal
selling, (iii) Sales promotion and (iv) Publicity. Every decision taken by the marketer in this respect
affects the sales. These decisions are taken keeping in view the budget of the company.

10. Physical Distribution:

Under this function of marketing the decision about carrying things from the place of production to the
place of consumption is taken into account. To accomplish this task, decision about four factors are
taken. They are: (i) Transportation, (ii) Inventory, (iii) Warehousing and (iv) Order Processing. Physical
distribution, by taking things, at the right place and at the right time creates time and place utility.

11. Transportation:
Production, sale and consumption-all the three activities need not be at one place. Had it been so,
transportation of goods for physical distribution would have become irrelevant. But generally, it is
not possible. Production is carried out at one place, sale at another place and consumption at yet
another place.

Transport facility is needed for the produced goods to reach the hands of consumers. So the enterprise
must have an easy access to means of transportation.

12. Storage or Warehousing:

There is a time-lag between the purchase or production of goods and their sale. It is very essential to
store the goods at a safe place during this time-interval. Go-downs are used for this purpose.
Keeping
of goods in go-downs till the same are sold is called storage.
For the marketing manager storage is an important function. Any negligence on his part may
damage the entire stock. Time utility is thus created by storage activity.

MARKETING SEGMENTATION

Market segmentation is the process of dividing a market of potential customers into groups, or
segments, based on different characteristics. The segments created are composed of consumers who
will respond similarly to marketing strategies and who share characteristics such as similar
interests, needs, or locations.
The Basics of Segmentation:
Understanding segmentation starts with learning about the various ways you can segment your market. There
are four primary categories of segmentation,:

1. Demographic / Geographic
2. Firmographic
3. Psychographic
4. Behavioral

DE M OGR AP HI C / GE OGR AP HIC SE GM EN T A T I O N

Geographic segmentation creates different target customer groups based on geographical
boundaries.
Because potential customers have needs, preferences, and interests that differ according to their
geographies, understanding the climates and geographic regions of customer groups can help
determine where to sell and advertise, as well as where to expand your business.

Demographic segmentation sorts a market by demographic elements such as age, education,

income, family size, race, gender, occupation, nationality, and more. Demographic segmentation is
one of the simplest and most commonly used forms of segmentation because the products and
services we buy.

FIRM OGR APH IC SE GM EN T AT IO N

Firmographic segmentation is similar to demographic segmentation. The difference is that
demographics look at individuals while firmographics look at organizations. Firmographic
segmentation would take into consideration things like company size, number of employees and
would illustrate how addressing a small business would differ from addressing an enterprise
corporation.

BE H AVI ORAL SE GM E N T A T I O N
Behavioral segmentation divides markets by behaviors and decision-making patterns such as
purchase, consumption, lifestyle, and usage. For instance, younger buyers may tend to
purchase body wash, while older consumer groups may lean towards soap bars. Segmenting
markets
based off purchase behaviors enables marketers to develop a more targeted approach.

P SYCH OGR AP HI C SE GM E N T AT IO N
Psychographic segmentation takes into account the psychological aspects of consumer behavior by
dividing markets according to lifestyle, personality traits, values, opinions, and interests of consumers.
Large markets like the fitness market use psychographic segmentation when they sort their customer The
4Ps were designed at a time where businesses were more likely to sell products,
rather
than services and the role of customer service in helping brand development wasn't so
well knowns into categories of people who care about healthy living and exercise.

MARKETI NGMIX

The marketing mix is a foundation model for businesses. The marketing mix has been defined as
 the "set of marketing tools that the firm uses to pursue its marketing objectives in the target
market". Thus the marketing mix refers to four broad levels of marketing decision, namely: product,
price, place, and promotion.

The marketing mix is a familiar marketing strategy tool, which as you will probably know, was
traditionally limited to the core 4Ps of Product, Price, Place and Promotion. The 4Ps were designed
at a time where businesses were more likely to sell products, rather than services and the role of
customer service in helping brand development wasn't so well known.
Today, it's recommended that the full 7Ps of the marketing mix are considered when reviewing
competitive strategies.
The 7Ps helps companies to review and define key issues that affect the marketing of its products
and
services and is often now referred to as the
7Ps framework for the digital marketing mix.

PRODUCT

PHYSICAL PROMOTION
EVIDENCE
7 P’s of
Marketing Mix

PROCESS PRICE

PEOPLE PLACE

7P’s Marketing Mix

Product Promotion Price Place People Process Physical Evidence
*Quality *Marketing *Positioning *Trade *Individuals on *Customer *Sales/staff
*Features Communications *List Channels marketing focus contact
*Variants * Personnel *Discounts *Sales Support activities *Business-led experience of
*Mix Promotions *Credit *Channel *Individuals on *IT supported brand
*Support * Sales *Payment Number customer *Design *Product
*Customer Promotions Methods * Segmented contact features packing
Service *PR *Free or Channels *Recruitment *Research and *Online
*Use Occasion *Branding Value added *Culture/image Development experience
*Availability *Direct Marketing *Training and

*Warranties skills
*Remuneration
Benefits of Marketing Mix:
1. It provides a valuable guide for resource allocation
2. It helps to allocate the responsibilities
3. It provides an opportunity to analyze cost benefit elasticity’s
4. It facilitates communication process

MARKETING RESEARCH
Market research is the process of determining the viability of a new service or product through
research conducted directly with potential customers. Market research allows a company to discover
the target market and get opinions and other feedback from consumers about their interest in the
product or service.

This type of research can be conducted in house, by the company itself, or by a third-party company
that specializes in market research. It can be done through surveys, product testing, and focus
groups.
Test subjects are usually compensated with product samples and/or paid a small stipend for their
time.

Market research consists of a combination of primary information, or what has been gathered by
the company or by a person hired by the company, and secondary information, or what has been
gathered by an outside source.

Many companies use market research to test out new products or to get information from
consumers about what kinds of products or services they need and don't currently have.

Market Research has variety of market functions:

1. Customer Research
2. Advertising Research
3. Product Research
4. Distribution Research
5. Sales Research
6. Environmental Research

Market Research Process

1. Identify the problem

2. Develop the research plan
3. Conduct research
4. Analyze the report findings
5. Take action

Benefits of Market Research :

It helps firms or companies to stay in touch with customer’s changing attitudes and purchase
patterns. It helps in better understanding of the market situation. It improves the marketers or
managers in taking right decision for the business. It guides the business of the organization to
choose the right product for the customers.
SALES PROMOTION AND PERSONNEL SELLING

Sales Promotion – Meaning

The most important tool used in promotion is sales promotion. Most consumers relate ideas of
marketing to the use of sales promotion techniques. The other main forms are advertising, and
personal selling.

This means to move forward or to push forward an idea. Sales promotion is the important element
of promotion mix. The general purpose of Sales promotion is to boost product selling.

Sales promotion means any steps that are taken for the purpose of obtaining or increasing the sales.

Objectives of sales promotion : Sales promotion secures the following objectives:

1. Bridge between advertising and personal selling

Sales promotion consists of those activities other than personal selling, advertising and publicity. It
serves as a bridge between personal selling and advertising.

2. Introduction of new products

Sales promotional devices help introduce new products in the market. They induce buyers to
purchase a new product. Free samples are distributed or money or merchandise
allowance is offered to the dealers to stock and sell the new product.

3. Attracting new customers Sales promotion aims at wooing new customers. Sales promotional
devices at consumers level include Coupons, product samples, giving demonstration about the
product, organizing contests, refund offers, offering free trials etc. These stimulate customers to
make purchase promptly on the spot.

4. Inducing present customers to buy

Sales promotion induces present customers to buy more of the product. Sales promotion methods work
faster than advertisement. Moreover, sales promotion materials make the salesman’s effort more
productive. It enables the consumer to know more about the product, its ingredients and uses.

5. Increasing sales during off season

Some products are seasonal in nature. After the season is over, they are not demanded any more. Sales
promotion is used to retain customer’s interest in the product during off-season. Short term incentives
offered to the buyers stimulate sales.
6. Encouraging business buyers
Wholesalers and retailers purchase goods for resale. Promotional activities are undertaken to attract
retailers and wholesalers to stock the products more. Display and advertising allowances are granted to
dealers to compensate them for the space given for the display of manufactured products. Premiums
are offered for purchasing above a particular level.

7. Improving the public image of the firm

Huge amounts are now being spent on determining appeals for arresting the attention of the
prospects towards the product. Consumer’s dissatisfaction about a particular brand can be removed
by aggressive sales promotion programmes. Sales promotional devices make products popular
among customers. Ultimately, they enhance the public image of the firm.

DISTRIBUTION CHANNELS IN MARKETING

Distribution channels in marketing are a key element of your entire marketing strategy. A
distribution channel helps you expand your reach & grow revenue.

A distribution channel is the route through which goods or services move from the company to the
customer or the transfer of payment happens from the customer to the company.
Distribution channels can mean selling of products directly or selling through wholesalers, retailers etc.
The same applies for payment transfer from customers to company; it can move through a path or can
be sent directly to the company.
Functions of Distribution Channels
Distribution channels basically function to deliver goods from the manufacturer to the customer.
The following are the functions of distribution channels −
 Facilitate selling by being physically close to customers
 Gather information about potential and current customer competitions, other factors and forces
of the environment
 Provide distributional efficiency by bridging the gap between the manufacturer and the user
efficiently and economically
 Assemble products into assortments to meet buyers’ needs
 Match segments of supply with segments of demand
 Assist in sales promotion
 Assist in introducing new products
 Assist in implementing the price mechanism
 Assist in developing sales forecast
 Provide market intelligence and feedback
 Maintain records
 Take care of liaison requirements
 Standardize transaction
Objectives of Distribution Channels
Objectives of a distribution channel are planned as per the target of the enterprise and executed
respectively. The following are the various objectives behind the planning of distribution channels −
 To ensure availability of products at the point of sale
 To build channel member’s loyalty
 To stimulate channel members to put greater selling efforts
 To develop management efficiency in channel organization
 To identify the organization at the level
 To have an efficient and effective distribution system for making the products and services
available readily, regularly, equitably and fresh.
Major Channels of Distribution
Here is a list of some of the major channels of distribution −
 Manufacturer → Consumer
 Manufacturer → Retailer → Customer
 Manufacturer → Wholesaler → Customer
 Manufacturer → Wholesaler → Retailer → Customer
 Manufacturer → Agent → Retailer → Customer
 Manufacturer → Agent → Wholesaler → Customer
 Manufacturer → Agent → Wholesaler → Retailer → Customer
Profit distribution decreases as the channel length increases.

ADVERTISING STRATEGY
An advertising strategy is a plan to reach and persuade a customer to buy a product or a service.
The basic elements of the plan are :
1) the product itself and its advantages,
2) the customer and his or her characteristics,
3) the relative advantages of alternative routes whereby the customer can be informed of the
product, and
4) the optimization of resulting choices given budgetary constraints.

In effect this means that aims must be clear, the environment must be understood, the means must
be ranked, and choices must be made based on available resources.
DEVELOPING ADVERTISING STRATEGY
Marketing strategy includes advertising strategy, and this is based on the following important
aspects of the product, pricing and promotional aspects form the point of view of organizational
goals.

1. Positioning Statement : the meaning of which, simply, is what the company's product or service
2. is, how it is differentiated from competing products and services, and by which means it will reach
3. the customer.

4. Target Consumer : The target consumer is a complex combination of persons. First of all, it
includes the person who ultimately buys the product. Next it includes those who, in certain
circumstances, decide what product will be bought (but do not physically buy it). Finally, it
 includes those who influence product purchases (children, spouse, and friends).

5. Communication Media: Once the product and its environment are understood and the target
consumer has been specified, the routes of reaching the consumer must be assessed—the media of
communication. Five major channels are available to the business owner:

 Print—Primarily newspapers (both weekly and daily) and magazines.

 Audio—FM and AM radio.
 Video—Promotional videos, infomercials.
 World Wide Web.
 Direct mail.
 Outdoor advertising—Billboards, advertisements on public transportation

Each of the channels available has its advantages, disadvantages, and cost patterns. A crucial stage
in developing the advertising strategy, therefore, is the fourth point made at the outset: how to
choose the optimum means, given budgetary constraints, to reach the largest number of target
consumers with the appropriately formulated message.

Implementation
The advertising campaign itself is distinct from the strategy, but the strategy is meant to guide
implementation. Therefore across-the-board consistency is highly desirable. Copy, artwork,
images, music—indeed all aspects of the campaign—should reflect the strategy throughout.

This is especially important when multiple channels are used: print, television, and direct mail, for
instance. To achieve a maximum coherence, many effective advertisers develop a unifying
thematic expressed as an image, a slogan, or a combination which is central to all the elements that
ultimately reach the consumer.

PRODUCT DEVELOPMENT IN MARKETING

Product development, also called new product management, is a series of steps that includes the
conceptualization, design, development and marketing of newly created or newly rebranded goods or
services.

The objective of product development is to cultivate, maintain and increase a company's market share
by satisfying a consumer demand. Not every product will appeal to every customer or client base, so
defining the target market for a product is a critical component that must take place early in the
product development process.

Quantitative market research should be conducted at all phases of the design process, including
before the product or service is conceived, while the product is being designed and after the product
has been launched.

Steps should be followed to decide which order makes most sense for the specific product that is to be
developed. There are five elements of product development:

1. Identifying the design idea and criteria

2. Idea analysis
3. Concept finalizing marketing strategy
4. Prototype manufacturing / marketing
5. Product development / marketing

EIGHT STAGES OF NEW PRODUCT DEVELOPMENT

This composite new product development (NPD) framework for manufactured goods has eight
important components:

Idea generation is the continuous and systematic quest for new product opportunities, including
updating or changing an existing product. The goal is to generate ideas for new products or services –
or, improvements to products or services -- that address a gap in the market.

Idea screening takes the less attractive, infeasible and unwanted product ideas out of the running.
Unsuitable ideas should be determined through objective consideration, including through early
testing and feedback with consumers.

Concept development and testing is vital. The internal, objective analysis of step two is replaced
by
customer opinion in this stage. The idea, or product concept at this point, must be tested on a true
customer base.

Market strategy/business analysis identifies the strategy of how to optimally market and sell
your product or service. It is comprised of four P's, which are product, price, promotion and
placement.
Product -- The service or good that's been designed to satisfy the demand of a target audience.
Price -- Pricing decisions affect everything; profit margins, supply and demand, and market strategy.
Promotion -- The goals of promotion are to present the product to the target audience
-- increasing demand by doing so -- and to illustrate the value of the product. Promotion includes
advertisements, public relations and marketing campaigns.
Placement -- The transaction may not occur on the web, but in today's digital economy, the customer is
generally engaged and converted on the Internet. the optimal channel, or channels, for
placement must be determined if the targeted potential customers are to become actual
customers.

PRODUCT LIFE CYCLE

(Marketing)

A new product progresses through a sequence of stages from introduction to growth, maturity, and
decline. This sequence is known as the product life cycle and is associated with changes in the
marketing situation, thus impacting the marketing strategy and the marketing mix.

A new product progresses through a sequence of stages from introduction to growth, maturity and
decline. The sequence is known as the product life cycle and is associated with changes in the
marketing situation, thus impacting the marketing strategy and the marketing mix.

The product revenue and profits can be plotted as function of life cycle steps as shown in the graph
below:

INTRODUCTION STAGE :

In the introduction stage, the firm seeks to build product awareness and develop market for the
product. The impact on the marketing mix is as follows:
1. Product Branding
2. Product Pricing
3. Product Distribution
4. Product Promotion
GROWTH STAGE :

In the growth stage, the firm seeks to build brand preference and increase market
share.

MATURITY STAGE :
At maturity stage, the strong growth in sales diminishes. Competition may appear with similar products.
The primary objective at this point is to define market share while maximizing the profits.

DECLINE STAGE :
As decline in sales take place, the firm has several options:
1. Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
2. Harvest the product, reduce costs and continue to offer it, possibly to a loyal segments.
3. Discontinue the product, liquidating remaining inventory or selling it to another firm that is
willing to continue the product.
INTERNATIONAL TRADE
International trade is the exchange of goods and services between countries. ...
Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the
global market is an export, and a product that is bought from the global market is an import.
International trade allows us to expand our markets for both goods and services that otherwise may not
have been available to us. It is the reason why you can pick between a Japanese, German or American
car.
As a result of international trade, the market contains greater competition and therefore more
competitive prices, which brings a cheaper product home to the consumer.
Trading globally gives consumers and countries the opportunity to be exposed to goods and services
not available in their own countries. Almost every kind of product can be found on the international
market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies, and water.
International trade not only results in increased efficiency but also allows countries to participate in a
global economy, encouraging the opportunity of foreign direct investment (FDI), which is the amount
of money that individuals invest into foreign companies and other assets