Basic Terms of Marketing

Dr.Manish Singh
Basic Terms of Marketing
NEED:
A human need is a state of felt
deprivation of some basic satisfaction.
People require foods, clothing, shelter,
safety, belonging, esteem etc. these
needs exist in the very nature of human
beings.
This is a Need
Needs - state of felt
deprivation including
physical, social, and
individual needs
Wants
Needs become wants they are
directed to specific objects that might
satisfy their needs.

This is a Want
Wants Needs
become wants
when they are
directed to specific
objects that might
satisfy the need.

Basic Terms of Marketing
Demand:
Demands are wants for specific
products that are backed up by an
ability and willingness to buy them.
Wants become demands when
backed up by purchasing power.
This is Demand
Buying Power
Wants
Demand
Basic Terms of Marketing
Product:
Products are defined as anything that
can be offered to some one to satisfy a
need or want.
Product as an idea
Products do not have to
be physical objects.
Here the product is an
ideaprotecting
animals.

Basic Terms of Marketing
Market:
A market consist of all the existing
and potential consumers sharing a
particular need or want who might be
willing and able to engage in
exchange to satisfy that need or
want.
Basic Terms of Marketing
Available Market (who have interest, income and
access to a particular offer)

Target Market or Served Market (a company can
go for serving whole available market or can
concentrate on certain segments)

Penetrated Market (set of buyers who are buying
the companys product)


Basic Terms of Marketing
Value and Satisfaction:
Consumers choose among the products,
a particular product that give them
maximum value and satisfaction.
Value is the consumers estimate of the
products capacity to satisfy their
requirements.

Basic Terms of Marketing
Exchange:
Exchange is the act of obtaining a
desired product from someone by
offering something in return.
Basic Terms of Marketing
Transaction:
A transaction is a trade of values
between two or more parties ( A BARTER
TRANSACTION OR A MONETARY
TRANSACTION ).
A transaction involves at least two thing of
value, conditions that are agreed to, a time of
agreement and a place of agreement.

Concept of Marketing
Concept of Marketing
Marketing is an economic process by
which goods and services are exchanged
between the producers and consumers
and their values is determined in terms of
money prices.
GOODS


SERVICES

SERVICES
IDEAS

Concept of Marketing
Marketing is the performance of
business activities that direct the
flow of goods and services from
producer to consumer or user.
Concept of Marketing
Marketing is getting the right
goods and services to the right
people at the right place at the
right time at the right price with
the right communication and
promotion.

Concept of Marketing
Marketing is the management process
which identifies, anticipates, and supplies
customer requirements efficiently and
profitably.
In other words, it is the process of
understanding, creating, and delivering
profitable value to targeted customers
better than the competition.

Concept of Marketing
Its aim is to establish, maintain,
enhance long term relationship with
customers at a profit so that the
objectives of the parties involved are
met.
In short marketing consists of
attracting, developing, and retaining
profitable customers.

Definition of Marketing
In the words of Philip Kotler-
Marketing is a social process by
which individuals and groups obtain
what they need and want through
creating and exchanging products of
values.

Definition of Marketing
According to Eldridge (1970) -
"Marketing is the combination of
activities designed to produce profit
through ascertaining, creating,
stimulating, and satisfying the needs
and/or wants of a selected segment
of the market."

Definition- Marketing
Dibb, Simkin,Pride and Ferrel
Marketing Consists of individual and
organizational activities that facilitate and
expedite satisfying exchange relationships in
dynamic environment through the creation,
distribution, promotion and pricing of goods,
services and ideas

Definition- Marketing
Chartered Institute of Marketing UK
Marketing is a management process,
which is responsible in identifying,
anticipating and satisfying customer
needs and wants at a profit

Iceberg Theory


Iceberg- under
water
Selling &
advertising

M
A
R
K
E
T
I
N
G


Water

Real Iceberg
Nature of Marketing
1. Marketing is an integrated process :
Marketing is not a single activity. It is rather a
coordination of several inter-related activities. The
interaction between different activities gives a unique
character to marketing.

Marketing is a managerial process in so far as it
involves the functions of planning and control.

Marketing is also a social process as it is concerned
with the satisfaction of human needs and this is one
of the most important Characteristics of Marketing.

Nature of Marketing
2. Marketing is customer oriented-
Marketing exists to identify and satisfy the
wants of present and potential consumers.
Customer is the focus of all marketing
activities.
3. Marketing is a system- Another important
characteristic of marketing is its function as a
system. Marketing is a system comprising
several sub systems. Under marketing, inputs
are drawn from the society and converted into
outputs which are supplied to the society.

Nature of Marketing
4. Marketing is a part of total environment-
Marketing operates within the framework of
total environment which comprises economic,
social, legal, political, international and other
forces. Changes in the environment influence
marketing activities. Marketing is, therefore, a
dynamic process as it keeps on adjusting to
the changing environment.

Nature of Marketing
5. Marketing is creative- Marketing creates
time, place and possession utilities. Time
utility is created by preserving goods for use in
future. Place utility is created by carrying
goods to places where they are needed the
most. Marketing creates possession utility by
transferring products and services from
producer to customer. Exchange process
between buyer and seller is the essential
element in marketing.

Nature of Marketing
6. Marketing is goal -oriented- Of the many
important characteristics of marketing; one
very important aspect is it is goal-oriented.
Marketing seeks to achieve benefits, for both
buyer and seller. It results in mutually
beneficial relationship by satisfying wants of
customers and by generating revenues for
marketers.
Nature of Marketing
7. Marketing is pervasive- marketing is
required in business as well in social and
other organizations. In other organizations,
marketing is necessary for spreading socially
useful ideas and programs family planning,
adult education, communal harmony, national
integration, environmental protection, etc.
Such marketing is called social marketing.


Objectives of marketing
Marketing activities are organized to achieve the following objectives:

1. Consumer satisfaction : Marketing activities are organized with
the objective of ensuring that consumers get maximum satisfaction
from the use of the product. Consumer satisfaction ensures steady
and growing demand for firms products.
2. Product development : This objective aims at developing new
and better products, which may provide greater satisfaction to
consumers. Product development is necessary for the survival
and growth of the firm.

3. Sustaining Customer loyalty : If customers
continue to make repeated purchases of goods and
services, it is possible to sustain the demand for the
products of the firm.
4.Earning profits : Business must earn sufficient
profit. Marketing activities are organized with the
objective of earning adequate profits for the firm.

5. To secure competitive advantage : This objective of
marketing ensures that a firms products are preferred over
competitors product. Competitive advantage is achieved through
cost efficiency and quality improvements of the products.

6. Growth in Sales : Marketing aims at increasing the sale of
firms products. This is necessary to maintain or increase the
market share of the firm. Market share means percentage demand
satisfied by the firm for a particular product. Growth in sales
ensures survival of the firm in the long run.

7. Creation of goodwill : This objective of
marketing ensures that a business firm is regarded
as a useful part of society engaged in satisfying
consumer needs. This help business firms to
survive and grow.
Functions of Marketing
Functions of Exchange:
Buying: - Buying involves planning o f
purchase search for the seller selecting of
goods to be purchased enabling of goods to
suit the requirement of the buyer.
Selling:-Selling functions involves location of
the buyer negotiation of the terms of sale,
price, quantity, quality. Etc.


Pricing:-Price is the most important element
determining the market share and profitability
of the company. The firm has to decide the
price of commodity by considering many
factors of a price policy of a pro duct such as
determining demand, estimating the cost,
analyzing, competitors cost price and
selecting pricing method.


Advertising :- In the aim of advertising is a
creation of awareness, interest and finally of
purchase of goods and services
Sales promotion:-Sales promotion stimulate
greater purchase after particular product or
service b y a consumer, consumer sales
promotion activities include samples, cash
refund offers, prices off, premium, prices,
discounts etc
Functions on basis of physical supply:-
Transportation:- Transportation creates place
place of production to the place of
consumption. Roads, railways, waterways and
airways
Storage:-Storage creates time utility, it is necessary
because there is time gap between the production
and consumption of the goods. During this time gap
a warehouse preserves the goods quantitatively.



Functions on basis of facilitating or
services:
Risk taking:-It is the primary function of a
marketing activity and profit is the reward for
taking such risk marketing. Risk can be
classified into insurable and non-insurable
risks. Risk arising out of theft fire and natural
calamites are insurable risk. Non-insurable
risk are change in demand, change in
consumer preference, increasing competition
etc.



Marketing information:-Marketing
information is an essential function as it gives
information about the products, demand,
supply, price competition etc.
Marketing research:-It is a systematic
gathering, recording and analyzing of data
about problems relating to marketing goods
and services. It is a generation of primary data
analyzing of information and recommendation,
implementations of findings.


Standardization:-It is mental process of
setting standard norms criteria for the goods
and services. It determines the basis of color,
weight, quality, and other special features.E.g.
ISI Mark.
Packing:-Packing and packaging are the two
side of a coin. Packaging is a part of product
planning, it refers to inner wrapping of a
product. Packing refers to outer casting, which
is used to transport number of units of a
product.


Branding:-Branding is done on a product or
on the package of the product. It is the name ,
mark, symbol, design or distinctive number of
letters given to a product for distinguishing it
from other products.

Functions of Marketing
Customer is the center of all Marketing
activities.
Marketing focuses on the needs and wants of
customers.
Identifying favorable emerging market
opportunities
It is concerned about satisfying customers
through supply of goods and services
Functions of Marketing
Marketing involves analysis, planning and
control
Marketing is concerned about staying ahead
with competition and making profits
Marketing has a heavy emphasis on
relationships
Creating value to both the customer and
organization


Development of Marketing
Marketing as an exchange process
exchange is the act of obtaining something by
offering something in return ( money, services, goods
or a combination)
For an exchange to take place following conditions
must exists:
1. Two parties
2. Each party must possess something of value that
the other party likes
3. The parties must be involved voluntarily
4. Parties must be able to communicate about their
value proposition

Evolution of Marketing
The Production Concept
Product Concept
The Selling Concept
The Marketing Concept
The Societal Marketing Concept

DISTINCT MARKETING CONCEPTS
Studies have revealed that different organisations have
different perceptions of marketing and it has lead to the
formation of different concepts of marketing such as:
1.The Exchange concept:
a)Exchange of product between seller and buyer.
b)marketing is much more broader than exchange and exchange is only a
part of it.
c)it does not cover other aspects of marketing like :
1.concern for the customer
2.creative selling
3.generation of value satisfactions
4.integrated action for serving the customer


2.The Production concept:
a)All the focus is on the production.
b)Concentrate on achieving high production efficiency, low cost& mass
distribution.
c)This concept also fail to understand the needs of the customer as they
believe that the steep decline in the unit cost arising from the maximization
of output would bring them all the customers and the profit they need but
this will not give them the customer support as the customers are motivated
by the variety of considerations in their purchases.
d)As a result ,the production concept also fails to serve the right marketing
philosophy.

e.g.Inexpensive Toys,electronics
3.The Product concept:
a)This concept is based on product excellence-improved products,new
products and ideally designed and engineered products.
b)It also places the emphasis on quality assurance.
c)They spend considerable time and money on research and development
and bring in new variety of products yet they fail in the market.
d)They do not bother to study the market and the consumer in depth.
e)they get so engrossed in their product that they forget to find out what the
customer actually need and what they would gladly accept.
f)It leads to marketing myopia.
Marketing Myopia
a)marketing myopia means crooked perception of marketing and short
sightedness about business.
b)Excessive attention to the production or product or selling aspects at the
cost of customer and his actual needs,creates a myopia.
c)it leads to wrong or inadequate understanding of the market and hence
failure in the market place.
d)It also leads to a wrong understanding or inadequate understanding of the
very nature of the business thereby affecting its future.
e)Since The business keep changing with times but the basic fundamental
characteristics related to human need which business seek to serve amd
satisfy through its products should be maintained.
f)they should define their business according to their fundamentals and not
in the terms of the products and services manufactures at given point of
time.
E.g. movie makers should define their business as entertainment.
4.The Selling concept:
a)The selling concept maintains that a company cannot expects its product
to get picked up automatically by the customers.
b)The company has to consciously push its products.
c)Aggressive advertising , high power personal selling , large scale
promotion , heavy price discounts , strong publicity and public relations are
the normal tools that rely on this concept.
d)In this kind of concept companies believed that selling is synonymous
with marketing but in reality there is a great deal of difference between
selling and marketing.
Marketing Selling
1.Marketing starts with the customer ,present and
potential and focuses constantly on the need of the
buyer.Buyer is the centre of the business
universe.activities follow the buyer and his needs.
1.Selling starts with the seller.It focuses on the need of the
need.Seller is the centre of the business universe.activities
starts with sellers existing products.
2.Emphasis on identification of a market opportunity and
fulfilling the needs of the customer.
2.Emphasis on saleable surpluses available within the
corporation.
3.Seeks to convert customer needs into products. 3.Seeks to convert productinto cash,concerns itself with
the tricks and techniques of getting the customers to buy
the product available with the salesman in exchange of
cash.
4.View business as customer satisfying process. 4.View business as a goods producing process.
5.It is concern with the value satisfaction customer
should get from the exchange.
5.Overemphasis the exchangeaspect without caring for
the value satisfaction inherent in the exchange.
6.The firm makes a total product offeringthat would
match and satisfy the identified needs of the customers.

6.The firm makes the product first and then figure out how
to sell it and make profit.

7.Adopting more innovative technology to provide better
value to the customer.

7.Emphasis on staying with the existing technology and
reducing the cost of production.

8.If the enterprise has a customer orientation-concerned
more about his needs,and make genuine efforts to satisfy
those needs ,then it is practising Marketing.
8.If the enterprise has internal orientation concerned more
about itself and its products and the need to dispose off its
products,then it is practicing Selling.

Marketing Selling
9.Consumer determines price ; price
determines cost.
9.Costs determine price.
10.They are seen as vital services to be
provided to the customers keeping in mind
their convenience.

10.Transportation,storage and other
distribution functions are merely a part of
production function.

11.In firms practicing marketing,marketing
is the central function of the business;the
entire company is organised around the
marketing function.
11.In firms practising selling,production is
the central function of the business.

12.Marketingviews the customer as the
very purpose of the business;sees business
from point of view of the customer.

12.Selling views the customer as the last
link in the business.

Features of Marketing Concept

1.Consumer Orientation ; Consumer orientation places consumer at the
beginning as well as at the end of the business cycle.Consumer becomesthe
focal point of the business.Organisations should strive,adapt and alter
products to keep pace with the ever changing customer preferences and
desires.

2.Long term profitability ; Customer satisfaction,which is a major theme
of the marketing concept does not preach that a firm must generate
consumer and forget the other goals of the organisation.Instead it should
treat customer as a pathway to the attainment of all the goals of the
organisation.And ,inthis process,the Organisational goals including profits
are automatically realised.The Market Concept never suggests that profit is
unimportant to the firm but are essential for the survival and growth of any
business.
3.Integrated Managementaction;All Organisational departments should be
well coordinated keeping marketing as the pivot.Lack of coordination
between different departments or function can hamper the performance of the
organisation.The marketing department should be well coordinated with other
departments like R&D,finance,personnel and manufacturing.
The organisations that do not practice integrated management,the departments
are preoccupied with the optimisation of their specific activities thus effecting
the overall result.
e.g. the engineering department may create a substandard product to save cost
of production.
Who benefits from the Marketing Concept
1.The Organisation;The organisation keep itself in the pace with the times
and through contineous marketing audit,market research and consumer
testing.It is quick to respond to changes in the buyer behaviour,rectify its
products and give great importance to planning,research and innovation.

2.The Consumer;As the organisation improve its products,it benefits its
consumers as they get better quality,low price,improved/new products and
ready stocks at convinient places.

3.The Society;Since the Organisations are producing products as per the
consumers so it ensures that the societys economic resources are
channelised in the right direction.It also creates entrepreneurs and managers
in the given society.It improves the standard of living of the people and
accelerates economic development of the society as a whole.
Production Concept: Consumers will prefer
products that are widely available and
inexpensive
- Concentrates on high production efficiency-
low cost- mass distribution
Example : Ford T- Model
: Govt Hospital and other Service Depts
Heavy focus on the Price and Place on M.Mix
Ford T Model




Product Concept
Consumers will favor those products that offer
most quality, performance or innovative features
Just making superior products will make
customers seek and buy them
More focus on Product in the M. Mix.
Ex-Better mouse trap of Woolworth Co. Made a
very effective reusable mousetrap that the existing
ones but price was more than double. It did not
sell well. People did not want to spend twice as
they used to throw the mousetrap also with the
catch.
Marketing Myopia- shortsightedness of not
considering customer needs and behavior


Woolverths mouse trap

The Selling Concept
Consumers , if left alone , will not buy
enough of companys products.

Therefore, promote sales aggressively.

And,build profit through quick turnover.

The Marketing Concept
The key to achieving organizational goals
consist in determining the needs and wants of
target markets and delivering the desired
satisfactions more effectively and efficiently
than competitors.
And build profit through customer satisfaction
and loyalty.

4 PILLARS
The marketing concept rests on 4 pillars,
namely
1. Target Market
2. Customer Needs
3. Integrated marketing
4. Profitability

Marketing and Sales Concepts Contrasted
The Societal Marketing Concept
The societal marketing concept holds that the
organizations task is to determine the needs, wants, and
interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the
consumers and the societys well being.

Societal Marketing =

Consumer Satisfaction + Company s Profits + Societys well
being.

What is Green Marketing?
This stems from how marketer responds to the
environment. The marketers have been practicing
very environmental destructive activities.
Resource depletion and degradation - Genetic
engineering- Pollution- Harmful emissions and
products- health hazards
Barriers to Green M- Cost- Technological problems-
less innovation -less commitment and ignorance-
considering world as bundle of raw materials for the
benefit of the current generation.
What is ethical Marketing?
Ethical Marketing are the rules of conduct and moral
principals regulating marketing.
- The limit of Claims/Promises that can be made as to
product benefits
- Discriminating competing products
- Marketing of products like cigarettes, alcohol
- Limitations in Marketing products to children
- Religious/racially susceptible Brand names and images
- Unaccepted Promotional methods
- Using women in unaccepted manner
- Purposeful deception
-
Relationship Marketing
Customer retention has
become a major problem in
the competitive world of
business
Relationship Marketing is
the process of creating,
building and managing long
term relationship with
customers, distributors and
suppliers. Life Time Value of
a customer is emphasized
more than a value of a
single transaction
Traditional Marketing is
concerned with the
exchanges with customers.
The emphasis was to
develop products that will
satisfy customers and focus
was basically on (single)
transaction.
Not much effort was kept on
keeping the customer for a
long time and Life Time
Value was not considered
much.


Types and Levels of Relationship
Transactional approach- Marketer concludes a
transaction of selling a product. The marketer, in
offering the product, is looking for a response.
Transaction based marketing is on individual
transaction
Relationship approach- The concluded transaction is
not the end of a process, but start of a long term
relationship with the customer.

Benefits of relationship marketing
Retaining existing customers is cheaper than getting new
ones
Repeat customers are costing less to service as they are
familiar with the company
Reduce customer deflection and bad word of mouth
Keep customer databases and service more effectively
Small changes in retention rates have large effects on
revenue
Identify and explain the anticipated benefits of
introducing marketing orientation to an organisation.
If a company to be successful in the long run the
most important philosophy they should follow is the
marketing orientation/ concept
The mere survival of a company in the modern
globalised world depends on how much of customer
satisfaction that it can offer.
Therefore the customer focus should be an integral
part of the organisation
All the departments in the company should have an
integrated approach towards satisfying customers


Further it would be able to reduce the
number of dissatisfied customers.
Dissatisfied customers will tell others
Research confirms it takes six times of
effort and cost to make anew customer
than keeping the existing ones.
It would make the organisation gain a
competitive advantage

If an organisation can adopt a marketing
oriented approach it would be able to get
Increased customer satisfaction
Increased customer loyalty
Increased reputation
Increased motivation among staff
Increased market share
Reduction of waste
Combat threats from competitors