Marketing

Notes 76 Pages

Savitribai Phule Pune University

Bachelor of Business Administration

AYK

Contributed by

Alpa Yash Khare

Unit 1: INTRODUCTION TO MARKETING

Marketing is the science of meeting the needs of a customer by providing valuable
products to customers by utilizing the expertise of the organization, at same time,
to achieve organizational goals. According to The American Marketing
Association [1]:
Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large.
With this definition, it is important to realize that the customer can be an
individual user, a company, or several people who contribute to the purchasing
decision. The product can be a hard good, a service, or even an idea – anything that
would provide some value to the person who provides an exchange. An exchange
is most often thought of as money, but could also be a donation of time or effort, or
even a specific action. A producer is often a company, but could be an individual
or non-profit organization.
Classical marketing is often described in terms of the four “P’s, which are:
 Product – what goods or services are offered to customers
 Promotion – how the producer communicates the value of its products
 Price – the value of the exchange between the customer and producer
 Placement – how the product is delivered to the customer.
A complete analysis of these categories is often called the Marketing Mix. More
detail on these categories can be found in the later entry on the Marketing Plan.
Marketing has both inbound and outbound activities. Inbound activities largely
center on discovering the needs and wants of the potential customers. The
collective group of all potential customers is called a market. Categorizing these
needs into groups is called segmentation. Organizing markets into segments allows
a producer to more logically decide how to best provide value to that group of
potential customers. The analysis of market segment needs; analysis of existing
sales and profitability; the descriptions, design and introduction of new products;
and the analysis of competitor offerings are also inbound activities that are
important but not often seen by the public.

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Definition
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:
(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 a promotional

– Goals – Concepts of Marketing
The Five Concepts Described

The Production Concept. This concept is the oldest of the concepts in
business. It holds that consumers will prefer products that are widely available and
inexpensive. Managers focusing on this concept concentrate on achieving high
production efficiency, low costs, and mass distribution. They assume that
consumers are primarily interested in product availability and low prices. This
orientation makes sense in developing countries, where consumers are more
interested in obtaining the product than in its features.

The Product Concept. This orientation holds that consumers will favor
those products that offer the most quality, performance, or innovative
features. Managers focusing on this concept concentrate on making superior
products and improving them over time. They assume that buyers admire well-
made products and can appraise quality and performance. However, these
managers are sometimes caught up in a love affair with their product and do not
realize what the market needs. Management might commit the “better-mousetrap”
fallacy, believing that a better mousetrap will lead people to beat a path to its door.

The Selling Concept. This is another common business orientation. It
holds that consumers and businesses, if left alone, will ordinarily not buy enough
of the selling company’s products. The organization must, therefore, undertake an
aggressive selling and promotion effort. This concept assumes that consumers
typically sho9w buyi8ng inertia or resistance and must be coaxed into buying. It
also assumes that the company has a whole battery of effective selling and
promotional tools to stimulate more buying. Most firms practice the selling
concept when they have overcapacity. Their aim is to sellwhat they make rather
than make what the market wants.

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The Marketing Concept. This is a business philosophy that challenges
the above three business orientations. Its central tenets crystallized in the 1950s. It
holds that the key to achieving its organizational goals (goals of the selling
company) consists of the company being more effective than competitors in
creating, delivering, and communicating customer value to its selected target
customers. The marketing concept rests on four pillars: target market, customer
needs, integrated marketing and profitability.

Distinctions between the Sales Concept and the Marketing Concept:

1. The Sales Concept focuses on the needs of the seller. The Marketing
Concept focuses on the needs of the buyer.

2. The Sales Concept is preoccupied with the seller’s need to convert his/her
product into cash. The Marketing Concept is preoccupied with the idea of
satisfying the needs of the customer by means of the product as a solution to the
customer’s problem (needs).

The Societal Marketing Concept. This concept holds that the
organization’s task is to determine the needs, wants, and interests of target markets
and to deliver the desired satisfactions more effectively and efficiently than
competitors (this is the original Marketing Concept). Additionally, it holds that
this all must be done in a way that preserves or enhances the consumer’s and the
society’s well-being.

Goals of marketing

BUILDING BRAND AWARENESS
2. GENERATING HIGH LEAD VOLUME
3. ESTABLISHING THOUGHT LEADERSHIP
4. CONTRIBUTING TO REVENUE GENERATION
5. INCREASING BRAND ENGAGEMENT

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Approaches to Marketing
There are four different approaches to the study of marketing. These approaches
explain clearly the mechanism and concept of marketing. These approaches are
Commodity Approach, Institutional Approach, Functional Approach and Decision
Making Approach.
(1) Commodity Approach or Product Approach:
This approach refers to the study of a product in detail. The marketing situation of
each product chosen for study is examined from such viewpoints as sources and
conditions of supply, producer marketing organisations, policies, different
middlemen (wholesaler’s 6f retailers etc.) who take part in distributing the product.
Problems with regard to a particular product are studied in detail under this
approach. Products of any nature e.g. agricultural products wheat, rice, maize, etc.,
industrial products like machine tools, lathe-machines, generators, oil engines, etc.,
and any other products can be covered under this study. In practice, this approach
tends to be repetitive and time consuming.
(2) Institutional Approach:
This approach relates to various marketing institutions viz., wholesalers, retailers
etc., engaged in marketing. In applying this approach, a thorough study with regard
to a particular middleman is undertaken. For example, in retailing, nature and
significance of retailing in terms of functions and services performed and rendered
by retail institutions like departmental stores, multiple shops, mail order houses
etc.
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Besides wholesalers and retailers, other marketing institutions can be stock
exchanges, produce exchanges, banks, regulated markets, etc. In short, it can be
said that this approach is applicable on various types of marketing intermediaries.
(3) Functional Approach:
As the very name suggests this approach comprises of the study of various
activities or functions performed in the process of marketing of goods and services.
It analyses each function in relation to the importance of its performance.
Various marketing functions are buying, selling, financing, transportation, banking,
risk bearing, market information etc. By analysing and studying every function in
detail and problems confronted in the performance of each function, it is possible
to understand marketing properly.
(4) The Decision Making Approach:
This approach is of vital importance from the viewpoint of marketing management.
Various decisions are taken at every level of management. In successful marketing,
decision making occupies an important place. The marketing manager should be
very expert and competent in his job so that he takes proper decisions for
marketing the goods and services.
The decision is based on two variables which can be classified as ‘uncontrollable’
and ‘controllable’. Uncontrollable’ variables relate to economic, sociological,
psychological and political forces which are the basic causes of market changes.
On the other hand, ‘controllable’ variables are within the control of the
organisation.
12 Important Functions of Marketing (ver imp for Exam)
1. Gathering and Analysing Market Information:
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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)?
What kind of distribution system do they like? All the relevant information about
the consumer is collected and analysed. On the basis of this analysis an effort is
made to find out as to which product has the best opportunities in the market.
2. Marketing Planning:
In order to achieve the objectives of an organisation with regard to its marketing,
the marketeer chalks out his marketing plan. For example, a company has a 25%
market share of a particular product.
The company wants to raise it to 40%. In order to achieve 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. To do this is
known as marketing planning.
3. Product Designing and Development:
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Product designing plays an important role in product selling. The company whose
product is better and attractively designed sells more than the product of a
company whose design happens to be weak and unattractive.
In this way, it can be said that the possession of a special design affords a company
to a competitive advantage. 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. Standardisation and Grading:
Standardisation 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.
This way, sale is made possible on the basis of samples. Mostly, it is the practice
that the traders look at the samples and place purchase order for a large quantity of
the product concerned. The basis of it is that goods supplied conform to the same
standard as shown in the sample.
Products having the same characteristics (or standard) are placed in a given
category or grade. This placing is called grading. For example, a company
produces commodity – X, having three grades, namely A’. ‘B’ and ‘C’,
representing three levels of quality; best, medium and ordinary respectively.
Customers who want best quality will be shown ‘A’ grade product. This way, the
customer will have no doubt in his mind that a low grade product has been palmed
off to him. Grading, therefore, makes sale-purchase easy. Grading process is
mostly used in case of agricultural products like food grains, cotton, tobacco,
apples, mangoes, etc.
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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.
Label 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.
For example, the name of the medicine on its bottle along with the manufacturer’s
name, the formula used for making the medicine, date of manufacturing, expiry
date, batch no., price etc., are printed on the slip thereby giving all the information
regarding the medicine to the consumer. The slip carrying all these is details called
Label and the process of preparing it as Labelling.
6. Branding:
Every producer/seller wants that his product should have special identity in the
market. In order to realise 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.
For instance, if a company wants to popularise its commodity – X under the name
of “777” (triple seven) then its brand will be called “777”. It is possible that
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another company is selling a similar commodity under AAA (Triple ‘A’) brand
name.
Under these circumstances, both the companies will succeed in establishing a
distinct identity of their products in the market. When a brand is not registered
under the trade Mark Act, 1999, it becomes a Trade Mark.
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
Helping the customer in this way offers him satisfaction and in today’s competitive
age customer’s satisfaction happens to be the top-most priority. This encourages a
customer’s attachment to a particular product and he starts buying that product
time and again.
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
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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 organisation.
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.
Mostly we see on the road side’s private vehicles belonging to Pepsi, Coca Cola,
LML, Britannia, etc. These private carriers are the living examples of
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