Unit I Introduction to Marketing

Marketing activities start once goods and services have been produced. While marketing
certainly includes selling and advertising, it encompasses much more. Marketing also involves
analyzing consumer needs, securing information needed to design and produce goods or services
that match buyer expectations and creating and maintaining relationships with customers and
suppliers. The following table summarizes the key differences between marketing and selling
concepts.
Point of difference Selling Marketing
Starting point Factory Market Place
Focus Existing products Customer needs
Means Selling and Promoting Integrated Marketing
End Profits through Volume Profits through Customer
satisfaction

The difference between selling and marketing can be best illustrated by this popular
customer quote: ‘Don‘t tell me how good your product is, but tell me how good it will make
me‘.

Definition of Marketing

The American Marketing Association, the official organization for academic and professional
marketers, defines marketing as: “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 organizational objectives”

According to Kotler (2000) – “A societal 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.

CORE MARKETING CONCEPTS

The 'marketing concept' proposes that in order to satisfy the organizational objectives, an
organization should anticipate the needs and wants of potential consumers and satisfy them more
effectively than its competitors. This concept originated from Adam Smith's book The Wealth of
Nations, but would not become widely used until nearly 200 years later. Marketing and
Marketing Concepts are directly related.
Given the centrality of customer needs and wants in marketing, a rich understanding of these
concepts is essential:
Needs: Something necessary for people to live a healthy, stable and safe life. When needs
remain unfulfilled, there is a clear adverse outcome: a dysfunction or death. Needs can be
objective and physical, such as the need for food, water and shelter; or subjective and
psychological, such as the need to belong to a family or social group and the need for self
esteem.
Wants: Something that is desired wished for or aspired to. Wants are not essential for basic
survival and are often shaped by culture or peer-groups.
Demands: When needs and wants are backed by the ability to pay, they have the potential to
become economic demands.

Nature of Marketing

1. Marketing is an Economic Function: Marketing embraces all the business activities

involved in getting goods and services, from the hands of producers into the hands of final
consumers. The business steps through which goods progress on their way to final consumers is
the concern of marketing.
2. Marketing is a Legal Process: by which Ownership Transfers In the process of marketing
the ownership of goods transfers from seller to the purchaser or from producer to the end user.
3. Marketing is a System: of Interacting Business Activities Marketing is that process through
which a business enterprise, institution, or organisation interacts with the customers and
stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is
the performance of business activities that direct the flow of goods and services from producer to
consumer or user.
4. Marketing is a Managerial function: According to managerial or systems approach –
―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.‖
According to this approach the emphasis is on how the individual organisation processes
marketing and develops the strategic dimensions of marketing activities.
5. Marketing is a social process: Marketing is the delivery of a standard of living to society.
According to Cunningham and Cunningham (1981) societal marketing performs three essential
functions:-
 Knowing and understanding the consumer‘s changing needs and wants
 Efficiently and effectively managing the supply and demand of products and services
 Efficient provision of distribution and payment processing systems.
6. Marketing is a philosophy based on consumer orientation and satisfaction
7. Marketing had dual objectives – profit making and consumer satisfaction

Scope of Marketing

1. Study of Consumer Wants and Needs: Goods are produced to satisfy consumer wants.
Therefore study is done to identify consumer needs and wants. These needs and wants motivates
consumer to purchase.
2. Study of Consumer behavior: Marketers perform study of consumer behavior. Analysis of
buyer behavior helps marketer in market segmentation and targeting.
3. Production planning and development: Product planning and development starts with the
generation of product idea and ends with the product development and commercialization.
Product planning includes everything from branding and packaging to product line expansion
and contraction.
4. Pricing Policies: Marketer has to determine pricing policies for their products. Pricing
policies differs from product to product. It depends on the level of competition, product life
cycle, marketing goals and objectives, etc.
5. Distribution: Study of distribution channel is important in marketing. For maximum sales
and profit goods are required to be distributed to the maximum consumers at minimum cost.
6. Promotion: Promotion includes personal selling, sales promotion, and advertising. Right
promotion mix is crucial in accomplishment of marketing goals.
7. Consumer Satisfaction: The product or service offered must satisfy consumer. Consumer
satisfaction is the major objective of marketing.
8. Marketing Control and Marketing audit: is done to control the marketing activities.

Functions of Marketing:
In order for the marketing bridge to work correctly -- providing consumers with opportunities to
purchase the products and services they need -- the marketing process must accomplish nine
important functions. The functions are

Exchange Functions:
Buying - people have the opportunity to buy products that they want.
Selling - producers function within a free market to sell products to consumers.

Physical Distribution Functions:

Storage - products must be stored and protect ed until they are needed. This function is
especially important for perishable products such as fruits and vegetables.
Transportation -products must be physically relocated to the locations where consumers can
buy them. This is a very important function. Transportation includes rail road, ship, airplane,
truck, and telecommunications for non-tangible products such as market information.

Facilitating Functions:
Grading and Standardizing - Many products are graded in order to conform to previously
determined standards of quality. For example, when you purchase US No. 1 Potatoes, you know
you are buying the best potatoes on the market.
Financing - banks and other financial institutions provide money for the production and
marketing of products.
Securing Market Information - information from around the world about market conditions,
weather, price movements, and political changes, can affect the marketing process. Market
information is provided by all forms of telecommunication, such as television, the internet, and
phone.
Risk-Taking - insurance companies provide coverage to protect producers and marketers from
loss due to fire, theft, or natural disasters.

Importance of marketing can be studied as follows:

1) Marketing Helps in Transfer, Exchange and Movement of Goods:

Marketing is very helpful in transfer, exchange and movement of goods. Goods and services are
made available to customers through various intermediaries’ viz., wholesalers and retailers etc.
Marketing is helpful to both producers and consumers. To the former, it tells about the specific
needs and preferences of consumers and to the latter about the products that manufacturers can
offer. According to Prof. Haney Hansen “Marketing involves the design of the products
acceptable to the consumers and the conduct of those activities which facilitate the transfer of
ownership between seller and buyer.”
2) Marketing Is Helpful In Raising And Maintaining The Standard Of Living Of The
Community: By making available the uninterrupted supply of goods and services to consumers
at a reasonable price, marketing has played an important role in raising and maintaining living
standards of the community. Community comprises of three classes of people i.e., rich, middle
and poor. Everything which is used by these different classes of people is supplied by marketing.

In the modern times, with the emergence of latest marketing techniques even the poorer
sections of society have attained a reasonable level of living standard. This is basically due to
large scale production and lesser prices of commodities and services. Marketing has infact,
revolutionized and modernized the living standard of people in modern times.
3) Marketing Creates Employment: Marketing is complex mechanism involving many people
in one form or the other. The major marketing functions are buying, selling, financing, transport,
warehousing, risk bearing and standardization, etc. In each such function different activities are
performed by a large number of individuals and bodies.
Thus, marketing gives employment to many people. It is estimated that about 40% of
total population is directly or indirectly dependent upon marketing. In the modern era of large
scale production and industrialization, role of marketing has widened.
This enlarged role of marketing has created many employment opportunities for people.
Converse, Huegy and Mitchell have rightly pointed out that “In order to have continuous
production, there must be continuous marketing, only then employment can be sustained and
high level of business activity can be continued”.
4) Marketing as a Source of Income and Revenue: The performance of marketing function is
all important, because it is the only way through which the concern could generate revenue or
income and bring in profits. Buskirk has pointed out that, “Any activity connected with
obtaining income is a marketing action. It is all too easy for the accountant, engineer, etc., to
operate under the broad assumption that the Company will realize many dollars in total sales
volume.
However, someone must actually go into the market place and obtain dollars from
society in order to sustain the activities of the company, because without these funds the
organisation will perish.”
Marketing does provide many opportunities to earn profits in the process of buying and
selling the goods, by creating time, place and possession utilities. This income and profit are
reinvested in the concern, thereby earning more profits in future. Marketing should be given the
greatest importance, since the very survival of the firm depends on the effectiveness of the
marketing function.

5) Marketing Acts as a Basis for Making Decisions: A businessman is confronted with many
problems in the form of what, how, when, how much and for whom to produce? In the past
problems was less on account of local markets. There was a direct link between producer and
consumer.
In modern times marketing has become a very complex and tedious task. Marketing has emerged
as new specialised activity along with production.
As a result, producers are depending largely on the mechanism of marketing, to decide what to
produce and sell. With the help of marketing techniques a producer can regulate his production
accordingly.
6) Marketing Acts as a Source of New Ideas: The concept of marketing is a dynamic concept.
It has changed altogether with the passage of time. Such changes have far reaching effects on
production and distribution. With the rapid change in tastes and preference of people, marketing
has to come up with the same.
Marketing as an instrument of measurement, gives scope for understanding this new
demand pattern and thereby produce and make available the goods accordingly.
7) Marketing Is Helpful In Development Of An Economy:
Adam Smith has remarked that “nothing happens in our country until somebody sells
something”. Marketing is the kingpin that sets the economy revolving. The marketing
organization, more scientifically organized, makes the economy strong and stable, the lesser the
stress on the marketing function, the weaker will be the economy.

Problems of Marketing:

MARKETING ENVIRONMENT
Marketing Environment is the combination of external and internal factors and forces which
affect the company’s ability to establish a relationship and serve its customers.

Components of Marketing Environment: The marketing environment is made up of the

internal and external environment of the business. While internal environment can be controlled,
the business has very less or no control over the external environment.

Internal Environment:
The internal environment of the business includes all the forces and factors inside the
organization which affect its marketing operations. These components can be grouped under the
Five Ms of the business, which are:
 Men
 Money
 Machinery
 Materials

External Environment: The external environment constitutes factors and forces which are
external to the business and on which the marketer has little or no control. The external
environment is of two types:

Micro Environment
The micro component of the external environment is also known as the task environment. It
comprises of external forces and factors that are directly related to the business. These include
suppliers, market intermediaries, customers, partners, competitors and the public

1. Suppliers: They are the people who provide necessary resources needed to produce
goods & services. Policies of the suppliers have a significant influence over the
marketing manager‘s decisions because, it is laborers, etc. A company must build cordial
& long-term relationship with suppliers.

2. Market intermediaries: They are the people who assist the flow of products from the
producers to the consumers; they include wholesalers, retailers, agents, etc. These people
create place & time utility. A company must select an effective chain of middlemen, so
as to make the goods reach the market in time. The middlemen give necessary
information to the manufacturers about the market. If a company does not satisfy the
middlemen, they neglect its products & may push the competitor‘s product.
3. Partners: are all the separate entities like advertising agencies, market research
organizations, banking and insurance companies, transportation companies, brokers, etc.
which conduct business with the organization.
4. Customers: The main aim of production is to meet the demands of the consumers.
Hence, the consumers are the center point of all marketing activities. If they are not taken
into consideration, before taking the decisions, the company is bound to fail in achieving
its objectives. A company‘s marketing strategy is influenced by its target consumer. Eg:
If a manufacturer wants to sell to the wholesaler, he may directly sell to them, if he wants
to sell to another manufacturer, he may sell through his agent or if he wants to sell to
ultimate consumer he may sell through wholesalers or retailers. Hence each type of
consumer has a unique feature, which influences a company‘s marketing decision
5. Competitors: A prudent marketing manager has to be in constant touch regarding the
information relating to the competitor‘s strategies. He has to identify his competitor‘s
strategies, build his plans to overtake them in the market to attract competitor‘s
consumers towards his products. Any company faces three types of competition:

a) Brand Competition: It is a competition between various companies producing similar

products. Eg: The competition between BPL & Videcon companies.

b) The Product Form Competition: It is a competition between companies

manufacturing products, which are substitutes to each other Eg: Competition between
coffee & Tea.

c) The Desire Competition: It is the competition with all other companies to attract
consumers towards the company. Eg: The competition between the manufacturers of TV
sets & all other companies manufacturing various products like automobiles, washing
machines, etc.

6. Public: A Company‘s obligation is not only to meet the requirements of its customers,
but also to satisfy the various groups. A public is defined as ―any group that has an
actual or potential ability to achieve its objectives. The significance of the influence of
the public on the company can be understood by the fact that almost all companies
maintain a public relation department. A positive interaction with the public increase its
goodwill irrespective of the nature of the public. A company has to maintain cordial
relation with all groups, public may or may not be interested in the company, but the
company must be interested in the views of the public.
Macro Environment: Larger societal forces that affect the whole microenvironment are known
as the macro environment. These forces are of uncontrollable variables which the company must
take care of and to respond it quickly because the global forces have huge impact on consumers
and companies. The macro environment consists of following major forces which affect the
whole micro environment of a company.

1. The demography: The study of human populations in terms of size, density, location, age,
gender, race, occupation and other statistics comes under the demographic environment. The
demographic environment itself is affected by changes in the mix of age groups in the
population. If the population becomes older, this will lead to rising demand for products and
services consumed by older people and a similar fall in demand for products consumed by
younger people.

2. Economic: The economic environment is important to marketers because it affects the

amount of money people have to spend on products and services. One of the components of the
economic environment is the distribution of income. Economies around the world not only vary
in their absolute or total level of wealth but also in how their wealth is spread within the
population. For example, poor countries may be classified either as those which have a highly
unequal spread of wealth or those where it is more evenly shared. The former group of countries
may be markets for luxury goods, despite the level of poverty. In contrast, the second type of
country may be more attractive to marketers of inexpensive goods for the mass market.

3. Natural: Natural resources needed as inputs by marketers or that are affected by marketing
activities. This is important to marketers insofar as it is the source of many raw materials and
fluctuation in supply can affect the prices paid for purchases. There is increasing pressure from
public opinion as to where raw materials are sourced from, and their effect on the natural
environment.

4. Technological: Technological developments offer marketers both opportunities and threats.

Although firms can offer customers a wider array of advanced products, changes in technology
also mean that there may be more than one technical solution to a customer‘s needs. Increased
technological development accelerates the speed of obsolescence. Marketers have to consider
how their product may need to be developed over time, if it is to remain competitive.

5. Culture: People‘s opinions and tastes are shaped by the society in which they live. It should
be noted that societies are not made up of homogeneous populations. They contain sub-cultures,
which are beliefs and values shared by smaller groups of people. Such groups may arise out of a
common race, religion, social activity or hobby. Sub-cultures are important to marketers insofar
as they may have different consumption habits from the rest of the population.

6. Political and legal: Marketers are influenced by the regulatory environment. This has
implications for their obligations to customers and the wider public. Customers are increasingly
able to seek redress for faulty products, and those who live near manufacturing plants are able to
claim compensation for pollution. The political environment around the world has recently
favored the privatization of public companies. Such companies have also been able to compete
more freely in the private sector. Political changes in Eastern Europe have also meant that these
markets are now open to marketers from around the world.

Approaches to Study Marketing

1. Institutional Approach:

In the institutional approach, the focus is on the study of institutions- middlemen, wholesalers,

retailers, importers, exporters, agencies, warehousing etc., engaged in the marketing during the

movement of goods. The approach is also known as middlemen approach. Here, emphasis is

given to understand and analyses the functions of institutions, who are discharging their

marketing functions.

The activities of each institution form a part of marketing and collectively complete the

marketing functions. In the process of moving the goods from the producer to the final

consumers, a large number of persons are engaged. This system pays attention to the problems

and functions of marketing institutions-transporting, banks and other financial institutions,

warehousing, advertising, insurance etc. This method does not give adequate knowledge of the

entire marketing functions and also’ fails to explain the interrelations of different institutions.

2. Product or Commodity Approach:

Under the commodity approach the focus is placed on the product or it is an approach on the

marketing on commodity wise basis. In other words, the study relates to the flow of a certain

commodity and its movement from the original producer right up to the ultimate customer. The

subject-matter, under this study, is commodity.

When one studies the marketing on this basis—commodity approach, one must begin to study

and analyses the problems relating to a commodity i.e.,

1. Sources and conditions of supply,

2. Nature and extent of demand,

3. Mode of transporting, storage, standardization, packing etc.

Again, take an example of a commodity, say rice. One has to study the sources of rice,

location, people involved in buying and selling, means of transport, problems of selling

the product, financing, storage, packing etc. Thus, we get a full picture of the marketing

from the original producer to the ultimate consumer. The method of study is repeated for

each item.

The system claims that it is simple and gives good result over the marketing of each product;

description study is possible. But at the same time this approach is time-consuming and

repetitive process which is a drawback.

3. Management Approach:
This approach is the latest and scientific. It concentrates upon the activities or marketing

functions and focuses on the role of decision-making at the level of firm. This approach is

mainly concerned with how managers handle specific problems and situations. It aims through

evaluation of current market practices to achieve specific marketing objectives.

Generally there are two factors-controllable and uncontrollable, which are more concerned

with the decision-making.

 Controllable include price adjustment, advertisement etc.

 Uncontrollable-economical, sociological, psychological, political etc. are the basic causes

for market changes. And these changes cannot be controlled by any firm.

But controllable can be controlled by the firm. The uncontrollable limit the marketing

opportunities. As such, managerial approach is concerned with the study of uncontrollable and

then taking decisions for controllable within the scope set by uncontrollable. Managerial or

decision-making approach emphasizes on the practical aspects of marketing, but ignores the

theoretical aspects of marketing. At the same time, this approach provides an overall information

of the entire business.

4. System Approach:

The system approach can be defined as “a set of objects together with the relationships among

them and their attributes.” Systems focus on interrelations and interconnections among the

functions of marketing. The system examines marketing connections (linkage) inside as well as

outside the firm. Inside the firm there is a co-ordination of business activities-engineering,

production, marketing, price etc.

5. Functional Approach:

The functional approach gives importance on the various functions of marketing. In other words,

one concentrates attention on the specialized services or functions performed by marketers. In

this approach, marketing splits into many functions-buying, selling, pricing, standardization,

storage, transportation, advertising, packing etc. This may be studied one after another. Here

each function is studied in detail in order to understand it and analyses the nature, need and

importance of each function.

In this approach, marketing is regarded as “business of buying and selling and as including those

business activities involved in the flow of goods and services between producers and

customers.” This system gives too much importance to various marketing functions and fails to

explain how such functions are applied to the specific business operations.

6. Societal Approach:
This approach has been originated recently. The marketing process is regarded as a means by

which society meets its own consumption needs. This system gives no importance as to how the

business meets the consumer’s needs. Therefore, attention is paid to ecological factors

(sociological, cultural, legal etc.) and marketing decisions and their impact on the society’s well-

being.

7. Legal Approach:

This approach emphasizes only one aspect i.e., transfer of ownership to buyer: It explains the

regulatory aspect of marketing. In India, the marketing activities are largely controlled by Sales

of Goods Act, Carrier Act etc. The study is concentrated only on legal aspects, leaving other

important aspects. This does not give an idea of marketing.

8. Economic Approach:

This approach deals with only the problems of supply, demand and price. These are important

from the economic point of view, but fail to give a clear idea of marketing.

Marketing Mix

Back in the 1960s, when marketing men smoked at their desks, ladies tapped away in their
typing pools, and sliced bread was the yardstick of whether a product was any good, a marketing
notion was hatched that was so perfect, sixty years later it is still considered an integral part of
any marketing strategy.

It’s called the seven Ps of marketing and includes product, price, promotion, place, people,
process, and physical evidence.

Here’s how the 7 Ps of marketing can be applied to everything in your marketing mix:

1. PRODUCT
It goes without saying that the service or product you’re selling should be at the centre of every
element of the marketing mix. Fundamentally, it allows you to address the questions key to sales
conversion: what problem or issue does the product solve for customers? Why is your
product the best one to solve it?

2. PRICE
The strategy behind the pricing of your product needs to be based on what your customers are
prepared to pay, costs such as retail mark-up and manufacturing, as well as other considerations.

3. PROMOTION
Successful marketing strategies include all the promotional activities across the marketing mix,
including advertising, direct marketing, and in-store promotional activities. The possibilities of
digital promotion are limited only by your imagination and can include online events, chats,
social media groups, and livestreams.

4. PLACE
Where and how your product is displayed and sold should be directly informed by your
customers. A deep understanding of their purchasing patterns – and targeting them at the
right stage in their buying cycle – will make it clear where you should promote and sell your
products and how that fits into your online and real-world marketing mix.

5. PEOPLE
Excellent customer service not only converts to sales, but can increase your customer base by
referrals. Acquiring these referrals by people who love your brand can also be a great example
of how your marketing efforts can support your sales process.
It’s important that everyone who represents your brand or deals with customers – including the
non-human chat bot variety! – are fully trained sales professionals with an intimate knowledge
of your product and how it will improve the lives or solve the problems of your customers.
6. PROCESS
The process of delivering your product to the consumer should be designed for maximum
efficiency and reliability, but may also include features that are in line with your brand, such as
being environmentally or sustainably focused.
With the rise in online shopping, digital partnerships and logistics have become an essential part
of the marketing mix.

7. PHYSICAL EVIDENCE
Physical evidence incorporates aspect that proves your brand exists and that a purchase took
place. Examples of proof that your brand exists can include things like a physical store or office
for your business, a website if your business operates solely online, and printed business cards
that you exchange when meeting people. Examples of proof of purchases can include physical or
digital receipts, invoices, or follow-up email newsletters that you send to customers as a
retention exercise.