UNIT-1 PRINCIPLES OF MARKETING

MODULE 1: INTRODUCTION TO MARKETING

Market

The term ‘market’ is derived from the Latin word “mercatus, which means ‘to trade’(i.e to
purchase and sell goods). It also means merchandise, were traffic and place of business.

According to Jevons “ A Market means anybody of persons who are in intimate business relations
and carry on extensive transactions in any commodity”

In the words of Prof. Seligman, “A market means a coming together of offers and demand for
economic goods irrespective of the physical presence of the contracting parties”

Marketing

It's a business process involving creating, promoting, and selling products or services to
customers. Marketing is like a bridge between businesses and customers. It involves understanding
what people want or need and then creating products or services to meet those desires.

The traditional view of marketing, prevalent until the mid-20th century, perceived marketing as a
set of activities primarily aimed at selling products or services. It was product-centric, emphasizing
the creation and promotion of goods without a deep understanding of customer needs. But in
modern view of marketing, which has evolved over recent decades, takes a customer-centric
approach. It begins with a thorough understanding of customer needs and preferences, aiming to
create value by offering products or services that genuinely fulfill those requirements and building
long-term relationships with customers.

Nature /Features of Marketing.

1. Marketing is an Economic Function:

Marketing plays a crucial role in the economy by facilitating the exchange of goods
and services. It helps allocate resources efficiently by connecting producers with
consumers. This function involves activities such as product distribution, pricing, and
promotion, which contribute to economic growth.

2. Transfer of Ownership:
Marketing involves the transfer of ownership of goods or services from producers to
consumers. This transfer occurs when customers purchase products or services, and it's a
fundamental aspect of marketing. Effective marketing strategies help ensure this transfer is
smooth and beneficial for both parties.

3. Interacting Business:
Marketing is not limited to a single business entity. It often involves interactions
between multiple businesses in the supply chain, including manufacturers, wholesalers,
retailers, and service providers. These interactions are essential for the flow of products and
services from producers to end consumers.

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4. Marketing is a Managerial Function:

Marketing is not just about advertising or selling products. It's a strategic and
managerial function within organizations. Marketing managers are responsible for making
decisions related to product development, pricing, distribution, and promotion. They
develop marketing plans and strategies to achieve the organization's objectives.

5. Social Function:
Marketing has a significant impact on society. It influences consumer behavior,
shapes preferences, and can impact societal values. Ethical marketing practices are crucial
to ensure that marketing serves the best interests of society as a whole, not just the business.

6. Dual Objective
Profit and Consumer Satisfaction: Marketing seeks to achieve a balance between
two primary objectives. On one hand, businesses aim to generate profit by selling products
or services at a price higher than production costs. On the other hand, marketing also
focuses on ensuring consumer satisfaction by delivering value and meeting customer needs.
Successful marketing strategies align these dual objectives to create long-term customer
relationships and sustained profitability.

Scope or Objective of Marketing

Marketing covers all aspects of understanding customers, creating products or services to

satisfy their needs, ensuring customer satisfaction, guiding production decisions, setting prices,
managing distribution, and effectively promoting offerings.

1. Study of Consumer Wants and Needs: Marketing begins by conducting in-depth research
to understand what potential customers want and need. This involves gathering data on their
preferences, desires, and pain points. This understanding forms the foundation for
developing products or services that can effectively meet these customer demands.
2. Study of Consumer Behavior: To make informed marketing decisions, it's crucial to study
how consumers behave in the marketplace. This includes analyzing factors such as what
influences their purchasing decisions, where they shop, what products they prefer, and how
they respond to marketing messages. This behavioral analysis helps tailor marketing
strategies to better resonate with the target audience.
3. Consumer Satisfaction: Beyond just selling products, marketing is responsible for
ensuring that customers are content with their purchases. This involves post-purchase
activities like customer support, addressing complaints, and seeking feedback. Satisfied
customers are more likely to become repeat buyers and loyal advocates for the brand.
4. Production: Marketing plays a pivotal role in influencing the production process. It guides
decisions regarding what products or services to create based on market demand. Marketing
research helps determine product features, quality, and quantity to ensure they align with
customer preferences and expectations.
5. Pricing: Setting the right price is a critical marketing decision. Pricing strategies consider
factors such as production costs, competitors' pricing, and perceived value to customers.

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The goal is to find a pricing strategy that maximizes profitability while remaining attractive
to potential buyers.
6. Distribution: Marketing strategies determine how and where products or services are made
available to customers. This involves decisions about distribution channels (e.g., retail
stores, e-commerce platforms), logistics, inventory management, and ensuring products
reach customers efficiently and conveniently.
7. Promotion: Promotion involves various activities aimed at creating awareness and interest
in products or services. Marketing uses advertising, public relations, social media, content
marketing, and other communication channels to convey the value of what's being offered.
Effective promotion helps generate interest, inform potential customers, and persuade them
to make a purchase.

Importance of Marketing

Importance of marketing may be shown on the basis of Consumer, Society and Business firm,

1. Importance of Marketing for Consumers:

A. Sorting & Meeting of Unmet Needs & Wants:

Marketing research helps businesses understand what consumers need and want,
even before consumers themselves recognize these needs. By identifying unmet needs,
marketing facilitates the creation of products and services that directly address these desires,
improving people's lives.

B. Reduce Price of Product/Service:

Competition is a fundamental aspect of marketing. When businesses compete for
consumers' attention and dollars, they often lower prices to attract more customers. This
price competition benefits consumers by making products and services more affordable.

C. Awareness and Information:

Marketing campaigns and advertising provide consumers with valuable information
about products and services. This information helps consumers make informed choices by
understanding the features, benefits, and potential drawbacks of what they are buying.

D. Wide Choice:
Marketing creates a marketplace with a wide array of options. Consumers can
choose from various brands, styles, and price ranges, allowing them to find products that
align with their personal preferences, budgets, and needs.

E. Value Proposition:
Marketing communicates the value a product or service offers. Consumers can
assess whether a purchase aligns with the perceived benefits they'll receive, helping them
make decisions that provide the best value for their money.

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F. Innovation:
Marketing drives businesses to continually innovate and improve their offerings. It
encourages the development of new and better products and services that meet evolving
consumer demands and technological advancements.

G. Feedback and Improvement:

Marketing channels consumer feedback back to companies, fostering a culture of
improvement. Companies use this feedback to enhance their products, services, and
customer experiences, ultimately benefiting consumers with better-quality offerings.

2. Importance of Marketing for Society:

A. Division of Labor Specialization:

Marketing enables specialization within an economy. Different businesses can focus
on what they do best and efficiently serve their niches, which leads to higher productivity
and economic growth.

B. Creation of Place, Time, Ownership:

Marketing ensures that products are available where consumers want them, when
they want them, and in the form they desire. This involves the distribution of goods and
services through intermediaries like retailers, making it convenient for consumers.

C. Reducing Cost of Distribution:

Efficient marketing reduces the cost of getting products from manufacturers to
consumers. This efficiency helps keep prices competitive and affordable for consumers.

D. Employment Opportunity:
The marketing industry creates jobs at various levels, from advertising and sales
positions to logistics and customer service roles. This contributes to overall employment
and economic stability.

E. Identification of Consumer Requirements:

Through market research and analysis, marketing identifies consumer needs and
preferences. This information guides businesses in tailoring their products and services to
better serve the market, resulting in products that are more in line with consumer
expectations.

F. Promotion of Economic Stability:

Marketing activities, by promoting sales and trade, contribute to economic stability.
They drive business growth and attract investment, which, in turn, supports economic
stability within a society.

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G. Increased Income of People:

The growth of businesses, driven by effective marketing, leads to higher incomes for
individuals. When businesses thrive, they generate more revenue, provide higher wages,
and contribute to an overall improved standard of living.

H. Effective Utilization of Research:

Marketing research and analysis provide valuable insights into consumer behavior
and market trends. This data helps businesses make informed decisions about resource
allocation, ensuring that investments are directed toward products and services that are in
demand and align with consumer preferences.

3. Importance of marketing for business firms

A. To Earn More Profit:

Marketing is a key driver of profit for business firms. Effective marketing strategies
can increase sales and revenue, leading to higher profits. By understanding customer needs
and preferences and tailoring products or services to meet them, businesses can charge
premium prices and capture a larger market share, ultimately boosting their bottom line.

B. Continuous Information About the Market:

Marketing involves ongoing market research and analysis. This continuous flow of
information helps businesses stay informed about market trends, consumer behavior,
competitors, and emerging opportunities. This knowledge is vital for making informed
decisions and adapting to changes in the marketplace.

C. Basis for Decision Making:

Marketing provides essential data and insights that serve as the foundation for
strategic decision-making. Businesses use marketing research to assess the feasibility of
new product launches, pricing strategies, market expansion plans, and more. It guides
decisions on resource allocation, product development, and marketing investments.

D. Provides Working Capital Requirement:

Marketing activities, such as effective sales and promotion, generate revenue that
supports the working capital requirements of a business. This working capital is essential
for day-to-day operations, including purchasing inventory, covering operational expenses,
and managing cash flow. Without revenue generated by marketing efforts, a business may
struggle to meet its financial obligations.

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Concepts of marketing

Core concepts of marketing includes Need, want, demand, products and services, value satisfaction,
exchange, transactions, relationships and markets.

 Need: A "need" in marketing refers to a basic (fundamental) requirement for survival and
well-being. For instance, people need food to nourish themselves. In marketing, recognizing
this need might lead to the creation of products like juice, which provides a convenient
solution to satisfy the need for thirsty.

 Want: A "want" goes beyond basic needs and represents a specific desire for something.
While you need food, you might "want" a meal at a fancy restaurant. Businesses often
identify and target these wants to create demand for their products or services.

 Demand: "Demand" arises when people not only want something but also have the means
and willingness to purchase it. For example, many people want smartphones, but only those
who can afford them and are ready to buy create the demand. Apple's iPhone meets this
demand by offering high-quality smartphones with various features.

 Products and Services: "Products" are physical items, while "services" are intangible
actions or experiences. An example of a product is a laptop, while a service could be
computer repair. Microsoft's Windows operating system is a product, and the IT support
service offered by a local tech company is a service.

 Value: "Value" represents the benefit a customer perceives in a product or service

compared to its cost. If a luxury car provides a smooth ride, advanced technology, and
prestige, and customers are willing to pay the premium price for these benefits, it offers
excellent value.

 Satisfaction: "Satisfaction" is the feeling of contentment and happiness a customer

experiences when a product or service meets or exceeds their expectations. If a hotel offers
comfortable rooms, excellent service, and fulfills all guest needs, customers leave satisfied
and are more likely to return.

 Exchange: "Exchange" refers to the act of giving something (typically money) in return for
a product or service. When you buy a ticket for a concert, you're engaging in an exchange of
money for the experience of attending the event.

 Transactions: "Transactions" are individual instances of buying and selling. Each purchase
or sale is a separate transaction. For instance, when a customer buys a cup of coffee from a
café, it's a transaction.

 Relationships: Building "relationships" in marketing involves developing long-term

connections with customers. Companies do this by providing consistent quality, excellent
customer service, and loyalty programs. For example, a coffee shop that offers a loyalty

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card, giving customers a free coffee after buying a certain number, encourages repeat
business and builds customer relationships.

 Markets: A "market" consists of potential buyers who share a particular need or want. For
example, the market for outdoor adventure gear includes people interested in hiking,
camping, and other outdoor activities. Companies tailor their marketing efforts to target
specific markets effectively.

Approaches of marketing

Marketing approaches offer distinct perspectives and strategies for businesses to consider,
depending on their objectives, target audience, and competitive landscape. Effective marketing
often involves a strategic blend of these approaches to create a well-rounded and impactful
marketing strategy.

1. Commodity Approach:
The commodity approach treats products or services as undifferentiated and focuses
primarily on price competition. It assumes that consumers perceive products as nearly
identical and make their decisions based on the lowest cost. It treats products or services as
standardized and interchangeable. It emphasizes price as the primary differentiator,
assuming consumers make purchasing decisions based on the lowest cost.
Eg: The market for basic kitchen staples like rice and flour often operates on a
commodity approach. Consumers typically choose based on price, as there is little perceived
difference between brands or varieties

2. Institutional Approach:
The institutional approach emphasizes building and promoting the reputation and
image of the organization itself, rather than specific products. It aims to create a strong and
trusted corporate identity. It focuses on promoting the reputation and image of the
organization or brand itself rather than individual products. It aims to create a strong and
recognizable corporate identity.
Eg: Apple Inc. is known for its institutional marketing. The company consistently
communicates its values of innovation, design excellence, and user experience across all its
products, contributing to brand loyalty.

3. Functional Approach:
The functional approach highlights the specific features, benefits, and utility of a
product or service. It focuses on demonstrating how the product effectively fulfills
consumers' practical needs. It highlights the specific features, benefits, and utility of a
product or service. It aims to demonstrate how the product meets consumers' practical needs
and solves problems.
Eg: When marketing a smartphone, companies often emphasize features like camera
quality, battery life, and processing speed to address consumers' functional requirements for
communication and convenience.

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4. Decision-Making Approach:
The decision-making approach explores the psychological and emotional factors
influencing consumer choices. It delves into how consumers make decisions, considering
both rational and emotional aspects. It explores the psychological and emotional factors that
influence consumers' choices. It examines how consumers make decisions, whether driven
by logic, emotions, or a mix of both.
Eg: Luxury car brands like Mercedes-Benz appeal to consumers' emotions by
showcasing elegance, prestige, and a sense of achievement. Such marketing influences the
emotional aspect of decision-making.

5. System Approach:
The system approach views marketing as a complex system with interconnected
elements. It considers how various internal and external factors, such as market dynamics,
supply chains, and consumer behavior, impact marketing decisions. It views marketing as a
complex system with interconnected elements. It considers internal and external factors,
such as market dynamics, organizational capabilities, and consumer behavior, influencing
marketing decisions.
Eg: When launching a new gaming toy, a company must consider factors like
production capacity, market demand, competition, and distribution logistics within the
broader system of the gaming industry.

6. Social Approach:
The social approach focuses on the broader societal impact of marketing decisions.
It considers how marketing can contribute positively to society, address social issues, and
align with ethical and sustainability principles. It focuses on the societal impact of
marketing decisions. It considers how marketing can contribute positively to society,
address social issues, and align with ethical and sustainability principles.
Eg: Several electric car manufacturers, such as Tesla and Nissan, embrace the
societal marketing concept. They don't just focus on selling electric cars but also consider
the larger societal and environmental impacts of their products.

7. Holistic Approach:
The holistic approach integrates various marketing elements, such as product
development, pricing strategies, promotion, and distribution, into a comprehensive and
coordinated strategy. It recognizes that all these aspects must align to achieve marketing
objectives.
Eg: McDonald's uses a holistic marketing approach by offering a consistent menu
(product), pricing its items competitively, promoting through global campaigns
(promotion), and ensuring accessibility through a vast network of outlets (distribution).

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Evolution of marketing/ Concepts of marketing

1. Production Concept

According to Kotler's "The production concept holds that customers will favor products that are
available and highly affordable. Therefore, management should focus on improving production and
distribution efficiency."

The production concept is centered on the idea that businesses should focus primarily on
maximizing production efficiency and producing as many goods as possible. It assumes that
consumers will buy products that are widely available and affordable.

Features

1. Low price :
This concept believes that consumers are attracted by low price. It also believe that
consumer favour those product which are available in right qualities at right time.
2. Low cost of production :
This concept believes that management should always tried to bring down the cost
of production and thereby make the product available at cheaper price.
3. Regular supply:
It believes that there should be regular supply of goods.

Suitability

1. Production concept is suitable to mass consumption products such as food, articles,

stationery etc.
2. It is always suitable to service organization.

Demerits

1. No personal attention :
Consumer are not given personal attentions.
2. Price is not only the factor to buy
Price is not important always , sometimes consumers may prefer to buy at higher price.
3. No importance to quality :
It does not give importance to quality of product.

2. Product Concept

According to Kotler's "The product concept holds that consumers will favor products that
offer the most in quality, performance, and innovative features. Organizations should, therefore,
focus on making continuous product improvements."

The product concept shifts the focus from production efficiency to product quality and
innovation. It assumes that consumers favor products with superior features, performance, or
unique attributes.( Concentration on product development, innovation, and differentiation)

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Features

1. Focus on quality
The quality of the product is given almost importance because consumer prefer to
buy such products.
2. Continues activity
Improvement of quality requires continuous product planning and development.
3. May attract customer
This concept believes that to attract the consumer.

Suitability

1. It encourages product innovation, research and development

2. Service oriented product and non-product organizations follow this product.
3. It suits on fashionable and expensive reay-made garments, shoes, watch, clinic, education
etc.

Demerits

1. Lack of marketing efforts

This concept does not give importance to the marketing efforts but reality of product
requires sufficient marketing and advertisement efforts.
2. No much importance to consumer needs
Product concept may lead to negligence on the part of production regarding many
other needs and desires of the consumer.

4. Selling Concept.
According to Kotler's "The selling concept holds that consumers and businesses, if
left alone, will ordinarily not buy enough of the organization's products. The organization
must, therefore, undertake an aggressive selling and promotion effort."
The selling concept centers on aggressive sales and promotional efforts to persuade
consumers to buy a product. It assumes that consumers may not buy unless they are actively
convinced.

Features.

1. Assumption that consumer is unaware of product

It is based on the assumption that the consumer are left alone will not buy a product
therefore a firm should make aggressive selling his product.
2. Imaginative
Marketer has to be imaginative then only there will be successful in selling his
product.
3. Suitable for unknown products
Selling concept is a product followed usually for unknown products. Eg : Insurance,
Mutual funds.
4. Selling concept gives importance to the increase the sales.

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Suitability

1. Insurance business
2. New product like soaps, creams etc
3. Electrics and mechanical equipment’s.
4. Other products like automobiles, books etc.

Demerits

1. Lack of consumer satisfaction

It gives more importance to selling and not consumer satisfaction.
2. Reduces marketing scope
An attempt to narrow down marketing to the functions of selling only.
3. Forces customer
Sometimes it forces the buyers to purchase of the product.

4. Marketing concept
According to Kotler's Definition "The marketing concept holds that the key to achieving
organizational goals consists of the company being more effective than competitors in
creating, delivering, and communicating customer value to its chosen target markets.
The marketing concept places the consumer at the core of all business activities. It
focuses on understanding and meeting customer needs and wants better than competitors.
Profit results from satisfying customer needs.

Features :

1. Target consumer
Marketing concept concentrate on determining the needs and wants of target
consumers.
2. Consumer Satisfaction
This concept does not believe in just putting sales efforts. It makes relevant sales
efforts to satisfy the needs and wants of the consumers.
3. Consumer is the king
It believes in then like “consumer is the king” consumer can be identified in to market
segment depending upon their characteristics and behavior.
4. Focused preference
Consumers have definite preference towards products or brands, which match with
their perceived value or attributes.

Suitability

1. The points out that long-term success is assured if the needs of the consumers received top
consideration.
2. It suggests that marketing risk can be reduced by the understanding the market. Example
electronic goods.

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Demerits
1. No practicability
Business firm just talk about marketing concept but do not practice it.
2. Change is consumer behavior
In reality it is difficult to keep with changing of the consumer behavior.
3. Creates pressure on Consumer
Consumerism is promoted by the marketing concept. It said that consumerism is a
sale of marketing.
Eg : Sometimes influencers and aggressive advertising to encourage consumers to
constantly update their wardrobes with the latest clothing items. As a result, consumers
feel pressured to purchase new clothing regularly, even if their current wardrobe is still
good to wear.
4. No value on society
There is an argument that some firms neglect the needs of the society.

5. Societal Concept

According to Philip Kotler's Definition: "The societal marketing 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,
in a way that preserves or enhances the consumer's and the society's well-being."
The social concept expands beyond consumer satisfaction to consider broader
societal well-being. It acknowledges a company's responsibility to address social and
environmental issues while meeting consumer needs.

Features.

1. Society wellbeing
It believes in giving expected satisfaction to the customers and thereby enhancing
the well beings of the society.
2. Quality of life
Its based on the assumption that a marketer has to fulfill the customer demand which
ultimately stood the quality of life.
3. Need of consumer
Marketer should not offer a product if it does not serve the needs of the consumers.
4. Long term
Marketer should look after the long term needs of the consumer and public welfare.

Merits.

1. It is helpful in the creation of intelligent consumption pattern.

2. It serves ecological needs and helping the industry to grow and prosper.
3. It serves the business world as well as the society as a whole.

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Selling Vs marketing
Marketing is a comprehensive strategy that involves understanding customer needs, creating
value, and managing customer relationships, while selling is a specific activity within marketing
that focuses on persuading customers to buy a particular product or service. Both marketing and
selling are essential for a successful business, but they serve different purposes within the overall
business strategy. Marketing is like the preparation and planning stage, where you identify what
customers want, create appealing products or services, and let people know about them through
various means like advertising and branding. It's about building the cake and making it look
delicious. On the other hand, selling is the actual interaction with customers, where you present
your product or service, explain its benefits, and persuade them to make a purchase.

Basis Selling Marketing

Meaning Selling means transferring ownership of Marketing means serving customer
goods and services from manufacturers to demands by offering and selling right
buyers in exchange of money and money's product, at right price, in right amount,
worth at right place and to right customers.
Objective In selling, emphasis is on maximising In marketing, emphasis is on customer
sales. satisfaction
Time of Selling starts after production Marketing starts before production
Implement
Time of closure Selling ends with the sale of goods or Marketing continues after sale. Post-
services. sale research is conducted to know
consumer satisfaction with the
product.
Need In selling, the focus is on seller's needs, In marketing, focus is on customer's
i.e., to convert product into cash. needs, i.e., providing product as per
wants and needs of customer.
Scope Selling is narrower in scope. Marketing is wider in scope as it
includes various functions.
Area Selling is a part of marketing. Marketing includes selling and other
activities.
Principle Selling is based on the principle 'let the Marketing is based on the principle 'let
buyer beware'. the seller beware'.
Activity Selling is a routine activity. Marketing is a philosophy of
management. It includes planning,
decision-making and execution of
marketing plans and programmes.
Focus Selling is product-oriented. Marketing is customer-oriented

Perspective Selling has a short-term perspective. Marketing has long-term perspective.

Time of activity Selling is concerned with sale of goods Product designing and development is
already produced and designed. an - important marketing function. (It
starts before producing goods)
Important Role Personal selling has great importance in In marketing, personal selling,
selling. advertising, product designing,
packaging, product pricing and
product distribution are equally
important.

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Marketing environment:

The marketing environment is consist of all the factors and influences that can impact a company's
marketing activities and overall business performance. It consists of both micro environmental and
macro environmental factors.

The microenvironment includes elements such as customers, suppliers, competitors, and

intermediaries, all of which directly affect a company's day-to-day operations. On the other hand,
the macro environment comprises broader forces like economic conditions, social and cultural
trends, technological advancements, political regulations, and environmental concerns, which shape
the market's overall landscape.

Understanding the marketing environment is vital for businesses as it enables them to adapt
to changing conditions, identify opportunities, and mitigate potential threats. By staying attuned to
their marketing environment, companies can develop more effective strategies, enhance customer
satisfaction, and achieve their long-term goals in a dynamic and ever-evolving marketplace.

Importance of studying the marketing environment

1. Identify Customer Needs: Studying the marketing environment helps businesses

understand changing customer preferences, behaviors, and needs. This knowledge is crucial
for tailoring products, services, and marketing strategies to meet customer demands
effectively.
2. Identify Opportunities and Threats: By analyzing the marketing environment, companies
can identify emerging opportunities for growth and potential threats to their operations. This
proactive approach allows for better decision-making and risk management.
3. Competitive Advantage: Understanding the competitive landscape within the marketing
environment helps companies identify where they can gain a competitive edge. It enables
them to differentiate their offerings, pricing, and positioning to stand out in the market.
4. Economic Factors: Economic conditions, such as inflation, unemployment, and consumer
spending, significantly impact business operations. Monitoring these factors helps
companies adapt to economic changes and make informed financial decisions.
5. Technological Advancements: Keeping abreast of technological developments is crucial
for staying competitive. A sound understanding of technological trends helps businesses
innovate, streamline operations, and offer new solutions to customers.
6. Social and Cultural Influence: Social and cultural trends influence consumer behaviors
and preferences. Companies that are attuned to these influences can create marketing
strategies that resonate with specific demographics and cultural segments.
7. Strategic Planning: Information from the marketing environment informs strategic
planning. It guides decisions related to market entry, product development, marketing
campaigns, and resource allocation, ensuring that strategies align with market conditions.
8. Environmental Stability and Reputation Building: Addressing environmental concerns
and promoting sustainability is essential for building a positive reputation. Companies that
proactively respond to environmental factors can enhance their brand image and gain the
trust of environmentally conscious consumers.

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Components of marketing environment

1. Micro Environment
2. Macro environment

1.Micro Environment

The microenvironment in marketing refers to the immediate and specific factors and entities
that directly influence and impact a company's day-to-day operations and marketing activities.
specific set of factors and entities that are closely connected to a company and have a direct impact
on its day-to-day operations and marketing activities. These factors are typically closer to the
company which are controllable by the business.

a. Company:
This refers to the organization itself and its internal departments, including management,
production, marketing, and employees. The company's decisions, actions, and capabilities
profoundly influence its marketing efforts. For instance, if a company invests in research and
development to create innovative products, its marketing team can use these innovations to attract
customers and gain a competitive edge.

b. Supplier:
Suppliers are external entities that provide the company with the necessary materials,
components, or resources for its operations. The relationship with suppliers can impact a company's
production, cost structure, and ability to deliver products on time. For example, a restaurant chain
relies on food suppliers for fresh ingredients; the quality and reliability of these supplies directly
affect the restaurant's menu and customer experience.

c. Intermediaries:
Intermediaries include wholesalers, retailers, distributors, and other middlemen who help the
company distribute its products or services to the end customers. These intermediaries play a
critical role in the distribution chain. For example, a book publisher works with distributors and
bookstores to get its books into the hands of readers. The choice of intermediaries affects pricing,
availability, and market reach.
d. Competitors:
Competitors are other companies in the same industry or market that offer similar products or
services. A company must monitor its competitors to understand their strategies, strengths, and
weaknesses. For instance, in the smartphone market, Apple competes with Samsung.
Understanding the competition can help a company position itself effectively, set competitive
pricing, and differentiate its products.

e. General Public:
The general public consists of individuals and groups that may not be direct customers but can
influence the company's reputation and operations. This can include activist organizations, social
media users, and community members. For example, a fashion brand's use of sustainable materials
can positively influence its image among environmentally conscious consumers, even if those
consumers are not immediate buyers.

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f. Customer:
Customers are the individuals or organizations that purchase the company's products or
services. They are the primary focus of marketing efforts. Companies must understand their
customers' needs, preferences, and buying behaviors to tailor their products and marketing
strategies accordingly. For instance, a fitness equipment manufacturer studies customer preferences
to design and market exercise equipment that meets specific fitness goals.

2. Macro Environment
The macro environment in business and marketing refers to the external factors and forces
that influence an organization's operations, strategies, and decision-making. These factors are
typically beyond the control of the organization and have a broad impact on the industry or market
as a whole

a. Physical Environment:
This refers to the natural world around us, including things like land, water, air, and
natural resources. It also includes environmental concerns like pollution and climate
change. Companies need to consider how their activities impact and are influenced by the
physical environment.
 Natural Resources: This refers to the availability and sustainability of natural resources
such as water, minerals, and forests. For instance, a beverage company must consider the
availability of clean water when selecting the location of its bottling plants.
 Climate: Climate conditions in different regions can affect product choices and consumer
behavior. For example, a clothing retailer might offer different product lines in regions with
cold winters versus warm climates.
 Ecology: Companies need to be mindful of their impact on the environment. Implementing
eco-friendly practices, such as reducing waste and using sustainable materials, is an
example of green marketing.

b. Socio-Cultural Environment:
This is about the people and the societies we live in. It includes our customs,
traditions, values, and lifestyles. Companies need to understand the culture and values of
their target customers to create products and messages that resonate with them.

 Customs: Social customs and traditions vary by culture and region. Companies need to
respect and adapt to these customs in their marketing strategies.
 Lifestyle: Understanding the lifestyle choices and habits of a target market is crucial. For
instance, a fitness brand would tailor its products and advertising to align with a health-
conscious lifestyle.
 Values: Companies must align with the values of their target audience. For example, a
brand promoting fair trade products aligns with the value of ethical and responsible
consumption.
 Social Class: Socio-economic factors, such as income and occupation, influence consumer
preferences. A luxury car manufacturer targets consumers in higher social classes.

c. Demographic Environment:

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Demographics are the statistical characteristics of a population, like age, gender, income,
and education. Companies look at these factors to understand their customers better.

 Age Structure: Different age groups have distinct needs and preferences. For example, a
toy company designs products targeting specific age ranges, like toddlers or teenagers.
 Family Lifestyle: Changes in family structures and lifestyles impact consumer behavior.
Companies adapt their products and marketing to accommodate diverse family structures.
 Education and Profession: Educational levels and professions influence buying decisions.
High-income professionals may invest in luxury goods, while students may opt for budget-
friendly options.
 Geographical Shift: Population shifts between urban and rural areas can affect market
demand. Companies may choose to expand their presence in growing urban centers.

d. Scientific & Technical Knowledge:

This is all about advancements in science and technology. It includes things like new
inventions and innovations that can change how businesses operate and what products they
offer.
 Digital & Internal Technology: Advances in technology impact consumer behavior
and business operations. Companies invest in digital marketing and internal technology
systems to improve efficiency.
 Options in Technology: The availability of new technologies can create or disrupt
markets. For example, the rise of electric vehicles has reshaped the automotive industry.

e. Economic Forces:
This is about money and how it flows in the economy. It includes things like supply and
demand, employment rates, and how much people earn. Companies need to know if people
have money to spend and how economic conditions might affect their sales.

 Demand & Supply: Economic conditions influence demand and supply dynamics. A
recession may lead to reduced consumer spending, impacting various industries.
 Unemployment: High unemployment rates can lead to decreased consumer confidence and
spending. Companies may need to adjust pricing or marketing strategies accordingly.
 Income: Changes in income levels affect purchasing power. Luxury brands target high-
income consumers, while budget brands cater to lower-income segments.
 Market Competition: The level of competition within an industry influences pricing,
product differentiation, and marketing strategies.

f. Political and Legal Factors:

This involves government policies, laws, and the overall political stability of a region.
Companies have to follow the rules and regulations set by governments, and they need to be
aware of how changes in politics might impact their business.

 Political Environment: Political stability, government policies, and regulations impact

business operations. Companies must comply with local laws and adapt to changes in
political leadership.

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 Legal Environment: Legal factors, such as intellectual property laws and product safety
regulations, influence product development and marketing practices. Companies face legal
consequences if they do not adhere to these regulations.

Marketing management
Marketing management is a process of planning, organizing, implementing, and controlling
an organization's marketing activities and resources to achieve specific marketing objectives and
goals. It involves overseeing various aspects of marketing, including market research, product
development, pricing, distribution, advertising, and promotion, with the ultimate aim of meeting
customer needs, maximizing sales, and achieving sustainable competitive advantage in the
marketplace.
As per Philip Kotler has defined “Marketing management is both art and science of
choosing target markets and getting, keeping and growing customers through creating, delivering
and communicating superior customer values of management”

Importance of Marketing Management:

1. Customer Satisfaction:
Understanding customer needs and preferences through market research and
analysis allows organizations to develop products and services that align with customer
expectations. Satisfied customers are more likely to remain loyal and provide positive
feedback, driving long-term success.

2. Market Expansion:
Effective marketing management helps companies identify growth opportunities in
both existing and new markets. It enables organizations to diversify their customer base and
expand their reach, potentially increasing market share and revenue.

3. Competitive Advantage:
Marketing management involves creating and executing unique strategies that
differentiate a company from its competitors. This distinctiveness can lead to a sustainable
competitive advantage, making it difficult for rivals to replicate success.

4. Innovation:
Continuous market analysis and customer feedback can uncover trends and unmet
needs. Marketing management facilitates innovation by inspiring new product development
and improvements to existing offerings, enhancing competitiveness.

5. Resource Allocation:
Marketing management plays a crucial role in resource allocation, ensuring that
marketing budgets are used efficiently to maximize return on investment. This involves
prioritizing marketing efforts based on their potential impact on achieving business goals.

6. Brand Building:

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Marketing management is instrumental in brand development. Strong branding

creates recognition, trust, and loyalty among customers. Companies with well-established
brands often command premium prices and enjoy customer loyalty.

7. Risk Management:
Thorough market research and analysis can identify potential risks and challenges in
the marketplace. Marketing management allows organizations to proactively address these
issues, reducing the impact of adverse market conditions.

8. Profitability:
Ultimately, marketing management aims to boost sales and revenue, which directly
impacts profitability. By optimizing pricing, promotion, and distribution strategies,
organizations can increase their bottom line.

9. Customer Relationship Management:

Marketing management fosters relationships with customers, enhancing their
experience and engagement. Strong customer relationships lead to repeat business, referrals,
and positive word-of-mouth marketing.

10. Adaptation to Changing Markets:

In today's dynamic business environment, marketing management helps
organizations stay flexible and responsive to evolving market conditions, consumer
preferences, and competitive pressures. It allows businesses to adjust their strategies to
remain relevant and competitive

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