Chapter - Marketing

Notes

1. Definition of Marketing :
Traditionally, marketing has been described in terms of its functions or activities.
In this respect, marketing has been referred to as performance of business
activities that direct the flow of goods and services from producers to consumers.
2. Modern Definition of Marketing
Phillip Kolter has defined marketing as, “a social process by which individual
groups obtain what they need and want through creating offerings and freely
exchanging products and services of value with others”.
3. Marketing is a social process where in people interact with others, in order to
persuade them to act in a particular way, say to purchase a product or a service,
rather than forcing them to do so.
4. Features of Marketing.
1- Need and Want: The focus of the marketing process is on satisfaction of the
needs and wants of individuals and organisations
A need is a state of felt deprivation or feeling of being deprived of something. If
unsatisfied, it leaves a person unhappy and uncomfortable.
Human needs shaped by such factors as culture, personality and religion are
called wants.
Job of a Marketer : A marketer’s job in an organisation is to identify needs of the
target customers and develop products and services that satisfy such needs.
2. Creating Marketing offering : Market offering refers to a complete offer for a
product or service, having given features like size, quality, taste, etc; at a certain
price; available at a given outlet or location and so on.
A good ‘market offer’ is the one which is developed after analysing the needs and
preferences of the potential buyers.
3. Customer Value:
A product will be purchased only if it is perceived to be giving greatest benefit or
value for the money.
The job of a marketer, therefore, is to add to the value of the product so that the
customers prefer it in relation to the competing products and decide to purchase it.
4.Exchange Mechanism:
The process of marketing involves exchange of products and services for money
or something considered valuable by the people, In the modern world, goods are
produced at different places and are distributed over a wide geographical area
through various middlemen, involving exchanges at different levels of
distribution. Exchange is, therefore, referred to as the essence of marketing. For
any exchange to take place,
5. Marketing Management PHILOSOPHIES/THINKING/CONCEPTS
The Production Concept: The focus of business activities was, therefore, on
production of goods. It was believed that profits could be maximised by
producing at large scale, thereby reducing the average cost of production. It was
also assumed that consumers would favour those products which were widely
available at an affordable price. Thus, availability and affordability of the product
were considered to be the key to the success of a firm. Therefore, greater
emphasis was placed on improving the production and distribution efficiency of
the firms.

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The Product Concept : The focus of business activity changed to bringing
continuous improvement in the quality, incorporating new features, etc. Thus,
product improvement became the key to profit maximisation of a firm, under the
concept of product orientation.
The Selling Concept : It was assumed that the customers would not buy, or not
buy enough, unless they are adequately convinced and motivated to do so.
Therefore, firms must undertake aggressive selling and promotional efforts to
make customers buy their products. The use of promotional techniques such as
advertising, personal selling and sales promotion were considered essential for
selling of products. Thus, the focus of business firms shifted to pushing the sale of
products through aggressive selling techniques with a view to persuade, lure or
coax the buyers to buy the products.
The Marketing Concept :
Marketing orientation implies that focus on satisfaction of customer’s needs is the
key to the success of any organisation in the market. It assumes that in the long
run an organisation can achieve its objective of maximisation of profit by
identifying the needs of its present and prospective buyers and satisfying them in
an effective way. In other words, customer’s satisfaction become the focal point
of all decision making in the organisation.
The Societal Concept :
The societal marketing concept holds that the task of any organisation is to
identify the needs and wants of the target market and deliver the desired
satisfaction in an effective and efficient manner so that the long-term well-being
of the consumers and the society is taken care of. Thus, the societal marketing
concept is the extension of the marketing concept as supplemented by the concern
for the long-term welfare of the society. Apart from the customer satisfaction, it
pays attention to the social, ethical and ecological aspects of marketing. There are
large number of such issues that need to be attended.
6. Marketing Mix: is a set of marketing tools that the firm uses to pursue its
marketing objectives in a target market. The variables or elements of marketing
mix have been classified in to four categories, popularly known as four Ps of
marketing viz., Product, Price, Place and Promotion. These elements are
combined to create an offer.
Marketing Mix: Marketing mix refers to the 4P’s of the marketing i.e
Product: Product means goods or services or ‘anything of value’, which is
offered to the market for sale.
Price: Price is the amount of money customers must pay to obtain the product. In
case of most of the products, level of price affects the level of their demand. The
marketers have not only to decide about the objectives of price setting but to
analyse the factors determining the price and fix a price for the firm’s products.
Place: Place or Physical Distribution include activities that make firm’s products
available to the target customers. Important decision areas in this respect include
selection of dealers or intermediaries to reach the customers, providing support to
the intermediaries (by way of discounts, promotional campaigns, etc.).
Promotion: Promotion of products and services include activities that
communicate availability, features, merits, etc., of the products to the target
customers and persuade them to buy it. Most marketing organisations, undertake
various promotional activities and spend substantial amount of money on the
promotion of their goods through using number of tools such as advertising,
personal selling and sales promotion techniques (like price discounts, free

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samples, etc.).
7. Product Mix:
a) Branding :The activity of connecting a product with
a particular name, symbol, etc. or with particular features or ideas,
in order to make people recognize and want to buy it
b) Packaging: Packaging refers to designing and developing the package for
the products.
c) Labelling: Labelling refers to designing and developing the label to be put
on the package. The label may vary from a simple tag to complex graphics.
Packaging and labelling have become so important in modern day marketing that
these are considered as the pillars of marketing. Packaging is important not only
for protection of the products but also serves as a promotional tool. Sometimes,
the quality of the product is assessed by the buyers form packaging.
8. Price Mix: Factors affecting price
Price may be defined as the amount of money paid by a buyer or received by a
seller in consideration of the purchase of a product or service. Generally, if the
price of a product is increased, its demand comes down, and vice-versa. Pricing is
considered to be an effective competitive weapon. It is also the single most
important factor affecting the revenue and profits of a firm. The factors affecting
price determination are
(i) Product Cost
(ii) The Utility and Demand
(iii) Competition
(iv) Government and Legal regulations and
(v) Marketing Methods Used
Pricing objectives
(a) Obtaining Market Share Leadership: If a firms objective is to obtain larger
share of the market; it will keep the price of its products at lower levels so that
greater number of people are attracted to purchase the products;
(b) Surviving in a Competitive Market: If a firm is facing difficulties in surviving
in the market because of intense competition or introduction of a more efficient
substitute by a competitor, it may resort to discounting its products or running a
promotion campaign to liquidate its stock; and
(c) Attaining Product Quality Leadership: In this case, normally higher prices are
charged to cover high quality and high cost of research and Development.
9. Place Mix -Physical distribution
There are two important decisions relating to this aspect one regarding physical
movement of goods and two, regarding the channels. Physical Distribution covers
all the activities required to physically move goods from manufacturers to the
customers. The main component of physical distribution are
(i) Order Processing; A good physical distribution system should provide for an
accurate and speedy processing of orders, in the absence of which, goods would
reach the customers late or in wrong quantity or specifications
(ii) Transportation; Transportation is the means of carrying goods and raw
materials from the point of production to the point of sale. It is one of the major
elements in the physical distribution of goods. It is important because unless the
goods are physically made available, the sale cannot be completed.
(iii) Warehousing; Warehousing refers to the act of storing and assortingproducts
in order to create time utility in them. The basic purpose of warehousing activities
is to arrange placement of goods and provide facilities to store them. The need for

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warehousing arises because there may be difference between the time a product is
produced and the time it is required for consumption.
the firm has to strike a balance between the cost of warehousing and the level of
customer service.
(iv). Inventory Control: Just-in-Time-Inventory: Linked to warehousing decisions
are the inventory decisions which hold key to success for many manufacturers,
especially those where the per unit cost is high. A very important decision in
respect of inventory is deciding about the level of inventory. Higher the level of
inventory, higher will be the level of service to customers but the cost of carrying
the inventory will also be high because lot of capital would be tied up in the stock.
Thus, a balance is to be maintained in respect of the cost and customer
satisfaction.
1. Channel of distribution:
Direct-zero level channel
Indirect channel
1. One Level-Manufacturer------Retailer ------Customer
2.Two level -Manufacturer----Wholesaler – Retailer ----Customer
3. Three level - Manufacturer----Agent -----Wholesaler – Retailer ----Customer
10 Promotion Mix: Promotion mix refers to combination of promotional tools
used by an o r g a n i s a t i o n t o a c h i e v e i t s communication objectives
ADVERTISING : Advertising is perhaps the most commonly used tool of
promotion. It is an impersonal form of communication, which is paid for by the
marketers (sponsors) to promote some goods or service. The most common modes
of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’. The
important distinguishing features of advertising are as follows:
(i) Paid Form: Advertising is a paid form of communication. That is, the sponsor
has to bear the cost of communicating with the prospects.
(ii) Impersonality: There is no direct face-to-face contact between the prospect
and the advertiser. It is therefore, referred to as impersonal method of promotion.
Advertising creates a monologue and not a dialogue.
(iii) Identified Sponsor: Advertising is undertaken by some identified individual
or company, who makes the advertising efforts and also bears the cost of it.
PERSONAL SELLING : Personal selling involves oral presentation of message
in the form of conversation with one or more prospective customers for the
purpose of making sales. Personal Selling plays important role for the business
persons as well as for the society
Features of Personal selling
(i) Personal Form: In personal selling a direct face-to-face dialogue takes place
that involves an interactive relationship between the seller and the buyer.
(ii) Development of Relationship: Personal selling allows a salesperson to
develop personal relationships with the prospective customers, which may
become important in making sale.
PUBLIC RELATIONS : are the variety of programme which are designed by the
marketer to protect and promote the image of the product and company in the
eyes of Public.
SALES PROMOTION :Sales Promotion refers to short-term incentives, which
are designed to encourage the buyers to make immediate purchase of a product
service. These include promotional efforts other than advertising, personal selling
and publicity, used by a company to boost its sales. Commonly used Sales
Promotion Activities include rebate, Discount, refunds, Product Combinations,

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Quantity Gift, Instant Draws and Assigned Gift, Lucky Draw, Usable Benefit, Full
Finance @ 0%, sampling, and contests
11. Functions of Marketing: The important functions of marketing include
Gathering and Analysing Market Information, Marketing Planning, Product
Designing and Development, Standardisation and Grading, Packaging and
Labelling, Branding, Customer Support Services, Pricing of Products, Promotion,
Physical distribution, Transportation, Storage or Warehousing.
12 Distinguish between marketing and selling:
. Many people confuse ‘selling’ for ‘marketing’. They consider these two terms as
one and the same. Marketing refers to a large set of activities of which selling is
just one part. For example, a marketer of televisions, before making the sale, does
a lot of other activities such as planning the type and model of televisions to be
produced, the price at which it would be sold and selecting the distribution outlets
at which the same would be available, etc. In short, marketing involves whole
range of activities relating to planning, pricing, promoting and distributing the
products that satisfy customer’s needs. The function of selling, on the other hand,
is restricted to promotion of goods and services through salesmanship,
advertising, publicity and short-term incentives so that title of the product is
transferred from seller to buyer or in other words product is converted into cash.
13 Distinguish between advertising and personal selling:
. Advertising Personal Selling
1 Advertising is an impersonal Personal selling is a personal form
form of communication. of communication.
2 Advertising involves In personal selling, the sales talk is
transmission of standardised adjusted keeping view customer’s
messages, i.e., same message is background and needs.
sent to all the customers in a
market segment.
3 Advertising is inflexible as the Personal selling is highly flexible.
message can’ t be adjusted to the as the message can be adjusted.
needs of the buyer.
4 It reaches masses, i.e., a large Only a limited number of people
number of people can be can be contacted because of time
approached. and cost considerations.
5 In advertising the cost per The cost per person is quite high in
person reached is very low.. the case of personal selling.
6 Advertising can cover the Personal selling efforts take a lot of
market in a short time. time to cover the entire market.
7 Advertising makes use of mass Personal selling makes use of sales
media such television, radio, staff, which has limited reach.
newspaper, and magazines
8 Advertising lacks direct Personal selling provides direct and
feedback. Marketing research immediate feedback. Sales persons
efforts are needed to judge come to know about the customers’
customers’ reactions to reactions immediately.
advertising.
9 Advertising is more useful in Personal selling plays important
creating and building interest of role at the awareness stage of
the consumers in the firms decision making.

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products.
10 Advertising is more useful in Personal selling is more helpful in
marketing to the ultimate selling products to the industrial
consumers who are large in buyers or to intermediaries such as
numbers. dealers and retailers who are
relatively few in numbers.
14 ‘A product is abundle of utility ‘comment
. Ans: From the customer’s point of view, a product is a bundle of utilities, which is
purchased because of its capability to provide satisfaction of certain need. A buyer
buys a product or service for what it does for her or the benefit it provides to her.
There can be three types of benefits a customer may seek to satisfy from the
purchase of a product, viz., (i) functional benefits, (ii) psychological benefits, and
(iii) social benefits.
For example, the purchase of a motorcycle provides functional utility of
transportation, but at the same time satisfies the need for prestige and esteem and
provides social benefit by the way of acceptance from a group, by riding a
motorbike. Thus, all these aspects should be considered while planning for a
product.