Subject: Marketing Management

Module 1 – FUNDAMENTALS OF MARKETING

INTRODUCTION TO MARKETING: Definition

u “The science and art of exploring, creating, and delivering value to satisfy the needs of
a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines,
measures and quantifies the size of the identified market and the profit potential”

- Philip Kotler

Difference between Marketing and selling

OBJECTIVES OF MARKETING

Marketing majorly focuses on achieving consumer satisfaction and maximising profits.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 1

Following are the illustration of different aims of marketing practices:

• Customer Satisfaction: The primary motive of a company is to satisfy the needs

of customers.
• Ensure Profitability: Every business is run for profit, and so goes for marketing.
• Building Organizational Goodwill: It portrays the product and the company’s
positive image in front of the customers.
• Create Demand: It works for generating the demand for products and services
among the customers.
• Increase Sales Volume: It is a rigorous process of increasing the sale of product
or service to generate revenue.
• Enhance Product Quality: Marketing initiates customer feedback and reviews
to implement them for product enhancement.
• Create Time and Place Utility: It makes sure that the product or service is
available to the consumer whenever and wherever they need it.

IMPORTANCE OF MARKETING:

Marketing is indispensable in today’s business world. It plays a significant role in smooth

transfer of goods and services from the place of production to the place of consumption. The
following points highlight the importance of marketing:

• Marketing facilitates exchange of goods: Marketing helps in the possession of goods

and transfer of ownership from seller to buyer. Marketing through promotion brings
together the buyers and sellers and facilitates sale of goods as per need and wants of the
consumers.
• Marketing increases market base: Marketing locates the untapped areas, stimulates
demand and creates demand for new product and services. Banking, insurance and
financing facilities ensure smooth flow of goods to distant markets.
• Marketing gives boost to other activities: Marketing increases demand of various
related activities like banking, insurance, warehousing and transport. Advertising, sales
promotion and direct marketing efforts also get a boost as they are needed more to
accelerate sales.
• Marketing raises standard of living of people: A society enjoys a better standard of
living when necessities, comforts and luxuries are within the reach of a large number
of people.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 2

• Marketing provides satisfaction of human wants: Marketing informs and guides the
people about product availability and its utility. People come to know about variety of
products.
• Marketing creates job opportunities: In the highly competitive market, only
organized marketing programs can be implemented. It calls for the need of services of
people who are specialized in their fields.
• Marketing creates stable economy: Marketing creates a link between production and
consumption. Goods are easily available at any part of the country or even in other
countries due to fast means of transportation, communication and warehousing
facilities.
• Marketing helps in optimum use of resources: The unused plant capacity increases
cost per unit as that portion of plant does not contribute anything but consumes
resources in the form of maintenance charges, rent of plant, insurance
charges and depreciation. Marketing creates more demand.
• Marketing helps in increasing national income: Marketing activities help in more
production of goods and services and increase in sales. It also improves earning
capacity of people due to employment opportunities.
• Marketing provides base for making production decisions: Marketing research is
an important marketing function. Customer needs and wants are assessed through
market surveys
• Marketing serves various sections of society: Marketing helps producer in increasing
sales. Consumers are benefited as they get products and services to satisfy their wants.

FUNCTIONS OF MARKETING:

a. Buying: The set of procedures used to identify products for purchase, verify quality
and compliance of products and vendors, carry out purchasing transactions, and verify
that operations associated with purchasing have been executed appropriately.
b. Selling: The core objective of market is to facilitate sales. Selling is concerned with the
persuasion of prospective buyers to actually complete the purchase of a product or
service, or transfer of the ownership.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 3

c. Pricing: Pricing is the method of determining the value a producer will get in the
exchange of goods and services. Simply, pricing method is used to set the price of
producer’s offerings relevant to both the producer and the customer.
d. Assembling: Assembling starts after the goods have already purchased. Buying mainly
involves transfer of ownership of the goods, whereas assembling involves creation and
maintenance of the inventory of goods purchased from different sources.
e. Transportation: Transportation refers to the movement of product from one location
to another as it makes its way from the beginning of a supply chain to the customer’s
handle. This requires a new broad look at the business of transportation supply chain,
including supply chain management, logistics, & procurement.
f. Storage: Storage refers to the holding and preservation of goods until they are
despatched to the consumers. Storing or warehousing is very significant in marketing
and it also aims at protection of the quality and quantity of the stored products.
g. Grading: Grading means classification of standardized items into certain well-defined
classes or groups. It includes the division of products into classes made of units
possessing similar features of size and quality.
h. Financing: Financing is the process of providing funds for business activities, making
purchases or investing. The financing function of marketing deals with providing credit
card facilities to all the entities in the marketing channel such as distributors,
wholesalers, retailers and customers.
i. Branding: The marketing practice of creating a name, symbol or design that identifies
and differentiates a product from other products.
j. Risk Taking: Risk bearing in marketing means the financial risk invested in the
ownership of goods held for an anticipated demand, including the possible losses
because of fall in prices and the losses from spoilage, depreciation, obsolescence, fire
and flood, etc,..
k. Market Information: The importance of this facilitating function of marketing has
been recently marked. The only sound foundation on which marketing decisions depend
is timely and correct market information.

DIFFERENCE BETWEEN TRADITIONAL MARKETING AND MODERN

MARKETING :

S. TRADITIONAL MARKETING
No. CONCEPT MODERN MARKETING CONCEPT
Traditional Marketing concepts Modern Marketing concepts focuses on
01. focuses on products only. customer’s needs and wants.
In traditional marketing the objective In modern marketing the objective is
02. is maximum profit. maximum customer satisfaction.
Traditional marketing is short term
03. oriented. Modern marketing is long term oriented.
It targets customer in focus of It targets customer in focus of providing
product/service selling and availing product/service and availing satisfactory
04. high profit. profit.
In traditional marketing concept there In modern marketing concept there is
05. is less promotional activities. sustained promotional activities.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 4

Traditional marketing is one type of Modern marketing is one type of pull
06. push marketing. marketing.
It is based on manual and physical It includes digital/automated marketing
07. marketing concepts. along with traditional marketing methods.
Traditional Marketing concept is a Whereas, modern marketing is a broader
08. narrow concept. concept.
In modern marketing segments are
In traditional marketing segments are developed by differences between
09. developed by product portfolio. customers.
10. It is stuck in existing market. It is always in search for potential market.
It has no target set of customers or any It has target set of customers or a regular
11. regular customer base. customer base.
It is based on production and selling
12. concept. It is based on social and selling concept.

MARKETING MYOPIA:

u Marketing myopia is a situation when a company has a narrow-minded marketing

approach and it focuses mainly on only one aspect out of many possible marketing
attributes.
u A brand focusing on the development of high-quality products for customers who
disregard quality and only focus on the price is a classic example of marketing myopia.

Characteristics of Marketing Myopia:

• More focus is on short-term vision rather than long-term vision

• Businesses assumes that they are in growth industry
• The primary goal is to sell the product rather than build customer-oriented service
• Considers there are no competitors in the market
• Fails to consider the changing consumer lifestyle in the digital age
• Predicts growth without proper analysis and research
• Focus is on the past, ignoring the future

How to avoid Marketing Myopia

• Have a clear
• Focusing more on customer vision
• Market research and Marketing First
• Don’t Stop the Marketing
• Attend your competition
• Diversification

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 5

SERVICES – DEFINITION

u The American Marketing Association defines services as - “Activities, benefits and

satisfactions which are offered for sale or are provided in connection with the sale of
goods.”
u Intangibility: Services are intangible and do not have a physical existence. Hence
services cannot be touched, held, tasted or smelt

Features/characteristics of services:

u Heterogeneity/Variability: Given the very nature of services, each service offering is

unique and cannot be exactly repeated even by the same service provider. While
products can be mass produced and be homogenous the same is not true of services.
u Perishability: Services cannot be stored, saved, returned or resold once they have been
used. Once rendered to a customer the service is completely consumed and cannot be
delivered to another customer.
eg: A customer dissatisfied with the services of a barber cannot return the service of the
haircut that was rendered to him. At the most he may decide not to visit that particular
barber in the future.
u Inseparability/Simultaneity of production and consumption: This refers to the fact
that services are generated and consumed within the same time frame.
Eg: a haircut is delivered to and consumed by a customer simultaneously unlike, say, a
takeaway burger which the customer may consume even after a few hours of purchase.
Moreover, it is very difficult to separate a service from the service provider.

Types of Services:

1. Core Services: A service that is the primary purpose of the transaction. Eg: a haircut
or the services of lawyer or teacher.
2. Supplementary Services: Services that are rendered as a corollary to the sale of a
tangible product. Eg: Home delivery options offered by restaurants above a minimum
bill value.

Differences between goods and services:

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 6

Services Marketing: Services marketing is a form of marketing businesses that provide a
service to their customers use to increase brand awareness and sales. Unlike product marketing,
services marketing focuses on advertising intangible transactions that provide value to
customers.

MARKETING ENVIRONMENT

Definition: According to Philip Kotler,

“A company’s marketing environment consists of the internal factors & forces, which affect
the company’s ability to develop & maintain successful transactions & relationships with the
company’s target customers.”

Environment scanning is a process of monitoring, forecasting, assessing and collecting

information about various internal and external factors and forces influencing a marketing firm.

Importance of Environmental Scanning

• Goal Accomplishment: The objectives of an organization cannot be fulfilled unless it

adapts itself to environmental changes. One has to adjust the strategies to fit in the
changing demands of the environment.
• Threats and Weakness Identification: For an organization to grow, it must minimize
its threats and identify its weaknesses. This is made possible with the help of
environmental scanning with which better strategies can be [Link]
• Future Forecast: Environmental changes are often unpredictable. An organization
cannot anticipate all the future events but based on the analysis, it can make better
strategic decisions in the future. Hence, environmental analysis helps to forecast the
prospects of the business.
• Market Knowledge: Every organization must be aware of the ongoing changes in the
market. If it fails to incorporate strategic changes due to changing demands, it will not
be able to achieve its objectives.
• Focus on the Customer: Environmental scanning and analysis make an organization
sensitive to the changing needs and expectations of the customer.
• Opportunities Identification: With the analysis of the current environment, an
organization will be able to identify the possible opportunities and take necessary steps.

Marketing Environment Components:

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 7

Micro Environment in Marketing

Micro-environment elements are close to the firm and incorporate the suppliers, showcasing
delegates, consumer markets, public, competition, and marketing intermediaries.

1. Company:

Internal environment includes:

• HR
• Finance
• R&D
• Purchasing
• Operations

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 8

2. Suppliers:

• Provide the resources to produce goods and services

• Treated as partners to provide customer value
• Suppliers and Marketing firm are dependent on each other and their relationship is
built on the basis of value

3. Marketing Intermediaries:

Help the company to promote, sell, and distribute its products to final buyers Include:

• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries

4. Customers:

A customer is an individual or business that purchases the goods or services produced by a

business. Attracting customers is the primary goal of most public-facing businesses,
because it is the customer who creates demand for goods and services.

5. Competitors:

They are same market players who make efforts to attract similar audience as that of
business organization. Every firm should keep an eye over the activities of their
competitors, as it enables them in formulating all strategies as per the market trends.

6. Public:

Public refers to a society that has some direct or hidden interest in business and affects its
overall capability to attain its objectives. Every business should pay attention and serve
interest of public at large in addition to its shareholders and customers.

Macro Environment in Marketing

The Macro environment is the uncontrollable factor of the company. For this reason, it has to
structure its policies in the limits set by these factors. Macro-environment on the whole deals
with the demographic, economic, technological, natural, socio-cultural and politico-legal
environment aspects of the markets.

1. Demography

Demography is the study of population and demographic environment refers to trends in

country’s population composition and its growth, levels of income, household patterns and
regional characteristics and other factors of the market in which an organization operates.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 9

2. Economic Environment

Economic Environment refers to the sum of all economic factors, policies and nature of an
economy, trade cycles, economic resources, level of income, distribution of income and
wealth etc…which acts as a major determinant of the economic environment with in which
the business enterprise work.

3. Natural Environment

Natural Environment refers to combination of natural resources which is used by business as

inputs and affects their marketing activities.

4. Technological Factors

Technological Environment refers to the advancements in the field of technology which

influences business by new inventions of productions and other innovations in techniques to
perform the business operations and product development.

5. Political Factors

The political Environment simply refers to the way a country is being run in terms of politics.
The political environment includes all laws, government agencies and lobbying groups that
influence or restrict individuals or Organisations.

6. Social & Cultural Factors

Socio cultural environment refers to a set of beliefs, customs, practices, norms and behaviour
that exists within a society which describes relationship to themselves and others.

Marketing Management: Notes compiled by Ms. Sridevi M (Administrative Management College) 10