Module 1

Marketing and Selling Concept

 The marketing concept concentrates on the buyer’s needs

and then the means are identified to meet out those needs.
Therefore, the customer is regarded as the king of the
market.

 On the other hand, selling concept stresses on the needs of

the seller and so, it is the seller who rules the market.
Marketing Concept

 The marketing concept is a business idea, which states that the

company’s success lies in becoming more effective than the rivals, in
producing, delivering and communicating greater customer value to
the target market.

 It relies on four elements, i.e. Target Market, Integrated Marketing,

Customer Needs and Profitability. The concept begins with the
specific market, stresses on customer needs, coordinates activities
that influence customers and reaps profit by satisfying customers.
Marketing Concept
Selling Concept

 The selling concept holds that if businesses and consumers are left isolated, then the
consumers are not going to buy ample products manufactured by the company. In the case of
goods are not sought, i.e. the goods which the customer don’t think of purchasing and also
when the firm is operating at more than 100% capacity, the firm aims at selling what they
produce, but not what the market demands.

Hence, the consumer wants are induced to buy the products, through aggressive
selling and promotional techniques such as advertising, personal selling and sales
promotion.
Selling Concept

 According to Kotler: “the selling concept takes an inside-out perspective.” It starts

with the production unit be it a farm or factory, focuses on the company’s existing
products, and calls for aggressive sales promotion to generate as much profit as
possible from increased volume of sales. By contrast, the marketing concept takes
an outside-in perspective.
Comparison Chart

Basis for Comparison Selling Concept Marketing Concept

Selling concept is a business notion, Marketing concept is a business

which states that if consumers and orientation which talks about
Meaning businesses remain unattended, then accomplishing organizational goals by
there will not be ample sale of becoming better than others in providing
organization's product. customer satisfaction.

Compelling consumer's mind towards Directing goods and services towards

Associated with
goods and services. consumer's mind.

Starting point Factory Target Market

Focuses on Product Customer needs

Perspective Inside-out Outside-in

Essence Transfer of title and possession Satisfaction of consumers

Business Planning Short term Long term

Orientation Volume oriented Profit oriented

Means Heavy selling and promotion Integrated marketing

Price Cost of Production Market determined

 Marketing process involves ways that value can be created
for the customers to satisfy their needs.
 Marketing process is a continual series of actions and
reactions between the customers and the organisations .
 In marketing process, the situation is analysed to identify
opportunities, the strategy is formulated for a value
proposition, tactical decisions are taken, plan is implemented,
and results are monitored.
 Identifying opportunities to satisfy unfulfilled customer needs.
• Before identifying customer needs, firms needs to understand its own
capabilities in which its operating.

• Firms need to analyse the external and internal environment.( macro & micro
environment )

• Situation analysis should include past, present and future aspects.

• Framework that can be used to add structure to the situation analysis.

5C analysis – Company. Customers, competitors, climate. Company covers

internal situation and the rest external situation
PEST analysis – Political, Economic, Social and Technological
SWOT analysis – Strength, Weaknesses, Opportunity and Threat
The marketing strategy involves :

 Market Segmentation - Identification of the market that are different from one
another - Market segment is important as customers have different needs and wants
and its impossible to serve them all alike.

Requirements of Market Segments :- Segmentation criteria should be evaluated

against the following criteria :

1. Accessible – reachable through communication and distribution channel

2. Identifiable – must be measurable so that they can be identified
3. Substantial - segments should be large
Aspects to consider when evaluating attractiveness of a market segment:
Size

Competition in the segment

Sales potential

Brand loyalty of existing customers in the segment .

Marketing Mix decisions falls into 4 controllable categories

Product- Brand name, quality, styling, safety packaging

Price – Pricing strategy, flexibility, discrimination

Place- distribution channel, centres, members

Promotion – Promotional campaign development, advertising, sales

 At this point we assume that the marketing plan has been developed and the
product has been launched.

 As the market changes, marketing mix can be adjusted to accommodate the

changes either changing the advertising message or redesign the entire
product entirely.

 Implementation is needed to accommodate these changes and continual

monitoring us needed to fulfil customer needs consistently.

 Control makes sure that the marketing programme moves in the direction set
for it.
Marketing Mix.

The term “Marketing mix" became popularized after Neil H. Borden

published his 1964 article, The Concept of the Marketing Mix.

Borden began using the term in his teaching in the late 1940's after James
Culliton had described the marketing manager as a "mixer of ingredients".
 The marketing mix is probably the most famous phrase in
marketing. The elements are the marketing 'tactics‘, also
known as the 'four Ps‘ i.e Product, Price, Place and Promotion

Product Price

Promotion Place
Example: A cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter
the final cake by altering the amounts of mix elements contained in it. So for a sweet cake
add more sugar! It is the same with the marketing mix. The offer you make to you
customer can be altered by varying the mix elements. So for a high profile brand increase
the focus on promotion and desensitize the weight given to price.

Another e.g. Artisit's palette

• Channel
• Coverage
• Location
• Transport
•Product Variety
•Quality
•Design
•Features
•Brand Name

• Personal Selling.
• Sales Promotion.
• Public Relations.
• Direct Mail.
• Trade Fairs
• List price and Exhibitions.
• Discount • Advertising.
• Allowance • Sponsorship.
• Payment period
• Credit terms
 Core Product
 Actual Product
 Augmented Product
Augmented
product
The CORE product is not the tangible, physical product. You
can't touch it. That's because the core product is the BENEFIT
of the product that makes it valuable to you.

So with the car example,:- the benefit is convenience i.e. the

ease at which you can go where you like, when you want to.
Another core benefit is speed since you can travel around
relatively quickly.

The ACTUAL product is the tangible, physical product. You

can get some use out of it.
Again with the car example, it is the vehicle that you test
drive, buy and then collect.

The AUGMENTED product is the non-physical part of the

product. It usually consists of lots of added value, for which
you may or may not pay a premium. So when you buy a car,
part of the augmented product would be the warranty, the
customer service support offered by the car's manufacture,
and any after-sales service.
Product Life Cycle

The Product Life Cycle (PLC) is based upon the biological

life cycle. For example, a seed is planted (introduction); it
begins to sprout (growth); it shoots out leaves and puts
down roots as it becomes an adult (maturity); after a long
period as an adult the plant begins to shrink and die out
(decline).
Introduction.
The need for immediate profit is not a pressure. The product is
promoted to create awareness. If the product has no or few
competitors, a skimming price strategy is employed. Limited
numbers of product are available in few channels of
distribution.

Growth.
Competitors are attracted into the market with very similar
offerings. Products become more profitable and companies
form alliances, joint ventures and take each other over.
It is called the market acceptance stage. Following are its
features:
Consumers & traders accept the product
Sales & profit increase
More competitions enter the market
The focus of competition is on the brand rather than the
product
Competitors may introduce new features to the product
Distribution network increase
The price will be reduced marginally.
Maturity.

 Those products that survive the earlier stages tend to spend

longest in this phase. Sales grow at a decreasing rate and then
stabilize. At this point the market reaches saturation. Producers
begin to leave the market due to poor margins. Promotion
becomes more widespread and use a greater variety of media.

 In this stage, the manufactures have to take responsibility to

promote his product. This strategy aims at creating brand
loyalty.
Decline.

At this point there is a downturn in the market. For example

more innovative products are introduced or consumer tastes
have changed. There is intense price-cutting and many more
products are withdrawn from the market. Profits can be
improved by reducing marketing spend and cost cutting.
Price is the exchange value of the product and also the
amount of money that customer pay for the product.

 List price
 Discount
 Allowance
 Payment period
 Credit terms
There are many ways to price a product. Let's have a
look at some of them and try to understand the best
policy / strategy in various situations.

1. Premium Pricing
2. Penetration Pricing
3.Economy Pricing
4.Skimming Pricing
A channel of distribution comprises a set of institutions which perform all of the
activities utilised to move a product and its title from production to consumption.

Place is also known as channel, distribution, or intermediary. It is the

mechanism through which goods and/or services are moved from the
manufacturer/ service provider to the user or consumer.
There are Five basic 'channel' decisions:
decisions

 Do we use direct or indirect channels? (e.g. 'direct' to a

consumer, 'indirect' via a wholesaler).

 Single or multiple channels.

 Cumulative length of the multiple channels.

 Number of intermediaries at each level (e.g. how many

retailers in Southern Spain).

 Which companies as intermediaries to avoid 'intra-channel

conflict' (i.e. infighting between local distributors).
Types of Channel Intermediaries.
Intermediaries
 There are many types of intermediaries such as
wholesalers, agents, retailers.
 Internet, overseas distributors, direct marketing (from
manufacturer to user without an intermediary), and
many others.
Another one of the 4P's is 'promotion'. This includes all of
the tools available to the marketer for 'marketing
communication'. As with Neil H.Borden's marketing mix,
marketing communications has its own 'promotions mix.

The elements of the promotions mix are:

 Personal Selling.
 Sales Promotion.
 Public Relations.
 Direct Mail.
 Trade Fairs and Exhibitions.
 Advertising.
 Sponsorship.
Promotion Mix

Sales Promotion

Advertising.
Offer Mix

Company Product Target

Services
Sales Force Channel customer
Price

Public Relation

Direct Mail
 For example, a radio advert is made for a car manufacturer.

The car manufacturer (sender) pays for a specific advert with

contains a message specific to a target audience (encoding). It is
transmitted during a set of commercials from a radio station
(Message / media).

 The message is decoded by a car radio (decoding) and the target

consumer interprets the message (receiver). He or she might visit
a dealership or seek further information from a web site
(Response).
(Response The consumer might buy a car or express an interest
or dislike (feedback). This information will inform future
elements of an integrated promotional campaign.
 Process is another element of the extended marketing mix, or
7P's.There are a number of perceptions of the concept of
process within the business and marketing literature. Some
see processes as a means to achieve an outcome, for example
- to achieve a 30% market share a company implements a
marketing planning process.
 At each stage of the process, markets:
 Deliver value through all elements of the marketing mix. Process,
physical evidence and people enhance services.
 Feedback can be taken and the mix can be altered.
 Customers are retained, and other serves or products are extended
and marked to them.
 The process itself can be tailored to the needs of different
individuals, experiencing a similar service at the same time.
Another view is that marketing has a number of processes that
integrate together to create an overall marketing process, for
example - telemarketing and Internet marketing can be
integrated.

A further view is that marketing processes are used to control the

marketing mix, i.e. processes that measure the achievement
marketing objectives. All views are understandable, but not
particularly customer focused.
 Deliver value through all elements of the marketing mix.
Process, physical evidence and people enhance services.
 Feedback can be taken and the mix can be altered.
 Customers are retained, and other serves or products are
extended and marked to them.
 The process itself can be tailored to the needs of different
individuals, experiencing a similar service at the same time.
Physical evidence is the material part of a service. Strictly speaking there
are no physical attributes to a service, so a consumer tends to rely on
material cues.
Examples of physical evidence, including some of the following:

Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets and dispatch notes).
Brochures.
Furnishings.
Signage (such as those on aircraft and vehicles).
Uniforms.
Business cards.
The building itself (such as prestigious offices or scenic headquarters).
Mailboxes and many others . . . . . .
People are the most important element of any service or
experience. Services tend to be produced and consumed at
the same moment, and aspects of the customer experience
are altered to meet the 'individual needs' of the person
consuming it.
 Most of us can think of a situation where the personal

service offered by individuals has made or tainted a tour,

vacation or restaurant meal.
 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”.
 Internal Factor
 
 External Factor

External Factors may be further classified into:

 
 External Micro Factors & External Macro Factors
 A Company’s marketing system is influenced by its
capabilities regarding production, financial & other factors.

 Research & Development Department,

 Personnel Department,
 Accounting Department
Marketing
Intermediaries
Market Segmentation Market Targeting Market Positioning
1. Identify 3.Evaluate the 5.Identify possible
Segmentation variable attractiveness of each positioning concept for
and segmt the mkt. segment. each target segment.
2.Develop profile of 4.Select the target 6.Select,develop,and
resulting segments. segment. communicate the
chosen positioning
concept.
 According to Philip Kotler, “It is the subdividing of market into
homogenous subsets of consumers where any subset may be
selected as a market target to be reached with distinct
Marketing Mix”.
 Market segmentation is built around the consumers.

 Company analyses the needs of the consumers, & the group

of those consumers who have similar needs. It tries to satisfy
those needs by having common marketing program, without
such segmentation, market program becomes haphazard &
they lead the company no where.
 Geographical Factors:
 Demographic Factors :Market is classified on the basis of
population, using ages, income, sex, Family Life Cycle etc as
indicators.
 Psychological factors:
 Personality: Most consumers are influenced by personality
traits. This is particularly true in the case of urban consumers.
On the basis of personality, consumers may be divided in to
introverts (reserve people), talkative, status, conscious,
suspicious & so on.
 Economic Factors:
On the basis of economic factors, markets have been classified in
the westerns countries as follows:
a. Upper Class b. Upper-upper class c. Lower-upper class
d. Middle class e. Upper-middle class f. Lower-middle class
g. Lower class h. Upper-lower class i. Lower-lower class
 
In our country, it is classified as upper class (rich), middle class, &
the lower class. Another classification based on income in our
country is as follows:
a. Very Rich b. The Rich class c. The Aspiration Class &
d. The Destitute.
 Behavior Factors
 After segmenting the market based on the different groups
and classes, you will need to choose your targets. No one
strategy will suit all consumer groups, so being able to
develop specific strategies for your target markets is very
important.
There are three general strategies for selecting your target markets:

Undifferentiated Targeting: This approach views the market as one group with no
individual segments, therefore using a single marketing strategy.

Concentrated Targeting: This approach focuses on selecting a particular market

niche on which marketing efforts are targeted. Your firm is focusing on a single
segment so you can concentrate on understanding the needs and wants of that
particular market intimately.

Multi-Segment Targeting: This approach is used if you need to focus on two or more
well defined market segments and want to develop different strategies for them.
Multi segment targeting offers many benefits but can be costly as it involves greater
input from management, increased market research and increased promotional
strategies.
 Positioning is developing a product and brand image in the
minds of consumers. It can also include improving a
customer's perception about the experience they will have, if
they choose to purchase your product or service.

 Business can positively influence the perceptions of its chosen

customer base through strategic promotional activities and
by carefully defining your business' marketing mix.