Module-1-Introduction To Marketing

Introduction to Marketing: Introduction, Definitions of market and Marketing, The

Exchange Process, Elements of Marketing Concept, Functions of Marketing, Old
Concept or Product- oriented Concept, New or Modern or Customer- oriented
Concept, Marketing Environment, Techniques used in environment analysis,
Characteristics (Micro and Macro), Marketing to the 21st century customer

Introduction: Marketing – Definition

Marketing is a societal process by which individuals and groups obtain what they need and
want through creating, offering and exchanging products and services of value with others.

Marketing is an organizational function and a set of processes for creating, communicating

and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders.
- American Marketing Association

Marketing activities include –

 Identifying customer needs
 Designing goods and services that meet those needs
 Pricing goods and services to reflect costs, competition and customer’s ability to
buy.
 Communicating information about those goods and services to prospective buyers
 Making the goods or services available at times and places that meets customer’s
needs
 Providing the necessary service and follow-up to ensure customer satisfaction after
the purchase

Marketing Management is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational goals.

The Exchange Process:

Marketing Entails an Exchange – Marketing is about an exchange-the trade of things of

value between the buyer and the seller so that each is better off as a result. Sellers provide
products or services (eg. Aqua Guard water purifier) then communicate (through
magazines publishing a review of the product) and facilitate the delivery of their offering to
consumers (included an ad saying that it is available at Big Bazaar Store or provide the
number of the sales representative). At the time of purchase, customer provides the
personal information and store creates a record of this information which may be used in
the coming months to inform about the new products and build a relationship.
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Elements of Marketing Concept:

The basic element of marketing concept comprising of:-

1. customer’s orientation
2. integrated marketing efforts
3. profit direction
4. customer’s satisfaction

1. Customer’s Orientation: The customer’s orientation means that the marketer

organization would have to adopt the organization sources and merge towards ensuring
the proper identification and satisfaction notion that the sole purpose of the business being
alive is the customer’s patronage it implies the development of product and services, to
satisfy customer’s needs. It does not exclude the possibility that those needs might be
stimulated by business that aggressive selling might be needed to persuade customers to
have been created by them.
2. Integrated Marketing Efforts: According to Agbonifoh et al (2007:46); this means that
the effort of all the functional areas of the organization like production, purchasing, finance
and accounting should be involved in order to achieve customer’s satisfaction.
The effort of these functional areas should be coordinate and controlled to ensure the
achievement of a common goal for example if a firm is striving to produce the product
according to the needs to the consumer’s the production managers all have to base the
design and features of the product on the advice of the marketing managers, also the
procurement manager will base the procurement of raw materials on the need of the
production unit of the above to be achieve, there have to be a proper coordination of the
activities of the entire department involved.
3. Profit Direction: The marketing concept is intended to make money by focusing
attention on customer’s satisfaction and profit rather than sales volume.
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4. Customer’s Satisfaction: it is customer’s problems solving by giving the customers

those goods and services or things of value, which they need, at the right price in the right
place, at the right time, i.e. the right quality in the right combination will have to operate
with a good marketing information system. This will help the organization to continuously
monitor the dynamic in their produce exactly what the target market needs it also involved
applying the 4ps of the marketing mix, which include, product, prices, promotion, and place
distribution) in the proper mix that will enable the organization achieve its purpose.
Functions of Marketing:
Market Information: To identify the needs, wants and demands of the consumers and
then analyzing the identified information to arrive at various decisions for the successful
marketing of a firm’s products and services is one of the most important functions of
marketing. The analysis involves judging the internal weaknesses and strengths of the
organization as well politico-legal, social and demographic data of the target market. This
information is further used in market segmentations.

Market Planning: Market-planning aims at achieving a firm’s marketing objectives. These

objectives may involve increasing market presence, dominate the market or increase
market share. The market planning function covers aspects of production levels,
promotions and other action programmes.

Exchange Functions: The buying and selling are the exchange functions of marketing.
They ensure that a firm’s offerings are available in sufficient quantities to meet customer
demands. The exchange functions are supported by advertising, personal selling and sales
promotions.

Product Designing and development: The product design helps in making the product
attractive to the target market. In today’s competitive market environment not only cost
matters but also the product design, suitability, shape, style etc. matter a lot in taking
production decisions.

Physical Distribution: The physical distribution functions of marketing involve

transporting and storing. The transporting function involve moving products from their
points of production to locations convenient for purchasers and storing function involve
the warehousing products until needed for sale.

Standardization and Grading: Standardization involves producing goods at

predetermined specifications. Standardization ensures that product offerings meet
established quality and quantity. It helps in achieving uniformity and consistency in the
output product. Grading is classification of goods in various groups based upon certain
predetermined characteristics. It involves the control standards of size, weight etc. Grading
helps in pricing decisions also. The higher quality goods and services attract higher prices.

Financing: The financing functions of marketing involve providing credit for channel
members or consumers.
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Risk Taking: Risk taking is one of the important marketing functions. Risk taking in
marketing refers to uncertainty about consumer purchases resulting from creation and
marketing of goods and services that consumers may purchase in future.

Packaging, labeling and branding: packaging involves designing package for the
products, labeling means putting information required / specified on a product’s covering.
Packaging and labeling serve as promotional tools now a days, Branding distinguishes the
generic commodity name to a brand name. For example, Wheat Flour is a generic name of a
commodity while “Ashirvad Aata” is a brand name. In service industry, also branding
matters a lot.

Customer Support: Customer support is a very important function of marketing. It

involves pre sales counseling, after sales service, handling the customer complaints and
adjustments, credit services, maintenance services, technical services and consumer
information. For example, water purifier comes with an onsite service warranty of 7 years
helps in marketing and is an important marketing function as well.

Evolution of Marketing / Various Marketing Orientations

Ford manufactured cars in single black colour and only

one model, Hindustan Motors manufactured Ambassador
cars in one single white colour and one standard pattern.

Hyundai Santro with good quality, performance and Product

available in several colours. Concept

Nissan Micra with RanbirKapoor as brand ambassador

and advertising aggressively and offering special offers to Selling Concept
attract the customers.

Mercedes Benz gives the facility to its customers to

customize their cars and the cars would then be built in Marketing
their presence only. Concept

Tata group thought of making an affordable four wheeler

for the mass public who otherwise can’t afford to have a Societal Marketing
car. Concept
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Evolution of Marketing/ Various Marketing Orientations

Barter Transaction – Exchange of goods in return of some other goods. For eg. Exchange
of wheat in return of rice.

Monetary Transaction – Exchange of goods in return of money.

The Production Concept

It holds that customers will choose products and services that are widely available and
inexpensive. So managers try to achieve higher volume by lowering production costs and
following intensive distribution strategy. This seems a viable strategy in a developing
market where market expansion is the survival strategy for the business. For eg. Coca-Cola
is one of the successful examples of companies that adopt production concept. The
company makes Coca-Cola can be purchased almost everywhere in a country, either urban
area or rural area.
Salient features
 This concept is based on the belief that customer’s needs can be satisfied with
reasonable quality and reasonably priced product.
 The manufacturer should maintain availability of sufficient quantity of low priced
products and consistency in quality.
 There is fair amount of competition and competing products are sold with complete
knowledge of the products available in the market.

The Product Concept

Consumers will favour those products that offer the most quality, performance or
innovative features. Managers in these organizations should focus on making
innovative and superior products and improving them over time. For example, in order
to compete with other brands of coloured pencils, Faber-Castell has introduced and
promoted its “non-toxic coloured pencils” which has successfully won the support from
those parents who are more emphasising on safety of usage.

Salient Features
 Consumers generally look and prefer quality of the product.
 Consumers compare quality of products to competing product or brand quality.
 Consumers are aware of the product quality differences between competing brands
and they choose the quality which comes closest to their preference and their
affordable price.
 Consumers’ rating of manufacturers is based on their quality products and
reliability and brand loyalty is also based on quality perception.

The Selling Concept

 The concept maintains that the company has to aggressively promote and push its
products; it cannot expect its products to get picked up automatically by the
customers. Heavy advertising, high power personal selling, large scale sales
promotion, heavy price discounts and strong publicity and public relations are the
normal tools used by organizations that rely on this concept.
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 Practiced most aggressively with unsought goods, goods that buyers normally do
not think of buying. Eg. Insurance, encyclopedias etc.

Salient Features
 Consumers generally do not waste money in buying things which are not essential
or buying excess quantities than required.
 Consumers prefer to be motivated to buy things by use of selling efforts by
organisations.
 Consumers appreciate good selling techniques, efforts and good salesmanship.
 Consumer rating of organization and retail outlets is high where there is an
organized and effective selling effort being made.

The Marketing Concept

It holds that the key to achieving its organisational goals consist of the company being
more effective than competitors in creating, delivering, and communicating superior
customer value to its chosen target markets.

Dell Computer doesn’t prepare a perfect computer for its target market. Rather, it provides
product platforms on which each person customizes the features he desires in the
computer.
Product centred Customer centred
(Make and sell) (Sense and respond)

Salient Features

 The customer’s needs and wants are varied and these must be understood and suitable
products and services offered to match the requirement.
 The market consists of different segments and these segments can be grouped
according to the customer’s characteristics.
 The consumers in any market may not buy a product if they feel that it will not serve
the purpose of solving their needs and wants.

The societal-marketing concept

 It holds that the organisation’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 customer’s and the society’s
well-being.
Eg. McDonalds provides burger and French Fries with low fat content which is a healthy
food, hygienically prepared and packs in a biodegradable packaging, thus showing
concerns about the society.
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Society (Human Welfare)

Societal
Marketing
Concept
Consumers (Want Company
Satisfaction) (Profits)

Objectives of Societal marketing

 To satisfy customer’s long term needs and wants and satisfy society’s long term
interests. Consumers will prefer and favour such marketing organisations.
 Consumers are now concerned about safety and environmental problems and
marketing companies need to understand them.
Holistic Era
In this era, the marketer is making use of all possible concepts, a combination of
production, product, selling and marketing concepts to serve the customers holistically.

Marketing Environment
Marketing Environment includes all forces and institutions external to the organisation
which affect the organisation’s ability to develop and organization has to maintain timely,
relevant and appropriate adaptation to these factors so as to be successful in carrying out
business operations.
It is required to assess the marketing environment to help secure the right fit between the
environment and the business unit; which is the crux of marketing.
Eg. BSNL was the only company in the domain of telecom till late nineties, so it had a
monopoly and was providing only basic telephony. Later on, new players came into the
business like Reliance Telecom, Idea, Vodafone, Tata Indicom etc. BSNL also took it as a
challenge and started providing mobile phones, broadband services and latest 3G services
and thus still surviving in the market.
Hindustan Motors ‘Ambassador is obsolete now as it didn’t make any changes as per the
changing technology, market and needs of the customer.
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Macro Environmental Factors influencing business

Economic
Technological
Demographic Environment
Environment
Environment

Natural
Internal
Social – Cultural Environment
Organizational
Environment Processes

Political-Legal
Environment
1. Demography is the study of population and its characteristics. Population is
monitored because people make up markets. Marketers are always interested in
population related growth indices because eventual market growth rate in the long
run depends largely on growth of population.

Marketers are keenly interested in –

 Size and growth rate of population - As the population is growing at a fast pace, it
attracts many marketers to tap the Indian Market. Rural market also has a huge
potential to be tapped.

 Population Age Mix - For eg. Japan has more of old age population above 60 , and
thus demand for products that support digestion, viewing and mobility and services
like nursing and old age care will be high. Mexico has more young population so
there is more demand of diapers, school supplies, toys etc.

 Educational Groups - High no. of educated people in US spells a high demand for
quality books, magazines and travel.

 Household Patterns - Size of the family (Joint family and Nuclear family) – Size of the
family affects the stock keeping unit size and growth of small size, convenient
products on the retail shelf. Eg Pack of 5 kg Atta.

 Working and non-working ladies – Market for fast food, restaurants, convenience,
processed and packaged foods, consumer durables like refrigerators, washing
machines, and vacuum cleaners for working women. MTR – Ready to Eat packs, Cut
vegetables, Readymade Parothas for working ladies.

2. Natural Environment: Increased energy costs – As oil prices soar to record levels,
companies are searching for practical means to harness solar, nuclear, wind and
 Module-1-Introduction To Marketing

other alternative forms of energy. The Indian Railways, which is one of the largest
consumers of high-speed diesel, is looking to develop sustainable fuels such as
Jatropha oil to power its locomotives.
Reva – an electric driven car has been launched.
 Some industrial activity will inevitably damage the natural environment. Littering of
environment with non-biodegradable plastic, bottles etc. Factories are mixing DDT
and chemical pollutants in the soil and food supplies.
McDonalds and Burger King eliminated their polystyrene cartons and now use
smaller recyclable paper wrappings and paper napkins.
– In India, the Union Government of Delhi implemented the rule that public
transportation vehicles like auto rickshaws and buses use only compressed natural
gas (CNG) as fuel instead of diesel and petrol. They have set up a separate industrial
area away from residential area. Judiciary of India has been active in enforcing anti-
pollution norms

3. Technological Environment: Wonders such as I-Pod, LCD, LED and 3D TV are

released due to technology. It is observed in every sphere of life:
Television – LCD, LED, Plasma TV, 3D, Hi-Definition
Telecom – GSM, CDMA, 3G.
Education – SMART Classes
Medical and Surgical – Videoconferencing
Corporates – Fax Machines, Wi-Fi, Internet Access, Printers etc
Automobile Assembly – Robotics
Supply Chain – Bar-Coding, RFID Technology.
– Increasing opportunities emerging as a result of globalization are forcing many
companies to increase their R&D efforts. In India, as a result of economy opening up
to global competition, all large pharmaceutical companies have started putting
greater vigor into R&D.
Label of Agmark for food products, ISI mark for Consumer Durables and Hallmark
for Jewellery is mandatory.
Exciting work is being done in biotechnology, robotics, computers, and
microelectronics. Researchers are working on AIDS vaccines, nonfattening tasty
nutritious foods.

4. Economic Environment: It has the highest influence on the marketing decisions as

it affects the purchasing power of the consumer. In a declining economy, company
which sells price value products has more scope to get customer as compared to a
luxury brand
During the time of recession in 2008, travel agents and hotel industry came out with
special discounted offers to attract the customers.
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Most of the foreign brands are targeting India as the income of the population is
rising day by day.

5. Political-Legal Environment: Consists of laws, govt. agencies and pressure groups

that influence and limit various organization and individuals.
Govt. has made mandatory that all packaged food products should carry the green
dot to denote pure veg and red dot to indicate non veg. Packaged products should
mention MRP and ingredients and nutritional value in the packaging itself.
Legislation ensures establishment of consumer dispute redressal forums such as
District Forums and prescribes specific processes to address consumer complaints
with speed and in an inexpensive manner.

6. Social Cultural Environment: Society shapes the beliefs, values and norms that
largely define consumer tastes and preferences.
Languages – Different languages are being spoken. Has to be considered for the
Decisions concerning Marketing Communication.
Dress Code – Different dresses are being worn in different parts of the country.
Food Habits – Marketer has to keep in mind the food habits of different parts of the
country.
For eg. HUL markets different blends of tea under the same brand name to address
the regional preferences of consumers.
Mc Donalds has introduced Mc Aloo Tikki made of potatoes for Indian consumers
instead of pork and beef.
Market of physical fitness and exercise equipments is growing as people are
becoming more conscious towards health and physical fitness.

Microenvironment
Elements which affect the company directly constitute the microenvironment.
 Internal Marketing Environment – Factors within other functions of their own
firm like HR recruiting personnel, Finance setting the price, Production
manufacturing the products.
 Customers – No customer, No business. Organization should know its customers so
well that it is able to predict what they will require next rather than wait until it is
possibly too late and then follow. Understand changing needs by an appropriate MIS
and carry out research in collecting, analysing and disseminating information.
 Intermediaries – Marketing channels through which the product is being sold. Help
in promoting products. Eg. Food manufacturers who do not get shelf space in the
major supermarkets may find it difficult to achieve large sales volume.
 Suppliers and Vendors – Provide an organization with goods and services which
are transformed by the organization into value added products for customers.
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Companies operating in highly competitive environment where differentiation

between products is minimal, obtaining supplies at the lowest possible price may be
vital in order to be able to pass on cost savings in the form of lower prices charged
to customers.
Toyota is following JUST IN TIME strategy and thus function of supplies becomes
very important.
 Other stakeholders – 1) Local Community Groups – may object to a new
production factory or service outlet. Eg Plant of Nano in West Bengal and Reliance
Fresh in Ahmedabad were being opposed by the local people residing over there.
2) Employees - service providers where front line employees can make or break
customer’s perceptions of service quality.
 Shareholders – Have financial stake in the company. Interested in maintaining
steady growth and increasing sales and profit, thus companies can pay them higher
dividends.

Marketing to the 21st century customer

Industrial revolution was the start point of the old economy with focus on producing
massive quantities of standardized products. This mass product was important for cost
reduction and satisfying large consumer base, as production increased companies
expanded into new markets across geographical areas. The old economy had the
organizational hierarchy where in top management gave out instructions which were
executed by the middle manager over the workers.

In contrast, the new economy has seen the buying power at all time thanks to the digital
revolution. Consumers have access to all types’ information for product and services.
Furthermore, standardization has been replaced by more customization with a dramatic
increase in terms of product offering. Purchase experience has also changed as well with
the introduction of online purchase, which can be done 24 × 7 with products getting
delivered at office or home.

Companies have also taken advantage of information available and are designing more
efficient marketing programs across consumers as well as the distribution channel. Digital
revolution has increased speed of communication mobile, e-mail SMS, etc. This helps
companies take faster decisions and implement strategies more swiftly.

Marketing is art of developing, advertising and distributing goods and services to

consumer as well as business. However, marketing is not just limited to goods and
services it is extended to everything from places to ideas and in between. This brings forth
many challenges within which marketing people have to take strategy decisions. And
answer to these challenges depends on the market the company is catering to, for
consumer market decision are with respect to product, packaging and distribution channel.
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For business market, knowledge and awareness of product is very essential for
marketing people as businesses are on the lookout to maintain or establish a
credential in their respective market. For global market, marketing people have to
consider not only culture diversity but also be careful with respect to international trade
laws, trade agreement, and regulatory requirements of individual market. For non for
profit organization with limited budgets, importance is related to pricing of products, so
companies have to design and sell products accordingly.

Marketing philosophy employed by any given company has to be mix of organization

interest, consumer interest and societal interest. In production philosophy, companies
focus is on numbers, high production count, which reduces cost per unit and along with
mass distribution. This kind of concept is usually making sense in a developing market
where there is the need of product in large numbers.

The product philosophy talks about consumers who are willing to pay an extra premium
for high quality and reliable performance, so companies focus on producing well made
products.

The selling concept believes in pushing consumers into buying of products, which under
normal circumstance, they would be resistant. The marketing concept believes consumer
satisfaction, thereby developing and selling products keeping focus solely on customer
needs and wants.

The customer philosophy believes in the creation of customized products, where in

products is design looking at historical transaction of consumers.

The last philosophy is the societal concept which believes in developing products, which
not only generate consumer satisfaction but also take into account well-being of society or
environment.

Digital revolution and 21st century have made companies fine tune the way they conduct
their business. One major trend observed is the need of stream lining processes and
systems with the focus on cost reduction through outsourcing. Another trend observed
in companies is, encouragement to entrepreneur style of work environment with glocal
(global-local) approach. At the same time, marketers of companies are looking forward to
building long term relationship with consumers. This relationship establishes platform
understanding consumer needs and preference. Marketers are looking at distribution
channels as partners in business and not as the customer. Companies and marketers are
making decisions using various computers simulated models.

To summarize 21st century marketing is challenge, which is to keep up pace with changing
time.
Module-1-Introduction To Marketing