UNIT: - I BASIC CONCEPTS IN MARKETING MANAGEMENT

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UNIT: - IBASIC CONCEPTS IN MARKETING .101.11Introduction to MarketingDefinition of MarketingEvolution of MarketingMarketing ConceptRole of MarketingStrategic Marketing PlanningScope of MarketingApproaches of MarketingDifference between selling and marketingFrom Barter to complex marketing – A Historical perspectivesLet us Sum upCheck your progress- The Key1.0 Introduction to MarketingMarketing is an ancient art and has, since the day of Adam and Eve, beenpracticed in one form or the other. In the modern world, Marketing is everywhere; mostof the task we do and most of the things we handle are linked to marketing. Marketing is anactivity. Marketing activities and strategies result in making products available that satisfycustomers while making profits for the companies that offer those products. Your morning tea,your newspaper, your breakfast, the dress you put on for the day, the vehicle you drive, the mobilein your pocket, the quick lunch you have at the fast food joint, the PC at your desk, your internetconnection, your e-mail ID almost everything that you use and everything that is around you, hasbeen touched by marketing. Marketing has its imprint on them all depending on the product andthe context/experience the imprint may be visible or subtle. But it is very much there. Marketingpermeates most of your daily activities. Marketing is an omnipresent entity.1.0.1 Learning Objectives To understand the concept of Marketing in the present eraDefine marketing and the utility it creates for the customersTrace the origin of marketing and explain how it has evolved during the yearsTo understand the Role of Marketing and the strategic marketing planningTo understand different approaches of marketTo able to differentiate between selling and marketing1

1.0.2 Meaning of Market and MarketingA market is any such person, group or organization which has existing or potentialexchange relationship. It starts with customers and ends with customers. Creation ofsuperior customer value and delivering high levels of customer satisfaction are at theheart of present day marketing. Companies today, needs to understand customer needs,study completion, develop and offer superior value at reasonable price, and make theproduct available to customer at convenient place. Only then their products will be indemand and sell consistently.Marketing deals with customers. It is delivery of customer satisfaction at a profit.The twofold goal of marketing is to attract new customers by promising superior valueand to keep current customers by delivering satisfaction.1.1 Definition of Marketing1.1.1 MarketThe concept of market has undergone significant changes over the years,commensurate with the changes in the structure and scope of markets.Kotler (1) defined market as“A set of all actual and potential buyers of a product.”This definition implies that wherever there is a buyer of a product or service, thereis a market. It succeeded in changing the view that market is a place. Further thisdefinition also indicates that market refers to the existence of buyers of a product orservice, that when these things get exchanged, the marketing process commences.Kohl‟s and Uhl (2) characterized market as“an arena, wherein all buyers and sellers were highly sensitive to each other‟stransactions, and where what one did affected the other.”2

This concept of market focuses on a situation where all buyers and sellers would beable to communicate with one another; they would also be capable, of exchangingproducts with each other. It could also be inferred from the definition that buyer-sellerinteraction is crucial to market.According to Cochrane (3)“a market is some sphere or space, where certain physical and institutionalarrangements could be seen, and the forces of demand and supply are at work todetermine prices with a view of transferring the ownership of some quantity of good orservice.”This definition brings to light that the exchange takes place in a market for aconsideration, i.e., price. Apart from that, the exchange takes place with certain physicaland institutional structure, there by the role of various facilities required to facilitatetransfer of ownership are indicated.1.1.2 MARKETINGMarketing refers to the various groups of activities that take place in a market.These activities are either planned or spontaneous. For example, production, assembling,distribution and storage could be planned, consumption is often spontaneous.The American Marketing association (4) defined marketing as“Market is an organizational function and a set of process for creating,communicating value to customers and for managing customer relationships in ways thatbenefit the organization and its stakeholders."According to Dahl and Hammond (5)the purpose of production, assembling, storage, and transportation wasconsumption. All these steps from production to ultimate consumption were included inthe term marketing. Hence, marketing is a set of activities without which what is producedcannot reach the ultimate consumer. Hence it might be said that the importance of theseactivities is the study of marketing.Kotler (6) says“Marketing is a societal process by which individuals and groups obtain what theyneed and want through creating, offering, and freely exchanging products and services ofvalue with others.”3

To him, to define a marketing situation there should be two or are parties withpotential interest, capable of communicating with each other and each possessing things ofvalue to the other. From this definition is could be noted that marketing consists of anumber of facilitating activities.Often marketing is confused with selling. To clarify this, Kaddar‟s (7) distinctionbetween the selling and marketing.Selling is the process by which the salesman tries to dispose of the product at thebest possible price. Marketing is much ore comprehensive and aims at maximizing thereturns to the producer, at an affordable price to the consumer. Marketing starts withproduction and ends with the customer finally purchasing the product. Kaddar‟sdefinition is very clear in pointing out that selling is just one activity in the marketingchain of activities.Pyle‟s (8) view of marketing wasThat phase of business activity through which human wants were satisfied by theexchange of goods or services for valuable consideration usually money or its equivalent.According to Philips (9)Marketing was all the activities necessary to place tangible goods in the hands ofthe customer and includes only such activities as would involve a charge in the form of thegoods. This definition is narrow in the sense that it excludes creation of place and timeutility and such efforts as to inform the prospective buyers to motivate them.When marketing is viewed as a process of moving goods and transferring rights ofownership with or without changes in the physical form of product, it involves severalfunctions relating production to consumption.Irwin (10)Classified the marketing functions into tangible and intangible functions. Tangiblefunctions included mainly the transporting, processing, storing and grading of productswhile intangible functions were those connected with transfer of ownership, financing, risktaking and guiding products to consumers in place, form and time.Memoria and Joshi (11) defined marking asbusiness functions, which we most directly concerned with demand stimulation anddemand fulfilling activities of the business enterprise.According to abbot and Makeham (12)4

Marketing meant different things to different people; to the housewife it meantshopping for food; to the farmer it means the sale of his product; and to the fertilizerdistributor it meant the selling to the farmer.In short, marketing would include all the activities performed from the stage ofproduction to ultimate consumption. In other words it refers to functions of marketingviz., assembling, warehousing, grading, barding, packing, labeling, distribution, sellingand servicing1.2 Evolution of MarketingMarketing is as old as human civilization. Even in the earliest stage of humancivilization exchange was taking place, though, without any consideration. The evidence ofthis could be noted from the anthropological studies. The number of excavations that havetaken place around the world has also confirmed this. However in those days, theexchange was not so well organized or structured. This was because, there was very littlesurplus and efforts to create surplus was not even realized. When groups of human beingsstarted living in batches, there arose the need for exchange within the group or among thegroups. Historical evidence indicated that this took place in a very crude barter term. Thiswas the earliest seed for modern marketing.Another convincing evidence is the number of ancient literatures of Indian origin.All of them referred to the classification of the society in to four groups viz., Brahmins,shathriyas, vysyas and sudras. Of these four groups, was mainly indulging in exchangeactivities. They were governed by ethical practices and considered it as sin to violate suchpractices.As years rolled, the approach to marketing also changed. From a stage ofhousehold exchange of goods and services, exchange started taking place between familiesand households. Such an exchange always took place through barter system. But whenexchange took place between different groups in the society, the need for a medium ofexchange was felt. Originally stones were used which was replaced by anything whichcommanded social respect was accepted. But in due course, precious metals like gold andsilver were used as a medium. It is interesting to note that till very recently, the value ofmany was linked to the value of gold. When man invented money, exchange became verysmooth devoid of all the problems associated with the barter exchange system. Whileexchange was getting perfected, the world stated looking at marketing in different ways.Till the mid 1940‟s it was thought that the producers should produce what ispossible and then make efforts to sell what is produced. In this approach, marketing wasviewed from producers/sellers side. But this was proved to be a fatal mistake by Levittthrough his historic article. Levitt brought sense to the world of marketing. He provedthat market should be facing customer rather than the customer facing the market. In otherwords, manufacturers should contently look at the market to capture signals and translatethat into acceptable products or services. Hence, marketing became customer focused and5

customer centered. So the approach now turned out to be „Produce what the consumerswant‟. This automatically made every producer to identify his consumer and study hisrequirements so that what is produced is what is wanted.1.3 Marketing ConceptsMarketing concept has undergone a great change over the period. The differentstages of change are explained below.1. PRODUCTION CONCEPT OF MARKETINGThis is the oldest concept of marketing. It emphasizes that consumers will favourthose products that are available and highly affordable and therefore management shouldfocus on improving production and distribution activities.This holds good wheni.the demand for a products exceeds the supply andii.the product cost is high.To overcome the problem of cost, production should take place in large scale tomeet the demand. At the same time, price should also be addressed so that by makingavailable large quantity, buyer who wants to buy the product would be able to buy. Butthere are occasions when the product is not attractive, even at low price, the buyers maynot buy the product.2. PRODUCT CONCEPT OF MARKETINGThis concept believed that the consumers will favour those products that offer thebest quality, performance and features and therefore the organization should devote itsenergy to making continuous product improvements. This concept implies that there is noeffort required for marketing a product, as long as the product is good and its price isreasonable. This concept remained as an important guideline for the manufacturers forquite a long time. But when considering the reality, it could easily be proved that thisconcept is not true. A producer may feel that he should come up with a good qualityproduct, while the consumers may look for better solution to a problem. FOR EXAMPLE,colleges may feel that the high school students want a liberal arts education, failing to notethat the preference is for vocational education. Hospitals may feel that patients want fastcure but patients may be looking for permanent remedy. The consumers may not beaware of the product features and qualities unless a vigorous selling effort is made by theproducers. Further, now a days every manufacture has a separate research anddevelopment section to facilitate continuous product improvement. For example, from a6

stage of ordinary washing soap, continuous research has brought us the detergent powdereasy to use. But this concept of marketing would expect a well organized promotionaldrive to make the product a success.3. SELLING CONCEPT OF MARKETINGIn this concept the importance of sales efforts to be undertaken to make theconsumers buy the products which otherwise will remain unsold. So every organizationhas to make substantial selling and promotional effort to push the sales of its product.Even the best product cannot have desired sales without the help of sales promotion andaggressive salesmanship. This concept points out that goods are not bought but they haveto be sold through organized advertisement and sales promotion efforts. FOR EXAMPLE,goods like automobiles are not readily bought by the consumers and they have to be soldonly through promotional effort. Hence, the producers have to develop effectivepromotional effort. Hence, the producers have to develop effective promotionalprogrammes to sell the products. Even in the case of election, several political partiesattempt to project their candidates by using various promotional efforts. While, there isnothing illogical about this approach, yes, producer might have to conceal the flaws in theproduct and hard sell the product. Hence, more often than not, the consumers regret theirdecision after purchasing the product. Even if they try to force the producers tocompensate the loss, it might not be forthcoming.4. PROFIT CONCEPT OF MARKTINGAccording to profit concept of marketing, there is a necessity for the marketingfunction to generate profit for the organization. But it is the production activities whichwould determine the cost of manufacturing and so profit generation becomes the ultimateresponsibility of the marketing function. For this purpose, the marketing personnel haveto identify the right product and take it to the right people at the right time at right pricethrough the right channel and with right promotion. This would indicate the extent towhich the marketing function has to ensure profit realization for a firm. This in turn willforce the production function to minimize its cost of production so that marketingfunction can try to optimize its activities by maximizing profit at minimum cost. On itspart, the production department has to protect its own interest. So now a days, theproduction department would sell the product to marketing at a price befitting its cost ofproduction and a market quantum of profit. In turn, the marketing would determine aprice with which it would be able to generate profit and also meet its promotionalexpenses. Hence this concept of marketing underscores the need to minimize cost at everylevel, so that at every level every function can earn profit.5. MODERN MARKETING CONCEPTThe modern marketing concept revolves around customer. It focuses on theultimate customer and undertakes to meet his requirements in full. For this theorganization has to correctly understand the customer requirement and deliver thedesired products more effectively and efficiently than the competitors.7

Hence a major shift took place in emphasis from product to customer. This has ledto the manufacturers accept the philosophy, manufacturer is following the old approach,[manufacturing what he can], then be would be out of business in no time. The modernconcept is build in recognition of consumers‟ sovereignty and so it helps everyorganization to maximise customer satisfaction and profit. It is this realization of the needto study customer want that very detailed research efforts are made to study and analyzeconsumer behavior. Similarly marketing information system has become a significantmethod of receiving valuable inputs about consumers‟ wants and needs. Based on thisapproach, every manufacturer has to redefine his production decision from design todelivery. A constant study of the change in consumer‟s behavior has become a necessity toremain in business. The unique selling proposition is developed on the basis of customer‟sreaction to various product features. Further, every manufacturer and marketingpersonnel tries to exceed customer expectations so as to win the customer from thecompetition. Customer complaints are given utmost respect and importance and thebusiness consider the customer complaints as the best input for product improvement.„A compiling customer is seen as the contributing customer.‟ Hence the modernmarketing concept has changed the market for almost every product from seller‟s market‟to „buyer‟s market. At the same time, it should be noted that the tall claim that everyorganization tries to meet the customer expectations in full, is proved to be true on paperthan in practice.6. SOCIAL MARKETING CONCEPTThis philosophy of marketing underlines the importance of marketing activities tosupport and ensure social well-being. Marketing should determine the needs, wants andinterests of target markets and deliver the desired satisfaction effectively. Only throughthis marketing can keep the competitors at bay. This broadened role of marketing isprescribed for marketing as in modern days, a number of products and services hastenenvironmental pollution, scarcity and inflation.FOR EXAMPLE, excessive use of ground water resources to produce mineralwater and earn money will result in faster depletion of water source. Similarly, use ofharmful ingredients in product manufacturing/process, would cause irreparable damageto human beings. Further questionable business practices and unethical actions wouldbring about a severely damaged social fabric. Another important example is the Bhopalgas tragedy. Years have rolled without little efforts to uplift the victims. Profit maximizingefforts have only helped a small segment of the community and caused impoverishment ofthe community. Hence, in these days, marketing concept emphasizes that everyorganization should consciously explore the scope for it to contribute to the social-wellbeing. When firms have started adopting this approach, not only they could substantiallyincrease their sales, the society also benefited from this. Social marking concept thereforeaims at enabling consumers to get maximum satisfaction and contribute to their quality oflife, designing product with consumer‟s interest as an input and ensuring all marketingefforts to have consumer as the focal point.8

1.4 Role of MarketingAccording of Mc Carthy, an effective macro market system is a necessaryingredient for economic development. To peter Drucker, marketing may be the key togrowth is less developed nations. Marketing can enable fuller utilization of resources andfacilitates integration of countries and continents. For Nurkse marketing carries with itthe solution to break through the vicious circle of poverty in very country. Hence, in everydeveloping and less developed country efforts should be made to reorganize the marketingsystem.It is well known that producers and consumers are separated from each other on severalcounts. Marketing should enable removing these separations. This could be understood byanalyzing Mc Carthy‟s view point.1. Spatial separation: This refers to the geographical separation between theproducers and consumers. Producers have several compelling reasons to locatetheir operations in a particular place. But the consumers are wide spread. Thisseparation could be avoided with a well knit logistic function. That is, by ensuringthat the products reach the consumers at the right time, at right price in rightshape and at right place. Simply this means if marketing can ensure time utility,place utility and form utility through its performance, then the spatial separationwould disappear.2. Separation in time: One of the basic functions of producers is to determine the timewhen the product/service is required by the consumers. If it does not reach theconsumer at the time of need, it loses its appeal to consumers. Generally producersover come this problem by using various rigorous forecasting and estimationtechniques. Similarly by a well-planned inventory management, produces caneasily manage demand and supply.3. Separation of information: Most of the ills in marketing are caused by lack ofinformation. Marketing information could be relating to various aspects like,product functioning or use, availability, price, etc. it is always said that the basisreason for market imperfection is deliberate information lack out. Selectiveinformation sharing is viewed as a marketing tactic. The more the consumers areignorant the more the producer benefits. Hence if marketing ensures flow ofrelevant and useful information to the consumers at the right time, it would help tonarrow the separation of intended of benefits and realized benefits.9

4. Separation in values: One of the major role performed by marketing is to enableboth the producers and the consumers to determine the value of theproduct/service. Normally producers to would determine the price of theproduct/service based on their cost of production. Consumers would consider pricepayable with the economic utility conferred by the product/service and their owncapability to pay. If the interests of these two groups should be served, thenmarketing alone can achieve this. It has the demand forces and supply forces tointeract and determine the true value of a product/service. This way both the sellerand the buyer stand to gain.5. Separation of ownership: The basic requirement for exchange to take place is thetransfer of ownership from the seller to the buyer. Sellers would transfer theirownership for a consideration and the buyers would get their ownership for aconsideration. When the consideration in question is acceptable to both the parties,exchange is facilitated. Hence, it is marketing which can facilitate legal transfer ofownership for a consideration from the sellers to buyers. This is because producersdo not want to retain the ownership of goods they produce and consumers want toget the ownership of goods before consuming the product or service.6. Discrepancies of quantity: It is well known that producer‟s objective is to minimizecost and maximize production. That is unless there is scale economy; producerswould not be able to optimize their operations. On the other hand, consumersalways require the product/service in convenient small quantity. This makes itimperative that marketing should provide efficient warehousing and storagesystem so that both producers and consumers would achieve their objectives.7. Discrepancies of assortment: A fundamental function of marketing is grading andstandardization. Through this, marketing can enable the consumers to get theproduct of his choice and the producers would confine to manufacturing the gradeor standard that they are capable of. FOR EXAMPLE, local manufacturers wouldbuild the features in their products to fulfill the expectations of the consumers inthe locality, while a country level producer has to meet the requirements andaspirations of multitude of consumers with varying preferences. Some time, themanufacturers would have two brands one for the locality and the other for thecountry as a whole. Therefore, it is marketing which can give indications ofconsumer‟s preference and choice with which the producers would be able to planand produce the product/service meeting such preferences/choice of the consumers.Economy as explained by Mamoria and Joshi could be discussed toappreciate the contribution of marketing in modern economy. These are explainedbelow.10

1. Improvement in marketing efficiency brings about reduction in distributioncost, which could help to reduce the price. This in turn, would add to thenational income.2. When the marketing cost declines, the society stands to gain as product/servicewill be available at a cheaper price adding to the social well-being.3. It is marketing which brings together the producers and consumers therebyfacilitating both to share the common benefits in terms of new varieties andquality goods.4. With widening of market, the employment potential of the country would alsowiden.5. Scientific marketing contributes by eliminating unfair trade practices andstabilizing the price level.6. Productive efficiency would increase, as marketing would ensure optimumallocation of resources.7. Artificial scarcity would be avoided when marketing forces are allowed tooperate.8. Time and place utility of a product are achieved only through marketing.9. Value addition to services takes place with marketing. For example, when awholesaler or retailer performs his function, the product moves from theproduction end to consumption end. This is certainly a value addition to theservice.10. Pattern of consumption is determined other by the structure of the marketingsystem and by the value added to the goods or services through performance ofmarketing activities.1.5 Strategic Marketing PlanningStanton defines strategic marketing planning as the process of setting marketinggoals, selecting target markets and designing a marketing mix to satisfy these markets andachieve these goals. The marketing strategy is therefore functional strategy. It is differentfrom corporate strategy. However, the marketing strategy stems from the corporatestrategy. In other words, the functional strategies should be in conformity with the overallstrategy of the company. The functional strategy like marketing strategy sets theboundaries for all the action programmes related to marketing. According to staton, thesix stages involved in strategic marketing planning process are:11

1. Situational analysis-with a purpose to determine where we are and where are wegoing.2. Determine the objectives – these goals should be specific and realistic3. Select and measure target markets-identify present and potential customers4. Design marketing mix strategies and tactics – How do we get to where we want togo.5. Prepare annual marketing plan-the how to do it guide to yearly marketingoperations.6. Implementation and evaluation – How are we doing? Did we do what we said wewould do?Situation analysis consists of an analysis of external environmental forces and thenon-marketing resources that influence an organization‟s marketing programmed. Thesefactors are: political, economic, competitive, socio cultural, historical, etc. this analysisalso reviews and evaluates an organization‟s existing marketing mix so as to identify theflaws and problems associated with them. This analysis will help an organization to knowwhere it is and where it should reach in future, which may be called the first stage.The second stage is to formulate the objectives. This includes both the corporateobjectives as well as marketing objectives. At the time of setting the marketing objectives,care should be taken to make it specific, measurable and in conformity with the corporateobjectives. It will be better to spell them out in writing so that there is no scope forconfusion.In the third stage, the organization should identify the present and potentialcustomers. This is what is called selection of target markets. Apart from analyzing theexisting market for its products, the organization should try to identify the new market forits products. For this purpose, the company has to adopt the marketing segmentationtechnique. Once the market is segmented, it is necessary to forecast the market for theproduct in each segment.The fourth stage is to design a strategic marketing mix that enables theorganization to satisfy the wants of its target markets and to achieve the markingobjectives. The design and later the operation of the marketing mix components constitutethe bulk of a Company‟s marketing effort.In the fifth stage, the strategic marketing planning is prepared. A series of shortterm marketing plans are prepared. Usually a period of one year is covered. They arecalled annual marketing plans. It includes a statement of objectives, identification oftarget markets, strategies relating to the marketing mix, information regarding thebudgetary support for the marketing activity.After formulating the strategic marketing planning in the above manner, the laststage is, it should be implemented and evaluated periodically. This is done to understand12

how for the organization is following plan. If there are deviations, the causes andconsequences of such deviations are analysed. Further, to design the future course ofaction, there is a need to analyze the changing marketing environment. The actualperformance of the strategic plan has to be critically evaluated so as to accomplish theobjectives of the company as desired and as planned. In the process of evaluation, it anydefect is found, corrective measures should be incorporated immediately. It would also bewise to do this evaluation segment – wise so that the strategy developed for each segmentcan be perfected. It is also good to study the strategic planning of the competitor to comeout with new ideas and plans.1.6 Scope of marketingUnder marketing

UNIT: - I BASIC CONCEPTS IN MARKETING MANAGEMENT STRUCTURE 1.0 Introduction to Marketing 1.1 Definition of Marketing 1.2 Evolution of Marketing 1.3 Marketing Concept 1.4 Role of Marketing 1.5 Strategic Marketing Planning 1.6 Scope of Marketing 1.7 Approaches of Marketing 1.8