Marketing Management
Module -1
The American Marketing Association offers the following
definition:
“Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, services to create exchanges that satisfy individual and
organizational goals’
According to Phillip Kotler:
Marketing management may be defined as “analysis,
planning, implementation and control of program and designs
to create built and maintain beneficial exchanges with target
markets for the purpose of achieving organizational
objectives.”
Different concepts MARKETING :
Needs, Wants, and demands
Needs describe the most basic human requirements. People need
food, air, water, clothing and shelter to survive.
Needs become Wants when they are directed to specific objects that
might satisfy the needs. A person in USA needs food but wants a pizza
and French fries and a person in India needs food but wants rice, lentils
and curry. Wants are shaped by one’s society.
Demands are more specific products backed by an ability to pay. For
example, many people want a Mercedes; however, only a few are able
and willing to buy one.
Marketers and prospects:
Marketer is someone seeking a response in the form of attention,
purchase, vote and donation. The response is sought from prospect.
Product or offering:
A product is any offering that can satisfy a need or want. Major types of
basic offerings are goods, services, experiences, events, persons, places,
properties, organizations, information and ideas. A brand is an offering
from a known source.
Value and satisfaction:
Value is what a customer gets and what he gives. Customer gets
benefits and assumes costs. Benefits include functional and emotional
benefits. Costs include monetary costs, time costs, energy costs and
psychic costs.
A transaction is a trade of values between two or more parties. For
example a monetary transaction includes paying money in exchange of
goods. A few points to be satisfied for a transaction to exist:
At least two things of value
Agreed upon conditions
A time of agreement
Place of agreement
The term market can be viewed in 3 concepts:
i) Place concept,
ii) Exchange concept,
iii) Demand concept.
Place concept: According to place concept any area where the buyers
and sellers physically meet and exchange goods and services, is called a
market.
Exchange concept: According to Philip Kotler, “a market may be defined
as an area of potential exchange.”
According to this concept, a market need not have any geographical
area, but, wherever an exchange of transaction is facilitated, such an
area will be termed as a market. There are four essentials of an
exchange transaction.
(i) There must be at least two individuals.
(ii) The individuals must be in close interaction or communication with
each other.
(iii) The communication must be in regard with a product or service
which has an exchange value.
(iv) Both the parties must have the power to accept or refuse the
transaction.
Nature of MARKETING:
•Marketing is a process of exchange where goods and services are exchanged between
buyers and sellers. Buyers get the good or services and the sellers or organizations get
money for the goods or services sold.
• Marketing starts and ends with the consumer. It precedes and succeeds production.
It is very important to know and understand customers’ requirements, tastes and
demands etc. For this the organization needs to have a strong information system.
Marketing research is an essential tool which helps the organization to understand the
customers’ needs.
• Marketing provides mutuality of benefits. On one hand, the consumers’ needs are
fulfilled and the firm earns its returns.
• Marketing is a continuous and dynamic process involving a set of activities which are
interrelated. These activities help in reaching out to the customer. Inputs from the
environment help the organization to supply the desired goods and services to satisfy
the demands of the customers.
•Marketing is goal oriented; its basic aim is to earn profits through customer
satisfaction. Any marketing process aims at increasing the sales, increasing the
profits and making sure that there is enough growth opportunities for the
product or service.
•Marketing is an integrated activity which guides the business. Modern
marketing is a part of the economic development of the country. It helps in
raising the standard of living of people; it is no more a mere function of
business.
•Marketing is an operational and dynamic process. Any changes in the
environment will have an impact on the marketing process also. The changes
must be keenly followed and understood, so that, necessary changes can be
done to the marketing process and, for that, the process itself needs to be
flexible enough.
Scope of Marketing
Marketing is a task of creating, promoting and delivering goods and services to consumers
and businesses. Marketing people are involved in marketing 10 types of entities:
• Goods: Steel, cotton, clothing, housing etc.
• Services: Services include like airlines, hotels, barbers, lawyers, doctors.
• Experiences: Walt Disney world’s magic kingdom, climbing Mount Everest.
• Events: Marketers promote time based events like Olympics, trade shows, sports.
• Persons: Celebrity marketing became a major business.
• Places: Tourism development boards of various states, Confederation of Indian Industries etc.
• Properties: real property(real estate) or financial property (stocks and bonds).
• Organizations: ‘Lets make things better’ (Philips), or HSBC ‘The world’s local bank,’ etc.
• Information: WIKIPEDIA.
• Ideas: CONSULTANCIES
Functions of marketing:
Clark and Clark have divided the marketing functions into the following three divisions:
1) Functions of Exchange
• Buying and Assembling
• Selling
2) Functions of Physical Distribution
• Transportation
• Storage
3) Functions of Facilitating or Auxiliary Functions
• Standardization
• Grading
• Packaging and Packing
•Labeling
• Branding
• Financing
• Risk taking & Insurance
• Pricing
• Advertising
• Market Information
Function of exchange:
Any function or transaction helping in exchange of goods is called the function of exchange.
These functions are the core of any marketing process. They include
i) Buying
Buying or purchasing of raw materials, finished goods is the starting point for any manufacturing
or trading process. Buying includes
a) Planning
Buyers must plan in order to determine their needs.
b) Contacts/ sources
This involves finding the right kind of the supplier, finding out the various sources of supply.
c) Negotiating & contracting
Negotiation regarding pricing and other terms and conditions are decided, final agreements are
made and then the title of the goods is transferred.
d) Assembling
Goods produced at different places are assembled to serve promptly the needs of the
buyers.
ii) Selling:
Another important function of exchange is selling and includes the following
1) Product planning
The goal of any seller is to make sure that the product offered is according to the requirements
of the buyers. He must know about the requirements, desires and demands of the customers
and then plan accordingly and make the product available at the price which they are willing to
pay.
2) Contacting
This is a process of making sure that the buyer is aware of the product availability. Advertising is
a major form of contacting the prospective buyers.
3) Demand Creation
Efforts are made to make the buyer purchase the product. Two kinds of strategies are used for
this. Pull strategy and push strategy.
4) Negotiating
Terms and conditions of the sale are negotiated at this stage. Quality and pricing, shipment,
method of payment etc are determined.
5) Contracting
This includes the final agreement entered by the buyers and sellers.
2) Function of physical distribution:
These functions are responsible for making the products available at the right
place at
the right time. They include:
a) Transportation: The physical movement of the products from the producers
to the consumers. This makes the availability of the goods conveniently and
they are easily accessible. The better and faster means of transportation used,
faster the product reaches the customers and the manufacturer gets the first
entry advantage. This creates the place utility.
b) Storage and warehousing (creation of time utility) :
The process of storing and conserving the products till such time as their
demanded by the prospective customer is called as storage and warehousing.
This helps in the availability of seasonal products throughout the year.
3)Facilitating functions or auxiliary functions:
Those functions which help in assisting the functions of exchange as well as the
functions of physical distribution are called facilitating function.
a) Standardization:
A standard is the minimum acceptable level of quality or minimum acceptable level of
performance in terms of purity and potency for a particular product.
b) Grading:
it is a process of classifying the standard products in to various categories for the
purpose of easy identification and sale.
c) Packing and packaging:
Packaging may be defined as the process of wrapping, creating, bottling, compression
and containerization of a product for the purpose of protection, promotion,
information or any other allied benefit.
d)Labeling:
Labeling is the process of importing information through the packages of a product.
The labels generally carry the information of the weight, the manufacturing and expiry
date, the name of the manufacturer and his address
e)Branding:
Branding may be defined as the assigning of a name, term, symbol or design to a product
in order to give it a separate identity and distinguish it from the competitors.
f ) Financing:
Finance is the life line of any business and the process of raising and allocating trends
for the purpose of any operational or strategic activity if the business is called financing.
g) Risk taking & Insurance:
Every marketer has to contend with uncertainties regarding demand, effectiveness add
campaign overseas ventures etc.
h) Pricing:
It may be defined as that auxiliary function, which is concerned with fixing the monetary
value of a product or service.
i) Advertising:
Advertising is that part of promotion which is concerned with impersonal mass communication
to the target customers in order to influence their buying behaviors.
j) Market Information:
Marketing information is an important process for the business system as it helps in taking
timely and accurate decisions. This information should be accurate and adequate.
Marketing Concepts
Marketing needs to follow a philosophy where there
is no conflict of interest between the organization, the
customers and the society. Marketing activities should
be carried under a well-thought out philosophy of
efficient, effective, and socially responsible marketing.
There are few concepts under which organizations
conduct marketing activities.
The Production Concept
The production concept is the oldest concept in business. According to
this concept consumers will prefer products that are widely available
and inexpensive. The concept believes that product should be available
and affordable. This concept works well in developing countries where
consumers are more interested in obtaining the product than its
features.
Managers of production-oriented business concentrate on achieving
high production efficiency, low costs and mass distribution. They
assume that consumers are primarily interested in product availability
and low prices.
The Production Concept
The production concept is the oldest concept in business. According to
this concept consumers will prefer products that are widely available
and inexpensive. The concept believes that product should be available
and affordable. This concept works well in developing countries where
consumers are more interested in obtaining the product than its
features.
Managers of production-oriented business concentrate on achieving
high production efficiency, low costs and mass distribution. They
assume that consumers are primarily interested in product availability
and low prices.
The Selling Concept
The selling concept holds that consumers will not be interested in
buying on their own; they need to be coaxed into buying. This concept
believes that a company needs effective selling and promotional tools to
stimulate more buying. Salesmen are hired to make people aware about
the availability of the product and also to the increase the sales.
The selling concept is practiced in the non-profit area by fund-raisers,
college admission offices and political parties. When the product is new,
this method is beneficial and people become aware of the product; but,
at the same time, it carries high risks also.
They sell what they make rather than make what the market wants.
The Marketing Concept
According to this concept, achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the desired
satisfaction better than the competitors. It is based on premise like customer
orientation, marketing information system, systems approach and dual
objectives.
Therefore, under this concept, customer focus and value are the paths to
sales and profits. Instead of “make and sell” philosophy, here we focus on
“sense and respond” tactics. Therefore this is a customer-centered concept.
The job is not to find the right customers for your product but to find the right
product for your customers.
The Selling concept is an inside-out perspective where the focus is the
company’s existing products. But the Marketing concept is an outside-in
perspective where the focus is the customer needs. The modern marketing
concept believes that the philosophy of marketing is to deliver goods more
efficiently and effectively than the competitors with a view of overall customer
satisfaction.
This concept insists on a good marketing information
system with a view of maintaining such information and data
which will help in satisfying the customer.
Each and every department is well co-ordinated and inter
related with one another in bringing about customer
satisfaction.
This concept concentrates on dual objectives of profit
maximization and customer satisfaction.
The Social Marketing Concept
According to the Social marketing concept, the marketing
strategy should deliver value to customers in a way that
maintains or improves both the customer’s and the society’s
well-being.
Therefore, it’s similar to the Marketing concept but adds the
focusing on society’s well-fare. So there are three
considerations underlying the social marketing concept:
Consumers Satisfaction, Company’s Profit and Society’s
Welfare.
Marketing Approaches
Approaches to the field of marketing:
An Approach is defined as “the perspective by which the particular field of study is
examined or the way in which a particular subject is studied.” There are several
approaches in the field of marketing: they are, as under.
1) Product or commodity approach
This approach studies about a single product from before production to after sales
service. It examines the center of production, people engaged in buying and selling,
distribution and after sales services. Problems of producers, consumer satisfaction,
reach of the product, segment covered by the product and every single detail which is
concerned with the marketing of the product.
2) The institution approach
The institutional approach uses marketing in relation to the various institutions which
come into contact directly and indirectly in the marketing of a product. They mainly
include transport undertakings, wholesalers, retailers, storage and warehouses,
insurance, etc.
3) The functional approach
This approach studies the various functions involved in marketing and examines
three basic functions of marketing namely;
i. Functions of exchange
ii. Functions of physical distributing
iii. Facilitating or auxiliary function.
iv. It gives an operational view of marketing and helps in altering the functions
according to the requirements.
v. Decision making or managerial approach
The decision making approach concentrates on the decision making process.
4) Systems approach
“A system may be defined as a set of interdependent variables integrate in to a single
or whole entity in a definite predetermined sequence, with a view, to achieve a
predetermined objectives.”
E very part of the system is a sub system and if one system is affected the other
subsystems and also the systems as a whole.
5) Technological approach
This approach uses marketing strategy through technical aspects and aims at
using technology and forward the marketing process. Internet marketing,
mobile marketing, etc are products of this approach.
6) Legal approach
This approach studies the legal aspects of marketing and the rules which
govern the marketing distinction of goods and services. It includes the study of
various laws such as COPRA, Essential commodities act and sale of goods act.
7) Economic approach
This approach understands the economic aspects of marketing by studying
various laws of economics such as the law of diminishing marginal utility, law
of demand law of variable proportion, etc.
Recent trends in Marketing
E-Business
It is defined as the application of information and communication technologies in support of all
the activities of business. Using these information technologies, the organizations improve and
transform their business processes.
E-Business models
• Business-to-consumer (B2C) – Sells products or services directly to consumers.
• Business-to-business (B2B) – Sells products and services to other businesses.
• Business-to-government (B2G) – Selling to local, state and other government agencies.
• Consumer-to-consumer (C2C) – Consumers sell directly to consumers.
• Consumer-to-Business (C2B) – Consumers decide the price or bid amount for a specific good
or service generating demand.
M- Marketing (Mobile marketing)
According to the Mobile Marketing Association’s definition, “ Mobile Marketing is a set
of practices that enables organizations to communicate and engage with their
audience in an interactive and relevant manner through any mobile device or
network.” It is a highly personalized and interactive method which has an immediate
impact.
Relationship Marketing
Relationship marketing is an approach that focuses on developing a series of
transactions with consumers. The focus is on transactions to build a long term,
profitable customers, products and channels.
Concept Marketing
Concept marketing is the marketing process of understanding the hidden needs of the
customer, creating awareness in the minds of the customers about product/services,
initiating changes in the customers’ minds and creating a sense of need in the
customers to buy the product or service. It is an act of converting a new concept into a
product.
Ex- ATM’S dishwashers, micro wave ovens, instant noodles.