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 LEARNING OUTCOMES:

After studying this module, you shall be able to

1. Understand the concept of marketing.

2. Understand how marketing has evolved from the traditional to the modern concept.

3. Know nature and the scope of marketing.

4. Appreciate the importance of marketing.

1.2 CONCEPT OF MARKETING

Marketing is an inescapable phenomenon in the present-day world. Everyday, we are exhibited to marketing of goods, services, and ideas. For example, when a salesperson sells T.V., a doctor treats a patient or a state government asks people to get their vehicles checked for pollution, each is marketing something to the targets. Marketing is all about recognizing and meeting human and social needs. Marketing holds that an organization should anticipate the needs and wants of customers and try to satisfy them more effectively than its competitors and by doing this it will be able to achieve its organizational objectives and goals more efficiently. In simple words, marketing is “meeting needs profitably”.

Marketing emphasizes on the needs of the customers before putting the ideas into concrete products. With the customer's wants and needs engulfed into the design and production of the product, sales and the goal of earning profit is likely to be accomplished.

What is marketing?

As per AMA, “Marketing 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”.

Marketing has been also been defined in the following manner:

 According to the American Marketing Association (AMA), “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.”

 In the words of Peter Drucker, “The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

 Philip Kotler has defined marketing as, “Marketing Management is the analysis, planning, implementation and control of programs designed to bring about desired exchanges with target audiences for the purpose of personal and of mutual gain. It relies heavily on the adoption and coordination of product, price, promotion, and place for achieving responses.”

For marketing to be constructive an organization needs to have proper management of marketing activities i.e. marketing management.

What is Marketing Management?

It dictates the direction of purposeful activities that would lead to attainment of marketing goals. It is required to build up a suitable marketing-mix to accomplish the objectives of the business. It is accountable for planning, organizing, directing and controlling the marketing activities.

Through efficacious employment of market and marketing research an organization should be able to recognize the needs and wants of the customer and try to deliver benefits that will intensify or add to the customer’s lifestyle, while at the same time ensuring that the satisfaction of these needs concludes in a healthy turnover for the organization. For example, when Sony launched its Play Station 3 game system and when Apple launched iPhone 5, these manufacturers were flooded with orders because they had crafted the right product, based on doing careful marketing homework.

1.2.1 NEEDS- Needs are the most basic concept underlying marketing. Need arises when a person feels deprived of some basic satisfaction. Marketers do no create these needs. They exist automatically in every individual. Humans possess many elaborated needs which include:

1. Basic physical needs: It includes need for food, shelter, clothing and safety.

2. Social needs: It includes the need for belongingness and affection.

3. Individual needs: It includes the need for knowledge and self-expression.

1.2.2 WANTS- Wants are felt for specific products to satisfy human needs. Human needs are few, but their wants are unlimited. These wants are continually shaped by one’s social, cultural and individual personality. Marketers can influence the wants by offering various products, informing the customers about the products and using marketing strategies to persuade them to buy the product.

1.2.3 DEMANDS- Wants that are supported by purchasing power i.e. ability and willingness to buy is referred to as demand. Companies should emphasis on calculating how many people would actually be willing and able to buy the company’s products rather than measuring how many people want their products.

1.2.4 PRODUCTS- A product is defined as anything that can be offered to satisfy human need or want. The scope of product is not limited to physical objects only. It also includes services, experiences, persons, events, places, properties, organizations, information, ideas etc. Products are vehicles for delivering satisfaction to customers. In other words, a product is a solution that marketers offer to its target market.

1.2.5 VALUE- Value is a customer’s estimate of the product’s capacity to satisfy a set of goals. It is the difference between what a customer spends to obtain the product and the worth that he gets from using it. It is the value which guides the customers to choose among different products that can satisfy a given need. Value is a combination of quality, service and price and is known as “Customer Value Triad”. Value increases with quality and service and decreases with price.

1.2.6. SATISFACTION- It depends upon a product’s performance as perceived by the buyer in delivering value relative to their expectation.

•  If performance matches buyer’s expectation then he feels satisfied.

•  If it falls short of expectations then the customer is dissatisfied.

•  And if it exceeds expectations then the buyer is delighted.

1.2.7 EXCHANGE- It is defined as an act of obtaining a desired product from someone by offering something in return. It is the process of creating value because it leaves both the parties better off.

There are 5 conditions which must be satisfied for exchange to take place. They are as follows:

1. The foremost condition is that there must be at least 2 parties

2. Each party must possess something of value that can be exchanged with another party.

3. Each party must have the ability to communicate and delivery.

4. Acceptance or rejection of the exchange offer lies at the discretion of each party.

5. Each party is in opinion that it is appropriate or desirable to deal with the other party.

1.2.8 TRANSACTION- It is defined as a trade of values between two or more parties. It is considered as marketing’s unit of measurement. It engulfs at least two things of value, agreed upon conditions, a time of agreement and ace of agreement.

1.3 NATURE OF MARKETING

Marketing is a never ending task. Marketing concerns itself with a arranging all the resources in a way that meets the needs of the customers. The following points will bring forth the nature of marketing.

1. Marketing is customer oriented: Marketing begins and ends with the customer. Marketing concerns itself not only with the satisfaction of the customer but also objects to delight him/her. All the organizational activities must be targeted and focused towards the customer. Customers must be allowed to decree product specifications and standards regarding quality. And for this, customer’s needs must be examined continuously.

2. Marketing is the delivery of value: When a customer is satisfied from a particular product based on its overall performance, then the satisfaction that he has received is known as customer value. Customers consider the product’s value and price before making a decision and make a trade-off between cost and benefit of the product. They will choose a product that gives them more value per rupee. According to De Rose, “Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership and use”. Thus, the organization must aim to deliver greater customer value than that of their competitors.

3. Marketing is network of relationships: The focal point of all marketing activities is the customer. The term relationships marketing came into light in1990’s. According to Philip Kotler, “Relationship Marketing is the practice of building long-term satisfying relations with key parties like customers, suppliers and distributors in order to retain their long term preference and business.” So the marketers should aim at maintaining long term relationships by delivering high quality products, better services and fair prices than their competitors.

4. Marketing is business: All activities start from marketing i.e. through knowing customer’s needs and wants and ends on the customer i.e. providing after sales service and knowing customer dissonance. The entire business revolves around marketing.

According to Peter F. Drucker “Marketing is so basic that it cannot be considered as a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view. Business success is not determined by the producer but by the customer.”

5. Marketing is dynamic: The word dynamic means ever changing. The needs and wants of the customer are changing constantly. Since the goal of marketing is to meet customer’s needs and wants by furnishing them with the products they want to buy, therefore, marketing must also change constantly to meet those needs and wants.

1.4 SCOPE OF MARKETING

In today’s world marketing has become almost indispensable for the success of an organization. Therefore, it is of utmost importance to study the scope of marketing. The spectrum of marketing covers the following:

1.4.1. Marketing Research: Market Research is a tool used for decision making about the marketing mix’s elements. Research has to be carried out in order to identify the customer’s needs, their tastes and preferences, their interests, economic position, their paying capacity and effectiveness of certain advertisements. For this purpose, data is collected, tabulated, codified, analyzed, and presented through knowledgeable techniques crafted to reveal what customers will buy, why they will buy it, and how much they will pay for it. Market research aims at adapting products to the desires of buyers. Often a questionnaire is used to obtain feedback from the customers. Marketing managers must play an active role in the research process if the input is to be useful to them.

1.4.2. Pricing: Pricing is extremely important since it directly affects an organization’s sales and profits. While deciding the price of the product a number of factors have to be kept in mind like the cost of production, paying capacity of the customer, industry demand, competitor’s prices and the target profit margin. Price knits together the elements of the marketing mix and pays for their respective contributions. Therefore, the marketing manager must analyze and reconcile the various elements of those variables which influence price, and must then decide on an optimal price policy. A good pricing policy is a significant factor to attract the customers.

1.4.3. Advertising and Sales Promotion: In this era of tough competition, the sales promotion and advertisements have become almost an inbuilt part of the marketing. It helps to make the customer aware about the product, makes him curious about the product and thus promotes sales. There are ample sources of sales promotion and advertisements taking the decision about which source to be selected is also an imperative part in the sphere of marketing management. Through advertising marketers are able to position their products in the minds of the customer using various media like newspapers, magazines, television, radio, hoardings, window display and internet etc. Marketing managers must blend the methods of 1) face-to-face personal selling, 2) mass selling to large numbers of customers through advertising and 3) sales promotion, to inform the target market about the "right" product.

1.4.4. Channels of Distribution: Bringing together the buyer and seller and facilitating their exchange is the essence of marketing. Distribution channels are an integral part of a complex system that has evolved from cultural and social patterns in order to facilitate exchange transactions. Marketers must decide what methods are best for distributing their particular products. There are various media of distribution like the retailers, the wholesalers, department stores, chain stores, super markets etc. Marketers may choose to sell directly to the customers, to the customers through sales agents, to jobbers, directly to retailers, or to retailers through sales representatives. They must also determine as to how much long shall be its channel of distribution. A number of factors have to be borne in mind while selecting the medium of distribution like perishability, price of the product, size and weight, after sales service etc.

1.4.5. Financing:

It is difficult to perform various marketing activities without the availability of adequate and cheap finance. It has been rightly remarked “Money or Credit is the lubricant that facilitates the operation of the marketing machine as modern marketing requires vast resources.” The term financing includes decisions like budgeting for marketing activities, obtaining the necessary funds needed for operations and providing financial assistance to customers so they can purchase the business products and services. In the era of global competition, financing of customer purchasing has become an important part of marketing. Marketers have to offer different finance schemes to their customers to increase the volume of sales. There are various sources of marketing finance like commercial banks, cooperative credit society, government agencies etc. The modern business is constructed on the foundation of trade credit.

1.4.6. After-Sales Service: The furnishing of after sales service is very critical for the satisfaction of the customers. The free repairs, the return or exchange of the product during the guarantee period if the product proves defective or worthless, etc. are included in after sales service. Marketers must aim at maintaining cordial relationships with customers, and must attend their queries and solve their problems.

1.5 IMPORTANCE OF MARKETING

Marketing has become a very significant aspect in business since a firm’s financial success largely depends on marketing. Most facets of business depend on successful marketing. Therefore, no firm today can afford to ignore the significance of marketing. And it is not surprising that companies now have CMOs, that is, Chief Marketing Officer along with CEOs (Chief Executive Officer) and CFOs (Chief Financial Officer). Marketers have now come to appreciate the importance of their prudent marketing efforts and have understood that the success of a product will depend on how well the product is introduced and promoted into the market.

The umbrella term ‘Marketing’ covers advertising, promotion, public relations, and sales. A firm might be offering the best products or services in an industry but without marketing it would be impossible for the firm to inform its potential customers about the product. If no one knows about a company’s product, there will be no demand, company will make no sales and hence there will be no profits. This highlights the significance of marketing i.e. to create awareness about the products and make loyal customers and retain them. Marketing enables the customers to know what marketers are offering to them and at the same time it enables the marketers to convince their customers to buy their offerings.

Successful marketing strategies help in not only understanding the customer and his needs but also in the following ways: 

1.5.1. It promotes awareness among the public – Marketing enables the customers to become aware about the various products that are available in the market. A firm’s product must be known to the potential buyers for it to succeed. If there were no marketing or advertising, the customers would not know about the products. A company must capitalize on marketing activities so as not to miss the opportunity of being discovered. Attempts should be made to reach as many customers as possible and tell them what the company has to offer with the help of effective marketing strategies. 

1.5.2. It helps in boosting sales- Once the prospects become aware about the company’s products or services it boosts up the chances that customers will make a purchase. New customers also start to spread the word, informing their friends and family about the company’s product and consequently company’s sales starts to increase rapidly. No matter what a company is selling, it will generate sales once the people come to know about it through TV advertisements, commercials, newspaper advertisements, etc. The more the people see and hear about a new product, the more inclined they will be to buy it. 

1.5.3. It builds company reputation – Marketing helps to build brand name recognition or product recall and hence enables the customers to relate the brand name with the images, logos and captions that they see or hear in advertisements. When the company is able to satisfy the expectation of its customers, its reputation stand on a concrete ground. And once a company succeeds in establishing its name, its business will grow and expand and more and more customers will start purchasing its products and services.

 1.5.4. It helps in fostering healthy competition – Marketing promotes a climate of healthy competition in the marketplace. It helps to position the company as being superior to its rivals so that the customers will prefer its products rather than buying from other firms that sell similar products and services. Competition drives the firms to invest in research and development in order to produce better quality and innovative products and services. Thus marketing also helps to foster innovation.

To sum up, an attempt should be made to develop integrated marketing in the firm to serve the customers better.

1.6   APPROACHES TO THE STUDY OF MARKETING 

  Approaches  of  marketing In  layman  terms  marketing  is  the  process  of  selling  something  at  a  shop  or  market place.  To  some  it  is  the  study  of  individual  commodities  and  their  movement  in  the  market place;  to  others  it  is  the  study  of  institutions  and  persons  who  move  these  product  or  study of  the  economic  contribution;    to  still  others  it  is  the  study  of  the  behavior  of  product movements  and  the  way  the  persons  involved  to  move  them.  The  study  of  marketing  has, thus,  been  approached  in  more  than  one  ways.  However,  these  different  approaches  have immensely  contributed  to  the  evolution  of  the  modern  approach  and  the  concept  of marketing.  To  facilitate  the  study,  these  defend  approaches  may  be  broadly  classified  as the  commodity  approach,  the  institutional  approach  and  the  managerial  approach. Besides  these  well  recognized  and  established  approaches,  the  recently  developed  societal and  systems approaches have  been  attracting considerable attention.  A brief  description of these  different  approaches  is  given  below,  reflecting  their  respective  focus  and characteristics.  

 1.6.1  Commodity  Approach  

 In  the  commodity  approach  to  the  study  of  marketing,  the  focus  of  study  is  a specific  commodity,  say,  wheat,  rice,  sugar,  tea,  fabrics,  automobiles,  etc.  In  this approach,  the  subject  matter  of  discussion  centers  around  the  specific  commodity selected  for  the  study  and  includes  the  sources  and  conditions  of  supply,  nature  and extent  of  demand,  the  distribution  of  channels  used  and  the  functions,  such  as  buying, selling,  financing,  advertising,  storage,  etc.  performed  by  the  various  agencies.  By repeating  such  studies  in  case  of  different  commodities  one  gets  a  complete  picture  of  the entire  field  of  marketing. 

1.6.2  Functional  Approach 

In  the  functional  approach,  the  focus  of  marketing  study  is  one  of  the  different kinds  of  functions  which  are  recognized  for  their  repetitive  occurrences  and  the necessarily  performed  to  consummate  market  transactions.  Though  there  is  no  unanimity about  the  number  and  nature  of  functions  that  constitute  marketing,  nevertheless,  some functions  often  recognized  are  selling,  storage,  transpiration,  and  financing.  In  this approach,  marketing  is  regarded  as  the  “business  of  buying  and  selling  and  as  including those  business  activities  involved  in  the  flow  of  goods  and  services  between  producers  and consumers”.  These  functions  are  also  studied  in  relation  to  given  commodities  and marketing  institutions  in  term  of  their  nature,  importance,  operational  methods,  costs  and  problems. 

1.6.3 Managerial  Approach  

 In  the  managerial  approach,  the  focus  of  marketing  study is  on  the decision  making process involved in  the  performance  of  marketing function at the  level  of  a firm. The  study encompass  discussion  of  the  different  underlying  concepts,  decision  influencing  factors, alternative  strategies  –  their  relative  importance,  strengths  and  weaknesses,  and techniques and  methods of  problem-solving.   Here  there  is  apt  to  be  some  confusion between  the  functional  and  managerial  approaches  to  the  study  of  marketing  owing  to  the terms “functions” used  in  both  these  approaches. In  the  functional approach, the  emphasis on  the  study  of  marketing  functions  is  at  the  macro  level  and  its  scope  extends  to  those functions  only  which  are  involved  during  the  flow  of  goods  and  service  from  producers  to consumers.  In  the  managerial  approach,  on  the  other  hand,  the  emphasis  shift  to  the micro  parts  of  the  economy  and  settles  at  the  level  of  a  business  firm  which  performs  all those  functions  which  impinge  upon  and  are  involved  in  the  creation  and  distribution  of goods  and  services  desired  by  the  market.  The  managerial  approach  thus  entails  the  study of  marketing  at  the  micro-level-level  of  a  business  firm  –  of  the  managerial  functions  of analysis,  planning,  execution,  coordination  and  control  in  relation  to  the  marketing functions  of  creating, stimulating, facilitating and  valuing transactions. 

1.6.4    Institutional  Approach  

 In  the  institutional  approach  to  the  study  of  marketing,  the  focus  is  on  the  study  of the  various  middlemen  and  facilitating  agencies.  The  study  includes  their  position  in  the 14 distribution  channels,  the  purpose  of  their  existence,  the  functions  performed  and  service rendered  by  them,  their  operating  methods,  the  cost  involved,  and  the  problems  faced  by them.  In  order  to  obtain  a  comprehensive  view  of  marketing,  the  study  is  related  to  each type  of  institution. 

1.6.5 Societal  Approach 

In  the  societal  approach  to  the  study  of  marketing,  the  entire  marketing  process  is regarded  not  as  means  by  which  business  meets  the  ends  of  consumers  but  as  a  means  by which  society  meets  its  own  consumption  needs.  In  it,  the  focus  of  study,  therefore,  is  the interactions  between  the  various  environmental  factors  (sociological,  cultural,  political, legal)  and  marketing  decisions  and  their  impact  on  the  well-being  of  society.  As  such,  in this  kind  of  approach  there  is  a  significant  element  of  normative  and  substantial  reliance on  the  value  judgment  based  on  an  accepted  value  system  in  the  society  at  a  point  of  time. The  societal  approach  to  the  study  of  marketing  is  relatively  recent  and  was  born  out  of the  criticism  of  the  marketing  behavior  of  business  obsessed  with  profit  attainment  and growth by critics. 

1.6.6  Systems  Approach 

Among  the  recent  approaches  to  the  study  of  marketing,  the  one  that  has  been engaging  considerable  attention  lately  is  the  systems  approach.  It  is  based  on  Von Bartalanffy‟s  “general  system  theory”.  He  defined  system  as  a  “set  of  objects  together with  the  relationships  among  them  and  their  attributes.  Systems  thinking  recognize  the inter-relations  and  interconnections  among  the  components  of  a  marketing  system  in which  products,  services,  money,  equipment  and  information  flow  from  marketers  to consumers.  These  flows  largely  determine  the  survival  and  growth  capacities  of  a  firm. The  focus  of  systems  approach  is,  there  sore,  the  analysis  of  these  marketing  flows  and communication.  It  stresses  built-in  organizational  capacity  to  adapt  business  to  a changing ecosystem.   

(Source: epgp.inflibnet.ac.in/Home/ViewSubject?catid=0YyNXHI8GPO8SUQIuYNtTA==)