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Introduction to Marketing
MEDISHETTY DIVYA.
PGDM I -5/Marketing management Date: 02/10/2010.
Marketing:
Marketing is an organizational function and a set of processes for “planning and executing
the conception, pricing, promotion, and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives”. It is called as Marketing.
It deals with identifying and meeting human and social needs in ways that provide value for
customers and the organization’s stakeholders. One of shortest definition is, “meeting needs
profitability”.
Objectives of marketing:
1. To satisfy needs, wants, and demand of consumers and business.
2. To provide value, quality, and satisfactions.
Exchange and transactions:
Exchange is the process of obtaining a desired product from someone by offering something
in return. Every marketing exchange requires at least two parties –both with something
valued by the other party, both capable of communication and delivery, both free to accept or
reject the offer, and both finding it appropriate or desirable to deal with the other.
Exchange is a value –creating process because it normally leaves both parties better off. Two
parties are engaged in exchange if they are negotiating –trying to arrive at mutually agreeable
terms and when an agreement is made between two parties, a transaction has taken place.
A transaction is a trade of values between two or more parties, involving at least two things
of values, agreed upon conditions, a time of agreement, and a place of agreement.
Example: shopkeeper may sell a laptop to customer; and in return customer pays $1000 to
shopkeeper.
Transaction and transfer are totally different. Transfer means party A gives something to
party B but doesn’t receive anything tangible in return. Transfer behaviour can understood
through the concept of exchange. (An agreement to exchange constitutes a transaction,
whereas a transfer occurs when one party does not receive anything tangible in return.)
Example: parent gives Gift to son/daughter in Birthday wishes.
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Market & marketers:
• A marketer is someone who seeks a response (attention, a purchase, a vote, a
donation) from another party called the prospect. If two parties are seeking to sell
something to each other, we call them both marketers.
• A market was physical place when buyers and sellers gathered to buy and sell goods.
• Economic describes a market as a collection of buyers and seller who transact a
particular product or product class (E.g. Housing market or grain market)
Marketing peoples are involved 10 types of entities such as goods, services, events,
experiences, persons, places, properties, organizations, information, and ideas.
Fundamentals of marketing concepts:
1) Needs, wants, and demand.
2) Target markets, positioning, and segmentations.
3) Offering and Brands.
4) Value, Quality, and satisfactions.
5) Marketing channels.
6) Supply chain.
7) Competition.
8) Marketing environment.
9) Marketing planning.
Needs, wants, and demand:
• Needs are basic human requirements. People need food, air, water, clothing, and
shelter and survive. People also have strong needs for recreation education, and
entertainment.
• These needs became wants when they are directed towards a particular product or
object that might satisfy the need.
Example:
1) An American needs food but may want a hamburger, French fries, an d a soft drink.
Here sentence 1 describes needs. (We can’t create). And sentence 2 denotes a choice like
hamburger or fries. (We can create this one).
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2) A person in Mauritius needs food but may want a mango, rice, lentils and beans.
Demands are wants for a particular product backed by an ability to pay.
Example: many people’s wants a Mercedes; only a few peoples willing and able to buy one.
• Companies must measure not only how many peoples want their product but also how
many peoples willing and able to buy it.
Understanding customer needs, wants is not always simple. Some customers have needs of
which they are not fully conscious, or they can’t articulate these needs, or they use words that
require some interpretation. Consider the customer who says he wants “an experience car”. A
marketer may distinguish among five types of needs in this case.
• Stated needs: the customer wants an inexpensive car.
• Real needs: the customer wants a car with a low operating cost, not a low initial price.
• Unstated needs: the customer expert’s goods service from the dealer.
• Delight needs: the customer would like the dealer to include an on board navigation
system.
• Secret needs: the customer wants to be seen by friends as a savvy consumer.
Value, Quality, and satisfaction:
• The offering will be successful if it delivers value and satisfaction to the target buyer.
Value reflects the perceived tangible and intangible benefits and costs to customer.
Value can be seen as primarily a combination of quality, service and price, called the
“customer value triad”.
Value is a central market concept. Marketing is the process of identification, creation,
communication, delivery, and monitoring of customer value.
• Quality is one of the dimension such as “ reliability, functionality, aesthetics and how
well the products meets customers need”
• Satisfaction is nothing but, it reflects a customer of performance and expectations
from a perceived or quality product. Once if the performance matches the
expectations, the customer is satisfied. If the performance exceeds expectations, the
customer is highly satisfied or delighted.
Value + Quality = Satisfaction.
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Marketing philosophies:
The history of marketing philosophes:
A historical context,
Production era (1870-1900)
Product era (1900-1930)
Sales era (1930-1950)
Marketing concept (1950-today)
Societal marketing concept (1980-till date).
Marketing philosophes explains the following concepts,
1) Production concept.
2) Product concept.
3) Selling concept.
4) Marketing concept.
5) Societal marketing concept.
Production concept:
It is one of the oldest concepts in business.
The main emphasis concept is on improving the production process. And it
holds that the consumer will prefer to buy the products that are widely
available and inexpensive.
Here Manager concentrates on achieving high production efficiency,
investments, lowering production cost and mass distribution.
Faster delivery leads to more customers.
The concept is based on Moore’s law, “density of transistors double every 18
months”.
Example: the largest PC manufacture, LENOVO in China takes advantage of the huge
inexpensive labour pool to keep costs and prices low, there by dominator the markets.
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Product concept:
An emphasis only on product based. And it holds that consumer will prefer to buy the
products that offer the most quality, performance or innovative features.
So the Manager, in these organizations focus on investing in research process, product
development, manufacturing and engineering.
Adopted by companies at the forefront of technology.
To produce a better quality product.
Selling concept:
The goal is to increase the sales volume. It holds that consumer and business, if left
alone, the customer would not purchase the products.
Manager focus on aggressively target customers through advertisement and personal
selling.
Also it explains How to sell the products in markets? Meanwhile, attract the people or
customer through providing some offers such as coupons, sales, 0% financial charge,
instalment scheme, guaranties, warranties sometimes provides home delivery.
Marketing concept:
The goal is addresses the customer needs and wants. It holds that the key to achieving
organizational goals consists of the company being more effective than competitors in
creating, delivering, and communicating superior customer value to its chosen target
markets.
Manager focus on identifying customer needs wants, and preferences and market
effectively to address those needs, wants and preferences.
Selling focus on the needs of the seller; marketing focus on the needs of the buyers;
selling is preoccupied with the seller’s need to convert his product into cash;
marketing with the idea of satisfying the needs of customer by means of the product
and the whole cluster of things associated with creating, delivering and finally
consuming it.
To develop long –term relationship with customers.
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Societal marketing concept:
It holds that the organizations tasks is to determine the needs wants and interests of
target markets and to delivers the desired satisfaction to both consumer and society
effectively than competitors.
The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices.
Manager focus on identifying customer needs, wants, preferences and marketing
analysis like efficiency.
Societal DE marketing concept:
(i) Reducing demand for a company’s own products, if that is in best
interest of society.
(ii) Example: Philip Morris U.S.A. advertising the negative effects of
smoking. The company has a youth smoking prevention department
headed by a Senior Vice President; his role is to prevent youth from
starting to smoke and to help those who smoke to give up smoking.
Holistic marketing concept:
It is based on the development, design, an implementation of marketing programs,
processes and activities that recognize their breath and interdependences.
Holistic marketing recognizes that “everything matter” with marketing –and that a
board, integrated perspective is often necessary.
It explains the following concepts,
(1) Relationship marketing
(2) Integrated marketing
(3) Internal marketing
(4) Social responsibility marketing.
Relationship marketing:
Relationship marketing has the aim of building mutually satisfying long term
relationship with key parties –customers, suppliers, distributors, and other
marketing partners in order to earn profit in business. Also it builds strong
economic, technical, and social ties among the parties.
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For marketing, key constituents are customers, employees, marketing partners
(channels, supplies, distributors, dealers, agencies) and member of financial
community (shareholders, investors, analysts).
Internal marketing:
Ensuring everyone in the organization embraces appropriate marketing principles,
especially senior management.
Internal marketing is the task of hiring, training, and motivating able employees who
want to serve customers well.
It takes two levels. One is, the various marketing functions –sales force, advertising,
customer service, product management, marketing research –must work together and
be coordinated from the customers point of view.
And another level, marketing must be embraced by other departments, who must also
“think customer”. In fact, marketing thinking must be pervasive throughout the
company.
Integrated marketing: (including marketing mix)
Integrated marketing, the marketer’s task is to devise marketing activities and
assemble marketing programs that maximize the ability to create, communicate, and
deliver the value of customers.
McCarthy said the marketing mix tools in terms of four Ps. Such as Product, Price,
Place, and Promotion.
Marketing mix decisions must be made for influencing the trade channels as well as
the final customers.
Marketing mix is a set of controllable tactical and represents the seller’s view of
marketing tools like product, price, place, and promotion that the firm blends to
produce the response it wants in the target market.
The marketer mix consists of everything the firm can do to influence the demand for
the product. The many possibilities can be collected into four groups of variables
known as the “four Ps”.
Product: The Company sold the goods on different variety, quality, design, brand, package,
and some features and also given the services to customers. The company achieves target
market through providing the combination of goods –and –services.
Price: The Company provides some special offers like MRP prices, discounts, allowances,
payment period like instalments, credit terms. So here the company attracts the customers,
and the amount of money customers have to pay to obtain the product.
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Credit terms means –connected with suppliers and companies.
Place: Company activities that make the product available to target consumers.
Promotion: It holds the all marketing activities that communicate the merits of the
product through advertisements, personal selling, and sales promotion like buy 1 get 1 free,
public relation, and persuade target customers to buy it.
An effective marketing program blends all of the marketing mix elements into an
integrated marketing program designed to achieve the company’s marketing
objectives by delivers value to customers.
The marketing mix constitutes companies tactical tool for establishing strong
positioning in target markets.
Four Ps for influence buyers. From buyer’s point of view, each marketing tool is
designed to deliver a customer benefit. Robert Lauterborn suggested and replaces
four Ps by four Cs. Such as,
i) Customer solution.
ii) Customer cost.
iii) Convenience
iv) Communication.
Four Ps and four Cs,
1.) Product = Customer solution.
2.) Price = Customer cost.
3.) Place = Convenience
4.) Promotion = Communication.
Marketers must think through the four Cs first and then build the four Ps.
Social Responsibility marketing:
Understand the ethical, environmental, legal and social context of marketing activities
and programs. Social responsibility deals with social problems and involving in
social welfare.
It holds that the organizations tasks is to determine the needs wants and interests of
target markets and to delivers the desired satisfaction to both consumer and society
effectively than competitors.
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The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices.
Manager focus on identifying customer needs, wants, preferences and marketing
analysis like efficiency.
Yet a number of companies, including Ben & Jerry’s have achieved notable sales and
profit by adopting and practicing a form of the societal marketing concept called
cause –related marketing.
It is an opportunity to enhance their corporate reputation, raise brand awareness,
increase customer loyalty, build sales, and increase media coverage.
Indian Marketing Environment:
The marketing environment consists of task environment and the broad environment.
The task environment: includes the immediate actors (those who person do the marketing)
involved in producing, distributing, and promoting the offering, such as the company,
suppliers, distributers, dealers, and the target customers. Included in the supplier group
are material suppliers and service suppliers such as marketing research agencies,
advertising agencies, bank and insurance companies, transportation companies, and
telecommunications companies. Included with dealers are agents, distributers, brokers,
manufacture representatives, and other who facilitate finding and selling to customers.
The broad environment: consists of six components. Demographic environment, Economic
environment, physical environment, technological environment, political environment, legal
environment, and social –cultural environment. These environments contain forces that can
have a major impact on the actors in the task environment. Market actors must pay close
attention to the trends and developments in these environments and make timely
adjustments to their marketing strategies.
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MAHATMA GANDHI’S DEFINITION OF CUSTOMER:
• A customer is not an outsider to our business. He is a definite part of it.
• A customer is not an interruption of our work. He is the purpose of it.
• A customer is doing us a favor by letting us serve him. We are not doing him any
favor.
• A customer is not a cold statistic; he is a flesh and blood human being with feelings
and emotions like our own.
• A customer is not someone to argue or match wits with. He deserves courteous and
attentive treatment.
• A customer is not dependent on us. We are dependent on him.
• A customer brings us his wants. It is our job to handle them properly and profitably -
both to him and us.
• A customer makes it possible to pay our salary, whether we are a driver, plant or
office employ.
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