SECTION I

Marketing (Part B)
NATURE OF MARKETING
1. Marketing is an Economic Function - Marketing embraces all the business activities
involved in getting goods and services from the hands of producers into the hands of final
consumers while creating a profit. The business steps through which goods progress on their way
to final consumers is the concern of marketing.
2. Marketing is a Legal Process by which Ownership Transfers - In the process of
marketing the ownership of goods transfers from the seller to the buyer or from producer to the
end user.

3. Marketing is a System of Interacting Business Activities - Marketing is that process

through which a business enterprise, institution, or organization interacts with the customers
and stakeholders with the objective to earn a profit, satisfy customers, and manage relationships.
It is the performance of business activities that direct the flow of goods and services from
producer to consumer.

4. Marketing is a Managerial Function - According to the managerial or systems approach,

"Marketing is the combination of activities designed to produce profit through ascertaining,
creating, stimulating, and satisfying the needs and/or wants of a selected segment of the
market."
5. Marketing is a Social Process - Marketing is the delivery of a standard of living
to society.
According to Cunningham and Cunningham (1981), societal marketing performs 3
essential functions:

1. Knowing and understanding the consumer's changing needs and wants

2. Efficiently and effectively managing the supply and demand of products and
services
3. Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction - The

influence of consumer responses on the marketing activities of any organization is
immense.

7. The main objectives of marketing are profit making and consumer satisfaction – In
fact, marketing is the only function in any organization that generates revenue while
ensuring satisfied customers.
SCOPE OF MARKETING

1) Study of Consumer Wants and Needs - Goods are produced to satisfy consumer
wants. Therefore the study is done to identify consumer needs and wants. These needs
and wants motivate the consumer to purchase.

2) Study of Consumer Behavior - Marketers perform a study of consumer behavior.

Analysis of buyer behavior helps marketers in market segmentation and targeting.

3) Product Planning and Development - Product planning and development starts

with the generation of product ideas and ends with product development and
commercialization. Product planning includes everything from branding and packaging
to product line expansion and contraction.

4) Pricing Policies - The marketer has to determine pricing policies for their products.
Pricing policies differ from product to product. It depends on the level of competition,
product life cycle, marketing objectives etc.
5. Distribution - The study of distribution channels is important in marketing.
For maximum sales and profit, goods are required to be distributed to maximum
consumers at minimum cost through all possible channels.

6. Promotion - Promotion includes personal selling, sales promotion, advertising,

publicity, direct marketing etc. The right promotion mix is crucial in the
accomplishment of marketing goals.

7. Consumer Satisfaction - The product or service offered must satisfy the

consumer. Consumer satisfaction is the major objective of marketing and
companies are investing huge amounts of money in Customer Relationship
Management.

8. Marketing Control - Marketing control enables proper execution of marketing

plans to achieve marketing objectives and is helped by marketing audit.
FUNCTIONS OF MARKETING
1. Market Research - Market research is a systematic collection, analyzing,
interpreting data about market components such as consumers, competitors,
opportunities, threats etc. to improve/design a better marketing plan.

2. Planning about product/service design - It consists of planning about how

to satisfy consumers. Design of product will be decided in this plan. Its
materials, size, features etc. are vital factors while delivering value in the
market.

3. Organizing Resources - This function is about gathering all resources in a

proper way to perform all activities. These resources include financial,
materials, human resources and others.

4. Packaging & labeling - Packaging and labeling is vital for the product to be
safe, more attractive, to create better appeal and being informative to
customers.
5. Branding - A brand is a name, sign, logo, symbol, mark etc. to differentiate the
product from competitors and other related ones in the market. An effective branding
strategy will lead to more customer attraction, increased sales, enhanced image, customer
loyalty etc.

6. Pricing of product - Price is the exchange value which the marketer gets against the
offerings. Proper research should be done before making pricing decisions.

7. Promotion of product - Promotion consists of communication between company

and consumers regarding the products. The objective is to spread awareness about product
and to persuade the people to buy their offering. Nowadays, online promotion is also
growing at a rapid speed.

8. Selling & distribution – Selling brings revenues and thereby profit by employing
proper distribution channels and through effective advertisements.

9. After sales service & customer relations – After sales service guarantees
customer retention and loyalty. It is almost 5 times costlier to get a new customer than to
retain the existing customer.
IMPORTANCE OF MARKETING

1. Need/Want satisfaction - Marketing is all about identifying consumer's needs

and wants either unfilled or new, and utilizing those opportunities and satisfying
them effectively and profitably.

2. Economic growth - Marketing leads to economic growth as it creates business

opportunities which provides want satisfying products or services through
distribution system. All these activities helps in continuous flow of money in the
economy.

3. Generates employment - As we saw in above point, marketing leads to economic

growth, this continue growth creates new business opportunities, which leads to
growth in employment opportunities.
4. Enhances standard of living - Marketing leads to economic growth and generates
employment, so, it improves the standard of living of all those people who earn from marketing
activities.

5. Attain Goals - Every organization has some goals to achieve in the long-term. Effective
marketing strategy aids the management to earn good amount of profit continuously, which
leads to attaining the long-term goals.

6. Development of new products - Marketing is a continuous activity, and to be successful

in the long run, companies have to continuously modify their products, bring new ideas &
products.

7. Enhanced product quality - Modern marketing tries to get customer feedback about
the product, which helps companies to regularly monitor product performance and improve its
quality.
IMPORTANCE OF MARKETING TO VARIOUS
GROUPS
Marketing is the source of many new ideas in management thought and practice such as flexible
manufacturing systems, flat organizational structures, and an increased emphasis on service, all of which
are designed to make businesses more responsive to customer preferences and needs.

Importance to the Marketers

1. Financial Success: Nothing succeeds like success and financial success often depends on marketing ability.
Finance, accounting, operations, and other business functions will not matter if there is no sufficient demand for
products and services. Marketing is a total profit centre, other functions are cost centres.

2. Marketing is often the Route to the Top: Most companies have now created a position of chief
marketing officer, similar to a chief financial officer or chief strategy officer. Most of the top posts in the
organization are being fulfilled by people from marketing. There is no management discussion in the
annual reports without describing their latest marketing achievements, strategies and tactics adopted.

3. Helps Boost Product Sales: Marketing is a core business discipline. Apart from spreading awareness
about the products, marketing helps boost sales and revenue growth. Marketing creates a desire among the
general public to buy the product through effective strategic marketing plans including integrated
marketing communication.
4. Builds Company Reputation: Marketers aim at creating brand equity through brand
name, images, logos or captions that the customers listen to and watch in the advertisements.
Companies also build a reputation through the innovation of products, which is possible because
of the financial resources generated from sales.

5. Marketing is the Biggest Component of Product Offering: Normally 40-60% of the

price charged from a customer comprises marketing-related costs like advertising, market
research, development, etc. The greatest challenge before the marketer is how to bring it down
without sacrificing marketing purposes.

6. To Cope Up with the Changing Marketing Environment: Globalization, the internet,

and information transparency have led to an increasingly mobile workforce, ever more fussy
customers, and rapidly changing technologies and business models. Thus, companies are less
able to predict - let alone control the short-term shape of their markets.
Consequently, more and more organizations are choosing to adopt a marketing-led philosophy
to enable them to win market share and capture and retain the hearts and minds of present and
prospective customers.
Importance to the Consumers

1. They can Buy Goods Globally: Marketers through information technology can satisfy more
customers across the globe than ever before. Marketers do recognize the role of websites and blogs,
online communities, e-mail, SMS, etc. which facilitate marketing exchanges. Today, if someone has to
buy a fridge, he can visit the sites for new or old fridges, compare them and can find the best value.

2. Promotes Product Awareness: Getting the product recognized by the market is the primary
objective of marketing, by which customers take advantage of them. Customers never thought of
personal computers, mobile phones, or laptops. Awareness of these products was spread by marketers
only. Thus, marketing helps to sweeten the quality of life.

3. Creating Utilities: Marketing creates form utility (from timber into the desired furniture), place
utility (moving product closure to customer), time utility (product being made available when it is
needed), information utility (informing of availability of a particular product at a particular place for a
particular price), and possession utility (through the transfer of ownership).
Importance to the Society

1. Protection against Evil Effects of Depression: It is through marketing that the spending
is continued and the depression is kept at bay.

2. Employment: Marketing offers many exciting, interesting, and challenging careers like
personal selling, advertising, transportation, packaging, marketing research, product
development and design, cash and carry stores, retailing, lobbying, event management, etc.
Apart from such commercial activities, many non-governmental organizations which are
engaged in cause marketing, social marketing, and advocacy marketing. etc., also provide great
opportunities.

3. Availability of Various Products: Society would have no choice in the absence of

marketing. Today, there are hundreds of new products and tens of variants of every product
which are available only because of marketing.
 COMPANY ORIENTATIONS TOWARD
MARKETPLACE
There are five competing concepts under which organizations conduct marketing activities: The
Production concept, The Product concept, The Selling concept, The Marketing concept and The
Societal marketing concept.
1. The Production Concept - The Production concept, one of the oldest in business, holds
that consumers prefer products that are widely available and inexpensive. Managers of
production-oriented businesses concentrate on achieving high production efficiency, low
costs, and mass distribution. This orientation makes sense in developing countries, where
consumers are more interested in obtaining the product than in its features. It is also used
when a company wants to expand the market.
2. The Product Concept - Other businesses are guided by the Product concept, which holds
that consumers favor those products that offer the most quality, performance, or innovative
features. Managers in these organizations focus on making superior products and improving them
over time, assuming that buyers can evaluate quality and performance.

However, the product concept can lead to Marketing Myopia. Ex: In USA, Railroad management
thought that travelers wanted trains rather than transportation and overlooked the growing
competition from airlines, buses, trucks, and automobiles.

3. The Selling Concept - It holds that consumers and businesses, if left alone, will ordinarily not
buy enough of the organization’s products. The organization must, therefore, undertake an
aggressive selling and promotion effort.

The selling concept is practiced most aggressively with unsought goods—goods that buyers
normally do not think of buying, such as insurance and mutual funds investment.

Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they
make rather than make what the market wants.
4. The Marketing Concept - It holds that the key to achieving organizational goals consists of
the company being more effective than its competitors in creating, delivering, and communicating
customer value to its chosen target markets.
The selling concept takes an inside-out perspective. It starts with the factory, focuses on existing
products, and calls for heavy selling and promoting to produce profitable sales. The marketing
concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer
needs, coordinates activities that affect customers, and produces profits by satisfying customers.
5. The Societal Marketing Concept - It holds that the organization’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 consumer’s and the society’s well-being.
This concept calls upon marketers to build social and ethical considerations into their
marketing practices. They must balance the often conflicting criteria of company profits,
consumer want satisfaction, and public interest. Yet a number of companies have achieved
notable sales and profit gains by adopting and practicing the societal marketing concept.
The societal concept is more recent which came in 1980s. It considers society as its target.
It is society-oriented. This concept thinks that marketing activities should be done for the
society as a whole. It shifts the focus from consumers to society.
CONCEPTS OF TRADITIONAL AND MODERN
MARKETING
Traditional Marketing Concepts

1. The Production Concept

2. The Product Concept
3. The Selling Concept

Modern Marketing Concepts

1. The Marketing Concept

2. The Holistic Marketing Concept
HOLISTIC MARKETING CONCEPT
Holistic Marketing Concept can be defined as a marketing strategy which considers the business
as a whole and not as an entity with various different parts.
▪ According to holistic marketing concept, even if a business is made of various departments, the
departments have to come together to project a positive & united business image in the minds of the
customer. Holistic marketing concept involves interconnected marketing activities to ensure that
the customer is likely to purchase their product rather than competition.
COMPONENTS OF HOLISTIC MARKETING
Holistic marketing focuses on marketing strategies designed to market the brand to every person
related to it, be it employees, existing customers or potential customers, and communicating it in a
unified manner while keeping in mind the societal responsibility of the business.
1. Relationship Marketing
▪ The relationship marketing aspect of holistic marketing philosophy focuses on a long-term customer
relationship and engagement rather than short-term goals like customer acquisition and individual sales.
▪ This strategy focuses on targeting marketing activities on existing customers to create a strong,
emotional, and everlasting customer connections. These connections further help the business in getting
repeated sales, free word-of-mouth marketing and more leads.
▪ Also more emphasis on having better relation with all the channel partners like distributors, retailers, Ad
agencies etc. helps in reducing the costs.
2. Integrated Marketing
▪ Integrated marketing is an approach to create a unified and continuous experience for the consumer to
interact with the brand by designing and directing all communication (advertising, sales
promotion, direct marketing, public relations, and digital marketing) in such a way that all work together
as a unified force and centers around a strong and focused brand image.
3. Internal Marketing
▪ There are two types of customers to every business: internal and external. While focusing on
external customers should be a top priority for every business, internal customers should not
be left unnoticed as these internal customers (employees) play a vital role in marketing the
brand and products to the external customers of the business.
▪ Internal Marketing treats employees and staffs as internal customers who must be convinced
of a company’s vision and worth just as external customers. It also involves crafting processes
which make them understand their role in the marketing process.
4. Socially responsible marketing
▪ The socially responsible marketing aspect of the holistic marketing concept involves a
broader concern of the society at large. It requires the business to follow certain business
ethics and focuses on partnerships with philanthropic and community organizations. A
business is considered as a part of the society and is required to repay the same.
▪ Socially responsible marketing encourages a positive impact on company’s stakeholders.
MARKETING ENVIRONMENT

“A company’s Marketing Environment consists of the actors and forces outside of marketing
that affect marketing management ability to build and maintain successful relationships with
target customers”. – Philip Kotler

What Are The Components Of Marketing Environment?

▪ The marketing environment is made up of internal and external environment of the business.
While the internal environment can be controlled, the business has less or no control over the
external environment.
INTERNAL ENVIRONMENT
The internal environment of the business includes all the forces and factors inside the
organization which affect its marketing operations. These components can be grouped under the
Five Ms of the business, which are:

• Men: The people of the organization including both skilled and unskilled workers.
• Minutes: Time taken for the processes of the business to complete.
• Machinery: Equipment required by the business to facilitate or complete the processes.
• Materials: The factors of production or supplies required by the business to complete the processes
or production.
• Money: Money is the financial resource used to purchase machinery, materials and pay the
employees.

The internal environment is under the control of the marketer and can be changed with the
changing external environment. Nevertheless, the internal marketing environment is as
important for the business as the external marketing environment. This environment includes
the sales department, the marketing department, the manufacturing unit, the human resource
department, etc.
EXTERNAL ENVIRONMENT
The external environment constitutes factors and forces which are external to the business and on which the
marketer has little or no control. The external environment is of two types:
• Micro marketing environment
• Macro marketing environment

Micro Environment
The micro-component of the external environment is also known as the task environment. It comprises external
forces and factors that are directly related to the business. These include suppliers, market intermediaries,
customers, partners, competitors and the public
• Suppliers include all the parties which provide production resources needed for the organization.
• Market intermediaries include parties involved in distributing the product or service of the organization.
• Partners are all the separate entities like advertising agencies, market research organizations, banking and
insurance companies, transportation companies, brokers, etc. which conduct business with the organization.
• Customers comprise of the target group of the organization.
• Competitors are the players in the same market who targets similar customers as that of the organization.
• Public is made up of any other group that has an actual or potential interest or affects the company’s ability to
serve its customers.
Macro Environment
The macro component of the marketing environment is also known as the broad environment. It
constitutes the external factors and forces which affect the industry as a whole but don’t have a
direct effect on the business. The macro environment can be divided into 6 parts.
1. Demographic Environment
▪ The demographic environment is made up of the people who constitute the market. It is
characterized with grouping of the population according to their size, density, location, age,
gender, race, and occupation etc.
2. Economic Environment
▪ The economic environment constitutes factors that influence customers’ purchasing power and
spending patterns. These factors include the GDP, GNP, interest rates, inflation, income
distribution, government funding and subsidies, and other major economic variables.
3. Physical Environment
▪ The physical environment includes the natural environment in which the business operates.
This includes the climatic conditions, environmental change, accessibility to water and raw
materials, natural disasters, pollution etc.
4. Technological Environment
▪ The technological environment constitutes innovation, research and development in
technology, technological alternatives etc. Technology is one of the biggest sources of threats
and opportunities for the organization and it is very dynamic.
5. Political-Legal Environment
▪ The political & Legal environment includes laws and government’s policies prevailing in the
country. It also includes other pressure groups and agencies which influence or limit the
working of the industry and/or the business in the society.
6. Social-Cultural Environment
▪ The social-cultural aspect of the macro-environment is made up of the lifestyle, values, culture,
habits, customs and beliefs of the people. This differs in different regions.
IMPORTANCE OF MARKETING ENVIRONMENT
Every business, no matter how big or small, operates within the marketing environment. Its present and future
existence, profits, image, and positioning depend on its internal and external environment. In order to operate and
stay in the market for long, one has to understand and analyze the marketing environment and its components
properly.
1. Essential for planning
▪ An understanding of the external and internal environment is essential for planning for the future. A marketer
needs to be fully aware of the current scenario, dynamism, and future predictions of the marketing environment to
succeed.
2. Understanding Customers
▪ Thorough knowledge of the marketing environment helps marketers acknowledge and predict what the customer
actually wants. In-depth analysis of the marketing environment helps the marketer to understand consumer
behavior better.
3. Tapping Trends
▪ Breaking into new markets and capitalizing on new trends requires a lot of insight into the marketing
environment. The marketer needs to research about every aspect of the environment to create a perfect plan.
4. Threats and Opportunities
▪ Sound knowledge of the market environment often gives a first-mover advantage to the marketer as he makes sure
that his business is safe from future threats and taps the future opportunities.
5. Understanding the Competitors
▪ A better understanding of the marketing environment allows the marketer to understand more about the
competitions and about what advantages do the competitors have over his business and vice versa.