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Chapter wise Content Plan

Subject: Marketing management
Class & Semester: I Sem MBA
Session No.:
Module I :AN INTRODUCTION TO MARKETING AND ITS BASIC CONCEPTS
Key Concepts
Meaning and Scope of Marketing,
Fundamental Marketing Concepts,
Company orientations towards the Marketplace
Marketing and customer value
Strategic Planning,
Marketing plan,
Marketing in the Indian Economy
Brief Theoretical Framework
Meaning and Scope of Marketing
Marketing is so basic that it cannot be considered as 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' Peter Drucker
According to American Marketing Association (2004) - "Marketing is an organizational
function and set of processes for creating, communicating and delivering value to
customers and for managing relationships in a way that benefits both the organization and
the stakeholder."
Marketing may be narrowly defined as a process by which goods and services are
exchanged and the values determined in terms of money prices. That means marketing
includes all those activities carried on to transfer the goods from the manufacturers or
producers to the consumers.
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. 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 seller to the purchaser
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 organisation
interacts with the customers and stakeholders with the objective to earn profit, satisfy
customers, and manage relationship. It is the performance of business activities that direct
the flow of goods and services from producer to consumer or user.
4. Marketing is a Managerial function
According to managerial or systems approach - "Marketing is the combination of activities

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designed to produce profit through ascertaining, creating, stimulating, and satisfying the
needs and/or wants of a selected segment of the market."
According to this approach the emphasis is on how the individual organisation processes
marketing and develops the strategic dimensions of marketing activities.
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 three 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; and
3. Efficient provision of distribution and payment processing systems.
6. Marketing is a philosophy based on consumer orientation and satisfaction
7. Marketing had dual objectives - profit making and consumer satisfaction
Scope of Marketing
1. Study of Consumer Wants and Needs
Goods are produced to satisfy consumer wants. Therefore study is done to identify
consumer needs and wants. These needs and wants motivates consumer to purchase.
2. Study of Consumer behavior
Marketers perform study of consumer behavior. Analysis of buyer behavior helps marketer
in market segmentation and targeting.
3. Production planning and development
Product planning and development starts with the generation of product idea and ends with
the product development and commercialization. Product planning includes everything
from branding and packaging to product line expansion and contraction.
4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs form
product to product. It depends on the level of competition, product life cycle, marketing
goals and objectives, etc.
5. Distribution
Study of distribution channel is important in marketing. For maximum sales and profit
goods are required to be distributed to the maximum consumers at minimum cost.
6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion
mix is crucial in accomplishment of marketing goals.
7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major

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objective of marketing.
8. Marketing Control
Marketing audit is done to control the marketing activities.

The scope of marketing can be understood in terms of functions that an entrepreneur has to
perform. These include the following:
a. Functions of exchange: which include buying and assembling and selling?
b. Functions of physical supply: include transportation, storage and warehousing
c. Functions of facilitation: Product Planning and Development, Marketing Research,
Standardization, Grading, Packaging, Branding, Sales Promotion, Financing
The Marketing Management Concepts
There are four marketing management concepts that companies will utilize in their
marketing objectives. All of this aim to achieve profits and objectives, but the focus and
means by which they do so will differ. They will typically follow one of these four major
concepts:
1. Product Concept - This management orientation says that if you build a quality
product and set a reasonable price, very little marketing effort is needed to sell it.
The product generates the demand "build it, and they will come"
2. Selling Concept - This management orientation says that consumers will not
normally buy enough of a product unless it is aggressively promoted to them.
3. Marketing Concept - This management orientation says the major purpose of an
organization is to identify consumer needs and then adapt the organization in a way
that will satisfy the customers needs more effectively and efficiently than
competition. (i.e. Chain restaurants may alter their menu in different countries)
4. Societal Concept - This management orientation focuses on satisfying consumers
needs and demonstrating long run concern for societal welfare in order to achieve
company objectives and attend to its responsibilities for society. The idea is to find
a balance between social welfare, consumer needs, and company profits.
Concept

Focus

1. Product

Products

2. Selling

Products

3. Marketing Customer needs

Means
Ends
Quality product,
Achieve profits or objectives
reasonable price, little
by products generating
marketing effort
consumer demand
Achieve profits or objectives
Aggressive advertising
by generating sales volume
and selling efforts
Integrated marketing

4. Societal- Customer satisfaction Constant search for

Achieve profits or objectives

through customer satisfaction
Satisfy organizational goals

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Concept
Marketing

Focus
and long run public
welfare

Means
better products in
terms of appeal and
benefit

Ends
and responsibilities for society

Traditional vs. Integrated Marketing

To understand the fundamentals of marketing, it is important to understand two different
approaches used when a company chooses to introduce a new product. Here we see
traditional and integrated marketing.
There are typically 5 different departments directly involved with the product during
creation and launch: Development, Engineering, Production, Marketing, and Distribution.
If a company opts to use a traditional approach, all of these departments work as separate
entities. For example, development will draw up a product and then pass it along to
engineering to create it. Engineering will then pass it along to production mass produce it.
They will afterwards pass it to marketing, who will eventually move the product to
distribution for a product launch.
If a firm opts to utilize an integrated marketing approach, all of the departments work
together as a single unit. Engineering will not begin a product without ensuring that
production has the capabilities to produce it. Development will check with marketing to
ensure the product is line with the company image and approach. Basically, every
department will at some point integrate their work with all other departments in the
process.
Clearly, integrated marketing is the better approach. While it may take longer to launch a
product, the likelihood of success is greater. The traditional approach leaves much room
for interdepartmental conflicting interest and is therefore regarded as an outdated approach
in marketing. It all too often ignores the consumers needs. The integrated marketing
approach helps a business work collectively as one unit.

MARKETING VERSUS SELLING

The basic difference between marketing and selling lies in the attitude towards business.
The selling concept takes an inside-out perspective. It starts with the factory, focuses on
the companys 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 all the activities that will
affect customers, and produces profits through creating customer satisfaction.

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Starting point

Focus

Means

Ends

Selling Concept
Factory

Products

Selling and
Promoting

Profits through
sales volume

Marketing Concept
Market

Customer Needs

Coordinated
marketing

Profits through
customer satisfaction

Marketing
Focuses on Customers needs.
Customer enjoys supreme importance.
Converting customers needs into product.
Profits through customer satisfaction.
Emphasis is given on product planning and development to match products with
the market.
Integrated approach to marketing is practiced.
The principle of caveat vendor (let the seller beware) is followed.
Selling

Focuses on sellers needs.

Product enjoys supreme importance.
Converting product into cash.
Profits through sales volume.
Emphasis is placed on sale of products already produced.
Fragmented approach to selling is practiced.
The principle of caveat emptor (let the buyer beware) is followed

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Marketing and customer value
A customer perceived value is equal to the benefits derived divided by the costs.
Value = Benefits/Costs
Further, benefits can include functional and emotional benefits. Costs may include
monetary costs, time costs, energy costs, and psychic costs.
So,
Value = Functional benefits + emotional benefits / monetary cost + time cost + energy
cost + psychic costs
Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing a
products performance in relation to the person's expectations of performance.
Most expectations are derived from past buying experiences, friends, the marketer, peers,
competitors, and promises of performance.
It is also important to keep in mind that a person is twice as likely to tell others about a
negative product or experience as they are about a good product or positive experience.
Dissatisfied customers can also have a negative impact on employee morale.
Strategic Planning
Strategic planning is an organization's process of defining its strategy, or direction, and
making decisions on allocating its resources to pursue this strategy.
In order to determine the future direction of the organization, it is necessary to understand
its current position and the possible avenues through which it can pursue particular courses
of action. Generally, strategic planning deals with at least one of three key questions:[1]
1. "What do we do?"
2. "For whom do we do it?"
3. "How do we excel?"

MARKEYING PLAN
The marketing plan is an important document used by companies for planning. It is a
road map and surveys the business environment, describes problems, threats and
opportunities in the industry, contains a marketing strategy, and has financial
projections/budgets. Do not confuse a marketing plan with a business plan. A marketing
plan is concerned more with strategy whereas a business plan is more concerned with

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financial information. The primary purpose of a business plan is to raise money from
venture capitalists or bankers; the primary purpose of a marketing plan is to provide
direction for a company. The marketing plan is an integral part of the business plan.
Contents of the Marketing Plan
I. Executive Summary and Table of Contents
The marketing plan begins with a brief synopsis of the key points and major
recommendations. The Table of Contents follows the executive summary.
II. Environmental Analysis (also known as Situation Analysis)
Before starting this section, the organization might first discuss its mission statement.
Section II provides information about the firm's current situation with regard to the current
marketing environment. It is sometimes referred to as a situation analysis. The
marketing environment must be discussed. This section will look at external
environmental factors such as the market, competition, marketing channels, economy,
political climate, technology, legal and political climates, and sociocultural factors. This
section will also examine internal environmental factors such as costs, profits, human
resources, financial resources, and the age of plant and equipment. The target markets
also have to be studied. Have their needs changed? Is the company doing a good job of
satisfying the needs of its customers? Finally, the organization has to ascertain whether
their marketing objectives are still reasonable given the changing environment. The
information in section II is used to help the organization with the SWOT analysis
III. SWOT Analysis
SWOT has become a buzzword in marketing today: Companies should know their
Strengths, Weaknesses, Opportunities, and Threats. A company has to understand its
internal Strengths and Weaknesses and also be cognizant of external opportunities and
threats. To do a SWOT analysis correctly, you must know about your competition and the
industry. After the SWOT analysis is complete, a company has to build on the strengths
that is has, do everything possible to eliminate or correct weaknesses, take advantage of
opportunities, and do what it takes to minimize or avoid threats.
IV. Marketing Objectives
Based on the SWOT analysis, The organization's major objectives are stated. This makes
it clear to all what the organization is trying to accomplish through its marketing plan.
Objectives are in terms of such factors as market share, profitability, and/or sales volume.
Other factors to be considered include innovation (introduce five new products), image,
distribution, etc.
V. Marketing Strategies
A marketing strategy, as you know, has two key components: a target market and a
marketing mix to satisfy the target market. A good marketing strategy enables a firm to
achieve its objectives. A firm will succeed if it can use its strategy to achieve an advantage
over the competition. A successful product offers either a quality advantage and/or price
advantage over competing brands. How the product or service will be positioned is also
discussed in this section. Positioning will be discussed in a later chapter.
VI. Marketing Implementation/Action Program
This section describes the actual marketing programs that will be undertaken in order to
implement the marketing strategy. Some issues that must be discussed include what

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specific actions must be taken? Who will do it? When is it going to be done? How much
will it cost?
VII. Financial Projections/Evaluation and Control
Financial projections are required so that the organization can determine whether the
marketing plan is actually working. The detailed financial projections are done on a
monthly or quarterly basis. These projections are usually in terms of sales volume, profits,
and/or market share. Costs must also be projected since total profit = total revenue - total
cost. If the marketing plan is not working, it is very important for the organization to be
able to pinpoint the cause as soon as possible and have a contingency plan.
Environmental scanning can be defined as the study and interpretation of the political,
economic, social and technological events and trends which influence a business, an
industry or even a total market. The factors which need to be considered for
environmental scanning are events, trends, issues and expectations of the different interest
groups. Issues are often forerunners of trend breaks. A trend break could be a value shift in
society, a technological innovation that might be permanent or a paradigm change. Issues
are less deep-seated and can be 'a temporary short-lived reaction to a social phenomenon'.
A trend can be defined as an environmental phenomenon that has adopted a structural
character
Marketing Environment
The term Marketing Environment refers to the forces and factors that affect the
organization ability to build and maintain good relationship with its customers. Marketing
environment surrounds the organization and it impacts upon the organization. Marketers
have to interact with internal and external people at micro and macro level and builds
internal and external relationships. The key elements of marketing environment are as
follows :1.

Internal Environment,

2.

Micro Environment, and

3.

Macro Environment.

Internal Environment

Internal factors like men, machine, money, material, etc., on which marketing decision
depends consists internal marketing environment. The internal environment refers to the
forces that are within the organization and affects its ability to serve its customers. It
includes marketing managers, sales representatives, marketing budget, marketing plans,
procedures, inventory, logistics, and anything within organization which affects marketing
decisions and its relationship with its customers.

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Micro Environment
Individuals and organizations that are close to the marketing organization and directly
impacts its ability to serve its customers, makes Marketing Micro Environment. The micro
environment refers to the forces that are close to the marketing organization and directly
impact the customer experience. It includes the organization itself, its suppliers, marketing
intermediaries, customers, markets or segments, competitors, and publics. Happenings in
micro environment are relatively controllable for the marketing organization.

Macro Environment
Macro environment refers to all forces that are part of the larger society and affects the
micro environment. It includes demography, economy, politics, culture, technology, and
natural forces. Macro environment is less controllable.
Marketing research & Marketing Information System
Marketing research is a systematic method of collecting, recording & analyzing of data. It
is used to solve marketing problems. It finds out the needs & expectations of d consumers.
So the co. makes it products according to the needs & expectation of the consumers. It
helps co. to make it production & marketing policies

NATURE / CHARACTERISTICS

Marketing research has a wide scope

Systematic, scientific and objective

Continuous and dynamic process

Tool for decision making

Benefits to the co. and consumers

Similar to military intelligence

Applied research

Closely connected with marketing information system (MIS)

Reduces the gap between producers and consumers

Use different methods

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Limitations

MARKETING INFORMATION SYSTEM

Unified and centralized

Facilitates decision making

Provide quick and accurate information

Economical

Selective

Future oriented

Supply information regularly

New techniques

Used by all levels

information

Importance of Marketing Research and MIS in marketing decisions

Consumer needs and wants

Competitors products

Effectiveness of channels Of distribution

Studies the sales promotion techniques

Packaging design

Forecasting design

Pricing decisions

Helps to take advantage of business opportunities

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Marketing intelligence

Co. to recognize change

Quick supply of information

Quality of decision making

Facilitates marketing planning and control

Recognize trends

Integration of information

Demand Measurement And Forecasting

From your study of the previous chapters you have seen that marketing management
continually scans the marketing environment for signs of opportunities and threats.
Furthermore, you have seen that marketing management divides the heterogeneous mass
market up into more homogenous segments to facilitate the identification and exploitation
of opportunities.
Determining the potential of a market segment is indispensable for analysing the
opportunities within a segment, and for deciding if it can possibly be chosen as a target
market. It is not only the present market potential that is important and gives an indication
of opportunities, but the firm must also be interested in market forecasts. As you have seen
from the first chapter, the firm wants to survive in the long term and achieve its primary
goal being to maximize profitability. Consequently market forecasting is also a very
important aid for decision making by marketing management.
Measuring and forecasting requires an analysis of the market with an aim of expressing it
in quantitative (numeric) quantities both present and in the future. The quantitative
measurement and forecasting of the market, together with its qualitative characteristics, are
used as a basis for decision making by marketing management. Market measurement and
forecasting can be seen as a subdivision of market research which was discussed in the
previous chapter. This is a very superficial description of the important role market
measurement and forecasting play. However, you will learn a great deal more in the rest of
this chapter.

THE IMPORTANCE OF MARKET MEASUREMENT AND FORECASTING

As you can deduce from the previous section, the main goal of market measurement and
forecasting is to serve as an aid in the decisions that marketing management has to make.
As has already been emphasized, the quality of decisions cannot be better than the
information they are based on. Information gathered enables marketing management to
make their decisions in a more objective and scientific manner and to lessen the risk and

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uncertainty that accompany subjective decisions and guesswork.
Naturally marketing management often makes decisions which are not very important
and/or do not hold a great risk. It would be ridiculous to arrange for the gathering of
information by means of measurement and forecasting for all such small decisions of this
nature. Thus it must be emphasized that just as with market research, the importance and
risk of the decision must be weighed up against the cost and time involved in the gathering
and processing of information. Luckily there are various secondary sources which contain
information regarding market measurement and forecasting. These sources include various
published research reports which can be bought at a fraction of the price of a new market
research project, and other sources which, for example, are available on computer and can
be processed for clients' needs. You learnt about examples of these information sources in
the previous chapter.
Question Bank/quiz for tests :
1. Which of the following is central to any definition of marketing?
a. Making a profit
b. Making a sale
c. Demand management
d. Transactions
e. Customer relationships
2. Introducing new products to existing markets is an example of:
a. conglomerate diversification
b. vertical diversification
c. horizontal diversification
d. concentric diversification
3. Which of the following reflects the marketing concept philosophy?
a. "You won't find a better deal anywhere."
b. "When its profits versus customers' needs, profits will always win out."
c. "We're in the business of making and selling superior products."
d. "We don't have a marketing department, we have a customer department."
e. "We build them so you can buy them."

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4. When backed by buying power, wants become ________.

a. physical needs
b. demands
c. social needs
d. exchanges
e. self-esteem needs
5. Greater consumer control means that companies must rely more on marketing by
________ than by ________.
a. socialization; information
b. producing; selling
c. inspiration; competition
d. interruption; involvement
e. interaction; intrusion
6. An increasingly large number of firms are changing their organizational focus from
________ to ________.
a. product management; functional management
b. brand management; customer relationship management
c. territory management; functional management
d. product management; territory management
e. global management; regional management
7.When each party has something that could be of value to other party results to
a. Exchange process
b. Marketing Activity
c. Market place
d. Money exchange
8. In the history of marketing, when did the production period end?

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a. In the late 1800s.
b. In the early 1900s.
c. In the 1920s.
d. After the end of the Second World War
9. The key term in the American Marketing Association's definition of marketing is
a. Process
b. Sales
c. Products
d. Values
10. There are ________ main types of buyer-seller exchanges in marketing.
a. Five
b. Four
c. Six
d. Three
SUBJECTIVE QUESTIONS
1.Brief Selling Concept
2. What is mean by strategic marketing plan?
3. Discuss the meaning, scope and role of marketing function in the exchange process.
Illustrate with suitable examples.
4 Differentiate between marketing and selling
5 What is modern concept of marketing? Dose it apply in India .Discuss.
6 How is marketing a service different from marketing a good?
7. Explain how business and marketing are changing?
8. Does marketing orientation impact business performance? Discuss
9. Coordination between the marketing department and the other departments of an
organization is crucial for implementing the marketing concept. Explain
10 What barriers may a marketing manager face when trying to convince other people

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within an organization that they should adopt the marketing concept?

Signature of the Faculty:

Ms Bhavana U Kanthy