TOPIC Understanding Marketing

and The Marketing

1 Process

LEARNING OUTCOME

By the end of this topic, you should be able to:

 Define marketing and the utility (value) it creates for the customer
 Trace the origin of marketing and explain how it has evolved
 Describe the elements of a marketing strategy
 Understand the scope of marketing

Introduction:
Under the marketing concept, the firm must find a way to discover unfulfilled customer needs
and bring to market products that satisfy those needs. The process of doing so can be
modelled in a sequence of steps: the situation is analysed to identify opportunities, the strategy
is formulated for a value proposition, tactical decisions are made, the plan is implemented,
and the results are monitored.

Figure 1: The Marketing process, Source: netmba.com

 1.1 What is Marketing

Production and marketing of goods and services are the essence of economic life in any
society. All organizations perform these two basic functions to satisfy their commitments to
their stakeholders – the owners, the customers and the society, at large. They create a benefit
that economists call utility which is the want-satisfying power of a good or service. There are
four basic kinds of utility – form, time, place and ownership utility. Form utility is created when
the firm converts raw materials and component inputs into finished goods and services.
Although marketing provides important inputs that specify consumer preference, the
organization’s production function is responsible for the actual creation of form utility.
Marketing function creates time, place and ownership utilities. Time and place utility occur
when consumers find goods and services available when and where they want to purchase
them. Online retailers with 24*7 format emphasize time utility. Vending machines focus on
providing place utility for people buying snacks and soft drinks. The transfer of title to goods
or services at the time of purchase creates ownership utility. (Baker, 2016)

Responsible
Type Description Examples
function
Conversion of raw materials
Pizza made from
Form and components into Production
several ingredients
finished goods and services
Availability of goods and Dial-a-pizza; delivery
Time services when consumers guaranteed Marketing
want them in (0 min.
Availability of goods and
Delivery at your
Place services where Marketing
doorstep
consumers want them
Pizza sales (in
Ability to transfer title to
Ownership exchange for rupees
goods or services from Marketing
(possession) or credit card
marketer to buyer payment)

To survive, all organizations must create utility. Designing and marketing want satisfying
goods, services and ideas is the foundation for the creation of utility. Management guru, Peter
Fuddruckers emphasized the importance of marketing in his classic book, The Practice of
Management as: ‘If we want to know what a business is, we have start with its purpose. And
its purpose must lie outside the business itself. In fact, it must lie in society since a business
enterprise is an organ of society. There is one valid definition of business purpose: to create
a customer’.
How does an organization create a customer? Guillotining and Paul explain it this way:
Essentially, ‘creating’ a customer means identifying needs in the marketplace, finding out
which needs the organization can profitably serve and developing an offering to convert
potential buyers into customers. Marketing managers are responsible for most of the activities
necessary to create the customers the organization wants, these activities include:
 Identifying customer needs
 Designing goods and services that meet those needs
 Communication information about those goods and services to prospective buyers
  Making the goods and services available at times and places that meet customers’
needs
 Pricing goods and services to reflect costs, competition and customers’ ability to buy
 Providing for the necessary service and follow-up to ensure customer satisfaction after
the purchase. (Baker, 2016)

Marketing
Continuous exposure to advertising and personal selling leads many people to link marketing
and selling, or to think that marketing activities start once goods and services have been
produced. While marketing certainly includes selling and advertising, it encompasses much
more. Marketing also involves analysing consumer needs, securing information needed to
design and produce goods or services that match buyer expectations and creating and
maintaining relationships with customers and suppliers. The following table summarizes the
key differences between marketing and selling concepts.
In marketing, three concepts have a close connection. They include: market, product and
marketer.
Market: A market is an arrangement between a seller and a buyer in which:
 The seller agrees to supply the goods or the service.
 The buyer agrees to pay the price.
Defined this way, the market is not necessarily a geographical location. Products and services
are purchased over the phone, through mail and electronic mail, as well as online through the
internet. The market share for a company or a product is the value of the total sales for that
product or the company divided by the total sales in the market. It represents the proportion
of the total market sales claimed by the product or the company. (Baker, 2016)
 Product: People satisfy their needs and wants with products. A product is any offering
that can satisfy a need or want, such as one of the 10 basic offerings of goods,
services, experiences, events, persons, places, properties, organizations, information,
and ideas.
 Marketer: A person whose duties include the identification of the goods and services
desired by a set of consumers, as well as the marketing of those goods and services
on behalf of a company. Marketers are skilled in stimulating demand for their products.
However, this is too limited a view of the tasks that marketers perform. Just as
production and logistics professionals are responsible for supply management,
marketers are responsible for demand management. They may have to manage
negative demand (avoidance of a product), no demand (lack of awareness or interest
in a product), latent demand (a strong need that cannot be satisfied by existing
products), declining demand (lower demand), irregular demand (demand varying by
season, day, or hour), full demand (a satisfying level of demand), overfull demand
(more demand than can be handled), or unwholesome demand (demand for unhealthy
or dangerous products). To meet the organization’s objectives, marketing managers
seek to influence the level, timing, and composition of these various demand states.
According to definitions marketing management is seen as a social and managerial
 process by which individuals and groups obtain what they need and want through
creating, offering, and exchanging products of value with others.

Definition
Marketing is the science and art of exploring, creating, and delivering value to satisfy the
needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines
measures and quantifies the size of the identified market and the profit potential.

ACTIVITY

1. How do you distinguish between marketing, promotion and selling in your

organization?
2. Would you say your products are what the market wants, or what you prefer
to produce?
3. Do you start your planning process with a sales forecast and then work out
a budget, or do you start by setting marketing objectives which are based
on a thorough review of the previous year’s performance?

KEYWORDS

 Utility
 Product initiation

SUMMARY

1. Production and marketing of goods and services are the essence of

economic life in any society.
2. Market: A market is an arrangement between a seller and a buyer
3. Marketing is the science and art of exploring, creating, and delivering
value to satisfy the needs of a target market at a profit. Marketing
identifies unfulfilled needs and desires. It defines measures and
quantifies the size of the identified market and the profit potential.
 1.2 Marketing Management:

Marketing management is significant section of management process which envelops the

distribution of marketing activities. According to theorist, Rustom S. Davar, the term ‘marketing
management’ means the discovering of the consumers’ needs, converting them into the
products or services and the activity of transforming the product or service to the ultimate
consumer, so that needs of specific categories or groups of the customers could be so
satisfied that by the most favourable utilization of the resources, they could derive the
maximum benefits. Bulk of literature has demonstrated that -Marketing Management is the
core procedure to allocate the resources of the organization toward marketing activities. The
main role of a marketing manager is to direct expenditures of marketing funds. Cundiff and
Still stated that the marketing management is that branch of the general management which
is associated with the direction of activities in order to achieve objects concerned with
distribution. It can be established that the marketing management is that managerial or
management function which performs the marketing activities. Marketing management is the
art and science of selecting target markets and getting, keeping, and growing customers
through creating, delivering and communicating superior customer value. According to Kotler,
-Marketing is a social and managerial process by which individuals and groups obtain what
they need and want through creating and exchanging products and value with others. (Silk,
2006)
Marketing Management Tasks:
A marketing manager should perform several tasks including the following;
 Conduct marketing research to generate information on consumers and products.
 Study competitors’ products and market trends.
 Monitor and estimate future demand for products.
 Develop new products and services through marketing research, customer feedback
and other sources of information.
 Identify and implement promotion strategies to attract customers.
 Prepare marketing plans, budgets and schedules.
 Decide on price and price offers to customers.
 Monitor customer satisfaction over time.
Functions of a Marketing Manager:
The marketing manager’s job is to develop effective marketing strategies that give the
company a strong competitive advantage in its target market. This involves 4 key functions;
 Analysis
 Planning
 Implementation
 Control

1. Marketing analysis involves examining the company’s markets and marketing

environment to find attractive opportunities.
2. Marketing planning involves setting marketing objectives and deciding on the marketing
strategies to achieve the objectives.
3. Implementation is putting the plans into action. It involves day-to-day activities that
translate the plan to work.
4. Marketing control is essential because surprises may occur during implementation.
Control is the process of measuring and evaluating the results of marketing strategies
and taking corrective action to ensure that objectives are attained. (Silk, 2006)

ACTIVITY

1. What definition best describes the function of marketing?

2. What best describes the marketing mix?
3. What phrase best describes relationship marketing?
4. Which of the following represents the most logical progressive
sequence?
5. Which one of the following is not a direct segmentation base?

KEYWORDS

 Analysis
 Planning
 Implementation
 Control

SUMMARY

 Marketing management is significant section of management process

which envelops the distribution of marketing activities
 Marketing is a social and managerial process by which individuals
and groups obtain what they need and want through creating and
exchanging products and value with others
 Marketing analysis involves examining the company’s markets and
marketing environment to find attractive opportunities
 1.3 Marketing Management Philosophies

The concept of marketing is neither complicated nor original. ‘The customer is always right’ is
a view that has been cited ever since the Industrial Revolution. Marketing acknowledges
consumer sovereignty, and this has now developed into a management discipline. The subject
of marketing as a management discipline originated in the USA in the 19)0s, but its origins go
back further. America was the birthplace of modern marketing, but in terms of its earliest
practice, it was applied much earlier in Europe. The carpenter, tailor, saddler and stonemason
knew their customers personally and were in a position to discuss individual needs of size,
colour, shape and design at an individual level. Craftsmen appreciated they had to provide
satisfactory service to customers. The Industrial Revolution gave rise to large scale
manufacturing, so this personal contact ended. With mass production came mass markets
and mass distribution. Manufacturers were no longer able to offer a personalised service, and
techniques of marketing were developed to fill this gap. There is no universally accepted
definition of marketing. The way it is understood conditions people’s perceptions of its value
and the contribution it can make both to the success of an organisation and to the competitive
health of the economy. As a student of marketing, it is important to appreciate that the term
‘marketing’ means different things to different people. Marketing is based on the premise that
the customer is the most important person to the organisation. Most people think of the term
customer in the context of a profit-making facility. Whilst it is true that the marketing concept
has been more widely adopted and practised in the profit-making sectors of the economy, the
fundamental principles of marketing are equally applicable in the not-for-profit sectors; a fact
that is often overlooked. Marketing as an organisational philosophy and activity is applicable
to almost all types of organisation, whether profit-making or not-for-profit activities. Therefore,
under the marketing philosophy, there are following five concepts: (Reibstein, 2009)

1. Production Concept:
Production concept lays emphasis on availability and affordability of products. If these two
elements are present in marketing, the enterprise will succeed. Accordingly, marketing should
aim at the reduction in the cost of production and concentrate on mass production and
distribution. This concept holds that potential exchange would be realized when the products
are inexpensive and are widely available. However, this concept is not entirely true.
Sometimes customers don’t always buy products which are inexpensive and easily available.
For example, fleet shoes.

2. Product Concept:
Product concept lays emphasis on ‘quality of production’ rather than ‘quantity of production’.
Accordingly, the enterprise should concentrate on product and its continuous improvement
over time because customers favour high quality products and are ready to pay higher prices
for them. The enterprises following this concept direct their maximum efforts into creating
superior products and improving the existing products. However, the main drawback of this
concept is that customers will buy the product only if they require the same. For example, a
firm may be dealing in very spacious, luxurious and expensive cars but the customers will
demand same only when they really need them and can afford their price.
3. Sales Concept:
This concept stresses on attracting and persuading customers to buy the product by making
aggressive selling and promotional efforts. Thus, the focus of business firms is to ensure the
sale of products through aggressive selling techniques such as advertising, personal selling
and sales promotion without giving any consideration to customers’ satisfaction. The main aim
of selling is to convert the goods into cash by using fair or unfair means. But the buyers cannot
be manipulated every time; hence selling can be successful only for short period but not during
long period. (Reibstein, 2009)

4. Marketing Concept:
According to this concept, customer satisfaction is the key to organisational success. It
assumes that a firm can achieve its objective of maximizing profit in the long run only by
identifying and satisfying the need of present and prospective buyers in an effective way.
Business firms don’t sell what they can make; rather they make and sell what customers want.
This concept is based on the following pillars:
I. To identify the market or customers who are selected as the target of marketing effort.
II. To understand the needs and wants of customers in the target market.
III. Developing products or services for satisfying the needs of the target customers.
IV. To ensure better satisfaction of needs of the target market as compared to competitors.
V. To do all this at a profit.

VI. The Social Marketing Concept:

The marketing concept has been criticized by some of the people because of the challenges
posed by social problems like environmental pollution, deforestation, population explosion,
inflation etc. This is because any activity which results in customer satisfaction but is
harmful for the interest of the society at large cannot be justified. Therefore, the firms must
perform the functions of marketing keeping in view the social welfare. For example. No to
plastic bags, recycled paper. (Reibstein, 2009)

ACTIVITY

1. What are the 5 concepts of Marketing Management philosophy?

2. Marketing management philosophies Flashcards
3. Define Marketing Management? How Marketing and Selling are
constrained? Explain Societal Marketing Concept?
KEYWORDS

 Product concept
 Production concept
 Sales concept
 Marketing concept
 Social marketing concept

SUMMARY

 ‘The customer is always right’ is a view that has been cited ever since the
Industrial Revolution.
 Marketing as an organisational philosophy and activity is applicable to
almost all types of organisation, whether profit-making or not-for-profit
activities.
 The marketing concept has been criticized by some of the people because
of the challenges posed by social problems like environmental pollution,
deforestation, population explosion, inflation etc.
 1.4 Marketing Challenges

Well said by Heraclitus - -The only thing that is constant is change. - We are experiencing
change in our daily life and at marketplace too. Customer needs, wants, expectations are
changing more rapidly; customers are increasingly demanding better quality and reliability in
products and services; new products and services are coming to market more quickly,
competition is getting intense and global rather than just domestic; technology is changing
rapidly; and e-commerce and Internet is having a great impact on marketing practises.
In such a rapidly changing marketing environment it is really difficult for business organisations
to make quick and sound decisions and facing various marketing challenges. So, today we
are here to let you know what marketing challenges the business organisations are facing,
and how to overcome these challenges. (Ottman, 1993)
Marketing Challenges the Business Organisations Face Today
 Rapidly changing customer needs, wants, and expectations;
 Increasing domestic and global competition;
 Heterogeneous and fragmented market
 Increasing popularity of Internet;
 Rapid technological changes;
 Challenge of selecting among too many options; and
 Challenge of generating leads.

1. Rapidly Changing Customer Needs, Wants, and Expectations

Today, the needs, wants, and expectations of customer is changing rapidly. It is a great
challenge not only for small marketers but for big players too. It requires extensive study
of market trends and consumer behaviour while developing new product or updating
existing product.

2. Increasing Global and Domestic Competition

Competition today is global rather than just domestic. Marketers have to compete not only
with domestic players but with global players too. The intense and global competition is a
great challenge for marketers to deal with.

3. Increasing Popularity of Internet

With the increase in popularity of Internet a new spectrum of marketing channel is
emerged. The worldwide increase in number of Internet users brought a shift from
traditional print-based media to new online platforms. It presents a new set of marketing
challenges - challenge of deciding how much to allocate to digital v/s print-based media;
challenge of using social media marketing largely because of regulatory issues and
concerns over its measurability; and challenge of doing more with less money as the rise
of Internet made communication cheaper and efficient.
4. Challenge of Selecting Among Too Many Options
The greatest challenge the marketers face today is that there are too many options.
Firstly, too many potential customer segments, secondly, too many product or service
options and three, too many communication tools. The marketers today don’t suffer from
lack of opportunities or options, but they suffer from too many options.

Ways to Overcome These Challenges

For the success of any business, overall performance, be it financial or marketing, must be
the main agenda. Marketing performance includes - sales volume, market share, and
customer satisfaction. Various marketing challenges make it difficult for marketing managers
to achieve the targeted marketing performance. But, there are ways to overcome such
challenges. We are here to share the best possible ways to overcome marketing challenges
business organisations face today. (Ottman, 1993)

ACTIVITY

1. What are the biggest challenges a marketing manager faces today?

2. What technologies have you used to reach your clients?
3. Why are you interested in marketing our product/service?

KEYWORDS

 Global and Domestic Competition

 Decision making
 Customer satisfaction
 SUMMARY

 Customer needs, wants, expectations are changing more rapidly;

customers are increasingly demanding better quality and reliability in
products and services; new products and services are coming to market
more quickly, competition is getting intense and global rather than just
domestic; technology is changing rapidly; and e-commerce and Internet is
having a great impact on marketing practises.