Basic Marketing Concepts

What is Marketing?
‰ Any Interpersonal & Inter-organisational Relationship involving an
Exchange is Marketing ..-William
William J. Stanton
Essence of Marketing is a transaction- an exchange- intended to satisfy human
needs & wants. There are three elements in marketing process:
a) Marketers
b) What is being Marketed
c) Target Market
What is Marketing?
“Marketing, a social process by which individuals & groups obtain as they need &
want through creating & exchanging products & value with others”--Philip Kotler
This definition includes following core concepts: Needs, Wants & Demands---
Products--value & Satisfaction--exchange & Transaction--markets & Marketers
Needs, Wants & Demands
‰ Need: A state of felt deprivation of some basic satisfaction (Food, Clothing,
Shelter, Belonging etc.)
‰ Wants: Wants are desires for specific satisfiers of deeper needs. Needs are
few & wants are many.
‰ Demands: Demands are wants backed by Ability to buy & Willingness to buy
Products/Offers/Satisfiers/Resources
‰ Anything that can be offered to someone to satisfy a need or want is a product.
‰ Product refers to physical object
‰ Services refer to intangible object
Value & Satisfaction
‰ Value is customers’ estimate of Product’s capacity to satisfy a set of goals
‰ Value is ratio between what customer gets & what he gives (V=B/C)
‰ Customer gets benefits & assume costs
ÖWhen: Customer Expectance = Performance (satisfied)
ÖCustomer Expectance > Performance (dis-satisfied)
ÖCustomer Expectance < Performance (Highly satisfied)
Exchangeg & Transaction
‰ Exchange is act of obtaining a desired product by offering something in return
& it is taken place when 5 conditions are satisfied:
a) There should be at least Two parties.
b) Each party must have something of value to other
 a) Each party is capable of communication & delivery
b) Each party is free to accept or reject offer
c) Each party believes that it is appropriate to deal with other party
Exchange & Transaction
‰ Exchange is a process rather than event. It is a value creating process
because it normally leaves both parties better off.
‰ A transaction is a trade of values between two or more parties (A barter
transaction or a monetary transaction).
What is Marketing?
‰ A market consists of all potential customers sharing a particular need or
want who might be willing & able to engage in exchange to satisfy that need
or want.
‰ Marketing is management process which identifies, anticipates, & supplies
customer requirements efficiently & profitably.
profitably
‰ In other words, it is process of understanding, creating, & delivering
profitable value to targeted customers better than competition.
‰ Its aim is to establish, maintain, enhance long term relationship with
customers at a profit so that objectives of parties involved are met.
‰ In short marketing consists of attracting, developing, & retaining profitable
customers.
Business is Marketing
‰ Marketing can not be considered as a separate function, it is whole
business,, seen from p
point of view of its final results......that is p
profit,,
through customer satisfaction- Peter Drucker
A Simple Marketing System
Communication

Goods & Services

Industry Market
Money

Information/Feedback
What is Marketing Management?
‰ Marketing Management is analysis, planning, implementation & control of
programs designed to create, build & maintain beneficial exchanges &
relationships with target marketsto achievepurposeof organizational objectives.
‰ Marketing management is demand management or involves task of
influencing level, timing & composition of demand. At times actual demand
level may be below, equal to, or above desired demand level & major task of
marketing management is to regulate demand level.
State of Demand & Marketing Task
State of demand Marketing task
Ö Negative Demand Ö Conversional Mktg.
Ö No Demand Ö Stimulational Mktg.
Ö Latent Demand Ö Developmental Mktg.
Ö Falling Demand Ö Remarketing
Ö Irregular Demand Ö Synchro-marketing
Ö Full Demand Ö Maintenance Mktg.
Ö Overfull Demand Ö Demarketing
Ö Un-wholesome Demand Ö Counter-marketing
Evolution of Marketing Management
Marketing management has evolved through following stages :
1) Production Orientation Stage
2) Sales Orientation Stage
3) Marketing Orientation Stage
4) Social Responsibility & Human Orientation Stage
Company Orientation for Marketing Activities
Marketing Management can be defined as effort to achieve desired Exchange
outcomes with Target Markets. Now question arises :
1) What philosophy should guide marketing activities?
2) What weights shouldbegivenforinterests of organization, customers & society?
Marketing Concepts
Thereare05 competingconceptsunderwhich organizations conducttheirmarketing activities:
1) Production Concept
2) Product
d C
Concept
3) Selling Concept
4) Marketing Concept
5) Societal Marketing Concept
 1) Production Concept
Company

P d
Produce
Produce more & more
Consumers
Sell Practically sells itself

‰ Consumers favour those products that are widely available & low in cost.
cost
‰ Therefore increase production & cut down costs.
‰ And build profit through volume.
2) Product Concept

Produce
Quality Product practically sells itself,
Products Consumers
if it gives most quality for money
Sell

Buyers admire well-made products & can appraise product quality & performance
‰ Consumers favour those products that offer the most quality, performance,
or innovative features.
‰ Therefore,, improved
p quality,
q y, p
performance & features.
‰ This would lead to increased sales & profits.
3) Selling Concept

Produce
Aggressive selling & promotion efforts
Consumers
Sell it

Making sales becomes primary function & consumer satisfaction secondary

‰ Consumers, if left alone, will not buy enough of company’s products.

‰ Therefore, promote sales aggressively.
‰ And, build profit through quick turnover.
4) Marketing Concept
‰ “Love The Customer, Not The Product”
Learn what they want(MR)
Produce it
Consumers
Market it

Sell what they want(Satisfy needs of customers)

‰ Key
K to t achieving
hi i organizational
i ti l goals
l consist
i t in
i determining
d t i i needs
d & wants
t
of target markets & delivering desired satisfactions more effectively &
efficiently than competitors.
‰ And build profit through customer satisfaction & loyalty.
5) Societal Marketing Concept
‰ It is Marketing Concept (+) Society’s well being.
‰ Balancing of following 03 considerations while setting marketing policies :
Ö Customer’s want satisfaction
Ö Society’s well being
Ö Company’s profits
‰ Societal marketing concept holds that organization’s task is to determine
needs, wants & interests of target markets & to deliver desired satisfactions
more effectively & efficiently than competitors in a way that preserves or
enhances consumer’s & society’s well being.
‰ It addresses conflicts between consumer’s & firm’s short run wants & long
term welfare.
Selling & Marketing Concept Contrasted
Starting point Focus Means Ends
Factory Products Selling & Profit through Sales
Promoting Volume
Selling Concept
Target Market Customer Coordinated Profit through
Needs Marketing Customer
Satisfaction
Marketing Concept
Strategic Concept of Marketing
‰ Shifted
Shift d focus
f off Marketing
M k ti f
from P d t or customer
Product t t Customer
to C t i
in
Context of Broader External Environment .
‰ To succeed, marketers must know customer in a context including
competition, Govt. Policy & regulation & broader economic, social & political
macro forces that shape evolution of market.
 Strategic Concept of Marketing
‰ Shifted Marketing Objectives from Profit to Stakeholder Benefits.
‰ Stakeholders are individuals or groups have an interest in activity of a
company.
p y Theyy include employees
p y & management,
g , customers,, society, y,
Shareholders, Financiers/Bankers, Government etc.
‰ Strategic Marketing Concept is Strategic Management, integrates marketing
with other management functions (Major task is ProfitforStakeholders’benefits).
Marketing System
‰ Marketing is concerned with flow of goods & services from production
points to consumption points. There is a systematic arrangement of these
functions of marketing to move goods & services to needy persons. This
system is essential to creation of time, place & possession utilities.
‰ A dynamic marketing system must be willing to undertake following specific
activities : 1) Define market area.
2) Research consumer wants & needs.
3) Develop & redevelop product/service.
4) Select, train, motivate & control human resources.
5) Develop sales approach & advertising support.
Goals of Marketing System
(1) Maximize Consumption
(2) Maximize Consumer Satisfaction
(3) Maximize Choice
(4) Maximize Life Quality
Three Basic
Th B i Principles
P i i l off Marketing
M k ti
‰ Essence of marketing can be summarized in three great principles.
Ö 1st identifies purpose & task of marketing,
Ö 2nd competitive reality of marketing &
Ö 3rd principal means for achieving the first two.
1) Customer
C t V l & Value
Value V l
Equation :
V=B/P Where; V=Value
B= Perceived Benefits
P= Price
(Value is increased by increasing numerator &/or reducing denominator)
2) Competitive or Differential Advantage: Total offer must be more attractive
than that of competition in order to create a competitive advantage.
3) Focus or Concentration of Attention: Task of creating Customer Value at a
Competitive advantage.
Value Map
Value Disadvantaged Area VEL
C
Perceived
Price E
B D

A
Value Advantaged Area

Customer Perceived Benefits

Customer as Controlling Function

Production Finance

C t
Customer

Marketing Personnel

Marketing as Integrative Function

Production

M k ti
Marketing

Customer

Personnel Finance
 03 Levels of Marketing
‰ Responsive Marketing
‰ Anticipative Marketing
‰ Need Shaping Marketing
Responsive Marketing
It is form of marketing when some company defines an existing clear need &
prepare an affordable solution.
(Recognizing that women wanted to spend less time for cooking & cleaning, led
to the invention of modern washing machine, microwave oven etc.)
Anticipative Marketing
It is a form of marketing when a company recognize an emergent or latent
need, & come out with an affordable solution. Evian, Perrier anticipated
growing market for bottled drinking water as quality of water deteriorated in
many places.
places
Anticipative marketing is more risky than responsive marketing; companies
may come into market too early or too late, or may even be totally wrong about
thinking that such a market would develop.(e.g. Dish washers in India)
Need Shaped Marketing
The broadest
Th b d t level
l l off marketing
k ti occurs whenh a company introduces
i t d product
d t
that nobody asked for & often could not even conceive of.
(e.g. Sony Walkman, Sony Compact Disc )
Late Akio Morita, founder & chairman of Sony, who introduced these & many
other new products, summarized his marketing philosophy in these words: “ I
don’tt serve markets. I create them.
don them.”
Market- Driven & Market- Driving Company
‰ Market-driven companies focus on researching current customers to
identify their problems, gather new ideas, develop products that result in
incremental improvements, not radical innovations.
‰ Market-driving
M k t d i i companies
i generatet significantly
i ifi tl new products,d t services,
i
business formats & raise our sights & our civilization. These companies are
much more than customer-led. They lead customer where they want to go,
but don’t know yet.