CHAPTER 1

INTRODUCTION TO MARKETING

The activities of a company associated with buying and selling a product or service. It includes advertising, selling
and delivering products to people. People who work in marketing departments of companies try to get the attention
of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. The
four 'Ps' of marketing are product, place, price and promotion.

DEFINITION OF MARKETING:

1. According to the American Marketing Association (AMA) Board of Directors, Marketing is the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large.

2. Dr. Philip Kotler defines marketing as “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. It pinpoints which segments the company
is capable of serving best and it designs and promotes the appropriate products and services.”
3. Marketing is the messages and/or actions that cause messages and/or actions. Jay Baer– President, Convince &
Convert.

4. Marketing is traditionally the means by which an organization communicates to, connects with, and engages its
target audience to convey the value of and ultimately sell its products and services. However, since the
emergence of digital media, in particular social media and technology innovations, it has increasingly become
more about companies building deeper, more meaningful and lasting relationships with the people that they want
to buy their products and services. The ever-increasingly fragmented world of media complicates marketers’
ability connect and, at the same, time presents incredible opportunity to forge new territory. Julie Barile – Vice
President of eCommerce, Fairway Market.
5. Marketing includes research, targeting, communications (advertising and direct mail) and often public relations.
Marketing is to sales as plowing is to planting for a farmer—it prepares an audience to receive a direct sales
pitch. Mary Ellen Bianco – Director Marketing & Communications, Getzler Henrich & Associates LLC.

6. Marketing is an ongoing communications exchange with customers in a way that educates, informs and builds a
relationship over time. The over time part is important because only over time can trust be created. With trust, a
community builds organically around products and services and those customers become as excited about the
products as you are — they become advocates, loyal evangelists, repeat customers and often, friends. Marketing
is a really great way to identify what grabs people and gets them excited about your brand and give it to them,
involve them in the process, and yeah, the best part, build great friendships in the process. Renee Blodgett –
Chief Executive Officer/Founder,Magic Sauce Media.

7. Professor Philip Kotler explained that marketing was “meeting the needs of your customer at a profit.” For me
that definition extends beyond just communicating product features. Marketers are responsible for a 360-degree
experience. For example, in the social media world, a customer’s Twitter needs may differ from her needs to
“play with the brand” in terms of a social game promotion. Every customer touchpoint from customer service to
sales to accounting and more are part of the “new marketing.” Toby Bloomberg –Bloomberg Marketing/Diva
Marketing.

8. Marketing when done well is (a) the strategy of the business – its value proposition, go to market strategy, and
brand positioning and image to the world. Marketing when not done well is (b) an endless checklist of
advertising and promotional to-dos that can never be completed. Marketing in the twenty-first century must be
(c) largely, but not entirely, measurable and accountable around driving business goals. Marketing when done
brilliantly is driven by (a) includes a small, disciplined subset of (b), and is steeped in a culture of (c). Matt
Blumberg – Chairman and Chief Executive Officer, Return Path.

9. Marketing is the process by which a firm profitably translates customer needs into revenue. Mark Burgess –
Managing Partner, Blue Focus Marketing.

10. Intuitive by design, marketing matches the right message/cause to the right person. Finding someone who has a
personal connection with your product, service or cause in a way that is unobtrusive and inviting. Marketing can
be as simple as networking at an event or as complex as a multi-million dollar global campaign that integrates
print, digital, PR, social media and broadcast delivering a specific message with one unified goal. Some of the
best marketing outcomes come from the simplest initiatives. Keeping it simple is sometimes the best strategy.
 CUSTOMER ORIENTATION
As today the market is characterized by a number of products, a variety of diverse customers and stiff
competition. In such a scenario, marketing with consumer in mind has become a necessity. Marketing
managers are shifting their focus from selling a product to creating something that is needed. Starting from
product creation to selling and servicing, consumer focus is given the utmost priority. The focus group
discussions, Surveys and feedbacks done by companies to understand consumers are some examples to show
how much importance is given to consumers.

Customer orientation is of ultimate importance to deliver value added products. There are 4 basic stages for
customer orientation;

1) Develop
 Development has to be done keeping customer needs into mind.
 Products should be customer oriented.
 The development cycle time should be minimal

2) Manufacture
 As per the product, the manufacturing should be such that it gives the best products to the customer
 Quality should not be compromised
 Manufacturing cycle time should be reduced

3) Market
 Identifying and targeting the right customer
 Processing the demand as early as possible
 Customization of the products for the market

4) Deliver
 Deliver to the target customer
 Reduce delivery time
 Value for money products
PHASES OF CUSTOMER ORIENTATION:

 Identifying and Segmenting Customers

Effective customer-oriented sales strategies require the segmentation of customers into specific groups or areas
of focus. Not all customers are the same; different segments will have different needs. The more precisely
businesses can identify the specific customer segments they want to sell to, the better they will be able to
differentiate their communications to address unique customer preferences. For instance, a company that sells
outdoor furniture will likely have different strategies and messages for the single adult than for the young
married couple or the retired couple.

 Learning About Customer Needs and Preferences

The more a business knows about its customers and their needs and preferences, the more successful its sales
strategies will be. While small business owners certainly have a wealth of information from their perspective
about their products and services and why they're great, the perspectives of customers are often different and
sometimes surprising. Taking the time to learn about customers--what they know, what they value and what
their communication preferences are--can help ensure the effectiveness of sales strategies.

 Building Relationships

Hopefully customer interactions will not be one-time events. Businesses need to build relationships with
customers so they will keep coming back and will refer others to the business and its products and services.
Building relationships requires attention to the customer relationship at all stages, from first point of contact
through future sales and through times when sales are low or absent. It is more costly to acquire a new
customer than to retain an existing one, so efforts spent on building relationships can pay off significantly.

 Engaging in Service Recovery and Continuous Improvement

Despite a business's best efforts, mistakes can happen and sometimes customers are not satisfied. Effective
customer-oriented sales strategies will include consideration of service recovery processes to ensure that if
errors occur, they are quickly and effectively handled. In addition, businesses need to be continually seeking
input from customers about ways products and services can be improved, as well as acting on those inputs to
ensure long-standing success.
 CORE CONCEPT OF MARKETING

Marketing Management is a social and managerial process by which individuals or firms obtain what they need or
want through creating, offering, exchanging products of value with each other.

(1) NEED/ WANT/ DEMAND:

 Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing, safety, shelter.

 Want: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer tikka/ tandoori
chicken. Americans needs food- wants hamburger/ French fries.

 Demand: Want for a specific product backed up by ability and willingness to buy. eg.- Need –
transportation.
Want – Car (say, Mercedes)……but able to buy only Maruti. Therefore, demand is for Maruti.
Marketers cannot create needs. Needs preexists. Marketers can influence wants. This is done in
combination with societal influencers.

Demand influenced by making product :

 APPROPRIATE
 ATTRACTIVE
 APPROACHABLE/ AFFORDABLE
 AVAILABLE EASILY
 (2) PRODUCTS- GOODS/ SERVICES/ PLACE.
Product is anything that can satisfy need/ want.

Product component-
1. Physical Good.
2. Service.
3. Idea.

eg. Fast food- burger/ pizza.

 Physical Good – material eaten.

 Service – purchase of raw material/ cooking

 Idea – speed of computer/ processing power.

Importance of product lies in;

 Owning them (minor)
 Obtaining them (major).
Hence, products are really a via- media for services. Hence, in marketing, focus is on providing/ satisfying service
rather than providing products.

(3) VALUE/ COST/ SATISFACTION:

 Decision for purchase made based on value/ cost satisfaction delivered by product/ offering.
 Product fulfills/ satisfies Need/ Want.
 Value is products capacity to satisfy needs/ wants as per consumer’s perception or estimation.
 Each product would have a cost/ price elements attached to it.
Eg. – Travel from city A to city B.

Need – to reach B ( from A)

Method/ Products- Rail/ air/ road or train/ plane.

Satisfaction – Estimated in terms of time lead & travel comfort.

 VALUE– Products capacity to satisfy.

 COST– Price of each products.

 (4) EXCHANGE/ TRANSACTION:

To satisfy need/ want, people may obtain the product through

 Self Production
 By force or coercion
 Begging
 Exchange

 EXCHANGE: – The act/ process of obtaining a desired product from someone by offering something in
return. For exchange potential to exist, the following conditions must be fulfilled.
1. There must be at least two parties.
2. Each party has something of value for other party.
3. Each party is capable of communication & delivery
4. Each party is free to accept/ reject the exchange offer.
5. Each party believes it is appropriate to deal with the other party.

 TRANSACTION: – Event that happens at the end of an exchange. Exchange is a process towards an
agreement. When agreement is reached, we say a transaction has taken place.
a) Barter transaction.
b) Monetary Transaction.
1. At least two things of value.
2. Condition agreed upon.
3. Time of agreement.
4. Place of agreement.
5. May have legal system for compliance.
Proof of transaction is BILL/ INVOICE.

 TRANSFER: – It is one way. Hence, differ from Transaction.

 NEGOTIATION: – Process of trying to arrive at mutually agreeable terms.

Negotiation may lead to

 Transaction
 Decision not to Transaction

(5) RELATIONSHIP/ NETWORKING:

Relationship marketing:- It’s a pattern of building long term satisfying relationship with customers, suppliers,
distributors in order to retain their long term performances and business.
Achieved through promise and delivery of
 high quality
 good service
 fair pricing, over a period of time.
Outcome of Relationship Marketing is a MARKETING NETWORK.
  MARKETING NETWORK: It is made up of the company and its customers, employees, suppliers,
distributors, advertisement agencies, retailers, research & development with whom it has built mutually
profitable business relationship.

Competition is between whole network for market share and NOT between companies alone.

(6) MARKET:
A market consists of all potential customers sharing particular need/ want who may be willing and able to engage in
exchange to satisfy need/ want.

Market Size = fn (Number of people who have need/ want; have resources that interest others, willing or able to
offer these resources in exchange for what they want).

 In Marketing terms: Sellers – called as “INDUSTRY”.

 Buyers – referred to in a group as “MARKET”.

Types of Markets:
1. Resource Market,
2. Manufacturing Market,
3. Intermediary Market,
4. Consumer Market,
5. Government market.

(7) MARKETERS/ PROSPECTS:

 Working with markets to actualize potential exchanges for the purpose of satisfying needs and wants.
 One party seeks the exchange more actively, called as “Marketer”, and the other party is called “Prospect”.
 Prospect is someone whom marketer identifies as potentially willing and able to engage in exchange.
 Marketer may be seller or buyer. Most of time, marketer is seller.
 A marketer is a company serving a market in the face of competition.
 Marketing Management takes place when at least one party to a potential exchange thinks about the means
of achieving desired responses from other parties.
 MARKETING MANAGEMENT

AMA- American Marketing Association. It defines marketing management as the process of planning &
executing the conception of pricing, promotion, distribution of goods, services, ideas to create exchanges that satisfy
individual and organizational goals. And can be practiced in any market.

Task of marketing management is to influence the level, timing, composition of demand in a way that will help the
organization to achieve its objective. Hence, marketing management is essentially demand management.
States of “DEMAND” could be:

 Negative demand – Major market dislikes product, hence try to avoid. eg.- injections.
 No Demand – Constant unaware and uninterested in product. eg.- segway.
 Latent Demand – Need exists, not fulfilled by current products. eg.- ATM, mobile.
 Declining demand – Demand decreases over period of time. eg.- pagers, scooters.
 Irregular Demand – Seasonally. eg.- fans, raincoat.
 Full Demand – Good volume of business. eg.- tooth paste, most of FMCG items.
 Overfull Demand – Demand greater than ability to handle. eg.- BSNL sim card.
 Unwholesome Demand – Unwholesome product. eg.- cigarettes, narcotic drugs.

MEANING OF MARKETING MANAGEMENT:

Marketing management facilitates the activities and functions which are involved in the distribution of goods and
services.

According to Philip Kotler, “Marketing management is the analysis, planning, implementation and control of
programmes designed to bring about desired exchanges with target markets for the purpose of achieving
organisational objectives.

It relies heavily on designing the organizations offering in terms of the target markets needs and desires and using
effective pricing, communication and distribution to inform, motivate and service the market.” Marketing
management is concerned with the chalking out of a definite programmes, after careful analysis and forecasting of
the market situations and the ultimate execution of these plans to achieve the objectives of the organisation.

Further, their sales plans to a greater extent rest upon the requirements and motives of the consumers in the market.
To achieve this objective, the organisation has to pay heed to the right pricing, effective advertising and sales
promotion, distribution and stimulating the consumers through the best services.

To sum up, marketing management may be defined as the process of management of marketing
programmes for accomplishing organisational goals and objectives. It involves planning, implementation and
control of marketing programmes or campaigns.
IMPORTANCE OF MARKETING MANAGEMENT:

Marketing management has gained importance to meet increasing competition and the need for improved methods
of distribution to reduce cost and to increase profits. Marketing management today is the most important function in
a commercial and business enterprise.

The following are the other factors showing importance of the marketing management:
(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means of communication and modes of transportation within and outside the country.

(vi) Rise in per capita income and demand for more goods by the consumers.
 MARKETING PHILOSOPHIES:

There are 5 different concepts of marketing, each of which vary in the function that they deal with. For example –
production concept deals with production and selling concept deals with selling. Each of the concept was developed
as per the need of the market. As the market changed, so did the concepts of marketing. And today, we have an
opportunity to look at all 5 concepts of marketing and what they represent.
The article lists out the concepts of marketing in a very brief manner. You can click on each link to know more
about each individual concept of marketing.

i. Production Concept – Consumers prefer products that are widely available and inexpensive. The
production concept is more operations oriented than any other concept.

ii. Product Concept – Consumers favor products that offer the most quality, performance, or innovative
features. The product concept believes in the consumer and it says the consumers are more likely to be
loyal if they have more options of products or they get more benefits from the product of the company.

iii. Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these
products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your
product. You have to focus on marketing as well.

iv. Marketing Concept – Focuses on needs/wants of target markets & delivering value better than
competitors. The marketing concept believes in the pull strategy and says that you need to make your brand
so strong that customers themselves prefer your brand over every other competitor. This can be achieved
through marketing.

v. Societal Marketing concept – Focuses on needs / wants of target markets & delivering value better than
competitors that preserves the consumer’s and society’s well-being.
PILLARS OF MARKETING MANAGEMENT:

1. SEGMENTATION:

Market segmentation is a marketing strategy which involves dividing a broad

target market into subsets of consumers, businesses, or countries who have, or are
perceived to have, common needs, interests, and priorities, and then designing and
implementing strategies to target them.

2. TARGETING:

Targeted advertising is a type of advertising whereby advertisements are placed so

as to reach consumers based on various traits such as demographics,
psychographics, behavioral variables (such as product purchase history), and
firmographics ... or other second-order activities which serve as a proxy for these
traits.
3. POSITIONING:

Positioning is a marketing strategy that aims to make a brand occupy a distinct

position, relative to competing brands, in the mind of the customer.

4. DIFFERENTIATION:

Product differentiation (or simply differentiation) is the process of distinguishing

a product or service from others, to make it more attractive to a particular
target market. This involves differentiating it from competitors' products as well
as a firm's own products.

7 P’S OF MARKETING MIX:

No two products will be marketed in exactly the same way. The marketing mix is a term used to describe the unique
cocktail of marketing channels deployed to market a particular product.

Looked at another way, the marketing mix can be characterized as a recipe book, offering a comprehensive range of
complementary marketing tools, from which marketers can select and combine those that will best suit the product
they are seeking to promote.

Introducing the 7 Ps of the marketing mix:

The key point to bear in mind when marketing a product is that no one element of the marketing mix is more
important than any other. In a dynamic and sustainable marketing synthesis, the 7 Ps of the marketing mix should all
work in symphony to establish the brand’s unique selling point (USP), and to pitch it to the appropriate market
segment.

The 7 Ps of the marketing mix are:

1. Product:

The product is the primary – though not the only – component of the 7 Ps of the marketing mix. Marketing
consultants will consider carefully which features of the product are most likely to appeal to its target market, as
well as taking into account factors such as the life span of the product, and its potential for diversification and
development. Product should fit the task consumers want it for, it should work and it should be what the
consumers are expecting to get.

2. Price:
 The price that is set for a product not only determines the amount of profit the business will be able to make
from it (and therefore how many units will need to be sold), but also affects the value of the product as
perceived by the consumer (this is the relationship between quality and price). Many consumers will use the
product`s price as a means of judging its quality, and most will compare the price with that of similar products
before deciding which to purchase. The Product should always be seen as representing good value for money.
This does not necessarily mean it should be the cheapest available; one of the main tenets of the marketing
concept is that customers are usually happy to pay a little more for something that works really well for them.

3. Promotion:

This is an umbrella term, covering all the media by which a business informs customers about its product –
including advertising, public relations and sales promotion. Advertising, PR, Sales Promotion, Personal Selling
and, in more recent times, Social Media are all key communication tools for an organisation. These tools should
be used to put across the organization’s message to the correct audiences in the manner they would most like to
hear, whether it be informative or appealing to their emotions.

4. Place:

Products are not only sold in shops – they may also be sold door-to-door, online, or in trade fairs or markets.
The product should be available from where your target consumer finds it easiest to shop. This may be High
Street, Mail Order or the more current option via e-commerce or an online shop.

5. People:

Knowing the customer is the linchpin of a successful marketing strategy – without accurate customer profiling,
none of the other 7 Ps of marketing mix can be correctly channeled, and the product may well fail to sell. All
companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having
the right people is essential because they are as much a part of your business offering as the products/services
you are offering.

6. Processes –
The delivery of your service is usually done with the customer present so how the service is delivered is once
again part of what the consumer is paying for.

7. Physical Evidence –

Almost all services include some physical elements even if the bulk of what the consumer is paying for is
intangible. For example a hair salon would provide their client with a completed hairdo and an insurance
company would give their customers some form of printed material. Even if the material is not physically
printed (in the case of PDF’s) they are still receiving a “physical product” by this definition.

FACTORS EFFECTING BUSINESS ENVIRONMENT

The environmental factors that are affecting marketing function can be classified into :

1) Internal environment

2) External environment

 Internal Environment of Marketing :

This refers to factors existing within a marketing firm. They are also called as controllable factors, because the
company has control over these factors: it can alter or modify factors as its personnel, physical facilities,
organization and function means, such as marketing mix, to suit the environment.

There are many internal factors that influence the marketing function, they are:

 Top Management: The organizational structure, Board of Director, professionalization of

management.etc.Factors like the amount of support the top management enjoys from different levels of
employees, shareholders and Board of Directors have important influence on the marketing decisions and
their implementation.

 Finance and Accounting: Accounting refers to measure of revenue and costs to help the marketing and to
know how well it is achieving its objectives. Finance refers to funding and using funds to carry out the
marketing plan. Financial factors are financial policies, financial position and capital structure.

 Research and Development: Research and Development refers to designing the product safe and
attractive. They are technological capabilities, determine a company ability to innovate and compete.

 Manufacturing: It is responsible for producing the desired quality and quantity of products. Factors which
influence the competitiveness of a firm are production capacity technology and efficiency of the productive
apparatus, distribution logistics etc.,

 Purchasing: Purchasing refers to procurement of goods and services from some external agencies. It is the
strategic activity of the business.

 Company Image and Brand Equity: The image of the company refers in raising finance, forming joint
ventures or other alliances soliciting marketing intermediaries, entering purchase or sales contract,
launching new products etc.

In organization, the marketing resources like organization for marketing, quality of marketing, brand equity and
distribution network have direct bearing on marketing efficiency. They are important for new product introduction
and brand extension, etc.

 External Environment of Marketing.

External factors are beyond the control of a firm, its success depends to a large extent on its adaptability to the
environment.
The external marketing environment consists of :
a) Macro environment, and
b) Micro environment

a) Micro environment: The environmental factors that are in its proximity. The factors influence the company’s
non-capacity to produce and serve the market. The factors are :
 Suppliers: The suppliers to a firm can also alter its competitive position and marketing capabilities. These
are raw material suppliers, energy suppliers, suppliers of labor and capital. According to Michael Porter,
the relationship between suppliers and the firm epitomizes a power equation between them. This equation
is based on the industry condition and the extent to which each of them is dependent on the other.

The bargaining power of the supplier gets maximized in the following situations:
a) The seller firm is a monopoly or an oligopoly firm.
b) The supplier is not obliged to contend with other substitute products for sale to the buyer group.
c) The buyer is not an important customer.
d) The suppliers’ product is an important input to the buyer’s business and finished product.
e) The supplier poses a real threat of forward integration.

 Market Intermediaries: Every producer has to have a number of intermediaries for promoting, selling
and distributing the goods and service to ultimate consumers. These intermediaries may be individual or
business firms. These intermediaries are middleman (wholesalers, retailers, agent’s etc.), distributing
agency market service agencies and financial institutions.

 Customers : The customers may be classified as :

a) Ultimate customers: These customers may be individual and householders.

b) Industrial customers: These customers are organization which buy goods and services
for producing other goods and services for the purpose of other earning profits or
fulfilling other objectives.
c) Resellers: They are the intermediaries who purchase goods with a view to resell them at
a profit. They can be wholesalers, retailers, distributors, etc.
d) Government and other non-profit customers: These customers purchase goods and
services to those for whom they are produced, for their consumption in most of the cases.
e) International customers: These customers are individual and organizations of other
countries who buy goods and services either for consumption or for industrial use. Such
buyers may be consumers, producers, resellers, and governments.

 Competitors: Competitors are those who sell the goods and services of the same and similar description, in
the same market. Apart from competition on price, there are like product differentiation. Therefore, it is
necessary to build an efficient system of marketing. This will bring confidence and better results.

 Public: It is duty of the company to satisfy the people at large along with its competitors and the
consumers. It is necessary for future growth.The action of the company do influence the other groups
forming the general public for the company. A public is defined as ‘any group that has an actual or
potential interest in or impact on a company’s ability to achieve its objective.’ Public relations are certainly
a broad marketing operation which must be fully taken care of.
b) Macro Environment: Macro environment factors act external to the company and are quite uncontrollable.
These factors do not affect the marketing ability of the concern directly but indirectly the influence marketing
decisions of the company.

These are the macro environmental factors that affect the company’s marketing decisions:

 Demographic Forces: Here, the marketer monitor the population because people forms markets.
Marketers are keenly interested in the size and growth rate of population in different cities, regions, and
nations; age distribution and ethnic mix; educational levels; households patterns; and regional
characteristics and movements.

 Economic Factors: The economic environment consists of macro-level factors related to means of
production and distribution that have an impact on the business of an organization.

 Physical Forces: Components of physical forces are earth’s natural renewal and non-renewal resources.
Natural renewal forces are forest, food products from agriculture or sea etc. Non- renewal natural resources
are finite such as oil, coal, minerals, etc. Both of these components quite often change the level and type of
resources available to a marketer for his production.

 Technological Factors: The technological environment consists of factors related to knowledge applied,
and the materials and machines used in the production of goods and services that have an impact on the
business of an organization.

 Political and Legal Forces: Developments in political and legal field greatly affect the marketing
decisions. sound marketing decision cannot be taken without taking into account, the government agencies,
political party in power and in opposition their ideologies, pressure groups, and laws of the land. These
variables create tremendous pressures on marketing management. Laws affect production capacity,
capability, product design, pricing and promotion. Government in almost all the country intervenes in
marketing process irrespective of their political ideologies.

 Social and Cultural Forces: This concept has crept into marketing literature as an alternative to the
marketing concept. The social forces attempt to make the marketing socially responsible. It means that the
business firms should take a lead in eliminating socially harmful products and produce only what is
beneficial to the society. These are numbers of pressure groups in the society who impose restrictions on
the marketing process.