LESSON-1

MARKETING: NATURE, SCOPE AND CORPORATE

ORIENTATION TOWARDS MARKET PLACE

STRUCTURE

1.0 Objective
1.1 Introduction
1.2 Definitions and meanings
1.3 Corporate orientations towards market place
1.3.1 The Production Concept
1.3.2 The Product Concept
1.3.3 The selling concept/sales concept
1.3.4 The marketing concept
1.3.5 The societal marketing concept
1.4 Marketing Management
1.5 Nature of Marketing
1.6 Scope of Marketing
1.7 Summary
1.8 Keywords
1.9 Self Assessment questions
1.10 References/suggested readings

1.0 OBJECTIVE

After reading this chapter, you will be able to understand the

meaning of marketing, its nature, scope and different philosophies. This
chapter also discusses the relationship of marketing to the other
organisational functions. It is essentially a foundation chapter and many
issues discussed here will be addressed in more details in later chapters.

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1.1 INTRODUCTION

In the present day world ‘marketing’ is all pervasive. We are

exposed to marketing of products, services and ideas almost every day.
The study of marketing is very interesting in the sense that every body of
us have performed marketing activities in one form or other. For example,
during college days, working part time at a fast food restaurant to help
fund one’s own education or persuading parents to buy a new music
system. When a sales person engaged in selling a T.V., a doctor treats a
patient or the district administration asks its people to get their vehicles
checked for pollution, everybody is marketing something to the target
audience. Marketing is essentially about marshalling all the resources of
an organisation to meet the needs of the consumers on whom the entire
organisation depends. Although each of these examples are different,
they all have something in common; they consist a variety of marketing
activities. Many definitions have emerged to describe marketing activities.

1.2 DEFINITIONS AND MEANINGS

According to American Marketing Association “Marketing is the

process of planning and executing the conception, pricing, promotion,
and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organisational objectives”.

Ramaswamy and Namakumari defines marketing “It is the total

system of interacting business activities designed to plan, promote and
distribute need satisfying products and services to existing and potential
consumers”.

Philip Kotler defines marketing “It is 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”.
This definition of marketing is the most widely accepted by marketing

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educators and practitioners. It highlights the core concepts like needs,
wants, demands, products, value, cost, and satisfaction.

So, we can conclude that marketing is the process of identifying

the needs of the target audience and provide the products accordingly in
exchange of some value. This process mainly consists of two parties. On
the one side, marketers are there who go to resource markets (raw
material markets, labour markets, money market, and so on) to buy
these resources and shape them into goods and services for their target
consumers. On the other hand, consumers are there who provide vital
information to the marketers besides money for using various products
and services. This simple process can be understood by the figure given
below:

Communication

Goods & Services

Industry (a Money Market (a

collection of collection of

Informatio

Source: Marketing Management by Philip Kotler

Therefore, marketing highlights the satisfaction of consumers

needs and wants and it has become evident that knowing consumer
needs and desires is a road to success for the marketers. But the
scenario in marketing has not been the same as we see today. Therefore,
it is imperative to go through the various orientations of marketing.

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Marketing in Practice:

Do marketers create needs? If yes, can you think some of the

examples? If no, justify your answer.

1.3 CORPORATE ORIENTATIONS TOWARDS MARKET PLACE

The concept of marketing has evolved through different stages from

production orientation to societal orientation. The modern concept of
marketing highlights satisfaction of consumer needs and wants whereas
the societal concept cares for the well being of the consumer as well as
that of society. Let’s discuss these orientations/philosophies/concepts
one by one.

1.3.1 The Production Concept

It is one of the oldest philosophies in business. This concept views

that consumers will prefer those products that are widely available and
cheaper in cost. The organizations are production-oriented in nature and
try to achieve high production efficiency and emphasize on wider supply
of goods and services. This concept began in 1600s with the colonization
of America and continued till the later part of 19th century. In those
days, primary motive of the organizations was to make the product
available to consumers and to kept the price low.

In those days, the demand of products used to exceeds the supply.

In this particular situation consumers were more interested in obtaining
the products rather than its quality and features. The producers used to
enjoy the huge economies of scale and it was very difficult for the new
entrant to enter into the market as the existent marketers used to enjoy a
kind of monopoly situation. Henry Ford was the pioneer in the 1900s to
expand the automobile market on the basis of production concept by
providing his consumers only a single version of car i.e. T-model in black
colour. But the marketers, after a certain period of time, could not get the

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best of consumer patronage. The reason was that the consumers were
motivated to seek varieties while purchasing. As a result, the production
concept fails to serve as the right marketing philosophy for the
enterprises.

1.3.2 The Product Concept

The product concept assumes that consumers will buy the product
that offers them the highest quality, the best performance, and the most
features. A product orientation leads a company to try constantly to
improve the quality of its product. Under this concept, it is believed by
the managers that consumers prefer well-made products and can
appreciate better quality and performance. Organizations that are
devoted to the product concept of marketing, believe that consumers
would automatically favour for products of high quality. The managers of
these organizations spend considerable energy, time and money on
research and development to introduce quality and variations in
products. However, some of the managers are caught up in a love affair
with their product and do not even realise that the product is not
required in the market. This particular situation is described as
‘marketing myopia’ by the great philosopher of marketing Professor
Theodore Levitt. Marketing myopia means a wrong and crooked
perception of marketing and a short-sightedness about business. It is in
form of excessive attention to the quality of the product thereby leaving
other aspects without any due care. General Motors designed a beautiful
small-sized car with each and every attribute in it but that was a total
failure because at that time, that was not required by the consumers.
The marketers can add any kind of attribute to their products but if the
consumers are not aware of regarding the availability, how can they go
for purchasing that particular product. This phenomenon gave birth to
another concept i.e. selling concept.

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1.3.3 The selling concept/sales concept

The selling concept is based on the assumption that consumers are

unlikely to buy a product unless and until they are actively and
aggressively convinced to do so. The idea was evolved through the views
of may academicians and practioners that unless you make your
consumers aware about the product or if he/she is not persuaded, the
consumers may develop a tendency to ignore your products. This
philosophy maintains the view that an organization can not expect its
products to get picked up automatically by the customers. The
organization has to put certain amount of efforts consciously to push its
products. In this concept, the firm makes the product first and then
spells out how to sell it and make profit. Aggressive advertising, personal
selling, large-scale promotional instruments like discounts and free gifts
etc. are normally employed by the organizations to rely on this concept.
The problem with the selling orientation is that it does not take consumer
satisfaction into account. In this situation, when consumers are
compelled to buy products that they don’t need and consequently
unhappiness is likely to be communicated through negative word-of-
mouth that may dissuade other potential consumers from making a
similar purchase. Furthermore, when the product or service is not in a
position to fulfil the consumers’ needs, there is a remote possibility of the
repeat purchase.

1.3.4 The marketing concept

In the 1950s, some marketers started realising that they could sell
more products with more ease and comfort, if they produced only those
products which already had a place in the minds of the consumers.
Instead of trying to sell them the products that had already produced,
marketing-oriented firms strived to produce only those products which
have been produced according to the needs of the consumers. The

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marketing concept emphasis that an organization should strive to satisfy
the needs of the consumers by identifying them and then produce the
products accordingly through a co-ordinated set of activities. Satisfying
the customer should be the major focus of all the organisational
activities. Here instead of focusing on quality or sale, consumer’s need
and desired satisfaction become the premise which is a must delivered
phenomenon to be successful in the era of competition. To identify
unsatisfied consumer needs, organisations had to go for extensive
marketing research. While doing so, it was discovered that consumers
were highly complex individuals, possessing a wide variety of innate and
acquired needs. Hence, the study of consumer needs has become the
basis of another discipline also i.e. consumer behaviour.

1.3.5 The societal marketing concept

As our society moves through the 1990s, the marketing concept

continues to take on new meanings. The old and traditional concept of
marketing has emphasised and focused on the satisfaction of consumers’
needs and wants to meet the objectives and goals of the organisations.
But the ever changing scenario in the field of marketing brought in a
third consideration and that is the welfare of society. In this philosophy,
emphasis is being placed on how certain marketing activities and efforts
affect society as a whole in the era of limited resources, environmental
degradation and global competition. This philosophy puts a question
mark whether satisfying consumers’ need serve the long term intervals of
the society or not. Hence, the new concept emerged as the societal
marketing concept where it is emphasised that besides satisfying
consumer needs, long run societal welfare has to be considered by the
marketers. The marketers have to adopt social and ethical considerations
into their marketing practices. They must make a balance between the
different criteria of organization’s profits, consumer’s satisfaction and
public interest as a whole.

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 This section has dealt with the various philosophies of marketing
which describes how the field of marketing evolved through the periods.
Furthermore, a student of marketing must know about marketing
management at introductory level.

Now let’s discuss certain issues related to marketing management.

1.4 MARKETING MANAGEMENT

When marketers engage themselves in the exchange process with

the other parties, they have to go for a considerable amount of work
which require paramount skills on the part of the marketers. Marketing
management takes place when one party is more actively seeking an
exchange then the other party and also thinks about the means of
achieving perceived responses from the same. Many authors have strived
to define marketing management but the definition given by American
Marketing Association is widely recognised. The association defines
“marketing management is the process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods, and
services to create exchanges that satisfy individual and organizational
goals”. From the given definition, it can be observed that marketing
management encompasses a set of diverse activities. These activities are
not limited to companies that produce physical goods but also includes
the organisations like universities, charities, hospitals and other services
organizations. Even wide range of individual activities are also considered
as the activities of marketing management. For example, earlier doctors
were reluctant to engage in marketing but due to ever increasing
competition they have also started using advertising and new means to
promote their hospitals and clinics. This marketing management involves
analysis, planning, implementation and control which covers the
activities related to goods, ideas and services. For that matter a student
must know about these terms i.e. product, goods, idea and services. As

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far as product is concerned it may any good, service or idea that satisfies
a need or want. Good is a tangible item or object that can be seen and
touched whereas service is an intangible product which can be felt. Idea
can be defined as concept or philosophy. Non Government Organisations
(NGOs) involved in various issues like crime prevention, drug prevention
and environmental pollution etc., can be described as marketing ideas.

The marketing manager is someone who is perceived as demand

stimulator for the organization’s products. But actually his task is more
than this popular perception of the people. He has to look into the level,
timing and composition of demand in such a way so that the
organization’s objectives may be achieved. Through this discussion, it
can be seen that marketing management is eventually demand
management. Marketing managers can manage demand by carrying out
research in marketing and then planning the products accordingly. They
also decide about target markets, pricing, physical distribution and
promotion of the product. The eminent writer Philip Kotler has quoted
eight different states of demand and corresponding job of marketing
managers there to. Let’s discuss there different states of demand one by
one.

(A) Negative Demand: When a particular product is disliked by

the majority part of the market, it is a state of negative demand. Product
like vaccinations, heart surgery and dental work etc. are often avoided by
the consumers because of the negative feeling. The marketers task is to
redesign the promotional programme and is to reposition the products in
the mind of the consumers so that they are able to change their beliefs
and attitude of the target market.

(B) No Demand: When the target consumers are either not

aware about the product or they are not interested in the product. For
example, an industrial house may not be aware about the new

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technology, and college students of Haryana may not prefer English
language course. The marketers job is first to make the target audience
aware then describe the ways that what are the benefits of this product.

(C) Latent Demand: There may be a kind of hidden demand for

certain products which is not satisfied with the existing available
products. In India, demand for fuel-efficient bigger size cars, harmless
cigarettes and cheaper houses for middle-class employees etc. are some
of the examples of the strong latent demand. The marketers’ job is to
measures the size of the potential market and take the effective steps
towards providing goods and services so as to satisfy the demand.

(D) Declining Demand: Every product in its life-span faces

declining demand. This scenario is faced by every kind of organization i.e.
from physical goods providers to the service organisations. In these kind
of circumstances, the marketer has to look into the causes of decline in
demand and should see whether the same product can be carried on in
the same market with little modification or should the marketer diversify
in the other market to retain the aspect of profitability.

(E) Irregular Demand: The demand of certain products varies

on the basis of seasonality. For example, zoos remain vacant during the
examination days of the students and overfull in the days of their
summer vacations. Hotels and resorts of certain hill stations are found in
great demand during summer but in the off-season, its difficult to find
out a single consumer. Here, the marketer’s job is to maintain the
demand at the same pattern. He has to find out certain ways like flexible
pricing, special schemes and discounts in off-season, and through
different promotional measures.

(F) Full Demand: It is the happiest position for the marketers

because at this juncture their volume of business face full demand. In
the era of changing task and preferences of the consumers, marketer’s

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taste is to maintain the current level of demand. Persisting with the
quality standards and investment in R & D should be the objectives at
this level.

(G) Overfull Demand: Sometimes a peculiar situation arises

when organisations face a demand that is higher than their existing
capacity. For example, traffic is sometimes overcrowded on a particular
place. Due to the announcement of rising in fuel prices by the
government, people develop the tendency of hoarding and this situation
leads to overfull demand. The marketer’s job in this situation is to reduce
the demand on the temporary basis by adopting the measure of
increasing the prices. They may also adopt the concept of ‘demarketing’
i.e. reducing promotion and service.

(H) Unwholesome Demand: This demand relates to a particular

category of products like cigarettes, alcohol, drugs, and blue movies etc.
The marketer’s job is to make people aware about the fatal nature of
these products so that they can give up these products.

1.5 NATURE OF MARKETING

(a) Marketing is customer oriented: Marketing begins and

ends with the customer. The job of the marketing is not only to satisfy
the consumer but even to delight him/her. All the activities of an
organization must be directed and focussed towards the consumer. The
organisations can not ignore emerging technologies, materials,
instruments and new ways of organizing the things but with the
considerations of consumers. Therefore, marketers must allow their
customers to dictate product specifications and standards regarding
quality. This job can only be performed if consumers’ needs are
continuously monitored.

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 (b) Marketing is the delivery of value: when a consumer
derives satisfaction from a particular product on the basis of product’s
overall capacity and performance is known as value in consumer’s
perception. The consumers today make a trade-off between cost and
benefit of the product and they consider the product’s value and price
before making a decision. At times they will have to give up a particular
product to obtain the other one since first one involves a big cost. Thus,
he will choose the product that gives him more value per rupee.
According to De Rose, “Value is the satisfaction of customer requirements
at the lowest possible cost of acquisition, ownership, and use”. Thus, the
organisations’ strategies must be aimed at delivering greater customer
value than that of their competitors.

(c) Marketing is a net-work of relationships: The customer is

at the centre-stage and focus of all marketing activities. From 1990s
onwards the focus is not only to identify the needs and delivers it to
customers but is shifting towards relationships marketing. According to
Philip Kotler “Relationship marketing is the practice of building long-term
satisfying relations with key parties like customers, suppliers and
distributors in order to retain their long-term preference and business”.
The marketers who are smart enough to maintain their relationships by
delivering high quality products in time, better services and fair prices in
comparison with their counterparts.

(d) Marketing as a separate discipline: There used to be the

days when marketing was treated as a part of economics. But now it is
recognised as a full-fledged separate discipline. It is not the time when we
just talk of sales and purchase or the quality of the product or the
monopoly. With the emergence of modern marketing concept, the issue of
green marketing and environmental protection have come up and
regarding that various laws have been framed. When we talk of knowing
consumer behaviour, it leads us to entirely a new world of human

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behaviour and for that matter, a marketer must possess the knowledge of
psychology. Why a particular product is preferred by a consumer and
other declines it to use? The answer has in the study of culture.
Therefore, marketing has emerged as a separate discipline and got its
strength from the related areas like law, psychology, anthropology,
sociology and statistics etc.

(e) Marketing is business: When it is said that marketing is

business, the contention is that the all activities starts from marketing
i.e. through knowing consumer and end up on the consumers i.e.
knowing consumer dissonance. It means the entire business revolves
round the marketing. According to Peter F. Drecker “Marketing is so
basic that it can not be considered as a 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. Business success is not determined by the
producer but by the customer”. So, business seeks customers because
they are the business providers and ultimately marketing is business.

1.6 SCOPE OF MARKETING

Marketing management has become the subject of growing interest

for everybody in today’s scenario. Therefore, it is of utmost importance to
discuss the scope of marketing. It can be understood in terms of
functions that a marketing manager performs. Let’s discuss some of the
issues that are undertaken by a marketing manager so as to elaborate
the scope of marketing.

(a) Marketing Research: While sitting in a company’s office, no

one can identify the needs and wants of the consumers. For that
purpose, research has to be carried out in analysing the consumer’s
needs, their tastes and preferences, brand image of the product and
effectiveness of certain advertisements etc. These are the major areas of
research where a marketing manager requires information to be

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successful in market because by knowing these information, he takes
timely, accurate and better decision. The marketing research not only
gather information regarding certain problem but also suggests corrective
and action oriented steps.

(b) Product Planning and Development: A product is a bundle

of utility offered to consumers to satisfy their needs. Through marketing
research, a marketer is able to know the needs of the consumers but
what kind of storage and transportation is required, it depends upon the
nature of the product. Product must be according to the requirement and
must also be according to the paying capacity of the consumers. There
are number of decisions involved in this process like supplier of raw
materia, packaging, storage and distribution etc.

(c) Pricing: One of the important functions of a marketing

manager is to determine the price of a product. Price is always influenced
by the cost, services attached to it, government policy, competitors prices
and marketer’s requirement of profit margin. A good pricing policy is a
significant factor to attract the consumers because price is the only ‘p’ of
marketing mix which generates revenue for the organisations.

(d) Financing: Financing of consumer purchasing has become

an important part of modern marketing. The marketing manager plays an
important role in the finance department in this regard and
consequences thereto. In the era of global competition when there is
fierce competition and so many alternatives are available to a customer,
certain finance schemes have become an important device to increase the
volume of sales. Since the interest rates has come down significantly,
financing facilities have taken the shape of lubricants that facilitates the
operation of the marketing machine. In the era when the world economy
is passing through a great recession, these facilities help generating
revenue for the respective organisations and consequently are helping the

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economy to revive back and for the consumers those who can afford to
realise their dreams of having a colour TV or small car, can fulfill their
dreams through these instruments of marketing.

(e) Insurance: When goods and services are exchanged from one
hand to another, from one place to another place, a large number of risk
factors are involved. Marketing has now spread its arms to cover these
risks through insurance activities. National calamities like flood and
earthquake or damage of goods and services due to fire, theft or accident,
may cause big losses and can hamper the entire business. The various
insurance companies provide the protection against these risks by getting
a nominal amount of premium in return.

(f) Advertising: In this era of competitive world, advertising has

become an important instrument in the hands of marketers. It makes the
consumer aware about the product, makes him curious about the
product and then force him for action and thus promote the sale.
According to American Marketing Association “Advertising is a paid form
of non-personal presentation by an identified sponsor”. It is a non-
personnel link between a marketer and the consumer. Through
advertising marketers are able to position their products in the minds of
the consumer through various media like newspapers, magazines,
television, radio, hoardings, window display and internet etc.

Apart from the above areas there are many more business areas
where marketing activities have these vast scope but besides business
areas, marketing has its scope in the non-business or non-profit sector
also. A student who tries to occupy the front seat is also engrossed in
doing marketing. Churches, hospitals, colleges and universities are the
other non-profit sector where marketing activities are seriously
performed.

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1.7 SUMMARY

In the present day world ‘marketing’ is all pervasive. We are

exposed to marketing of products, services and ideas almost every day.
The study of marketing is very interesting in the sense that every body
have performed marketing activities in one form or other. Philip Kotler
defines marketing “It is 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”. This
definition of marketing is the most widely accepted by marketing
educators and practitioners. Therefore, marketing highlights the
satisfaction of consumers needs and wants and it has become evident
that knowing consumer needs and desires is a road to success for the
marketers.

The concept of marketing has evolved through different stages from

production orientation to societal orientation. It is one of the oldest
philosophies in business. This concept views that consumers will prefer
those products that are widely available and cheaper in cost. The
organisations are production-oriented in nature and try to achieve high
production efficiency and emphasize on wider supply of goods and
services.

The product concept assumes that consumers will buy the product
that offers them the highest quality, the best performance, and the most
features. A product orientation leads a company to try constantly to
improve the quality of its product under the concept, it believed by the
managers that consumers prefer well-made products and can appreciate
better quality and performance.

The selling concept is based on the assumption that consumers are

unlikely to buy a product unless and until they are actively and
aggressively convinced to do so.

16
 The marketing concept emphasises that an organization should
strive to satisfy the needs of the consumers by identifying them and then
produce products accordingly through a co-ordinated set of activities.

In the societal marketing concept it is emphasised that besides

satisfying consumer needs, long run societal welfare has to be considered
by the marketers.

Marketing management is the process of planning and executing

the conception, pricing, promotion and distribution of ideas, goods, and
services to create exchanges that satisfy individual and organizational
goals. There are different states of demand like Negative Demand, No
Demand, Latent Demand, Declining Demand, Irregular Demand, Full
demand, Unwholesome Demand. In the nature of marketing we include
differentiations like, Marketing is customer oriented, Marketing is the
delivery of value, Marketing is a net-work of relationships, Marketing as a
separate discipline, Marketing is business when it comes to scope of
marketing various issues are taken up like- Marketing Research, Product
Planning and Development, Pricing, Financing, Insurance, Advertising.
Apart from the above areas there are many more business areas where
marketing activities have vast scope, but besides business areas,
marketing has its scope in the non-business or non-profit sector also.

1.8 KEYWORDS

Needs: It refers to the state of felt deprivation. How individuals go

about satisfying a particular need is conditioned by the cultural values of
that society which he/she belongs to.

Wants: Wants are the specific satisfiers to satisfy a particular need.

For example, transportation is a need and a car is a satisfier.

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 Value: Value is represented by the ratio of perceived benefits to the
price paid. Value can be added by better specifying a product offer in
accordance with consumer’s expectations.

Market: Market consists of potential buyers and sellers where they

interact for an exchange process. Earlier people used to describe it as a
place only.

Marketing myopia: It means a wrong perception about marketing

where excessive attention is given to the quality without taking care of
the actual needs of the consumers.

1.9 SELF ASSESSMENT QUESTIONS

1. What do you mean by marketing? Describe the feature of

marketing.

2. Describe in detail the various philosophies of marketing.

3. Define marketing management? Also discuss the various

levels of demand and the task of a marketing manager
thereto.

4. Do all companies need to practice the marketing concept?

Could you cite companies that do not need this orientation?

5. Why is the study of marketing important to everyone?

Discuss.

6. Give an example of a good, service, and idea that you have

recently purchased.

1.10 REFERENCES/SUGGESTED READINGS

1. Kotler, Philip, “Marketing Management– Analysis, Planning,

Implementation and Control”, PHI, New Delhi, 1997.

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2. Skinner, J. Stenen, “Marketing”, Houghton Miami Company,
Boston, 1990.

3. Stanton, W.J., “Marketing Management”, Tata McGraw Hills

Publishers, 1996.

4. Ramaswamy V.S., Namakumari, S., “Marketing Management

—Planning, Implementation and Control”, MacMillan India
Limited, New Delhi, 1995.

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