FUNDAMENTALS OF

MARKETING
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FUNDAMENTALS OF MARKETING
FUNDAMENTALS OF MARKETING
FUNDAMENTALS OF MARKETING
FUNDAMENTALS OF MARKETING
INTRODUCTION TO MARKETING
 FUNCTIONAL AREAS OF MANAGEMENT

FUNCTIONAL
AREAS OF
MGMT

FINANCE HR IT LOGISTICS PRODUCTION MARKETING

Ghanshyam’s Life

9
Ghanshyam’s Life

10
Promotion WHAT IS
MARKETING?
 WHAT IS MARKETING ?
According to management guru Peter Drucker,
“The aim of marketing is to make selling unnecessary.”

Marketing must be understood not in the old sense of making a sale—“telling and
selling”—but in the new sense of satisfying customer needs.

The simplest definition of marketing is: Marketing is engaging customers and

managing profitable customer relationships.
 WHAT IS MARKETING ?

• Phillip Kotler defines marketing as a societal process by which individuals and

groups obtain what they need and want through creating, offering and freely
exchanging products and services of value to each other.

• The twofold goal of marketing is to:

1. attract new customers by promising superior value and
2. to keep and grow current customers by delivering value and satisfaction.
MARKETING
LANDSCAPE
 WHAT IS MARKETING ?

The simplest
definition is this one:
“Marketing is
engaging customers
and managing
profitable customer
relationships”.
For example:
• Nike leaves its competitors in the dust by
delivering on its promise to inspire and
help everyday athletes to “Just do it.”
• Amazon dominants the online marketplace
by creating a world-class online buying
experience that helps customers to “find
and discover anything they might want to
buy online.”
• Facebook has attracted more than 1.5
billion active web and mobile users
worldwide by helping them to “connect and
share with the people in their lives.”
• And Coca-Cola has earned an impressive
49 percent global share of the carbonated
beverage market—more than twice Pepsi’s
share—by fulfilling its “Taste the Feeling”
motto
 THE MARKETING PROCESS

The five-step model of the marketing process is used for creating and capturing
customer value.
In the first four steps, i.e., companies work to understand consumers, create
customer value, and build strong customer relationships.
In the final step, companies reap the rewards of creating superior customer value.
By creating value for consumers, they in turn capture value from consumers in the
form of sales, profits, and long-term customer equity.
CHAPTER 1 : MARKETING : CREATING CUSTOMER VALUE AND
ENGAGEMENT

Objectives
• Objective 1-2: Explain the importance of understanding the marketplace
and customers and identify the five core marketplace concepts
UNDERSTANDING THE MARKET PLACE AND CUSTOMER NEEDS

Marketers need to understand customer needs and wants and the marketplace in which
they operate.
We examine five core customer and marketplace concepts:
(1) needs, wants, and demands;
(2) market offerings (products, services, and experiences);
(3) value and satisfaction;
(4) exchanges and relationships; and
(5) markets.

We shall study each of these concepts in detail in the succeeding slides.

(1) Needs, Wants, And Demands
• The most basic concept underlying marketing is that of human needs. Human
needs are states of felt deprivation. They include basic physical needs for food,
clothing, warmth, and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression.
• Marketers did not create these needs; they are a basic part of the human makeup.
LAYS UNDERSTANDING CUSTOMERS NEED
• Wants are the form human needs take as they are shaped by culture and individual
personality.
• Wants are shaped by one’s society and are described in terms of objects that will
satisfy those needs.
• Example : An American needs food but wants a Big Mac, fries, and a soft drink. A
person in Papua, New Guinea, needs food but wants taro, rice, yams, and pork.
CASE QUESTION
HOW WILL YOU SELL A COMB TO A BALD MAN?
HOW WILL YOU SELL ICE TO ESKIMOS?
IMPACT: SELLING BY PASS TO CATARACT PATIENT
If you want to feel fresh in the evening time we would prefer different beverages for the same need…

NEEDS AND WANTS

NEED – TO FEEL FRESH
UNDERSTAND NEED, THE WAY GOD
UNDERSTANDS YOUR NEED
UNDERSTAND NEED, THE WAY GOD
UNDERSTANDS YOUR NEED
UNDERSTAND NEED, THE WAY GOD
UNDERSTANDS YOUR NEED
 DEMAND

• Customer demand is a want for specific product supported by:

– Desire
– Ability to Purchase
– Willingness to pay for it.
• Business therefore have not only to make products that consumer wants, but
they also have to make them affordable to a sufficient number to create
profitable demand.
• Business also tries to communicate the relevant feature of their products
through advertising at other marketing promotions.
Demand
• When backed by buying power, wants become demands. Given their wants and
resources, people demand products and services with benefits that add up to the
most value and satisfaction.
• Companies go to great lengths to learn about and understand customer needs,
wants, and demands. They conduct consumer research, analyze mountains of
customer data, and observe customers as they shop and interact, offline and online.
(2) Market Offerings (Products, Services, And Experiences)
• Consumers’ needs and wants are fulfilled through market offerings—some
combination of products, services, information, or experiences offered to a market
to satisfy a need or a want.
• Market offerings are not limited to physical products. They also include services—
activities or benefits offered for sale that are essentially intangible and do not result
in the ownership of anything.
• More broadly, market offerings also include other entities, such as persons, places,
organizations, information, and ideas.

• Examples include banking, airline, hotel, retailing, and home repair services.
Goods or
Products
 Services

Almost 60 % of the contribution to India's GDP from service sector.

 Experiences

There is market for different experiences .

Like spending a week at Jammu and
Kashmir and experiencing the skiing or
climbing mount Everest.
 information

Information can be produced and marketed by as a product.

 ideas

Products and services are platforms for delivering some idea or benefit.
Marketers try hard to search for core need they try to satisfy.
 PERSONS

Celebrity branding has become a major business

Tom peters marketing guru has advised every person can brand himself.
 PLACES

Cities, states, regions, and whole nations, compete actively to

attract tourists, industries, company headquarters, residents.
 Events

MARKETERS PROMOTE TIME BASED EVENTS:

There are professionals who plan, work out details of an event and
make it perfectly.
 Properties

Properties are bought and sold and thus can be marketed.

Investment companies and banks ,and insurance firms are involved in
its marketing to both individual as well as institutions.
 Organizations

Organizations actively work to build a strong and favorable brand

image In the mind of their publics.
We call it as corporate branding
 GOODS PERSONS PROPERTIES

SERVICES ORGANISATIONS
MARKET
OFFERINGS

EXPERIENCES INFORMATION

PLACES
EVENTS IDEAS
Market offerings are some
combination of products,
services, information, or
experiences offered to a
market to satisfy a need or
want.

Marketing myopia is
focusing only on existing
wants and losing sight of
underlying consumer needs.
(3) Value And Satisfaction
• Consumers usually face a broad array of products and services that might satisfy a
given need.
• Customers form expectations about the value and satisfaction that various market
offerings will deliver and buy accordingly.
• Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the product to
others.
• Marketers must be careful to set the right level of expectations
– If they set expectations too low, they may satisfy those who buy but fail to
attract enough buyers.
– If they set expectations too high, buyers will be disappointed.
• Customer value and customer satisfaction are key building blocks for developing
and managing customer relationships.
 SETTING EXPECTATION

• https://www.youtube.com/watch?v=Lhq9jRnH_8E
 SETTING EXPECTATION

• https://www.youtube.com/watch?v=Gj9he9jHKkA
(4) Exchanges And Relationships
• Marketing occurs when people decide to satisfy their needs and wants through
exchange relationships.
• Exchange is the act of obtaining a desired object from someone by offering
something in return.
• In the broadest sense, the marketer tries to bring about a response to some market
offering.
• The response may be more than simply buying or trading products and services.
• Example: A political candidate wants votes; a church wants membership and
participation; an orchestra wants an audience; and a social action group wants idea
acceptance.
(4) Exchanges And Relationships
(5) Markets
• The concepts of exchange and relationships lead to the concept of a market.
• A market is the set of actual and potential buyers of a product or service.
• These buyers share a particular need or want that can be satisfied through exchange
relationships.
(5) Markets
• Marketing is thought as a process being carried out by sellers, but, buyers also carry
out marketing.
• Consumers market when they search for products, interact with companies to obtain
information, and make their purchases.
• In fact, today’s digital technologies, from online sites and smartphone apps to the
explosion of social media, have empowered consumers and made marketing a truly
two-way affair.
CHAPTER 1 : MARKETING : CREATING CUSTOMER VALUE AND
ENGAGEMENT

Objectives
• Objective 1-3: Identify the key elements of a customer value-driven
marketing strategy and discuss the marketing management orientations that
guide marketing strategy
DESIGNING A CUSTOMER VALUE-DRIVEN MARKETING STRATEGY
AND PLAN

• Once it fully understands consumers and the

marketplace, marketing management can design a
customer value–driven marketing strategy.
• Marketing management is defined as the art and
science of choosing target markets and building
profitable relationships with them.
• To design a winning marketing strategy, the
marketing manager must answer two important
questions:
– What customers will we serve (what’s our target
market)? and
– How can we serve these customers best (what’s
our value proposition)?
• The various marketing strategy concepts are as follows-

4. Preparing an
1. Selecting
Integrated
Customers to
Marketing Plan
Serve
and Program

3. Marketing 2. Choosing a
Management Value
Orientations Proposition

• We shall study each of these concepts in detail in the succeeding slides.

(1) Selecting Customers to Serve
• The company must first decide whom it will serve.
• It does this by dividing the market into segments of
customers (market segmentation) and selecting
which segments it will go after (target marketing).
• Marketing managers wrongly adapt marketing
management as finding as many customers as
possible and increasing demand. But, in reality,
marketing managers know that they cannot serve
all customers in every way. By trying to serve all
customers, they may not serve any customers well.
Instead, the company wants to select only
customers that it can serve well and profitably.
• Ultimately, marketing managers must decide which
customers they want to target and on the level,
timing, and nature of their demand.
• Simply put, marketing management is customer
management and demand management.
(2) Choosing a Value Proposition
• A brand’s value proposition is the set of benefits or values it promises to deliver to
consumers to satisfy their needs.
• The company must also decide how it will serve targeted customers—how it will
differentiate and position itself in the marketplace.
 CLASSIFICATION OF CUSTOMER VALUE

• Customer Value: Customer delivered value is the difference between total customer value and the total
customer cost.
• Total customer value is the bundle of benefits that customers expect form given product or service.
• Total customer cost is the bundle of costs customer expect to incur in evaluating, obtaining, using, and
disposing of the product or service.
• The three central propositions behind this classification include the following:
1. Consumer choice is a function of a small number of consumption values.
2. Specific consumption values make differential contributions in any given choice of situations.
3. All the consumption values are independent of each other.
• These set of values are classified as functional or utilitarian value, social value, emotional value, epistemic
value and conditional value.
• These values are often found in the purchase of categories like food, grocery, computer peripherals, sporting
events and games.
 Value and Satisfaction
• The product or offering will be successful if it delivers value and
satisfaction to the target buyer.
• Value = Benefits/Costs
• Value can be increased by:
– Raising benefits
– Reducing costs
– Raising benefits and reducing costs
– Raising benefits by more than the raise in costs
– Lower benefits by less than the reduction in costs
 VALUE

• Value is the customers’ estimate of the Product’s capacity to

satisfy a set of goals
• Value is the ratio between what the customer gets and what he
gives (V=B/C)
• Customer gets benefits & assume costs
CLASSIFICATION OF CUSTOMER VALUE
 VALUE CLASSIFICATION
• FUNCTIONAL VALUE / UTILITARIAN
– The functional value of a consumer choice is the perceived functional, utilitarian or physical
performance utility received from the choice product's attributes.
– It is associated with economic utility theory, popularly expressed in terms of rational economic
reason.
• SOCIAL VALUE
– The social value of a choice is the perceived utility acquired because of the associations
between one or more specific social groups and consumer choice.
– A consumer's choice gains social value by being linked with positively or negatively
stereotyped demographic socio-economic and cultural-ethnic groups i.e. reference groups.
 VALUE CLASSIFICATION
• EMOTIONAL VALUE
– The emotional value of a choice is the perceived utility acquired from its capacity to stimulate
the consumer's emotions or feelings.
– A choice acquires emotional value when associated with specific feelings or when it triggers or
sustains those feelings.
• EPISTEMIC VALUE
– The epistemic value of a choice is the perceived utility that comes from the choice‘s ability to
foster curiosity, provide novelty and satisfy a desire for knowledge.
– New purchase and consumption experiences, especially, offer epistemic value.
– Since all new products provide some novelty, marketers should try to build some novelty
around the product.
 VALUE CLASSIFICATION
• CONDITIONAL VALUE
– Conditional value of a choice is the perceived utility acquired by a choice as an outcome of
some particular situation or circumstances facing the customer
– E.g. products associated with a particular time or event like coffee at breakfast.
– Some products have specific climate or location benefit like sunscreen lotions;
– some are associated with once-in-a-lifetime events like purchase of first car.
– And some are used only in emergency situations like a dentist on a Sunday afternoon.
– Conditional value is served best when we associate the brand with usage situations.
(2) Choosing a Value Proposition
• Such value propositions differentiate one brand from another. They answer the
customer’s question: “Why should I buy your brand rather than a
competitor’s?”
• Companies must design strong value propositions that give them the greatest
advantage in their target markets.
(3) Marketing Management Orientations
• Marketing management wants to design strategies that will engage target customers
and build profitable relationships with them. This is done by adopting marketing
management orientations.
• There are five alternative concepts under which organizations design and carry out
their marketing strategies namely-

Societal
Productio
Marketing
n Concept
Concept

Marketin Product
g Concept Concept

Selling
Concept
 Exchange concept
• Barter System is that system in which goods are
exchanged for goods.
• In ancient times when money was not invented trade as a
whole was on barter system.
• This was possible only in a simple economy but after the
development of economy, direct exchange of goods
without the use of money, was not without defects.
• DEMERITS:
– Double Coincidence of Wants
– Absence of Standard Value
– Indivisibility of Commodities
– Absence of Store of Value

Prof. Deepak R. Gupta

Sticking to the basics

Prof. Deepak R. Gupta

❑ Production Concept
• The production concept holds that consumers will favour products that are available
and highly affordable.
• Therefore, management should focus on improving production and distribution
efficiency. This concept is one of the oldest orientations that guides sellers.
• The production concept is still a useful philosophy in some situations.
• Companies adopting this orientation run a major risk of focusing too narrowly on their
own operations and losing sight of the real objective—satisfying customer needs and
building customer relationships.
• Example: both personal computer maker Lenovo and home appliance maker Haier
dominate the highly competitive, price-sensitive Chinese market through low labour
costs, high production efficiency, and mass distribution.
❑ Product Concept
• The product concept holds that consumers will favour products that
offer the most in quality, performance, and innovative features.
• Under this concept, marketing strategy focuses on making continuous
product improvements.
• Product quality and improvement are important parts of most
marketing strategies.
• However, focusing only on the company’s products can also lead to
marketing myopia.
• Innovations in the scientific laboratory are commercialized and
consumers get an opportunity to know and use these products. This is
called "Technology Push Model".
 Selling concept
• According to this concept the company’s entire focus
is on selling and hence making a lot of sales.
• The selling effort is backed by serious promotional
activities and aggressive advertising.
• The company does not bother about the market
demand, they just want to sell what they produce.
• The selling concept, instead of focusing on meeting
consumer demand, tries to make consumer demand
match the products it has produced.

Prof. Deepak R. Gupta

❑ Selling Concept
• Many companies follow the selling concept, which holds that consumers will not buy
enough of the firm’s products unless it undertakes a large-scale selling and promotion
effort.
• The selling concept is typically practiced with unsought goods—those that buyers do
not normally think of buying, such as life insurance or blood donations.
• These industries must be good at tracking down prospects and selling them on a
product’s benefits.
• It focuses on creating sales transactions rather than on building long-term, profitable
customer relationships. The aim often is to sell what the company makes rather than to
make what the market wants.
• It assumes that customers who are coaxed into buying the product will like it. Or, if
they don’t like it, they will possibly forget their disappointment and buy it again later.
Selling concept

Prof. Deepak R. Gupta

❑ Marketing Concept
• The marketing concept holds that achieving organizational goals depends on
knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do.
• Under the marketing concept, customer focus and value are the paths to sales and
profits.
• Instead of a product-centered make-and sell philosophy, the marketing concept is a
customer-centered sense-and-respond philosophy.
• The job is not to find the right customers for your product but to find the right
products for your customers.
Marketing vs selling

Prof. Deepak R. Gupta

MARKETING VS SELLING
 Marketing vs selling
• The basic difference between marketing and selling lies in
the attitude towards business.
• The selling concept takes an inside-out perspective.
– It starts with the factory, focuses on the company’s existing
products, and calls for heavy selling and promoting to produce
profitable sales.
• The marketing concept takes an outside-in perspective.
– It starts with a well-defined market, focuses on customer needs,
coordinates all the activities that will affect customers, and
produces profits through creating customer satisfaction.

Prof. Deepak R. Gupta

 Marketing VS Selling
MARKETING SELLING
• Focuses on Customer’s needs. • Focuses on seller’s needs.
• Customer enjoys supreme • Product enjoys supreme
importance. importance.
• Converting customer’s needs into • Converting product into cash.
product. • Profits through sales volume.
• Profits through customer • The principle of caveat emptor (let
satisfaction. the buyer beware) is followed.
• The principle of caveat vendor (let
the seller beware) is followed.

Prof. Deepak R. Gupta

❑ Societal Marketing Concept
• The societal marketing concept questions whether the pure
marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare. Is
a firm that satisfies the immediate needs and wants of target
markets always doing what’s best for its consumers in the
long run?
• The societal marketing concept holds that marketing strategy
should deliver value to customers in a way that maintains or
improves both the consumer’s and society’s well-being.
• It calls for sustainable marketing, socially and
environmentally responsible marketing that meets the present
needs of consumers and businesses while also preserving or
enhancing the ability of future generations to meet their
needs.
• Even more broadly, many leading business and marketing
thinkers are now preaching the concept of shared value, which
recognizes that societal needs, not just economic needs, define
markets. The concept of shared value focuses on creating
economic value in a way that also creates value for society
SOCIETAL CONCEPT

Prof. Deepak R. Gupta

 RELATIONSHIP CONCEPT

• The aim of relationship marketing is to create strong,

lasting relationship with core group of customers.
• It is to a firm's advantage to develop long term
relationship with existing customers because:
– It is easier and less expensive to make an additional sale to
an exiting customer
– than to make a new sale to a new customer.

Prof. Deepak R. Gupta

relationship

Prof. Deepak R. Gupta

• Three Considerations Underlying the Societal Marketing Concept
(4) Preparing an Integrated Marketing Plan and Programme
• The company’s marketing strategy outlines which customers it will serve and how
it will create value for these customers.
• Next, the marketer develops an integrated marketing program that will actually
deliver the intended value to target customers.
• The marketing program builds customer relationships by transforming the
marketing strategy into action.
• It consists of the firm’s marketing mix, the set of marketing tools the firm uses to
implement its marketing strategy.
• The major marketing mix tools are classified into four broad groups, called the four
Ps of marketing: product, price, place, and promotion.
 It must then decide
To deliver on its
how much it will
value proposition,
the firm must first charge for the offering
create a need- (price)
satisfying market
offering (product).

Finally, it must engage

how it will make the target consumers,
offering available to communicate about the
target consumers offering, and persuade
(place). consumers of the offer’s
merits (promotion).

The firm must blend each marketing mix tool into a comprehensive
integrated marketing program that communicates and delivers the intended
value to chosen customers.
4 P’s AND 4 C’s

PRODUCT PRICE PLACE PROMOTION

CONSUMER COST CONVENIENCE COMMUNICATION
Marketing mix

Prof. Deepak R. Gupta

 Marketing Mix

• The 4 P's of marketing that are the elements of a marketing mix are:
• Product: The products or services offered to your customer – Their physical
attributes, what they do, how they differ from your competitors and what benefits
they provide.
• Price: How you price your product or service so that your price remains competitive
but allows you to make a good profit. How price plays a role in your marketing
strategy with respect to differentiating your products or services from your
competitors'.
• Place (Also referred to as Distribution): Where your business sells its products or
• services and how it gets those products or services to your customers. May also be
used in your marketing strategy to differentiate you from your competition.
• Promotion: The methods used to communicate the features and benefits of your
products or services to your target customers.
 Factors influencing marketing mix

• Marketing objectives
• Type of product
• Target market
• Market structure
• Rivals’ behaviour
• Global issues – culture/religion, etc.
• Marketing position
• Product portfolio
– Product lifecycle
– Boston Matrix