Chapter – 1

Introduction to Marketing
 Whom to market?
Online or Offline Customers?
Departments in
an Organization
• Marketing
• Finance
• Human Resources
• Research & Development
• Production
• Stores
• Purchase
• Quality Control
• Maintenance
• IT (Systems) 3
Definition of Marketing

• Meeting needs profitably.

• Delivery of Customer Satisfaction at a

Profit

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Definition of Marketing

• Marketing is a Social and Managerial process by which

individuals, groups, and organizations obtain what they
need and want through creating, offering and exchanging
goods and services of value with others.

• Marketing is engaging customers and managing profitable

customer relationships.

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Company Orientations/Evolution of
Marketing

• Also Called as : Approach to Business

• Production Concept – focus on mass production &

extensive distribution

• Sales / Selling Concept – aggressive selling & promotion

 • Product Concept – quality,
performance & innovative
features are most important (R&D
Company + Quality)
Orientations • Marketing Concept – understand
towards the & meet customer needs
Market Place • Societal Concept – long term
welfare of customer, society &
environment
Societal Marketing
The Challenge: HUL's Prabha Narasimhan on FMCG major's
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 Functions/Scope of Marketing

• Sales • Promotion/Advertising
• Customer Service • Planning
• Market Research • Product & Brand Management
• Distribution • New Business Development
Management • New Product Development
• Business Analytics

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Major Objectives of Marketing

• Customer Satisfaction • Branding

• Sales Revenue • Profits

• Market Share
• Physical Goods
• Events
• Persons
• Properties
• Information
• Services
• Experiences
• Places
• Organizations…

Entities that can

be Marketed 1
3
 Core Concepts of Marketing

Exchange
Needs & Wants
Demand
Consumer & Customer
Market
Marketplace & Marketspace
Meta-Markets
Customer Value & Satisfaction
Customer Delight & Customer Loyalty
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4
 • Different ways to obtain a product –
borrow, buy or self produce

• Barter system – give and take

Concept of Exchange
• Process of obtaining a desired
product from someone by offering
something in return
Conditions for Exchange
At least 2 parties

Something of Value

Capable of Communication

Freedom to accept or reject the offer

Desire to deal with the other party

If negotiation reaches an agreement, it results in exchange or transaction.

 Types of Exchanges

Business to Business to Consumer to Consumer to

Consumer (B2C) Business (B2B) Business (C2B) Consumer (C2C)
 Needs

State of felt deprivation

Basic human requirements

for survival

Includes : Food, Clothing,

Shelter, Air & Water
Needs
• Additional needs evolved
over time :

• Communication,
• Transportation,
• Education,
• Recreation
 Form taken by human
needs, when they are
directed towards specific
objects (for satisfaction of
these needs)
Wants
Influenced by Culture,
personality & buying power
Eg. : Need – Food, Wants –
Pizza, Burger
• Demand :
Willingness which is
backed by purchasing Demand
ability or buying
power
Customer & Consumer
Customer Consumer
• Person who does the • End user or consumes
actual purchase the product / service
(Parents) (students)

Both can be same or

different persons
depending upon the
purchasing situation
Market
• Traditional Meaning (English)

• Physical place where buyers &

sellers gathered to buy & sell
goods
Market
In Marketing
• Group of Customers or Buyers who share common need or want.

All actual & potential buyers of a product/service.

Examples :

Telecom market, Insurance market

Real estate market, FMCG market

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 Marketplace (Offline)

It is physical, as when we shop in

Marketplace a store or retail outlet

&
Marketspace Marketspace (Online)

It is digital, as when we shop on

the internet
 • A Cluster of complementary products and
services that are closely related in the minds
Metamarkets of consumers but are spread across a diverse
set of industries
Automobile Metamarket
Auto Websites Fuel Pumps
Auto Magazines Driving School
Automobile Manufacturers Service Workshops
New Vehicle Dealers Spare parts Dealers
Financing Companies Car Accessories
Insurance Companies Used Vehicle Dealers
RTO
Customer The customer’s evaluation of the
difference between all the benefits and all

Value the costs of a marketing offer relative to

those of competing offers.

Value ~ Benefits-Costs

• Trade-off between :

• Perceived Benefits & Total Costs

• Benefits – Tangible & In-Tangible

• Benefits include features, quality,

service & Image

• Total Costs include Money, Time and

effort
 • The extent to which a product’s
Customer perceived performance matches a
Satisfaction buyer’s expectations.

• Trade-off between : E & P

• Expectations of the customers

before buying the product /
service (E) and

• Actual Performance (P) after

the consumer starts using it
Customer • 3 Possibilities : Different Reactions
Satisfaction • E = P, customer is Satisfied
• E > P, customer is Dis-Satisfied
• E < P, customer is Delighted

• Best Outcome ???

• Action or response will vary : 3

situations
 May /may not
purchase again

Satisfied Can shift to other

Customer brands / options…

Depending on
vailability or Price
 • Will not purchase again

• May ask for repair, exchange

or refund

Dis-Satisfied • May approach Consumer

Court
Customer
• Will spread Negative WOM
(Word of Mouth / Mouse)
 Customer Delight

• Buys again

• Buys more Products

• Buys new products

• Indifferent to Price
Customer Loyalty

• Becomes LOYAL Customer

• Talks favourably to others

• Unpaid BRAND
Ambassador (Positive
WOM)

• Increases profitability
 • Customers • Society
• Employees • Media
• Investors • Government
Relationships • Banks • Marketing Channel
and • Suppliers Members
Networks
 Networks
There are 3 types of networks
Operational networks
Operational networks include superiors,
people with the power to block or support
a project, and key outsiders such as
suppliers, distributors and customers.
Personal networks
Personal networks can provide important
referrals, and people who can offer
information and often developmental
support, such as coaching and mentoring.
Strategic networks
Strategic networks provide opportunities
to look at the bigger picture through
mentoring, or simply give a different
perspective on your organization.
 The Tipping Point by Malcom Gladwell

Mavens
Mavens are "information specialists", or "people we rely upon
to connect us with new information
Connectors
Connectors are the people in a community who know large
numbers of people and who are in the habit of making
introductions
Salespeople
Salesmen are "persuaders", charismatic people with powerful
negotiation skills
 Selling Versus Marketing

• Sales is to persuade • Marketing is to create

a customer to buy a interest in the minds of
product customers to buy the
product
• Focus on needs of the
Seller • Focus on needs of the Buyer

• Objective is to increase • Objective is to Satisfy needs

Sales and Profits of the Customer

• Starts in the factory • Starts in the market

 Selling Versus Marketing

• Involves Short term • Involves Long term planning

planning

• Emphasis is on selling • Emphasis is on

available products with identification of market
the organization opportunity

• Seeks to quickly convert • Seeks to convert customer

products into cash needs into products &
services
Concept of Marketing Myopia

• Given by Theodore Levitt in 1960 in Harvard Business Review

(HBR)

• Short sightedness towards Business/Marketing

• Coloured or crooked perception of Marketing

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 Concept of
Marketing
Myopia
• Narrow definition of Business - not
focusing on customers needs

• Top Management unable to see /

plan for the future - leading to
failure of Company to survive

• Eg. Kodak, Nokia etc.

Concept of Marketing Myopia

• Reasons for Marketing Myopia

• Lack of competitive substitutes

• Preoccupation with R&D
• Excessive faith in Mass Production and product concept
Marketing Mix

Neil Borden’s (1960) formulated factors such as planning,

pricing, branding, distribution channels, promotions, personal
selling, advertising, packaging, display, physical handling,
servicing, and fact-finding and analysis as marketing mix
elements.
Jerome McCarthy (1964) later categorized Borden’s elements
into the four P’s:
Product
Price
Place and
Promotion
Marketing Mix
Product
Anything that can be offered to a market for
attention, acquisition, use, or consumption
that might satisfy a want or a need.

Product can be a goods or services

Goods are tangible
Services are intangible
Price Price is the cost consumers pays
for a product.

Marketers must link the price to

the product's real and perceived
value, but they also must
consider supply costs, seasonal
discounts, and competitors'
prices.
Place
Place includes company activities that make the
product available to target consumers.

Ford partners with a large body of independently

owned dealerships that sell the company’s many
different models. Ford selects its dealers carefully
and strongly supports them.
The dealers keep an inventory of Ford
automobiles, demonstrate them to potential
buyers, negotiate prices, close sales, and service
the cars after the sale
Promotion

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5thP:
Packaging
Packaging is normally designed to:
•Present your products in the most
attractive way possible
•Communicates the price and value
of your products
•Promotes your products by sharing
information
•It is what consumers see when they
shop.
Marketing
Channel
A marketing channel is described as the set
of people, organizations, and activities that
work together to transfer goods (products
and services) from the point of origin to the
point of consumption.
The primary purpose of a marketing
channel is to create a connection between
the organization that creates a product or
service and prospective customers who
may want to purchase it.
Importance of Marketing Channel
Role of
Marketing
Channels
 Supply
Chain
Managing upstream and downstream
value-added flows of materials, final
goods, and related information
among suppliers, the company,
resellers, and final consumers.

A supply chain is a network between a

company and its suppliers to procure,
produce and distribute a specific
product to the final buyer.
Supply Chain for a firm
Competition
Competition is the rivalry between
companies selling similar products and
services with the goal of achieving
revenue, profit, and market share
growth.
Market competition motivates
companies to increase sales volume by
utilizing the components of the
marketing mix, also referred to as P's.
 Direct competitors are
competitors who are directly
Types of vying for your customers.
competitors Potential competitors are those
competitors who do the same
thing that you and target the
same kinds of customers but
aren’t selling in your market area
at present.
Indirect competitors are businesses that
are in the same category, but they sell
different products and services than you.
Industrial painter and a residential
painter.

Future competitors are like potential

competitors, but they’re much more
ready and likely to enter your market.
This might be the larger national company
that hasn’t entered your local market yet.
Think of them as between potential and
direct competition.
Replacement competitors are those
who provide an alternative to the
services that you offer that solves
the same pain points.

If there is more than one way to

solve the problems you solve with
your business, you may have a
replacement competitor.
For residential painter, this would
be any DIY store that sells painting
supplies.
Porters Five Forces Model
 Competitive
Strategies
Market Leader Strategies
P&G, Samsung, Walmart
Market Challenger Strategies
HUL, Lenovo, Target
Market Follower Strategies
Wipro Consumer Care,
Micromax
Market Nicher Strategies
Himalaya, Zydus Wellness, MCX
 The goal of the Blue
Ocean Strategy is to
Blue make competition
irrelevant.
Ocean
Strategy
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h?v=GkF_yStN4pw
Political Factors:
These determines the extent to
which government and
government policy may impact on
an organization or a specific
industry..
Economic Factors:
These factors impact on the
PESTEL
economy and its performance,
which in turn directly impacts on
the organization and its
Analysis
profitability. Factors include
interest rates, employment or
unemployment rates, raw material
costs and foreign exchange rates.
Social Factors:
These factors focus on the social
environment and identify emerging
trends. This helps a marketer to
further understand their customers’
needs and wants. Factors include
changing family demographics,
education levels, cultural trends,
attitude changes and changes in
lifestyles.
Technological Factors:
These factors consider the rate of
technological innovation and
development that could affect a
market or industry. Factors could
include changes in digital or mobile
technology, automation, research and
development.
Environmental Factors:
These factors relate to the influence of the surrounding
environment and the impact of ecological aspects. With the rise in
importance of CSR (Corporate Sustainability Responsibility), this
element is becoming more important. Factors include climate,
recycling procedures, carbon footprint, waste disposal and
sustainability
Legal Factors:
An organization must understand what is legal and allowed within
the territories they operate in. They also must be aware of any
change in legislation and the impact this may have on business
operations. Factors include employment legislation, consumer law,
healthy and safety, international as well as trade regulation and
restrictions.
Linking business strategy to
marketing

A business or organizational strategy

details a firm’s vision, mission and
long-term objectives. The
organizational objectives form the
heart of the strategy.

A marketing strategy refers to a

business's overall game plan for
reaching prospective consumers and
turning them into actual customers
of their products or services.
Steps in Marketing Process
Thank You