UNIT I.

INTRODUCTION
TO MARKETING CORE
CONCEPTS
• This unit discusses about the core concepts of
marketing. It has been said that marketing is
everywhere and all around us. The essential
ingredient in our daily lives, either at home, in the
workplace or in our journey to experience the
wonders of nature. It tells that it is the lifeblood of
every successful organization, groups or individuals
are it in the domestic or international markets for
goods and services.
What is Marketing?

• The American Marketing Association, the official

organization for academic and professional
marketers, defines marketing as: 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 organizational objectives.
• For Philip Kotler, (an American marketing author,
consultant and professor), Marketing 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.
Ways to Differentiate Selling and
Marketing

Selling Marketing
1. Emphasis is on the product Emphasis is on consumer needs and wants

1. Company manufactures the product Company first determines customers need and
first wants and then decides out how to deliver a
product to satisfy these wants
1. Management is sales volume- Management is profit-oriented
oriented

1. Planning is short-run oriented in Planning is long-run-oriented in terms of

terms of today’s products and today’s new products, tomorrow’s markets and
markets future growth
1. Stresses needs of sellers Stresses needs and wants of buyers
1. Views business as a good producing Views business as producing consumer satisfying
process process
1. Emphasis on staying with existing Emphasis on innovation on every existing
technology and reducing costs technology and reducing every sphere, on
providing better costs value to the customer by
adopting a superior technology
1. Different departments work as in a All departments of the business work in
highly separate water- tight integrated manner, the sole purpose being of
compartments consumer satisfaction
1. Cost determines price Consumer determine price, price determines cost

1. Selling views customer as a last link in Marketing views the customer as the very
business purpose of business
The Marketing Mix

• The term marketing mix is a foundation model for

businesses, historically centered on product,
price, place, and promotion (also known as the 4
Ps). The marketing mix has been defined as the
“set of marketing tools that the firm uses to
pursue its marketing objectives in the target
market.”
Product

• refers to what the business offers for sale

and may include products or services.
Product decisions include the "quality,
features, benefits, style, design, branding,
packaging, services, warranties, guarantees,
life cycles, investments and returns".
Types of Products

• Tangible Product is a physical object that can be perceived

by touch such as a building, vehicle, gadget, or clothing.
• Intangible Product is a product that can only be perceived
indirectly such as an insurance policy. Intangible data
products can further be classified into Virtual Digital Goods
that are virtually located on a computer and are accessible
to users as conventional types, such as jpeg and mp3 files,
without requiring application process or transformational
work by programmers.
Classification of Products

• Consumer Goods – are meant for final

consumption by the ultimate consumers.
Bread, butter, TV sets, cosmetics and
garments are all consumer goods.
• Industrial Goods – are those meant for use
in making other products or for rendering a
service in the operation of a business
organization.
Price

• refers to decisions surrounding "list pricing,

discount pricing, special offer pricing, credit
payment or credit terms". Price refers to the
total cost to customer to acquire the product,
and may involve both monetary and
psychological costs such as the time and effort
spent in acquisition.
Place

• is defined as the "direct or indirect channels to market,

geographical distribution, territorial coverage, retail
outlet, market location, catalogues, inventory, logistics
and order fulfillment". Place refers either to the physical
location where a business carries out business or the
distribution channels used to reach markets. Place may
refer to a retail outlet, but increasingly refers to virtual
stores such as "a mail order catalogue, a telephone call
center or a website".
Promotion

• refers to "the marketing communication used to

make the offer known to potential customers and
persuade them to investigate it further".
Promotion elements include "advertising, public
relations, direct selling and sales promotions."
Core Concepts of Marketing

• Philip Kotler defines Marketing Management

as 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. The
following are the key and core concepts of
marketing:
Needs, Wants, and Demands

• Needs are the feelings of deprivation of some

satisfaction. People need food, air, water,
clothes and shelter for their survival. Marketers
identify what type of products are needed by
society and their customers. By determining
those needs, the marketers then brings the
products in the market that will fulfill the
customers and the society’s needs at large.
• Wants are those desires that satisfy the
needs. Wants are shaped by the persons
themselves and continuously changes
according to time. There are only a few
needs of human but the wants are too many.
• Demands are the wants of people for some
specific products or services that are backed by an
ability and willingness to buy them. Wants become
demands when supported by purchasing power.
Marketers focus on the increasing demand of
those products in the market by making it
designable, attractive, and unique and also by
keeping it in mind that the product would be easily
available in the market at an affordable price.
Value, Cost and Satisfaction

• Value is the difference between the perceived benefits

gained from having or using the product and the cost of
obtaining it.

• A consumer’s satisfaction i.e., the level of his/her felt state

resulting from comparing a product’s perceived
performance or outcome in relation to his/her expectation,
is linked to his perceived value of the offering.
Exchange and Transaction

• Transaction is a contract or agreement

between two parties where a good or service
is exchanged in return for a monetary
value whereas an exchange is a swap of a
good or a service between two parties.
Kotler said that people can obtain products in
one of four ways

1. Self production
2. Coercion
3. Begging
4. Exchange
 Relationships and Networks
g is a practice of building long-
ons with key parties who are
ers and distributors.

nsists of the company and all

stakeholders: customers,
, distributors, retailers, and
among other with whom it has
le business relationships.
Market

• In marketing, the term market refers to the group of consumers or organizations that is
interested in the product, has the resources to purchase the product, and is permitted by
law and other regulations to acquire the product.

Beginning with the total population, various terms are used to describe the market based
on the level of narrowing:
• Total Population
• Potential market – those in the total population who have interest in acquiring the product
• Available market – those in the potential market who have enough money to buy the
product
• Qualified available market – those in the available market who legally are permitted to
buy the product
• Target market – the segment of the qualified available market that the firm has decided to
serve (served market)
• Penetrated market – those in target market who have purchase the product
Marketers and Prospects

• When one party is more actively seeking an

exchange than the other party, we call the first
party a marketer and the second party a
prospect. A marketer is someone seeking one or
more prospects who might engage in an
exchange of values. A prospect is someone
whom the marketer identifies as potentially
willing and able to engage in an exchange of
values.
Marketing Management

• The American Association of Marketing

define marketing management as the
process of planning and executing the
conception, pricing, promotion, and
distribution of ideas, goods and services in
order to create, exchange and satisfy
individual and organizational objectives.
The following are the 8 types of demand which are
necessary for fulfilling the customer value.
Demand State Definition Marketing Tasks
Negative demand This is created when  Try to create awareness
customers have disliked the rather than promotion
product but the product is  Inform the customers
actually useful to them. The about the importance of the
customers try to avoid the product
product and merely do not
want it.
Non-existent demand Target consumers are unaware  Marketers should first
of the product or they know create awareness
about the product but they are  Find ways to connect the
not interested to buy. This may benefits of the product with
be happening because of the person’s natural needs
culture or the customers think and interest
that buying the product is  Aggressive promotion is
merely a wastage of money. needed
Latent demand Many consumers may share a  Producers need to understand
strong need that cannot be the latent demand of the
satisfied by any existing product. customer
 Try to collect feedback from
the customer to know what
they want or if they have any
complaints

Declining demand Declining demand happens  Reverse the declining demand

because of changing preference through
and taste of consumers, and the  Re-marketing
radical technological  Re-branding
development  Re-positioning
Irregular demand This is created because of usage  Synchromarketing – which
rate based on seasonal, monthly, intends to shift the pattern of
weekly, daily, hourly basis, demand to dampen seasonal,
irregular, or inconsistent
demand levels in order to
synchronize the demand better
to the ideal pattern of supply.
Full demand The products have the same  Maintain the current level of
demand all over the year. demand in the face of changing
consumer preferences and
increasing competition
 The organization must
maintain or improve the its
quality and continually
measure consumer satisfaction
to make sure it is doing a good
job
Overfull demand Suddenly people are likely  Demarketing – (unselling or
buying more products that marketing in reverse) an
creates the shortage of supply attempt by the firm to
and an increase in prices. discourage all or some of its
customers from making
purchases either
temporarily or permanently.
Unwholesome demand People are aware of the bad  To get people who like
effect of the product but they something to give it up,
are still attracted to this. using tools such as fear
messages, price hikes and
reduced availability
The Evolution towards the
Marketing Concept

• There are five distinctive marketing concept types

or approaches to achieving effective marketing.
Not all these type of marketing concept work for all
industries, because differ in function. Every
marketing concept was created depending on the
need of the market. As markets changed, so did
the concepts.
The Production Concept

• The production concept is based on the approach that a

company can increase supply as it decreases its costs.
Moreover, the production concept highlights that a business
can lower costs via mass production. A company oriented
towards production believes in economies of scale
(decreased production cost per unit), wherein mass
production can decrease cost and maximize profits. As a
whole, the production concept is oriented towards
operations.
Product Concept

• Companies that focus on the product

concept believe that the most significant
priorities for a customer are quality and
functional characteristics of a product
The Selling Concept

• The selling concept involves companies that are

sales oriented. What this means is that they can
make a product and then sell it to their target
market without consideration of their consumers’
needs or wants. The selling concept highlights that
customers would buy a company’s products only if
the company were to sell these products
aggressively.
The Marketing Concept

• A company that believes in the marketing

concept places the consumer at the center of the
organization. All activities are geared towards the
consumer. A business, oriented towards the
market, aims to understand the needs and wants
of a customer and executes the marketing strategy
according to market research beginning from
product conception to sales.
The Societal Marketing Concept

• The societal marketing concept is a relatively new

marketing concept. While the societal marketing
concept highlights the needs and wants of a target
market and the delivery of better value than its
competitors, it also underscores the importance of
the well-being of customers and society as a
whole (consumer welfare or societal welfare).