L12 Notes On Introduction To Marketing
L12 Notes On Introduction To Marketing
Till 1950, marketing was usually sales-oriented and the selling concept stressed the need of
high pressure salesmanship and advertising to secure maximum sales volume. Since 1950, we
have customer-oriented marketing plans and programmes and this customer-orientation is
called the marketing concept.
The essence of marketing concept is that customer and not the product shall be the centre or
the heart of the entire business system. It emphasizes customer-oriented marketing process.
All business operations revolve around customer satisfaction and service. Marketing plans,
policies and programmes are formulated to serve efficiently customer demand.
Two radical changes were brought about when the marketing concept was introduced after
1950 in the process of marketing:
b) We have also a gradual shift from caveat emptor (buyer beware) to caveat
vendor (seller beware). This has clearly emphasized the social responsibility
of business towards consumer and the need for consumer protection in the
market place.
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According to the Marketing Guru, ‘Philip Kotler’, “Marketing is typically seen as the task of
creating, promoting, and delivering goods and services to consumers and businesses; it is
defined as a societal process by which individuals and groups obtain what they need and want
through mating, offering, and freely exchanging products and services of value with others.”
Sometimes, marketers confuse marketing with selling, since they consider marketing as an art
of selling products. However, marketing is different from selling in many ways.
2. Market Segmentation:
The total market for many of the products is not homogeneous but too much heterogeneous
because people have different needs and wants and therefore, marketer cannot derive
maximum benefit from an analysis of marketing as a whole. For example, there may be total
market for textiles, electrical appliances, refrigerators, etc., but within the total for each of
these products, there might actually exist many sub-markets which differ virtually from each
other.
Under textile markets, in one section of the population, there might be huge demand for
cotton textile, in another for synthetic fibre textiles and yet in another for pure silk garments.
This diversity may be due to differences in income of the people, taste, fashion buying habits
or motives, etc. Further no two customers are identical in their demand.
Therefore, to take advantage of this situation, the marketers may divide the total market into
smaller groups of consumers on the basis of significant difference in buyer characteristics or
buyer responses to marketing programs.
By tailoring product designs, pricing policies, promotion and distribution channels to meet
the needs of these small groups’ marketers often gain a competitive advantage. This kind of
marketing strategy is also consistent with the marketing concept, which requires the
identification of the consumer wants and needs and development of marketing programs to
satisfy them.
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Market segmentation is the process of dividing a potential market into distinct sub-markets of
consumers with common needs and characteristics. Market segmentation is the starting step
in applying the marketing strategy. Once segmentation takes place, the marketer targets the
identified customer groups with proper marketing-mix so as to position the
product/band/company as perceived by the target segments.
From the perspective of the marketing manager, market segmentation involves two closely
related areas. First, the total market for any product can be sub-divided or segmented into
groups of potential customers who are homogeneous with respect to certain wants or desires.
Second, it might be advantageous to the organisation to serve one or more of these market
segments.
Market segments are large identifiable groups like customers interested in personal computer,
laptop, tablet, etc. It is possible that a market creates a niche. Niche is a narrowly defined
group of customers that have a distinct and complex set of needs.
Thus, in Cycle Industry, for example, there might be segments like cycle for regular users,
sports, adventure, racing, kids, girls, etc. Niche is created when cycle is required for health
clubs, physically handicapped with left and right hand working, etc. In the niches, there are
few or no competitors and the product might command a premium price.
3. Multi-Level Marketing:
Under multi-level or network marketing, the product reaches the customers from the
manufacturer via distributors, sub-distributors, sub-sub distributors and sub-sub-sub
distributors. The distributors are organised in the form of hierarchy, i.e., level I, level II, level
III and so on. Each of the distributors is also a customer. The products are always sold
directly to the customers. The conventional retail route is completely by-passed.
In multi-level marketing (MLM), individuals become associated with the parent company in
an independent contractual relationship. They are compensated based on their sales of
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company’s products or services, as well as the sales of those they bring into the business.
Multi-level marketing has a recognised image problem because of difficulties in making a
clear distinction between legitimate network marketing and illegal “pyramid schemes” or
Ponzi schemes.
Due to this image problem, many new MLM network marketing firms do not use the words
“multi-level marketing” or “network marketing” and instead use terms like “affiliate
marketing”, “home-based business franchising” etc. Under this arrangement, commissions
are only earned on the sale of products or services to the end consumer who, in many cases, is
also a distributor. No money is earned on a “sign-up fee” or for recruiting distributors alone.
The companies which are using MLM include Amway Corporation (household goods,
personal care and nutritional products); Avon Products (cosmetics, jewellery, home
furnishing, and baby care products); Brite Music Enterprises (children’s song books, CDs,
DVDs, etc.), and Discovery Toys (educational toys, books, and games).
(i) Sales forecasting is difficult. This might result in under or over stocking of various items.
(iv) Distributors may become large customers and hence take over control of the company.
(v) The company cannot control its sales team’s actions because of its excessive dependence
on the network of distributors and subdistributors.
4. Organization Structure:
Inside any company, a large number of activities are carried out by big groups of individuals,
spread across multiple departments (e.g. Production, Sales, Marketing, Purchase, Human
Resources, Administration, Inventory (Stock), IT Systems, Accounts etc.).
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The activities within these departments must be properly coordinated such that every
employee understands his responsibilities. Also, the employees need to understand the
protocol for their communication and coordination within the department and also across
various departments.
Ideally, each department must be supervised by one single person, and the team within that
department must report to her. That person remains responsible for the day-to-day decisions
and performance of that department. This ensures a single line of command. Without a single
command line, employee coordination is very difficult.
According to the Marketing Guru, ‘Philip Kotler’, “Marketing is typically seen as the task of
creating, promoting, and delivering goods and services to consumers and businesses; it is
defined as a societal process by which individuals and groups obtain what they need and want
through mating, offering, and freely exchanging products and services of value with others.”
Sometimes, marketers confuse marketing with selling, since they consider marketing as an art
of selling products. However, marketing is different from selling in many ways.
If everybody takes decisions about everything, a lot of confusion and communication gaps
may arise. In such cases, nobody will be responsible when things go wrong. This is usually
observed in organizations which have grown without putting proper systems and processes in
place.
Of course, if the organization is very small where only one business leader takes care of all
the activities, only he is the single command, but division of activities within the team is
essential and applicable in such cases also.
The tool to graphically represent the relationships and responsibilities within a company is
called an Organization Structure. It is a tree-like graphical representation of the organization,
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starting from the head of the organization at the top and the hierarchy below him shown
downwards.
5. Channels of Distribution:
A channel of distribution refers to a path or route that a good or service takes in order to
reach the hands of the ultimate consumer. In other words, it is a chain of businesses or
intermediaries through which a good or service passes until it reaches the end consumer.
Distribution channels in marketing are a key element in the entire marketing strategy. It helps
the business in expanding its reach and grows its revenue.
A channel of distribution or marketing channels are the distribution networks through which
producers’ products flow to the market. — Cundiff, Still and Govoni
This is a route taken by the title to the goods as they move from producer to the ultimate
consumers or industrial users. —William J. Stanton
(ii) Physical movement from the point of production to the point of consumption.
(v) Most of the utilities of products are created by performing the function of physical
distribution promptly and efficiently.
(vi) Transactional function like buying from the manufacturer and selling to the consumer.
(vii)Storing the goods and sorting them into quantities desired by customers.
(viii) Channels of distribution also conduct marketing research and gather data on market
conditions, expected sales, consumer’s trends, competition etc. Thus giving valuable
information to the manufacturer.
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(ix) Distribution channels help in maintaining the price too. By stocking the goods, a constant
flow of goods to the market is assured. This equalizes the demand and supply factors which
stabilize prices.
Channels of distribution are very important for any firm because of the following:
(i) Distribution channel is an important element of marketing mix of a firm and other
elements are closely related with interdependence on the distribution channel. Other
marketing decisions like pricing, promotion and physical distribution are highly affected by
this.
(ii) A sound distribution channel enables the firm to cut down cost and maximize its sales
volume.
(iii) The cost involved in the use of distribution channels adds up into the price of the product
that the ultimate customer has to pay. Thus it is important to choose the distribution channel
wisely.
(iv) A product or service is really useful to the consumer only when it is available at the right
time and at the right price. Distribution channels ensure this.
(v) Due to right distribution channels fluctuations in the production can be reduced which
ensures steady employment and proper budgetary control.
6. Direct Marketing:
It also includes telemarketing that requires calling customers through telephones. This type of
marketing does not necessarily involve face-to-face interaction with customers. Direct
marketing proves to be an extremely effective element of marketing communication process
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that practices a targeted marketing approach to lure customers. It helps in creating valuable
and lasting relationships with customers in the long run.
Overview
Knowing how to sell is a vital ingredient for marketing success. In simple terms, effective
sales and negotiation techniques blend talking to the right people - and listening hard to find
out what they want to buy. Once you've got both those elements, you can close the deal to
mutual benefit.
A successful sales process starts by looking at the customer and what they want, rather than
just what you're trying to sell. This lets you tailor the way you present your product or service
to match each customer's individual requirements.
This kind of "solution selling" is a far more powerful selling technique than simply delivering
a general-purpose sales pitch. Your sales message can highlight exactly how your product
suits your customer, emphasizing the points where you have a competitive advantage. At the
same time, the more you know about the customer's position and what your product is worth
to them, the more likely you can prove its value to them.
The first hurdle is getting through to the right person. Sales training courses often includes
sales tips to help you get past gatekeepers such as secretaries and to create interest. Taking
the trouble to research the customer should put you in a strong position to come up with an
opening that explains why it's worth taking time to talk to you.
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Knowing what the customer wants also means that you will be in a strong position to explain
the benefits of what you can offer. Every product feature can be translated into a competitive
advantage - and a benefit for the customer.
Good sales skills include anticipating and dealing with any reasons the customer may choose
not to buy, known in sales terms as 'objections'. Last but by no means least, your selling
techniques should include the ability to see when the customer is ready to buy, and the right
selling technique for closing sales.
Selling techniques often focus exclusively on winning sales. But knowing how to negotiate
the right terms is important too. Like the earlier parts of selling, negotiation should start with
understanding the customer.
What's the problem that they're trying to solve through buying from you? And,
The good news is that most customers are far more interested in talking about themselves
than in hearing about you and your product - so use that human trait to your advantage. But
you should also be clear about your own position.
And what would make it a bad deal for you and therefore be the point of no return?
If your customer believes that you're working with their interests at heart as well as your own,
they're more likely to be more honest about what they view as their alternatives. And this in
turn allows you to do the same - making for a more positive environment to do good
business.
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Successful negotiation results in a coming together between buyer and seller - ideally both
you and your customer should have a sense of achievement as you shake hands on the deal.
Sales strategy
Selling is one of the most difficult tasks for small business owners. A sales strategy will focus
your attention and help you seize opportunities.
A good sales strategy will help you identify prospects, manage relationships and convert
leads to sales. The basic things you need to know.
The buying process is hindered by fears and doubts. It’s up to the salesperson to allay the
buyer’s fears.
Sales forecasting is essential for short and medium-term business planning. An accurate
forecast can help you manage your cash flow.
Reliable customers are the lifeblood of every business. However, it can be risky to rely on
them - if their business flounders, so might yours.
Before the negotiation begins, prepare yourself; aim to appear keen to do the deal, but
not desperate.
Clarify your objectives (eg price, volume or a quick sale) and how important the deal
is to you.
Find out what the customer wants. What features or extras do they value and what are
their priorities - price, service or delivery?
Research the customer's position: how urgently they need your product, what they can
afford and what alternatives the competition is offering.
Assess the value of your offering to the customer: the benefits it offers, the problems
it solves for them, the alternatives it replaces.
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Identify the strengths and weaknesses in your proposal and plan your strategy; aim to
reach a deal which will suit the customer as well.
Decide what could be negotiable; try to identify concessions which would cost you
little but the customer would value.
Consider the potential impact on other deals and other customers of any concessions
you make.
Clarify your terms and conditions from the start of the negotiation.
Pitch your opening price high; explain how the value in what you are offering justifies
the price.
Test the strength of any concessions the customer asks for; ask whether they are deal-
breakers, or what alternatives there are.
Look for reciprocation on any concessions you make: for example, an increased order
size in exchange for a discount.
Summarize each point as it is agreed; shake hands on the deal when all the points
have been covered and follow up with a written agreement.
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