MARKETING MANAGEMENT [Unit: 1 Introduction]

What is Marketing?
Marketing is a process of promoting the buying and selling of a product or service. The term
‘marketing’ has been defined in different ways by different people. Some consider marketing as a
business activity, while some believe marketing is a coordinated and integrative effort, a process of
adjusting demand and supply.

Marketing Definition
According to the American Marketing Association (AMA), marketing is “the performance of
business activities that direct the flow of goods and services from producer to consumer or user.”
As per Philip Kotler, “Marketing is a social and managerial process by which individuals and groups
obtain what they need and want through creating and exchanging products and value with other.”
The traditional concept of marketing focuses on selling goods and services which are already produced
by the organisation. Marketing activities are concerned with persuading consumers and selling goods
and services with least attention towards consumer satisfaction. It emphasises on the selling
philosophy by creating a separate department for maximising the sales volume.

On the other hand, as per the modern concept of marketing, consumer wants and needs are the guiding
spirit for any organisation. It starts with identifying the needs of consumers and then planning the
product or service in such a manner that it satisfies the consumers at the maximum level.

Scope of Marketing
In recent years, the scope of marketing has increased to a greater extent. There are various areas where
the concept of marketing can be applied. Let us discuss some of these areas as follows:

1. Products
2. Services
3. Events
4. Experiences
5. People
6. Places
7. Property
8. Information
9. Ideas

1. Products
Physical or tangible products constitute a major share in an economy’s production and marketing.
Organisations are involved in the production of billions of products under various categories, such as
food, automobiles, machinery, etc. These products need to be marketed to their target consumers.
2. Services
Services are intangible offerings offered to consumers for consumption. It includes various business
verticals such as hotels, airlines, banking, healthcare, education, software programs, consultants and
many more. The service sector constitutes a major share of the economy.

With the advancement of economies, countries have shifted from production of goods to the
orientation of services. Marketing covers both the manufacturing and service sectors.

3. Events
Marketing covers events, like tradeshows, organisation’s anniversary, award shows, festivals, health
camps and other such events. For example, if an organisation hosts global sports events, like Olympics
or Commonwealth Games, it would need marketing to get the audience and spectators.

4. Experiences
Much of marketing is around creating a memorable experience for customers. Marketers try to
entertain their customers by providing an in-depth experience with products/services. For example,
entertainment parks give customers a delightful experience of rides and games.

This type of marketing is called experiential marketing, which focuses on marketing strategies that
influence the purchasing decisions of customers.

5. People
Many a time, people also need to market themselves to gain publicity. This includes the likes of
artisans, musicians, politicians, sports personalities, bollywood celebrities, etc. These people market
themselves to show their talent to gain a brand image in society. This type of marketing is called
celebrity marketing.

6. Places
Geographical places such as cities, states, regions and historical places also need to market themselves
to attract tourism and trade. Many a time, the marketing or endorsement of these places is done by
well-known personalities or celebrities. For example, the marketing of State of Gujarat is done by Shri
Amitabh Bachchan.

7. Property
Real estate properties and financial assets also need to be marketed to their target consumers.
Marketing enhances the possession utility of these properties. With the rise in income level, people
have become interested in investing money in real estate, bonds and stocks. Marketing builds trust and
confidence among investors and plays a vital role in buying and selling of these properties.

8. Information
Marketing also encompasses the marketing of information-based products and services such as
educational institutions, encyclopaedias, non-fictional books, specialised magazines and newspapers.

Media revolution and rise in literacy level have also increased the need for marketing information. The
packaging of the product is a critical carrier of information about the product, from the marketer to the
consumer.

9. Ideas
Sometimes ideas also need to be marketed to the consumers. These ideas are intellectual thoughts that
can benefit customers. Ideas include concepts and philosophies on various issues. For an organisation,
an idea can be in the form of a blueprint of a business plan/project. In the social context, an idea may
aim at creating awareness about issues, such as AIDS or family planning.
Features of Marketing
Every organisation be it government or private, commercial or non-commercial or small scale or large
scale need to market themselves to their target consumers. While doing this, these are some of the
important features of marketing that they must keep in mind:

1. It is an exchange process
2. It is a consumer-driven approach
3. It is a continuous activity
4. It is an integrated approach

1. It is an exchange process
Marketing is an exchange process that involves the transfer of goods, services and ideas from one
person to the other in return of some monetary value. Different functions of marketing like
distribution, after-sales services and packaging facilitate the exchange process.

2. It is a consumer-driven approach
As discussed previously, a consumer is the focal point of all marketing activities. Marketing attempts
to satisfy consumer needs to retain the market demand for an organisation’s products. The process of
marketing starts with identifying the needs of consumers and then planning the product that satisfies
those needs.

3. It is a continuous activity
Marketing is a continuous process in the sense that it endlessly monitors the scope of innovation in the
business environment. It is a never-ending process that includes developing and improving products
and formulating various strategies such as pricing strategies, distribution strategies and promotional
strategies.

4. It is an integrated approach
Marketing involves the coordination of several interrelated activities with the aim of delivering value
to consumers. For example, marketing involves promotional measures to make consumers aware of the
availability of a product, its features, etc.

Importance of Marketing
1. Helps in business planning and decision making: Marketing helps in business planning as it
helps to shape the product from its production to it reaching the customers. The 4Ps of
marketing help the business to make sure what alternatives are better for the growth of the
business and help to make decisions that prove beneficial for the customers.
2. Product development: The product part of the 4Ps provides alternatives for developing the
product regarding its branding, labeling, packaging, and how it should be brought into the
market. Moreover, customer feedback and market research provide a blueprint of how the
product has to be further modified to suit the needs of the consumers.

3. Effective consumer engagement: with the use of various platforms online and offline, the
company can gain consumer engagement in some form or another. In personal selling, for
example, salesmen interact with the customers and get to know their needs.

4. Builds relationships among customers: marketing always tries to establish a cordial

relationship with the customers. Modern marketing deals with the customers as they are the
king. Hence continuous efforts make customers satisfied. And this helps them stay with the
brand or company for a long time.
 5. Marketing creates revenue options: When marketing techniques convert the leads to actual
sales. It ultimately increases revenue. Hence, marketing is crucial to generating and increasing
revenue by communicating the products with potential customers.

6. Set better goals for your business: Marketing helps the business know about the customers'
demands and needs. They could set their goals according to these.

7. Build a reputation for your brand: effective marketing tends to impact the customers' minds.
Hence, they build brand awareness among them.

Basic Terminology in Marketing

Marketing is an activity that is concerned with meeting and satisfying the needs and demands of
customers; thereby, building long- term relationships with customers.

In the words of Philip Kotler, a renowned Management Consultant, Marketing is a social and
managerial process by which individuals and groups obtain what they need and want through creating
and exchanging product and value with others.

Before understanding the concept of marketing in detail, let us first explain the terminologies
associated with marketing, in the next sections.

Needs, Wants and Desires

For any small or large organisation, the most important question to answer is “what do the customers
want?” This question can be answered by understanding the needs, wants and demands of customers.
Needs, wants and demands are a basic part of the marketing principles. Sometimes, these three terms
are used interchangeably; however these three terms have different implications. Let us delve into the
details of each of these three terms one by one.

Needs
A need refers to an individual’s basic requirement. The fundamental needs of a human include food,
clothes and shelter. Humans cannot survive if these needs are not fulfilled. These needs are not
created; rather they exist automatically in every human.

Also the fact that human needs go beyond fundamental needs. There can be needs for education,
healthcare, insurance, pension, etc. However, needs are not physical rather they can be social and
individual. Some of the needs of humans are:

 Basic physical needs include food, shelter, clothing and safety.

 Social needs can be a need for belongingness and affection.
 Individual needs can be a need for knowledge and self-expression.

Wants
Human needs are few, but their wants are unlimited. These wants are dictated by one’s social circle,
cultural background and individual personality. An individual may want branded clothes, high-end
ornaments or well-furnished house etc. It should be noted that wants are not permanent and they
change on a regular basis.

Demands
Demands are wants backed by the ability and willingness to buy. Wants which are supported by
purchasing power become demands. Many people want a BMW, only a few are able to buy one.
Marketers influence wants and demand by making products attractive, affordable and easily available
to the target group of customers.
Value and Satisfaction
Value can be defined as a ratio between what customers get and what they give in return. In other
words, it is the difference between the benefits derived from a product and costs of acquiring the
product. For example, Milind is a businessman and wants to buy a new car.

He had a criteria for choosing the car which includes reliability, durability, performance, delivery
services, and effective training and maintenance. He was considering five options, say, Dezire, Verna,
Aura, Amaze, and Honda City. After studying all the attributes that he wanted in his car; he decided to
buy Verna. Here, we can say that the value that Milind expects to derive is maximum in case of Verna.

On the other hand, satisfaction refers to the individual judgement of any person regarding the
perceived performance of any product in comparison with the expectations. If performance is less than
expectations, it leads to dissatisfaction. If the performance is equal to expectations, it brings
satisfaction.

On the other hand, if performance happens to be greater than what has been expected, it results in
customer delight. For example, Flipkart is a popular multi-brand online retailer that offers an
extremely beneficial No Questions Asked Return Policy which attracts customers especially those
thinking of trying a new product.

MARKETING CONCEPTS- TRADITIONAL AND MODERN

Concept is a philosophy, attitude, a line of thinking, an idea or notion to relating any aspects of divine
and human creations. The philosophy of an organization in the dynamic creation of marketing is
referred to as a marketing concept. Thus, marketing concept is a way of life in which the resources of
an organization are mobilized to create, stimulate and satisfy the consumer at a profit.

TRADITIONAL/ CLASSICAL CONCEPT According to this concept, marketing consists of those

activities which are concerned with the transfer of ownership of goods from producers to consumers.
Here, the role of physical distribution and marketing channels is over emphasized. It refers to
marketing as the process by which goods are made available to ultimate consumers from their place of
origin. The emphasis of marketing is on sale of goods and services. Consumer satisfaction is
overlooked.

MODERN CONCEPT According to this concept, marketing is concerned with the creation of
consumers. According to the modern thinker Peter Drucker, Marketing is so basic that it cannot be
considered as a separate function. It is the whole business seen from the customers’ point of
view…business success is not determined by the producer but the customer. Thus, the modern concept
lays greater emphasis on customers and considers them as kings. Marketing is not merely a physical
process but is something beyond that. It is the managerial philosophy which centres around the wants
and desires of customers.

TRADITIONAL CONCEPT vs. MODERN CONCEPT

1. Traditional marketing starts from production and ends with sale but modern marketing include
planning, product, price, promotion, place, people, after sale service etc.

2. Traditional marketing concentrate on favorable products, but modern marketing concentrates on

customer needs, wants and satisfaction.

3. In traditional marketing, only those products are sold which the producer produces. No focus is laid
on consumer preference. On the other hand, modern marketing indulge in production only after
analyzing consumer demands.
4. Traditional marketing is product and production oriented while modern marketing is consumer
oriented.

5. The target of traditional marketers was to earn maximum profit by maximizing sales. But, the main
motive of modern marketers is to earn profits through satisfaction of consumer needs.

6. The principle of traditional market was “caveat emptor” i.e., “let the buyer beware”. Whereas, the
principle followed by modern market is “caveat venditor” i.e., “let the vendor beware”.

Evolution of Marketing/ Philosophies of Marketing

With the Industrial Revolution during the late 18th and early 19th century, businesses expanded and a
need for established marketing practices was felt. The marketing philosophy was in existence for
centuries, but the modern concept of marketing is a professional practice which has emerged only after
the Industrial Revolution.

Since then the marketing philosophy has undergone various evolutionary changes. These changes can
be traced under four main stages or orientations, which are mentioned below:

1. Production Concept
Till the 1930s, there was a common believe among manufacturing
organisations that customers would prefer to purchase reasonably
priced and easily available products. Thus, the organisations laid
emphasis on increasing the output and achieving high production
efficiency.

The production concept prevailed for a longer duration as the demand

was far greater than the supply of goods and consumers were keen to
buy whatever being offered to them. In India, the pro- duction concept
existed till 1991 (the pre-liberalisation period).

Thus, it can be said high production efficiency, low prices and wider distribution are some key features
of the production orientation stage. For example, Ford automobiles are a classic example of production
orientation.

2. Product Concept
The product concept stresses that organisations should focus their efforts on creating a product of
superior quality and features. Under this concept, an organisation should focus on improving the
existing product lines over a period of time.

The product concept is based on as assumption that consumers prefer to buy products that offer high
quality, performance and innovative features.
However, there is a flaw in this concept i.e. organisations may forget to study consumers’ minds and
launch products based on their own technological research and scientific innovations. Many a time, it
is observed that innovations enter the market before the market is ready for the product. For example,
Apple Inc.

3. Selling Concept
This concept emphasises that organisations should make efforts towards pushing sales of their
products by promoting aggressively and making profits by increasing sales volume. The selling
concept is based on an approach that only making the best product available is futile for an
organisation unless it resorts to aggressive salesmanship.

Similar to production and product concepts, the sales concept also fails to focus on customers’ needs.
For example, Insurance companies.

4. Marketing Concept
The marketing concept is based on the principle of maximising profits by satisfying customer needs.
Organisations provide products as per the needs and wants of customers. Under the marketing
orientation, organisations consider that the ‘customer is king’.

All the activities of organisations (production, finance, human resource, research and development) are
centred on the marketing function.

5. Societal Marketing Concept

Under this concept- “Marketing strategy should deliver value to customers in a way that maintains or
improves both the customer’s and society’s well-being”. The marketing concept focuses on the
satisfaction of consumers. The societal marketing concept is more comprehensive because it stresses
that a marketer is responsible to all sections of society.

Societal marketing concept requires the marketers to build societal and ethical consideration into their
marketing practices.

The Societal marketing concept puts the human welfare on top before profits and satisfying the wants.