UNIT 1 - INTRODUCTION TO MARKETING

STRUCTURE

1.1 Basic Concepts in Marketing

1.1.1 Needs, Wants and Desires
1.1.2 Exchange and Transactions
1.2 What is Marketing?
1.2.1 Origin of Marketing
1.2.2 Nature of Marketing
1.2.3 Scope of Marketing
1.2.4 Characteristics of Marketing
1.2.5 Purpose or Objectives of Marketing
1.3 Marketing and Selling
1.3.1 Difference between Marketing and Selling
1.4 Key words
1.5 Summary

UNIT OBJECTIVES

After studying this unit, you will be able to:

o Explain the meaning of needs, wants, exchange and transactions in marketing
o Discuss the origin, nature and scope of marketing
o Explain the characteristics of marketing
o List and define the objectives of marketing
o Describe the difference between marketing and selling

INTRODUCTION

In modern organisations, change is the only constant for survival in the long run. Due to rapid
modernization, rising awareness among consumers, high competition and volatile market
conditions, it is very important for an organisation to adjust itself to marketing trends from time
to time.
Activity of marketing is as old as mankind. It is the most critical function in an organisation as
it is responsible for generating revenue, which is needed for the survival and growth of an
organisation. Finance department is responsible for managing these revenues. Production
department makes use of the amount generated from the revenue to generate products that are
ultimately sold in the market. The actual challenge is faced by the marketing department which
is generating revenues by maximizing consumer satisfaction.
Marketing is the process of exchange which includes distributing, promoting, branding and
pricing activities with the purpose of satisfying its consumers through products and services.
The opening section of this unit gives an overview of basic concepts related to marketing, such
as needs, wants, desires, exchange and transactions. The unit also discusses the nature, scope
and characteristics of marketing. The latter section of the unit explains the difference between
marketing and selling.

1.1 BASIC CONCEPTS IN MARKETING-

Philip Kotler, an eminent writer, defines modern marketing as 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.
According to American Marketing Association, Marketing is the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large.
A detailed analysis of this definition will throw light on some core concepts of marketing,
which are needs, wants, exchange, desires and transactions. These concepts relate to the
philosophy used by organizations to identify and fulfill their consumer needs, which benefits
both the consumer and the organisation.
Figure 1 describes various marketing concepts:

Needs

Transactions Wants
Marketing
Concepts

Exchanges Desires

Figure 1: Concepts of Marketing

1.1.1 NEEDS, WANTS AND DESIRES

Let us discuss the concept of needs, wants and desires.

Needs: Needs are the psychological state of mind which reflect the listlessness
feeling about the situation. It is the state of feeling of deprivation and dissatisfaction about
basic requirements, such as food, clothing and shelter. Unmet needs are the foundation of
marketing activities in a sense that a marketer tries to satisfy the unmet needs of the consumers
through his products and services.
From the marketing point of view, human needs are responsible for the repeated sales in which
the marketers are not required to put extra promotional efforts to maximize sales and purchases.
A consumer will go for the repeated purchase in case of need. Products of consumer goods,
agricultural sector, textile and water comes under the category of needs.
One important point to be noted is that the consumer is not brand-conscious in case of need, as
he will try to satisfy his needs as soon as possible. This is the reason why many brands offer
similar products to satisfy the growing consumer needs for a specific product.
Wants: Wants are the options available to satisfy needs. These options will help in
maximizing consumer satisfaction to meet specific needs. For example, the need for hunger
can be satisfied using various options, such as chapati, rice, roll, puff, etc. It is important to
note that need is one, but wants are many.
Wants change in nature depending on time, place and people, thereby simulating tastes and
preferences. Marketers take advantage of wants and innovate new products and services for
their consumers. They try to satisfy their consumers better than their competitors. Consumer is
brand-conscious in case of want and takes time to decide color, quality, flavor and features of
the product. Figure 2 depicts various brands that humans need to satisfy their thirst:

Figure 2: Various brands satisfying human need of thirst

Desire: Desire is a feeling of ‘craving’ in the human appetite for a specific product or service.
In case of marketing, marketers arouse desire in their consumers through advertising and
showcasing their products attractively. If the potential buyer is not thinking about buying the
product, marketers use attractive advertisements as a tool for attracting their consumers.
Marketers use advertising campaigns that associate a celebrity or model to stimulate desires in
consumers for a product or service. For example, around Valentine’s day, advertisements
featuring beautiful actors promote heart-shaped chocolates and create a romantic desire in the
audience.

1.1.2 EXCHANGE AND TRANSACTIONS

Exchange and Transactions are explained below:

 Exchange: Exchange can be defined as a provision which includes transfer of goods,
 services or ideas in return for something valuable. Organizations involve in exchange
process with an objective of transfer of goods, services and ideas. There are certain
conditions for the exchange process which are as follows:
 There must be at least two or more individuals, groups or organisations who participate
in process.
 There should be a benefit or satisfaction derived by both the parties involved in this
process.
 There should be “something of value” to which each party must possess
 confidence.
 There should be trust between parties so that expectations can be met in the
 exchange.
 Transactions: Transactions can be defined as an agreement between two parties
involving an exchange of a good or service for some monetary value. The term
‘transaction’ refers to transferring the ownership of goods or services for money.
 For example, a retailer sells Amul toned milk packet to Mr. Rakesh for ` 50 and Mr.
Rakesh immediately pays ` 50 in cash for the product to the retailer.

1.2 WHAT IS MARKETING?

As per the traditional concept, marketing refers to the activities which are undertaken by an
organisation to promote buying and selling of a product or service. It includes developing
satisfying exchanges which result in the benefit of both the consumers and the marketers. Its
emphasis is on advertising, selling and delivering products to the consumers. Traditional
concept focusses on selling of the goods and services

which are already produced by the organisation. The marketing activities are concerned with
persuading the consumers and sale of goods and services with least attention towards consumer
satisfaction, product or services. It emphasizes on selling philosophy by creating a separate
department for maximizing the sales volume. It further states that while the other departments
of the organisation will concentrate on their activities, it will be the selling department that will
be responsible for the generation of sales volume for the organisation. Following are the
implications of traditional concept of marketing:
 Marketing focusses on persuading the consumer to buy the product.
 Marketing people concentrate on selling the product through means of personal selling
and promotional measures.
 Marketing aims at the maximization of profits through sales volume.
According to the modern concept of marketing, consumer wants and needs are the guiding
spirit for any organisation. It starts with identifying needs of consumers and then planning the
product or service in such a manner that it satisfies the consumer at the maximum level.
Consumer is the focal point of all marketing activities. It uses marketing research, market
targeting, product development, public relations and market communication to achieve its
objective of consumer satisfaction.
According to the American Marketing Association’s (AMA’s) Board of Directors, Marketing
is the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for consumers, clients, partners, and society at large.
The Chartered Institute of Marketing defines marketing as the management process responsible
for identifying, anticipating and satisfying consumer requirements profitably.
Marketing definitions provided by various authors are as follows:

According to Dr. Philip Kotler, marketing author and academic defines marketing as the
science and art of exploring, creating, and delivering value to satisfy the needs of a target
market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and
quantifies the size of the identified market and the profit potential. It pinpoints which segments
the organisation is capable of serving best and it designs and promotes the appropriate products
and services.
According to Jay Conrad Levinson, Marketing is any contact that your business has with
anyone who isn’t a part of your business. Marketing is also the truth made fascinating.
Marketing is the art of getting people to change their minds. Marketing is an opportunity for
you to earn profits with your business, a chance to cooperate with other businesses in your
community or your industry and a process of building lasting relationships.
According to Peter F. Drucker, the aim of marketing is to know and understand the consumer
so well that the product or service fits him and sells itself.
According to Kotler and Armstrong, Marketing is the social process by which individuals and
organizations obtain what they need and want through creating and exchanging value with
others.
Marketing managers are responsible for the following activities to create value consumers for
the organisation:
 Identifying consumer’s needs and wants
 Developing goods and services for the consumers
 Communicating information about those goods and services to the consumers
 Ensuring availability of products and services at the right time and the right place to the
consumers
 Providing after-sales services to the consumers


1.2.1 ORIGIN OF MARKETING

Exchange is the origin of marketing as it began with the exchange of goods and services
through the barter system. With the industrial revolution during the late 18th and early 19th
century, the business expanded and the need for an established marketing channel was felt to
make the production successful. The practice of marketing has been carried out for centuries,
but the modern concept of marketing is a professional practice which has emerged after the
industrial revolution.
Initially, it was a production-oriented concept that dominated business thoughts and guided
sellers. It was witnessed by the production era from the 1860s to the 1930s. It focused on
production, manufacturing and efficiency with the objective of attaining economies of scale
and economies of scope.
During the Great Depression till 1950s, it was the selling-oriented concept
characterized by aggressive selling to push sales that ruled the market.
Finally, it was the marketing concept that emerged in the 1950s, which focused on its
consumer’s needs and wants. It believed that marketing efforts should be integrated in tune
with the consumer needs. It started with analyzing consumer needs, doing marketing research
to design and produce goods and services that match with consumer expectations, and creating
relationships with consumers in the long term.
1.2.2 NATURE OF MARKETING

Nature of marketing can be discussed in the following points:

 Marketing is an economic activity: It is an economic activity which embraces all
activities involved in the exchange of goods, services and ideas. It ensures ownership
of product transfers from producers to the final users.
 Marketing is consumer-oriented: Marketing is consumer-oriented by nature. It starts
with the identification of consumers’ needs and ends with satisfying consumers in the
best possible manner.
 Marketing is an art and science: Marketing is an art as well as the science of selecting
the target market and delivering value to consumers. It ensures the availability of
products to the consumers at the right time and in the right place.
 Marketing is a managerial function: It is a managerial function which includes all
activities designed to maximize profit through ascertaining, creating, stimulating, and
satisfying needs of the ultimate consumers.
 Marketing is a social process: It is a social process through which individuals and
groups obtain what they need through the exchange of products and services.
 In the words of Cunningham (1981), societal marketing performs three essential
 functions:
 Knowing and understanding the consumer’s changing needs and wants
 Efficiently and effectively managing the supply and demand of products and services
 Efficient provision of distribution and payment processing systems.

1.2.3 SCOPE OF MARKETING

Generation of profitable sales volume through consumer satisfaction is the main objective of
marketing. Marketing is a global phenomenon today, and the scope of marketing is much more
than merely satisfying consumer needs.
Marketing spans across all the aspects of the organisation and across all consumer points
including the organization’s website, answering phone calls, marketing and PR campaigns. It
also pays attention to the sales across, how the sales representatives present themselves, the
way of implementing products and services, managing the consumers and handling consumer
feedback, etc.
In the present scenario, it contributes to the well-being of the society through all possible
activities it can perform. Scope of marketing covers different entities, such as goods, services,
experiences, events, persons, places, properties, organisations, information and ideas.

In the words of Philip Kotler, Marketing management is the analysis, planning, implementation
and control of programs designed to bring about the desired exchanges with target markets
for the purpose of achieving the organizational objectives. It depends on designing the
organisations offering in terms of the target market needs and desires and using
effective pricing, communication and distribution to inform, motivate and service the market.

In the words of William Pride and OC Ferrell, Marketing is the process of creating, distributing,
promoting, and pricing goods, services and ideas to facilitate satisfying exchange relationships
in a dynamic environment.
 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.
 Following are the important factors to be considered while designing the product:
 Product planning: It is an important part of marketing. Market research is done to know
the consumer needs and then the product is planned accordingly. Price of the product
is fixed keeping in mind the competitor’s price and other relevant factors.
 Product promotion: It is done to spread awareness about products among consumers.
Advertising is done through newspapers, magazines, social media and other platforms.
 Product pricing: It is done considering the consumer expectations and competition.
Many types of pricing strategies are adopted by marketers to devise the price of a
product.
 Production distribution channel: It includes channels of distribution including outlets
and other modes for distribution.
 Services: They constitute a major share of population involved in various sectors.
Service sector includes various sectors, like hotels, airlines, banking, courier, medical,
education, software programmers, consultants and many more. With the advancement
in economy, a country shifts from production of goods to orientation of services.
Marketing covers both the goods and the services sector. A restaurant can be considered
as an example of marketing services as it offers both goods and services.
 Events: Marketing covers events, like trade shows, organization’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.
 Experiences: Marketing involves creating experiences by providing a blend of goods
and services. For example, a car with Bluetooth technology ensures connectivity while
driving the car.
 Persons: Persons include celebrity marketing which is a result of testimonial
 advertising. TV artists, film stars, sportspersons and celebrities have their own PR
teams or a talent management organisation which is responsible for maintaining their
public image.
 Places: Marketing includes places, such as cities, states, regions and countries which
compete for attracting tourists. They also offer opportunities to organisations, real estate
agents, banks and business associations. They use events and exhibitions to promote
tourist spots on a local, national and global level.

 Property: Marketing enhances possession utility for real properties and financial
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.
 Organisations: Marketing enhances organization’s goodwill by building its corporate
image. It promotes trust and reliability in the minds of consumers which helps in smooth
introduction of new products and services offered by the organisation.
 Information: Marketing covers information aspect through educational institutions,
encyclopedias, non-fictional books, specialized magazines and newspapers market
information. Media revolution and rise in literacy level have also increased the scope
of marketing. Packaging of the product also spreads information about the product.
  1.2.4 CHARACTERISTICS OF MARKETING

Characteristics of marketing can be discussed as follows:

 Marketing is an exchange process: Marketing is an exchange process which involves

the exchange of goods, services and ideas using money as a medium of this exchange.
Its function of distribution, after-sales service and packaging facilitate the exchange
process. Its distribution channels also help in the exchange process through creating
place utility.
 Marketing is consumer-focused: Consumer is the focal point of all marketing activities.
Marketing makes attempts to satisfy its consumer needs to retain its market demand.
The process of marketing starts with identifying the needs of consumers and then
planning the product which satisfied those needs.
 Marketing is both an art and a science: Marketing is both an art as well as a science. As
an art, it uses specific skills that are required in the marketing activities of the
organisation. It is also a science as it is a systematic body of knowledge which is based
on facts and principles. Some operations of marketing are based on certain principles.
Therefore, it is correct to say marketing is a combination of science as well as an art.
 Marketing is a continuous activity: Marketing is a continuous process in the sense that
it continuously monitors the environment which helps in innovating new products. It is
a never-ending process that includes developing product, planning pricing strategies,
distribution strategies and promotional strategies. It addresses both the present and the
future consumers.
 Marketing is an integrated approach: Marketing is an integrated approach as it is a
coordination of several activities which are interrelated. Marketing activities should be
coordinated with other functions, such as production, finance, research and public
relations to achieve success. It implies mixing the ingredients of marketing to deliver
value to the consumers. It includes:
 Developing a product which satisfies needs and wants of consumers
 Taking promotional measures to give knowledge to the consumers about their products,
such as product features, product quality, product design, product availability, etc.
 Taking pricing decisions considering target consumers, their purchasing power and
willingness to pay.
 Taking distribution decisions involving channels of distribution.

1.2.5 PURPOSE OR OBJECTIVES OF MARKETING

The objective of marketing is to identify and cater to consumer so well that the product or
service fits him perfectly. Ideally, marketing should result in consumer satisfaction in the long-
term:
 Provide satisfaction to the consumers: It is the basic objective of marketing. The process
of marketing starts with identifying consumer needs and the ultimate goal of marketing
is to cater to these needs effectively.
 Provide quality products to its consumers: Marketing aims at upgrading knowledge and
technology to provide quality products to their consumers. It also helps in gaining a
competitive advantage in the market.
 Rise in demand of products: Marketing aims to create additional demand for its
 products through promotional efforts. Satisfied consumers help create more demand for
its products and services.
 Create goodwill for the organisation: Marketing aims at creating goodwill by building
a good public image of the organisation. It helps in retaining consumer loyalty for the
existing products and for accepting new products of the organisation.

1.3 MARKETING AND SELLING

Selling is considered to be a modern version of the barter system focusing on the sales of
products. Sales department is responsible for converting the product into cash through
aggressive sales methods of selling the product.
Selling emphasizes on the selling philosophy for creating a separate department for sales of
products. It stated that while the other departments of the organisation will concentrate on their
activities, it will be the selling department which will be responsible for generating sales
volume for the organisation.
In the words of Kotler and Armstrong, the orientation of the selling concept was that the
company can sell any product it produces with the use of marketing techniques, such as
advertising and personal selling. The concept assumes that “consumers are unlikely to buy the
product unless they are aggressively persuaded to do so – mostly that ‘hard sell’ approach.
Marketing is a much broader concept than selling as it involves meeting and satisfying
consumer needs through product planning, product pricing, product promotion and product
distribution. It starts with the identification of consumer needs and continues even after the sale
of products.
According to Peter Drucker, Marketing is not only much broader than selling; it is not a
specialized activity at all. It encompasses the entire business. It is the whole business seen from
the point of view of the final result, that is, from the consumer’s point of view. Concern and
responsibility for marketing must ‘therefore permeate’ all areas of the enterprise.
Both marketing and selling are important for generating revenue for the organisation. Neither
marketing nor selling can work in isolation. They both go hand in hand to achieve the
organizational objectives.

1.3.1 DIFFERENCE BETWEEN MARKETING AND SELLING

The terms ‘marketing ‘and ‘selling’ are sometimes used as synonymous, but, in reality,
marketing is much wider than selling.
Selling is an integral part of marketing, which focusses on increasing sales volume through the
promotion of goods and services. Marketing function involves identifying consumer needs and
responding through planned, personalized communication which influences purchase decisions
and enhances opportunities for the organisation.
Marketing is much broader than selling, as it focusses on consumer satisfaction and winning
consumer loyalty in the long run. Selling considers product as supreme and sales is the main
focus, whereas, in marketing, emphasis is on earning profits through consumer satisfaction.
The difference between marketing and selling can be summarized below-
DIFFERENCE BETWEEN MARKETING AND SELLING

Marketin Selling
g
Marketing begins with marketing research Selling begins after the production
to know consumer needs, wants and process has taken place and ends at the
preferences and continue even after the point of sale when exchange of goods
sales have taken place in the form of after- and services has taken place.
sales services.
Marketing focusses on earning profit Selling focusses on earing profits with
volume through consumer satisfaction in rising
the long term. It believes in creating, sales volume of goods and services.
maintaining and retaining consumers.
Marketing stresses on needs of a buyer. It Selling stresses on the needs of a seller.
considers consumer as king and develops It considers a seller as supreme and
products according to the needs of believes that supply creates its own
consumer. demand.
Marketing is a long-term perspective of Selling is a short-term perspective
winning consumer loyalty through through increasing sales volume.
maximum satisfaction.

1.4 KEY WORDS.

 Transaction: A transaction can be defined as an agreement between a buyer and a

 seller to exchange goods and services.
 Experience: An experience is created through a blend of goods and services.
 Promotion: It is an activity done by the marketer to persuade the consumer to buy the
product.

1.5 SUMMARY

Need is a state of feeling of deprivation and dissatisfaction about basic requirements, like food,
clothing and shelter. Wants are the options available to satisfy a given need. Desire is a feeling
of ‘craving’ in the human appetite for a specific product or service. Exchange is a provision
that includes transfer of goods, services or ideas in return for something of value. A transaction
can be defined as an agreement between the two parties involving an exchange of a good or a
service for some monetary value.
Marketing activity is as old as mankind. It is the most critical function in an organisation as it
is responsible for generating revenue, which is needed or survival and growth of the
organisation. It is the process of exchange which includes distributing, promoting, branding
and pricing activities with the purpose of satisfying consumers through products and services.
Marketing is an exchange process which involves exchange of goods, services and ideas using
money as a medium of this exchange. Its functions of distribution, after- sales service and
packaging facilitate the exchange process. Its distribution channels also help in the exchange
process through creating place utility.
Marketing is both an art and a science. As an art, it uses specific skills that are required in the
marketing activities of the organisation. It is also a science as it is a systematic body of
knowledge, which is based on facts and principles.
Selling is an integral part of marketing which involves identifying consumer needs and
responding through planned, personalized communication which influences purchase decisions
and enhances opportunities for the organisation.
Marketing is much broader than selling as it focuses on consumer satisfaction and winning
consumer loyalty in the long run. It involves meeting and satisfying consumer needs through
product planning, product pricing, product promotion and product distribution. It starts with
the identification of consumer needs and continues even after the sale of products.