Introduction To Marketing

Prof. Yogesh Funde

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 Session 1 :
Fundamentals of Marketing

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 Session Objectives:-
• Introduction to marketing
• Core marketing concepts
• Orientation of firm towards marketing.
• Marketing Myopia
• Selling v/s Marketing
• Relevance of Marketing in India

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 Mother tongue
• You do not have to learn it
• You learn it automatically because…
• You grow in its surrounding right from your birth
• Similarly you grow in the surrounding of
Marketing “as a customer” right from your
childhood
• You have therefore already learnt Marketing…
and you are expert in marketing**

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 Marketing plan
• Assume yourself a Marketing Manager
• Your company is planning to manufacture a
bathing soap
• Make a program for selling that soap for the next
one year (Think of the factors that make you buy
the soap that you use)
• Time 20 minutes
• Randomly chosen 5 students to present their
plans**
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Product Price Promotion Place**

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 Marketing mix
• Product (kites)
• Price
• Promotion
• Place
• 4 P’s of marketing – Marketing mix**

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 Cause effect relationship
• Cause / Trigger – Marketing
• Effect – Sales (Top line in the profit and loss
account)
• Sales therefore is a barometer of marketing
• Consistent higher sales means marketing was
good and vice versa**

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 Effect of sales on profits
• Sales Rs 800 Cr • Sales Rs 750 Cr (discounts)
• Cost of goods sold Rs 550 • CGS 550 Cr
Cr • Overheads 120 Cr
• Overheads Rs 120 Cr • Profit Rs 80 Cr
• Profit Rs 130 Cr • Reduction in sales 6.25%
• Reduction in Profit
38.46%

A mere 6.25% drop in sales results in massive 38.46% drop in profits !!!

Imagine your this month’s salary will be 40% lower!! Profit is organization’s
salary.** 9 of 30
 DNA 3/9/08
• Shoe tycoon Thomas J Bata dies
• Age 94
• He introduced himself in his business card as
“Chief Salesman”
• No wheel moves unless a sale is made
• Salespeople are the bread earners for the
organization
• Assist salespeople in selling**
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 Definition of Marketing
“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 goals.”
---American Marketing Association

“Marketing is a societal process by which individuals and

groups obtain what they need and want through creating,
offering and freely exchanging products of services and of
value with others.”
---Philip Kotler
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 Core Marketing Concepts
Needs, wants & demands
• Needs are basic human requirements. We need food, air,
water, clothing and shelter to survive. People also have strong
need for recreation, education and entertainment.

• Wants are needs directed towards specific objects- e.g. A

South Indian needs food but wants Idlis, Dosas & Sambar. A
North Indian needs food but wants Rotis, Sabjis etc.

• Demands are wants for specific products backed by an ability

to pay. Many may want to own Mercedes; only a few are able
and willing to pay for Mercedes.
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 Core Marketing Concepts…
Market:-
Traditionally, a market was a physical place where buyers and sellers gathered to
buy and sell goods.
Economists now describe a market as a collection of buyers and sellers who
transact over a particular product or product class (the housing market or grain
market); but marketers view the sellers as constituting the industry and the buyers
as a constituting the market.
The term market can also be used to cover various groupings of customers such as
need market (the diet seeking market), product market (The shoe market),
demographic market (The youth market), and geographic market (The Asian
market) or the concept may also be extended to cover other markets such as
money market, forward market etc.
Depending on the focus of marketer we can classify the markets as consumer
markets, e.g. (FMCG markets), Industrial markets i.e. business buyers buying
goods in order to make or resell a product to others for profits, non-profit market
(organizations like Churches, Non government Organizations involved in social
causes etc.) or global (International) market.
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 Core Marketing Concepts…
Target markets and Segmentation:--
Market consists of heterogeneous buyers who might
prefer or require different product and services.

Marketer identifies and profile distinct groups of

buyers requiring varying products and services.

 The marketer then decides which segments present

the greatest opportunity, which are its target markets.

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 Core Marketing Concepts…
• Value and satisfaction:-
• Value can be defined as a ratio between what
customer gets and what he gives. The customer gets
benefits and assumes cost.
• The benefits include functional benefits and emotional
benefits.
• The costs include monetary costs, time costs and
psychic costs.
• Value can be seen primarily a combination of quality,
services & price (QSP), called customer value tried.
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 Core Marketing Concepts…
• Exchange and Transaction:
Exchange is the process of obtaining something from
someone by offering something in return. For exchange
five conditions must be satisfied:
– There are at least two parties.
– Each party has something that offers value to the other party.
– Each party is capable of communication and delivery.
– Each party is free to accept or reject the exchange offer.
– Each party believes it is appropriate to deal with the other
party.

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 Core Marketing Concepts…
Marketing Channels:-
Marketer uses three kinds of channels to reach to target market.

Communication channels deliver and receive messages from target buyers, and
include newspapers, radio, television, mail, telephone, posters, fliers, CDs,
audiotapes and internet.

The marketer uses distribution channel to display, sell or deliver the physical
product or services to the user. They include distributor, wholesalers, retailers
and agents.

The marketer also uses service channels to carry out transactions with
potential buyers. Service channels include warehouses, transportation
companies, banks and insurance companies that facilitate transaction.
Marketer must design the best mix of communication, distribution and service
channels for those offerings.
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 Firm’s orientation to the market.

• Production Concept
• Product concept
• Selling Concept
• Marketing Concept
• Societal Concept

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 The production concept
• The production concept holds that consumers
will prefer products that are widely available
and in-expensive.
• Thus the major thirst is on achieving high
production efficiency, low costs and mass
distributions.
• The production concept assumes that
consumers are primarily interested in availability
of product and low prices will attract consumers.

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 PRODUCTIO
N CONCEPT

Profits by Low Inward

prices, High looking
sales volume orientation

Achieve Focus on
Economies reducing cost
of scale of production
 The product concept
• The product concept proposes that the
consumers favor those products that offer the
most quality, performance and innovative
features.
• The product-oriented organization
concentrates on continuous improvement of
product and emphasis on quality assurance.
They spend heavily on research and
development.
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PRODUCT CONCEPT
Focus on
continuous MARKETING
product MYOPIA
improvement

Product merely
Keep track of
means of
peripheral
satisfying
developments
customer need
 The selling concept
• The selling concept holds that consumers
typically show buying inertia and hence
company has to aggressively promote and
push its products.
• Company practicing selling concept involve in
heavy advertising, high-power personal
selling, large scale sales promotion, heavy-
price discounts and strong publicity, and
public relations
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 SELLING
CONCEPT

Marketing
makes selling
redundant

Aggressive
Sell what is persuasion and
made heavy promotional
expenditure
 Marketing Myopia
• Prof. Theodore Levitt coined the term “Marketing Myopia” to
describe excessive obsession with the product, production or selling
and losing the sight of customer in the process.
• He describes this preoccupation as: “They don’t get as excited about
their customers in their own backyard as about the oil in distant
Sahara.”
• The production concept may lead to compromise in quality for the
obsession of low pricing and also understanding what customer
values.
• The product concept is blinded by love for the product and does not
understand that customers buy solution to their problems and not
product.
• The selling concept is obsessed with disposition of goods without
understanding needs and wants of customers.
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 Marketing concept
The marketing concept rests on four pillars:
• target market
• customer needs,
• integrated marketing, and
• profitability.
• The marketing concept starts with the well defined
market, focuses on customer needs, co-ordinate all the
activities that will affect the customers and produces
profits by satisfying customers.
• Thus, Marketing has customer at both the ends
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 MARKETIN
G
CONCEPT Meet customer
needs better
than
competition

Communicate Marketing
customer should
needs to other champion cause
departments of customer

Customer
Every
satisfaction
employee is a
company’s
ultimate goal marketer
Customer
needs central
to company
 The difference between selling and marketing:
Selling Marketing

i. Selling starts with the factory or production i.e. existing 1. Marketing starts with the identification of target markets, its needs
products. and wants.
i. Selling focuses on the product. 2. Marketing focuses on customer needs and wants.

i. Selling emphasizes on disposition of available products. 3. Marketing emphasizes on identification of a market opportunity.

i. Seeks to convert product into cash. 4. Seeks to convert customer ‘need’ into ‘product’.

i. Profits are generated through sales volumes. 5. Profits are generated through customer satisfaction and long term
relationships.
i. The firm makes the product first and then figure out how to sell 6 .The firm identifies customer needs and design products
it. accordingly.
i. View business as a ‘goods producing processes. 7 .Views businesses as ‘customer satisfying process’.

i. Seller’s preferences dominate the formation of marketing mix. 8. Buyers determine the marketing mix.

i. Cost determine price. 9. Consumer determine price, price determine cost.

i. Emphasis on staying with the existing technology and reducing 10. Emphasis on innovation, use of better technology, providing
costs. better value to the customer.
i. Transportation, storage and other distribution functions are 11. They are seen as vital services to be provided to the customer
considered as more extensions of the production function. leading to customer convenience.
i. Emphasis on ‘Somehow selling’ and other functions revolves 12. Emphasis on an integrated marketing with product, pricing,
around selling functions. promotion and distribution assuming equal importance.
i. Selling view customer as a last link in the business. 13. Marketing view customer as the very purpose of the business and
sees the business from the perspective of the customer. 28
 Societal Marketing
• The societal marketing concept also called cause-related marketing

• It holds that the organizational task is to determine the needs, wants and
interests of target markets and to deliver the desired satisfaction more
effectively and efficiently than competitors in a way that preserves or enhances
the consumers and the society’s well being.

• Thus, societal marketing requires marketer to build social and ethical

considerations into their marketing practices.

• The marketer must balance often conflicting issues of company profits,

consumer want satisfaction, and public interest.

• Thus the organization following SMC reflect the image of good corporate citizens
and shows concern for long-term consumer interest, social well-being and due
respect for ecology and environment while achieving corporate objectives.
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 Marketing Management
• Marketing management is…
• an art and science…
• of choosing target markets (customers)…
• and getting, keeping, and growing customers..
• through creating, delivering, and
communicating…
• superior customer value (benefit-cost)**

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 Reasons for growing importance of
Marketing
• Fast changing social behavior
• Mass communication and transport facilities
• Increased education facilities and literacy level
• Rise in standard of living
• Increased competition
• Technology driven products creating demand
• Increased international cooperation**

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