Unit 1: Introduction to marketing

Definition of marketing, Marketing management, Nature, Scope, Importance , Evolution

of marketing, Core marketing concepts, Functions of marketing, Analysing Micro and
macro marketing environmental factors, Introduction to 7Ps, Need for marketing in the
21st century.

Marketing:
Marketing management is the process of planning, executing, and tracking the marketing
strategy of an organization. This includes the marketing plan, campaigns and tactics used to
create and meet the demand of target customers to drive profitability.

Definition:

In 2012, Dr Philip Kotler defined marketing as “The science and art of exploring, creating,
and delivering value to satisfy the needs of a target market at a profit”.

Marketing management:

The marketing management process is used to streamline the job of a marketer and help them
reach their customer base to respond quickly and accurately to their target customers’ demands.
To ensure you’re making the right decisions, market research is necessary to understand the
marketplace and determine what needs are not being met, or how to exploit opportunities that
are currently not being served. Market research includes competitive research, key
demographics, pricing and the best promotions for attracting customers.

Nature of Marketing:

1. Customer Focus

Marketing is a customer-centric function of the business. It aims at finding out what customers
want and fulfilling their needs by delivering them the right products.

2. Creates Market Offering

Marketing provides offers of various goods and services to the potential customers. It is the
one activity that communicates all information regarding products like its prices, uses, quality,
and technology to customers.
 3. Exchange Oriented

It is a process which aims at exchanging products among buyer and seller. Marketing attracts
and influences people to buy the products of the company.

4. Continuous Activity

Marketing is a regular and continuous activity of business for selling their products. Businesses
always need to monitor the marketing environment and should accordingly plan, implement,
and control all marketing programs.

5. Goal-Oriented

Marketing is a goal-oriented business activity that is oriented towards enhancing profitability.

It focuses on approaching more and more customers and thereby satisfying their needs by
delivering them the required goods or services.

6. Manages 4 P’s

It is a combination of four elements that are product, place, price, and promotion. The whole
marketing system is made up of these variable factors which are influenced by customer
behaviour, competition, trade factors, etc.

7. Creates Utilities

Marketing creates various utilities such as form utility, time utility, and place utility. It creates
form utility by manufacturing the right product using inputs, time utility by storing goods in
warehouses, and place utility by delivering goods properly to end customers.

8. Economic Process

It is a process that involves exchanges of goods in monetary terms. Marketing is one by means
of which monetary transactions as per the exchange value of goods take place for transferring
goods among buyers and sellers.

Scope of marketing (Functions):

1. Create Awareness

Informing customers about the company’s products is a must for attracting them to buy
products. Marketing is the medium through which companies communicate with the public and
explain the features or benefits of their products. Marketing helps in creating wide publicity of
goods and services in the market.

2. Studies Customer’s Wants

Marketing helps in understanding the needs or wants of customers which enables them to
provide satisfactory services. Business through their marketing programs interacts with
customers and understands their behaviours. Proper understanding of customers’ demands
helps in designing the right product which satisfies their needs.

3. Product Planning

A product refers to a bundle of benefits that offers satisfaction to the consumers. Product
planning starts with the generation of the idea and continues until the product is ready to be
launched in the market. To create a successful product the company must understand the needs
of the consumer and the currently available competition in the market.

4. Advertising

Advertising is the best tool for marketing. It makes the consumers aware of the product that is
going to hit the market. Through marketing, big companies are able to condition our
subconscious mind about the goodness of the product. The advertisement also helps to increase
the sale drastically and ultimately the profits. Advertising can be done through various media
sources such as newspapers, television, magazines, hoardings, the internet, etc.

5. Pricing Policies

Determination of the pricing policies of the product is crucial because good pricing policies
will definitely help in attracting more consumers. generally, consumers are highly-priced
elastic which means lower the price, higher will be the demand and higher the price, lower will
be the demand. Cost of manufacturing the product, government policies, marketing,
competitors price, etc. are the factors that influence the price of the product.

6. Distribution

The selection of the proper distribution channel is very necessary for the product to attract new
consumers towards it. Selecting a distribution channel means defining the route of the goods
they will take while reaching from the producer to the ultimate consumer. Wholesaling and
retailing are the two most popular distribution channels.
 7. Selling

It refers to the process of selling what is manufactured by the company as a product in the
market. selling refers to the supply of goods and services directly or indirectly to the targeted
consumers. Selling involves performing and managing various activities simultaneously such
as approaching to the new consumers, distributing the free samples, making sales on a huge
discount, and getting feedback.

8. Packaging

The packaging is essential for delivering the product safely and secure a good image in the
consumer’s mind. It also helps in the goodwill formulation. Packaging involves designing and
producing the external covering for the product which will keep the product safe and hygienic.
packaging is inclusive of the product information which adds to the appeal of the product which
ultimately helps in the sales promotion.

9. After-Sales Services

The term marketing includes after-sale services to be provided by the business to its customers.
Resolving issues of the customer’s and problems in case of any product failure will help in
developing better relations with customers.

10. Collects The Feedback

It involves collecting the feedback or suggestions of customers once the product is sold.
Through this, satisfaction or dissatisfaction level of customers can be easily identified which
helps in improving the service quality using suggestions provided by them.

Importance of marketing:

1. Marketing generates revenue for business.

2. Marketing considerations are the most critical factors in business planning and decision
making.
3. Efficient marketing is a pre-requisite for the successful operation of a business
enterprise.
4. Marketing generates employment.
5. Marketing makes available new variety of useful and quality goods to consumers.
6. Marketing converts latent demand of the consumers into effective demand and thus
enables to raise the standard of living.
7. Marketing is helpful in stabilizing prices and optimum utilisation of resources.
8. Marketing raises the level of economic activity. There is a positive relation between
marketing activity and economic activity of a country—economic booms and depressions
are always marked by higher and lower tempo of marketing activities. Thus, a high level
of marketing activity is a pre-requisite for a higher level of economic activity.

Core marketing concepts:

1. Needs

Needs are the basic requirements which human beings require for existence. These mainly
consist of air, water, food, clothing and shelter. Along with these needs, some other needs
which are required to be satisfied are education, medical care, entertainment, and recreation. It
is a difficult task for a marketer to identify the needs of the customers since costumers may not
be conscious of their needs, and even if they are, then they might be unable to put forth their
needs clearly. The notion that marketer creates needs is wrong. The need actually pre-exists in
the market; the marketer just has to identify these needs, make the customers aware of these
needs, and make the customers believe that only their company can satisfy these needs.

2. Wants

The wants are a step ahead of needs and are largely dependent on the human needs. A need
becomes a want when a need is directed to a specified object. Wants are designed according to
the taste and preferences of the society. Needs already exists in the market; however, wants
may be created by the marketers. It can also be said that Need and Want are relative terms
because a product may be considered to be a need by someone but it may also be perceived as
a want by others. E.g., To have a food is a basic need of human beings but to have biscuits for
food is a want created by the marketers.

3. Demand

A demand is generated when a customer is willing to buy a particular product and has an ability
to pay for it. A company should study not only how many people want their product but also
how many would actually afford to buy the product. E.g. Many people would be desirous to
buy Ferrari car; however, there is only a small segment which can afford to buy it which reflects
the demand for Ferrari car in the market.

Demand = Willingness to pay + Ability to pay

 4. Customer Value

Value reflects the sum of the perceived tangible and intangible benefits and costs to customers.
Here the costs include both economic and non-economic costs whereas benefits include both
tangible as well as intangible ones. A product or services is successful when it delivers value
and satisfaction to the buyers. Value is usually a combination of quality, service, and price.
Value increases with quality and service and decreased with price. A value is a relative term as
perceived benefit for one person may not be a benefit for others. Value changes based on time,
place, and people in relation to changing environmental factors. It is a creative energy exchange
between people and organizations in our marketplace. Companies try to figure out the list of
add-on benefits that they can provide based on the taste and preferences of the customers. A
high value product not only helps the company to generate new customers but also helps to
retain the older ones. Eg. Online parcel tracking facility provided by the courier companies
without any additional cost can be one of the best examples of customer value.

5. Exchange

It is act of obtaining an object which one needs from another by offering some other thing in
return. Marketing occurs when individuals decide to satisfy needs and wants through exchange.
Marketing helps to create a business environment where exchange of value can take place.

6. Customer and Consumer

Customers and consumers are used interchangeably to define the same individual but there is
a difference. The path of the product, after it is purchased, differentiates the customer from a
consumer. If an individual purchases an item for his own use, then that individual is a
consumer; however, if the individual buys the product as a gift or purchases it for someone else
for any reason then the person purchasing that product is the customer and the person who will
use the product or benefit from its purchase is the actual consumer. The customer can be a
consumer but a consumer may or may not be a customer. E.g. If a person buys a bike for himself
then he is the customer as well as consumer of that bike but if a father purchases a bike for his
son, then the father will be customer and the son the consumer.

7. Customer Satisfaction

Satisfaction reflects a person’s judgment of product’s perceived performance in relationship to

expectations. Customer satisfaction with a purchase depends on how well the product’s
performance lives up to the customer’s expectations.
 a) If the performance falls short of expectations, the customer is dissatisfied.
b) If it matches expectations, then the customer is satisfied.
c) If it exceeds the expectations, then the customer is delighted.

8. Customer Delight
Customer delight can be defined as the effect of delivering a product or service that surpasses
customer expectations in a favourable experience.

Performance > Expectations → Delighted Customer

In most cases delighted customers tend to come back again because of the great services they
have received from the company. Customer Delight directly affects sales and profitability of a
company as it distinguishes the company and its products and services from the competition.

9. Customer Loyalty

Loyalty can be defined as a customer’s strong continuing belief that a particular organization’s
products/services offer remains their best option. Customers are said to be loyal when they
consistently purchase a certain product or brand over an extended period of time.

Loyalty also means customers hanging in there, even when there may be a problem with the
company’s products or services, just because the organization was good to them in the past and
had addressed their issues whenever they arise. It means that customers do not seek out
competitors and, even when approached by competitors do not show any interest in them.

10. Market

Market is a collection of buyers and sellers. A market, colloquially, is a group of people who
are willing to buy something. It is a public gathering held for buying and selling merchandise.
It is a place where goods are offered for sale. It is a set of individuals or institutions that have
similar needs and that can be met by a particular product. Therefore, a market is the set of all
actual and potential buyers of a market offer. A market is any space within which trade takes
place between buyers and sellers for a well-defined product.

Micro marketing environmental factors:

1. Suppliers

Suppliers can control the success of the business when they hold power. The supplier holds
the power when they are the only or the largest supplier of their goods; the buyer is not vital to
the supplier’s business; the supplier’s product is a core part of the buyer’s finished product
and/or business.

2. Resellers

If the product the organisation produces is taken to market by 3rd party resellers or market
intermediaries such as retailers, wholesalers, etc. then the marketing success is impacted by
those 3rd party resellers. For example, if a retail seller is a reputable name then this reputation
can be leveraged in the marketing of the product.

3. Customers

Who the customers are (B2B or B2C, local or international, etc.) and their reasons for buying
the product will play a large role in how you approach the marketing of your products and
services to them.

4. The competition

Those who sell the same or similar products and services as your organisation is your market
competition, and the way they sell needs to be taken into account. How do their prices and
product differentiation impact you? How can you leverage this to reap better results and get
ahead of them?

Macro Environment Factors

1. Demographic forces

Different market segments are typically impacted by common demographic forces, including
country/region; age; ethnicity; education level; household lifestyle; cultural characteristics and
movements.

2. Economic factors

The economic environment can impact both the organisation’s production and the consumer’s
decision-making process.

3. Natural/physical forces

The Earth’s renewal of its natural resources such as forests, agricultural products, marine
products, etc must be taken into account. There are also natural non-renewable resources such
as oil, coal, minerals, etc that may also impact the organisation’s production.
 4. Technological factors

The skills and knowledge applied to the production, and the technology and materials needed
for the production of products and services can also impact the smooth running of the business
and must be considered.

5. Political and legal forces

Sound marketing decisions should always take into account political and/or legal developments
relating to the organisation and its markets.

6. Social and cultural forces

The impact the products and services your organisations bring to market have on society must
be considered. Any elements of the production process or any products/services that are
harmful to society should be eliminated to show your organisation is taking social
responsibility. A recent example of this is the environment and how many sectors are being
forced to review their products and services in order to become more environmentally friendly.

7Ps of marketing

1. Product

This refers to what the company produces (whether it is product or service, or a combination
of both) and is developed to meet the core need of the customer – for example, the need for
transport is met with a car. The challenge is to create the right ‘bundle of benefits’ that meet
this need.

2. Price

This is the only revenue-generating element of the mix – all other marketing activities represent
a cost. So, it’s important to get the price right to not only cover costs but generate profit.

3. Place

This is the ‘place’ where customers make a purchase. This might be in a physical store, through
an app or via a website. Some organisations have the physical space, or online presence to take
their product/service straight to the customer, whereas others have to work with intermediaries
or ‘middlemen’ with the locations, storage and/or sales expertise to help with this distribution.
 4. Promotion

Promotion in our marketing mix is about communicating messages to customers, whichever

stage they are in the buyer journey, to generate awareness, interest, desire or action. We have
different tools for communication with varying benefits. Advertising is good for raising
awareness and reaching new audiences, whereas personal selling using a sales team is great for
building relationships with customers and closing a sale.

5. People

A company’s people are at the forefront when interacting with customers, taking and
processing their enquiries, orders and complaints in person, through online chat, on social
media, or via the call centre.

6. Process

All companies want to create a smooth, efficient and customer-friendly journey – and this can’t
be achieved without the right processes behind the scenes to make that happen. Understanding
the steps of the customer journey – from making an enquiry online to requesting information
and making a purchase – helps us to consider what processes need to be in place to ensure the
customer has a positive experience.

7. Physical Evidence/ Packaging

Physical evidence provides tangible cues of the quality of experience that a company is
offering. It can be particularly useful when a customer has not bought from the organisation
before and needs some reassurance, or is expected to pay for a service before it is delivered.

Need for marketing in the 21st century

The 21st century has seen the emergence of a new economy thanks to technological innovation
and development. To understand the new economy, it is important to have a brief understanding
of the characteristics and features of the old economy. The Industrial Revolution was the
starting point of the old economy, which focused on the production of large quantities of
standardized products. This mass-produced product was important for cost savings and
satisfaction on a large consumer basis as companies expanded into new markets in the
geographic area as production increased. The old economy had an organizational hierarchy in
which top management gave instructions for middle management through workers.
In contrast, thanks to the digital revolution, the new economy has always been a purchasing
power. Consumers have access to all kinds of information about products and services. In
addition, standardization has been replaced by greater customization with a dramatic increase
in product offerings. With the introduction of online shopping, the purchasing experience has
changed. Online shopping can be done 24 hours a day, 7 days a week by delivering products
to your office or home. 4,444 companies are also using the information available to develop
more effective consumer and channel marketing programs. The digital revolution has increased
the speed of communication via mobile phones, email, SMS and more. This allows enterprises
to make faster decisions and implement strategies faster. The digital revolution and the 21st
century have led companies to optimize their business processes. The main trend is the need to
streamline processes and systems with a focus on cost savings through outsourcing. Another
trend seen in businesses is the promotion of an entrepreneurial work environment with a global
(global local) approach. At the same time, corporate marketers look forward to building long-
term relationships with consumers. This relationship allows the platform to understand
consumer needs and preferences. Marketers see sales channels as business partners, not
customers. Companies and marketers use a variety of computer simulation models to make
decisions.