Introduction to Marketing

What is Marketing?
 Social definition
A societal process by which individuals
and groups obtain what they need and want
through creating, offering and freely
exchanging products and services of value
with others
 What is Marketing?
 Management definition
It 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.
 Needs and Wants
 Needs are basic human requirements
 Wants are needs directed to specific
objects/services that might satisfy the need
 Product
 A product is any offering catered to satisfy
needs and wants.
 A brand is when the product is from a
known source.
 Demand
 This is the wants for specific products
backed by an ability to pay.
 Target Market
 Very rarely does a product cater to the
entire market. Most products are designed
to cater to a group of customers who
specifically want such a product. This group
of customers is the target market which is
a slice of the total market. We say it is the
market segment.
 Value and Satisfaction
 Value = Benefits/Costs
 Benefits = Functional Benefits + Emotional
benefits
 Costs = Monetary costs + Time + Energy +
Psychic costs
 Exchange
 Get something (product /service) by
offering something in return.
Eg. kind (barter) or money (value )
 Exchange is a value creating process
because it leaves both parties better off
(win – win situation)
 Transaction and Transfer
 A transaction is an exchange between two
things of value on agreed conditions and a
time and place of agreement.
 A transfer is a one way exchange without
receiving anything in return.
 Relationship Marketing
 Building long term mutually satisfying
relations with customers, suppliers,
distributors in order to retain their long term
preference and business
 Marketing Network
 A marketing network is the relationships
built with its stakeholders. Effective
relationships make up an effective and
strong network.
 Marketing Channels
 Marketing channels are used to reach the
target segment.
 Communication channels
eg. Advertising, telephone enquiry system
 Distribution channels – trade, direct sales
 Supply Chain
 The supply chain represents a value
delivery chain – from procurement of raw
materials to final delivery of product to
consumer.
 Competition
 Potential and rival substitutes and offerings
a buyer might consider.
 Competition can be viewed in various
perspectives – brand, industry, form,
generic
 Marketing Environment
 Competition  Product
 Customers  Import tariffs
 Govt. policies  Trends
 Suppliers  Technology
 Trade  Politics
 Marketing Mix
 It is the tools that an organization employs
to pursue its marketing objectives in the
target market
 Product, Price, Place, Promotion
 4 C’s – Customer solution, Cost,
Convenience, Communication
 Concepts under which firms
conduct marketing activities
 Production concept
 Product Concept
 Selling Concept
 Marketing Concept
 Societal marketing Concept
 Company Responses and
Adjustments
 Reengineering  Partner – supplies
 Outsourcing  Market centered
 E – Commerce  Global/local
 Bench marking  Decentralization
 Alliances
 Phillip Kotler
 Marketing guru
 Evolution of Marketing
 History
 ORIGIN
 Marketing is one of the oldest business activity

 The earliest civilization witnessed agriculture &

handcrafts as major economic activity.

 There was exchange of goods commonly known

as barter system. It was inherent limitation of
volume and quality of goods in the exchange
process.
 Cont..
 Barter system was replaced by money or currency
system.

 Industrial Revolution

 Subsequent development of Science & Technology

 All the above brought in a major change in business

process & slowly marketing activity became an integral
part of the entire business programme.
 EVOLUTION
 Acc.. To Peter Drucker marketing was first surfaced in Japan in
the 17th century by Mitsui family in Japan around 1650 when they
started a departmental store in Tokyo.

 The credit for thinking in terms of scientific methods or ways to

investigate the needs of consumers & accordingly plan all
activities was done by
C.H. Mc Cormick in 1850.

 Mc Cormick’s invention of mechanical harvester and his ideas

about marketing as a central function in business was put into
practice by international harvesting companies in the 1850’s.
 Cont..
 The commercial research, as it was known at that time,
was first adopted by Curtis Publishing Company in 1911.

 They were taking up investigations in the market which

will fetch market information so that they can make their
sales more effective and remunerative.

 Various marketing functions like market research,

advertising customer’s service, distribution logistics,
transportation & packaging became more & more
prominent features after world war II.
 Cont..
 The term marketing first appeared in college education in
the early 1900’s.

 In 1905, “The marketing of products” was taught at the

University of Pennsylvania &

 In 1910, “marketing methods” was taught at the University

of Wisconsin.

 Marketing as a subject became popular only after World

War-II.
 Cont..
 In India marketing was regularly taught at business
management classes since 1970’s. And its one of the
popular professional course.

 Marketing research departments were established at US

Rubber in 1916 & Swift and Company in 1917.

 It was only in 1960’s & 1970’s, that service oriented

products like Airlines & Banks started using marketing.

 Initially, marketing was accepted in the consumer goods

sector & it spread & grew very fast in packaged goods
company & then to consumer durable firms.
 Cont..
 A few companies like GE, P&G (fmcc goods), GM
& Sears(largest retail shop in US) saw the potential
of marketing and were the first few companies who
started practicing marketing management.

 Gradually, marketing spread to industrial products

& equipment sector. Like Steel, Fertilizer, Oil,
Petrochemicals, Plastics, Paper, Cement, Chemical,
Synthetic products came much later into the
marketing area & still a long way to go & mature
into an activity or management function.
 Cont..
 Marketing has now entered into other service sectors
like insurance, tours & travel, hospital & health care.

 Marketing has now entered into Non-Govt

organizations & Non-profit organizations like schools,
colleges & universities.

 Police dept, political organizations, municipal and civic

bodies, housing and real estate museum, sports & sport
organizations.

 Non-profit organization use celebrities and

advertisements.
 Mass Niche Single
PERSPECTIVE Market Market
Customer

Product Market Customer

ORIENTATION Orientation Orientation Orientation

Product Market Customer

ORGANIZATION Organization Organization Organization

Jagdish N. Seth, Rajendra S. Sisodia and Arun Sharma, The Antecedents and Consequences of Customer-Centric
Marketing, Journal of the Academy of Marketing Science, Volume 28, No. 1, Winter 2000, pp. 55-66.
 Four Ages of Development
INFORMATION
ERA

INDUSTRIAL
AGE
LIVING STANDARD

AGRICULTURAL
AGE

NOMADIC
STAGE

40,000 BC 5,000 BC 1890 1980

TIME (Not to Scale)

Marketing in Different Ages
MARKET
EFFICIENCY

RELATIONSHIP
ORIENTTATION

PRE- INDUSTRIAL POST

INDUSTRIAL DAYS INDUSTRIAL
DAYS DAYS
 Various Marketing Orientations
The marketing function or activities are conducted by various
companies based on six alternative concepts or orientations.

1. The Production concept

2. The Product concept
3. The Selling concept
4. The Marketing concept
5. The Customer concept
6. The Social Marketing concept
 THE PRODUCTION CONCEPT
 The salient features of production concept are…
1. This concept is based on the belief that consumer’s needs
can be satisfied with reasonable quality and reasonably
priced product.

2. There is fair amount of competition and competing

products are sold with complete knowledge of the products
available in the market.

3. The manufacturer should maintain availability of

sufficient quantity of products and consistency in quality.
 THE PRODUCT CONCEPT
 The Product concept is primarily based on following premises

1. Consumers generally look & prefer quality of the product

2. Consumers compare quality of products to competing product or
brand quality
3. Consumers generally buy products to meet their overall needs
and not specific needs
4. Consumers are aware of the product quality differences b/w
competing brands & they choose the quality which comes closest
to their preference and their affordable price
5. Consumers’ rating of manufacturers is based on their quality
products and reliability and brand loyalty is also based on quality
perception
 THE SELLING CONCEPT
 The Selling concept is primarily based on following premises
1. Consumers generally do not waste money in buying things which
are not essential or buying excess quantities than required.

2. Consumers prefer to be motivated to buy things by use of setting

efforts by organizations.

3. Consumers appreciate good selling techniques, efforts and criteria

and good salesmanship is always useful.

4. Consumer rating of organization and retail outlets are high where

there is an organized and effective selling effort is made.
 THE MARKETING CONCEPT

The main promises on which the marketing concept

is based are:
1. The customers’ needs are varied & many & they
must be understood & suitable products &
services offered to match there requirement
2. The market consists of different segments & there
segments can be grouped according to the
customers’ characteristics.
 Cont..
1. The consumer in any market look for products &
services which carry attributes of features & there are
perceived closest to solving their needs & wants and
consumers’ preference will be for such products &
services.
2. The consumers in any market may not buy a product if
they feel that it will not serve the purpose of solving their
needs and wants.
3. The success of marketing concept lies in proper analysis
of market research, segmenting the market & offering
products specific to the segments, along with proper
marketing programmes.
 THE CUSTOMER CONCEPT
1. The firm should produce only that product as desired by the
consumer.
2. The management is to integrate all its activities in order to develop
programmes to satisfy the consumer wants.
3. The management is to be guided by ‘long-range profit goals’ rather
than ‘quick sales’.
This means a radical change in the philosophy. It means two basic
changes namely
a) Move from production to market orientation.
b) Gradual shift from age old “Caveat emptor” to “Caveat Vendor”.
Since 1950, this philosophy is in vogue and will continue so long as
consumer is the king of the market.
 THE SOCIETAL MARKETING CONCEPT
SOCIETY
SOCIETY

( Human welfare, environment)

Societal

marketing

Concept

CONSUMER COMPANY

(Needs, wants, satisfaction) (Sales volume, profits, growth)

 Societal Marketing Concept
 The assumptions of social orientation philosophy
1. The firm is to produce only those products as are wanted by
the customers.

2. The firm is to be guided by long-term profit goals rather than

quick sales.

3. The firm should discharge its social responsibilities.

4. The management is to integrate the firm’s resources and

activities to develop programme to meet these individual
consumer and social needs.
 Marketing Vs. Selling Concept
1. Focusses on Customers needs 1. Focusses on Sellers needs
2. Begins before production 2. Begins after Production
3. Continues after Sale 3. Comes to an end with sale
4. A Comprehensive Term in terms of 4. A Narrow Term in terms of
Meaning Meaning
5. Philosophy of Business 5. Routine day to day Physical Process
6. Profits through Customer 6. Profits through Sales Volume
Satisfaction
7. Let the Seller be aware 7. Let the Buyer be aware
8. Integrated Approach 8. Fragmented Approach
9. Long-term Perspective 9. Short-term Perspective
10. Customer first then Product 10. Product first then Customer
 Customer needs

 Stated needs
 Real needs
 Unstated needs
 Delight needs
 Secret Needs
 Customer needs
 Need a mere wish, a desire that are physiological,
security, esteem and actualization.

 Physiological needs- Basic needs like food, shelter, clothing,

security needs arise as man’s life is subjected to all sorts of insecurities both
natural and artificial.

 Esteem needs- are the result of competition and jealous.

 Self Actualization needs- those needs that bring him

unusual, unique status which is possible for very few people.
 Customer wants
 Want is something wanting a deficiency.
 Wants are needs directed to specific
objects/services that might satisfy the need
 A want in marketing terminology means
need plus ability to pay.
 Want is a selected need in which he is really
interested.
 Customer demands
 When needs arise, wants crop up, there
comes demand.
 Demand is a situation where the person is
willing to buy a product and has the ability
to pay for it.
 Demand is a clear cut commitment.