0% found this document useful (0 votes)
28 views34 pagesMarketing Management Unit-1 TP
Book mm
Uploaded by
shriramjanki0Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
0% found this document useful (0 votes)
28 views34 pagesMarketing Management Unit-1 TP
Book mm
Uploaded by
shriramjanki0Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
/ 34
Introduction to Marketing (Unit 1)
UNIT 1
Introduction to Marketing
EE
Learning Objectives
This unit gives an overview to marketing management. After studying this unit one
would be able to:
+ Understand the basic concepts and role of marketing and its management.
* Describe the core concepts of marketing,
* Understand the value delivery process
* Understand consumer buying behaviour.
1.1.1. Introduction
In a narrow view, marketing is an activity of selling
and purchasing of goods or services. But, the nature
and scope of marketing is a much wider perspective.
Along with the fulfilment of needs and wants related
to the sale and purchase of goods and services, it
encompasses the entire process of customer.
satisfaction. Hence, the process involves
identification of consumers’ néeds and wants and
fulfilling it to the extent till the customers are pleased
and contented,
With the changing marketing environment, the taste
and preferences of the customers are also changing.
Therefore, marketing also considers the changing
requirements of the consumers apart from providing
them with basic products or services. In totality,
marketing comprises of all activities like producing,
interacting, distributing and_—_ exchanging
roducts/services which offer value to the customers.
According to William J. Stanton, “Marketing is a
total system of interacting business activities
designed to plan, price, promote and distribute want-
satisfying products and services to the present and
potential customers”.
According to Cundiff and Still, “Marketing is the
business process by which products are matched with
the market and through which the transfers of
ownership are affected”
According to American Marketing Association
(new definition), “Marketing is an organisational
function and a set of processes for creating,
communicating and delivering value to customers
and for managing customer relationships in ways that
benefit the organisation and its stakeholders”
1.1.2. Nature of Marketing
‘The nature of marketing is as follows:
1) Marketing is an Integrated Process: Instead
of being a sole activity, marketing is .a
cohesive process of numerous allied activities.
The integration of different activities makes it
distinct from other features of marketing. It
‘comprises of functions related to planning and
control. Marketing also serves the social needs
of society by satisfying the consumers’ needs
and wants.
2) Marketing is Customer-oriented: Customer is
the centre of focus for all activities related to
marketing. The existence of marketing is to
identify and satisfy the needs and wants of
present consumers and future prospects.
3) Marketing is a System: Marketing functions as
@ system in which several sub-systems are
involved. In marketing, society acts as a source
of input and these inputs are processed into
outputs which are further provided to the society.
4) Marketing is Creative: Time, place and
Possession utilities are created by marketing. The
creation of time utility is done by conserving
products for future use, 2
‘», By delivering products to places where they are
Renuinely required, creates place utility. While,
Possession utility is created by transferring
[Products and services from producer to customer.
‘However, in all these marketing activities the
Tost important factor is the exchange process
between buyer and seller.
5) Marketing is Goal-oriented: The goal-oriented
characteristic of marketing is considered the
‘most significant. It provides benefits to both, i
buyer and seller. They share mutual benefits by
fulfilling the customers’ needs and eaming
profits from customers through sale of products
and services.
6) Marketing is Universal: Marketing is not
limited to business activities. It plays a key
role in other organisations also. In social and
other organisations, marketing is used to
promote programmes and initiatives such as
adult education, family planning, public
harmony, environmental protection, national
integration, etc. This form of marketing is
© known as social marketing.
7) Marketing is a Science as well as an Art:
‘Marketing is closely related to social and
behavioural sciences, though it has developed
‘Law, Sociology, Information Technology, etc.
‘The marketing conditions also depend upon the
factors affecting the target market such as
‘political environment, philosophy, demographic
‘environment, statistics, mathematics, etc.
) Marketing is an Exchange Activity:
‘Marketing is an on-going and dynamic practice.
“Therefore, it involves exchange of technology,
ideas, services and information. This
commercial exchange activity helps the
‘marketers to produce better and quality products
and services for customers.
MBA Pint Semener (Manageent Marketing) AKTY
.ds and wants of the
1, identifying the nee
me, en de le
ectively than the competitors using relevant
marketing mix.
Scope of Marketing =
‘The major driving force of marketing is to achieve
the organisational goals by harmonising activities
aoe cirbelp to attain custome satisfaction. Therefore,
ivxeting, bas wide scope in relation with its
iiversal activities. The scope of marketing i
described below:
1) Analysing ‘
1.1.3.
.. This is neces
ooaall the best possible way. Finally,
production of goods and services is carried out
‘on the basis of consumer preferences.
2) Analysing Consumer Behaviour: An effectual
analysis of consumer behaviour is essential to
identify the pattem of consumer buying. This
enables the marketers to segment and target the
market.
3) Product Planning and Development: The
‘marketing process initiates with idea generation
and ends up with product development. Product
planning involves numerous activities such as
branding, packaging and product line | decisions.
4) Pricing Decisions: Product pricing is also
defined by marketers. The pricing policy varies
from product to product. Different factors like
marketing goals, stage of product life cycle,
competition level, etc., are considered for
Designing of an effective
distribution channel for improved sales and profit
is also an important scope of marketing. The
study of distribution channels helps to cater large
number of customers at low distribution cost.
6) Promotion: Marketing is also responsible for
promoting products of an organisation.
Marketers use different techniques like
advertising, sales promotion, personal selling,
etc, An appropriate promotion mix is designed t0
achieve marketing objectives,
7) Company Analysis: In marketing, company
analysis is carried out by evaluating the cost
‘Structure and company's resources. The actual
Position of the company is estimated on the basis
Of its competitors. Marketers can also determine
the profit eared through different product
offerings across different customer segments Introduction to Marketing (Unit!)
with the help of accounting department. Another
technique of company analysis can be brand
auditing. This highlights the market potential of a
brand in the market.
8) Competitor Analysis: This analysis is done to
determine the strengths and weaknesses of
various competitors in the market. A detailed
evaluation of competitors’ sources of profits,
competencies, resources, cost structure, and
differentiation and positioning strategies is done
to figure out the most competitive organisation.
1.1.4. Core Concepts of Marketing
The first step in the process of marketing is the
determination of consumer needs and demands
Today, consumer is the king of the market. The
significant change in the demand-supply condition is
‘one major reason behind consumerism. Unlike earlier
times, the demand for a product is less than its
market supply. Marketers use different tactics t0
retain and satisfy their customers in this competitive
market. The core concepts related to marketing,
considered as its elements are given below:
Core Concepts of Marketing
Neads, Wants and Demands
‘Goods- Services Continuum
Products LY
Customer Value
‘Exchange and Transactions
Relationship Marketing &
Networks
ae Marketers
11. Needs, Wants and Demands
The three basic elements of marketing i.e., needs,
wants and demands are the major factors of
consumer motivation to buy a product. The desire of
consumer to satisfy his needs and wants, gives a kick
start to the marketing activities.
Needs refer to the basic necessities of human beings
related to their inherent characters. The need
fulfilment criterion depends upon the cultural and
Social environment of the society. For example,
shelter is the basic need of an individual, as one
cannot reside on roadside or on footpaths.
Wants refer to the desires for particular things which
are unified with the needs of the individual, For
example, for fulfilling the need of shelter, a person
may desire of a house in a clean locality. In
comparison with the needs, individuals “have
‘numerous wants.
‘These wants are constantly re-created dug to: the
influence of social institutions and factors. In. the
present scenario, individuals have boundless wants
but the resources to fulfil those wants are scarce.
‘Therefore, consumers wish to spend their money
only on those products which ensure maximum yalue
and satisfaction.
Demands are those definite wants for any product(s)
which are supported by the willingness and ability to
buy them. The purchasing power of the consumers
converts their wants into demands. In marketing, a
marketer is more interested to know about the
‘consumers having the purchasing power rather than
those who only desire to have a product. For
example, a person may desire of a penthouse by the
seaside, but due to low purchasing power his demand
remains ineffective.
1.1.4.2. Goods-Services Continuum
In general, organisational products are a composition
of goods and services. According to the goods-
services continuum in figure given below, some
products may have either tangible (e.g, salt) or
intangible (e.g., teaching) characteristics. However,
there are some products which provide both goods
and services at the same time, like travelling via
airplane. The position of product on the continuum
enables the marketer to spot potential opportunities.
‘At the tangible (pure goods) end of the continuum,
only those goods are positioned which are not related
to services. At the intangible (pure services) end of
the continuum, only those services are positioned
which have no association with physical products.
‘The middle portion of both the ends consists of the
products which have combined characteristics of
both goods and services, eg, goods like air-
conditioners also require services like installation and
delivery, besides being a product in itself.
Alll the three positions involved in goods-services
continuum, are described below:
1) Goods Dominated Products: These types of
products are tangible in nature and are
complemented with supporting services. For
example, one month warranty or toll-free
services are mainly offered by the company to
increase the value of the product. The strategy
of associating the supporting services with the
main product is called ‘embodying’, The term
embodying is used by IT industry, where
companies use this strategy to enter. into
international market which is flooded with low-
cost products having inappropriate user-
guidance, Marketing) AKTU.
(MBA First Semester (Management.
ices combine to form
/, both goods and services & ase
a Eauipment-Based “ rap meat in middle of the continuum, as they
Somplete product. For example, rests
Roods (e.g. expensive crockery) and serving’ (eg, skilled manpower).
‘cate of cn) Tangitity
Desree of ntangbilty
a Degree of Tangibtity
expected to yield Satisfaction of benefits to the
buyer”,
In marketing, product is anything tangible or
i Sheit legal and tax intangible. © eee NuCN ia. cdtered pe
‘work. fitness trainers have a consumption in order to Satisfy consumer needs,
grat business in mostly all cities. Even People :
hire professional dog walkers for their pets For example, in m: + Product is brought
Material an @ finished good,
1.1.4.3. Products r di
Product is anything that is offered for sale, It is a
in the market to satisty
Customer needs and w. ile. i
Rbeass where a thing is produced as a result ot
‘growth,
mans: While in retailing,
Products are known as “merchandise
labour, thought, or activity. A product can be
mayeie, Spice cx oven an tec, W fony be The level of customer Satisfaction
Produced immediately or gradually. It may asa'bee can (y
‘i for a product
derived on several bases ike Prot
resultant of mental efforts or an unconscious effort quantity, brand name,
such as seasonal fruits, by-products, ete.
“Sage, Warranty, serviee
“ATANY, Packaging, ete, AFAMty, service Introduction to Marketing (Unit 1)
1.1.4.4. Utility
In economics, utility is an important concept which is
related to marketing. The term utility is a measure of
absolute desirability, or consumption, or satisfaction
towards a particular product. It explains the ability of
goods or services to satisfy the needs and wants of
the consumers. The measure of utility helps to
identify the increase or decrease in the level of
utility. It may also be used to explain the economic
behaviour in the form of number of attempts required
to increase a product’s utility.
The basis of exchange process comprises of products
and/or services and marketing of these products
and/or services. Both these elements combine to
generate utility. There are four types of utilities, viz.,
form, time, place and ownership, where the ‘form
utility’ of goods or services is created by the
production process and marketing process is
responsible for the remaining three, Richard
Buskirk has introduced four types of utilities that
describe marketing as an activity.
They are as follows:
1) Form Utility: The process of product planning
and development combines to create form utility.
This involves various stages from converting the
raw material to the development of a finished
product. Finally, the form defines the utility of
the product.
2) Time Utility: Time utility occurs when the
product is made available to cater the consumer's
demand at his/her time of desire. This can be
made possible when the goods manufactured are
delivered through proper channels at right time to
the final destination.
3) Place Utility: Availability of a product at right
place, keeping in mind the convenience of the
customer, creates place utility. This can be done
by providing the product at the place, where it is
required the most by using different channels of
distribution.
4) Ownership Utility: When a seller legally
transfers his ownership over products to the
buyer through a sales operation, ownership utility
is created. The products remain liable to the
producer, retailer or seller until it is purchased by
someone else.
1.1.4.5. Customer Value
Value refers to the worth or usefulness of goods or
services. The best definition of value from
consumer's perspective is the difference between a
potential customer's evaluation of the benefits and
15
costs of one product in comparison to others. The
value can be generated only when product and user
come together. Therefore, the level of value
‘generated is determined in terms of high satisfaction,
satisfaction or dissatisfaction. It also affects the
customer decision-making and long-term relationship
with the organisation.
Value is a much broader concept than the price of a
product. The characteristics of value are multi-
dimensional and it offers products of high quality,
low price and excellent service experience to specific
target markets. All the elements such as price,
quality, service, company’s image and intangible
factors help to define company’s value proposition
In general, the product benefits can be evaluated on
the basis of customer's satisfaction and competitor's
offerings. By using the formula given below, value
can be calculated:
Customer Perceived Value =
Benefits Derivingfrom a Product
(Cost of Acquiring the Product
From the above equation, it can be concluded that the
value from a product is only created, when the
perceived benefits are more than the actual cost of
the product. Another crucial factor for value creation
is that the value of firm's product should also be
more than the competitor's product. Applying this
equation has proved beneficial to marketers. Now,
they know the two significant approaches which are
most desirable to survive in any market. The first
approach is to increase the perceived benefits and the
other one is to lower the cost of product. Following
the two approaches, it is widely preferable to focus
‘on providing highly perceived benefits rather than
‘competing on prices. Enhanced customer value is
the only way through which marketing concept can
be implemented. The marketing concept is all about
customer satisfaction and this can be achieved by
creating and delivering customer value. It can be
further said that, customer value is the crux of
marketing.
1.1.4.6. Cost, Satisfaction and Quality
In general, cost is the amount paid to buy or obtain
goods or services. In marketing, cost is the estimated
price of the product which is paid to satisfy one's
needs at the lowest possible cost of ownership or
usefulness. Satisfaction is an attitude towards a
particular product or service after its consumption. A
consumer feels satisfied when his/her needs meet
their expectations. Customer satisfaction is the
central focus of all marketers. It is very essential for marketers adopt customer-focused
and market-oriented approach to reach theis goal, ie.,
Customer satisfactior
n. It also helps to predict the
future buying intentions of the consumers,
when a customer feel
Fav uming a particular product, then he/ she shares
his/her experience with others, also known positive
Wordtof-mouth, Whereas, an unsatisfied cestomer
‘Who wants to switch ‘Over to another product will also.
Share his/her experience, which is known as negative
Reeofimouth. ‘The widely used approach by
ining the factors causing the
is disconfirmation pattern,
the difference between pre.
Purchase expectation
Is satisfied after
and post-purchase perception,
According to Peters and Olson, ‘Pre-purchase
Pere, TO ADRIES abou rmnticipetcd
Performance of the product;
_post-purchase
Sonsumer’s thoughts about how
well the product Performed.’ In other words,
Post-
Porchace
