CHAPTER ONE

OVERVIEW OF MARKETING
1.1 MEANING AND DEFINITIONS OF MARKETING

What image comes to mind when you hear the word “marketing”? Some people think of
advertisements or brochures, while others think of public relations (for instance, arranging for
clients to appear on TV talk shows). The truth is, all of these—and many more things—make up
the field of marketing. The Knowledge Exchange Business Encyclopedia defines marketing as
“planning and executing the strategy involved in moving a good or service from producer to
consumer.”
Marketing can occur any time one social unit (person or organization) strives to exchange
something of values with another social unit. Thus, the essence of marketing is a transaction or
exchange. In this broad sense, marketing consists of activities designed to generate and facilitates
exchange intended to satisfy human needs or wants.
Business firms and non-profit organization engaged in marketing. Products marketed include
goods as well as services, ideas, people and places. Marketing activities are targeted at market
consisting of product purchasers and also individuals and groups that influence the success of an
organization.
Marketing has been defined in various ways. The definition that serves our purpose best is as
follows: -
i) Marketing is a social and managerial process by which an individual or group obtain
what they need and want through creating, offering and exchanging of product of
values with others (Philip Kotler)
ii) Marketing is the total business activity designed to plan, price, promote and distribute
want satisfying products to target market to achieve organizational goal (William
J.Stanton)
iii) Marketing is the creation and delivery of standard of living to society (Paul. Mazor)
iv) Marketing management is the process of planning and executing, the conception,
pricing, promoting and distributing of ideas, goods and services to create an exchange
that satisfy individual or group objectives (American marketing Association)

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The above definitions of marketing resets on the following core concepts: needs, wants and
demands; products (Goods, Services and Idea), value, cost and satisfaction: exchange and
transaction; Relationship and Networks; market; and marketers and prospects.
1.2 CORE CONCEPTS OF MARKETING

1.2.1 Needs, Wants and Demand

A person at any given time has a need. This need arises out of physical or psychological
imbalances. Marketing starts with human needs and wants. People need food, air, water, clothing
and shelter to survive. Beyond this, people have a strong desire for recreation, education and
other services.
Need: - Human Need is a state of deprivation of some basic satisfaction. People require food,
clothing, shelter, safety and belonging and esteem. A person has many needs at any given time.
Some needs are biogenic. They arise from physiological states of tension such as hunger, thirst
and discomfort. Other needs are psychogenic; they arise from psychological state of tension such
as the need of recognition, esteem or belonging.
Abraham Maslow, a behavioral scientist has talked about human needs. He said, a human need
takes the form of a hierarchy. That is, once a person is satisfied with his basic needs, he keeps on
opting for his secondary needs.

Secondary needs (5) self

Or actualization
Psychological needs needs
Psychogenic needs (4) Esteem
Needs
(3) Social
Needs
(2) Safety and Security
Needs
Primary need (1) Physiological needs.
Or
Physiological need or Biogenic need

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1. Physiological Needs: - Physiological needs arise out of physical imbalances, which includes:
Food, Shelter, Air, Water, Cloth etc.
2. Once the person is satisfied with his primary needs, he keeps on opting to satisfy his
secondary needs. Psychological needs arise out of psychological imbalances. The various needs
under the various sub headings are as follows: -
- Safety and security
 Security and safety in the work place
 Protection
 Comfort and peace
 No threats or danger
 Orderly and net surroundings
 Assuming of long term economic well being
- Social Needs
 Acceptance
 Feeling of belonging
 Membership in group
 Love and affection
 Group participation
-Esteem or ego needs
 recognition and prestige
 confidence and leadership
 competence and success
 strength and intelligence
- Self-actualization needs
 Self fulfillment of potentials
 Doing things for the challenge of accomplishment
 Intellectual curiosity
 Creative and aesthetic appreciation
 Acceptance of reality

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Therefore, the marketers’ duty is to identify the unfilled needs of their product purchasers and
tailor all activities towards fulfilling them.
Wants: - Wants are desires for specific satisfiers of needs. Human wants are continually shaped
and reshaped by social forces and institutions including churches, schools, families and business
cooperation.
E.g. A person needs food but wants spaghetti
Demands: - Demands are wants for specific products that are backed by ability and willingness
to buy them. Wants become demand when supported by purchasing power. Companies must
therefore measure not only how many people want their product but, more importantly how
many would actually be willing and able to buy it.
1.2.2 Products (Goods, Services and Ideas)
People satisfy their needs and wants with products. A product is anything that can be offered to
satisfy a need or want. Products broadly classify as
 Tangibility and intangibility
Tangible products (Goods) are those products, which can be seen, touched, felt etc.
Intangible products (services) are those products which cannot be seen, touched, felt etc.
 Durable and Non-durable
Durable products are those products which last longer and which require more time to make a
purchase decision, whereby consumers will compare on such basis as suitability, durability, after
sales services, cost, features, etc.
Non-durable products: are those products which are consumed on a day-to-day basis and which
do not require much time for purchases decision.
 Consumer and Industrial goods
Products further more classified based upon use. On this classification we could find consumer
goods and industrial goods.
Consumer goods are those goods, which are being use for consumption.
Industrial goods on the other hand are those goods, which are being, use to further produce
other goods.
In general, a product can consists of as many as three components; physical goods, services, and
ideas. The following concept is illustrated with the following example.

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Example1: A restaurant is supplying goods (foods, drinks, etc), services (cooking, seating, etc)
and an idea (saves my time)
Example2: A computer manufacturer supply goods (computer, monitor, printer), services
(delivery, installation, training, maintenance etc) and an idea (computation power)
Example3: A church offers more in the way of services sermons, singing, education, counseling)
and ideas (community, salutation) etc.
What can be marketed?
Marketing people are involved in marketing 10 types of entities which are called scope of
Marketing: goods, services, experiences, events, persons, places, properties, organizations,
information, and ideas.
 Goods. Physical goods constitute the bulk of most countries’ production and marketing
effort. The United States produces and markets billions of physical goods, from eggs to
steel to hair dryers. In developing nations, goods— particularly food, commodities,
clothing, and housing—are the mainstay of the economy.
 Services. As economies advance, a growing proportion of their activities are focused on
the production of services. The U.S. economy today consists of a 70–30 services-to-
goods mix. Services include airlines, hotels, and maintenance and repair people, as well
as professionals such as accountants, lawyers, engineers, and doctors. Many market
offerings consist of a variable mix of goods and services.
 Experiences. By orchestrating several services and goods, one can create, stage, and
market experiences. Walt Disney World’s Magic Kingdom is an experience.
 Events. Marketers promote time-based events, such as the Olympics, trade shows, sports
events, and artistic performances.
 Persons. Celebrity marketing has become a major business. Artists, musicians, CEOs,
physicians, high-profile lawyers and financiers, and other professionals draw help from
celebrity marketers.
 Places. Cities, states, regions, and nations compete to attract tourists, factories, company
headquarters, and new residents. Place marketers include economic development
specialists, real estate agents, commercial banks, local business associations, and
advertising and public relations agencies.

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  Properties. Properties are intangible rights of ownership of either real property (real
estate) or financial property (stocks and bonds). Properties are bought and sold, and this
occasions a marketing effort by real estate agents (for real estate) and investment
companies and banks (for securities).
 Organizations. Organizations actively work to build a strong, favorable image in the
mind of their publics. Philips, the Dutch electronics company, advertises with the tag
line, “Let’s Make Things Better.” The Body Shop and Ben & Jerry’s also gain attention
by promoting social causes. Universities, museums, and performing arts organizations
boost their public images to compete more successfully for audiences and funds.
 Information. The production, packaging, and distribution of information is one of
society’s major industries. Among the marketers of information are schools and
universities; publishers of encyclopedias, nonfiction books, and specialized magazines;
makers of CDs; and Internet Web sites.
 Ideas. Every market offering has a basic idea at its core. In essence, products and services
are platforms for delivering some idea or benefit to satisfy a core need.
1.2.3 Value, Cost, and Satisfaction
How do consumers choose among the many products that might satisfy their needs and wants?
In terms of marketing, the product or offering will be successful if it delivers value and
satisfaction to the target buyer. The buyer chooses between different offerings on the basis of
which is perceived to deliver the most value. We define value as a ratio between what the
customer gets and what he gives. The customer gets benefits and assumes costs, as shown in this
equation:
Value= Benefits = Functional Benefit + Emotional Benefit
Cost Monetary cost+ Time Cost+ Energy Cost + Psychic Costs
According to DeRose, value is “the satisfaction of customer requirement at the lowest cost of
acquisition, ownership and use. Based on this equation, the marketer can increase the value of
the customer offering by
 Raising benefits,
 Reducing costs,
 Raising benefits and reducing costs,
 Raising benefits by more than the raise in costs, or
 Lowering benefits by less than the reduction in costs.

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Cost is the amount of money that is going to be expended or already incurred to acquire a
product.
Customers often do not judge product values and costs accurately or objectively. They act on
perceived value. Customers perceive the firm to provide faster, more reliable delivery and are
hence prepared to pay the higher prices that the company charges. Customer satisfaction depends
on -A product's perceived performance in delivering value relative to a buyer's expectations.
 If the product's performance falls short of the customer's expectations, the buyer is
dissatisfied.
 If performance matches expectations, the buyer is satisfied.
 If performance exceeds expectations, the buyer is delighted.
Outstanding marketing companies go out of their way to keep their customers satisfied. Satisfied
customers make repeat purchases, and they tell others about their good experiences with the
product. The key is to match customer expectations with company performance. Smart
companies aim to delight customers by promising only what they can deliver, then delivering
more than they promise.
Therefore, in modern marketing era, the role of the marketer is to provide goods or services at
affordable price by the consumer that meets its requirement and enhance the performance of the
product to exceed the customers’ expectations.
1.2.4 Exchange and Transactions
People can obtain products in one of four ways. The first way is self-production. People can be
relieving hunger through hunting, fishing or fruit gathering. In this case there no market and no
marketing. The second way is coercion (applying forces). Hungry people can wrest or steal food
from others. The third way is begging. Hungry people can approach others and beg for food.
Marketing emerges when people decided to satisfy needs and wants through exchange.
Exchange is the act of obtaining a desired product from someone by offering something in
return. For exchange potential to exist, the following conditions must be satisfied: -
1. There are at least two parties
2. Each party has something that might be of value to the other party
3. Each party is capable of communication and delivery
4. Each party is free to accept or reject the exchange offer
5. Each party believes it is appropriate or desirable to deal with the other party.
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Whether exchange actually takes place depends upon whether the two parties can agree on terms
that will leave them both better off (or at least not worse off) than before. Exchange is a value-
creating process because it normally leaves both parties better off. Note that exchange is a
process rather than an event. Two parties are engaged in exchange if they are negotiating—trying
to arrive at mutually agreeable terms. When an agreement is reached, we say that a transaction
takes place which is the trade of values between two parties. A transaction involves
 At least two things of value,
 Agreed-upon conditions,
 A time of agreement, and
 A place of agreement.
Usually a legal system exists to support and enforce compliance among the people. However,
transactions do not require money as one of the traded values. A barter transaction, for example,
involves trading goods or services for other goods or services. Note also that a transaction differs
from a transfer. In a transfer, A gives a gift, a subsidy, or a charitable contribution to B but
receives nothing tangible in return.
Eg. If Mr. A gives ‘X’ to Mr. B and receives Y in return, that is a transaction.

Eg. If Mr. A gave $400 to Mr. B and obtained a TV set. This is a classic monetary transaction.
1.2.5 Relationship and Networks
Transaction marketing is a part of a larger idea called relationship marketing. Relationship
marketing is the practice of building long term satisfying relations with key parties-customers,
suppliers, distributors- in order to retain their long term preferences and business. Smart
marketers try to build up long term, trusting, and win-win relationship with valued customers,
distributors, dealers and suppliers. They accomplish this by promising and delivering high
quality, good service, and fair prices to the other parties over time. Relationship marketing
results in strong economic technical and social ties among the parties.
The ultimate outcome of relationship marketing is the building of a unique company asset called
a marketing network. A marketing network consists of the company and all of its supporting
stockholders: customers, employees, supplies, distributors, retailers, and agencies, university
scientists, and others with whom it has built mutually profitable business relationships. The

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operating principle is simple: Build a good network of relationship with key stakeholders, and
profit will follow.

1.2.6 Market

The concept of exchange leads to the concept of a market. A market consists of all the potential
customers sharing a particular need or want who might be willing and able to engage in
exchange to satisfy their need or want.
Traditionally, a "market" is a physical place where buyers and sellers gathered to exchange
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 constituting the market.

Thus the size of the market depends on the number of people who exhibit the need or want, have
resources that interest others, and are willing and able to offer these resources in exchange for
what they want.

The seller and the buyer are connected by four Flows. The seller sends goods and services and
communications (ads, direct mail and so forth) to the market; in return they receive money and
information (attitudes, sales data, and so forth). In the diagram below the inner loop shows an
exchange of money for goods and services; the outer loop shows an exchange of information.

Communication

Industry Goods/Services Market

( a collection of ( a collection of
Sellers) Money buyers)

Information

All modern economies are abounding in markets. Essentially, manufactures go to resource

markets (raw-material markets, labor markets, money marketers and so on), buy resources and
turn them into goods and services and sell the finished products to intermediaries, who sell them
to consumers. Consumers sell their labor, for which they receive money with, which they pay for
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the goods and services they buy. The government uses tax revenues to buy goods from resources,
manufacturer and intermediary markets and uses these goods and services to provide public
services. Each nation’s economy and the whole world economy consist of complex interacting
sets of markets that are linked through exchange process.

1.2.7 Marketers and Prospect

The concept of market brings us full circle to the concept of marketing. Marketing means
working units markets to actualize potential exchange for the purpose of satisfying human needs
and wants.
When one party is more actively seeking an exchange than the other party, we call the first party
a marketer and the second party a prospect.
A marketer is someone who is seeking one or more prospects who might engage in an exchange
of values.
A prospect is someone whom the marketer identified as potentially willing and able to engage in
an exchange of values.
The marketer can be a seller or a buyer. Suppose several people want to buy a house that has just
become available. Each prospective buyer will try to market himself or herself to the seller.
These buyers are actually doing the marketing.
In the normal situation, the marketer is a company serving a market in the face of competitors.
The company and the competitors send their respective products and messages directly and /or
through marketing intermediaries to end users. Their relative effectiveness is influenced by their
respective suppliers as well as major environmental forces (demographic, economic, physical,
technological, political /legal, social/cultural).
1.3. DEMAND MANAGEMENT
Marketers are skilled in stimulating demand for a company's products, but this is too limited
view of the tasks they perform. Just as production and logistics professionals are responsible for
supply management, marketers are responsible for demand management. Most people think of
marketing management as finding enough customers for the company's current output, but this is
too limited a view. The organization has a desired level of demand for its products. At any point
in time, there may be no demand, adequate demand, irregular demand or too much demand, and
marketing management must find ways to deal with these different demand states. Marketing

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management is concerned not only with finding and increasing demand, but also with changing
or even reducing it.
1. Negative demand A market is in a state of negative demand if a major part of the market dislikes the
product and may even pay a price to avoid it -vaccinations, dental work,
vasectomies, and gallbladder operations, for instance, Employers have a negative
demand for ex-convicts and alcoholics as employees. The marketing task is to
analyze why the market dislikes the product and whether a marketing program
consisting of product redesign, lower prices, and more positive promotion can
change beliefs and attitudes.
2. No demand Target consumers may be unaware of or uninterested in the product. Farmers may
not be interested in anew farming method, and college students may not be
interested in foreign-language courses. The marketing task is to find ways to
connect the benefits of the product with the person's natural needs and interests.
3. Latent demand Many consumers may share a strong need that cannot be satisfied by an existing
product. There is a strong latent demand for harmless cigarettes, safer
neighborhoods, and more fuel-efficient cars. The marketing task is to measure the
size of the potential market and develop goods and services to satisfy the demand.
4. declining Demand Every organization, sooner or later, faces declining demand for one or more of its
products. churches have seen membership decline; private colleges have seen
applications fall. The marketer must analyze the causes of the decline and determine
whether demand can be restimulated by new target markets, by changing product
features, or by more effective communication. the marketing task is to reverse
declining demand through creative remarketing.
5. Irregular Demand Many organizations face demand that varies on a seasonal, daily, or even hourly
basis, causing problems of idle or overworked capacity. Much mass transit
equipment is idle during off-peak hours and insufficient during peak travel hours.
Museums are under visited on weekdays and overcrowded on weekends. The
marketing task, called synchro marketing, is to ford ways to alter the pattern of
demand through flexible pricing, promotion, and after incentives.
6. Full demand Organizations face full demand when they are pleased with their volume of business.
The marketing task is to maintain the current level of demand in the face of
changing consumer preferences and increasing competition. The organization must
maintain or improve its quality and continually measure consumer satisfaction.

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 7. Overfull Demand Some organizations face a demand level that is higher than they can or want to
handle. Yosemite National Park is terribly overcrowded in the summer. The
marketing task called demarcating takes such steps as raising prices and reducing
promotion and service. Selective demarcating consists of trying to reduce demand
from those parts of the market that are less profitable or less in need of the product.

8.Unwholesome demand Consumers may be attracted to products that have undesirable social consequences.

1.2.8. Target Markets and Segmentation

A marketer can rarely satisfy everyone in a market. Not everyone likes the same soft drink, hotel
room, restaurant, automobile, college, and movie. Therefore, marketers start with market
segmentation. They identify and profile distinct groups of buyers who might prefer or require
varying products and marketing mixes. Market segments can be identified by examining
demographic, psychographic, and behavioral differences among buyers. The firm then decides
which segments present the greatest opportunity-those needs the firm can meet in a superior
fashion.
For each chosen target market, the firm develops a market offering. The offering is positioned in
the minds of the target buyers as delivering some central benefit(s). For example, Volvo
develops its cars for the target market of buyers for whom automobile safety is a major concern.
Volvo, their fore, positions its car as the safest a customer can buy.

1.4 IMPORTANCE OF MARKETING

Marketing plays a major role in any individual and individual organization in the socio-economic
system of a given country and further in the global economy. It also has significance for you
personally – if not in business, then certainly in your role as a consumers.
i) Importance of marketing for an individual
Marketing is important globally, to the economy and in an individual organization. But what’s in
it for you? Why should you study marketing? There are a number of reasons:

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  Marketing pervades so many daily activities. Companies have designed products, set
prices, create advertisements, and chosen the best methods of making the product
available to their customers.
 Studying marketing will make you a better-informed consumer. You’ll understand more
about what underlies a seller’s pricing and how brand names are selected, as well as the
role of promotion and distribution.
 Lastly, marketing probably relates – directly or indirectly – to your career aspirations. It
you are thinking about a marketing major and employment in a marketing position, you
can develop a feel for what marketing managers do.
 Finally, if you are thinking about a career in a non business field such as health care,
government, music or education, you will learn how to use marketing in these
organizations.
ii) Importance of marketing to an individual organizations
The primary focus is on the performance of marketing in an organization. The variety of
managerial useful concepts that apply to business firms marketing goods and services, as well as
nonprofit organizations.
Marketing considerations should be an integral part of all short-range and long range planning in
any company. Here is why:
 The success of any business comes from satisfying the wants of its customers, which is
the social and economic basis for the existence of all organizations.
 Although many activities are essential to a company’s growth, marketing is the only one
that produces revenue directly.

When managers are internally focused products are designed, manufactured by manufacturing
people, priced by financial managers, and then given to sales managers to sell. This approach
generally won’t work in todays environmental of intense competition and constant changes. Just
building a good product will not result in sales.
Today charities, museums, and even churches- all organization that formerly reflected any
thought of marketing – are embracing it as a means of growth and for some survival.
This trend is accelerating due to the following two reasons:

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  Increasing competition among non-profit organizations. For example, the competitor
among colleges and universities for students is intensifying as the numbers of young
people of college are declines, and the search for donors has become more intense as the
number of charities has increased.
 Nonprofit organizations need to improve their images and gain greater acceptance among
donors, government agencies, and mass media and of course, consumers, all of which
collectively determine an organizations success.
iii) Importance of marketing to the society
Aggressive, effective marketing practices have been largely responsible for the high standard of
living to the society. The efficiency of mass marketing – extensive and rapid communication
with customers through a wide variety of media and distribution system that makes products
readily available – combined with mass productions has lowered the cost of many products.
One of the major benefits that marketing provides to the society at large is employment and
costs. The significance of marketing in the society can be considered by working as to show
many of the people are employed in some way in marketing and how much of what we spends
covers the cost of marketing. Because many people in labor forces are engaged in marketing
activities.
This will clearly indicates, employment in retailing, wholesaling, transportations, warehousing
and communication industries, as well as people who work in marketing departments of
manufacturers and those who work in marketing in agricultural, mining, and service industries.
Furthermore, over the past century; jobs in marketing have increased at a much more rapid rate
than jobs in production, reflecting economy is expanded role of marketing.
iv. Importance of marketing in the global economy.
The technologies that have been created during World War II have created the potential for a
truly global economy. Market has benefited the economies in the area like:
 The war produced massive investments in technology that lead to peace time innovations
in communications and improvement is transportation. The ability to be infrequent and
virtually instantaneous contact with markets around the world and the capability to move
goods had the effect of lowering the barriers to international trade.
 The economic development components of international organizations have produced
recognition of potential markets around the world.
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  Most nations today – regardless of their degree of economic development or their
political philosophy – recognize the importance of marketing beyond their own national
borders. Indeed, economic growth in the less developed nations of the world depends
greatly on their ability to design effective marketing system to produce global customers
for their raw materials and industrial output.
v. Importance of marketing in General
On the average, about 50 cents of each dollar we spend as consumers goes to cover marketing
costs. The money pays for designing the products to meet our needs, making products readily
available when and where we want them, and informing us about producers. These activities add
want satisfying ability or what is called utility, to products.
A customer purchases a product because it provides satisfaction. That something that makes a
product capable of satisfying want is its utility. And it is through marketing that much of a
products utility is created.
Then potential buyers must be informed about the products existence and the benefits it offers
through various forms of promotion. The kinds of utility that marketing provides in the process
are as follows: -
1. Form Utility: - Form utility is associated primarily with production- the physical or chemical
changes that make a product more valuable. When limber is made into furniture, form utility is
created. This is production, not marketing. However, marketing research may aid in decision
making regarding product design, color, quantities produced, or some other aspect of a product.
All of these things contribute to the product form utility.

2. Place Utility: exists when a product is readily accessible to potential customers. So physically
moving the products to a store near the customers add to its value.

3. Time Utility: means having a product available when you want it. Having a product available
when we want it is very convenient but it means that the retailer must anticipate our desires and
maintain an inventory. Thus, there are costs involved in providing time utility.
4. Information Utility: is created by informing prospective buyers that a product exists. Unless
you know a product exists and where you can get it, the product has no value. Advertising that
describes a sales person answering a customer questions about the durability of a product creates
information utility. Image utility is a special type of information utility. It is the emotional or
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psychological values that a person attaches to a product or brand because of its reputation or
social standing.
5. Possession Utility: is created when a customer buys the product-that is, ownership is
transferred to the buyer.
Thus, for a person to consume and enjoy the product, a transaction must take place. This occurs
when you exchange your money for a product.
1.4 Marketing Function
There are eight Universal functions that are performed in marketing these are
Buying (Raw material to produce goods and services and to purchase finished goods or services
as retailer or whole seller to sell them again for final customers and consumers): it is a function
that ensures that product offerings are available in sufficient quantities to meet customer
demands
Selling: it is performed to sell the products/services/idea to satisfy customer needs or wants.
Using advertising, personal selling and sales promotion to match goods and services to customer
needs
Transporting: Function related to create the availability of product or services. It is used for
moving products from their points of production to location convenient for purchases
Storing: Warehouses are used to store the products for further distribution.
Standardizing and grading: To provide more quality products and services without variation in
the quality. Ensuring that product offerings meet established and grading quality and quantity
control standards of size, weight, and other product variables
Financing: Providing the financial resources to carry out different functions e.g. promotion of
product and providing credit for channel members (wholesalers’ retailers) or consumers
Risk taking: Marketer takes a risk specifically when any new product is introduced in a market
because there are equal chances of success and failure. Dealing with uncertainty about consumer
purchases resulting from creation and marketing of goods and services that consumers may
purchase in the future
Securing Marketing Information: Collecting information about consumers, competitors,
information and channel members (wholesalers, and retailers) for use in making marketing
decisions Almost all marketing functions are based on information acquired from external

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environment and information distributed out of organization. Marketer seeks information to find
out customer needs and wants which are to be satisfied than after producing goods and services
awareness about the availability is required so that consumer can purchase the available goods
and services.

1.5 MARKETING PHILOSOPHIES

Large-scale marketing activities in the world did not take shape until the industrial revolution is
the latter part of the 1800s. Clearly, marketing activities should be carried out under a well-
thought out philosophy of efficient, effective and socially responsible marketing. There are five
competing concepts under which organizations can choose to conduct their marketing activities:

The production concepts: the product concept; the selling/sales concept; the marketing concept
and the societal marketing concept.
1.5.1 The Production Concept
The production concept is one of the oldest concepts in business and holds that consumers will
favor products that are widely available and low in cost. Managers of production-oriented
organization concentrate on achieving high production efficiency and wide distribution.
The assumption that consumers are primarily interested in product availability and low price
holds in at least two situations. The first is where the demand for a product exceeds supply, as in
many developing countries. Here consumers are more interested in obtaining the product that in
its fine points, and supplies will concentrate on finding ways to increase production.

The second situation is where the product’s cost is high and has to decrease to expand the
market.
1.5.2 The Product Concept
Other businesses are guided by the product concept. The product concept holds that consumers
will favor those products that offer the most quality, performance or innovative features.
Managers in product oriented organization focus their energy on making superior products and
improving them over time. Under the concept, mangers assume that buyers admire well-made
products and can appraise product quality and performance. Product-oriented companies often

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design their products with little or no customer input. They trust that their engineers will know
how to design or improve the product.
1.5.3 The Selling Concept/sales Concept
The selling concept (or sales concept) is another common approach. The selling concept holds
that consumers, if left alone, will ordinarily not buy enough of the organization product. The
organization must therefore undertake an aggressive selling and promotion effort.
This concept assumes that consumers typically show buying inertia or resistance and must be
persuaded into buying. It also assumes that the company has made available a whole battery of
effective selling and promotion tools to stimulate more buying.
The selling concept is practiced more aggressively with unsought goods, those goods that buyers
normally do not think of buying, such as insurance, encyclopedia, and funeral plots.
Most firms practice the selling concept when they have over capacity. Their aim is to sell what
they make rather than make what the market wants.
Therefore, people are surprised when they are told that the most important part of marketing is
not selling; selling is only the tip of marketing iceberg.
1.5.4 The Marketing Concept
The marketing concept is a business philosophy that challenges the three concepts we just
discussed. Its central tents crystallized in the mid 1950s.
The marketing concept holds that the key to achieving organizational goals consists of being
more effective than competitors in integrating marketing activities toward determining and
satisfying the needs and wants of target markets.
The marketing concept has been expressed in many colorful ways:
 “Meeting needs profitably
 “Find wants and fills them
 “Love the customers, not the product etc.
The marketing concept rests on four pillars: target market, customer needs, integrated marketing,
and profitability. The marketing concept takes an outside –in perspective. It starts with a well
defined market, focuses on customers’ needs, and integrates all the activities that will affect
customers and produces profit by satisfying consumers. A brief discussion of the following
concept is as indicated below.

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1. Target market: -
No company can operate in every market and satisfy every market and every need. Nor can it
always do a good job in this one broad market: even Microsoft cannot offer the best solution for
every processing need. Companies do best when they define their target market(s) carefully and
prepare a tailored marketing program.
2. Customer Needs: -
A company can define its target market but fail to fully understand the customer’s needs.
Although marketing is about meeting needs profitably, understanding customer needs and wants
is not always a simple task.
Consider the customer who says he wants an “inexpensive” car. The market must probe further
we can distinguish among five types of needs.
1. Stated Needs (the customer wants an inexpensive car)
2. Real Needs (the customers wants a car whose operating costs, not its initial price is, low)
3. Unstated Needs (the customer expects goods service from dealer)
4. Delight Needs (the customer buys the car and receives a complimentary)
5. Secret Needs (the customer wants to be seen by friends as a value oriented consumer)
Customer oriented thinking requires the company to define customer needs from the customer’s
point of view. Every buying decision involves trade-offs, and management cannot know what
these are without researching customers.
In general, a company can respond to customers request by giving customers what they want, or
what they need, or what they really need. The key to professional marketing is to understand
their customer real needs and meet them better than any other competitor can.

Because, a highly satisfied customer

 Stays loyal longer
 Buys more as the company introduces new products and upgrades existing producers.
 Talks favorably about the company and its products
 Pays less attention to competing brands and advertising and is less sensitive to price
 Offers product ideas to the company
 Costs less to serve than new customers because transactions are raised.

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Integrated marketing: When all the company’s departments’ work together to serve the
customer’s interest, the result is integrated marketing. Unfortunately, not all employees are
trained and motivated to work for the customer. An engineer complained that the sales people
were “always protecting the customer and not thinking of the company’s interest”.
Integrated marketing takes place on two levels: First the various marketing functions-sales
force, advertising, product management, marketing research, and so on- must work together. Too
often the sales force is made at the product managers for setting “too high a price” or “too high a
volume target”, or the advertising director and a brand manager cannot agree on advertising
campaign. All these marketing functions must be coordinated from the customer’s point of view.
4. Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the
case of private firms, the major goal is profit. In the case of non-profit and public organizations,
it is surviving and attracting enough funds to perform their work. In for-profit organizations, the
key is not to aim for profits as such but to achieve them as the by-product of doing the job well.

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1.5.5 The Societal Marketing Concept
The societal marketing concept holds that the organization should determine the needs, wants
and interests of target markets. It should then deliver the desired satisfactions more effectively
and efficiently than competitors in a way that maintains or improves the consumers and the
society’s well-being.
The societal marketing concept holds that the organization’s task is to determine the needs, want,
and interests of target markets and to deliver the desired satisfactions more effectively and
efficiently than competitors in a way that preserves or enhances the consumers and the society’s
well being.
The societal marketing concept questions whether the pure marketing concept is adequate in an
age of environmental problems, resource shortages, rapid population growth, worldwide
economic problems, and neglected social services. It asks if the firm that senses, serves and
satisfies individual wants is always doing what’s best for consumers and society in the long run.
According to the societal marketing concept, the pure marketing concept overlooks possible
conflicts between short-run consumer wants and long run consumer welfare.
As shown in the following diagram three considerations underlying the societal marketing
concept;

Society
(Human welfare)

Consumers Company
(Wants satisfaction) (profits)
Difference b/n Marketing and selling
The basic difference is that selling is internally focused (“inside-out” perspective), while
marketing is externally focused (“outside-in” perspective)

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  E.g. 1. When a firm makes a product and then tries to persuade customers to buy it, that’s
selling.
 E.g. 2. When a firm finds out the customer wants and develops a product that will satisfy
that need and also yield a profit, that’s marketing
Starting Focus Means Ends
Point
Selling Existing Selling and Profits through
Factory products promoting sales volume

Marketing Market Customer Integrated Profit through customer

needs marketing satisfaction
Marketing Mix
Marketers use numerous tools to elicit the desired responses from their target markets. These
tools constitute a marketing mix. Marketing mix is the set of marketing tools that the firm uses to
pursue its marketing objectives in the target market. McCarthy classified these tools into four
broad groups that he called the four Ps of marketing: product, price, place, and promotion.
Marketing-mix decisions must be made to influence the trade channels as well as the final
consumers. Typically, the firm can change its price, sales-force size, and advertising
expenditures in the short run. However, it can develop new products and modify its distribution
channels only in the long run. Thus, the firm typically makes fewer period-to-period marketing
mix changes in the short run than the number of marketing mix decision variables might suggest.
Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ Four Cs.
Four Ps Four Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication
Winning companies are those that meet customer needs economically and conveniently and with
effective communication.

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