Unit 1
Introduction
Marketing is the action, set of organizations, and cycles for making, conveying, and trading contributions that have an incentive for clients, customers, accomplices, and society at large. Marketing is the way toward getting possible customers or clients keen on your products and services. The catchphrase in this definition is "measure"; marketing including exploring, advancing, selling, and disseminating your products or services.
This discipline focuses on the investigation of market and buyer practices and it examines the business management of organizations to pull in, obtain and hold clients ideally imparting brand dependability by fulfilling their needs constantly.
According to AMA, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”.
Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential”.
The features of Integrated Marketing concept are-
1. Consumer orientation:
New concept is one that replaced ‘product’ by ‘customer’ in the centre of the whole scheme of marketing. Consumer is the ‘King’ and the pivot around which all the business philosophy or thinking rotates. This is a revolutionary change in the line of thinking where it is shifted from product to consumer or from factory to market. What is important is that consumer is placed both at the alpha and omega of the chain of business activities.
2. Consumer satisfaction:
Modern marketing concept is also founded on the consumer satisfaction. The success of a firm is not measured by its capacity to pass on the products lucratively or making huge profits and building up additional assets; contrary to this, its success lies in its ability to satisfy the consumer, his needs and aspirations. Consumer purchases are made with certain purposes and expectations.
These expectations are normally related with say, price, quality, quantity and timely supply. A marketer who fails to identify these consumer preferences has failed to satisfy the consumer.
The present and the future organizational success is hinged on this consumer satisfaction which an alert marketer cannot afford to forget.
3. Integrated managerial action:
Marketing activities are only a part of total managerial activities. That is, marketing management cannot be an independent function; it is a phase of overall management functions. The management functional areas are interdependent and not independent.
The marketing function influences production, finance, and personnel and in turn is influenced by these functions. Any firm wedded to modern marketing concept cannot think of working in isolation. For instance, the production manager has to think not as per his idea or plans of production maximization, limited varieties and slicing down the cost for he is to produce what is determined by the marketing manager.
The finance manager cannot think of fixing product prices as per his calculations but take into account the cost calculation of production and marketing manager. In short, in an integrated marketing setup, all the functions of management are aligned and integrated in tune and tone with marketing variables.
4. Realisation of organisational goals:
Though consumer satisfaction is the mainstay of modern marketing concept, it is not the final aim. On the contrary, it is the means to attain the organisational goals. Among other goals, the basic aims of an organisation may be survival, growth, innovation, productivity, profits, and social obligations and so on.
These goals can be achieved effectively through consumer orientation. When a firm has succeeded in maximizing consumer satisfaction, it means that it has delivered a quality product, at a reasonable price, at convenient place and in sufficient quantity.
The marks of consumer satisfaction are product and, hence, company image that is being created in the minds of consumers. Among these goals, profit maximization is also important. Marketing concept is for profit and not for profiteering. Reasonable profits are a must for survival and growth and innovation. The modern marketing concept allows earning reasonable profit through enhanced consumer satisfaction.
In a nutshell, modern marketing concept or integrated concept underscores the fundamental end of consumer satisfaction; consumer- orientation and integrated management action are its means and that organisational goals are achieved through consumer satisfaction including profit maximisation.
“Today's marketing capabilities are very complex. The domestic market is now a cheerful hunting ground for huge global companies. Great advances in technology have significantly reduced time and distance.”
Decades ago, companies faced variety of tough decisions to plug their products. They determine the functionality and quality of products, establish ancillary services, set prices, determine distribution channels, determine the quantity of cash to spend on marketing, advertising, sales today's marketing functions are very complex.
The domestic market is now a cheerful hunting ground for huge global companies. Great advances in technology have significantly reduced time and distance. New products are launched at an alarming pace and are available worldwide during a short time. Communication and transport systems are very developed.
In the midst of these economic developments, busy consumers are changing their lifestyles. To save lots of time, they're shopping in catalogs, phones, and computers. Today's consumers can look for the simplest prices on the web. You’ll handle almost any bank needs by phone or by phone. They will buy insurance and conduct financial transactions without cooperating with agencies and brokers. Consumers don't get to visit supermarkets; they will place orders on the web and have the products delivered to their homes. The planet is additionally characterized by an amazingly rich information environment. Consumers can access objective information about competing brands, prices, features and quality without counting on individual manufacturers or retailers. Customers are going to be ready to specify the worth they're willing to pay and even await the foremost enthusiastic sellers to reply.
The results of all economic development and technological progress may be a dramatic shift in economic power from seller to buyer. Companies have a marketing vision and marketing know-how for his or her success in responding to the mentioned areas. Consumers don't get to visit supermarkets; they will place orders on the web and have the products delivered to their homes. The planet is additionally characterized by an amazingly rich information environment. Consumers can access objective information about competing brands, prices, features and quality without counting on individual manufacturers or retailers. Consumers are going to be ready to specify the worth they're willing to pay and even await the foremost enthusiastic sellers to reply.
The results of all economic development and technological progress may be a dramatic shift in economic power from seller to buyer. Companies have a marketing vision and marketing know-how for his or her success in responding to the mentioned areas.
According to Philip Kotler, popularly known as the father of modern marketing, marketing is "the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit."
"Marketing management is 'the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.'- (Kotler and Keller)”
The American Association of Marketing define marketing management as "the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services in order to create, exchange and satisfy individual and organizational objectives."
Marketing concept is the philosophy that companies should examine the requirements of their customers and then make decisions to satisfy those needs in a better manner than the competitors.
Today, most of the companies have adopted various marketing concepts, but this has not always been the case. Let us now understand major marketing concepts.
The major marketing concepts are −
- Production concept
- Sales concept
- Marketing concept
Production Concept
According to the production concept, a company should focus on those items that it can produce most efficiently and also focus on creating supply of low-cost items that create the demand for the products.
The key questions that a company needs to ask itself before producing an item are−
- Can we produce the item?
- Can enough of it be produced?
This concept worked fairly during the 1920s as the items that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose task was to complete the transactions at a price fixed by the cost of production. All in all, this concept prevailed until the late 1920's.
Sales Concept
According to this concept, the companies would not only produce the items but would also try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were −
- Can we sell the item?
- Can we account enough for it?
This concept paid little attention to whether the item actually was required. The goal simply was to beat the competition with little focus on customer satisfaction. Marketing was an operation performed after the product was developed and produced and many people came to relate marketing with hard selling. Even today, people use the word "marketing" when they actually mean “sales.”
Marketing Concept
The marketing concept relies upon marketing studies to define market segments, their size, and their requirements. To satisfy those requirements, the marketing team makes decisions about the controllable parameters of the marketing mix.
This concept was introduced after World War II as the customers could afford to be selective and buy only those items that precisely met their changing needs and these needs were not immediately obvious. The key questions changed to −
- What do customers actually want?
- Can we improve it while they still want it?
- How can we keep the customers satisfied?
In reply to these discerning customers, companies began to adopt marketing concepts, which includes −
- Focusing on customer requirements before developing a product
- Aligning all operations of the company to focus on those needs
- Realizing a gain by successfully satisfying customer needs over the long-term
When companies began to adopt this concept, they actually set up separate marketing departments whose objective was to satisfy customer needs. Mostly, these departments were sales departments with expanded responsibilities. While this widened sales department structure can be found in some enterprises today, many of them have structured themselves into marketing organizations having a worldwide customer focus.
Difference between Marketing and Selling-
1. Scope:
‘Marketing’ involves the design of product acceptable to customers and transfer of ownership between the sellers and buyers. However, ‘Selling’ simply involves obtaining orders from customers and supplying them the products. It is more concerned with the sale of goods already produced.
2. Emphasis:
In case of ‘marketing’, the focus is on satisfying the wants of customers while, ‘selling’ emphasizes the need of the seller to convert products into cash. Marketing is customer-oriented and seeks to earn profits through customer satisfaction. On the contrary, selling is product- oriented and seeks to increase the sales volume.
3. Occurrence:
‘Marketing’ begins much before the production of goods and services. It continues even after the sale because, ‘after-sale services’ may be necessary for satisfying the wants of customers.
However, ‘selling’ comes after the production has been completed and it comes around with the delivery of the product to the customer. In other words, marketing begins before the manufacturing cycle, whereas selling comes at the end of this cycle.
4. Philosophy:
‘Marketing’ has philosophical and strategic implications. It is directed towards the long-term objectives of growth and stability. On the other hand, ‘selling’ is mere tactical routine activity with a short-term perspective, under which customers are taken for granted as one homogeneous unit.
5. Semantics:
‘Marketing’, as a word, has wider connotation which includes selling in its fold. ‘Selling’ is a part of marketing which covers many other activities like marketing research, product-planning and development, pricing, promotion, distribution and the like. Thus, marketing means selling but selling does not mean marketing.
Difference between Marketing and Retail -
Marketing is the key to moving a customer into the retail sales process. While the retail sales process deals with customers who are ready to buy, marketing is everything you do to entice your customer base and keep them engaged until they reach that stage.
Marketing tactics refer to all the ways in which a business communicates its value—from your business’s messaging through email marketing or on social media, to its packaging and pricing strategy, and even where and how products are sold (e.g. The design of a retail store or website).
Retail marketing is perhaps even more challenging than other types of marketing because it requires building a strong relationship with your customers that motivates them to pick your particular product over another—not just because the product itself is “better,” but because of all the other parts of the shopping experience that reinforce their choice.
That means retail marketing requires you to think carefully about all the touch-points surrounding your customer’s interaction with your products.
Neil Borden in the year 1953 presented the term Marketing mix, an augmentation of the work done by one of his partners James Culliton in 1948. The way toward advertising or conveyance of merchandise requires specific consideration of the executives since creation has no significance except if products are sold. Marketing mix is the way toward planning and coordinating different components of advertising in such a manner to guarantee the achievement of big business destinations. The components of marketing mix have been grouped under four heads—product, price, place and promotion. That is the reason marketing mix is supposed to be a combination of four P's.
Choices identifying with the product incorporates product planning, bundling and marking, and assortments of the product. Choice on cost is significant on the grounds that business depend to a huge degree on product valuing. Regardless of whether uniform cost will be charged or various costs will be charged for similar product in various business sectors are instances of choice relating to the cost of the product. The third significant component is place, which alludes to choose with respect to the market where products will be offered available to be purchased. Promotion includes choices bearing on the available resources of expanding deals.
Various instruments or strategies might be received for this reason. The overall significance to be connected to the different strategies is chosen while focusing on the component of promotion in marketing mix. So, marketing mix includes choices with respect to products to the made accessible, the cost to be charged for the equivalent, and the motivation to be given to the shoppers in the business sectors where products would be made ready to move. These choices are taken keeping in view the impact of marketing powers outside the association e.g., shopper conduct, contenders' technique and government strategy.
In this way, the advertising mix demonstrates the fitting mix of four P's—product, price, promotion, and place—for accomplishing marketing targets. The parts are otherwise called marketing mix factors or controllable factors as they can be utilized by business necessities. In 1960, E. Jerome McCarthy in his book, Basic Marketing, advocated a four-factor order, the supposed four P's Product, Price, Place and Promotion. Marketing Mix - A combination of a few thoughts and plans followed by an advertising delegate to advance a specific product or brand is called marketing mix. A few ideas and thoughts joined together to detail last systems accommodating in creation a brand famous among the majority structure marketing mix.
Elements of Marketing Mix
- Product: Product is a decent, (for example, music players, shoes and so forth) or administration, (for example, hotels, airlines, and so on) that is offered as an answer for fulfill the necessities of your client.
When building up the product, you need to consider its life cycle and plan for various difficulties that may emerge during its phases. When the product arrives at its last stage (deals decrease stage), it's an ideal opportunity to rethink the thing to win the interest of the clients once more.
Merchandise fabricated by associations for the end-clients are called products. Products can be of two kinds - Tangible Product and Intangible Product (Services). An individual can see, contact and feel substantial products when contrasted with theoretical products. A product in a commercial center is something which a merchant offers to the purchasers in return of cash.
2. Price: The following component of the advertising mix is the price your client is happy to pay for your product. This decides the benefit you will have the option to create. When setting a cost for your product, consider the amount you have spent on delivering it, the price scopes of your rivals, and the apparent product esteem.
The cash which a purchaser pays for a product is called as cost of the product. The cost of a product is by implication relative to its accessibility on the lookout. Lesser its accessibility, more would be its cost and bad habit a versa. Retail locations which stock remarkable products (not accessible at some other store) provide a greater expense estimate from the purchasers.
3. Place: This is about the dissemination focus of the product and the strategies utilized in dispersing it to the client. Any place this is, it should be effectively available to the client. For instance, on the off chance that you have an actual store, it should be situated in a place that can be effectively found by the client. In the event that you own a site to advertise your product, ensure it is effectively safe.
Place alludes to the area where the products are accessible and can be sold or bought. Purchasers can buy products either from actual business sectors or from virtual business sectors. In an actual market, purchasers and dealers can genuinely meet and associate with one another though in a virtual market purchasers and venders meet through web.
4. Promotion: Promotion alludes to the techniques a business uses to pick up the consideration of the clients to their product. These incorporates deals promotions, client assistance, advertising, marketing and so on While making your promotion system, consider the strategies utilized by your rivals, the channels that are best in arriving at your clients, and whether they coordinate the apparent estimation of your product.
Promotion alludes to the different procedures and thoughts executed by the advertisers to make the end - clients mindful of their image. Promotion incorporates different procedures utilized to advance and make a brand famous among the majority.
5. Advertising: Print media, Television, radio are compelling approaches to tempt clients and make them mindful of the brand's presence. Boards, hoardings, flags introduced astutely at key areas like substantial traffic zones, intersections, railroad stations, transport stands draw in the passing people towards a specific brand. Slogans likewise increment the review estimation of the brand among the clients.
Companies cannot connect with all customers in large, broad, or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behaviour and careful strategic thinking. To develop the best marketing plans, managers need to understand what makes each segment unique and different. Identifying and satisfying the right market segments is often the key to marketing success.
Market segmentation is a process of dividing the market of potential customers into smaller and more defined segments on the basis of certain shared characteristics like demographics, interests, needs, or location.
The member of these groups shares similar characteristics and usually have one or more than one aspect common among them which makes it easier for the marketer to craft marketing communication messages for the entire group.
Importance of Market Segmentation
1. Advantage over competitors: With deep study of product, policies, strategies of competitors in different market segments, we can develop a product which is different from our competitors and satisfy the needs of consumers.
2. Opportunity to expand market: With market segmentation, marketer is able to create a new market opportunity within the existing one.
3. Discovery of marketing opportunity: Market segmentation provides the opportunity to create and study a deep segment from the existing target markets. With extensive research, marketers are able to create a different marketing strategy for different segment.
4. Awareness of consumer needs: With market segmentation, the marketers are already aware of why the customer wants to purchase the product. All marketing activities are directed towards customer satisfaction. With the help of segmentation, it becomes easy to measure the level of segmentation of each segment and also to make improvement in the segmentation level.
Manager can easily get to know why customer do or do not buy certain products or services. All marketing activities are directed towards the customer s
5. Adjustments in products: Due to market segmentation, marketing manager can easily make adjustments in the product as per the needs of concerned segment.
6. Effective advertising: The advertising appeal is designed to create a positive impact in the buyer's mind. The message conveyed through advertisement influences the purchasing decisions of different buyer groups which are recognized with the help of market segmentation.
Bases of market segmentation
Segmenting is dividing a group into subgroups according to some set bases. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc.
Gender
Gender is one of the simplest yet important bases of market segmentation. The interests, needs and wants of males and females differ at many levels. Thus, marketers focus on different marketing and communication strategies for both. This type of segmentation is usually seen in the case of cosmetics, clothing, and jewellery industry, etc.
Age Group
Segmenting market according to the age group of the audience is a great strategy for personalized marketing. Most of the products in the market are not universal to be used by all the age groups. Hence, by segmenting the market according to the target age group, marketers create better marketing and communication strategies and get better conversion rates.
Income
Income decides the purchasing power of the target audience. It is also one of the key factors to decide whether to market the product as a need, want or a luxury. Marketers usually segment the market into three different groups considering their income. These are
- High Income Group
- Mid Income Group
- Low Income Group
This division also varies according to the product, its use, and the area the business is operating in.
Place
The place where the target audience lives affect the buying decision the most. A person living in the mountains will have less or no demand for ice cream than the person living in a desert.
Occupation
Occupation, just like income, influences the purchase decision of the audience. A need for an entrepreneur might be a luxury for a government sector employee. There are even many products which cater to an audience engaged in a specific occupation.
Usage
Product usage also acts as a segmenting basis. A user can be labelled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product.
Lifestyle
Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual.
Types of market segmentation
Geographic Segmentation
Geographic segmentation divides the market on the basis of geography. This type of market segmentation is important for marketers as people belonging to different regions may have different requirements. For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less.
People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone.
Demographic Segmentation
Demographic segmentation divides the market on the basis of demographic variables like age, gender, marital status, family size, income, religion, race, occupation, nationality, etc. This is one of the most common segmentation practices among marketers. Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that the customers’ buying behaviour is hugely influenced by their demographics.
Behavioural Segmentation
The market is also segmented based on audience’s behaviour, usage, preference, choices and decision making. The segments are usually divided based on their knowledge of the product and usage of the product. It is believed that the knowledge of the product and its use affect the buying decision of an individual. The audience can be segmented into –
- Those who know about the product,
- Those who don’t know about the product,
- Ex-users,
- Potential users,
- Current Users,
- First time users, etc.
People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be labelled according to their usage. For example, a sports person may prefer an energy drink as elementary (heavy user) and a not so sporty person may buy it just because he likes the taste (light/medium user).
Psychographic Segmentation
Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and attitude. This segmentation process works on a premise that consumer buying behaviour can be influenced by his personality and lifestyle. Personality is the combination of characteristics that form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc. Lifestyle is how a person lives his life.
References:
- Basic Marketing- Concepts, Decisions and Strategies- Cundiff, Edward, W. & Still, R.R.
- Marketing Management - Kotler, Phillip
- Principles of Marketing - Kotler, Phillip & Armstrong, Gray
- Marketing Management - Mamoria, C.B,Mamoria Satish & Suri, R.K.
