Unit 1: Introduction to marketing

5th Semester

Meaning of Marketing

Marketing in the pragmatic sense is composed of three key activities:

Marketing is not only with attracting customers but also with retaining customers.
Definition of Marketing
American Marketing Association-1960 The performance of business activities that direct the flow of goods and services from the producer to consumer or user.
American Marketing Association-2004 Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

  1. Marketing is a process
  2. Marketing consists of activities
    1. Product related
    2. Price related
    3. Place related
    4. Promotion related
  3. Marketing satisfies customer needs
  4. Marketing facilitates exchange relationship
  5. Marketing helps achieve objectives Profit, Service, Growth, Survival, Leadership
  6. Marketing occurs in a dynamic environment

Marketing process encompasses all activities aimed at identifying and satisfying customer needs through exchange relationships to achieve organizational objectives in a dynamic environment.

  1. Marketing is concerned with meeting needs and providing benefit.
  2. Marketing focuses on customer satisfaction and delivering value to individual customers, groups, organizations and the society at large.
  3. Future needs of the individual customer and the society as a whole should be identified, anticipated and served.
  4. Marketing focuses on achieving long term profit targets rather than short term sales and profit.
  5. Marketing can be applied in all spheres of the society to sell a variety of entities that includes goods, services ideas, experience, places, people, organizations, assets and information.

Several marketing concepts have evolved over time that has guided marketers to plan and implement their activities. These business concepts have different focus, means and ends. They put different weight to the interests of organizations, customers and society.

Marketing Philosophies
Production Concept (1950-1960)
The production concept believes that consumers will favor those products that are widely available and low in cost.

  • Emerged in 1950
  • Tank factories that produced tanks started manufacturing automobiles and uniform producers started manufacturing readymade garments
  • Influenced by the Keynesian Economics thought.
  • Mass production and wide distribution coverage.
  • Directed at raising output levels, produce standardized product and sell at lower price.
  • Focus on building internal capabilities of the organization in terms of production and selling.
  • Use lower costs to cut prices and expand market sizes.


Currently Chinese companies are adopting this concept in order to penetrate into the international markets with price advantages.
This concept was abandoned by many organizations when they realized that all consumers do not buy cheap products.
The production concept believes that consumers respond to good quality products that are reasonably priced.

  • Emphasis on product quality, performance and features.
  • Little effort is required to sell the good quality products that are reasonably priced.
  • Long lasting products
  • Provide warranty for longer periods.
  • Heavy faith in the role of engineers in development of super products.
  • Gave birth to various products- West-End Watches, Mercedes Benz, Hi-Tech Shoes etc.


Although this concept was not so successful in consumer market, it still has importance value in marketing of machinery and heavy equipment.
This concept disregard customer needs and preferences.
Selling Concept (1960-1970)
The selling concept is based on the idea that people will buy more goods and services if aggressive selling methods are used. It believes that people ordinarily will not buy the organization’s product unless they are persuaded to buy.

  • Organization believes that there is a large number of customers and there is a whole range of selling techniques available to attract the customers.
  • Organization can use another methods for selling if one methods fails.
  • Heavy emphasis on convincing and persuading the buyers about the super quality and fair prices.
  • Selling concept has been successful in the field of political marketing.
  • Focused for selling unsought products which buyers do not normally thing of buying. Life-insurance, encyclopedia, subscription of magazines.
  • Selling concept is successfully implemented in political marketing and marketing of unsought products. The Nepalese business sector today is dominated by selling concept.
  • The basic problem with the selling concept is its assumptions that a majority of the buyers who have been lured to buy the product would ultimately like the product. Those who do not like the product would forget their disappointment with the product.


Marketing Concept (1970-2000)
The marketing concept believes that the key to achieving organizational objectives lies in being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and want of the target markets.

  • It is different as of previous slogan: “We sell what we make.”
  • Change the business slogan to: “We make what we can sell.”
  • The mean adopted for achievement of organizational objective of profit differed among the production, product and selling concepts as it consider buyers an important variable in the business environment.
  • Managers focus on all activities at determining customer needs in the target market and earn profit through customer need satisfaction.
  • “Think Customer”
  • The marketing concept is a new way of thinking about organization’s entire activities. The concept is based on the notion that the main task of the organization is to know the needs, wants and value of the target market and then delivering products that satisfy those needs and wants.
  • Problems: Customer desire versus spending realities, lack of marketing knowledge, new features and services, lack of effective customer service, barriers to communication.


Fundamental Principles of Marketing Concept

An organization can do better if it can define the boundaries of its operation and follow a market tailored business strategy.
All activities of the organization are focused on determining and satisfying customer needs. All organizational activities are customer oriented.
All marketing activities are organizationally coordinated under the marketing department. Product management, marketing research, pricing, distribution, promotion etc.
The principle of profitability calls for an analysis of every business opportunity from the view point of profitability and survival of the organization.




Customer Concept
The customer concept believes that individual customer is the key to achieving organizational objectives. All marketing activities are done to satisfy the needs of individual customer.

  • The starting point is individual customer needs and values.
  • Tailoring marketing program to the needs of individual customer, customized marketing mix, individualized promotion and distribution.
  • Capture larger share of each customer’s expenditure.
  • One to one marketing integration.
  • Profit through customer loyalty and retention.
  • Organizations collect information about the profile of each customer.
  • They use e-ecommerce and the latest information technology.
  • This concept is useful to companies selling high value products.

Societal Concept
The societal marketing concept is an emerging concept which holds that organizational objectives should be achieved through customer need satisfaction in ways that protect the interests of the consumers and safeguard the well-being of society.
Marketing is blamed for green-house effect leading to global rise in temperature.

  • For depletion of ozone layers leading to a rise in the incidence of skin cancer.
  • For resource shortages due to indiscriminate use of scarce and non-renewable natural resources, such as oil, coal, forests etc.
  • For encouraging over consumption in the developed world while a large population in the underdeveloped countries is suffering from hunger, starvation, disease and premature death.
  • For social disharmony by projecting women as wrong symbols in advertisements.
  • The societal marketing concept believes that the organization should deliver the superior value product to the market that maintains or improves the consumer’s and society’s well-being.
  • The pressure groups, particularly environmentalist, consumerist and feminist, have forced many companies to adopt the societal marketing concept.


Holistic Concept
Philip Kotler- “The holistic marketing concept is based on the development, design and implementation of marketing programs, processes and activities that recognizes their breadth and interdependencies.”


The holistic concept emerged mainly due to the social and technological challenges that raised serious questions about the power of marketing to mold and modify consumer needs and preferences in the 21st century.
Marketing Philosophies – Comparison

Components of Marketing Mix

Product Mix

  • Product planning and development
  • Product quality
  • Variety
  • Design
  • Features
  • Branding
  • Packaging and labeling
  • Warranty
  • After sales service

Price Mix

  • Competitors’ price analysis
  • Pricing objectives
  • Price setting
  • Conditions of sale
  • Discounts, allowances and commission

Promotion Mix

  • Advertising
  • Personal selling
  • Sales promotion
  • Public relations
  • Direct Marketing

Place Mix

  • Channel
    • Wholesaler
    • Retailer
  • Physical Distribution
    • Order processing
    • Warehousing
    • Material handling
    • Inventory management
    • Transportation

Task of Marketing Management

  • Developing Marketing Strategies and Plans
  • Capturing Marketing Insights
  • Connecting with Customers
  • Building Strong Brands
  • Shaping the Market Offerings
  • Delivering Value
  • Communicating Value
  • Creating Successful Long Term Growth

Marketing Challenges

  • The information technology revolution
  • Connection with customers
  • Globalization
  • Ethics and social responsibility
  • Customer empowerment
  • Product Vs Selling
  • Creating and innovation

Relationship Marketing

  • The relationship marketing has emerged from 1980’s.
  • It has shifted attention from short term transaction and immediate profits toward a process of creating customer value through building long term relationships with customer.
  • Sales focus Vs Marketing mix.
  • Directed towards building a large group of satisfied and loyal customers.
  • Customer retention and winning back of lost customer.
  • Long term efforts in delivering value.
  • Win-win relationship
  • Directed at building strong economic, technical and social relationships.
  • Creating valuable marketing network.









Relationship marketing has the aim of building mutually satisfying long term relations with key parties-customers suppliers, distributors- in order to earn and retain business.
Dimensions of relationship marketing
Relationship marketing has three dimensions:

  1. The view of companies about customers is changing. The emphasis is shifting from transaction based marketing to relationship based marketing.
  2. In addition to their relationship with customer’s companies are increasingly concerned about their enduring relationship with suppliers, middlemen, stakeholder and other influences groups. The focus is also on internal marketing where all employees are trained and motivated to work for customer satisfaction.
  3. A strategy to bring the three key elements-quality, customer service and marketing activities-to work together in order to produce synergistic effects for the benefit of the customers and external agencies.

Relationship Building Process
Prospects
People who have interest in the product and ability to pay for it. They are likely to buy the product.
First Time Customers
Prospects who buy a product for the first time. They can be brand switchers.
Repeat Customers
First time customers who repeatedly buy the product. They experienced satisfaction with first time purchase. They have potential to become loyal customers.
Clients
Repeat customers who are treated specially and knowledgeable by the organization. They are loyal and satisfied customers. They buy products for a longer period of time.
Members
Clients who join membership program to take advantage of benefits. Customer clubs are organized.
Advocates
Members who enthusiastically recommend the organization and its products to others.
Partners
Advocates who work together actively for mutual benefits with the organization.
 
Strategies for Relationship Marketing

Green Marketing
Green marketing refers to the process of selling products and services based on their environmental benefits.

  • Part of societal marketing concept.
  • Environmental friendly.
  • Potential customer will view a product or services “greenness” as a benefit.
  • Customer will pay more for green products.
  • Address ecological problem or make balance.
  • Address environmental problems due to mass production, mass marketing and mass consumption.
  • Environmental friendly processes and practice.

Marketing of products taking into considerations the ecological issues is popularly known as Green Marketing.

Green Marketing calls for business organizations and consumers to show environmental consciousness by modifying business and consumption behavior favoring green products and practices.
Practices of Green Marketing
Environmental awareness – polythene bags, plastic packaging, water bottles and glass and tin containers, old vehicles etc. Customer associations around the world have become very active to pressurize governments and businesses to adopt more environmental friendly business practice.
Resource conservation – Renewal resources & Non-renewal resources. The society today emphasizes on using more of the renewal resources and conserving the non-renewal resources for the future generations.
Recycled products – The pressure on non-renewal resources has greatly been reduced through recycling of plastics, iron, cooking oil, paper and many other products.
Green products – Use of excessive fertilizers, genetically modified grains, fruits and vegetables and use of pesticides on plants has harmed the general health of people. Promoting organic farming and marketing of organic food.
E-Commerce (Internet Marketing/E Marketing
E commerce is the marketers’ effort to inform, communicate, promote and sell its products and services through the internet.

E Business uses three types of networks for conducting business operations.
Internet: The global network through which a firm or an individual can contact, access and share information, order for products and services and sell products and services to other users of the internet.
Intranet: This is an in-company network that allows employees to access and share information with each other in order to improve the company’s performance.
Extranet: This is a network of the company with its suppliers, distributors, and major customers facilitating exchange of information, execution of orders, transactions and payments.