Marketing is a vital functional area of management. The term ‘marketing’ was derived from the word ‘market’ or ‘shop’ which refers to a place for buying and selling of goods and services. The traditional definition of marketing was concerned with the only the sale of goods but the modern definition is consumer oriented which is creating customers and satisfying their needs.
Marketing consists of a set of activities that starts with the identification of human needs, followed by the creation of a product or service, setting a price for that, making the potential customers aware of it and, finally selling that product or service to the consumers so that they can full fill their needs, and attain satisfaction, through which marketers can maximize their revenue.
Definition of Marketing
Marketing refers to those essential functions like buying, selling, transportation, warehousing, financing, packing, risk-taking, insurance, advertisement, salesmanship, distribution, etc., by which the movement of products and services from the producer to the consumer takes place.
Nature of marketing
Marketing is a very complex function and much broader concept. The nature of marketing are as follows:-
1. Marketing is an Economic Function: Through marketing activities, goods, and services are sold to the final consumers and the business earns a profit. Therefore marketing is an economic function.
2. Dynamic Function: Marketing is a dynamic function because due to change in technology and changes in society the need, wants and aspirations of human beings changes and marketing also change accordingly. So marketing is a dynamic function.
3. Transfer of Ownership: Marketing is legal because the ownership and title of goods are transferred from seller to buyer through marketing.
4. foundation of business: Marketing is the foundation of the business because marketing helps in building modern business and it is the key to business.
5. Satisfying the needs of the customers: A business enterprise needs to earn profit and for that reason it interacts with the customers, satisfy them and build long-term relationship with them. It is possible only due to the performance of business activities which transfers the goods and services from producer to the consumers.
6. Marketing Mix: Marketing mix refers to four elements -product ,price, place and promotion. These four elements are combined for achieving the two objectives of the organization-satisfaction of customers and profit maximization.
7. Lawful System: Marketing is a lawful system because in marketing law of contract, sale of goods act are required to be followed.
8. Searching Function: The objective of modern business is to earn profit by satisfying the customers. For this reason it is necessary to search for new markets, new customers and satisfy their demand, needs and preferences.
9. Social Responsibility: Marketing function must satisfy the duties and responsibilities towards the society. So the marketing activities are to be performed in such a way so that goods can be transferred at the right time, at right place and at right time to the consumers for satisfying them.
10. Coordinated Process: Marketing is a coordinating function which coordinates between the demand of the customers and the resources of the organization. The net result of this coordination is reflected through marketing.
Marketing Concept: Traditional Vs Modern
Marketing concept refers to the marketing philosophy of the organisation. the concept of marketing can be classified as under:-
(1) Traditional or old concept and (2) Modern concept
(1) Traditional or Old Concept:
Marketing consists of all those activities which are meant to ensure the flow of goods and services from the producer to consumer. In this case, marketing begins after the goods are produced and ends with their sale. It emphasizes only one way traffic i.e. transfer of goods from producers to consumers.
Traditional concepts of marketing include:
1. Production Oriented: It implies that consumers will buy those products that are best in quality and performance, in addition to having some innovative features. Thus good quality product with reasonable price requires little promotional efforts. This was the marketing philosophy till 1930.
2. Sales Oriented Marketing Concept: It implies intensive sales promotion, advertising and aggressive salesmanship in order to convince a customer to buy a product because they are not willing to buy a product unless marketers takes various aggressive selling and promotional efforts.
(2) Modern Concept
This concept is focusing its attention on the consumer and the ‘satisfaction of his needs’ and is, therefore, consumer-oriented.
1. Consumer Oriented: Marketing today produces that which consumer needs, in the quantity that the consumer requires, at a price that the consumer can pay, and the desired satisfaction is given to him by offering competitive and quality goods and services through the various channels of distribution that suit the consumer convenience.
2. Socially Oriented: This concept is also known as social marketing concept. It implies that the business enterprise will have to adopt socially responsible marketing policies and plans so that both customer welfare and social welfare are assured.
Scope of Marketing
Marketing is a universal concept. The scope of marketing is as follows:
1. Study of Consumer needs and wants: Marketing tries to understand the needs and wants of the customers because goods are manufactured on the basis of their needs and wants. These needs and wants motivates consumer to purchase the goods and services.
2. Market Oriented: The activities of any business are market oriented and customer oriented.
3. Study of Consumer behaviour: The purchase decision-making behaviour of the consumers is studied by the marketer for developing appropriate product marketing strategies. Analysis of buyer behaviour helps marketer in market segmentation, targeting and positioning of products.
4. Starts and ends with customers: The marketing functions starts with searching the needs, wants and aspiration of the customers and ends with the satisfaction of customers.
5. Production planning and development: The scope of marketing includes product planning and development. It starts with the generation of product idea and ends with the development of the product and commercialization. Product planning includes everything from branding and packaging to product line expansion and contraction.
6. Pricing Policies: The scope of marketing includes pricing. Marketer has to determine pricing policies for their products which must be consistent with the company’s objectives, costs, competition and demand for the product. Though pricing policies
differs from product to product but pricing policies and strategies will make price setting easier which depends on the level of competition, product life cycle, marketing goals and objectives of the companies, etc.
7. Distribution: The scope of marketing also includes the study of distribution channels. Marketing of goods and services are to be made through various types of direct and indirect channels in case of consumer goods and industrial goods so that sales and
profit is maximized at minimum cost.
8. Cost Reduction: The marketing activities are to be performed in such a way so that profit is maximized and cost is reduced.
9. Promotion: The various components of promotion include personal selling, sales promotion, and advertising. Right proportion of promotion mix is really important in accomplishment of marketing goals.
10. Finance: Marketing is also concerned about the finance. For every marketing activity like packaging, advertising, sales force management, a budget is fixed and all the marketing activities are to be completed within the limit of that budget.
11. After Sales services: Marketing does not end with the sale of goods and services to the consumers but it also covers after sales services given to customers, maintaining good customer relationships management, attending their queries and solving their problems.
7 function of marketing
1. Buying and assembling: Buying means the procurement of raw materials, components and finished products. Efficient and economical buying is essential for success in marketing. Buying involves several activities such as determination of needs, selecting the source of supply, ascertaining the suitability of goods, negotiating the terms of purchase and arranging for the transfer of ownership. Goods may be purchased through various modes like purchase by sample, purchase by inspection, purchase by description and purchase by grade.
Assembling is different from buying. It begins after the goods have been purchased. It involves collection of goods already purchased from different sources at one common place. Assembling is essential in the case of agricultural commodities which are produced by small farmers at scattered places.
2. Selling and distribution: Selling is the heart of marketing. ‘Nothing happens until somebody sells something’. The purpose of all marketing activities is to sell the goods or services. Selling enables a firm to satisfy the needs of the customers, and thereby achieve its objectives.
Once the goods and services are manufactured and packaged, ready to be sold, they need to be distributed to their real-consumer. This is done by physical distribution functions.
3. Transportation: Transportation is the physical means of carrying goods from one placed to another. It plays a vital role in marketing. It serves as a link between the producers and consumers who are located at different places. Transportation helps in assembling and dispersing the goods. It creates place utility by carrying the goods to such places where they are needed. It also helps in widening the market. In the absence of transportation, a manufacturer will have to restrict his production for the local market only. Transportation removes the barrier of distance and helps to stabilise prices by matching supply with demand.
4. Storage or Warehousing: Storage refers to the holding and preservation of goods from the time of production until the time of consumption. Storage creates time utility by bridging the time gap between production and consumption. It equalizes supply and demand thereby stabilizing prices.
Warehousing is essential for commodities like wheat, sugar, rice, etc. which are produced during particular seasons but demanded throughout the year. Similarly, storage facilities are required for products such as umbrellas, woolens, etc., manufactured throughout the year but demanded during particular seasons.
5. Product planning and development: Products are the foundation of marketing because all marketing functions revolve around products. The success of the marketing department depends upon the degree to which the products offered by it satisfy the needs of customers.
Customers buy only those products which offer them maximum satisfaction or utility. Therefore, it is the responsibility of the marketing department to design and develop the right type of products. This function is known as merchandising or product planning and development. It involves decisions as to what products to produce or purchase for sale. The design, colour, size, quality and other features of the product should be decided keeping in view the needs and desires of the customers. Thus, product planning and development involves introduction and development of new products, improvement of the existing products and dropping out unprofitable items from the product line.
6. Pricing: Pricing refers to the process of fixing the price (money value) of a product or service Pricing is an important function in marketing because it determines the sales volume and the amount of profits. A product is acceptable to the customers when it is reasonably priced. A sound price policy helps to satisfy customers and to yield profits.
7. Risk taking: Risk means uncertainly of profits or danger of loss due to unknown and unavoidable future events. Several types of risk are involved in marketing. Risk taking in marketing refers to the financial risk inherent in the ownership of goods held for sale in anticipation of demand. risk may also due to change in demand, fall in prices, spoilage in storage and transportation, theft, fire, flood, earthquake, bad debts, etc. risk is the part of business and cannot be eliminated fully.
Why Marketing
1. Creation of demand for goods and services: Marketing is helpful both to producers and consumers. Because marketing creates demand for goods and services. It arouses dormant desires of customers and creates new demand for goods and services.
2. Equilibrium between demand and supply: Marketing brings or maintains balance between demand and supply by conducting marketing research.
3. Livelihood: Marketing provides livelihood to many, such as, wholesalers, brokers, marketing agents, retail traders etc.
4. Certainty: Marketing assures selling. Thus the producer can continue production and maintain the flow of distribution.
5. Increase in the risk-bearing capacity: Production of good involves risk if it is not liquidated very fast. Marketing creates secured market for goods and increases the risk bearing capacity of the enterprises.
6. Improvement in the standard of living: Marketing increases the consumption propensity of the consumers and brings diversity in demand. As a result the producer is required to produce different types of products in increase quantities which helps to improve the standard of living of the consumers.
7. Increase in Employment Opportunities: Marketing creates increased demand for goods and services. In order to produce more organisations are required to employ more human resources. So marketing creates employment opportunities and helps to increase national income of the country.
8. Transfer of ownership: Through marketing, title of goods is transferred from the seller to the buyer.
9. Creation of various utilities: Marketing creates four types of utilities-time, place, possession and form utilities.
10. Innovation: Modern marketing innovates new products, new services, new channels of distribution and sales promotion.
Objectives of Marketing
The following are the basic objectives of marketing:
1. Securing Consumer Satisfaction: The basic objective of marketing is to organise the factors of production within the organisation in a satisfactory manner keeping in view the factors of consumption. Good marketing must provide for meeting out the consumer needs. To assess the customer needs, present and potential, marketing provides the major criteria for managerial decisions regarding products, pricing, quality, development, channels of distribution, etc.
Marketing management must provide right feed-back to the general manager or production manager. Goods which are produced in anticipation of the demand must meet the requirement of the consumer and give them full satisfaction.
2. Organisational Integration: Marketing must aim at bringing about a proper co-ordination and integration between product and its price, sales promotion and distribution. It must establish co-ordination with other managerial departments, such as, manufacturing, inventory control, finance, personnel etc.
3. Profitability: A business enterprise is an economic institution established for earning profit. Marketing must aim at earning profits but through maximisation of consumer satisfaction. Pricing of product is an important element of marketing. Prices should be so regulated that they generate adequate economic resources (profits) for optimisation of both production and
consumer satisfaction.
4. Service to Society: Marketing has to be oriented towards service to the society. marketing should provide only socially useful goods and enable people to improve the quality of their living. It must generate employment. marketing should offer them wide variety of goods and services of superior quality at reasonable prices. it should not resort to profiteering by adopting unfair trade practices.
Challenges of Marketing
The various factors which pose various challenges before marketing managers are:
a) Difficulty in obtaining correct information.
b) Impossibility of converting customer’s wants into products.
c) Inability to bridge the time gap between new product and fast changing marketing environment.
d) Difficulty in avoiding product obsolescence.
e) Inability to develop a new product.
f) Difficulty in getting a shelf space for the product.
g) Continuous over-crowing of the media which appeal to the target market.
What is Marketing Environment
Marketing environment refers to the external and internal factors and forces of the environment that affect the ability of the company to develop and maintain successful relationship with target customers.
Marketing environment can be classified into:- (A) Macro Environment and (B) Micro Environment
(A) MACRO ENVIRONMENT:
There are certain factors which indirectly affect the company’s working. These factors are external to the company and are quite uncontrollable. The major factors of macro environment are:-
1. Demography: Marketers are highly interested in demography, that is scientific study of human population and its distribution structure. The factors of population which have effect on the market are:
(i) Age distribution.
(i) Occupational status.
(ii) Family Income.
(iv) Educational Background
(V) Birth, Death and Marriage rates and
(vi) Gender mix.
2. Economic Environment: Economic conditions play a significant role in the marketing system. High economic growth assures higher level of employment and income, and this leads to marketing boom in many industries. Marketing plans and programmes are also influenced by many other economic items, such as:
(i) Interest rates.
(ii) Money supply.
(iii)Price level.
(iv) Consumer credit etc.
3. Social and Cultural Environment: Social and cultural forces usually influence the welfare of a business concern in the long run. We have ever changing society. New demands are created and old ones are lost in the due course. Marketing management is called upon to make necessary adjustments in marketing plans in order to fulfill new social demands There are four aspects of social environment.
(i) Changes in our life styles and social values e.g. changing role of women, emphasis on quality of goods, greater preference to recreational activities, etc.
(ii) Major social problems, e.g. concern for pollution of our environment, socially responsible marketing policies, need for safety in occupations and products etc.
(iii) Growing consumerism.
(iv) Social responsibility of business.
4. political and Legal Forces: Political and legal forces are gaining considerable importance in marketing activities and operations of business enterprises. Marketing systems are affected by:
(i) Monetary and Fiscal policies of the
(ii) Import-export policies.
(iii)Custom duties.
(iv) Anti-pollution laws etc.
5. Science and Technology: Unprecedented development of science and technology has created a phenomenal impact on marketing environment. The way consumers’ purchases goods and the manner in which they are consumed reflect a society’s life-style. Technological forces help to shape changes in the style of living of consumers. Marketing management with the help of technology can create and deliver standards and styles of life. The impact of digital revolution on business is huge.
New market opportunities are created by new technologies and the marketers must notice such change in the technological environment. But if they fail to notice the changes then they may find their products outdated, lose market opportunities and leave chance to competitors.
6. Physical Forces (Natural environment): Ecological environment has assumed a unique importance in production and marketing in modern economies. The marketing system of an enterprise has now to satisfy not only the buyers of its products (consumers/users) but also societal wants which may be adversely affected by its activities and then only it is entitled to achieve its profit objectives.
(B) MICRO ENVIRONMENT
It refers to the company’s immediate or internal environment. These factors affect the activities of the organisation directly. The major factors of micro environment are:-
1. Competition: Marketing decisions of major importance should not be made without assessing competition in a free market economy. The marketing manager has little or no control over the actions of competitors. He can merely anticipate competitive actions and be prepared to deal with them. Competitors considerably influence the company’s choice of marketing strategies particularly in relation to:
(i) Selection of target markets
(ii) Suppliers
(iii) Marketing channels
(iv) Product mix
(v) Price mix and
(vi) Promotion mix.
2. Customer Demand: Customer demand is ever changing, unpredictable and also unmeasurable with accuracy. Under the market-oriented marketing philosophy, customer needs and desires act as the centre of the marketing universe. In fact, marketing system must respond to the customer needs and desires in all respects.
3. Marketing Intermediaries: Marketing intermediaries like wholesalers, retailers and various facilitating organisations (that provide transportation, warehousing, financing and other supportive services) aid in the flow of products and services between a marketing organisation and the market. Marketing environment depends greatly on the availability and working ability of the middlemen.
4. The Company: The organisations internal environment consists of the marketing sales force, such as, marketing manager, researchers, advertising and sales promotion specialist, sales representatives etc. Internal environment also consists of different departments like purchase, production, finance, research & development etc. The inter-relationship among the various departments, their efficiency and planning has an immense effect on the marketing environment of the company.
5. Publics: The marketing environment of the company is also affected by the public’s, i.e. those who are interested in the affairs of the company. It includes:-
(i) Customers, (ii) Government,(iii) Investors (iv) Media and (v) Employees.
What is Marketing Mix
Marketing mix is the particular blend of four controllable marketing (product, price, place and promotion) variables that the firm uses to achieve its objectives in the target market and promote its brands or products in the market. The 4P’s of marketing mix are (i) Product mix, (ii) Price mix (iii) Promotion mix and (iv) Place or Distribution mix. Each element is also called decision variables.
1. Product Mix: Product is any tangible, intangible offering that might satisfy the needs or aspirations of a consumer. The product mix is the full list of all products offered for sale by a company. A company’s product mix has four important dimensions, such as, width, length, depth and consistency.
2. Price Mix: Price mix is built up with different aspect of price determination of saleable goods and services. It is the only element of marketing mix which generates sales revenue for the organization. Fundamental basis of price determination together with its various strategies is fixed up in this mixture.
3. Promotion Mix: Promotion mix refers to various activities the company takes up to communicate and promote its products to the target market. It is an effort on the part of marketer by which the customer can be informed of the goods and can be persuaded and influenced to buy the goods.
4. Place or Distribution Mix: Place mix stands for the various activities the company undertakes to make the product accessible and available to target customers. For tangible products it refers to the physical distribution system of the product including warehouse, transport, sales force, and retail outlets i.e. where it is sold. For intangibles it refers to channels through which consumers are reached like shopping malls, doctor’s clinics etc.
Concept of 4Ps and 4Cs
Neil H. Borden popularized the concept of marketing mix in the year 1964. Later on E. Jerome McCarthy grouped the ingredients of Borden’s marketing mix into the four categories that today are known as 4P’s of marketing. According to McCarthy these four controllable elements are 1.Product 2. Price 3. Promotion and 4. Place or Distribution.
The 4P’s is probably the best known way of defining the marketing mix from seller’s perspectives.
1. Product: The product which is a bundle of utilities constitutes the most important element of the marketing mix. A product group is formed with some separate groups and the product mix is built up through integration of a few product groups.
2. Price: The exchange value of goods and services in terms of money at any level of marketing is called the price. It is the amount a customer pays for the product.
3. Promotion: Promotion implies such type of activities on the part of producer or sales personnel that it will be possible to increase the sales volume. It has four distinct elements: advertising, public relations, personal selling and sales promotion.
4. Place or Distribution: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It include any physical store as well as virtual stores on the Internet.
Another marketing mix approach was given by Robert Lauterborn in the which is known as 4C’s, which presents the elements of marketing mix from the buyer’s point of view. It is made up of:-
1. Customer needs and wants (the equivalent of product),
2. Cost (price)
3. Convenience (place) and
4. Communication (promotion)
FAQ
Q.1. What is Marketing Myopia?
Ans- It means taking a short-sighted view of marketing for gains only in the short-run rather than preparing for the next five years and so on.
Q.2. What is Demarketing?
Ans- This is the task of trying to reduce the demand for a product or service on a temporary or permanent basis. For example, at the time of power shortage consumers may be encouraged to reduce their energy consumption. In the face of the oil crisis, the use of oil was also sought to be reduced. Normal marketing tools are used in reverse for the purpose.
Q.3. What is Remarketing?
Ans- Remarketing is rebuilding interest in a stable or declining product or service. An example would be popularising cinema theaters, in the face of growing competition from DVD/CD players, home theatres, etc.
Q.4. What is Conversional Marketing?
Ans- It is the task of trying to get people who dislike something, to like it. For example, trying to popularise coffee with people for whom tea is preferred drink.
Q.5. What is Synchro Marketing?
Ans- It is altering the time pattern of demand so that it will match the time pattern of supply. Example : public transportation agencies encouraging passengers to travel during lean periods to avoid peak hours.
Q.6. What is Developmental Marketing?
Ans- It is the task of developing a new product or service that meets a clear market need. For example, developing an expensive washing machine.
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