UNIT I.docx
- 1. UNIT - I Marketing - Meaning Marketing refers to activities a company undertakes to promote the buying or selling of a product or service. Marketing includes advertising, selling, and delivering products to consumers or other businesses. Some marketing is done by affiliates on behalf of a company. Definition 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. ---American Marketing Association (AMA) 2. “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” — Philip Kotler Functions of Marketing 1. Finding the Best Distribution Channels Distribution is about deciding how you'll get the goods or services you want to sell to the people who want to buy them. Having an idea for a product is great, but if you aren't able to get that product to the customers you aren't going to make money. Distribution can be as easy as setting up shop in the part of a city where your target customers are – but in an increasingly interconnected world, distribution more often than not now means that you'll need to take your products or services to the customers. 2. Financing an Enterprise It takes money to make money. As a business owner, an important function of marketing a product is finding the money through investments, loans, or your personal capital to finance the creation and advertising of your goods or services. 3. Deep Market Research Market research is about gathering information concerning your target customers. Who are the people you want to sell to? Why should they buy from you as opposed to a rival business? Answering these questions requires that you do some on-the-ground observation of the market trends and competing products.
- 2. 4. Setting Prices Setting the correct price for your product or service can be a challenge. If you price it too high, you might lose customers – but if you price it too low you might be robbing yourself of profits. The "right" price normally comes through trial and error and doing some market research. 5. Product and Service Management Once you've determined the target market and set the price of your product or service, the goal becomes to effectively manage the product or service. This involves listening to customers, responding to their wants and needs, and keeping your products and services fresh and up to date. 6. Promotional Channels Most business owners are familiar with the idea of promotion. Advertising your products and services is essential to attracting new customers and keeping existing customers coming back. As the marketplace changes, you'll want to respond appropriately by tailoring your promotion messages to social media, by sticking with more conventional outlets, or by using a mix of the old and new. 7. Matching Products to Customers While we tend to think of selling and marketing as being closely linked, selling is last on the list of the seven functions of marketing. This is because selling can happen only after you've determined the wants and needs of your customer base and are able to respond with the right products at the right price point and time frame. Market orientation Market orientation is a business approach wherein the processes of product development and creation are focused on satisfying the needs of consumers. It is a type of marketing orientation technique that designs products with qualities that consumers want, which is completely different from the conventional marketing approach. Marketing orientation can be categorized into five key groups. These are: Production orientation Product orientation Sales orientation Societal orientation Market orientation The Production Concept. This concept is the oldest of the concepts in business. It holds that consumers will prefer products that are widely available and
- 3. inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. The Product Concept. This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. The Selling Concept. This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. The Marketing Concept. This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original
- 4. Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being. ROLES OF MARKETING 1. Meets consumer needs and wants: Needs pre-exist in market. Marketers identify the needs of the consumer and adopt their marketing strategies accordingly. They influence wants, as these are shaped by cultural and individual personalities. Their needs are satisfied through the exchange process. 2. Ensures organization survival, growth and reputation: A business survives because of customer retention and increase in the market share. Marketing helps companies achieve their objectives because it is customer-centric. Marketing helps in satisfying customers beyond their expectations. 3. Widens market: Marketers use mass communication tools such as advertising, sales, promotion, event marketing and PR to promote their products far and wide. Moreover, PR programmes build and protect a company’s image and product. Revolutions in media technology have made marketing more interactive. 4. Adapting the right price: Price is a critical element in the marketing mix of a producer because it generates revenue. Marketing strategies help in setting fair prices, incorporating appropriate changes, and preparing a right approach. The exchange process move smoothly when prices are fixed in a favourable manner. 5. Better product offerings: Most companies sell more than one product. Physical products, that is goods have to be well packed and labelled. In contrast, services are characterized by intangibility and inseparability. Thus, marketing plays an active role by designing and managing product offerings. 6. Creates utility: Much of a product’s utility is created through marketing. Utility is the ability of a product to satisfy wants. Marketing creates form, place, time, information and possession utility. For example, a car fulfills the need to possess a vehicle and ride it.
- 5. 7. Management of demand: Marketers are skilled professionals who play a key role in influencing level, timing and composition of demand. A demand can be a negative demand, no demand, latent demand, declining demand, irregular demand, full demand or overfull demand. Marketing helps in dealing with these varied levels of demand. 8. Face competition: Competitive orientation is important in today’s global markets. Marketing helps in maintaining balance of consumers’ expectations and competitor’s offerings by monitoring the market closely. Superior services, premium products and efficient dealership are used by marketers to retain their market share. 9. Discharge social responsibilities: Rising customer expectations, government pressure and environmental degradation have forced companies to practice higher levels of social responsibilities. Here, social marketing plays an important role. Cause-related marketing is widely used by big corporate houses. For example, through the promotion of low-priced Lifebuoy, Hindustan Unilever Limited spreads hygiene awareness in rural areas. 10. Economic growth: Marketing creates demand. Increased demand encourages production and distribution activities. As a result, industrial growth is boosted and income levels improve due to increased employment opportunities. This improves the standard of living by offering superior and improved products. Thus, the overall economic growth is boosted. IMPORTANCE OF MARKETING 1. INCREASES SALES: Marketing’s main purpose in most businesses is to generate more sales. Marketer need to advertise and promote to help people know about your products. If no one knows about the
- 6. company's products, no one will buy them. That’s the reason business owners invest in marketing. Marketing strategies are used to create product awareness. If a company wants to increase the sales percentage and increase production, the marketing department must be able to deliver effective marketing strategies. 2. BUILDS AND MAINTAIN REPUTATION: The success of any business is dependent on its reputation. In order to have good reputation marketing plays an important role by building a brand’s name in the market. Marketing educates people on the latest market trends, helps boost sales and profit, and develops company reputation. 3.KEEPS IN THE COMPETITION: By marketing the company is able to compete with other competitors. Without competition, big and recognized companies would continue to sell while small or new companies would stand little chance of ever becoming successful. Marketing let all your customers know that your company is reliable and trustworthy through a strong marketing message. 4. CREATES REFERRALS: Company can develop a market leader position through word of mouth by using marketing strategies. Companies make good profits by using existing customers to obtain referrals. Every small business owner’s goal is to profit and expand, and without marketing, this is not going to happen. CLASSIFICATION OF MARKETS On the Basis of Geographic Location Local Markets: In such a market the buyers and sellers are limited to the local region or area. They usually sell perishable goods of daily use since the transport of such goods can be expensive.
- 7. Regional Markets: These markets cover a wider are than local markets like a district, or a cluster of few smaller states National Market: This is when the demand for the goods is limited to one specific country. Or the government may not allow the trade of such goods outside national boundaries. International Market: When the demand for the product is international and the goods are also traded internationally in bulk quantities, we call it an international market. On the Basis of Time Very Short Period Market: This is when the supply of the goods is fixed, and so it cannot be changed instantaneously. Say for example the market for flowers, vegetables. Fruits etc. The price of goods will depend on demand. Short Period Market: The market is slightly longer than the previous one. Here the supply can be slightly adjusted. Long Period Market: Here the supply can be changed easily by scaling production. So, it can change according to the demand of the market. So, the market will determine its equilibrium price in time. On the Basis of Nature of Transaction Spot Market: This is where spot transactions occur, that is the money is paid immediately. There is no system of credit Future Market: This is where the transactions are credit transactions. There is a promise to pay the consideration sometime in the future. On the Basis of Regulation Regulated Market: In such a market there is some oversight by appropriate government authorities. This is to ensure there are no unfair trade practices in the market. Such markets may refer to a product or even a group of products. For example, the stock market is a highly regulated market. Unregulated Market: This is an absolutely free market. There is no oversight or regulation, the market forces decide everything