• State the nature and scope of marketing. • Narrate the

UNIT-3 : BASIC CONCEPTS OF MARKETING

UNIT STRUCTURE

3.1 Learning ObjectivesI

3.2 introduction

3.3 Meaning of Market

3.4 Meaning and Definition of Marketing

3.4.1 Definition of Marketing

3.5 importance of Marketing

3.6 Basic Concepts Underiying Marketing

3.6.1 Evoiution of Basic Marketing Concepts

3.6.2 Seiiing Concept Vs Marketing Concept

3.7 Marketing Mix

3.8 Service Marketing Mix

3.9 Difference Between Goods And Service Marketing

3.10 Let Us Sum Up

3.11 Further Readings

3.12 Answer to Check Your Progress

3.13 Possibie Questions

3.1 LEARNING OBJECTIVES

After going through this unit, you wiii be abie to-

• Expiain the meaning and importance of Marketing.

• Describe the various concepts of marketing and the differences

between selling and marketing concepts.

• State the nature and scope of marketing.

• Explain the meaning marketing mix.

• Narrate the evolution of marketing concepts.

122 Fundamentals of Computer and Management

Basic Concepts of Marketing Unit-3

3.2 INTRODUCTION

Marketing as a subject of study is now attracting attention from business

firms, companies, institutions and even f/^om countries. In history, its origin

dates back to the days when the people realized that he should specialize

only in the activity to which he was best suited and he found it to be his. o

advantage to utilize the services of others when they could do things better

than him. This specialization created the necessity of exchange and thus

the foundation of business was started. After Industrial Revolution, there

were changes in the techniques, methods and volume of production. Large

scale production introduced the new methods of marketing to create

demand for products and services.

Marketing Includes various activities which are involved in the generation

of markets and the satisfaction of consumer needs. Marketing is not a

single activity nor is it the sum of several activities. It is the result of a

balanced interaction of several activities. In this unit we will explain thebasic concept of marketing, its nature, scope, importance and the evolutionof marketing concepts.

LET US KNOW

Industrial Revolution: The Industrial Revolution was a period

in the late 18th and early 19th centuries when major changes

in agriculture, manufacturing, mining, and transportation had

a profound effect on the socioeconomic and cultural conditions

in Britain. The changes subsequently spread throughout

Europe, North America, and eventually the world. The onset

of the Industrial Revolution marked a major turning point in

human society; almost every aspect of daily life was eventually

influenced in some way.

Fundamentals of Computer and Management123

Unit-3 Basic Concepts of Marketing

3,3 MEANING OF MARKET ~

The term 'Market' refers to a place where goods are bought and sold by

the buyers and sellers. In wider sense, market includes the whole of any

region in which buyers and sellers are brought into contact with one another

and by means of which the price of goods tend to be equalized easily and

quickly.

Basically, there are two concepts of market-

(a) Place Concept: A convenient meeting place of buyers and sellers

for exchange of goods e.g. physical or spot market.

(b) Demand Concept: A market is equated with the total demand. Market

means buyers having unmet wants and purchasing power to make

their demand effective with the will to spend their income to fulfill

those wants. This is a right approach to determine a target market.

Demand concept of market assumes unique importance in the

marketing concept. '

3.4 MEANING AND DEFINATION OF MARKETING

The traditionat-view of marketing states that marketing is mainly concerned

with the physical and ownership transfer of goods and services from the

producer to the ultimate consumers. But the modern concept of marketing

states that marketing involves the production of the product acceptable to

the customers and the activity which helps physical transfer and ownership

from the producer to the ultimate consumers. The modern view assumes

that marketing means identifying, anticipating and satisfying consumer's

needs and desires. Thus, marketing creates place utility, time utility and

possession utility.

Marketing is a human activity directed at satisfying needs and wants through

exchange processes.


Basic Concepts of Maiketing ^ Unit-3

A need is a state of fejt deprivation. Marketers create wants on the basis

of needs. For example, food is an essential to satisfy the hunger needs.

Marketers produce various types of food such as Pulao, Sweets, Tea, arid

Coffee etc. to create wants. Creating wants means creating demand for a

product by prpviding an opportunity for choice or selection. Here, the buyers

have an opportunity to select out of the four altematives -Pulao, Sweets,

Tea or Coffee to satisfy their hunger needs. The exchange process means .the transfer or transaction of goods which cannot be made free of cost i.e.

it should be on payment basis.

/

The process of marketing starts With the identification of needs and wants

through marketsuiyey and converting them into products or services and

distributing the same to ultimate consumers through buyer oriented channel

with suitable sales promotion technique at logical price to make a

reasonable profit.

3.4.1 Definition of Marketing

The term "marketing" has been defined by a number of scholars in a

variety of ways. In fact, there are as many definitions as there are

popular scholars in marketing. The reason is obvious. The subject is

even changing and at every stage of evolution new potentialities are

recognized which result in a new definition. We shall describe a few

definitions here to realize how dynamic the subject marketing is-

1. "Marketing is the performance of business activities that direct

the flow of goods and services from producer to consumer or user".

-Committee of the American. Marketing Association.

This definition merely emphasizes one particular aspect i.e.

movement of goods and services from producer to consumer. It

makes marketing production oriented rather than consumer

oriented.

2. "Marketing is that part of economics which deals with the creation

of time, place and possession utilities"

-American Marketing Association

Fundamentals of Computer and Management 125


Place utility is created by marketing the goods and services available

to the consumer at the place where such goods are needed.

Time utility is created by making the goods available at the time

when they are needed.

Possession utility is created by transferring the goods to those

who need them.

This definition expresses the traditional views of marketing and it

covers only few aspects of marketing.

3. "Marketing is a total system of interacting business activities

designed to plan, promote and distribute want satisfying products

and services to present and potential consumers"

-W. J. Stanton

The above definition given by Stanton appears to be more suitable

as it covers almost all the modern views such as-

(a) It views marketing as a total concept.

(b) It describes marketing as dynamic process.

(c) It covers all the activities ranging from product planning to

distribution.

(d) It indicates that marketing is the result of interaction of several

activities.

(e) It pays importance for satisfying consumer's needs and wants.

4. "Marketing is the process of discovering and translating consumer

wants into product and service specifications and then in turn

helping to make it possible for more and more consumers to enjoymore and more of these products and services".

-Harry L. Harsen

5. "Marketing is the business function that identifies customers' needsand wants, determines which target markets the organisation canserve best, and designs appropriate products, services, andprogrammes to serve these markets"

-(Kotler and Armstrong, 1996).Fundamentals of Computer and Management

Basic Concepts of Marketing - Unit-3

This definition has also covered all the activities of marketing starting

from identification of needs and wants of consumers, converting than

into product and service and making things available to consumers

in a manner that they can enjoy more and more.

3.5 IMPORTANCE OF MARKETING

The success or failure of any organization, profit making or otherwise

depends on marketing. As the economy progresses, the importance of

marketing also increases. With the progress of economy, the demand

and supply of certain new products and services start increasing and some

of the existing products or services start losing their demands. In this ever

changing situation marketers are forced to sell the product according to

the needs, wants and desires of the customers. The importance of marketing

may be studied from both from the point of view of society and producer.

Importance of marketing from society point of view:

(I) Marketing improves standard of iiving: Marketing promotes large

scale production and sales which bring down the cost of production

and increase the amount of profit. Lower price results in large

consumption by large number of consumers which improves the

standard of living at large.

(ii) Marketing connects the producers and consumers: The

producers produce goods and services for the purpose of selling.

Therefore, the producers should be in touch with the consumers

who require such goods and services. In the absence of marketing

process, it would have been extremely difficult for producer to find

out what customer want.

(ili) It provides employment opportunities: Marketing results in large

scale production which in tum creates a good number employment

in the production process. Thousands of people are employed to

manage the retail and wholesale establishments. In our country, the

business establishment ranks second to agriculture sector in providing

employment opportunities.

Fundamentals of Computer and Management j 27

^ . Basic Concepts of Marketing

(IV) It helps to provide economic stability: Good marketing systemenables to maintain the price level stable.by equalizing the demand

, , and supply at various places and different period. This is possible bycreating time and place utility.

(V) It. helps .to utilize our natural resources: It is mafketing which

collects needs, wants desires,, preferences etc. of dorqestic

consumers and international consumers and analyze the information

to produce goods and services for better satisfaction of consumers.

In the process of producing various goods, they are utilizing the

national resources up to optimum level. Importance of marketing

from producers/firms point of view:

(a) Marketing creates awareness among potential consumers and

motivates people to purchase the products and services to satisfy

their needs and wants. In this process, the firms generate revenue

by selling the goods and services with which the firms further

produce and grow.

(b) The marketing organization provides a channel of communication

between the firm and the consumers. It is fumishing information

about the consumers demands, tastes and preferences to the

top managements. This process helps the firm to adjust its

production schedule to suit the tastes of the consumers.

(c) It helps the producers to increase the volume of sales which

forces large scale production and results more profit.

From the above explanation you will be able to realize the importance of

marketing in the economic development of a country.

3.6 BASIC CONCEPTS UNDERLYING MARKETING

NEEDS

The core concept of marketing is to understand or feel the "human

needs" that denotes the state of felt deprivation. Therefore being the

marketers you need not go for inventing these needs. Rather you

1 ?8 Fundamentals of Computer and Management

Basic Concepts of Marketing , ^ . Unif-3.

should try to understand it. the needs are in-built in human nature

itself and thus naturally existed in the composition of human biology

and human condition. When the needs are not satisfied, a person

will try to either reduce the need or look for a substitute object that

has the ability to satisfy the need.

The need for food, clothing, shelter and safety are the basic physical

needs and the needs of belongingness and affection are the social

needs. The individual needs include the need for knowledge and

self expression.

• WANTS

Human wants are desires for specific satisfaction of deeper needs

that means the needs become wants when they are directed to

specific object that might satisfy the need. For example, a teenage

may need water to quench his thirst but want to have a cold drink.

Human needs may be few, but their wants are numerous. These

wants are continually shaped and re-shaped by social forces and

institutions such as families, collogues, office neighbours etc.

Marketers need not to create needs because these needs pre-exist

in the market. But they can influence the wants and suggest and

inform the consumers about' certain products and persuade them to

purchase these by stressing the benefits of such products.

• DEMANDS

People may have almost unlimited wants. But resources are limited

in compare to the wants they have. Therefore they have to choose

the products that are likely to provide the most value and satisfaction

for their money. When backed by purchasing power, wants become

demand. Thus, demands are basically wants for specific products

that are linked /associated with the ability and willingness to pay for

these products. For example, many desire a car such as Mercedes

Benz, Toyota, BMW, Honda etc. but only a few are really willing and

able to buy one. Therefore being a marketing executive you must

measure how many people would actually be willing and able to buy

your company's products than how many of them want the products.


Ufiit-3 • Basic Concepts of MarkeUng

• PRODUCTS

To satisfy the wants and needs of people the company must offer

their products in the market. That means people purchase the

products to satisfy their needs and wants. Specifically, a product

can be defined as ah object, service, activity, person, place,4 I

organisation or idea. You can note here that the tangible items are

known as product while the intangible items are known as service.

The hidden use of a physical objects may be to provide the service.

For example a lipstick is bought to supply service (beautify);

toothpaste for whiter teeth - prevent germs or give fresh breath etc.

Therefore it is the job of marketer to sell the service packages

associated with the physical products. If you give a thought, you will

realise that the importance of a product does not lay not so much inowning them than to use them to satisfy our wants. For example, we

do not buy a bed just to admire it, but because it aids resting better.

• EXCHANGE

We have already got that marketing takes place only when people

decide to satisfy needs and wants through exchange. So in the

process of marketing there is exchange value between the two party's

i.e buyer and seller. The value for buyer is to obtain the desired

object to satisfy its needs and wants while the value for the seller is

generally the profit or the money. For example, hungry people can

find food by hunting, fishing or gathering fruits. They could offer

money, another food or a service in retum for food. Marketing focuses

' on this last option. Kotler (1984) states that for exchange to take

place, it must satisfy five conditions, namely:

(i) There are at least two parties.

(ii) Each party has something that might be of value to the other

party.

(iii) Each party is capable of communication and delivery.

(iv) Each party is free to accept or reject the offer.

(v) Each party believes it is appropriate or desirable to deal withthe other party.

^ Fundamentals of Computer and Management


3.6.1 Evolution of Basic Marketing Concepts

A few decades ago, companies face a number of tough decisions

for marketing their products. They had to determine product features,

and quality, establish accompanying services, set the price, determine

the distribution channels, decide how mush to spend on marketing,

and decide how to divide their resources among advertising, sales

force, and other promotion tools. Modem marketing has become

very complex and dynamic.

Chronologically, the concepts are classified in five. They are

mentioned below:

(i) Production concept,

(ii) Product concept,

(iii) Selling concept,

(iv) Marketing concept, and

(v) Societal Marketing concept.

(i) Production Concept: This concept assumes that customers

will favour products that are available and highly affordable and

that management should therefore; focus on increasing

production and distribution. Most of producers believe that the

customers prefer only low priced products and so they

concentrates on large scale production to reduce the cost. A

firm may apply this concept in two types of situations:

(a) When the demand for the product or service is higher than

' the supply of the same.

(b) When the cost of the product is high and increase in

production is going to reduce the cost due to economics of

large scale production. This concept can work only in a

sellers market. In buyer's market it fails to market under

keen competition. American luxury car market was captured

by Japanese and European car because of this concept.


Uhit-3 Basic Concepts of Marketing

(ii) Product Concept: This concept assumes that buyers favour

those products that offer the most quality, performance and

features. The producers are of the opinion that it is the quality

of product that attracts the customers, the quality of the product

alone will yield satisfactory sales and profits. Though this

concepts appears to be initially very sound, it failed in actual

operation. Leading companies have produced quality products

but have not been able to push up the sales, unless they take

positive steps to design, pack and price attractively, to place

them in proper distribution channels, bring them to the notice of

persons concerned and convince them that the product is of

superior quality. No wise marketer can follow this philosophy of

marketing in this competitive world. This concept may lead to

"marketing myopia" or short-sighted marketing because of undue

concentration on the product rather than the needs and desires

of consumers for whom the products or services produced.

(in) Selling concept: The selling concept assumes that the

consumer's response will not increase without promotional

efforts. Even the best products cannot have assured sales

without the help of sales promotion and aggressive salesman

ship. It implies, the consumer's satisfaction is considered

secondary; selling the product is the primary consideration. The

seller in the long run is likely to lose his customers, who would

not be satisfied with the product. Dissatisfied customers do act

on their dissatisfaction. As a result, the dissatisfied consumers

do not purchase further and do not recommend your product to

any of their friends and relatives or they do complain to .consume.

Since there are many potential customers, the producer is not

very particular about the reparative sales iri monopoly or less

competitive markets but in highly competitive market, the

producers are under compulsion to play attention or reparative

purchases. The selling concept starts with the factory and it

focuses on the existing products and promotion and calls for

heavy selling and promotion to obtain profitable sales volume.

This concefpt may be explained with the help of the following

diagram.



Factory the Existing Selling & Profits through

starting point products Promotion increased sales

volume

Selling Concept

(iv) Marketing Concept: This is a new idea in the field of exchanging

of goods. Under this concept the organization trice its best to

determine the needs, wants and values of the buyer's market

and takes all possible steps to deliver the desired satisfaction

more effectively and efficiently than its competitions do. Every

attempt is made to satisfy the wants of customers and to achieve

this objective; a special programme of Market Research is

undertaken. The organization fully understands that it can win

the loyalty of its customers and their appreciation only by

providing them satisfactory services in respect of their needs

and wants. Winning the confidence of customers is as good as

fulfilling the goals of the organization. It fully believes in theory

known as customer sovereignty and ensure the maximum

welfare of consumers, thereby ensuring a good amount of profits.

This concept assumes that organizations produce what

customer want and thereby yield consumers' satisfaction and

make profits. This concept, may be explained with the help of

the following diagram.

Market the Customer Integrated Making Profit

starting point Needs Marketing through customer

Activities satisfaction

(v) Societal Marketing Concept: This concept is management

orientation that holds that the key task of the organization is to

determine the needs and wants of target market and to adapt

the organization to deliver the desired satisfaction more

effectively and efficiently than its competitor in a way that

preserves or enhances the customers' and society's well being.

Environmental trends like public welfare concems for better living

quality of life etc. indicate that organization would have to adopt


Basic Concepts of Marketing

socially responsible marketing policies and plans in order to

assume social welfare in addition to consumer welfare. The

socially responsible marketing concept is based on the

assumption:

(a) The mission of an organization is to create satisfied and

healthy customers and contribute to the quality of life.

(b) The organization will not offer a product to customer if it is

not in the best interest of customers.

(c) Marketing plans and programmes shall duly consider

consumers wants, interest, desires, social welfare and

corporate needs e.g. profits.

(d) The organization will offer long run customer and public

welfare.

The last two concepts of current market philosophy have been

extensively adopted and widely accepted in the interest of the

organization, the consumer and society.

The first three concepts remained successful till competitors

did not emerge in a large number and supply was less than

demand. As the numerous competitors came into market it

became flooded with goods and services of same quality andprice. That led producers to give importance on selling efforts

like personal selling and advertisement. But the selling effortsof the producers did not last long. As almost all producers appliedthe same sort of selling efforts. Ultimately, the producers started

price-war to increase their market share but all of them were

adversely affected in price-war. Thus during those periodsmarketing managers were in big crisis. Some enlightenedmarketing managers thought changing of their basic attitude

and philosophy to solve the crisis. They started to take into con

sideration of needs, wants, tastes and preferences of consumersfor marketing their products. This idea saved them from un

necessary selling efforts including false propaganda andprotected them from going out of market with the adoption ofthis concept.



The first three concept are known as traditional concept and

the last two concepts are known as Modem marketing concept.

3.6.2 Selling Concept Vs Marketing Concept

The differences between the two concepts are explained on the basis

following points:

(i) Satisfaction: The experts of selling concepts did not pay due

priority to the elements consumers' satisfaction. They were of

the view that the ultimate objective of marketing is to bring

circulation of products so that the customers get the product in

time and in right manner.

But the experts of marketing concept assumed that customers'

satisfaction is an important element of marketing. The marketers

can not survive for long period if they do not consider consumers'

satisfaction is an essential element.

(ii) Profit Generation: The selling concept experts worked with an

objective of generating profit.

Whereas, the market concept experts are of the view that the

generation of profit would not be possible unless, the marketers

concentrate on consumers' satisfaction.

(Hi) Consumer Orientation: The selling concept experts felt that

marketing should be product oriented. Where the experts of .

marketing concept advocates that marketing should be

consumer oriented. This concept pays emphasis on customer's

needs arid wants. The" marketers first determines the needs

and wants of the customer and then delivers the product to

satisfy those needs and wants. But in selling concept they make

■ the product and then decide how to sell it.

(iv) Planning: In selling concept, planning is short run oriented

where as in marketing concept, planning is long term oriented.

(v) Process: In selling concept, first production, then selling takes •

place at a profit without knowing customer's needs. In marketing

Fundamentals of Computer anil Management 135


concept, first consumer's need is known and then production

takes place, then the product is sold at a profit.

(vi) Price: In selling concept, cost of production determines price

where as in marketing concept, buyer determines the price and

price determines the cost.

(vii) Welfare: In selling concept, the experts did not assign any place

to the welfare channelisation. In marketing concept, the experts

talk about the payment of taxes to the govemment and the social

welfare programmes taken up by the business houses.

(viii) Research and Development: In selling concept, the marketing

survey and research did not receive the due place but in

marketing concept these activities are considered very essential

for growth of marketing.

In conclusion, it may be mentioned that the selling concept

unnecessarily limited the preview of marketing. This selling

concept cannot get results in the age of globalization.

3.7 MARKETING MIX

Marketing mix is the mixture of the essential elements of marketing in

order to enhance consumer satisfaction. Marketing mix is the mixture of

4Ps' - Product, Pricing, Promotion and Place (Physical distribution and

channel of distribution). To attain success in marketing effort, the various

components should be well coordinated. Marketing mix offers an optimum

combination of all marketing elemerits so that we can achieve company

goals such as profit, return, on investment, sales volume, and market shares

and so on. The market mix will naturally be changing according to changing

marketing conditions and also with changing environmental factors such

as technical, social, economic, and political and competition.

Elements of Marketing Mix:

The elements of marketing mix are described below:

136 Fundamenials of Computer and Management

Basic Concepts of-Marketing, * Unit-3

(i) Product: Product means anything which can satisfy consumers

needs and wants through exchange process, it provides economic

utility and socio-psychological advantages. The marketer may offer

a single product or several products. The marketer should also revise

the product design, make improvements in the products frequently

so as to suit the changing tastes, habits and preferences of the

consumers. Packaging and branding decisions are also included in

product decision.

(ii) Price: Price is the value which is paid by the buyer to the

manufacturer in exchange of the products and sen/ices. The marketer

has to take into consideration the cost factors, profit margin, the

possibility of sales at different price level and the competitors pricing

policy as well as number of competitors.

(lii) Promotion: The marketers should provide information to the

customers about its products and services and motivate customers .

to buy. Advertising, personal selling, publicity and other sales

promotional programs are the various promotional activities. All these

activities increase the volume of sales by expending as well asretaining the market share for the products. Basically, promotion deals

with no price competition in the market. Promotion is done for three

purposes - (a) informing, (b) persuading and (c) influencing

consumers.

(iv) Physical Distribution: Distribution is the delivery of the product

and transfer of ownership to the buyers and consumers. It includes

channels and outlets through which products move to the buyer and

arranging their physical movement to different market segments. It

depends upon the middlemen, products and services, channels of

distribution etc. It maintains the flow of products and services from

the producers to the buyers.

The combination of all the ingredients of marketing mix is shown in

the following figure:


Unit-^ . V Basic Concepts of Maiketing

TargetConsumers

Marketing Strategy on

target market to yield

consumers' satisfaction

Product Mix

1. Brand

2. Style

3. Colour

4. Design

5. Package

6. Warranty

7. Service

Price Mix

1. Pricing strategy

3. Basic Price

4. Terms^ of credit

5. Discount

6. Allowance

Promotion Mix

1. Personal selling

2. Advertising

4. Sales promotion

(a) Dealer Aids

(b) Consumer Aids

Piace Mix Distribution

Channeis

^ 1. Wholesaler

2. Retailer

3. Mercantile Agents4. Transport

5. Warehousing

Marketing Mix

Service can be defined as "a service is an act or performance offered byone party to another. Although the process may be tied to a physical prodi^ct,the performance is transitory, often intangible in nature and doesn't normallyresult in ownership of any of the factors of production".

Phillip Kotler defined services as "Service is any act or performance thatbne party can offer to another that is essentially intangible and does notresult in any ownership".

A service is an act or performance offered by one party to another. Thisperformance is transitory and intangible in nature. This does not necessarily

^

^ Fundamentals of Computer and Management

Basic Concepts of Marketing Un:t-

result in ownership of any of the factors of production. The process of

offering performance may be tied to a physicai product. A service is an

economic activity that creates vaiue and provides benefits for customers

of specific times and piaces by bringing about a desired change in, or on

behaif of, the recipient of service.

In the case of 'goods', the benefits come from ownership of physical objects,

whereas in 'services' the benefits are created by actions or performances.

The growing complexities in the service environment demand a higher

emphasis on the marketing aspects of services, it is very important to run

efficient operations, but that aione is no longer enough for success.

Employers must be customer service oriented in addition to being

concerned about efficiency in operations. The service product must meet

customers' requirements. The service product shouid be priced reaiistically

and judiciously distributed through effective channels convenient for the

customers and shouid be actively promoted so that customers become

aware and interested in the service product.

As a service is a deed or performances, it is ephemeral - transitory and

perishable - and so cannot be stocked as inventory after being produced.

The service is produced and consumed simultaneousiy.

CHECK YOUR PROGRESS-1

1. Expiain the meaning of marketing.

2. Expiain two importance of marketing.



3. Distinguish between selling and marketing concept (Any two

points).

4. Match the organizational objectives given in column I with the

marketing concepts in Column - II

Organizational Marketing

Objectives Concept

(a) Effective distribution (i) Marketing concept

and affordable price

(b) To make continuous (ii) Selling concept

product improvement

(c) Large scale selling (iii) Product concept

and promotion to obtain

profitable sales volume •

(d) Determing needs. (iv) Production concept

wants and preference

of largest market and

deliver the product

5. State whether the following statements are true or false:

(i) Demand for a product exceeds the supply during the stage

of production concept.

(ii) Marketing creates only time and place utility.

(iii) Marketing helps to utilize our natural resources.

(iv) Marketing helps to provide economic stability.

3.8 SERVICE MARKETING MIX

Generally for goods market we use four P's of marketing strategy. But the

major difference in the education of services marketing versus regular

marketing is that instead of the traditional "4 P's," Product, Price, Place,



Promotion, there are three additional "3 P's" consisting of People, Physical

evidence, and Process. Thus, 7p's of service marketing are as follows:

• Product: A product is anything that can be offered to a market for

consumption that might satisfy a want or need. Generally when we

talk about a product we consider physical objects. But a service

product is different from a physical product. A service product refers

to an activity that a marketer offers to perform, which result in

satisfaction of a need or want of pre determined customers. Managers

must select the core service and its supplementary service to create

value for customers.

• Price: Price is one of the important marketing tools that a marketer

controls and manages. In service marketing price is often used bythe buyers in making pre purchase quality assessments. Therefore

low priced services are often considered to be low quality and highprice services are considered to be high quality. Service marketing

is not limited to the traditional pricing task of determining the sellingprice to customers. While setting price, service marketer should

include monetary costs, such as travel expenses, time, mental and

physical effort etc.

THE EXPANDED MARKETING MIX FOR SERVICES

ProductPeople

Promotion

Physical Evidence


Basic Concepts of Marketing

• Promotion: Promotion means promoting a product to the potential

customers. Marketers employ various promotional tools like

advertising, sales promotion, public relation and personal selling.As services are intangible in nature, promotion plays a vital role in

this field. In service marketing much promotion is educational in

nature, specially for new customers. Companies may need to teachthis customers about the benefits of the service, where and when to

obtain it, and how to participate in service processes. Communicationcan be delivered through advertising or face to face interaction with

sales people. For example, insurance agent explains us about the

benefit of their service.

• Place: Delivering product or service to the customers involves

decision on the place and time of delivery, as well as the methods

and channels used. Firms may deliver service directly to the

customers or through intermediaries. Service marketers also have

to handle distribution of their services. But, services can not be

produced in some centralized location and transported later to

different market for sale and consumption. Rather services must

move near the place of demand.

• Physical Evidence: It is the environment in which service is delivered

and where the firm and the customer interact. The appearance of

buildings, equipments, vehicle, interior furnishing, staff member,

brochures, other printed material etc. provides tangible evidence of

a firm's service quality.

• Process: The actual procedure through which service is delivered

is known as process. Creating and delivering product elements

require the design and implementation of effective process. A badly

'' designed process generally leads to slow and ineffective processand customer dissatisfaction.

• People: Here people mean all the human being who takes part in

the service delivery process. Many services depend on direct

interaction between customers and a firm's employees. These

interactions strongly influence the customer's perception of service

quality. For example getting a hair cut strongly influences customer's

i expectation from the barber.

142 Fundamentals of Computer and fikanagement


3.9 DIFFERENCE BETWEEN GOODS AND SERVICE

MARKETING

Physical Goods Services

1. Tangible 1. Intangible

2. Homogeneous 2. Heterogeneous

3. Production and distribution 3. Production, distribution and

are separated from consumption are

consumption simultaneous process

4. A thing 4. An activity or process

5. Core value processed in 5. Core value produced in the

factory buyer seller interaction

6. Customer do not participate 6. Customers participate in the

in the production process product

7. Can be kept in stock 7. Cannot be kept in stock

8. Transfer of ownership 8. No transfer of ownership.

9. Non perishable 9. Perishable

10. Can be returned 10. Can not be returned

11. mass distribution possible 11. Localized distribution


1. Fill in the blanks with appropriate words:

(i) A service is an act or ^ offered by one party

to another.

(ii) Urbanization is another important factor for the

of services.

(iii) The actual procedure through which service is delivered

is known as

(iv) Service marketing has instead of traditional

4P's.

Fundamentais of Computer and Management 143

Units Basic Concepts of Marketing

3.10 LET US SUM UP

• In this unit, we have discussed about basic concepts of marketing.

Marketing occupied an important place in all stages of economic life

from simple barter economy to the present societal marketing

concept.

I

• Marketing has five different stages of development, each stage is

term as concept namely - (i) Production concept, (ii) Product concept,

(iii) Selling concept, (iv) Marketing concept, (v) Societal marketing

concept. However, many companies are still in the earlier concepts.

• The success of the business firms and the economic growth of a

country is related to a greater extent on the success of its marketing

efforts. Marketing efforts deliver the standard of living, connect the

producers and consumers, increase national income, provide

employment, provide economic stability of a country and utilize out

natural resources.

• The success of marketing activities again depends on right

combination of marketing elements - product, price, promotion and

place. We can achieve company goals such as profit, return on

investment, sales volume, and market shares only when the various

elements are adequately coordinated. The combination of marketing

mix should be flexible to change with marketing conditions and also

with changing environmental factors.

• In this unit we have also discussed different aspect of service

marketing.

• Services are intangible in nature, so marketing of services are difficult

to explain compared to marketing of physical goods. The growingcomplexities in the service environment demand a higher emphasis

on the marketing aspects of services. The service product must meet

customers* requirements. In case of service marketing mix, it has

got 7P's instead of 4P's. Here the additional three P's are people,process and physical environment. Services have become popular

in all sector of the business. Some of the factors which influences in

Fundamentals of Computer and Management


the expansion of services are increase in income, urbanization,

women in work force etc. Some of the basic characteristics of services

which we have discussed in this unit are intangibility, inseparability,

heterogeneity, ownership, perishability etc.

3,11 FURTHER READINGS

Marketing Management-P/7////p Kotler(1CP Edition).

Service Marketing -Valarie A. Zeithami, Mary Jo Bitner, 3"' Edition

(Tata Mc Graw Hiil).

Service Marketing -Text and Cases, Harsh V. Verma, Pearson

Education.

Principles and Practice of Management-L M. Prasad, S. Chand

and Sonc, New Delhi.

3.12 ANSWERS TO CHECK YOUR PROGRESS


1. Marketing means identifying, anticipating and satisfying consumers'

needs, wants and desires through exchange process. Thus marketing

creates place, time, form and possession utility.

2. The two important functions of marketing are as below:

(a) Marketing delivers the standard of living: Marketing promotes

large scale production and sales which bring down the cost of

production and increase the amount of profit. Lower price results

in large consumption by large number of people which improves

standard of living.

(b) Marketing connects the producers and consumers: In the absence

of marketing process, it would have been difficult to know the

needs and preferences of consumers to produce goods and

services at the same time consumers would not have the goods

at their affordable reach.


Unit-3 ^ Basic Concepts of Marketing

3. The two differences between marketing and selling concept are as

below:

(a) Satisfaction: Selling concept did not pay due weightage to the

satisfaction of consumers. In this concept production and

distribution of goods are considered enough. But marketing

concept assumed that customers' satisfaction is an important

element of marketing.

(b) Profit generation: Selling concept worked with sole objective of

generating profit whereas the marketing concept works with the

objective of earning profit through providing consumers'

satisfaction.

4. a. (IV). b. (III). c. (II), d. (I)

5. I. True, II. False, III. True, IV. True)


(i) Performance, (ii) growth, (ill) process,

(iv) 7P's, (v) expectancy

3.13 POSSIBLE QUESTIONS

1. Define Marketing.

2. What are the different concepts of marketing?

3. Explain the importance of marketing?

4. Write five difference between traditional and modem marketing.

5. Explain the evolution of marketing concept.

6. What is marketing mix?

7. Explain the term societial marketing concept.

8. Define services.

9. Describe the basic differences between goods and services.

10. Discuss the reasons for the growth of service sector.

11. Intangibility of services is a significant problem and service providersmust be sensitive to this''-Elaborate the statement.


Documents

• State the nature and scope of marketing. • Narrate the