MM Ch1 Intro

8/3/2019 MM Ch1 Intro

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INTRODUCTION TO MARKETING

- MEANING/ DEFINITION- MARKET

- MARKETING

- DIFFERENCES BETWEEN MARKET,MARKETING, SELLING

- NATURE AND SCOPE

- IMPORTANCE OF MARKETING- APPROACHES

- TRADITIONAL AND MODERN CONCEPT

- FUNCTIONS OF MARKETING


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What is Market?Meaning / Definition

Market originated from Latin wordmercatus meaning trade, marketplace,

which is derived from

mercari meaning to trade,

which is derived from

from merc-, merx meaning merchandise

In layman term, Market refers to a particular place wheregoods are purchased and sold.

In management and economics Market is any region in

which buyers and sellers are brought into contact with one

another and facilitate price fixation.


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AREA

MARKET

PRICE

BUYERS AND

SELLERSA COMMODITY

What is Market?Components


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What is Market?Features

In the economic sense, Market is a system by which buyersand sellers come in contact with each other, bargain for the

price of a product, settle the price and transact their

business- buy or sell a product. Physical contact between

the buyers and sellers is not necessary.

M

A

R

K

E

T

Buyers and Sellers

Exchange ofGoods and/or Services

Meeting Place / Meeting ofMinds

Purchase Consideration (Price)

Existence offree competitionto sell

Exchange involves physicalandlegal

transfer ofownership ofgoods


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What is Market..ing?Meaning / Definition

Marketing is the human ACTIVITY directed atsatisfying needs and wants through an exchangeprocess. Philip Kotler

Marketing is the PROCESS of discovering andtranslating consumer needs and wants into product/service specifications, creating demand for these

products/services and then, in turn, expanding thedemand. - Harry Hansen


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Marketand MarketingNeeds

andWants Demands

Exchange ofMoney andTransactions

MARKET

MARKETING


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Distinction between Marketand Marketing

MARKET MARKETING

System: Is a system or anatmosphere or a mechanism

that facilitate such forces

leading to price fixation.

Activity: Marketing is the sumtotal of all activities that are

related to the free flow of goods

from the points of production to

the points of consumption

Outlet : It is an outlet to let out

the products. It is the key to the

engine of Marketing.

Means: Marketing is a gigantic

machinery facilitating

movements of goods.

Narrow Concept : Signifies

place and atmosphere wheretransaction takes place

Wider Concept: It represent the

entire process of distributionand the process prior to it.

Change Quickly : Buyers and

sellers change, demand and

supply change, prices change,

market characteristics change.

Consistent : As a philosophy, it

remains more constant, take

decades to change in response to

changes in environmental factors.


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MARKETING SELLING

Scope Wider : Involves thedesign of products

acceptable to customers .

Narrow: Involves obtainingorders from customers and

supplying them the products

Emphasis Focus is on satisfying

customer needs.

Is Customer oriented

Earn profits through

customer satisfaction

Focus is on selling the

products and get returns

Is Product Oriented

Earn profits through increase

in sales volume

Occurrence Begins before production

Continues after Sale

Begins after production

Comes to an end with SalePhilosophy Philosophical and Strategic

Long term perspective

Customer First

Routine and Tactical Activity

Short term perspective

Product First

Differences between Marketingand Selling

Semantics Marketing includes selling Selling is a part of Marketing


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Nature / Characteristics ofMarketing

1. Marketing is a Process of Exchange.

2. Is a Consumer Oriented Process.

3. Marketing starts and ends with the customer.

4. Marketing is a goal oriented process.

Achieve profits through customer satisfaction.5. Marketing is based on mutuality of benefits.

Quality goods to customer in return for profit

to business.

6. It covers both Profit and Non-Profit making

organisation.

7. It is Value driven.

8. It is proactive to the Environment.


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Nature / Characteristics ofMarketing

7. It is Value driven: Business values are reflected in Marketing

strategies. ITC's Core Values are aimed at developing a customer-focused,

high-performance organisation which creates value for all its

stakeholders. We are always customer focused and will deliver

wh

at th

e customer needs in terms of value, quality andsatisfaction.Ranbaxy's mission is Enriching lives globally, with quality and

affordable pharmaceuticals.

Values:

Achieving customer satisfaction is fundamental to our business.

Provide product andservices of the highest quality.

8. It is proactive to the Environment. Ranbaxy: Manage our operations withhigh concern for safety and

environment.


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Scope ofMarketing

Marketing is the great task of creating, promoting and

delivering goods and service to final consumers andbusiness buyers.

Scope of Marketing involves ten types of activities :

1. Goods

2. Services3. Experiences

4. Events

5. Persons

6. Places7. Properties

8. Organisations

9. Information

10. Ideas


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Scope ofMarketing1. Goods: All types of products (durable, non-durable;

Necessities/ Luxuries)2. Services : Unskilled to Skilled; Personal Services/ Group

Services; Financial and Non-financial Services

3. Experiences: Cruise Experience, Wild Life Experiences,

Walt Disneys EntertainmentExperience4. Events : Rock shows, Sports Events : Olympics, Trade

Shows

5. Persons: Celebrity Marketing- Amitabh Bachchan,

Magicians PC Sorcar, Musicians- Bryan Adams/Britney Spears Show

6. Places : Marketing of cities, states, region and even

the whole country, places of tourist interest.. Eg. Kerala

Gods Own Country, Incredible India!


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Scope ofMarketing

7. Properties : Marketing of properties include Real Estate

or Financial properties Stocks and Bonds.8. Organisations: Business Organisations, Private

Institutions, Govt. organisations market themselves.

Eg. Philips Lets make things better. IIPM- Think

BeyondIIMs

9. Information: Encyclopedias and non-fiction

publications are rich source of information. Periodicals

and Journals provide specialized information. Travel

Guides, Internet Search engines.

10. Ideas: Environmental protection, Antismoking, Blood

donations, Recycling.

For eg. WOW (Wealth out of Waste), Say No to Plastic


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Importance ofMarketing1. Marketing helps the organisation to achieve its

objectives.2. Helps the community to satisfy their economic and

social needs and thus raise their standard of living.

3. Helps in an efficient and productive utilization of

resources, both human and material, eliminating

wastages. Maximum efficiency at Minimum cost.

4. Helps the enterprise to adapt to the changing

conditions and circumstances.

5. Provides guidance to the organization on the

innovations to be adopted.

6. Ensures the economic growth of the enterprise which

results in growth and development of the country.


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Approaches to the study ofMarketing

1. Commodity Approach2. Functional Approach

3. Institutional Approach

4. Managerial / Decision-Making Approach5. Systems Approach

Other Approaches

6. Legal Approach7. Societal Approach

8. Economic Approach


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Approaches to the study ofMarketing1. Commodity Approach: Study the flow of a commodity

from the original producer up to the final customer.This study helps to locate :

Centre of production

People engaged in buying & selling of the product

Mode of transportation

Problems related to selling, advertising, financing

and storageEg. Marketing of agricultural products such as wheat, cotton etc.

2. Functional Approach: Involves study of marketing

functions such as buying, selling, storage, financing,

risk bearing, advertising and providing information.


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Approaches to the study ofMarketing

3. Institutional Approach: Centers around the marketing

institutions or agencies such as distributors,

wholesalers, retailers, transport companies, banks,

insurance companies etc. who participate in

discharging their responsibilities during the movement

of goods.

4. Managerial / Decision-Making Approach: It combines

certain aspects of commodity, institutional and

functional approaches. Focus is on the decision making

process. The study involves identification of decision

factors, alternative strategies, techniques and methods

of problem solving.


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Approaches to the study ofMarketing5. Systems Approach: Is an integrated approach that

includes:I. Objectives : are profitability through customer satisfaction

II. Inputs: Information from internal andexternal sources

III. Processor: Information is processed

IV. Output: Actions are taken w.r.t. the marketing activityV. Feedback:forms the basis for future change .

6. Legal Approach: Emphasis is on legislations related to

marketing system. Eg. Sale of Goods act, Carrier act etc.

7. Societal Approach: based on the belief that producersproduce and sell according to the desires projected by the

consumers in the society.

8. Economic Approach: focuses on market forces like

demand, supply , price etc.


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Marketing Concepts1. Production Concept : Consumers will favor those products

that are low in cost and are widely available. ProductionOriented Organisation work towards achieving production

efficiency (low cost) and wide distribution coverage (widely

available).

2. Product Concept: Consumers will favor those products thatoffer the best quality, performance or features. Product

Oriented Organisation work towards making superior and

innovative products. This orientation leads to Marketing

Myopia:

focus on product rather than on consumer needs.3. Selling Concept: Consumers need to be coaxed into buying

as they generally have buying inertia/ resistance to buying.

Selling Oriented Organisation undertake aggressive selling

and promotion effort to stimulate buying.


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Marketing Concepts4. Marketing Concept: Based on achieving profitability

through customer satisfaction more effectively andefficiently than the competition. The emphasis is on

understanding consumer needs and wants. Marketing

concept is based on the following premises:

Customer orientation: Understanding the needs anddesires of target customers.

Systems approach: All marketing activities are properly

integrated and coordinated to achieve the objectives

Marketing Information System:

Based upon adequate andaccurate information about customer and competition.

Dual Objective: Advocates serving the consumers and

maximizing profits at the same time. Guaranteed route to

profits is through customer satisfaction


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Marketing Concepts5. Social / Societal Marketing Concept : This is a new concept

that goes beyond understanding consumer needs andmatching the products accordingly. This concept cares for

not only customer satisfaction but for consumer or social

welfare. Concerns about Public welfare, better living

environment, better quality of life etc. make organisationsadopt socially responsible marketing policies. For eg. An

automobile not only fuel efficient but less polluting.

It requires the organisation to balance three considerations:

I. Company profitsII. Consumer Needs

III. Public Interest/ Social Welfare


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Traditional Concepts Modern Concepts

Production, Product and Sales

Concept are traditional concepts

of Marketing.

Customer Oriented and Societal

Marketing are modern concepts

of Marketing.

Takes inside-out perspective.

Starts with the factory, focuses

on products and advocates

heavy selling to get profitablesales

Takes outside-in perspective.

Starts with a well defined target

market, focuses on customer

needs and advocates customersatisfaction for higher profits.

Caveat Emptor : Buyer Beware Caveat Vendor: Seller Beware

Differences between

Traditionaland Modern Marketing Concepts


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Functions ofMarketingClark and Clark have classified the marketing functions into

the following three divisions:

I. Functions of Exchange

II. Functions of Physical Supply

III. Facilitating Functions

Functions ofExchange

i. Buying : involves procuring goods of required quality and

quantity at a satisfactory price. It Involves assembling goods

under a single ownership for production, resale or

consumption. Buying process may involve following activities:

Planning, Negotiating, Contracting and Assembling

ii. Selling : involves finding buyers to sell goods at a satisfactory

price. Selling process may involve following activities:

Planning, Prospecting, Creating demand/ inducing buyers,

Negotiating and contracting.


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Functions ofPhysical Supply

Function of exchange is effected only through the function of

physical supply. The function of Physical supply of goods fromthe producers to consumers involves:

I. Transportation : needs to be speedy, efficient, on-time,

hassle-free and safe delivery. Company has a choice of five

modes of transportation:

Rail, Road, Air, Waterways (Shipping) and Pipelines.

II. Storage and Warehousing: Goods are stored for different

reasons such as:

Goods produced seasonally may be used throughout the

year and vice versa. Manufacturers store raw materials for ready supply

Goods are also stored in the hope of getting a higher

price in future


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FacilitatingFunctions

1. Financing

2. Risk-taking3. Market Information

4. Standardization and Grading

5. Pricing6. Branding

7. Packing and Packaging

8. Sales Promotion

9. Personal Selling/ Salesmanship

10.Advertising


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Facilitating Functions are:

1. Financing :Marketing department needs capital for Investing inland, buildings, furniture etc.; Maintaining inventory and

extending credit to customers. Acquiring funds for these

marketing purposes is known as financing.

2. Risk Taking: Marketing may face the risk of loss, fire, theft,

natural calamity, price fluctuations, exchange rate fluctuations

etc. Some of these risks may be insured wholly or partly or

borne by the businessman.

3. Market Information: The function of collecting, analyzing and

communicating information is also important in marketing.

Modern Marketing involves setting up an efficient Marketing

Information System and undertaking Market research.


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4. Standardization and Grading: A standard is a measure of quality

consisting of specifications such as size, color, appearance,shape, chemical contents, flavour etc.. Standardization carries

the idea of uniformity.

When standardized goods are further subdivided into well

defined classes it is called grading. Grading may be done basis

quality, size etc. conforming to certain standards.

5. Pricing: Generates revenue, all other functions involve costs.

Pricing need to be right. Neither too high nor too low.

6. Branding: is the practice of giving a specified name to a product

or a group of products from one seller. Branding helps

Identify & differentiate products from those of competitors

Create Brand Image and Brand Equity

Build Brand loyalty and control over the market


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7. Packing and Packaging : Almost every article has to be packed to

make a trip to the ultimate consumer. Packing provides handlingconvenience, maintains freshness and quality of the product and

prevent damages or adulteration of the product.

Packaging is much more than mere packing. It is advertising on

the shelf, an attractive display or an eye-catching appearance.

Packaging creates an image in the minds of the consumer.

8. Sales Promotion: are the short term promotion tools designed

to stimulate customers to buy and assist sales-force/ retailers in

their sales efforts.

9. Personal Selling/ Salesmanship: Personal Selling involves

salesman making direct contact with the buyer and negotiate for

the sale of the goods. Salesmanship is an art of persuading

people to buy.


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10. Advertising:

is the backbone of modern marketing. It informs,guides, educates and protects buyers, so that they can take right

decisions on what to buy. It is beneficial to the manufacturer,

retailers, salesmen , consumers & to the community in general.


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Marketing Environment

Marketing Environment consist of all the internal and external

influences which affect marketing decision making and have animpact on its performance.

The components of Marketing Environment may be classified

into two categories:

Macro Environment : External Factors, Uncontrollable

Micro Environment : Internal Factors, Controllable

Macro / External Environment

1. Demography

2. Economic

3. Socialand Cultural4. Politicaland Legal

5. Scienceand Technology

6. Competition

7. Ecology/ Natural

8. International

Micro / Internal Environment

1. Organisation

2. Corporate Resources

3. Marketing Mix: 4Ps

4. Markets

5. Suppliers

6. Intermediaries

7. Employees


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Macro Environment

Macro / External Environment

1. Demography : is Understandingthe compositionanddistribution ofhuman

population. Demographic factors are:

Age Group

Gender

Education

Religionand Ethnicity

Birthand Deathrate, populationdensity, ruralandurban population

2. Economic: Marketers needs to understandnot onlythe population butalso

the purchasing power ofpeople. Purchasing Powerdepend on:

Income

Savings and Investment Inflation

Credit Availability

Interest Rate

Stage ofBusiness Cycle:

Prosperity, recession, boom, depression, recovery


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Macro Environment contd

3. Socialand Cultural : Society in which peoplelive in, shapetheir beliefs,

culturalvalues and socialnorms. Socialand Culturalfactors are

Socialand Cultural Values / Lifestyle : Influencefashion,youth

behaviour, Double Incomehouseholds, Nuclearfamilies/ jointfamily,

Time Pressureetc.

Social Problems: Child Labour, Awareness ofEnvironment pollution,

Workingand Living Conditions ofpeople

Social Trends: Consumerism, Ethical consciousness, socialresponsibility

ofbusiness,arethegrowingtrends thatthe organisationneedto payheedto.

4. Politicaland Legal: Marketing system areaffected bygovernment policies,

laws andregulations. Theseare:

MonetaryandFiscal Policies Taxes and Duties

Anti pollutionlaws

Drug Controlact,

MRTP act

Advertising Council ofIndia


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MARKET CLASSIFICATION

Criteria

1. By the Area :Manner in which buyers and sellers are located

Local, regional, national, International market

2. By the Nature of transactions:

Vegetable Market,

F

ish

Market, Stock Market : Spotmarket/Futures Market

3. By the Volume of Business:

Wholesale andRetail Markets

4. On the basis of Time

:

Very short period, short periodandlong periodmarket

5. By the Status of Sellers : Primary / Secondary Market

6. By the Nature of Competition : Buyer seller interaction

PerfectCompetition, Monopoly, Monopolistic, Oligopoly

Documents

MM Ch1 Intro