MARKETING MANAGEMENT Chapter one: Marketing perspective

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1. Definition of Marketing:

Marketing is about meeting the needs and wants of customers. It is the process of creating
consumer value in the form of goods, services, or ideas that can improve the consumer’s life.
Marketing is the organizational function charged with defining customer targets and the best way
to satisfy needs and wants competitively and profitably. Marketing is not only restricted to
selling and advertising as is perceived but is more than it advertising it identifies and satisfies
customers needs. It functions revolve around wide variety and range of tasks and activities
mostly termed as functions related to 4ps i.e. Product, price, place and promotion. A very simple
definition of marketing is that it is the delivery of customer satisfaction at a profit. Sound
marketing is critical to the success of every organization. Marketing can also be defined as
process of planning and executing the conception, pricing, promotion, and distribution of ideas,
goods, and services to create exchanges that satisfy individual and organizational objectives.”
The major goals of marketing are to attract new customers by promising superior value and to
keep & grow current customers by delivering satisfaction.

According to Philip Kotler, “Marketing is the beginning and end of all business activities.”

According to Paul Mazur, “Marketing is the creation and delivery of a standard of living to
the society.”

According to American Marketing association, “Marketing is the performance of business

activities that directs the flow of goods and services from the producer to the consumer or
users.”

2. Core Marketing Concepts

To have more clear view about the marketing and to understand the marketing process first we
should discuss the some basic concepts and we can say that marketing revolves around these
concepts.

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a. Needs, wants, and demands:

Needs: Human needs are the most basic concept underlying marketing. A human need is a state
of felt deprivation. Humans have many complex needs. Needs includes basic needs like physical
needs for food, clothing, warmth, and safety, social needs for belonging and affection, individual
needs for knowledge and self-expression. These needs are part of the basic human makeup.

Wants: A human want is the form that a human need takes as shaped by culture and individual
personality. Eg: American wants hamburger, Nepali wants MOMO.

Demands: Demands are human wants that are backed by buying power. Consumers view
products as bundles of benefits and choose products that give them the best bundle for their
money. People demand products with the benefits that add up to the most satisfaction.
Outstanding marketing companies go to great lengths to learn about and understand their
customer’s needs, wants, and demands. The outstanding company strives to stay close to the
customer.

b. Marketing Offers—Products, Services, and Experiences

Consumers’ needs and wants are fulfilled through a marketing offer—some combination of
products, services, information, or experiences offered to a market to satisfy a need or want. A
product is anything that can be offered to a market to satisfy a need or want. A service is an
activity or benefit offered for sale that is essentially intangible and does not result in the

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ownership of anything. The concept of product is not limited to physical objects and can include
experiences, persons, places, organizations, information, and ideas.

c. Value, satisfaction, and quality:

Customer value is the difference between the values that the customer gains from owning and
using a product and the costs of obtaining the product. Customers do not often judge product
values and costs accurately or objectively--they act on perceived value.

Customer satisfaction depends on a product’s perceived performance in delivering value relative

to a buyer’s expectations. If performance exceeds expectations, the buyer is delighted (certainly
a worthy goal of the marketing company). Smart companies aim to delight customers by
promising only what they can deliver, then delivering more than they promise. The aim of
successful companies today is total customer satisfaction. Customer delight creates an emotional
affinity for a product or service, not just a rational preference, and this creates high customer
loyalty. Quality has a direct impact on product or service performance. Quality is defined in
terms of customer satisfaction.

d. Exchange, transactions, and relationships

Marketing occurs when people decide to satisfy needs and wants through exchange. Exchange is
the act of obtaining a desired object from someone by offering something in return. Exchange is
only one of many ways to obtain a desired object. Exchange is the core concept of marketing.
Conditions of exchange include:

1. At least two parties must participate.

2. Each must have something of value to the other.

3. Each must want to deal with the other party.

Each must be free to accept or reject the other's offer whereas exchange is a core concept of
marketing, a transaction (a trade of values between two parties) is marketing’s unit of
measurement. Transaction most involve money, a response, and action. Transaction marketing is

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part of a larger idea of relationship marketing. Beyond creating short term transactions,
marketers need to build long- term relationships with valued customers, distributors, dealers, and
suppliers. The goal of relationship marketing is to deliver long-term value to the customer and
thereby secure customer satisfaction and retention of patronage.

e. Markets

The concepts of exchange and relationships lead to the concept of a market. A market is the set
of actual and potential buyers of a product. Originally a market was a place where buyers and
sellers gathered to exchange goods (such as a village square). Marketing means managing
markets to bring about profitable customer relationships. Buyers also carry on marketing.
Consumers do marketing when they search for the goods they need at prices they can afford.
Company purchasing agents do marketing when they track down sellers and bargain for good
terms. The company and the competitors send their respective offers and messages to consumers.
All of the actors in the system are affected by major environmental forces. Each party in the
system adds value for the next level.

3. Marketing Management Philosophies:

There are several alternative philosophies that can guide organizations in their efforts to carry out
their marketing goal(s). Marketing efforts should be guided by a marketing philosophy. There
are five alternative concepts under which organizations conduct their marketing activities.

a. The Production Concept:

The production concept holds that consumers will favor products that are available ad highly
affordable and that management should, therefore, focus on improving production and
distribution efficiency. This is one of the oldest philosophies that guide sellers. The production
concept is useful when:

1). Demand for a product exceeds the supply.

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2). The product’s cost is too high and improved productivity is needed to bring it down.
The risk with this concept is in focusing too narrowly company operations. Its greatest drawback
is that it is not always necessary that the customer every time purchases the cheap and easily
available goods or services. The production concept holds that consumers will favor products
that are affordable and available, and therefore management’s major task is to improve
production and distribution efficiency and bring down prices.

b. The Product Concept

The product concept holds that consumers favor quality products that are reasonably priced, and
therefore little promotional effort is required. The selling concept holds that consumers will not
buy enough of the company’s products unless they are stimulated through a substantial selling
and promotion effort. The product concept states that consumers will favor products that offer
the most quality, performance, and features, and that the organization should, therefore, devote
its energy to making continuous product improvements. The product concept can also lead to
“marketing myopia,” the failure to see the challenges being presented by other products.

c. The Selling Concept

Many organizations follow the selling concept. The selling concept is the idea that consumers
will not buy enough of the organization’s products unless the organization undertakes a large-
scale selling and promotion effort. The basis of this thinking is that the customers can be
attracted. Keeping in view this concept these companies concentrate their marketing efforts
towards educating and attracting the customers. In such a case their main thinking is ‘selling
what you have’.

This concept is typically practiced with unsought goods (those that buyers do not normally think
of buying e.g. insurance policies). To be successful with this concept, the organization must be
good at tracking down the interested buyer and selling them on product benefits. Industries that
use this concept usually have overcapacity. Their aim is to sell what they make rather than make

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what will sell in the market. There are not only high risks with this approach but low satisfaction
by customers.

d. The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and
efficiently than competitors do. The marketing concept believe that success can be achieved only
through consumer satisfaction. The basis of this thinking is that only those goods/service should
be made available which the consumers want or desire and not the things which you can do. In
other words, they do not sell what they can make but they make what they can sell. Keeping in
mind this idea, these companies direct their marketing efforts to achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be earned on a
long-term basis.

e. The Societal Marketing Concept

The societal marketing concept holds that the organization should determine the needs, wants,
and interests of target markets. It should then deliver the desired satisfactions more effectively
and efficiently than competitors in a way that maintains or improves the consumer’s and the
society’s well being. The societal marketing concept is the newest of the marketing philosophies.
This concept stresses not only the customer satisfaction but also gives importance to Consumer
Welfare/Societal Welfare. This concept is almost a step further than the marketing concept.
Under this concept, it is believed that mere satisfaction of the consumers would not help and the
welfare of the whole society has to be kept in mind.

For example, if a company produces a vehicle which consumes less petrol but spreads pollution,
it will result in only consumer satisfaction and not the social welfare. Primarily two elements are
included under social welfare-high-level of human life and pollution free atmosphere. Therefore,
the companies believing in this concept direct all their marketing efforts towards the

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achievement of consumer satisfaction and social welfare. The societal concept calls upon
marketers to balance three considerations in setting their marketing policies:

a). Company profits. b). customer wants. c). Society’s interests.

Difference between selling and marketing concepts

The marketing and selling concepts are often confused. The primary differences are:

1). The selling concept takes an “inside-out” perspective (focuses on existing products and uses
heavy promotion and selling efforts) whereas the marketing concept takes an “outside-in”
perspective (focuses on needs, values, and satisfactions).

The marketing concept asserts that businesses are required to focus on the consumers' needs and
wants so they can offer products or services that will satisfy these needs better than the
competition. The marketing concept brings to the fore the principle of competitive advantage and
superior offerings. This concept was developed because with time, consumers grew to be more
discerning and selective about their purchase decisions. In this regard businesses invested in
strategies that would provide them with information about what the consumer needs prior to
product development.

The selling concept, on the other hand, asserts that consumers need to be influenced in order to
buy the products on offer through promotional campaigns. The focus of this concept is directed
towards turning products into cash for the business.

In summary, the differences between the two are;

The selling concept focuses on the needs of the seller while the marketing concept focuses on the
needs of the buyer

The selling concept works to turn products into cash while the marketing concept works to
satisfy the customers' needs through the product

In the selling concept, competition is predominantly centered on sales while in the marketing
concept the competition is centered on consumer satisfaction.

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Concepts Starting Focus Means Ends

The Factory Mass Low price Profit

Production production through
Mass distribution
Concept production
efficiency

The Product Factory Product High quality innovations Profit

Concept quality through well
Performance guarantee
made
products

The Selling Factory Products Aggressive selling Profit

Concept through high
Heavy promotions
sales volume

The Market Customer Integrated marketing Profit

marketing needs through
concept customer
satisfactions

The Societal Market Social Integrated marketing Profit

Marketing responsibility Protection of social well through
Concept being

Figure: Comparative features of Marketing Concepts

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