Functions of Marketing

WHAT IS A MARKET ?

In the traditional sense , the term market refers to the place where buyers and
sellers gather to enter into transactions involving the exchange of goods and
services .
Product market -Cotton market, Gold market etc .
Geographic market- International and national market .

In modern sense, the term market has a broader meaning- refers to the set or
group of actual and potential consumers of product or service .

MARKETING :

DEFINITIONS :
1. 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

3. Marketing is “The management process responsible for identifying,

anticipating and satisfying customer requirements profitably.”

— The Chartered Institute of Marketing

 WHAT CAN BE MARKETED :

WHO IS A MARKETER :

A marketer is any person whose duties include the identification of the goods
and services desired by a set of consumers, as well as the marketing of those
goods and services on behalf of a company.

Marketer is someone whose job involves encouraging people to buy a particular

company's products, by deciding the price, type of customer, and advertising
policy .
 ROLE OF MARKETING
The key objective of an organization’s marketing efforts is to develop satisfying
relationships with customers that benefit both the customer and the
organization. These efforts lead marketing to serve an important role within
most organizations and within society.

1. ROLE IN THE FIRM :

1. Understanding the economic and competitive features of a sector .

2. Identifying target markets .
3. Identifying segments within a target market .
4. Identifying most appropriate strategies .
5. Commissioning, understanding and acting upon market research .
6. Understanding competitors and their strategies and likely responses .
7. Developing new products .
8. Auditing customers’ brand experience .
9. Establishing environmental scanning for opportunities and threats .
10. Understanding an organisation’s strengths and weaknesses .
11. Creating a sustainable competitive advantage for the company .
12. Understanding where a brand needs to be in the future .
13. Creating and delivering marketing plans to get to the top .
14. Establishing management information systems to identify progress .

ROLE IN ECONOMY / SOCIETY :

1. Developing products that satisfy needs, including products that enhance

society’s quality of life .
2. Creating a competitive environment that helps lower product prices.
3. Developing product distribution systems that offer access to products to a
large number of customers and many geographic regions .
4. Building demand for products that require organizations to expand their
labor force .
5. Offering techniques that have the ability to convey messages that change
societal behavior in a positive way (e.g., anti-smoking advertising) .

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 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.

Functions of Marketing
Marketing is a very broad term and cannot be explained in a few words.
Marketing is an essential business function that helps in making the customers
aware of the products or services that are offered by a business.

The definition of marketing as defined by the American Marketing Association

is as follows.

“Marketing is the process of planning and executing conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges
that satisfy individual and organizational objectives.”

Functions of marketing are those aspects that define the practice of marketing
and are being discussed in detail in this article.

The following are the functions of marketing:

1. Identify needs of the consumer: The first steps in marketing function is to

identify the needs and wants of the consumer that are present in the market.
Companies or businesses must therefore gather information on the customer and
perform analysis on the collected information.

By doing this they can present the product or service that matches closely with
the customer needs and wants.

2. Planning: The next step in marketing function is planning. It is considered

very important for a business to have a plan. The management should be very
clear about the company objectives and what it wishes to achieve from the
created plan.

The company should then chalk out a timeline that is essential for achieving the
objectives.

3. Product Development: After the details are received from the consumer
research, the product is developed for use by the consumers. There are many
factors that are essential for a product to be accepted by the customer, a few
factors among the many are product design, durability and cost.

4. Standardisation and Grading: Standardisation refers to the process of

ensuring uniformity in the product which means that a product developed by a
business shall be standard for every consumer with the same quality and design
and this is one of the key aspects that needs to be maintained by the business.
Grading is referred to as the process of classifying products that are similar in
quality and characteristics. Grading helps in making the customer know about
the quality of the product offered. It helps in making customers understand that
the products conform to highest quality standards.

5. Packing and Labelling: The first impressions of a product are its packaging
and the label attached to it. Therefore, packaging and labelling should be looked
after very well. It is a well known fact that a great packaging and labelling goes
a long way in ensuring product success.

6. Branding: Branding is referred to as the process of identifying the name of

the producer with the product. Certain brands are there in the market which
have a lot of goodwill and any product coming from the same brand will be
accepted more warmly by the consumers. Although, having a separate identity
for the product can be helpful.

7. Customer Service: A company has to set-up various kinds of customer

service based on their product. It can be pre-sales, technical support, customer
support, maintenance services, etc.

8. Pricing: It can be regarded as one of the most important parts of marketing

function. It is the price of a product that determines whether it will be successful
or a failure. Some other factors are market demand, competition, price of
competitors.

The company or business should understand clearly that bringing about frequent
changes in the price of a product can lead to confusion in the minds of
consumers.

9. Promotion: Promotion is the process of making the customers aware of the

product by presenting it to customers across various channels of promotion and
entice them to buy the product.

The major channels of promotion are: advertising, media, personal selling and
promotion (publicity). An ideal promotion mix will be a combination of all or
some methods.

10. Distribution: Distribution refers to the movement of consumer goods to the

point of consumption. A company must ensure that the correct channel of
distribution is selected for the product.The mode of distribution is dependent on
the factors such as shelf life, market concentration and capital requirements.
Proper management of inventory is also essential.

11. Transportation: Transportation is defined as the physical movement of

goods from one place to another. In other words, it is the movement of goods
from the place of production to the place of consumption.Also, the correct mode
of transportation can be selected based on the geographical boundaries of the
market.

12. Warehousing: Warehousing of products creates time utility. It is often seen

that there is a gap between the time a product is produced and the time when it
is consumed. Companies like to maintain the smooth flow of goods even when
the products are of seasonal nature. Warehousing and storing provides the
opportunity to provide goods during off season also.

Evolution of Marketing Concept:

This marketing philosophy has undergone a thorough and gradual change since
the great Industrial Revolution that took place during the latter-half of the 18th
and first-half of the 19th centuries. This gradual change can be traced under four
periods and captions namely, production orientation period, sales-orientation
period, customer-orientation period and social orientation period.

1. Production Orientation Philosophy:

Till 1930s, there prevailed a strong feeling that whenever a firm has a good
product, it results in automatic consumer response and that needed little or no
promotional efforts. This production-oriented marketing concept was built on
“Good wine needs no push.” That is, if the product is really good and the price
is reasonable, there is no need for special marketing efforts.

The assumptions of this concept are:

(i) Anything that can be produced can be sold,

(ii) The most important task of management is to keep the cost of production
down.
(iii) A firm should produce only certain basic products.

This concept can be illustrated as under:

Under this concept, production is the starting point. The product acceptability
occurs after the product is produced.

2. Sales Orientation Philosophy:

The failures of the production orientation philosophy of 1930s paved the way
for change in the outlook that was possible during 1940s. This reshaped
philosophy was sales-orientation that holds good to a certain extent even today.

It states that mere making available the best product is not enough; it is futile
unless the firm resorts to aggressive salesmanship.

Effective sales-promotion, advertising and public- relations are of top

importance. High pressure salesmanship and heavy doses of advertising are a
must to move the products of the firm.

The essence of sales orientation philosophy is “Goods are not bought but sold.”
The maker of product must say that his product is best and he fails if he keeps
mum.

The assumptions of this philosophy are:

(i) Producing the best possible product.

(ii) Finding the buyer for the product,

(iii) The management’s main task is to convince the buyers through high
pressure tactics, if necessary.
It can be illustrated as under:

The philosophy has been prevailing since 1940. It is more prevalent in selling
all kinds of insurance policies, consumer non-durables and consumer durable
products, particularly the status-symbols.

3. Customer Orientation Philosophy:

This philosophy was brought into play during 1950s and points out that the
fundamental task of business undertaking is to study and understand the needs,
wants, desires and values of potential consumers and produce the goods in the
light of these findings so that consumer specifications are met totally.

Here, the starting point is the customer rather than the product. The enterprise is
to commence with the consumer and end with the requisite product. It
emphasizes the role of marketing research well before the product is made
available in the market place.

The assumptions are:

1. The firm should produce only that product as desired by the consumer.

2. The management is to integrate all its activities in order to develop

programmes to satisfy the consumer wants.

3. The management is to be guided by ‘long-range profit goals’ rather than

‘quick sales.’

It can be illustrated as under:

This means a radical change in the philosophy.

It meant two basic changes namely:
(i) Move from production to market-orientation,

(ii) Gradual shift from age old “Caveat emptor” to “Caveat vendor”

Since 1950, this philosophy is in vogue and will continue so long as consumer
is the King of the market.

4. Social Orientation Philosophy:

There has been a further refinement in the marketing concept particularly during
1970s and 1980s. Accordingly, the new concept goes beyond understanding the
consumer needs and matching the products accordingly.

This philosophy cares for not only consumer satisfaction but for consumer
welfare or social welfare. Such social welfare speaks of pollution-free
environment and quality of human life.

Thus, a firm manufacturing a pack of cigarettes for consumer must not only
produce the best cigarettes but pollution-free cigarettes; an automobile not only
fuel efficient but less pollutant one.

In other words, the firm is to discharge its social responsibilities. Thus, social
welfare becomes the added dimension.

The assumptions of social-orientation philosophy are:

(i) The firm is to produce only those products as are wanted by the consumers,

(ii) The firm is to be guided by long-term profit goals rather than quick sales.

(iii) The firm should discharge its social responsibilities,

(iv) The management is to integrate the firm’s resources and activities to

develop programme to meet these individual consumer and social needs.
This concept can be illustrated as under:

This social oriented philosophy is the latest and is considered as an integrated

concept. This philosophy, as it covers earlier long-standing concepts, is bound
to rule the marketing world for pretty long time.

Classification of Markets
Classifications of markets are two classified into – the product market and the
factor market. The factor market refers to the market for the buying and selling of
factors of production like land, capital, labour, etc. The other classification of
markets are as follows,

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.
 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

1] Perfect Competiton

In a perfect competition market structure, there are a large number of buyers and
sellers. All the sellers of the market are small sellers in competition with each
other. There is no one big seller with any significant influence on the market. So
all the firms in such a market are price takers.

There are certain assumptions when discussing the perfect competition. This is the
reason a perfect competition market is pretty much a theoretical concept.
These assumptions are as follows,

 The products on the market are homogeneous, i.e. they are completely
identical
 All firms only have the motive of profit maximization
 There is free entry and exit from the market, i.e. there are no barriers
 And there is no concept of consumer preference

2] Monopolistic Competition
This is a more realistic scenario that actually occurs in the real world. In
monopolistic competition, there are still a large number of buyers as well as
sellers. But they all do not sell homogeneous products. The products are similar
but all sellers sell slightly differentiated products. Now the consumers have the
preference of choosing one product over another. The sellers can also charge a
marginally higher price since they may enjoy some market power. So the sellers
become the price setters to a certain extent.

For example, the market for cereals is a monopolistic competition. The products
are all similar but slightly differentiated in terms of taste and flavours. Another
such example is toothpaste.

3] Oligopoly

In an oligopoly, there are only a few firms in the market. While there is no clarity
about the number of firms, 3-5 dominant firms are considered the norm. So in the
case of an oligopoly, the buyers are far greater than the sellers.

The firms in this case either compete with another to collaborate together, They
use their market influence to set the prices and in turn maximize their profits. So
the consumers become the price takers. In an oligopoly, there are various barriers
to entry in the market, and new firms find it difficult to establish themselves.

4] Monopoly

In a monopoly type of market structure, there is only one seller, so a single firm
will control the entire market. It can set any price it wishes since it has all the
market power. Consumers do not have any alternative and must pay the price set
by the seller.

Monopolies are extremely undesirable. Here the consumer loose all their power
and market forces become irrelevant. However, a pure monopoly is very rare in
reality.

Definition of Niche Marketing:

Niche marketing is a strategy that focuses on targeting a specific segment of a larger market.
This segment is defined by unique preferences, needs, or identity traits. Instead of appealing
to a broad audience, niche marketing aims to connect deeply with a smaller, well-defined
audience, offering products or services tailored to their specific requirements.
Features of Niche Marketing:

1. Targeted Audience:
o Focuses on a well-defined, specific group of consumers with shared needs,
preferences, or characteristics.
2. Specialized Offerings:
o Products or services are tailored to meet the unique requirements of the niche
audience, often addressing gaps in the broader market.
3. Strong Customer Relationships:
o Builds loyalty and trust through personalized interactions and attention to the
needs of the niche market.
4. Lower Competition:
o Operating in a smaller segment often reduces competition compared to
broader, more generalized markets.
5. Higher Profit Margins:
o Because niche markets value specialization, businesses can often charge
premium prices for their offerings.
6. Expertise and Authority:
o Businesses develop a reputation as specialists or leaders within their chosen
niche.
7. Efficient Use of Resources:
o Marketing efforts are concentrated, reducing waste and ensuring that resources
are spent effectively.
8. Challenges of Scale:
o The market size is limited, which may constrain growth opportunities unless
the business diversifies or expands the niche.
9. Innovation-Driven:
o Often requires unique and creative solutions to meet the specific demands of
the niche.

Examples of Niche Marketing:

 Vegan and cruelty-free cosmetics.

 Eco-friendly travel services.
 Tech gadgets designed specifically for seniors.
 High-performance gear for extreme sports enthusiasts.

Advantages of Niche Marketing

1. Reduced Competition:
o Operating in a specialized segment often means fewer competitors compared
to broader markets.
2. Customer Loyalty:
o By meeting the specific needs of a niche audience, businesses can build
stronger, long-term relationships with customers.
 3. Higher Profit Margins:
o Niche products or services are often perceived as unique or premium, allowing
businesses to charge higher prices.
4. Expertise and Brand Authority:
o A business focusing on a niche can develop a reputation as an expert or leader
in that specific area.
5. Efficient Marketing:
o Marketing efforts are more targeted, reducing waste and increasing the
effectiveness of advertising campaigns.
6. Room for Innovation:
o Businesses often create unique and tailored solutions, encouraging creativity
and innovation.
7. Better Understanding of Customer Needs:
o Close interactions with a niche audience allow for a deeper understanding of
their preferences and pain points.
8. Higher Conversion Rates:
o Because the audience is highly targeted, the likelihood of turning leads into
customers is greater.

Disadvantages of Niche Marketing

1. Limited Market Size:

o The narrow focus can restrict the potential customer base, limiting growth
opportunities.
2. Risk of Over-Dependence:
o A business might become overly reliant on the niche, which could be
problematic if market trends shift.
3. Difficult to Scale:
o Expanding beyond the niche may require significant adjustments to product
offerings or marketing strategies.
4. Vulnerability to Market Changes:
o A small niche can be heavily impacted by economic shifts, new competitors,
or changing customer preferences.
5. Higher Costs for Customization:
o Tailoring products or services to specific needs can be expensive and
resource-intensive.
6. Challenging to Enter:
o Gaining trust and establishing credibility in a niche market can take time and
effort, especially if competitors are well-established.
7. Potential Saturation:
o Since the niche is small, it can become saturated quickly, making it harder to
maintain growth.

Advantages of a Local Market

1. Personalized Customer Relationships:

 o Businesses can build close, trust-based relationships with customers through
face-to-face interactions.
2. Loyal Customer Base:
o Local businesses often enjoy strong loyalty from the community, as customers
prefer to support familiar brands or individuals.
3. Lower Transportation Costs:
o Products and services are delivered within a limited area, reducing logistics
and distribution expenses.
4. Quick Feedback:
o Businesses can directly receive customer feedback, enabling quicker
adaptation to local preferences and needs.
5. Cultural Relevance:
o Products and services can be tailored to match local customs, traditions, and
preferences.
6. Support from Local Networks:
o Local businesses can benefit from partnerships with other businesses,
suppliers, or community organizations.
7. Low Marketing Costs:
o Marketing efforts can focus on targeted local channels like community events,
local newspapers, or social media groups, which are often less expensive.
8. Ease of Entry:
o Starting in a local market usually requires less capital and infrastructure
compared to entering national or international markets.

Disadvantages of a Local Market

1. Limited Growth Potential:

o The customer base is confined to a specific geographic area, restricting
business expansion opportunities.
2. Dependency on Local Economy:
o The business’s performance is tied to the local economic conditions, which
can be a vulnerability during economic downturns.
3. High Competition:
o In small local markets, businesses often face intense competition from other
local players offering similar products or services.
4. Lack of Scalability:
o Growth may require significant investment in infrastructure or expansion
beyond the local area.
5. Market Saturation:
o A small population and high competition can lead to a saturated market,
limiting profitability.
6. Seasonal Demand Variability:
o Local markets might be affected by seasonal changes, impacting demand for
certain products or services.
7. Limited Resources and Expertise:
o Local businesses may struggle with access to advanced technologies, skilled
labor, or specialized knowledge.
 8. Brand Visibility Challenges:
o Staying visible and relevant requires constant effort, as local businesses may
lack the marketing reach of larger competitors.

Definition of Green Marketing

Green marketing refers to the practice of promoting products, services, or business practices
based on their environmental benefits. It involves creating, advertising, and delivering
offerings that are eco-friendly, sustainable, and aligned with environmental conservation
efforts. This strategy appeals to environmentally conscious consumers and supports
sustainability.

Features of Green Marketing

1. Eco-Friendly Products:
o Focus on products made with sustainable materials, biodegradable packaging,
or environmentally friendly production processes.
2. Sustainability Focus:
o Prioritizes long-term environmental sustainability in operations, including
reducing waste, conserving energy, and minimizing emissions.
3. Ethical Practices:
o Ensures ethical sourcing of raw materials and fair treatment of workers,
aligning with broader ethical and environmental standards.
4. Consumer Awareness:
o Targets consumers who are informed and concerned about the environmental
impact of their purchases.
5. Green Certification and Labeling:
o Often involves obtaining certifications (e.g., Energy Star, USDA Organic) to
verify environmental claims.
6. Cost Implications:
o Can involve higher production costs due to sustainable materials and
processes, which may influence pricing.
7. Transparency:
o Emphasizes honest communication about the environmental benefits of
products, avoiding "greenwashing" (false or exaggerated claims).

Advantages of Green Marketing

1. Attracts Eco-Conscious Consumers:

o Appeals to a growing segment of consumers prioritizing sustainability in their
buying decisions.
2. Enhances Brand Image:
o Positions businesses as socially responsible and environmentally conscious,
improving reputation and trust.
3. Regulatory Compliance:
 o Helps businesses align with environmental laws and regulations, reducing
legal risks.
4. Market Differentiation:
o Offers a competitive edge by standing out in a crowded market with eco-
friendly products.
5. Long-Term Cost Savings:
o Energy-efficient production and waste reduction can lead to significant cost
savings over time.
6. Encourages Innovation:
o Drives the development of new, sustainable technologies and practices.
7. Positive Environmental Impact:
o Contributes to conservation efforts and helps combat climate change.

Disadvantages of Green Marketing

1. Higher Costs:
o Sustainable materials and processes can be expensive, potentially leading to
higher product prices.
2. Limited Market Size:
o Not all consumers are willing to pay a premium for eco-friendly products,
limiting the customer base.
3. Risk of Greenwashing:
o Businesses making false or misleading environmental claims can damage their
reputation if exposed.
4. Challenges in Sourcing:
o Finding reliable and ethical suppliers for sustainable materials can be difficult.
5. Need for Consumer Education:
o Requires educating customers about the benefits of green products, which can
be time-consuming and costly.
6. Regulatory Scrutiny:
o Businesses must comply with strict environmental standards, which can be
complex and resource-intensive.
7. Slow Adoption in Certain Markets:
o In markets where environmental awareness is low, green marketing may not
yield significant results.