UNIT 1

Fundamentals of Marketing : Introduction

and Concepts
 Unit – 1

Marketing

1. Introduction

Marketing refers to activities undertaken by a company to promote the

buying or selling of a product or service. Marketing includes advertising,
selling, and delivering products to consumers or other businesses. Some
marketing is done by affiliates on behalf of a company.

Marketing as a discipline involves all the actions a company undertakes to

draw in customers and maintain relationships with them. Networking with
potential or past clients is part of the work too, including writing thank you
emails, playing golf with a prospective client, returning calls and emails
quickly, and meeting with clients for coffee or a meal.
Marketing is the process of converting prospective buyers into actual
customers by communicating complete information of the product or services
to the customer. The key elements which are the secret to a successful
marketing practice are thorough market survey and research, framing a
competitive strategy, designing a realistic marketing plan and implementing
different tactics to execute the plan.

Marketing is an ongoing practice to capture customer’s attention towards a

product or service. It is the core of all the business practices, without which
any business will prove to be a colossal failure.

2. Nature of Marketing

Marketing is a complex function and does not sum up to sales alone.

Figure 1:- Nature of Marketing

To develop a better understanding of the marketing practices, let us know

about its nature:

 Managerial Function: Marketing is all about successfully managing the

product, place, price and promotion of business to generate revenue.
 Human Activity: It satisfies the never-ending needs and desires of human
beings.
 Economic Function: The crucial second marketing objective is to earn a
profit.
 Both Art and Science: Creating demand of the product among consumers
is an art and understanding human behaviour, and psychology is a science.
 Customer Centric: Marketing strategies are framed with the motive of
customer acquisition.
 Consumer Oriented: It practices market research and surveys to know
about consumer’s taste and expectations.
 Goal Oriented: It aims at accomplishing the seller’s profitability goals and
buyer’s purchasing goals.
 Interactive Activity: Marketing is all about exchanging ideas and
information among buyers and sellers.
 Dynamic Process: Marketing practice keeps on changing from time to
time to improve its effectiveness.
 Creates Utility: It establishes utility to the consumer through four
different means; form (kind of product or service), time (whenever needed),
place (availability) and possession (ownership).

3. Scope of Marketing

a. Study of Consumer Wants and Needs

Goods are produced to satisfy consumer wants. Therefore study is done to

identify consumer needs and wants. These needs and wants motivates
consumer to purchase.

b. Study of Consumer behaviour

Marketers perform study of consumer behaviour. Analysis of buyer behaviour

helps marketer in market segmentation and targeting.

c. Production planning and development

Product planning and development starts with the generation of product idea
and ends with the product development and commercialization. Product
planning includes everything from branding and packaging to product line
expansion and contraction.

d. Pricing Policies

Marketer has to determine pricing policies for their products. Pricing policies
differs form product to product. It depends on the level of competition, product
life cycle, marketing goals and objectives, etc.

e. Distribution

Study of distribution channel is important in marketing. For maximum sales

and profit goods are required to be distributed to the maximum consumers at
minimum cost.

f. Promotion

Promotion includes personal selling, sales promotion, and advertising. Right

promotion mix is crucial in accomplishment of marketing goals.

g. Consumer Satisfaction

The product or service offered must satisfy consumer. Consumer satisfaction is

the major objective of marketing.

h. Marketing Control

Marketing audit is done to control the marketing activities.

4. Importance of Marketing

Importance of marketing can be studied as follows:

(a) Marketing Helps in Transfer, Exchange and Movement of Goods

Marketing is very helpful in transfer, exchange and movement of goods. Goods

and services are made available to customers through various intermediaries’
viz., wholesalers and retailers etc. Marketing is helpful to both producers and
consumers.

To the former, it tells about the specific needs and preferences of consumers
and to the latter about the products that manufacturers can offer. According to
Prof. Haney Hansen “Marketing involves the design of the products acceptable
to the consumers and the conduct of those activities which facilitate the
transfer of ownership between seller and buyer.”

(b) Marketing is Helpful in Raising and Maintaining the Standard of

Living of the Community

Marketing is above all the giving of a standard of living to the community. Paul
Mazur states, “Marketing is the delivery of standard of living”. Professor
Malcolm McNair has further added that “Marketing is the creation and delivery
of standard of living to the society”.

By making available the uninterrupted supply of goods and services to

consumers at a reasonable price, marketing has played an important role in
raising and maintaining living standards of the community. Community
comprises of three classes of people i.e., rich, middle and poor. Everything
which is used by these different classes of people is supplied by marketing.

In the modern times, with the emergence of latest marketing techniques even
the poorer sections of society have attained a reasonable level of living
standard. This is basically due to large scale production and lesser prices of
commodities and services. Marketing has infact, revolutionised and
modernized the living standard of people in modern times.

(c) Marketing Creates Employment

Marketing is complex mechanism involving many people in one form or the

other. The major marketing functions are buying, selling, financing, transport,
warehousing, risk bearing and standardization, etc. In each such function
different activities are performed by a large number of individuals and bodies.

Thus, marketing gives employment to many people. It is estimated that about

40% of total population is directly or indirectly dependent upon marketing. In
the modern era of large scale production and industrialization, role of
marketing has widened.

This enlarged role of marketing has created many employment opportunities

for people. Converse, Huegy and Mitchell have rightly pointed out that “In
order to have continuous production, there must be continuous marketing,
only then employment can be sustained and high level of business activity can
be continued”.

(d) Marketing as a Source of Income and Revenue

The performance of marketing function is all important, because it is the only

way through which the concern could generate revenue or income and bring in
profits.

Buskirk has pointed out that, “Any activity connected with obtaining income is
a marketing action. It is all too easy for the accountant, engineer, etc., to
operate under the broad assumption that the Company will realize many
dollars in total sales volume.

However, someone must actually go into the market place and obtain dollars
from society in order to sustain the activities of the company, because without
these funds the organization will perish.”

Marketing does provide many opportunities to earn profits in the process of

buying and selling the goods, by creating time, place and possession utilities.
This income and profit are reinvested in the concern, thereby earning more
profits in future. Marketing should be given the greatest importance, since the
very survival of the firm depends on the effectiveness of the marketing
function.

(e) Marketing Acts as a Basis for Making Decisions

A businessman is confronted with many problems in the form of what, how,

when, how much and for whom to produce? In the past problems was less on
account of local markets. There was a direct link between producer and
consumer.

In modern times marketing has become a very complex and tedious task.
Marketing has emerged as new specialized activity along with production.

As a result, producers are depending largely on the mechanism of marketing,

to decide what to produce and sell. With the help of marketing techniques a
producer can regulate his production accordingly .
5. Marketing Management

Marketing management facilitates the activities and functions which are

involved in the distribution of goods and services.

According to Philip Kotler, “Marketing management is the analysis, planning,

implementation and control of programmes designed to bring about desired
exchanges with target markets for the purpose of achieving organizational
objectives.

It relies heavily on designing the organizations offering in terms of the target

markets needs and desires and using effective pricing, communication and
distribution to inform, motivate and service the market.” Marketing
management is

concerned with the chalking out of a definite programme, after careful analysis
and forecasting of the market situations and the ultimate execution of these
plans to achieve the objectives of the organization.

Further, their sales plans to a greater extent rest upon the requirements and
motives of the consumers in the market. To achieve this objective, the
organization has to pay heed to the right pricing, effective advertising and
sales promotion, distribution and stimulating the consumers through the best
services.

6. Core Concepts of Marketing

 Figure 2: Core Marketing Concepts

1. Needs:
Existence of unmet needs is precondition to undertake marketing activities.
Marketing tries to satisfy needs of consumers. Human needs are the state of
felt deprivation of some basic satisfaction. A need is the state of mind that
reflects the lack-ness and restlessness situation.

2. Wants:
Wants are the options to satisfy a specific need. They are desire for specific
satisfiers to meet specific need. For example, food is a need that can be
satisfied by variety of ways, such as sweet, bread, rice, sapati, puff, etc. These
options are known as wants. In fact, every need can be satisfied by using
different options.
3. Demand:
Demand is the want for specific products that are backed by the ability and
willingness (may be readiness) to buy them. It is always expressed in relation
to time. All wants are not transmitted in demand. Such wants which are
supported by ability and willingness to buy can turn as demand.

4. Product:
Product can also be referred as a bundle of satisfaction, physical and
psychological both. Product includes core product (basic contents or utility),
product-related features (colour, branding, packaging, labeling, varieties, etc.),
and product-related services (after-sales services, guarantee and warrantee,
free home delivery, free repairing, and so on). So, tangible product is a
package of services or benefits. Marketer should consider product benefits and
services, instead of product itself.

5. Utility (value), Cost, and Satisfaction:

Utility means overall capacity of product to satisfy need and want. It is a
guiding concept to choose the product. Every product has varying degree of
utility. As per level of utility, products can be ranked from the most need-
satisfying to the least need-satisfying.

6. Exchange, Transaction, and Transfer:

Exchange is in the center of marketing. Marketing management tries to arrive
at the desired exchange. People can satisfy their needs and wants in one of
the four ways – self-production, coercion/snatching, begging, or exchanging.

Transaction differs from exchange:

Exchange is a process, not event. It implies that people are negotiating and
moving toward the agreement. When an agreement is reached, it is
transaction. Transaction is the decision arrived or commitment made.

For example, Mr. X pays Rs. 25000 and obtains a computer. There are various
types of transactions, such as barter transactions, monetary transactions,
commercial transactions, employment transactions, civic transactions,
religious or charity transactions.
Transaction involves following conditions:
i. At least two things of value

ii. Agreed upon conditions

iii. A time of agreement

iv. A place of agreement

v. A law (legal system) of contract to avoid distrust

7. Relationships and Network:

Today’s marketing practice gives more importance to relation building.
Marketing practice based on relation building can be said as relationship
marketing. Relationship marketing is the practice of building long-term
profitable or satisfying relations with key parties like customers, suppliers,
distributors, and others in order to retain their long-term preference in
business.

8. Market, Marketing, Marketer, and Prospect:

In marketing management, frequently used words are markets, marketing,
marketer, and prospects. A market consists of all potential customers sharing
a particular need or want who might be willing and able to engage in exchange
to satisfy this need or want.

7. Selling Concept

Selling concept was developed after production and product concepts of

marketing. The product concept could not be fully successful in the business
sector. Despite production of quality goods, there appeared serious problem in
selling. As a result, selling concept was developed. This concept believes that
the consumers do not buy the product until they are motivated through sales
promotion efforts. In other words, the consumers do not buy products with
their own initiative rather they should be motivated. More quantity of products
can be sold to the consumers by creating need and arousing interest in them
through different promotional activities.

Selling concept of marketing focuses attention on the needs of seller but not
on consumers’. It aims to increase sales volume and earn profit through
different promotional activities. This concept became very popular during
1930-1950. That period is called ‘Ideal Sales Era’. During that period, except
during the second World War period, supply became more than demand. The
premise of the product concept that the ‘customers easily buy quality goods of
low price’ could not work. As a result, many firms appointed sales employees,
and focused attention on advertisement and sales promotional activities. On
order to attract customers’ attention, the techniques such as advertisement,
decoration and display of goods, publicity, exhibition or trade fair etc were
started. Even then the management would give more emphasis to the product
rather than to the customers’ need.

Some firms are found to believe in selling concept even today. Life Insurance
companies, Encyclopedia Publications etc. gives emphasis to selling concept.
Such companies give arguments that use of ‘hard sell techniques’ can help to
identify needs of customers and motivate them to buy. This technique believes
that efforts should be made the customers realize needs and so that they can
buy products. Selling concept emphasis to sell products but does not care for
the after-sale services.

8. Production Concept
Production is a process of combining various inputs to produce an output for
consumption. It is the act of creating output in the form of a commodity or a service
which contributes to the utility of individuals.
In other words, it is a process in which the inputs are converted into outputs.

The basic proposition of the production concept is that customers will choose
products and services that are widely available and are of low cost. So
business is mainly concerned with making as many units as possible. By
concentrating on producing maximum volumes, such a business aims to
maximize profitability by exploiting economies of scale.

Managers try to achieve higher volume with low cost and intensive distribution
strategy. This seems a viable strategy in a developing market where market
expansion is the survival strategy for the business. Companies interested to
take the benefit of scale economies pursue this kind of orientation.

In a production-orientated business, the needs of customers are secondary

compared with the need to increase output. Such an approach is probably
most effective when a business operates in very high growth markets or where
the potential for economies of scale is significant. It is natural that the
companies cannot deliver quality products and suffer from problems arising
out of impersonal behavior with the customers.

Do note, the production concept is a thing of the past and was used when
there was very less competition. At such times, the more you produced, the
more will be the consumption of the product. An example in this case is FORD,
which manufactured huge number of automobiles through its manufacturing
assembly line which was the first of its kind.

Production is a process of transformation of the factors of production into the

economic goods. So in term of production analysis we are dealing with the
physical relationships between inputs and outputs (i.e. we are observing the
dependence of physical production volume on physical quantity of the inputs).

9. Modern Marketing Concept

Modern approach to marketing is referred to as the marketing concept which

has developed gradually passing through different stages called Marketing
Management Philosophies

a. The Production Concept

This concept lays emphasis on production and assumes that consumers will
always respond to products that are made available to them. This concept
developed when there was a period of manufacturing dominance and there
was no competition. It was producers market and hence production problems
were of more importance than anything else.

The major task of the management was to strive constantly to increase

production and there were no selling or marketing problems. The production
concept may boost the sales in the initial stages but it invites the criticism that
it is impersonal in its approach and ignores the interests of the consumers.

b. The Product Concept

With the passage of time, it was realized that it is not only the quantity of
production but also the quanlity of the product that is important. The product
concept assumes that the consumers will respond favourably to the best
quality products that are reasonably priced and hence the major task of the
management is to improve the quality of the product it offers to successfully
attract and hold customers. Enterprises which rely too much upon the product
concept may face difficulties due to the tendency on the part of such
enterprises “to look to often in a mirror when they should be looking out of the
window.”

c. The Sales Concept

With the development in technological field, the competition had grown and
the market had become more complex. During 1920’s and 30’s the selling
activity became more important and marketing was regarded merely as a
selling activity, giving rise to the sales concept. The selling concept assumes
that the consumers will generally not buy enough of the firm’s products unless
their interest is stimulated in its products through substantial selling and
promotional activities. In this concept the focus is on the product, the means
are selling and promoting and the objective is maximization of profits through
sales volume. The drawback of the sales concept is that it ignores the
customer’s interest and a firm which follows this concept may face difficulties
in the long run.

d. The Marketing Concept

The modern approach to marketing is referred to as the marketing concept.

The essence of the marketing concept is that the customer and not the
product is the centre of entire business activity. It is also referred to as the
customer-oriented approach to business. This concept explains the rationale
for a firm’s existence in terms of its ability to satisfy some aspects of
consumer needs and recognizes the purpose of the business as to ‘create a
customer’.

In the words of Stanton, “the marketing concept is a philosophy, an attitude,

or a course of business action. The customers want satisfaction in the
economic and social justification of a company’s existence. Consequently all
company’s activities in production, engineering and finance, as well as
marketing, must be devoted to, first, determining what the customers wants
are and then, satisfying these wants while making a reasonable profit.

According to the marketing concept, the main task of the enterprise

is:
(i) To determine the actual needs, wants and preferences of customers, and
(ii) To adopt the enterprise in such a way so as to deliver the desired
satisfaction more effectively and efficiently than its rivals.
In this concept, the focus is on the customer needs, the means are integrated
marketing and the objective is maximization of profits through customer
satisfaction.

e. The Social Marketing Concept

Social marketing connects social issues to commercial marketing strategies.

10. Societal Marketing

Societal Marketing emphasizes on social responsibilities and suggests that

to sustain long-term success, the company should develop a marketing
strategy to provide value to the customer’s to maintain and improve both the
customers and society’s well being better than the competitors.

Societal marketing concept that holds that a company should make good
marketing decisions by considering consumer’s wants, company’s
requirements, and society’s long-term interests.

Societal Marketing creates a favorable image for the company increases the
sales. It is not the same as the terms social marketing and social media
marketing. It is a term closely related to CSR and sustainable development.

Societal marketing connects the concept of social responsibility into

commercial marketing strategies.

It emphasizes social responsibilities and suggests that to sustain.

It calls for sustainable marketing, socially and environmentally responsible

marketing that meets the present needs of consumers and businesses while
also preserving or enhancing the ability of future generations to meet their
needs.

The global warming panic button is pushed and a revelation is required in the
way we use our resources. So companies are slowly either fully or partially
trying to implement the societal marketing concept.
 Figure 3: Three Considerations of Societal Marketing Concept

Companies should balance three considerations in setting their marketing

strategies: company profits, the consumer wants, and society’s interests.

a. Society (Human Welfare)

Companies must make sure the products, services, actions, investments

innovations servers the society first.

b. Consumers (Satisfaction)

Products and services should be satisfying the consumer’s needs.

c. Company (Profits)

Building long-term customer relationship, being socially responsible, and

providing satisfactory products are important for profit-making and wealth
maximization.

10.1 Objectives of Societal Marketing Concept.

 To maintain a long-term relationship with customers.

 To create a better image in the society for the company than it’s
competitors.
 To carry out its social responsibilities.
 Developing community awareness towards its brands.
 To carry out its social responsibilities.
 To increase the consumer base and market share.
 Importance of Societal Marketing Concept
  Societal Marketing is very important to society, environment, and
businesses. This concept was developed in order to tackle the
consumerism and profit only the motive of business.
 The societal marketing concept helps to maximize profits for the
organization and creates a long-term relationship with customers.
 It encourages developing products that benefit society in long run and
satisfies consumers.

10.2 Examples of Societal Marketing

Most recent examples of societal marketing are the super bowl 2017 ads of
several companies.

Most ads took on issues like environment and immigration. These come after
president Donald Trump implemented executive orders that raised
controversies.

 Kia’s the “Hero’s Journey” commercial starring Melissa Mccarthy is the

prime example of societal marketing.
 Coca Cola release an ad that shows people of different ethnicity and
singing “America is Beautiful” in different languages.

 Airbnb’s #WeAccept super bowl 2017 ad.

The societal marketing does not stop there. Societal marketing policies are
what making companies actively trying to change social policy, taking part in
social activities, investing time and money in corporate social responsibility.

Societal marketing concept questions whether the pure marketing concept

overlooks possible conflicts between consumer short-run wants and consumer
long-run welfare.

The societal marketing concept holds “marketing strategy should deliver value
to customers in a way that maintains or improves both the consumer’s and
society’s well-being”.