Unit 1:

Introduction to Marketing
WHAT IS MARKET ?

A market consists of all the potential

customers sharing a particular need or
want who might be willing and able to
engage in exchange to satisfy that need or
want.
WHAT IS MARKETING ?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
NEEDS,WANTS AND DEMANDS

NEED : A state of deprivation of some basic

satisfaction ( Food, Clothing, Shelter,
Belonging etc. )
WANTS : Wants are desires for specific
satisfiers of the deeper needs. Needs are few
and wants are many .
DEMANDS : are want for specific product backed
by Ability to buy and Willingness to Buy
Marketers cannot create needs. Needs preexists.
Marketers can influence wants. This is done in
combination with societal influencers.
PRODUCTS ( Goods/Services)

Anything that can be offered to someone

to satisfy a need or want is a product .

Product refers to physical object

Services refer to intangible object

VALUE AND SATISFACTION
Value is products capacity to satisfy
needs/ wants as per consumers
perception or estimation.
Value is the ratio between what the
customer gets and what he gives
VALUE BENEFITS / COST
Customer gets benefits & assume costs
WHEN :CustomerExpectance=Performance (satisfied)
Customer Expectance>Performance (dis-satisfied)
Customer Expectance<Performance (Highly satisfied)
EXCHANGE AND TRANSACTION

Exchange is the act / process of obtaining

a desired product by offering something
in return .
Exchange takes place when 5 conditions are satisfied:
(a) Two parties should be there
(b) Each party must have something of value to the other
(c) Each party is capable of communication & delivery
(d) Each party is free to accept or reject the offer
(e) Each party believes that it is appropriate to deal with
the other party
EXCHANGE AND TRANSACTION

Exchange is a process rather than event. It is a

value creating process because it normally leaves
both parties better off.
TRANSACTION :- Event that happens at the end of an
exchange. Exchange is a process towards an
agreement. When agreement is reached, we say a
transaction has taken place.
A transaction is a trade of values between two or
more parties ( A BARTER TRANSACTION OR
MONETARY TRANSACTION ).
RELATIONSHIP/ NETWORKING

MARKETING NETWORK: It is made up of the

company and its customers, employees,
suppliers, distributors, advertisement agencies,
retailers, research & development with whom it
has built mutually profitable business
relationship.

RELATIONSHIP MARKETING:- Its a pattern of

building long term satisfying relationship with
customers, suppliers, distributors in order to
retain their long term performances and business
MARKETERS/ PROSPECTS:

One party seeks the exchange more actively,

called as Marketer, and the other party is called
Prospect.
Prospect is someone whom marketer identifies as
potentially willing and able to engage in
exchange.
Marketer may be seller or buyer. Most of time,
marketer is seller.
A marketer is a company serving a market in the
face of competition.
WHAT IS MARKETING ?

Marketing is the management process

which identifies, anticipates, and
supplies customer requirements
efficiently and profitably.
In other words, it is the process of
understanding, creating, and delivering
value to targeted customers better than
the competition.
WHAT IS MARKETING ?

Its aim is to establish, maintain, enhance

long term relationship with customers at a
profit so that the objectives of the parties
involved are met.
In short marketing consists of attracting,
developing, and retaining profitable
customers.
BUSINESS IS MARKETING

Marketing cannot be considered as a

separate function , it is the whole
business, seen from the point of view of
its final results i.e.profit,through
customer satisfaction

PETER DRUCKER
WHAT IS MARKETING MANAGEMENT ?

Marketing management is the art and

science of choosing target markets and
getting, keeping, and growing
customers through creating, delivering,
and communicating superior customer
value.
WHAT IS MARKETING MANAGEMENT

Marketing management is demand

management or it involves the task of
influencing the level, timing and
composition of demand.
At times the actual demand level may
be below, equal to, or above the
desired demand level and the major
task of marketing management is to
regulate the level of demand.
Key Elements of Marketing
Concepts
MARKETING CONCEPTS
These concepts may be termed as the approaches
or, sometimes, the evolution stages of marketing
development.
1. The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept
First three concepts are traditional, the forth is modern
concept and the last is the latest concept.
Todays marketing practices are based on combination
of last three concepts.
The Production Concept
The production concept holds that consumers will
favor those products that are widely available and
low in cost.
Managers of production-oriented organizations
concentrate on achieving higher production
efficiency and wide distribution coverage.
It is applicable when there was no competition and
market was dominated by sellers.
Elements of the production concept include:
Low price
Easy/wide availability of product
The Product Concept
The product concept holds that consumers will favour
those products that offer the most quality, performance,
and innovative features.
Managers in product-oriented organizations focus their
energy on making superior products and improving
them over time.
The product concept is an improvement over the
production concept.
This concept also works under monopoly situation.
Elements of the selling concept include:
Low price.
Wide availability.
Better qualities, innovative features, and performance.
3. The Selling Concept
The selling concept holds that consumers, if left alone, will
ordinarily not buy enough of the organizations products.
The organization must, therefore, undertake aggressive
selling and promotional efforts.
This concept functions under competitive market. It is
assumed that consumers will not buy companys products
(even products are cheap, widely available, and of better
quality, features and performance) if they are not informed,
convinced, or requested.
This concept emphasizes on managers effective
promotional and selling efforts.
Elements of selling concept include:
i. Low price.
ii. Wide availability.
iii. Quality, innovative features, and performance.
iv. Aggressive selling and promotional efforts.
4. The Marketing Concept
The marketing concept holds that the key to
achieve organizational goals consists in
determining the needs and wants of target markets
and delivering the desired satisfaction more
effectively and efficiently than competitors.
Being more effective than competitors by
integrating marketing activities toward determining
and satisfying the needs and wants of target
markets.
This concept operates under severe competition.
It is a consumer centric concept. Here, it is assumed
that consumers will buy our product if they are
satisfied.
All other elements up to the selling concept are
also automatically included.
4. The Marketing Concept

Marketer should first identify needs and wants of the

target market, and then should design the product to
satisfy these needs and wants.
Elements of the marketing concept include:
i. Low price.
ii. Wide availability.
iii. Quality, features, and performance.
iv. Selling and promotional efforts.
v. Target markets (instead of total market).
vi. Integrated marketing.
vii. Emphasis on consumer satisfaction.
Key Elements or Pillars of Marketing Concept:

1. Consumer Orientation:
2. Target Market Focus:
3. Profitability:
4. Integrated Marketing:
 Marketing Concept versus
Selling Concept
Starting Point Focus Means Ends

The Marketing Concept

Customer Integrated Profits from
Market
needs marketing satisfied customers

The Selling Concept

Sell and Profits through
Factory Product
Promote it sales volume

Figure 1.3
5. The Societal Concept:
The societal concept holds that the organizations task is to
determine the needs, wants, and interests of target markets and
to deliver desired satisfaction more effectively and efficiently
than competitors in a way that preserves or enhances the
consumers and societys well-being.
The societal concept is based on the following assumptions:
1. Consumers want to protect their long-term interest and
welfare.
2. Consumers favor those products, which protect their
interest and social welfare.
3. Therefore, management is concerned with developing
products that satisfy consumers with protecting their
interest.
4. Marketer needs to make the organization consumer-
oriented and society-oriented for their long-term benefits.
5. The Societal Concept:
Societal concept is the latest marketing philosophy and
guideline.
It stresses on triple reward system, i.e., reward to
company, customers, and society.
Societal concept involves:
i. Low price.
ii. Wide availability.
iii. Quality, features, and performance.
iv. Selling and promotional efforts.
v. Integrated marketing
vi. Consumer satisfaction.
vii. Protection of consumers and societys long-
term interest and well-being.
The Marketing Environment
The marketing environment includes the
actors and forces outside marketing that affect
marketing managements ability to build and
maintain successful relationships with target
customers.

Environment offers both opportunities and

threats.
The Marketing Environment
Includes:
Micro environment: actors close to the
company that affect its ability to serve its
customers.
Macro environment: larger societal forces
that affect the microenvironment.
Considered to be beyond the control of the
organization.
Actors in the Microenvironment
The Companys Microenvironment
Companys Internal Environment:
Areas inside a company such as Top
Management, Finance & Accounting , R&D,
Purchasing, Operations.
Affects the marketing departments planning
strategies.
All departments must think consumer and
work together to provide superior customer
value and satisfaction.
The Companys Microenvironment

Suppliers:
Provide resources
needed to produce goods
and services.
Important link in the
value delivery system.
Most marketers treat
suppliers like partners.
The Companys Microenvironment
Marketing Intermediaries
Help the company to promote, sell and distribute its
products to final buyers
Types of Marketing Intermediaries
Resellers- Wholesalers, Retailers, Agents, Brokers,
Dealers
Marketing service agencies - Advertising agencies,
Consultancy firms etc.
Financial intermediaries - banks, insurance companies etc.
Physical distribution firms - Warehousing firms,
transportation firms.
The Companys Microenvironment
Customers
The company needs to study 5 types of customers
closely-
Consumer Market
Business Markets
Reseller Market
International Market
Government market

Should identify the differences in customer

characteristics and segment the customers in
different groups.
The Companys Microenvironment

Competitors
Those who serve a target market with products and
services that are viewed by consumers as being same
or reasonable substitutes

Firms must gain strategic advantage by positioning

their offerings against competitors offerings
The Companys Microenvironment

Publics
Any group that has an actual or potential interest in
or impact on an organizations ability to achieve its
objectives
Financial publics
Media publics
Government publics
Citizen-action publics
Local publics
General public
Internal publics
The Companys Macroenvironment
The Companys Macroenvironment

Demographic Environment
Demography is the study of human populations
in terms of size, density, location, age, gender,
race, occupation, and other statistics
Demographic environment is important because it
involves people, and people make up markets
Demographic trends include age, family structure,
geographic population shifts, educational
characteristics, and population diversity
The Companys Macroenvironment

Economic Environment
Economic environment consists of factors that affect consumer
purchasing power and spending patterns
Industrial economies are richer markets
Subsistence economies consume most of their own agriculture
and industrial output
Some of the factors are
Change in Disposable income
Income distribution
Changes in Consumer Spending Patterns
Economic conditions
Business cycle
Economic health
 Economic Environment :

Stage of business cycle

Current and project economic growth, inflation and
interest rates
Unemployment and labor supply
Labor costs
Levels of disposable income and income
distribution
Impact of globalization
Likely impact of technological or other change on
the economy
Likely changes in the economic environment

41
 The Companys Macroenvironment
Natural Environment
Natural environment involves the natural resources that are
needed as inputs by marketers or that are affected by marketing
activities
Concern for the natural environment has grown steadily, increasing
the importance of these trends:
Shortages of raw materials
Increased pollution
Increase government intervention
Companies adopt Environmentally sustainable strategies
The Companys Macroenvironment

Technological Environment
The technological environment is characterized by rapid
change.
New technologies create new opportunities and markets
but make old technologies obsolete.
The U.S. leads the world in research and development
spending.
Creates new products and opportunities
The Companys Macroenvironment

Political Environment
Political environment consists of laws,
government agencies, and pressure groups that
influence or limit various organizations and
individuals in a given society
Key trends include:
Increased legislation to protect businesses as
well as consumers.
Changes in governmental agency enforcement.
Increased emphasis on ethical behavior and
social responsibility.
Political Environment :

Government type and stability

Freedom of press, rule of law and levels of bureaucracy
and corruption
Regulation and de-regulation trends
Social and employment legislation
Tax policy, and trade and tariff controls
Environmental and consumer-protection legislation
Likely changes in the political environment

45
The Companys Macroenvironment

Cultural Environment

Cultural environment consists of institutions

and other forces that affect a societys basic
values, perceptions, and behaviors
The Companys Macroenvironment

The Cultural Environment

Core beliefs are Societys cultural
persistent values are expressed
Passed from parents through peoples views
to children; reinforced of:
by society Themselves
Shape attitudes and Others
behavior Organizations
Secondary cultural Society
values change and shift Nature
more easily The Universe
Techniques used in environment analysis
Environmental analysis is a strategic tool.
It is a process to identify all the external and internal
elements, which can affect the organizations performance.
The analysis entails assessing the level of threat or
opportunity the factors might present.
These evaluations are later translated into the decision-
making process.
The analysis helps align strategies with the firms
environment.
There are many strategic analysis tools that a firm can use
PESTLE Analysis
SWOT Analysis.
Importance of PEST Analysis
PEST Analysis ( or sometimes called as STEP analysis) is a simple
but important and widely-used tool that helps you to understand the
big picture of the environment comprising of

environments you are operating in. PEST is used by business leaders

worldwide to build their vision of the future.
 Political factors Economic Factors
The inflation rate
Government policies The interest rate
Taxes laws and tariff Disposable income of
Stability of government buyers
Entry mode regulations Credit accessibility
Unemployment rates
The monetary or fiscal
policies
The foreign exchange
rate
 Social factors Technological factors
The cultural implications New discoveries
The gender and Rate of technological
connected demographics obsolescence
The social lifestyles Rate of technological
The domestic structures advances
Educational levels Innovative
Distribution of Wealth technological platforms
 Legal Factors Environment Factors
Product regulations Geographical location
Employment regulations The climate and weather
Competitive regulations Waste disposal laws
Patent infringements Energy consumption
Health and safety regulation
regulations Peoples attitude towards
the environment
It is important for the following main reasons:

Firstly, by making effective use of PEST Analysis, you ensure

that what you are doing is aligned positively with the powerful
forces of change that are affecting our world. By taking
advantage of change, you are much more likely to be successful
than if your activities oppose it;

Secondly, good use of PEST Analysis helps you avoid taking

action that is doomed to failure for reasons beyond your control;
and

Thirdly, PEST is useful when you start operating in a new

country or region. Use of PEST helps you break free of
unconscious assumptions, and helps you quickly adapt to the
realities of the new environment. 53
 Key Points:
PEST Analysis is a useful tool for understanding the big
picture of the environment in which you are operating,
and the opportunities and threats that lie within it. By
understanding your environment, you can take advantage
of the opportunities and minimize the threats.

PEST is a mnemonic standing for Political, Economic,

Social and Technological. These headings are used firstly to
brainstorm the characteristics of a country or region and,
from this, draw conclusions as to the significant forces of
change operating within it.

This provides the context within which more detailed

planning can take place to take full advantage of the
opportunities that present themselves.
54
SWOT Analysis
It helps an organization match its strengths and
weaknesses with opportunities and threats operating
in the environment.
We should try to capitalize on the opportunities and
by using organizational resources & capabilities to the
best advantage and neutralize the threat by
minimizing the adverse influence of weaknesses.
STRENGTHS internal capabilities of a firm
which can be used to gain competitive
advantage over its rivals.
WEAKNESSES Limitations or constraints
which tend to decrease the competencies of the
firm particularly in comparison to its rivals.
OPPURTUNITIES Major favorable conditions in
a firms environment which help a firm
strengthen its position.
THREATS Major unfavorable conditions in a
firms environment which may pose a risk
damage to the firms position in comparison to
its rivals.
ETOP Analysis

Environmental Threat and Opportunity Profile

also known as Environmental Impact Matrix.

It includes the following steps: -

- Environmental Factors Identification of

different components of environment.
- Assessing importance of Environmental
factors
- Assessing Impact factors
- Combining Importance and Impact
factors
QUEST ANALYSIS

QUEST stands for Quick Environmental Scanning Technique.

It is a four step process which uses scenario-writing for scanning

the environment and identifying strategic options.
 The four steps involved are: -

Strategists make observation about the major events

and trends in their industry.
Then they speculate on a wide range of important issues
that might effect the future of their organizations by
scanning the environment broadly and comprehensively.
The QUEST director prepares a report summarizing
the major issues and their implications, and 3 to 5
scenarios incorporating the major themes of the
discussion.
The report and scenarios are reviewed by a group of
strategists who identify feasible strategic options to deal
with the evolving environment. The options are then
ranked.
21st Century Customer

Customization
Human contact
Social media responsiveness
Mobility
Multiple touch points
Self-service
Memorable experiences
Empathy