VIDYA VIKAS MANDAL

Lecture 1

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Objective: To develop an understanding of the marketing

environment and relevant decisions.
Unit I Introduction to marketing
(25 Marks 15 Lectures)
Market concepts-- place concept, area concept demand
concept.
Kinds of goods—convenience goods, shopping goods
speciality goods.
Marketing concepts - product concept, selling concept,
marketing concept, societal marketing concept. Scope of
marketing - goods, services, events, organisations etc.
  

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 Marketing mix decisions-product, price,

promotion and physical distribution (in brief).

 Sales force management-selection, training,

compensation. Areas in physical distribution-

 Order processing, Inventory, Warehousing

and Transportation. Global marketing-
Alternative marketing entry strategies

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 Consumerism and need for consumer

protection. Social aspects of marketing—

 social responsibility of marketing, ecological

and ethical aspects of marketing. Marketing
of Services and its scope.

 Direct marketing—Catalog marketing, Kiosk

marketing, Telemarketing and On-Line
marketing.

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 Kotler, Philip. Marketing Management. Prentice Hall.

 Kotler, P., Keller, K.L. Koshy, A. & Jha. M. (2009).
Marketing Management: A South Asian Perspective .
(Thirteenth Ed). Pearson Education, New Delhi.

 Gandhi, J.C. Marketing a Managerial Introduction.

Tata McGraw Hill.
 Maheshwari, R.P., Jindal, Lokesh, (2011). Marketing
Management Theory and Practice.
 Sherlekar, S.A. Marketing Management. Himalaya
Publishing House.
 Saxena, Rajan. Marketing Management.
 Ramaswamy & Kumari Nama. Marketing Management.

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 Marketing Environment- concept, major

environmental forces.
 Market segmentation- concept, Bases for

segmenting markets.
 Consumer behaviour and marketing research
 Consumer buying behaviour, factors

influencing consumer buyer behaviour.

 Marketing research and its importance.

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 To develop an understanding of the

marketing environment and relevant
decisions.

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 The term ‘MARKET’ originates from the Latin

noun “ Marcatus” which means “ a place
where business is conducted.”
 Philip Kotler has defined the term ‘market ’as

“ an arena for potential exchanges”.

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 Marketing is the basic reason for the

existence of a business organisation
 Marketing is the springboard of all business

activities
 Marketing is a powerful mechanism which

alone can satisfy the needs and wants of

consumers at the place and price they desire

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American Marketing Association :

“ Marketing consists of performance of business activities
that direct the flow of goods and services from
producers or suppliers to consumers or end users.”
William Stanton:
“ Marketing is a total system of interacting business
activities designed to plan ,price, promote and
distribute want satisfying products and services to
present and potential customers.”

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 Marketing management is the management of

marketing activities. It is the management of all
those activities which are performed by the
marketing department of an enterprise
 Philip Kotler defines “ marketing management as
the analysis ,planning ,implementation and control
of programmes designed to bring about desired
exchanges with target audiences for the purpose
of personal or mutual gain. It relives heavily on the
adoption and co-ordination of product,price,
promotion and place for achieving response.”

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 Place concept: A market may be considered

as convenient meeting place where buyers
and sellers gather together for exchange of
goods,eg., spot,cash,or physical market.
 Area concept: It is the economic concept. Any

area providing a set of price making forces

may become a market; we need three
conditions: unmet wants, products to meet
this demand, and means of interaction or
intercommunications.

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 Demand concept :Market means a group of

people having unmet wants, purchasing
power to make their demand effective and
the will to spend their income to fulfill those
wants. This is considered a good approach to
define a target market or a market segment

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 Convenience Goods
 Frequently purchased
 High replacement rate
 Purchased in small quantities
 Demand minimum efforts, time and shopping

for purchase
 Available at the nearest store
 Branded low priced goods

Examples Bread, Milk, Soap, Newspaper, etc.

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Shopping Goods:
Demand search efforts in central markets
Purchases can be postponed
Demand evaluation and comparison on the
basis of quality, style, price and suitability
Do not need numerous shops
Fashion and service goods
Examples Women’s clothing, furniture, major
appliances, costly shopping goods, etc.

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Specialty goods:
Goods have unique features
Unusual shopping behaviour needed
Special purchasing effort is required for preferred
brands
Theses goods act as important life styles and
images
Costly luxury goods
Available in specialty shops
Examples are TV , Watches, Cars, Fancy goods, etc

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 Production concept:
 Classical concept of marketing

 According to this concept, marketing is a part of

production process
 Based on the assumption that the manufacturer

must produce the goods and distribute them to

the consumers
 It stresses upon production
 It assumes that marketing is only the physical

distribution of goods and services from producer

to consumer
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It assumes that marketing starts after the

goods have been produced and it ends after
the goods have been sold
It does not provide for any allied activity of
marketing such as, transportation,
warehousing, insurance, financing, etc
According to this concept, the ultimate object
of marketing is to maximize the profits by
maximizing the sales

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 The selling concept holds that customers, if

left alone, will not buy enough of the
products of an organisation
 The organisation must undertake aggressive

selling and promotion effort

 Under selling, a company uses various selling

methods to persuade customers to buy its

products
 This concept is practiced in the NGOs, college

admissions, offices, and political parties.

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 The important aspects of selling are:

It enhances the customer’s confidence in the
seller
It provides a human touch to business
transactions
It provides prospective customers with a better
understanding of the product and an
interactive opportunity to liaise with sales
persons

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 Modern concept of marketing

 A customer oriented concept
 The concept is based on the assumption that

a business and industrial enterprises can

achieve its object of maximizing the profits
only when it considers the needs and wants
of its consumers and it tries for the
satisfaction of these needs and wants.

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 The consumer is the king and therefore, the

satisfaction of consumer must be the prime
object of an enterprise
 The functions of marketing must be recognized
as the most important functions of an enterprise
 Needs and wants of the customers must be
identified properly and deeply before starting
production
 Production must be in accordance with these
needs and wants

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 It is aimed at generating customers’ satisfaction

and long term consumer and public welfare as a
key to satisfying organisational goals and
responsibilities
 Societal Marketing is based on the principle of

societal welfare. 
  It emphasizes that an organization must make

strategic marketing decisions keeping in mind

the consumer wants, the organizational needs
and most important the long term interests of
the society.
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 Societal Marketing is nothing but an outgrowth

of the principles of Corporate Social
Responsibility and Sustainable development
  It underlines that an organization should not
ignore the society’s long term welfare so as to
achieve it’s mission and vision. An
organization should have moral and
environmentally friendly strategies and should
ensure that proper acts and laws are
implemented.

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 Marketers market 10 main types of entities:

goods,
services,events,experiences,persons,places,
properties,organizations,information, and ideas
 Goods :Physical goods constitute the bulk of
most countries’ production and marketing
efforts. Examples cars,television,watches,etc
 Services: As economies advance, a growing
proportion of their activities focuses on the
production of services.

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 Events: Marketers promote time based events

such as major trade shows ,artistic
performances, and company anniversaries.
Global sporting events such as the Olympics
and the World Cup are promoted aggressively
to both companies and fans.
 Experiences: BY orchestrating several services

and goods, a firm can create, stage,and

market experiences. Example Amusement
Park

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 Persons: Artists ,musicians, CEOs,high

profile lawyers and financiers and other
professionals get help from celebrity
marketers. Celebrities such as Amitabh
Bachchan,Sachin Tendulkar, Amir Khan, etc.
 Places: Cities,states,regions and whole

nations compete to attract tourists,

residents,factories, and company
headquarters. The tourism industry is a good
example of place marketing.

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 Properties: are intangible rights of ownership to

either real property(real estate) or financial
property(stocks and bonds). They are bought
and sold, and these exchanges require
marketing. Investment companies and banks
market securities to both institutional and
individual investors.
 Organizations: work to build a strong,

favorable, and unique image in the minds of

their target publics. Many organisations in India
and abroad undertake socially useful initiative.

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 Information: The production ,packaging, and

distribution and information are major
industries. Information is essentially what
books, schools and universities produce,
market, and distribute at a price to parents,
students, and communities.
 Ideas: Every market offering includes a basic
idea. Products and services are platform for
delivering some idea or benefit. Examples
creating awareness about AIDS, encouraging
family planning, eye and blood donation,etc.
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Marketing Environment- concept

According to Philip Kotler, the company’s
marketing environment is made up of the
sectors and forces outside the firm’s
marketing function which infringe upon the
ability of marketing management to develop
and maintain a successful relationship with
the firm’s target audience.
Two components of marketing environment are
micro environment and macro environment.

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 Economic Environment: Most significant

component. It affects the success of a business
organisation as well as survival. The economic
policy of the government needless to say has a
great impact on business.
 Three broad categories of economic
environment are general economic conditions
which includes agricultural trends ,industrial
output trends ,per capita income trends, etc.
Industrial conditions which includes market
growth of the industry, etc.

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 The third force is state of supply of resources

for production which includes land ,labour,
capital, etc.
 To sum up, economic environment describes

the overall economic situation in a country

and helps in analysing GNP per capita, rate of
economic growth, inflation rate, interest
rates, unemployment problems, etc .
Therefore, it is necessary to examine carefully
the economic environment of the country.

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 Demographic environment explains the pattern

and changes in the society based on age, sex,
educational background, marital status, family
size, family life style, religion, nationality, etc.
 Demographic environment is useful for
marketing decisions, market segmentation and
formulation of marketing strategies.
 A knowledge of the demographic environment
is very important to a marketer for
performance of his functions

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 People constitute the market and market

depends on customers
 Demography provides quantitative as well as

qualitative aspects of population

 Demographic environment is also helpful in

behavioural analysis of population.

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 Social environment factors consist of human

relationships and the development form
and function of such a relationship having a
bearing on the business of an organisation.
Some of the important factors are the buying and
consumption habits of people, their languages,
beliefs and values, customs and traditions,
tastes and preferences, education and all factors
that affect the business.
Social environment of a nation determines the
value system of the society
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 Social factors are

caste,customs,conventions,cultural heritage
etc.
 In India, social environment is continuously

changing. For example, large number of

women entering the job market affected the
hiring and compensation policies of the
employers
 Change in the quality of lifestyle has created

demand for consumer durables

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 Culture influences every aspect of marketing

 Marketing decisions are based on recognition

of needs and wants of the customer, a

function of consumer perceptions. These help
in understanding of lifestyles and behaviour
patterns as they have grown in the society’s
culture in which the individual has been
groomed

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 Consists of those factors related to knowledge

applied and the materials and machines used
in the production of goods services that have
an impact on the business of an organistion
 Important factors operating in the
technological environment are sources of
technology,technological development, impact
of technology on human beings,
communication and infrastructural technology

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 Technological environment provides both

opportunities and threats, and its impact is direct as
well as indirect
 Technological environment in India is guided by

technology policy which is framed by the

Government of India and is updated from time to
time
 The new policy provides for imports of technology

and facilities substantial exports

 It requires upgradation of technology through

domestic R&D efforts for improvement of overall

quality
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 The political environment consists of factors

related to the management of public affairs and
their impact on the business of an organisation
 Political environment has a close relationship
with the economic system and the economic
policy
 India is a democratic country having a stable
political system where the Government plays an
active role as a planner,promoter and regulator
of economic activity

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 Marketing decisions are strongly affected by

developments in the political environment
 A marketer has to operate his business in a given
political environment and his operations are
affected by government programmes at different
levels
 The various political factors that a marketer should
consider are role of private sector in the economy,
Government procedures and changes in government
policy, role of small scale industry in the economy
and role of service sector in the economy

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 Marketing decisions are strongly affected by

laws pertaining to competition, price setting,
distribution arrangements,advertising,etc
 It is necessary for a marketer to understand the
legal environment of the country and the
jurisdiction of its courts
 The various laws affecting business in India are
Indian Contract Act,1872, Factories Act,1948,
Minimum Wages Act,1948, Essential
Commodities Act,1955, The Companies
Act,1956, Consumer Protection Act, 1986 etc

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 According to Philip Kotler, “Market

Segmentation is the sub-dividing of market
into homogeneous sub-sections of customers
where any sub-section may conceivably be
selected as a market target to be reached with a
distinct marketing mix.”
 Market Segmentation is a way of dividing a
large market into smaller grouping of
consumers or organisations in which each
subject has a common characteristics such as
needs,or behaviour
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 Geographic Segmentation calls for dividing the

market into different geographical units such
as nations, regions, states, cities, or
neighbourhoods.A company may decide to
operate in one or a few geographical areas, or
to operate in all areas but pay attention to
geographical differences in needs and wants
 A particular brand may be popular only in North
India , then the North Indian market can be
divided on the bases of
zones,villages,cities,climate,etc.
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 Examples Woollens sold in North India and

limited segments in the South like Bangalore,
Hyderabad, Ooty, and Kodaikanal.
 Tractors and fertilizers are sold in rural areas

where as Laptops in cities.

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 Divides the market on the on the basis of

demographic factors such as age, marital
status,family size.gender,family
lifecycle,income,occupation,
education,race,genration, and nationality
 Demographic factors are the most popular bases
for segmenting customer groups. The reason is
that consumer needs, wants and usage rates
vary closely with demographic variables. Again,
demographic variables are easier to measure
than most other types of variables.

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 Examples are ,
 Garments- Men, Women, Children
 Cosmetics- Women, Men
 Airlines- Economy class, Executive class
 Fridge- Different sizes like 180,230 litres for

different family sizes

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 It involves dividing buyers into different

groups based on social class, lifestyles, or
personality characteristics
 People in the same demographic group can

have very different psychographic make up

 In psychographics, lifestyle and attitude are

the core bases for the segmentation angle,

since buyer behaviour predominantly
depends on them in the case of certain
products

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 Examples are
 Coke and Pepsi-popularity in villages
 Titan watches- Fast Track meant for

teenagers for casual, stylish look

 Raymonds, Reid & Taylor-suiting for the elite

class

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 It divides buyers into groups based on their

knowledge ,attitude, uses, or responses to a
product.
 Many marketers believe that behaviour variables

are the best starting point for building market

segments
 Occasions-buyers can be grouped according to

occasions-when they get the idea to buy,

actually buy, or use the product. For example
jewellery and expensive sarees on festivals or
wedding occasions
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 Benefits- A powerful form of segmentation is

to group buyers according the different
benefits that they seek from the product
 For example- Proctor & Gamble-different

laundry detergent segments, each with a

unique benefit- cleaning, bleaching,economy,
fabric softening, fresh smell, strong and mild,
etc.

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 User Status- Markets can be segmented into

groups of non-users, ex-users, potential users,
first time users and regular users of the
product.
 User Rate- Markets can be segmented into light,

medium, and heavy product users

 Loyalty Status- A market can also be segmented

by consumer loyalty. Consumers can be loyal to

brands, stores, and companies. Buyers can be
divided according to their degree of loyalty

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 Consumer behaviour or buyer behaviour is

defined as the behaviour that consumers
display in searching for
purchasing,using,evaluationg and disposing
of products and services that they expect will
satisfy their needs.
 Consumer behaviour focuses on how

individuals make decisions to spend their

available resources(time, money,effort) on
consumption related items.

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 The Dictionary of Marketing and Advertising

defines consumer behaviour as, “ observable
activities chosen to maximise satisfaction
through the attainment of economic goods and
services such as choice of retail outlet,
preference for particular brands, and so on.”
 According to Loudon and Della Bitta, “
Consumer behaviour is the decision process
and physical activity individuals engage in when
evaluating, acquiring, using, or disposing of
goods and services.”
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 Motivation: It is the drive to act ,to move to

obtain a goal or an objective. It is a mental
phenomenon. It points out what is wanted.
Maslow’s Need Hierarchy Theory is a well
known theory of motivation.
 Perception: It is a process through which a

consumer’s mind receives, organises and

interprets physical stimuli. It is influenced by
various factors such as colour, size and
brand.

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 Learning: It is closely related to knowledge, skill

and intention-three basic behavioural
characteristics .Two approaches of learning are
Conditional Learning and Cognitive Learning.
Under conditional learning, consumers may derive
learning from being conditioned to respond to
stimuli. Under cognitive learning, consumers are
engaged in various behaviours, use the sum total
of their information,experiences,attitudes,values,
beliefs, etc to try to solve their problems and
derive satisfaction

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 Attitudes: It is a tendency to respond to a

given product in a particular way. An
awareness about attitudes helps the marketing
managers because many consumer behaviours
are related to attitudes. Change in attitude
leads to change in consumer behaviour.
 Personality: It refers to a person’s consistent
way of responding to a wide range of
situations. It is a complex psychological
concept.

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 Family: The family can exert considerable

influence in shaping the pattern of
consumption and indicating the decision
making roles. Personal values, attitudes, and
buying habits have been shaped by family
influences.
 Reference Groups: These are the social,
economic, and professional groups which a
buyer uses to evaluate his or her opinions or
beliefs. It is useful for self evaluation and
attitude formation.
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 Social Class: These are very broad groupings of

individuals who hold similar status levels. We
have three distinct social classes namely upper,
middle, and lower. Social class may act as one
criterion for market segmentation.
 Culture :It represents an overall social heritage,
a distinctive form of environmental adaptation
by a whole society of people.Cultural influence
is a force shaping both patterns of
consumption and patterns of decision making.

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 The dictionary meaning of research is that, “ it is

a study or investigation in a field of knowledge
that is careful, systematic and patient.”
 American Marketing Association defines

Marketing Research as “the systematic gathering,

recording, and analysing of data about problems
relating to the marketing of goods and services.”
 It is a formalised means of obtaining information

to be used in making marketing decisions.

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 Kotler defines Marketing Research as,

“systematic problem analysis, model building
and fact finding for the purpose of improved
decision making and control in the marketing
of goods and services.”
 Glasser defines marketing research as, “ the

application of scientific methods to the study

of the factors that affect buying decision in a
given market and the profitability of the
business concerned.”

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Department Name 64
 VIDYA VIKAS MANDAL Institution Name/ Program Name/Class/Subject Name

 Marketing research reduces the risks involved

in marketing decisions
 Facts from research can form the basis of
planning, selling, sales promotion, advertising
 The marketers get valuable information and
facts regarding customer’s habits and
preferences through marketing research
 Marketing research provides information
regarding various uses of the product thereby
creating demand

© 2016, VVM
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Department Name 65
 VIDYA VIKAS MANDAL Institution Name/ Program Name/Class/Subject Name

 Various valuable information about the

customers are made available by the
marketing research
 As marketer comes to know about the need

satisfaction of his customers and the

marketing strategies of his competitors
through marketing research, he can select the
best channel of distribution for his product to
meet the needs of the customers effectively

© 2016, VVM
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Department Name 66
 VIDYA VIKAS MANDAL Institution Name/ Program Name/Class/Subject Name

 Marketing research studies the nature of

demand of the company’s product whether it
is elastic or non-elastic or highly elastic or
seasonal. This helps the producer to plan his
product programme effectively.
 Through marketing research, potential

markets are discovered where company’s

product can be sold. It widens the scope of
company’s operations and company extends
its marketing activities to such markets.

© 2016, VVM
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Department Name 67
 VIDYA VIKAS MANDAL Institution Name/ Program Name/Class/Subject Name

 Through marketing research, company studies

the marketing policies, practices, and strategies
of its competitors, and makes the necessary
changes in its policies, strategies, and practices
so as to give them a suitable light in the
market.
 Marketing research helps in estimating the
demand of the product. It facilitates the
production of the product in a planned way by
maintaining the equilibrium in demand and
supply position in the market.
© 2016, VVM
1.
Department Name 68