CHAPTER 3

What is marketing?

There are many different definitions of marketing. Consider some of the following alternative definitions:

“The all-embracing function that links the business with customer needs and wants in order to get

the right product to the right place at the right time”

“The achievement of corporate goals through meeting and exceeding customer needs better than the

competition”

“The management process that identifies, anticipates and supplies customer requirements efficiently

and profitably”

“Marketing may be defined as a set of human activities directed at facilitating and consummating

exchanges”

Which definition is right? In short, they all are. They all try to embody the essence of marketing:

• Marketing is about meeting the needs and wants of customers;

• Marketing is a business-wide function – it is not something that operates alone from other business

activities;

• Marketing is about understanding customers and finding ways to provide products or services which

customers demand.

To help put things into context, you may find it helpful to often refer to the following diagram which

summarises the key elements of marketing and their relationships:

Figure 1.2

Marketing Concept and Orientation

It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs

and wants of customers. This important perspective is commonly known as the marketing concept. The

marketing concept is about matching a company's capabilities with customer wants. This matching

process takes place in what is called the marketing environment. Businesses do not undertake marketing

activities alone. They face threats from competitors, and changes in the political, economic, social and

technological environment. All these factors have to be taken into account as a business tries to match its

capabilities with the needs and wants of its target customers. An organisation that adopts the marketing

concept accepts the needs of potential customers as the basis for its operations. Success is dependent on

satisfying customer needs.

What are customer needs and wants?

A need is a basic requirement that an individual wishes to satisfy.

People have basic needs for food, shelter, affection, esteem and self-development. Many of these needs

are created from human biology and the nature of social relationships. Customer needs are, therefore,

very broad. Whilst customer needs are broad, customer wants are usually quite narrow. A want is a

desire for a specific product or service to satisfy the underlying need.

Consider this example:

Consumers need to eat when they are hungry.

What they want to eat and in what kind of environment will vary enormously. For some, eating at

McDonalds satisfies the need to meet hunger. For others a microwaved ready-meal meets the need. Some

consumers are never satisfied unless their food comes served with a bottle of fine Chardonnay. Consumer

wants are shaped by social and cultural forces, the media and marketing activities of businesses. This

leads onto another important concept - that of customer demands. Consumer demand is a want for a

specific product supported by an ability and willingness to pay for it.

For example, many consumers around the globe want a Mercedes. But relatively few are able and willing

to buy one.

Businesses therefore have not only to make products that consumers want, but they also have to make

them affordable to a sufficient number to create profitable demand. Businesses do not create customer

needs or the social status in which customer needs are influenced. It is not McDonalds that make people

hungry. However, businesses do try to influence demand by designing products and services that are

• Attractive

• Work well

• Are affordable

• Are available

Businesses also try to communicate the relevant features of their products through advertising and other

marketing promotion.

MARKETING MIX

The marketing mix is generally accepted as the use and specification of the four Ps describing the strategic

position of a product in the marketplace. One version of the origins of the marketing mix starts in 1948 when

James Culliton said that a marketing decision should be a result of something similar to a recipe. This version

continued in 1953 when Neil Borden, in his American Marketing Association presidential address, took the

recipe idea one step further and coined the term 'Marketing-Mix'. A prominent marketer, E. Jerome McCarthy,

proposed a 4 P classification in 1960, which would see wide popularity. The four Ps concepts are explained in

most marketing textb

ooks and classes.

DEFINITION

Although some marketers[who?] have added other Ps, such as personnel and packaging, the fundamentals of

marketing typically identifies the four Ps of the marketing mix as referring to:

Product -An object or a service that is mass produced or manufactured on a large scale with a specific volume

of units. A typical example of a mass produced service is the hotel industry. A less obvious but ubiquitous mass

produced service is a computer operating system. Typical examples of a mass produced objects are the motor

car and the disposable razor.

Price – The price is the amount a customer pays for the product. It is determined by a number of factors

including market share, competition, material costs, product identity and the customer's perceived value of the

product. The business may increase or decrease the price of product if other stores have the same product.

Place – Place represents the location where a product can be purchased. It is often referred to as the distribution

channel. It can include any physical store as well as virtual stores on the Internet.

Promotion – Promotion represents all of the communications that a marketer may use in the marketplace.

Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain

amount of crossover occurs when promotion uses the four principal elements together, which is common in film

promotion. Advertising covers any communication that is paid for, from television and cinema commercials,

radio and Internet adverts through print media and billboards. One of the most notable means of promotion

today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation

attached. This category has grown each year for the past decade while most other forms have suffered. It is the

only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are

where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions,

conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication

about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of

mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product

above).

Broadly defined, optimizing the marketing mix is the primary responsibility of marketing. By offering the

product with the right combination of the four Ps marketers can improve their results and marketing

effectiveness.

Making small changes in the marketing mix is typically considered to be a tactical change. Making large

changes in any of the four Ps can be considered strategic. For example, a large change in the price, say from

$19.00 to $39.00 would be considered a strategic change in the position of the product. However a change of

$131 to $130.99 would be considered a tactical change, potentially related to a promotional offer.

CRITICISMS

Peter Doyle claims that the marketing mix approach leads to unprofitable decisions because it is not grounded

in financial objectives such as increasing shareholder value. According to Doyle it has never been clear what

criteria to use in determining an optimum marketing mix. Objectives such as providing solutions for customers

at low cost have not generated adequate profit margins. Doyle claims that developing marketing based

objectives while ignoring profitability has resulted in the dot-com crash and the Japanese economic collapse. He

also claims that pursuing a ROI approach while ignoring marketing objectives is just as problematic. He argues

that a net present value approach maximizing shareholder value provides a "rational framework" for managing

the marketing mix.

Some people claim the four Ps are too strongly oriented towards consumer markets and do not offer an

appropriate model for industrial product marketing. Others claim it has too strong of a product market

perspective and is not appropriate for the marketing of services.

An expanded system based on Seven Ps stresses the importance of Place, Product, Price, Promotion, People,

Process, and Physical evidence

MARKET RESEARCH

Market research is for discovering what people want, need, or believe. It can also involve discovering how

they act. Once that research is complete it can be used to determine how to market your specific product.

MR-Anywhere is a very good platform for market research and analysis

For starting up a business there are a few things that are important:

Market information

Market information is making known the prices of the different commodities in the market, the supply

and the demand. Information about the markets can be obtained in several different varieties and

formats.

Examples of market information questions are:

Who are the customers?

Where are they located and how can they be contacted?

What quantity and quality do they want?

When is the best time to sell?

Market segmentation

Market segmentation is the division of the market or population into subgroups with similar motivations.

Widely used bases for segmenting include geographic differences, personality differences, demographic

differences, use of product differences, and psychographic differences.

Market trends

The upward or downward movements of a market, during a period of time. The market size is more

difficult to estimate if you are starting with something completely new. In this case, you will have to

derive the figures from the number of potential customers or customer segments. [Ilar 1998]

But besides information about the target market you also need information about your competitor, your

customers, products etc. A few techniques are:

Customer analysis

Choice Modelling

Competitor analysis

Risk analysis

Product research

Advertising research

Competitive strategies are the method by which you achieve a competitive advantage in the market. A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. Before devising a competitive strategy, one needs to evaluate all strengths, weaknesses, opportunities, threats in the industry and then go ahead which would give one a competitive advantage. According to Michael Porter, competitive strategy is devised into 4 types:

Cost Leadership

In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.

Differentiation Leadership

In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price. Cost Focus In cost focus a firm seeks a cost advantage in its target segment.

Cost focus

exploits differences in cost behavior in some segments. Such strategy helps firm to satisfy sufficient consumers and gain popularity.

Differentiation Focus

In differentiation focus a firm seeks differentiation in its target segment. Differentiation focus exploits the special needs of buyers in certain segments. This type of differentiation is made to meet demands of border customers who refrain from purchasing competitors’ products only due to missing of small features. It is a clear niche marketing strategy.

TARGET MARKETING

Tata Solar targets the mass market with its products, but combines this broad scope with a differentiation strategy based on design, branding and user experience that enables it to reach the Indian common man. Tata Solar has a generic cost leadership and product differentiation strategy in the solar energy industry. The current strategic goals of Tata Solar are market diversification and operations

expansion. Consumer categories: -Domestic -Agricultural Solar powered equipment is more environmentally friendly and economical in its operation compared to equipment’s powered by an internal combustion engine (ICE) or nuclear power. For irrigation and drinking watersolar PV water pumping systems are used in India. Solar water pumping system works on power generated using solar photovoltaic system. The solar energy is converted in to electricity by using a photo voltaic array. The residential consumer category contributes to about 29 percent of the total Indian Power requirement; this is expected to increase to 34 percent by 2021-22, according to KPMG report. It is expected that high-end residential consumers will be proactive in adopting solar rooftop given their higher power tariffs. A large number of these consumers are likely to start adopting solar power from 2017-18. However, government involvement will be required in encouraging non-high-end residential and agriculture consumers to use solar power. Solar Market Segment: -Grid Connected Solar Potential -Off-Grid Connected Solar Application Potential -Solar Water Heater (SWH) Grid Connected Solar Potential includes; Residential Rooftops and Utility Scale Solar power (CSP and PV). And Off-grid connected Solar Application Potential includes; Solar Powered Agricultural Pump sets and Solar powered Telecom towers. In the off-grid space, solar power is already cost competitive with alternatives in certain applications. For example, telecom towers are an attractive market for solar PV installations. And Solar Water Heating (SWH) applications could be used in residential, commercial as well as industrial sectors.

STATERGY USES IN MARKETING

Products

Goods panels, transformers, inverters, necessary construction equipment. In the proposal include all the equipment needed, spec sheets, and warranty info to better inform the client of what they are buying. Services and ideas: have expert and experienced salespeople, engineers, and installers. Perform analysis of the property and financial implications of the purchase. Perform maintenance at no charge if anything breaks.

Price

Give the customer a detailed accounting of all equipment and service fees, tally it up, and come up with a total. This total is usually pretty high. Use marketing to get the client to think of the purchase as an investment, rather than a huge expense.

Place

Salespeople need to be available to travel to the individual sites to perform the analysis, and go wherever they need to close the sale.

Promotion

Tata BP Solar has embarked on an extensive retail distribution network, named Project Disha, to reach out to customers across the country and overseas Advertising: newspaper, TV, radio, billboards, anything to get your message across Personal Selling: very important. Solar Panels are complex and customized. Meet face to face with the potential buyer to understand their goals and resources. Give them immediate feedback. Public Relations: media is constantly reporting

about new developments in the renewable energy industry. Informs the public of the benefits of solar without having to spend money on advertising. Sales Promotions.

Direct marketing: uses direct communication to generate a response in the form of an order or a request for further information.

SWOT Analysis

Strength

First established manufacturer in the country. Beneficiary of major Solar lighting system schemes Warranty of up to 5 years is a major benefit manufacturing plant based in the country Huge supply network and service facilities. Quality of the products manufactured is durable

Weakness

Limited portability of products available. Products limited for indoor use mostly Poor efficiency of the solar panels as compared to competitor products. Portable product market yet to be tapped. Present systems utility limited to lighting and heating. High cost of the product.

Opportunity

Existing supplier network be strengthened. Supply from Tata subsidiaries for component could improve margins To expand its product mix. Use of its R & D Centre’s for development of newer cheaper products.

Threats

Chinese solar lighting products providing cheaper alternatives For water heating, biogas is another cheaper option compared to solar water heating systems. Newer and bigger entrants like Philips entering the solar lighting system market.