Unit 1 Marketing) 1

8/8/2019 Unit 1 Marketing) 1

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By:

Mirza Rashid Mehmood

MBA (Marketing / Finance)Administrator: Apple Science Academy

Mandi Bahauddin, Cell: 0333 801 8756

A biggest fool can draw a picture but a genius one required to sell it.

T r u s t C o l l e g e o f C o m m e r c e

Mandi Bahauddin


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Principals of Marketing M.Com. I

Compiled By: Mirza Rashid Mehmood, MBA (Marketing / Finance), Trust College of Commerce, Mandi Bahauddin.

Principal, Apple Science Academy, Mandi Bahauddin, Cell: 0333 801 87562

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Marketing Concepts

Introduction of Marketing

What image comes to mind when you hear the word marketing? Some people think of advertisements or

brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk

shows). The truth is, all of theseand many more thingsmake up the field of marketing.

The Knowledge Exchange Business Encyclopedia defines marketing as:

Planning and executing the strategy involved in moving a good or service from producer to

consumer.

Philip Kotler looks marketing as:

"Marketing is a social and managerial process by which individuals and group obtains what

they need and want through creating offering and exchanging products of value with others."

With these definitions in mind, its apparent that marketing and many other business activities are related

in some ways. In simplified terms, marketers and others help move goods and services through the

creation and production process; at that point, marketers help move the goods and services to

consumers. But the connection goes even further: Marketing can have a significant impact on all areas of

the business and vice versa.

Understanding Marketing

Marketing: It is the process of creating consumer value in the form of goods, services, or ideas that can

improve the consumers life. Marketing is the organizational function charged with defining customer

targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and

business buyers face an abundance of suppliers seeking to satisfy theireveryday need, companies and

nonprofit organizations cannot survive today by simply doing a good job. They must do an excellent job if

they are to remain in the increasingly competitive global marketplace. This is what we say that survival of

the fittest. Many studies have demonstrated that the key to profitable performance is to know and satisfy

target customers with competitively superior offers. This process takes place today in an increasingly

global, technical, and competitive environment.

What is marketing?

The aim of marketing is to know and understand the customer so well the product or service fits him and

sells itself. Peter Drucker



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Marketing is not only restricted to selling and advertising as is perceived but is More than it advertising it

identifies and satisfies customers needs. It functions revolve around wide variety and range of tasks and

activities mostly termed as functions related to 4ps i.e. Product, price, place and promotion. Marketing is:

a. Creating customer value and satisfaction are at the very heart of modern marketing thinking

and practice.

b. A very simple definition of marketing is that it is the delivery of customer satisfaction at a profit.

c. Sound marketing is critical to the success of every organization.

Marketing can also be defined as:

Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods,

and services to create exchanges that satisfy individual and organizational objectives.

The definitions of marketing rest on the following core concepts:

Needs

Wants

Demands

Products

Value

Cost

Satisfaction

Exchange

Transaction

Relationship

Markets

Marketing and marketers

Needs

Marketing thinking starts with the fact of human needs and wants. People need food, air, water, clothing

and shelter to survive. Besides this, people have a strong desire for recreation, education and other

services. They have strong preferences for peculiar versions and brands of basic goods and services.

People need food, clothing shelter etc. Society or marketers do not create these needs. They exist on the

very texture of human biology.

Wants

"Wants are desires for specific satisfiers for deeper needs" Needs for travel in a rich country may be

meeting with automobile where as in a poor country the same need may be satisfied by a bicycle. AnAmerican needs food and wants hamburger, French fries and coke and in another country this need and

want may be satisfied with other items. Although peoples needs are few and their wants are many,

human wants are continuously shaped and reshaped by social forces and institution.

Demands

"Demands are wants for specific products that are backed by an ability and willingness to buy them."

Wants become demands when supported by purchasing power. Many people want a Mercedes and few

of them are able to buy one. Companies must know when many people would actually be willing and able

to buy rather than how many people want their product.



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We can now see that marketers do not "create NEEDS" Needs pre-exist marketers. Marketers get people

to buy thing they don't want.

Products

People satisfy peoples needs and wants with goods (Tangible) and services (Intangible). The term

product covers both. The importance of physical products lies not so much owning them but in obtaining

the services they render. We buy microwave oven as it supplies cooking service and car for supplies

transportation service. In fact Services are also supplied through other ways such as persons, places,

activities, organizations etc. For example, if we are bored we can go to a comedy show and watch a

comedian (person) or do some walking activity. A physical product is a package of services and a

marketers job is to sell the benefits or services built in that product.

Value, Cost & Satisfaction

How customers choose a product among many products that might satisfy a required need?

Suppose Mr. X needs to travel 3 km every day. A number of products can satisfy his need:

A bicycle

A motorcycle

An automobile

A taxicab

A bus

Now each product can satisfy various needs.

The X has to decide which product will give the most total satisfaction. The guiding concept is "Customer

Value". Suppose X is mainly interested in speed and ease of getting to work and all products are offered

free of cost. He will choose automobile. Since each product involves cost he may not buy automobile.

Therefore he will consider the product value and price before making a choice. He will, therefore, buy the

product that produces most value per Rupee.

According to DeRose:

Value is the satisfaction of customer requirements at the lowest possible cost of acquisition,

ownership, and use

Exchange, Transactions & Relationships

The fact that people have needs and wants and can place value on products does not fully define

marketing. Marketing emerges when people decide to satisfy needs and wants through exchange.

Exchange in one of the four ways through people can obtain products:

1. Self-production - People can relieve hunger through hunting or fruit gathering

2. Coercion - Hungry people can fight or steal food from others

3. Begging - Nothing to offer back except gratitude

4. Exchange - Hungry people can approach others and offer resources in exchange such as money,

another good or service

Marketing arises from the last approach. Exchange is in the act of obtaining a desired product from

someone by offering something in return.

Conditions for Exchange:

1. They are at least 2 parties willing for exchange

2. Each party has something of value to the other party has



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Productwhat are you selling? (It might be a product or a service.)

Pricewhat is your pricing strategy?

Place or distributionhow are you distributing your product to get it into the marketplace?

Promotionhow are you telling consumers in your target group about your product?

It Identifies the 4 marketing variables i.e. product, price, promotion, and distribution it also states that the

public, the customer, and the client determine the marketing program. Marketing mainly emphasizes on

creating and maintaining relationships and applies for both non-profit organizations and profit oriented

businesses. Major activities that are performed in marketing process include: Personal selling Advertising,

Making products available in stores and maintaining inventories. Any thing like goods, services,

experiences, events, persons, places, organizations, information and ideas can be marketed to the

customers in return of something of value.

How Does an Organization Create a Customer?

Organizations (producer/ seller) can create the customers by Identifying customer needs, designing goods

and services that meet those needs than communicating information about those goods and services to

prospective buyers Making the goods or services available at times and places that meet customers

needs Pricing goods and services to reflect costs, competition, and customers ability to buy and finally

providing for the necessary service and follow-up to ensure customer satisfaction after the purchase

How is Marketing Done?

According to Peter F. Drucker1, If we want to know what a business is, we have to start with its purpose.

And its purpose must lie outside the business itself. In fact, it must lie in society since a businessenterprise is an organ of society. There is one valid definition of business purpose: to create a customer.

Reasons for Studying Marketing:

Marketing is part of all of our lives and touches us in some way every day. To be successful each

company that deals with customers on a daily basis must not only be customer-driven, but customer-

obsessed. The best way to achieve this objective is to develop a sound marketing function within the

organization. Major reason to study marketing is:

Marketing plays an important role in society

It is Vital to business

Marketing offers outstanding career opportunities

Marketing affects our life every day

What do Marketers think about?

To have clearer concept in this regard lets consider an example of Opening a Book Shop on campus. To

do so we have to answer different questions like:

1. Is there a need? (Of having bookshop)

2. Whatis my target market? (Who will be buying products from your book shop)

3. What is my product? (Basic items to be sold)

4. How can I produce and deliver a product better than my competitors?

5. How shall I promote my product?

6. How can I insure customer loyalty?

1The Man Who Invented Management (born in Vienna, the capital of Austria & died on November 11, 2005 Claremont, California,

USA)



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Mostly before starting any activity of above-mentioned type marketer performs an analysis termed as

SWOT (Strength, Weakness, Opportunity and Threat). Marketing is a process of getting the right products

to the right people at the right price and at the right place and time with the right promotion. But this

requires solution to certain simple question: like

Simple Questions, Hard Answers:

1. Who are our customers? (Target Market)

2. What important & unique benefits do we provide? (Product/service)

3. Are these benefits sustainable? (Long-term competitive advantage)

These questions are apparently very simple but are very difficult to be answered theses questions like it is

really difficult to define basic characteristics to be produced in product and services as per demands and

requirements pf the customers; and then to precisely define your target market and to have long-term

competitive advantage through customer satisfaction.

Quote:The productivity of work is not the responsibility of the worker but of the manager.

Peter F. Drucker

Types of Marketing:

If you want your company to succeed, at some point you will need to begin marketing your products or

services. The old proverb that the worst type of advertising is no advertising is still true. No matter what

your marketing budget may be, there are many different types of marketing that you can take advantage

of. Let's take a look at a few of the more proven techniques that combine low cost with major results.

Online Marketing:

Online marketing has opened up incredible avenues for small businesses. Thanks to companies like

Goggle and Yahoo, you can place ads for your company right along side the big guns at competitive

prices. Never before has it been easier to market your business than it is right now.

New forms of online marketing are also making headway. Online video ads are easy and cheap to shoot

and give you the kind of exposure that was previously limited to expensive national television campaigns.

With low production costs and reasonable pricing, you can run an online video campaign at a fraction of

the cost of traditional advertising.

Offline Marketing:

The benefits of traditional marketing cannot be overlooked in our digital age. Many companies are reaping

the benefits of combining online and offline marketing techniques. For example, you can use direct mail or

local advertising to drive potential customers to your site. This is a great and proven combination that

results in increased traffic and better conversions.

You can actually save money on print campaigns by relying on your website to do the actual selling while

the print ad can function as a pointer. You'll save money using less words while building brand

awareness. Radio ads are still a proven way to increase awareness of your company. If you are new to

radio marketing, try placing a sample ad with a local station. They'll be able to assist you in producing

your first ad until you get the hang of the process.

Word of Mouth Marketing:

Word of mouth is still one of the most powerful forms of advertising on the planet. The best word of mouth

comes from satisfied customers. Go the extra mile for them, and really work towards building relationships

with your customers. This will result not only in more leads but they'll keep coming back to you in the

future. Try running special promotions or coupons for these regular customers to help them feel that they

are special and you'll really be able to continue to build on these relationships in the future.



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The best marketing strategies take advantage of all the different types of advertising. By spreading your

ad dollars around you can be assured of greater success and better interaction with the public. Start small

by combining a special promotion that will run both in print and online avenues at the same time. You can

keep track of the success of each method by using coupon codes to see which form suits your company

the best.

Marketing Management & Marketing Concepts

Definition - By American Marketing Association 1985

"Marketing management is a process of Planning and executing the conception, pricing,

promotion and distribution of goods, services and ideas to create exchanges that satisfy

individual and organizational goals

This definition recognizes that marketing management is a process involving analysis, planning,

implementation and control. It rests on a notion of exchanges and that the goal is to produce satisfaction

for the parties involved. Many of these jobs involve managing particular marketing resources such as

advertising, sales promotion or marketing research. The marketing managers task is primarily to stimulate

demand for the companys product. There are five competing concepts under which organizations

conduct their marketing activity.

Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

1) Production Concept

The production concept holds that:

Consumers will favour those products that are widely available and low in cost.

Production-oriented organizations manages concentrate on achieving high production efficiency and wide

distribution coverage.

2. The Product Concept

The product concept holds that

Consumers will favour these products that offer the most quality performance or innovative

features. Product-oriented organizations managers focus their energy on making superior

products and improving them over time".

Those managers who follow this concept assume that buyers admire well-made products. Product-

oriented companies often design their products with little or no customer input. They trust that their

managers can design the products with little or no customer output.

3. The Selling Concep t

The selling concept holds that

Consumers, if left alone, will ordinarily not buy enough of the organizations products. The

organization must therefore undertake an aggressive selling and promotion effort."

The concept assumes that consumes typically show resistance and has to be directed to buy and that the

company has available a whole battery of effective selling and promotion tools to stimulate more buying.

The selling concept is practiced most aggressively with unsought goods, those goods that buyers

normally do not think of buying such as insurance, encyclopedias etc.



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Most firms practice the selling concept when they have overcapacity. Their aim is to:

"Sell what they make rather than make what the market wants."

4. The Marketing Concept

The marketing concept is a business philosophy that challenges the previous three concepts.

"The marketing concept holds that the key to achieving organizational goals consists in

determining the needs and wants of target markets and delivering the desired satisfactions more

effectively and efficiently than competition."

The marketing concept holds that the key to achieve the organizational goals consists of determining the

needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently

than competitors.

The marketing concept has been expressed in many colorful ways:

Meeting needs profitably

Find wants and fill them

Love the customers and not the product

Have it your way

You are the boss

Therefore, Prof Levitt 2 drew a perceptive contrast between the selling and marketing concepts. Selling

focuses the needs of the seller and the marketing on the needs of the buyer. Selling in preoccupied with

the sellers need to convert his product into cash and marketing with idea of satisfying the needs of the

customer by means of product.

The marketing concept rests on 4 pillars:

1. Target Market

2. Customer Needs

3. Integrated marketing

4. Profitability

Here we can examine how each pillar of the marketing concept contributes to more effective marketing.

Target Market

Every company cannot run its operations in every market and satisfy each need of customers. Nor can it

always do job within on broad market. Companies do best when they define their target market (s)

carefully and prepare a tailored marketing program.

Customer Needs

A company can define its target market but fail to fully understand the customers needs. Consider the

following example. A major chemical company invented a new substance that hardened into a marble like

material. Looking for an application, the company created a few model bathtubs and exhibited them at a

bathroom tradeshow. They hoped to convince bathtub manufacturers to produce tubs with a new material.

Although bathtub manufacturers thought the new bathtubs were attractive, none signed up. The reason

was obvious. The bathtub would have to be priced at USD 2000; the consumers could buy bathtubs made

of real marble for USD 500. In addition, the new bathtubs were so heavy that house owners had to

reinforce their floor. Further more, the chemical company chose a target market but failed to understand

the customers. Customer oriented thinking requires the company to define customer needs from customer

point of view. In general a company can respond to customers requirements by giving customers what

2 Distinguished Service Professor of Economics at the University of Chicago



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they want or what they need, or what they really need. The key to professional marketing is to meet the

customers real needs better than any competitor can.

Why it important to satisfy the target customer? Basically because a company's sale each period comes

from two groups, new customers & repeat customers. Attracting a new customer is five times costlier than

pleasing an existing customer. Customer retention, therefore, is more important than customer attraction

A satisfied customer:

Buys more and stays "loyal" longer

Buys additional products as the company introduces and upgrades its products

Talk favorably about the company and its products

Pay less attention to competing brands and advertising and is less price sensitive

Offers product / service ideas to the company

Costs less to service than new customers

Delighted customers are more effective advertisers than all the paid advertisements placed in the media.

Listening is not enough. The company must respond constructively to the complaints. A customer-

oriented company would track its customer satisfaction level each period and set improvement goals.

Integrated Marketing

When all the departments of a company work together to serve the customers interest, the result isintegrated marketing. Generally, all employees are not trained and motivated to work for the customer.

Each Head of Department (HOD) will pay attention on different areas, production Manager on volume,

Engineer on service, Finance Manager on cost. But all these functions must be coordinated from the

customers point of view. Marketing must be well coordinated with other company departments. Managers

should realize that customer is the key to profitability.

Profitability

The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of

private firms, the major goal is profit. In the case of nonprofit organizations, it is surviving and attracting



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enough funds to perform their work. A company should make profit by satisfying customer needs better

than its competitors.

The Societal Marketing Concept

The societal marketing concept holds that the organizations task is to determine the needs, wants, and

interests of target markets and to deliver the desired satisfactions more effectively and efficiently than

competitors in a way that preserves or enhances the consumers and societys well-being.



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Documents

Unit 1 Marketing) 1