Marketing Management
Unit 1
Marketing: An Overview
INTRODUCTION:
Generally, marketing is understood to mean the
sale and purchase of goods and services but it is narrow thinking to understand
it so. Te term ‘marketing’ is very wide. It does not mean only the sale and
purchase of goods and services. It means entire process of satisfying the needs
of consumers. It starts with discovery of needs and wants of the consumer, and
it continues, till these needs and wants are satisfied.
Ø DEFINITION:
WHAT IS MARKET
Market is a place
where buyers and sellers meet to buy or sell products, as in the case of a fish
market, vegetable market or gain market. Market need not be a place as in the
traditional sense. Here the sellers or marketers are treated as the industry
and the buyers as the market.
A market is the set
of actual and potential buyers of a product. Such buyers or customers share a
particular need or want that can be satisfied through exchange relationships.
The size of the market will depend on the number of people who exhibit the
need, have the buying power and are willing
to exchange their resources for what they want.
A market is one of
many varieties of systems, institutions, procedures, social relations and
infrastructures whereby parties engage in exchange. While parties may exchange
goods and services by barter, most markets rely on sellers offering their goods
or services (including labor) in exchange for money from buyers. It can be said
that a market is the process by which the prices of goods and services are
established.
WHAT IS MARKETING?
v “Marketing is the process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods,
and services to create exchanges that will satisfy individual and organizational
objectives.”
v AMA ( American marketing association )
“ Marketing is the performance of performance
of business activities that directs the flow of goods and service from producer
to customer or user.
v “Marketing is a total system of interacting
business activities designed to plan, price, promote and distribute
want-satisfying products and services to the present and potential customers.”
v These traditional definition have undergone
some changes and the new version are as below
“ Marketing is a societal process by which
individual and groups obtain what they need and want through creating, and
freely exchanging products and services of value with other”
v As a managerial
definition, marketing has often been described as “the art of selling
products.”
v But Peter Drucker, a
leading management theorist, says that
“The aim of marketing is to make selling superfluous. The aim of marketing
is to know and understand the customer so well that the product or service fits
him and sells itself. Ideally, marketing should result in a customer who is
ready to buy.”
v
The American Marketing Association offers this managerial definition:
Marketing (management) is the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges that
satisfy individual and organizational goals.
v Marketing is about identifying and meeting
human and social needs. One of the shortest good definitions of marketing is “meeting
needs profitably.”
v Marketing Management as the art and science of
choosing target markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer value.
Objectives
of marketing:
— Intelligent and capable application of modern
marketing policies.
— To develop the marketing field.
— To develop guiding policies and their
implementation for a good result.
— To suggest solutions by studying the problems
relating to marketing.
— To find sources for further information
concerning the market problems.
— To revive existing marketing function, if
shortcoming are found.
— To take appropriate actions in the course of
actions.
Ø CORE
MARKETING CONCEPT
1.
Needs, Wants, and Demands
The
successful marketer will try to understand the target market’s needs, wants,
and demands.
Need
Needs describe
basic human requirements such as food, air, water, clothing, and shelter.
People also have strong needs for recreation, education, and entertainment. Social
need are craving for belonging and affection.
Want
Want are the
forms human needs take as they are shaped by culture and individual personality
characteristics. These needs become wants when they are directed to specific
objects that might satisfy the need. An American needs food but wants
a hamburger, French fries, and a soft drink. A person in Mauritius needs
food but wants a mango, rice, lentils, and beans. Clearly, wants are shaped by one’s society. Human
need are limited but wants are unlimited.
Demand
Demands are wants for
specific products backed by an ability to pay. Many people want a Mercedes;
only a few are able and willing to buy one. Companies must measure not only how
many people want their product, but also how many would actually be willing and
able to buy it. However, marketers do not create needs:
Mercedes
would satisfy a person’s need for social status. They do not, however, create
the need for social status.
Example Need,
want and demand of an MBA Student.
Need :
transportation- the MBA student has to reach college in time. Buses are not
dependable.
Want: The student
wants a motorcycle, which looks grand, has many latest features and is
dependable. E.g. Bajaj Or Honda.
Demand: purchasing
power is provided by the boy’s father, who also has the willingness to buy the
bike, which his son wants.
2.
Marketing
Offers
Marketing offers are combination of products, service,
information, or experiences offered to a market to satisfy a need or want. It
is also called “a value proposition, which a set of benefits that marketing
people promise to the consumer to satisfy their needs.
The Largest share of marketing offers
consists of physical product which include non-durable goods and consumer
durables. Some example are given below.
v Goods
Non-Durable:
Cosmetics
(Face Cream, lipstick, hair dye, nail polish etc.)
Toiletries (Toothpaste, soap,
powder, shampoo,etc)
Packaged Food (Biscuits, chocolets,
coffes, tea, Horlicks, Atta, Ketchup, Soft drink, etc.)
Others (Books, petrol, Gas, shoes,
textiles, vegetable, fruits, fish, etc.)
Durable
Automobiles (Cars, Vans, Jeep etc.)
Two-wheelers (scooter, bike, mopeds, etc)
Household Appliances (Fridge, TV, washing
Machine, Microwaves ovens, Furniture, etc)
Marketing
offers are not limited to physical products only. In addition o tangible
products, marketing offers include services, activities pr benefits, offered
for sale that are essentially intangible and do not result in the ownership of
anything.
v Services
A
growing portion of business activities are focused on the production of
services.
Banking,
airline, hotel, transportation, tourism and travel consultancy etc are example
of such services.
In addition,
marketing offers also include Other entities such as
Person,
places, organization, information and Ideas.
v Events:
Marketers
promote time-based events such as trade shows, artistic performances, and the
Olympics.
v Experiences:
By orchestrating several
services and goods, a firm can create and market experiences such as Walt
Disney World’s Magic Kingdom.
v Persons:
Celebrity marketing is a major business.
v Places:
Cities, states, regions, and whole nations compete actively to attract
tourists, factories, and new residents.
v Properties:
Are intangible rights of ownership of either real property (real
estate) or financial property (stocks and bonds).
v Organizations
Actively
work to build a strong, favorable, and unique image in the minds of their
target publics.
v Information
Can be produced and marketed as a product.
Schools, universities, and others produce information and then market it.
v Ideas
Every market offering includes a basic idea.
Products and services are platforms for delivering some idea or benefit.
3.
Value and Satisfaction
a)
Customer Value
In terms of marketing, the product or
offering will be successful if it delivers value and satisfaction to the target
buyer. The buyer chooses between different offerings on the basis of which is
perceived to deliver the most value. We define value as a ratio between what
the customer gets and what he gives. The customer gets benefits
and assumes costs, as shown in this equation:
Value =
Benefit
Cost
Based
on this equation, the marketer can increase the value of the customer offering
by
(1)
raising benefits,
(2)
reducing costs,
(3) raising benefits and reducing costs,
(4)
raising benefits by more than the raise in costs, or
(5)
lowering benefits by less than the reduction in costs.
Example
Jet airways:
The airlines
have launched issues of boarding pass for ticket booking done online, for the
first time in India.
b)
Customer satisfaction.
Customer with a purchase depends on how well
the product’s performance lives up to the customer’s expectations. Customer
satisfaction is a key influence on the futurebuying behavior of the people.
Satisfaction customer will buy the product again and tell the others about
their good buying experiences. Dissatisfied customers, on the other hand,
switch to a competitors’ products and also discourage others from buying the
product.
Marketers
must be careful to set the right level of expectation. If they set
expectation too low, they may satisfy those who buy fail to attract enough
customers.
4.
Exchanges
transaction and Relationship
Exchange
Exchange, the core of marketing, involves obtaining a
desired product from someone by offering something in return. For exchange
potential to exist, five conditions must be satisfied:
1. There are at least two parties.
2. Each party has something that might be of
value to the other party.
3. Each party is capable of communication and
delivery.
4. Each party is free to accept or reject the
exchange offer.
5. Each party believes it is appropriate or
desirable to deal with the other party.
Whether exchange actually takes place depends
upon whether the two parties can agree on terms that will leave them both
better off (or at least not worse off) than before. Exchange is a value-creating
process because it normally leaves both parties better off. Note that exchange
is a process rather than an event. Two parties are engaged in exchange if they
are negotiating—trying to arrive at mutually agreeable terms. When an agreement
is reached, we say that a transaction takes place.
Transaction
A transaction
involves at least two things of value, agreed-upon conditions, a time of
agreement, and a place of agreement. Usually a legal system exists to support
and enforce compliance among transactors.
However, transactions do not require money as
one of the traded values. A barter transaction, for example, involves trading
goods or services for other goods or services. Note also that a transaction
differs from a transfer. In a transfer, A gives a gift, a subsidy, or a
charitable contribution to B but receives nothing tangible in return. Transfer
behavior can also be understood through the concept of exchange. Typically, the
transferer expects something in exchange for his or her gift—for example,
gratitude or seeing changed behavior in the recipient.
For
example- A customer pays 4 Lakhs to Hyndai dealer and buy a santro.
A Physician treats a patient and the pay him Rs. 100 as
his fees.
Transaction may be monetary as in the above
examples or can also be non-monetary in the barter system, transactions take
place without the involvement of money as only the good or service are
exchanged.
Relationship
v Transaction
marketing is part of a larger idea called relationship marketing. Relationship
marketing aims to build long-term mutually satisfying relations with key
parties— customers, suppliers, distributors—in order to earn and retain their
long-term preference and business.
v Effective
marketers accomplish this by promising and delivering high-quality products and
services at fair prices to the other parties over time Relationship marketing
builds strong economic, technical, and social ties among the parties.
v It cuts down
on transaction costs and time. In the most successful cases, transactions move
from being negotiated each time to being a matter of routine.
v The ultimate outcome of relationship marketing
is the building of a unique company asset called a marketing network.
v A marketing network consists of the
company and its supporting stakeholders (customers, employees,
suppliers, distributors, university scientists, and others) with whom it has
built mutually profitable business relationships. Increasingly, competition is
not between companies but rather between marketing networks, with the profits
going to the company that has the better network.
5.
Market
v Market is a place
where buyers and sellers meet to buy or sell products, as in the case of a fish
market, vegetable market or gain market. Market need not be a place as in the
traditional sense. Here the sellers or marketers are treated as the industry
and the buyers as the market.
v A market is the set
of actual and potential buyers of a product. Such buyers or customers share a
particular need or want that can be satisfied through exchange relationships.
The size of the market will depend on the number of people who exhibit the
need, have the buying power and are
willing to exchange their resources for what they want.
v A market is one of
many varieties of systems, institutions, procedures, social relations and
infrastructures whereby parties engage in exchange. While parties may exchange
goods and services by barter, most markets rely on sellers offering their goods
or services (including labor) in exchange for money from buyers. It can be said
that a market is the process by which the prices of goods and services are
established.
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