22 Concept of Marketing and Marketing Management

A. Swarnalatha

1. Introduction

Entrepreneurship is a processing of stimulating a new venture. Marketing is a critical function in entrepreneurship which determines the success and failure of the new venture. Marketing is not merely sales and advertisement. Beyond sales, it is a compilation of various processes which required for successful business. Each entrepreneur should adopt relevant marketing strategy suitable for their business. Before taking up new venture, one should know about the fundamentals of marketing.

Learning objectives To

Describe the Meaning of marketing
Explain basic concept of marketing and marketing management
Distinguish selling and marketing

2. Marketing

Marketing is defined differently by different authors to mean that marketing is to know the customer’s need and satisfy them with the product/service that fits their need. A popular definition is that “Marketing is performance of business activities that divert the flow of goods and services from producer to consumer or user”. According to Hansen “Marketing is the process of discovering and translating consumer needs and wants into product and service specifications, creating demand for these products and services and then in turn expanding this demand”

According to Kotler “Marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others”

American Marketing Association defines marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, services to crate exchanges that satisfy individual and organizational goals

3. Core marketing concepts

Marketing depends on four core concepts. They are

Needs, wants and demands,
Product or offering,
Value and satisfaction,
Exchange and transaction
Market

3.1. Needs, wants and demands

Food, air, water, cloth and shelter are once needs. It becomes wants when it is to specific objects. People need food, it becomes wants when it is to specific food items like rice, chappthi or dosa. Indians want to have rice or chappthi and the Chinese want to have noodles. Wants depends on once society.

Demands are wants for specific products backed by an ability to pay. When a person need food, want to have chappthi but if he wants to have chappathi in five star hotel, then it becomes demand. Many people want to have car, but few can afford. So companies must measure not only the wants and also the demand. These distinctions shed light on the frequent criticism that ‘market create needs’ or ‘marketers get people to buy things they don’t want”. Marketer do not create needs, needs preexist. Marketers, along with other social influence, influence wants, and create demands. Marketers might promote idea that owning BMW car would satisfy once social status. So it influence the people wants, and there by create demands.

3.2. Product or offering

The needs and wants of the people are satisfied by the product.

The major types of basic offerings are

goods
services
experiences
events
persons
places
properties
organizations
information and ideas

Certain products will have brand name and have high demand. A brand implies that the product is from a known reputed source. It says the uniqueness of the product.

3.3. Value and satisfaction

Value is the customer’s estimate of the product’s capacity to satisfy their requirements. The products or offering will be successful only if it delivers expected value and satisfaction to buyers. The value can be defined as a ratio between what the customer gets and what he gives.

Value= Benefit / Cost

The benefits include functional benefits, i.e. it serves the purpose and emotional benefit, it satisfy the psychological need. The costs include monetary costs, time costs, energy costs and psychic costs.

The customer who is choosing between two value offerings, V1 and V2 , will examine the ratio is smaller than one she will be indifferent if the ratio equals one.

3.4. Exchange and transactions

Exchange is the act of getting a desired product form someone by offering something in return. Earlier days, people exchange some products to get the desired products. Nowadays we get things mostly by exchanging money. Exchange is the core concept of marketing involves getting desired products from someone by offering something in return. For a exchange, two parties must be there.

Each party should have something that value for other.
Each of them should have ability to communicate with other.
Each has right to accept or reject the other party’s exchange offer.
Each might have faith and desire to deal with other party.

The exchange take places only when there is mutual acceptance occur between two parties. 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.

A transaction involves at least two thing of value, conditions that are greed to, a time of agreement and a place of agreement, between two or more parties: If a person X, gives A to person Y and get B in return. Geetha gets her one favourite dress from a designer by paying Rs. 3,000. This is commonly termed as classic monetary transaction. But all the transaction not necessarily made by money transaction.

A barter transaction involves trading service for goods or for other service. Lawyer A files a case for Doctor B in returns for his medical treatment. Barter transaction becomes most popular transaction in Canada and United states. It has more advantages in business. It increases cash flow in business which is very important for a business. They need not spend amount for goods or service and it can be return in terms of other goods or service. But business cannot be run on 100per cent Barter transaction, because business needs cash flow to run.

New York, BarterQuest (www.barterquest.com), offers cashless service for goods and service and real estate. This site acts as a connector between the consumer and business markets.

A transaction differs from a one transfer to other. X gives A to Y but does not get any tangible returns. For example, donation, gifts, subsidies and other charitable contributions will not receive any tangible returns. They will receive thank you note, included in donors list and invitation to events etc. Marketing consists of actions undertaken to elicit desired response from a target audience. To effect successful exchanges, marketers analyze what each party expects from the transaction.

3.5. Market

A market consist of all the existing and potential consumers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want. This can be done face to face at some physical location or it can be done indirectly through a complex network which links middleman, sellers and buyers living apart. The all the above concepts bring us full circle to the concept of marketing.

There are different types of market.

Consumer market
Industrial/Business market
Government market
Global market
Non profit market

4. Types of market

4.1. Consumer market

In this market, consumers get what they need or want for their personal use and for their family use in day to day life like Tooth paste, Soap, Food items, Facial creams, Internet service, Transportation etc. The durable consumer market is the market where people buy items like car,bike, furniture etc for their long usage

4.2. Industrial/business market

Industrial marketing, also known as business-to-business (B2B) marketing, is a branch of communications and sales that specializes in providing goods and services to other businesses, rather than to individual customers. For business, they need to purchase raw materials like iron rods, crude oil, microtubes, computers, pens etc.

Consider the differences between a candy store selling a chocolate bar to a single customer, and a chocolate manufacturer selling thousands of chocolate bars to a single candy store. The later is termed as business market.

4.3. Government market

In government market, federal, state and local government are the consumers. They purchase aircrafts, crude oil, military weapons from different countries. Central Government and State Govt. and local municipality provide services like roadways and police and sewage and disposal and water supply respectively.

4.4. Global market

The name itself implies that global marketing is not fixed to geographical location; rather it involves the exchange of service and goods from any geographical location in the world. It is possible and convenient through the development of internet. For example, Business may be located in India and it may purchase certain components from UK, does certain product tests in Korea and the business stock may be traded on the New York stock exchange.

4.5. Non profit marketing

The society is making progress in all aspects in one end and suffers from related problems in other end. For example, textile industry has ever lasting demand in one end, in other end, it causes land and water pollution. The nonprofit organizations plays role in creating awareness, provides training and try to reduce the social issues. These organizations thrive on donation from individual, industry or government and other fund raising activities.

5. Importance of marketing

Marketing brings foods and services to satisfy the needs and wants of the people
Marketing brings new varieties and good quality to consumers
Marketing converts latent demand into effective demand
Marketing provides wide employment opportunities
Marketing helps to move the wheel of production and consumption constantly moving
Marketing keep the standard of living of the society
Marketing increases the value of the product with time to time

6. 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.

The organization conduct their market activities under five distinct concepts

6.1. Production concept

6.2. Product concept

6.3. Selling concept

6.4. Marketing concept

6.5. Social marketing concept

6.1. Production concept

It is the one of the oldest concept, the sellers have. In this approach, the firm is considered as the central point. The companies believe that if the goods/services are low in cost, they can be sold anywhere. Keeping this in mind company put all his efforts to reduce the cost ofproduction, and strengthen their distribution system. They concentrate on large scale production.

This is useful when the demands of product exceed supply.

These organizations too often are looking into a mirror, when they should be looking out of the window. The customers never prefer always the low cost products. So production concept may suitable for standard raw materials, CD etc but not for all.

6.2. Product concept

This is somewhat different from the production concept. This concepts hold the product at the centre. The companies believe that customer will accept those products that offer most quality, performance and features. So the focus their energy mainly on making good products, improving them over time.

But the basic thing is that the customer will not always prefer good quality products, they also see the price, availability etc. Good quality product with high cost may upset the consumer budget. These type of companies always occupied with the product development and lag behind in customer needs and wants analysis.

6.3. Selling concept

The sales concept rolls on the idea that the customer cannot expect its products to get picked up automatically by the customers. The company has to consciously push their products in front of the customer through advertising, high-power personal selling large scale sales promotion, discounts, exhibitions, strong publicity and public relation are the common tools used by the company to make the customer to rely on the product.

This concept also have certain limitation with certain ‘unsought goods’, such as encyclopedia, funeral plots etc.

6.4. Marketing concept

The marketing concept holds that the key to achieving its organizational goals consist of the company being more effective than competitors in creating, delivering and communicating customer value to this chosen target markets. The marketing concept has been expressed in many colourful ways:

Burger king- “Have it your way”

United Airline – “Your are the boss”

British Airways – “putting people first”

The marketing concept rest on four pillars

Target market
Customer needs
Integrated marketing
Profitability

It starts with the factory, focuses on existing products and calls for heavy selling and promoting to produce profitable sales.

Difference between selling concept and marketing concept

6.5. Social marketing concept

This concept stresses not only the customer satisfaction but also gives importance to consumer welfare/societal welfare. These companies will have societal benefits as their primary objective and next comes the profit. This social enterprise tries to solve the existing social problems like poverty, unemployment, health etc. Companies adopts social marketing concepts will achieve long-term profit.

7. Various factors influence marketing concept

Population growth
Increase in house hold
Disposal of income
Surplus income
Technological development
Mass communication media
Credit purchase
Changing social behavior
Transport facilities
Increase competition

These factors have changed the traditional thinking of business mangers and dragged the producers to change their idea of marketing to modern marketing concept.

Modern concept of marketing

What can I sell?

You prefer to make the product what you can sell, but donot try to sell what you can make

Shall first create product?

First create customer, then create products

Shall I love my product?

Love your customers then the product

Who is supreme in market?

Customer is supreme or king in market

Who will shape my decision?

Customer’s preferences have to shape your decision.

Summary

Marketing is not only advertising or not only sales but it is a compilation of several activities that facilitate the flow of goods and services from producer to consumer or user. It is an intrinsic activity in any business. Needs, wants and demand, product/offering, value and satisfaction, exchange and transaction and market are the core concepts of marketing. A better understanding of the marketing helps to decrease the numbers of both product and firm failures.

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Reference Books

Rajan Saxena, Marketing management, New Delhi, McGraw Hill Education (India) private Limited,
Pillat and Bagavathi, Marketing management, New Delhi, S.Chand & company Ltd,2010 Shukla, Entrepreneurship and small business management, Allahabad, Kitab Mahal, 2007
Holt David, Entrepreneurship –new venture creation, New Delhi, Prentice hall of India, 1992