Principle of Marketing BBA 3rd Semester Notes

Unit 1

Meaning and Definition of Marketing.

Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses.

Marketing has been defined in many ways.

According to the Committee of Marketing Teacher’s Association, USA, “Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers or users.”

According to Philip Kotler, “Marketing is a societal process by which individuals and groups obtain what they need and want, through creating, offering and freely exchanging products and services of value with others.”

According to Paul Mazur, “Marketing is the delivery of a standard of living to the society.”

Thus, marketing is the creative management function which promotes trade and employment by assessing consumer needs and initiating research and development to meet them. Marketing makes goods and services useful to the society by getting them where they are wanted, when they are wanted and by transferring them to those people who want them. In this sense marketing means, “All the activities involved in the creation of place, time and possession utilities.” It has been righty remarked, “Nothing happens in our economy until somebody sells something.”

Nature of Marketing

When we discuss the nature of marketing we come to know that marketing is both a science as well as an art. It has the features of both science as well as art.

Marketing as a science:

The handling of marketing responsibilities needs a diversity of human talents. These responsibilities require the men who have personality traits which enable them to do an effective job in dealing with customers.

Marketing needs innovative and imaginary people to create effective advertisement and sales promotion programmes. Marketing people need to develop new ideas in products, market and distribution methods. They must have strong analytical abilities and observations to cope with the strategical and logistical aspects of marketing operations.

All these prove that marketing is a science. Many marketing problems can be sorted out by taking a scientific approach.

Marketing as an art:

Marketing is a continuous practice through which one can bring perfection. Marketing develops a ‘group of artists’ for bringing solutions to the problems of personal selling, advertising and sales promotion etc. The artistic aspect of marketing influence and educate the customers and bring success to the organization.

As science and art, the nature of marketing has the following features-

As Science	As an Art
1. It advances knowledge	1. It advances practice
2. It proves	2. It feels
3. It predicts	3. It guess
4. It impresses	4. It expresses
5. It measures	5. It opines
6. It defines	6. It describes

Scope of Marketing

Marketing is typically seen as the task of creating, promoting and delivering goods and services to consumers and businesses. Marketing people are involved in marketing of ten different types of entities. In other words, marketing today includes the following activities within its scope –

1. Goods:

Physical goods constitute the bulk of most countries production and marketing efforts. For example, each year US companies alone market billions of canned and frozen goods, million tons of steel, cars, tv sets, machines etc.

2. Services:

As economies advance, a growing proportion of marketers’ activities are focused on the production of services. Services include the work of airlines, hotels, beauticians, maintenance and repair people as well as professionals such as accountants, lawyers, engineers, bureaucrats, doctors, software programmers and management consultants.

3. Experiences:

By producing several services and goods, a firm can create stage and market experiences. Walt Disney World’s Magic Kingdom represents experiential marketing. Customers visit a fairy kingdom or a haunted house. There is also a market for customized experiences, such as spending a week at a baseball camp playing with some retired baseball greats or climbing Mount Everest.

4. Events:

Marketers promote time-based events, such as Olympics, company anniversaries, major trade shows, sports events and artistic performances. There is a whole profession of meeting planners who work out the details of an event and make sure it comes off perfectly.

5. Persons:

Celebrity marketing is a major business. Today every major film star has an agent, a personal manager and ties to a public relations agency. Artists, musicians, CEOs, physicians, lawyers and other professionals are also getting help from celebrity marketers.

6. Places:

Places i.e., cities, states, regions and whole nation compete actively to attract tourists, factories, company headquarters. For example – Ireland has been an outstanding place marketer having attracted more than 500 companies to locate their plants there.

7. Properties:

Properties are intangible rights of ownership of either real property or financial property. Properties are bought and sold, and this requires marketing. Investment companies and banks are involved in marketing securities (financial property) to both institutional and individual investors.

8. Organizations:

Organizations actively work to build a strong and favorable image in the minds of their target customers. Companies spend money on Corporate Identity Ads. Universities, museums and performing art organizations all use marketing to boost their public images and to compete for audiences and funds.

9. Information:

Information can be produced and marketed as a product. We buy software and CDs and we visit internet for information. The production, packaging and distribution of information are one of the society’s major industries.

10. Marketing of Ideas:

Every market offering includes a basic idea. Charles Revson of ‘Revlon’ observed, “In the factory we make cosmetics, in the store we sell hope.” Products and services are platforms for delivering some idea or benefits. Today social marketers are busy in promoting ideas such as –
a) Say no to Drugs,
b) Save the Rain Forest,
c) Exercise Daily,
e) Avoid fatly food.

Importance of Marketing

The various functions of marketing under concentration, equalization and dispersion are explained below with their importance –

1. Buying and Assembling:

Buying and assembling is an important function of marketing. The marketers have to take a number of decisions regarding the types of products to be purchased or assembled. Their quality, quantity, price, time of purchase, selection of suppliers and forms of purchase.
The failure in the successful performance of buying function may lead to losses in the form of unsellable inventories, which will finally be the cause of business ruin.

2. Selling:

Selling creates demand for a product.

Selling function includes –
a) Product planning and development.
b) Finding out the buyers.
c) Creation of demand through personal selling, advertisement and sales
promotion.
d) Negotiation of terms of sale.
e) Sales contract.

Selling is important not merely for increasing the profits but also for making the goods and services available to the consumers in the society. In modern marketing selling activity involves tackling with a number of problems such as facing competition and conducting market research from time to time.

3. Standardization and Grading:

Standardization and grading are also important functions of marketing. Standardization is the process of setting up standards. It assures quality. It promotes uniformity of products i.e. size, shape, design and colour of the products. Grading is a part of standardization. It is a process of sorting out goods into a number of grades or classes. Grading enhances marketing efficiency.

4. Financing:

Financing is the life blood of business. Value of goods is expressed in money and it is denoted by price to be paid by a buyer to a seller.

Finance is very important in marketing operations such as maintenance of minimum inventory level, payment of rent and insurance charges. Salaries and commission to sales force, advertising expenses etc.

5. Warehousing and Storage:

The place where the goods are stored and
preserved against natural and human hazards is known as warehouse.
Warehousing and storage of goods are necessary not only for the markets but
also for the wholesalers (as well as) and retailers.
Warehousing performs the functions like, storage risk bearing, price
stabilization, packing etc.

6. Marketing Risk (Risk taking):

Risk is a universal function and is present in all marketing transactions. Risks are constantly challenging the businessmen and no businessmen are able to develop an all-out formula to eliminate risk 100%.

Risk implies an element of uncertainty and possibility of loss due to some unpredictable happening of events in future. There are many ways of minimizing risk. They may be –
a) Avoiding or preventing the risk
b) Shifting the risk (insurance)
c) Accepting unavoidable risk

7. Marketing Information:

Marketing conditions are dynamic and they may affect industry in any way and to any degree. Therefore, marketers must know the trends in marketing demand, supply, prices, competition and other related marketing information.

8. Transportation:

Transportation involves the movement of goods from the point of production to the point of consumption. Without transportation, large scale production, specialization and distribution would have become impossible. Transportation provides place utility to products. The marketers need to use the appropriate mode of transport for quick and safe movement of goods at the minimum possible cost.

Marketing Concepts

Marketing concept means the philosophy which guides the marketing efforts. There are marketing concepts which are adopted by organizations for their marketing activities. They may broadly be divided into two groups-

Traditional Concept

Production Concept

Product Concept

Selling Concept

Modern Concept

Marketing Concept

Societal Marketing Concept

1. The Production Concept:

This concept holds that the consumers will support those products that are produced in large quantities at low unit cost. The authorities of this view believe that marketing can be managed by managing production. It involves high production efficiency and wide distribution network. This concept holds good (valid) in cases where there is more demand than supply. In such a situation, consumers readily accept the product that is made available. For e.g. cooking gas.

Production ——-> Consumption

2. The Product Concept:

Under this concept, producers believe that if the product is good and reasonably priced, it will be quite popular among consumers even if no special marketing efforts are made. They are of the opinion that it is the quality of product alone will yield satisfactory sales. The marketers under this concept believe on the slogan that, “Good wine needs no wishes.”

Production —> Quality of Product —> Consumers

3. The Selling Concept:

The third concept followed is the selling concept. Under this concept it is presumed that consumers will not normally buy as much as expected unless they are approached and convinced. The company lays emphasis on getting sufficient sales for its products. Under this concept the company assumes that its products are sold and not bought. In other words, the consumer’s satisfaction is considered secondary, selling the product is the primary consideration. Till 1953, marketing was usually sales oriented.

Production —> Product Quality —> Approaching Consumer’s —> Consumers

4. The Marketing Concept:

This is a new idea in the field of exchanging. Under this concept, the organization tries its best to determine the needs, wants and values of the buyer’s market and finally takes all steps to deliver the desired satisfaction more effectively and efficiently than its competitors do. Every attempt is made to satisfy the wants of customers. Winning the confidence of customers is as good as fulfilling the goals of organization. In selling, the main idea is to convert the product into cash. But marketing deals with the satisfaction of the customers with the product that is supplied. Marketing concept has been extensively adopted.

Identification of needs

⬇️

Production

⬇️

Product Quality

⬇️

Selling Efforts

⬇️

Satisfaction of the Consumers Needs

5. Societal Marketing Concept:

Under the marketing concept, individual satisfaction and personal interest are both ignored. This limitation is removed by introducing the societal marketing concept. This concept aims at giving individual satisfaction so far the costumer is concerned and maintains public welfare as its goal and responsibility in the long run. The societal marketing concept involves creation of a healthy life for its customers by providing quality products and maintaining customer interest at the top level.
The societal marketing concept believes in the slogan that, “Marketing both begins and ends with the customers.”
This is the current or modern concept which has been extensively adopted and widely accepted in the interest of the organization, the customers and the society. In short, societal marketing can seek profits by-

a) Satisfying customer utility.

b) Maximizing the public welfare.

c) Enhancing the quality of life.

Difference between Selling and Marketing

Basis	Selling	Marketing
1. Objective	Its main objective is to maximize sales without caring for the needs and satisfaction of the customers.	Its main objective is to identify the wants and demands of the buyers and to satisfy them.
2. View	It views business as a process of converting finished goods into turnover.	It views business as a value satisfying process.
3. Cost and Price	In selling, cost determines price.	In marketing, price determines cost.
4. Decision of Production	In selling, seller determines what product or service is to be produced.	In marketing, buyer determines what they want and what product or service is to be produced.
5. Goal	It tries to maximize the profits by converting output into cash.	It tries to maximize profits by satisfying consumer needs and delivering quality of life to people.
6. 4 Ps	In selling, the decisions on ‘Four Ps’ i.e., Product, Price, Place and Promotion are taken from seller’s point of view.	In marketing, decisions on ‘Four Ps’ are taken from customers’ point of view.

Marketing Environment

Marketing environment comprises external or macro factors over which
the organization and management has little control. These are relatively
uncontrollable external forces.

The marketing management must be in close contact with many
uncontrollable forces. To be successful in marketing they must learn to
accommodate them and if possible to take advantage of them. These
uncontrollable forces are the parameters of the market.
Let us describe the various environmental forces of marketing in brief:

Forces	Components of the Environment
1. Socio-cultural	Changes in social values, lifestyles, role of women, attitudes, preferences etc.
2. Technology	Innovation of new technology, product innovation, distribution, packaging etc.
3. Economic	Economic growth, economic policy and stability, per-capita income, economic system etc.
4. Political-legal	Stability of government, law, political organizations, foreign policy, consumer protection.
5. Demographic	Population growth, age, sex, level of education, density of population etc.
6. Competing firms	Substitute brands, competitive firms, price policy etc.
7. Ecological	Air, water and noise pollution, conservation of forests and scarce resource

1. Socio-cultural factors:

The socio-cultural environment determines the value system of a society. Marketing manager is called upon to make necessary adjustments in marketing policies and strategies in order to meet the socio-cultural needs of people.
There are three aspects of socio-cultural environment.
a) Changes in our lifestyle and social values.
b) Growing consumerism indicating consumer dissatisfaction since 1960.
c) Major social problems i.e. concern for pollution of our environment.

We have witnessed many changes in socio-cultural environment in India. Indian consumers are acquiring new lifestyles influenced by various satellite channels. There is a clear decline in joint family concept in favour of nuclear family.

2. Technological factors:

Technology has shaped the face of human life faster than the pace of human life. The unprecedented development of science and technology has created a phenomenal impact on our lives. We have witnessed radical changes in our lifestyles, in our consumption pattern as well as in our economic welfare.

The technological changes have increased competition in the market and the marketers are compelled to innovate and improve the products. The packaging technology has revolutionized the Indian Industry. The world has moved from early machine age to the digital age.

3. Economic factors:

Marketing plans and programmes are influenced by many economic factors like economic growth rate, level of employment and income, purchasing power and willingness to buy, price level, interest rate,consumer credit etc. The role of marketing management becomes important when economic factors greatly touch the lives of consumers. The liberalization of economic policies is responsible for bringing changes in our economic system, economic policies, licensing policy, investment policy, merger and acquisition policy etc. For e.g. Coca-Cola had to go from India in 1977. But in 1992 it came back due to changes in economic policies.

4. Political and legal forces:

Political and legal forces are gaining considerable importance in marketing activities and operation of business enterprises. Marketing system is affected by government, monetary and fiscal policies, import/export environment influence marketing plans and policies. E.g. the bio-medical waste rules 1998 apply to all persons to generate, collect, receive, store, transport, dispose or handle the bio-medical waste in any form.

5. Demographic forces:

Demographic environment refers to the development of population growth, age, sex, education pattern, urban and rural population, occupation, income etc. The demographic factors are directly related to the marketing activities. Hence, management must make a scientific study of human population and its distribution structure.

E.g. growing population indicates growing marketing particularly for baby products. But, when we have reduction in the birth rate and the lower rate of growth of population, companies, specializing in baby products will have to adjust their marketing program accordingly.

6. Competitive environment:

No marketing decision of major importance should be made without accessing competition in a free market economy. The marketing manager has little or no control over activities of competitors. Competitor’s considerably influence the marketing strategies particularly in relation to selection of target market, suppliers, channels of distribution, product mix, price mix and promotion mix.

Competition may be of two types:
a) Competition within an industry producing and selling similar goods.
b) Competition between two companies engaged in production and selling of different goods or services. The marketing manager must understand that his rivals are bound to limit the marketing activities of his firm sooner or later.

7. Ecological factors:

Ecological environment has assumed a unique importance in production and marketing in modern economies. The marketers are expected to take measures to conserve and allocate scarce resources properly. Prevention of all types pollution and efficient use of scarce resources can restore the balance in our ecological environment. The marketers have to innovate new marketing process so as to make them eco-friendly.

Marketing Mix

The policies adopted by manufacturers to attain success in the market constitute the marketing mix. Broadly speaking, the combination of marketing methods or device is known as marketing mix.

There are 7 Ps in the marketing mix. They may broadly be divided as:

A) Traditional Marketing Mix:

It consists of 4 Ps i.e. product, price, place and
promotion.

B) Extended Marketing Mix:

It consists of 3 more Ps people, process and
physical evidence.

The 7 Ps in marketing are known as elements of Marketing Mix. They are
explained below:

A. Traditional Marketing Mix:

1. Product Mix:

Product is the thing possessing a bundle of utilities. It covers
the physical attributes, the package, branding, labelling, style, shape and
design, warranties and after sales services of the product. The product mix
must match with customer needs and expectations.

2. Price Mix:

It includes pricing policies and pricing objectives. Price is the
monetary value of the product. Pricing decision also includes discount,
allowances, terms of credit, profit margin etc. Price is an effective means of
publications. It can also act as a device of promotion.

3. Place Mix:

Place mix covers decisions about-

i) Channels of distribution including all middlemen and facilitating agencies and
ii) Physical distribution which is concerned with transporting, warehousing, storing and handling of products.

4. Promotion Mix:

It covers all means of marketing communication designed to persuade buyers to purchase the product. There are five main devices of promotion:

a) Personal selling
b) Advertising
c) Sales promotion
d) Publicity
e) Public relations

B. Expanded Marketing Mix:

In 1988, 4Ps concept was challenged by Alan. J. McGrath. He added three more Ps to the traditional 4Ps and suggested ‘7Ps’ framework of marketing mix.

The 3Ps include:

1) People
2) Process
3) Physical evidence

The 3 Ps are explained below:

5. People:

People mean those who are in touch with the consumers i.e. salesmen. They deliver the services to the consumers. People in service marketing must possess sound knowledge and skill and they must have positive attitude towards the customers.

6. Process:

Process means the system or method used by the marketers for delivering the goods and services to the customers. The process must be customer friendly. In modern marketing all companies are trying to have some comparative advantages over the others in developing the process.

7. Physical Evidence:

It includes use of vouchers, cards, booklets etc. which are of use to the customers as evidence of visiting that place or institution. It also includes the maintenance of neat and clean shopping area with sufficient space for parking and sitting arrangements. The place where delivery and service of product takes place must be entertaining with beautiful interior decorations.

Market Segmentation

What are the basis of market Segmentation

Define Product

Various Stages of PLC

What is new product development

Various stages of New Product Development

Define Brand

Essentials of a Good Brand Name

Define Labeling

Define Packaging