School of Management Studies UNIT I- MARKETING FOR MANAGERS - SBAA5201 UNIT – I INTRODUCTION Marketing – Nature and Scope of Marketing, Philosophies of Marketing Management – Marketing Concepts – Customer Value – Holistic Marketing – Marketing Environment – Environmental Monitoring , Understanding the impact of Macro and Micro environment on Marketing – Elements of Marketing Mix – Services Marketing. Introduction In today's world of marketing, everywhere you go you are being marketed to in one form or another. Marketing is with you each second of your walking life. From morning to night you are exposed to thousands of marketing messages everyday. Marketing is something that affects you even though you may not necessarily be conscious of it. Definition of Marketing According to American Marketing Association (2004) - "Marketing is an organisational function and set of processes for creating, communicating and delivering value to customers and for managing relationships in a way that benefits both the organisation and the stakeholder." AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user." According to Eldridge (1970) - "Marketing is the combination of activities designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market." According to Kotler (2000) - "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." Nature of Marketing Marketing is an Economic Function : Marketing embraces all the business activities involved in getting goods and services , from the hands of producers into the hands of final consumers. The business steps through which goods progress on their way to final consumers is the concern of marketing. Marketing is a Legal Process by which Ownership Transfers : In the process of marketing the ownership of goods transfers from seller to the purchaser or from producer to the end user. Marketing is a System of Interacting Business Activities : Marketing is that process through which a business enterprise, institution, or organisation interacts with the customers and stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is the performance of business activities that direct the flow of goods and services from producer to consumer or user. Marketing is a Managerial Function : According to managerial or systems approach - "Marketing is the combination of activities designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market." According to this approach the emphasis is on how the individual organisation processes marketing and develops the strategic dimensions of marketing activities. Marketing is a Social Process : Marketing is the delivery of a standard of living to society. According to Cunningham and Cunningham (1981) societal marketing performs three essential functions:- o Knowing and understanding the consumer's changing needs and wants; o Efficiently and effectively managing the supply and demand of products and services; and efficient provision of distribution and payment processing systems. Marketing is a philosophy based on consumer orientation and satisfaction Marketing had dual objectives - profit making and consumer satisfaction Scope of Marketing Study of Consumer Wants and Needs: Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants. These needs and wants motivates consumer to purchase. Study of Consumer Behavior: Marketers performs study of consumer behaviour. Analysis of buyer behavior helps marketer in market segmentation and targeting. Production Planning and Development: Product planning and development starts with the generation of product idea and ends with the product development and commercialization. Product planning includes everything from branding and packaging to product line expansion and contraction. Pricing Policies: Marketer has to determine pricing policies for their products. Pricing policies differs from product to product. It depends on the level of competition, product life cycle, marketing goals and objectives, etc. Distribution: Study of distribution channel is important in marketing. For maximum sales and profit goods are required to be distributed to the maximum consumers at minimum cost. Promotion: Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in accomplishment of marketing goals. Consumer Satisfaction: The product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing. Marketing Control: Marketing audit is done to control the marketing activities. Marketing Management Philosophies There are five marketing concepts. A company should choose the right one according to their and their customers‟ needs. Production Concept Product Concept Selling Concept Marketing Concept Social Marketing Concept Production Concept: This concept works on an assumption that consumers prefer a product which is inexpensive and widely available. This viewpoint was encapsulated in Says Law which states „Supply creates its own demand‟. Hence companies focus on producing more of the product and making sure that it is available to the customer everywhere easily. Increase in the production of the product makes the companies get the advantage of economies of scale. This decreased production cost makes the product inexpensive and more attractive to the customer. A low price may attract new customers, but the focus is just on production and not on product quality. This may result in a decrease in sales if the product is not up to the standards. This philosophy only works when the demand is more than the supply. Moreover, a customer not always prefers an inexpensive product over others. There are many other factors which influence his purchase decision. Examples of Production Concept of Marketing Management Philosophies Companies whose product market is spread all over the world may use this approach. Companies having an advantage of monopoly. Any other company whose product‟s demand is more than its supply Product Concept This concept works on the assumption that customers prefer products of „greater quality‟ and „price and availability‟ doesn‟t influence their purchase decision. Hence the company devotes most of its time in developing a product of greater quality which usually turns out to be expensive. Since the main focus of the marketers is the product quality, they often lose or fail to appeal to customers whose demands are driven by other factors like price, availability, usability, etc. Examples of Product Concept of Marketing Management Philosophies Companies in the technology industry. Companies having an advantage of monopoly. Selling Concept Production and product concept both focus on production but selling concept focuses on making an actual sale of the product. Selling Concept focuses on making every possible sale of the product, regardless of the quality of the product or the need of the customer. The main focus is to make money. This philosophy doesn‟t include building relations with customers. Hence repeated sales are very less. Companies following this concept may even try to deceive the customers to make them buy their product. Companies which follow this philosophy have a short-sighted approach as they „try to sell what they make rather than what market wants‟. Examples of Selling Concept of Marketing Management Philosophies Companies with short-sighted profit goals. This often leads to marketing myopia. Fraudulent companies. Marketing Concept Selling Concept cannot let a company last long in the market. It‟s a consumers market after all. To succeed in the 21st century, one has to produce a product to fulfil the needs of their customers. Hence, emerged the marketing concept. This concept works on an assumption that consumers buy products which fulfil their needs. Businesses following the marketing concept conduct researches to know about customers‟ needs and wants and come out with products to fulfil the same better than the competitors. By doing so, the business establishes a relationship with the customer and generate profits in the long run. However, this isn‟t the only philosophy that should be followed by all the businesses. Many businesses still follow other concepts and make profits. It totally depends on the demand and supply and the needs of the parties involved. Examples of Marketing Concept of Marketing Management Philosophies Companies in perfect competition. Companies who want to stay in the market for a long time. Societal Marketing Concept Adding to the marketing concept, this philosophy focuses on society‟s well-being as well. The business focuses on how to fulfil the needs of the customer without affecting the environment, natural resources and focusing on society‟s well-being. This philosophy believes that the business is a part of the society and hence should take part in social services like the elimination of poverty, illiteracy, and controlling explosive population growth etc. Many of the big companies have included corporate social responsibility as a part of their marketing activities. Holistic Marketing Concept Holistic marketing is a new addition to the business