Ch. 1. Introduction to Market & Marketing PDF

Generic Elective / Open Elective for Other Faculty BOS: Marketing Subject: Fundamentals of Marketing Academic Year: 2024-2025 Ch. 1. Introduction to Market and Marketing 1.1 Meaning and Definition of...

Generic Elective / Open Elective for Other Faculty BOS: Marketing Subject: Fundamentals of Marketing Academic Year: 2024-2025 Ch. 1. Introduction to Market and Marketing 1.1 Meaning and Definition of Market 1.2 Classification of Markets 1.3 Marketing Concept 1.4 Different between Traditional and Modern Marketing 1.5 Importance of Marketing 1.6 Functions of Marketing 1.7 Selling vs. Marketing 1.8 Recent Trends in Marketing 1.1 Meaning and Definition of Market: In the context of commerce and economics, a market is a fundamental concept that refers to a place or platform where buyers and sellers interact to exchange goods, services, or information. The notion of a market extends beyond a physical location; it encompasses various forms and structures, including online platforms, local market places, and even global trading networks. Definitions of Market Several scholars and economists have defined the market in various ways: 1. Philip Kotler: Describes a market as "a set of actual and potential buyers of a product." 2. Paul Samuelson: Defines it as "a mechanism by which buyers and sellers interact to determine the price and quantity of goods sold." 3. Economics Dictionary: States that a market is "any structure that allows buyers and sellers to exchange any type of goods, services, and information." 1.2 Classification of Markets: The classification of markets plays a vital role in understanding the dynamics of economic activities. Each market type has its unique characteristics and functions, which impact business strategies, pricing, competition, and overall market behavior. Following are the classifications of markets 1. On the Basis of Geographical Area: Local Markets: These markets serve a limited area such as a town or city. Buyers and sellers are located within close proximity. Example: A local vegetable market. Regional Markets: These cover a larger geographical area, including several towns or districts. Example: A regional market for agricultural products. National Markets: Goods and services are traded across the entire country. Example: Stock exchanges in India like the NSE and BSE. International (Global) Markets: Here, buyers and sellers are from different countries, and goods or services are exchanged across borders. Example: Global oil markets or international trade markets. 2. On the Basis of Nature of Goods: Commodity Markets: These markets deal in raw materials or primary agricultural products such as gold, oil, grains, etc. Consumer Goods Markets: Here, finished goods that are ready for consumption are traded, like clothing, electronics, or food products. Industrial Goods Markets: These deal with goods that are used in the production of other goods, such as machinery, equipment, and raw materials. 3. On the Basis of Time: Very Short Period Market: In this market, the supply of goods cannot be increased due to the limited time frame, such as a few hours or a day. Perishable goods are usually traded here, like fruits or flowers. Short Period Market: Here, the supply of goods can be increased but only to a limited extent. Example: Weekly markets where goods like vegetables, dairy, or clothes are sold. Long Period Market: The supply of goods can be adjusted freely over time, such as industrial goods or non-perishable products. Secular Markets: These are markets where goods and services are exchanged over a long-term period, allowing for significant adjustments in both supply and demand. 4. On the Basis of Competition: Perfect Competition Market: In this type of market, there are many buyers and sellers, homogeneous products, free entry and exit, and no individual player can influence the price. Example: Agricultural markets with a large number of small farmers. Monopoly Market: A single seller dominates the entire market with no close substitutes, giving them price-setting power. Example: Public utilities like water or electricity in some regions. Monopolistic Competition: Many sellers offer differentiated products (slight variations in features or branding), but still, there is competition. Example: The market for shoes, where various brands sell similar but distinct products. Oligopoly: A few sellers control the market, often leading to interdependent decision- making regarding pricing and production. Example: Automobile or mobile phone markets, where a handful of companies dominate. Duopoly: A special case of oligopoly, where only two firms dominate the market. Example: In some cases, the airline industry in specific routes. 5. On the Basis of Transaction: Spot Market: Transactions are settled immediately, with delivery and payment occurring on the spot. Example: Buying goods in a retail store. Future Market: Transactions are agreed upon today but will be settled in the future, often seen in stock or commodity exchanges. 6. On the Basis of Regulation: Regulated Markets: These are markets that are regulated by the government or a statutory body, ensuring transparency, fair practices, and price control. Example: Stock markets regulated by SEBI in India. Unregulated (Free) Markets: These markets operate without government intervention, and prices are determined by the forces of supply and demand. Example: Open-air markets or online marketplaces like Craigslist. 7. On the Basis of Channel of Distribution: Direct Markets: Producers directly sell to consumers without intermediaries. Example: Farmers' markets where farmers sell directly to customers. Indirect Markets: Products are sold through intermediaries like wholesalers, retailers, or agents before reaching the final consumer. 1.3 Marketing Concept: A Marketing Concept is a strategic philosophy that emphasizes understanding and fulfilling the needs, wants, and desires of customers as a pathway to achieving business goals. It focuses on aligning a company's products, services, and processes with customer expectations to create value and build long-term customer relationships. Here are the core principles of the Marketing Concept: 1. Customer-Centric Approach: The customer’s needs and satisfaction are at the heart of every marketing decision. Companies must continuously study customer behavior, preferences, and market trends to offer products and services that fulfill those needs. 2. Integrated Marketing: All departments within a company—sales, production, R&D, and customer service—must work together to achieve marketing goals. This ensures that the customer experience is consistent across all touchpoints. 3. Profit Through Customer Satisfaction: Instead of focusing solely on increasing sales or market share, the marketing concept suggests that business profits are driven by customer loyalty and repeat business. Satisfied customers are more likely to return and recommend the brand. 4. Targeted Marketing: A company should focus its efforts on specific segments of the market where it can meet customer needs better than its competitors. Targeted campaigns help in efficiently using resources and generating a better ROI. 5. Long-Term Focus: While short-term sales and profits are important, the marketing concept emphasizes building lasting relationships with customers. This can lead to sustained profitability and market share. 1.4 Different between Traditional and Modern Marketing: Here is a table highlighting the key differences between Traditional Marketing and Modern Marketing: Aspect Traditional Marketing Modern Marketing Focuses on direct, physical, and Focuses on engaging customers Definition often one-way communication with through digital platforms and customers through offline channels. creating two-way communication. Primarily offline (TV, radio, print Primarily online (social media, Channels ads, billboards, direct mail). websites, email, search engines). Two-way communication; Customer One-way communication; customers can interact and provide Interaction customers are passive receivers. feedback. Highly segmented and Mass marketing with broad, Targeting personalized targeting based on undifferentiated audience targeting. data and customer behaviour. Often expensive due to high Generally cost-effective; lower costs for Cost production and distribution costs digital ads, social media campaigns, and (e.g., TV ads, billboards). SEO efforts.  Limited reach; geographically restricted Global reach; can target and engage Reach to the physical location of media audiences worldwide through digital placement. platforms. Difficult to measure the Highly measurable; detailed analytics, Measurability exact impact and ROI of tracking, and reporting tools provide campaigns. real-time insights. Limited data collection Extensive use of real-time data from Consumer through surveys or sales web analytics, social media insights, and Behavior Data reports. customer databases. Little to no personalization; High level of customization; tailored Customization generic messaging to appeal to content and ads based on user the masses. preferences and behavior. Long lead times for campaign Shorter, real-time campaign Time planning and execution (e.g., print adjustments based on immediate Frame ads, TV commercials). feedback (e.g., social media ads). Dynamic content including blogs, Content Static content such as brochures, videos, interactive posts, and live Type billboards, TV commercials. streams. Limited brand-customer Strong emphasis on engagement, Brand engagement; focus on creating a community around the Engagement selling the product. brand, and building relationships. Direct and immediate feedback via Feedback Indirect feedback via sales comments, likes, shares, and customer Mechanism data or customer surveys. reviews. 1.5 Importance of Marketing: Marketing is indispensable in today’s business world. It plays a significant role in smooth transfer of goods and services from the place of production to the place of consumption. The following points highlight the importance of marketing:  Marketing facilitates exchange of goods: Marketing helps in the possession of goods and transfer of ownership from seller to buyer. Marketing through promotion brings together the buyers and sellers and facilitates sale of goods as per need and wants of the consumers. It creates possession, place and time utilities in goods and services. Through transportation, goods are provided to the consumers who may be scattered throughout the geographical area or region. Warehousing provides time utilities by holding the stock of goods when they are not in demand.  Marketing increases market base: Marketing locates the untapped areas, stimulates demand and creates demand for new product and services. Banking, insurance and financing facilities ensure smooth flow of goods to distant markets. It, thus, widens the market. The manufacturers are able to increase production as well as sale of their products.  Marketing gives boost to other activities: Marketing increases demand of various related activities like banking, insurance, warehousing and transport. Advertising, sales promotion and direct marketing efforts also get a boost as they are needed more to accelerate sales.  Marketing raises standard of living of people: A society enjoys a better standard of living when necessities, comforts and luxuries are within the reach of a large number of people. Large scale production and availability of wide variety of products have become possible due to marketing. Transportation and warehousing functions have facilitated the transfer of goods to distant places. People living in remote areas or other places are able to use a variety of goods at affordable prices. Thus, people are enjoying a better standard of living.  Marketing provides satisfaction of human wants: Marketing informs and guides the people about product availability and its utility. People come to know about variety of products. They are able to select the product which can satisfy their need and wants in best possible manner. Marketing makes possession of goods easier for consumers and thus provides satisfaction.  Marketing creates job opportunities: In the highly competitive market, only organized marketing programs can be implemented. It calls for the need of services of people who are specialized in their fields. Marketing of goods has become complex. Therefore, organisation creates a separate department for marketing which is headed by a marketing manager.  Marketing helps in increasing national income: Marketing activities help in more production of goods and services and increase in sales. It also improves earning capacity of people due to employment opportunities. The net effect of marketing efforts is thus increase in per capita income as well as national income.  Marketing provides base for making production decisions: Marketing research is an important marketing function. Customer needs and wants are assessed through market surveys. Consumer demands are forecasted on the basis of surveys as well as retailers and wholesalers’ estimates. The buying pattern of customers is analyzed. This provides valuable information to producer regarding what to produce, when to produce and how to produce. Thus, decision regarding production becomes more effective.  Marketing serves various sections of society: Marketing helps producer in increasing sales. Consumers are benefited as they get products and services to satisfy their wants. Government gets more revenues in the form of taxes. NGO gets more funds to carry on welfare activities. Society at large is benefited in terms of more employment opportunities, optimum utilization of resources, better services, innovations and reasonable cost of products. 1.6 Functions of Marketing: Marketing is a very broad term and cannot be explained in a few words. Marketing is an essential business function that helps in making the customers aware of the products or services that are offered by a business. The definition of marketing as defined by the American Marketing Association is as follows. “Marketing is the process of planning and executing conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” Functions of marketing are those aspects that define the practice of marketing and are being discussed in detail in this article. The following are the functions of marketing: 1. Identify needs of the consumer: The first steps in marketing function is to identify the needs and wants of the consumer that are present in the market. Companies or businesses must therefore gather information on the customer and perform analysis on the collected information. By doing this they can present the product or service that matches closely with the customer needs and wants. 2. Planning: The next step in marketing function is planning. It is considered very important for a business to have a plan. The management should be very clear about the company objectives and what it wishes to achieve from the created plan. The company should then chalk out a timeline that is essential for achieving the objectives. 3. Product Development: After the details are received from the consumer research, the product is developed for use by the consumers. There are many factors that are essential for a product to be accepted by the customer, a few factors among the many are product design, durability and cost. 4. Standardisation and Grading: Standardisation refers to the process of ensuring uniformity in the product which means that a product developed by a business shall be standard for every consumer with the same quality and design and this is one of the key aspects that needs to be maintained by the business. Grading is referred to as the process of classifying products that are similar in quality and characteristics. Grading helps in making the customer know about the quality of the product offered. It helps in making customers understand that the products conform to highest quality standards. 5. Packing and Labelling: The first impressions of a product are its packaging and the label attached to it. Therefore, packaging and labelling should be looked after very well. It is a well-known fact that a great packaging and labelling goes a long way in ensuring product success. 6. Branding: Branding is referred to as the process of identifying the name of the producer with the product. Certain brands are there in the market which have a lot of goodwill and any product coming from the same brand will be accepted more warmly by the consumers. Although, having a separate identity for the product can be helpful. 7. Customer Service: A company has to set-up various kinds of customer service based on their product. It can be pre-sales, technical support, customer support, maintenance services, etc. 8. Pricing: It can be regarded as one of the most important parts of marketing function. It is the price of a product that determines whether it will be successful or a failure. Some other factors are market demand, competition, price of competitors. The company or business should understand clearly that bringing about frequent changes in the price of a product can lead to confusion in the minds of consumers. 9. Promotion: Promotion is the process of making the customers aware of the product by presenting it to customers across various channels of promotion and entice them to buy the product. The major channels of promotion are: advertising, media, personal selling and promotion (publicity). An ideal promotion mix will be a combination of all or some methods. 10. Distribution: Distribution refers to the movement of consumer goods to the point of consumption. A company must ensure that the correct channel of distribution is selected for the product. The mode of distribution is dependent on the factors such as shelf life, market concentration and capital requirements. Proper management of inventory is also essential. 11. Transportation: Transportation is defined as the physical movement of goods from one place to another. In other words, it is the movement of goods from the place of production to the place of consumption.  Also, the correct mode of transportation can be selected based on the geographical boundaries of the market. 12. Warehousing: Warehousing of products creates time utility. It is often seen that there is a gap between the time a product is produced and the time when it is consumed. Companies like to maintain the smooth flow of goods even when the products are of seasonal nature. Warehousing and storing provides the opportunity to provide goods during off season also. 1.7 Selling vs. Marketing: In every business today, we often come across the concept of marketing and selling, a number of times. The concept of marketing focuses firstly on the customer’s requirements, and then the means to fulfil that need is identified. In marketing, the customer creates market demand. On the other hand, the concept of selling emphasises only the requirements of the seller; therefore, in this process, the seller rules the market. Selling Marketing Definition The selling theory believes that if companies and The marketing theory is a business plan, customers are dropped detached, then the which affirms that the enterprise’s profit customers are not going to purchase enough lies in growing more efficient than the commodities produced by the enterprise. The opponents, in manufacturing, producing notion can be employed argumentatively, in the and imparting exceptional consumer value case of commodities that are not solicited. to the target marketplace. Related to Constraining customer’s perception of Leading commodities and services towards commodities and services. the consumer’s perception. Beginning point Factory Marketplace Concentrates on Product Consumer needs Perspective Inside out Outside in Business Planning Short term Long term Orientation Volume Profit Cost Price Cost of Production Market ascertained 1.8 Recent Trends in Marketing: Over the last few years marketing has changed drastically. In the past the sales executives had the most of information and we as customer were depended on sales professionals to inform and guide us in our decisions, but now the development in information technology has changed everything. Businesses are constantly under pressure to keep up with ever-changing technology advancements. With the majority of people having access to high speed internet, online videos, social networking sites, blogs, product review sites, automated follow-up systems and online advertising, marketers are more focused on making marketing more attractive and interactive. Marketing now is not just selling and promoting products and services but it is all about changing the methods from straight out selling to educating, attracting prospects and customers by adding loads of value to what business offer. There is a major shift in the Marketing Techniques in the recent past. So the recent trends in marketing are: 1. E-business 2. Tele marketing 3. M-business 4. Social networked marketing 5. Viral marketing 6. Interactive Television 7. Green marketing 8. Retail marketing 9. Relationship marketing 10. Customer Relationship Management 1. E-BUSINESS: The use of Internet and Web technologies in business – commonly known as “ebusiness” – has changed how marketers implement and enhance their business processes and interact with their environments. In order to develop a successful e- business model understanding the customer needs in the light of the new environment is very essential. 2. TELE- MARKETING: Telemarketing is one of the method of direct marketing of products and services offered by the marketer. Telemarketing is a process of persuading prospective customers to buy products or services using telecommunication technology. Telemarketing is interactive marketing medium and it helps the marketers to address the prospect customer’s questions, concerns, and overcome their objections. There are different methods of telemarketing and each of the telemarketing method includes a different function. In order to obtain the best results, most businesses use telemarketing methods depending on their diverse business needs. To achieve the favourable results, marketers can adopt one or more telemarketing methods separately. The following are different variants of telemarketing. 3. M-business: M-business is a branch of electronic commerce which includes buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs). 1. Social networked marketing: Social Networked Marketing is a form of digital marketing where businesses use social platforms to reach their target audiences, share content, and engage users. It focuses on creating content that resonates with users and encourages interactions such as likes, shares, comments, and follows, leading to organic brand promotion. It also includes paid advertising (sponsored posts, display ads) and influencer partnerships to boost reach and visibility. Key Social Media Platforms Facebook: Ideal for community building, with features like Pages, Groups, and ads targeting specific demographics. Instagram: Visual-centric, great for showcasing products, influencer marketing, and user-generated content (photos, videos, Stories). Twitter (X): Real-time updates and short-form content; used for brand communication, news sharing, and customer service. LinkedIn: B2B networking, professional content sharing, and thought leadership. TikTok: Short-form video platform for viral, creative content, especially popular among younger audiences. YouTube: Video marketing, tutorials, product demos, and influencer partnerships for long-form video content. 1. Viral marketing: The goal of viral marketing is to inspire individuals to share a marketing message with friends, family, and other individuals to create exponential growth in the number of its recipients. Viral marketing seeks to spread information about a product or service from person to person by word of mouth or via the Internet. 2. Interactive Television: Interactive television is a form of media convergence, adding data services to traditional television technology. It has included on-demand delivery of content, online shopping, and viewer polls. Interactive TV is an example of how new information technology can be integrated vertically into established technologies and commercial structures. 7. Green marketing: 8. Retail marketing: Retail marketing is a strategic blend of in-store and digital techniques a retail business uses to attract customers and drive purchases. Effective retail marketing establishes a unique brand identity, engages consumers across multiple touchpoints, and allows timely responses to market trends and consumer preferences. Retail marketing’s goal is to drive sales through effective product promotion and foster customer loyalty with superior experiences. 9. Relationship marketing: Relationship Marketing is a strategy of Customer Relationship Management (CRM) that emphasizes customer retention, satisfaction, and lifetime customer value. Its purpose is to market to current customers versus new customer acquisition through sales and advertising. A good relationship marketing strategy is rooted in building customer loyalty and lasting, long-term engagement with your customer base. Benefits include increased positive word-of-mouth, repeat business, and a willingness on the customer's part to provide valuable feedback to the company and their peers. 10. Customer Relationship Management: The full form of CRM is Customer Relationship Management. CRM is a strategy to sustain and preserve the relationship with the current customers as well as future customers to support the organisation’s growth. It is applied widely in all growing industries. CRMs was configured to compile the company’s customer contact information that includes company email, website, products, phone number, services, live chat, and so on. It also offers comprehensive customer data such as staff names, phone number, history of sales, feedback, suggestions and so on. CRM software gathers all the customer-specific information and records into a single CRM folder. It is an easy and effortless way of running an organisation and offers a structured view of the bond between customer and employee.