Principles of Marketing Unit-1 PDF

UNIT-1 INTRODUCTION TO MARKETING AND MARKETING ENVIRONMENT Instructor: Dr. Ankur Kukreti  DEFINITION OF MARKETING “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individ...

UNIT-1 INTRODUCTION TO MARKETING AND MARKETING ENVIRONMENT Instructor: Dr. Ankur Kukreti  DEFINITION OF MARKETING “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.” - AMA American Marketing Association(1985) Dr. Philip Kotler defines marketing as “the science and art of exploring, creating and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. -Philip Kotler Marketing is a process of identifying latent needs (Unsaid Needs) of customer and satisfying those needs profitably. -Buddy Manager Meeting needs with a profit. -Layman MARKETING V/S SELLING MARKETING SELLING SATIAFYING NEEDS INTERACTION BETWEEN PROFITABLY BUYER AND SELLER IN RETURN FOR SOME MONEY OR SOME KIND OF ITS CONSIDERATION IT IS BUYER ORIENTED IT IS SELLER ORIENTED FOCUSES ON NEEDS OF FOCUSES ON NEEDS OF BUYER SELLER CONVERTS NEEDS INTO CONVERTS PRODUCTS INTO PRODUCTS CASH IT IS A CONTINIOUS PROCESS NON CONTINIOUS PROCESS STARTS WITH NEED STARTS WITH CUSTOMER IDENTIFICATION AND EVEN PROSPECTION AND ENDS CONTINUE AFTER SALES JUST AFTER CASH IS OBTAINED  GOODS V/S SERVICES 1.Goods are tangible, physical products, while services are intangible, non-physical activities. 2.Goods can be seen, touched, and stored, whereas services are perishable and consumed at the time of production. 3.Goods are manufactured or produced, while services are generated or performed. 4.Goods can be owned and transferred, whereas services cannot be owned or transferred. 5.The evaluation of goods is based on tangible attributes like quality and quantity, while services are evaluated based on intangible attributes such as customer experience and expertise. 6.Goods are distributed physically through various channels, while services are delivered through personnel or digital platforms. 7.Goods have limited customization possibilities, while services offer a high degree of customization. 8.Goods are produced before consumption, whereas services are produced and consumed simultaneously. 9.Examples of goods include cars, furniture, and clothing, while services encompass education, healthcare, and transportation services. 10.The value of goods depends on their physical features and scarcity, while the value of services relies on factors like expertise, convenience, and customer demand. Needs, Wants and Demand Needs-:basic human requirement (food , clothing and shelter). Wants-:when needs are directed to specific objects that might satisfy the need. e.g.-: requirement of mineral water to satisfy thirst. Demand-:wants for specific products backed by an ability to pay.eg-:requirement of only BMW to ride and having bank balance to pay for it. Buyer, Customer and Consumer Buyer-: One who interacts with the seller. Customer-: Payee of the product. Consumer-: End user of the product. Things which can be marketed 1. Goods-tangible items 2. Services-intangible items(only exp. of ownership) 3. Events-Olympics 4. Experiences-amusement parks 5. Persons-brand ambassador 6. Places-museums 7. Properties-stock and bonds 8. Organisations-firms 9. Information-schools 10.Ideas-encouraging family planning MARKETER AND PROSPECTS Marketers is an individual who seeks a response from another party called prospect. If two parties are seeking to sell something to each other then we call both of them-:marketers e.g.-India sells wheat and LPG to Iran and Iran sells oil to India. So in international market these two countries are Marketers. Demand States 1. Negative demand-disliking the product and paying price to avoid it 2. Non-existent demand-uninterest in product 3. Latent demand-product unable to satisfy 4. Declining demand-decreasing demand 5. Irregular demand-seasonal demand 6. Full demand-all products sold 7. Overfull demand-demand more than supply 8. Unwholesome demand-undesirable consequences MARKETING CONCEPTS Unlocking new horizons 5 Concepts of Marketing The term “concepts of marketing” refers to a broad term that includes various approaches or philosophies utilized to promote a product or service. Five key concepts form the foundation of marketing: 1. The production concept 2. The product concept 3. The selling concept 4. The marketing concept 5. The societal marketing concept 1. THE PRODUCTION CONCEPT The production concept suggests that people prefer products and services that are easily available and affordable, which is essentially the idea of mass production. Focusing your marketing efforts on this concept means you’re looking to achieve a highly efficient production process, keep costs low, and aim to scale production. Think Walmart, McDonald’s (or any of the big, fast food franchises), Forever 21, Starbucks, and countless other big brands you’ll find across the U.S. in every mall, town, and city. They all use this approach. Brands that focus on mass production keep costs low and sell to a large customer base. Each item sold attracts a low-profit margin, but selling at a very high volume ensures that profit remains high. That’s why Amazon can offer such low prices on its products, and why H&M can sell clothes at affordable prices. 2. THE PRODUCT CONCEPT The product concept emphasizes that buyers prioritize a product’s quality, features, and benefits. Product-focused buyers seek innovation and uniqueness rather than solely seeking the lowest price. A prime example that exemplifies this type of marketing is Apple. Apple products are renowned for their exceptional user experience. They are designed to be user-friendly, intuitive, and easy to set up and update. Every aspect, from their sleek packaging to their minimalist design and intuitive controls, exudes elegance. Apple sets a premium price for their products, but their dedicated fan base is willing to pay for the superior quality and user experience they offer. When customers purchase an Apple product, they have a clear understanding of what they’re getting. Apple also prioritizes accessibility, which sets their products apart in the market. Other companies that follow the product concept approach include Bose, a prominent manufacturer of audio equipment, as well as iconic brands like Tag Heuer watches.  3. THE SELLING CONCEPT The selling concept is founded on the belief that customers will not purchase an adequate quantity of a product or service unless they are actively persuaded to do so. This concept assumes that customers tend to be resistant and need to be convinced to make a purchase. Marketing strategies rooted in the selling concept involve pervasive and continuous advertising efforts. Companies that embrace this concept often employ various techniques to sway hesitant buyers into making a purchase. This approach is commonly utilized by companies that have excess inventory and need to sell it in order to create space for new products. Examples of employing the selling concept include: Brands that aggressively promote Black Friday (and Cyber Monday), such as Amazon, although many big brands also use very similar tactics. Brands that heavily rely on email marketing — think of those that flood your inbox with daily emails that advertise discounts, sales, and special offers. These brands constantly strive to capture your attention with their latest deals. Cold calling or emailing on a large scale without properly qualifying leads – any tactic that prioritizes quantity over quality, emphasizing that “it’s all about the numbers,” aligns with the sales concept. Moreover, aggressively pushing for a sale without adequately assessing a lead’s suitability, disregarding a customer’s refusal, employing manipulative tactics, or making extravagant promises are all indicative of the sales concept. 4. THE MARKETING CONCEPT Brands that utilize the marketing concept spend time getting to know their customer’s likes and dislikes. They understand what problems keep their customers awake at night and develop products and services to solve those issues. This is the approach you’ll see small businesses take. While they can’t compete on scale or price with more prominent brands, they can, through a deep understanding of their customer, fill the gaps in the market and meet a niche demand. You’ll often see this approach with freelancers building small, agile businesses online. Spend time on LinkedIn and engage with content from copywriters, designers, coaches, and consultants, and you’ll see how they interact with their audience — often asking (and answering) questions in their chosen niche. A good example of this is those who offer LinkedIn coaching. They work with clients to help improve their LinkedIn profile so that they can bring in new business or land a new role. 5. THE SOCIETAL MARKETING The societal marketing concept takes the marketing concept further and is increasingly becoming the concept of choice when devising a marketing strategy. This concept emphasizes focusing on meeting customers’ needs to solve their problems while ensuring no harm comes to them. You should also provide this solution as ethically as you can. Examples of brands and products that focus on this marketing concept include: 1. Herbivore and other beauty brands use organic ingredients and claim that their products are ethically produced and do not harm the environment 2. Reformation is a clothing brand that focuses on ethically made clothing produced without harm to nature.  MARKETING MYOPIA THEODORE LEVITT Focus on product, production, or sales could lead to myopia Could lead to ignoring specific consumer needs Could lead to ignoring important markets Botla/Marketing/Philosophy WHICH CONCEPT OF MARKETING IS THE BEST? Well, it depends. The concept of marketing you choose depends on your business, your product or service, and your relationship with your customers. There are also several other factors to consider. We must approach some concepts, such as the production concept, cautiously. Mass production has several issues. It’s usually environmentally destructive and may involve exploiting workers making the product. That is not to say this is the case for all mass-produced items, but it is a reality in numerous instances. Using this concept as the basis of any marketing effort assumes that consumers are primarily interested in easy access to your product and a low price. If you’re looking to build a long-term business, you should consider your customers’ needs. In this day and age of mass consumption, you need to make sure your business practices are ethical. Also, your product is environmentally friendly, and you are addressing the genuine need of your customer. By incorporating the marketing and societal marketing concepts into your marketing strategy, you establish a solid foundation to foster the long-term growth of your business.  MAHATMA GANDHI’S DEFINITION OF CUSTOMER A customer is not an outsider to our business. He is a definite part of it. A customer is not an interruption of our work. He is the purpose of it. A customer is doing us a favour by letting us serve him. We are not doing him any favour. A customer is not a cold statistic; he is a flesh and blood human being with feelings and emotions like our own. A customer is not someone to argue or match wits with. He deserves courteous and attentive treatment. (Wal- Mart Rule 1&2) A customer is not dependent on us. We are dependent on him. A customer brings us his wants. It is our job to handle them properly and profitably - both to him and us. A customer makes it possible to pay our salary, whether we are a driver, plant Or office employ Botla/Marketing/Philosophy BEFORE HOLISTIC MARKETING… Holistic: Relating to or concerned with complete systems rather than with individual parts My doctor takes a holistic approach to disease. Ecological problems usually require holistic solutions. Botla/Marketing/Philosophy HOLISTIC MARKETING The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing acknowledges that everything matters in marketing Four broad components characterizing holistic marketing: 1. Relationship marketing 2. Integrated marketing 3. Internal marketing 4. Performance marketing Botla/Marketing/Philosophy  HOLISTIC MARKETING Botla/Marketing/Philosophy RELATIONSHIP MARKETING Customers Employees Marketing Partners Financial Community Attracting new customer may cost five times as much as retaining an existing one Wal-Mart: Rule 1 and 2 Botla/Marketing/Philosophy RELATIONSHIP MARKETING Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. Four key constituents for relationship marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and members of the financial community (shareholders, investors, analysts). The ultimate outcome of relationship marketing is a unique company asset called a marketing network, consisting of the company and its supporting stakeholders—customers, employees, suppliers, distributors, retailers, and others—with whom it has built mutually profitable business relationships. The operating principle is simple: build an effective network of relationships with key stakeholders, and profits will follow. Ex. Nike CRM and PRM: IBM co-creates with customers and partners Botla/Marketing/Philosophy  INTEGRATED MARKETING Marketers devise marketing activities and assemble marketing programs to create, communicate, and deliver value for customer All activities and programs in integrated manner to provide better value The whole is greater than the sum of the parts Key themes: (1) many different marketing activities can create, communicate, and deliver value, and (2) marketers should design and implement any one marketing activity with all other activities in mind. Ex. GE: MRI medical systems – customers expects good installation, maintenance, and training services along with the product purchased. Botla/Marketing/Philosophy  INTERNAL MARKETING Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. AECS Nurses Infosys: value of the Company at 5.00 p.m. is zero Marketing is no longer the responsibility of a single department—it is a company-wide undertaking that drives the company’s vision, mission, and strategic planning. Everyone sells at IBM Marketing succeeds only when all departments work together When engineering designs the right products, finance furnishes the right amount of funding, purchasing buys the right materials, production makes the right products in the right time horizon, and accounting measures profitability in the right ways. Interdepartmental harmony. Vertical alignment and horizontal alignment Botla/Marketing/Philosophy  PERFORMANCE MARKETING Performance marketing requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. Top marketers are increasingly going beyond sales revenue to examine the marketing scorecard and interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. Companies are also considering the legal, ethical, social, and environmental effects of marketing activities and programs. Equity: LVPEI 50% free(inc-subsidized) surgeries Carbon Footprint: TCS, reduce by 50% by 2020. Brand value of USD 10.391 b, in 2018, 10K Run Botla/Marketing/Philosophy  MARKETING ENVIRONMENT The marketing environment refers to the external forces that affect a company's ability to develop and maintain successful relationships with its target customers. Understanding the marketing environment is crucial for businesses to make informed decisions and to adapt to changing market conditions. The marketing environment can be broadly categorized into two main types: 1.Micro-environment 2.Macro-environment  1. Microenvironment The microenvironment consists of the factors that are close to the company and have a direct impact on its operations and success. These factors are typically within the company's immediate control or influence. The microenvironment includes the following components: a. The Company Internal Environment: This includes the company's internal factors such as its management structure, corporate culture, and organizational resources. A company's strategies, objectives, mission, and internal policies play a crucial role in shaping how it interacts with the external environment. Departments and Functions: Departments like R&D, marketing, finance, and human resources need to work in harmony to create a cohesive marketing strategy. b. Suppliers Role: Suppliers provide the resources needed by the company to produce goods and services. They have a significant influence on the company's operations. Impact: If suppliers raise prices, it can increase production costs, which might necessitate a rise in product prices, potentially leading to a reduction in sales. Conversely, a shortage of supplies can delay production and affect a company’s 30 ability to serve its customers.  c. Marketing Intermediaries Definition: These are firms that help the company to promote, sell, and distribute its products to final buyers. They include resellers (e.g., wholesalers, retailers), physical distribution firms (e.g., logistics companies), marketing services agencies (e.g., advertising agencies), and financial intermediaries (e.g., banks, insurance companies). Role: Effective partnerships with intermediaries can enhance a company's market presence and operational efficiency. d. Customers Types: Customers are central to any marketing strategy, and they can be categorized into different markets: Consumer Markets: Individuals and households who buy goods and services for personal use. Business Markets: Organizations that purchase products to use in their operations or to resell at a profit. Reseller Markets: Companies that buy products to resell at a profit. Government Markets: Government agencies that buy goods and services for public services or for transferring them to those in need. International Markets: Buyers in other countries, including consumers, producers, resellers, and governments. 31  e. Competitors Competitive Analysis: Companies must be aware of their competitors and understand their strengths and weaknesses. Competitors can affect market share, pricing, and customer preferences. Strategies: Companies must develop strategic plans to position themselves effectively against their competitors, using differentiation, cost leadership, or niche strategies. f. Publics Definition: Publics are any group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives. Types: Financial Publics: Affect the company’s ability to obtain funds (e.g., banks, investment analysts). Media Publics: Influence public perception (e.g., newspapers, magazines, social media platforms). Government Publics: Regulatory bodies that influence the company’s operations through laws and regulations. Citizen-action Publics: Environmental groups, consumer advocacy groups, etc., that can challenge the company’s decisions. Local Publics: Neighborhood residents, community organizations. General Public: The general population, whose attitude toward the company can affect its image. Internal Publics: Employees, managers, volunteers, and board members. 32  2. Macroenvironment The macroenvironment encompasses the larger societal forces that affect the microenvironment. These factors are external and usually beyond the control of the company, but they significantly influence the company’s operations. The macroenvironment is often summarized using the acronym PESTLE, which stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental factors. a. Political Environment Government Policies: The extent of government intervention in the economy can influence business operations. This includes tax policies, trade restrictions, tariffs, and political stability. Regulatory Environment: Laws regulating advertising, product safety, and business practices can shape how a company markets its products. Global Political Climate: Political relations between countries can affect international trade and market entry strategies. b. Economic Environment Economic Conditions: These include factors like inflation rates, interest rates, economic growth, exchange rates, and the overall economic climate. These factors influence consumers' purchasing power and spending patterns. Income Distribution: Changes in income levels and the distribution of wealth across a population can affect the types of products that are in demand. Globalization: The interconnectedness of global markets can lead to opportunities for expansion but also to increased competition. 33 c. Sociocultural Environment Cultural Trends: The values, attitudes, and behaviors of the society in which a business operates can affect the demand for products and services. Marketers must understand cultural nuances to effectively reach their target audience. Demographic Factors: Age, gender, ethnicity, education level, and population growth rates are important demographic factors that influence market demand. Social Responsibility: Increasing awareness of environmental and ethical issues has led to greater demand for corporate social responsibility (CSR) and sustainable practices. 34 d. Technological Environment Innovation: Advances in technology can create new products, services, and ways of doing business. Companies that stay ahead of technological trends can gain a competitive advantage. Automation: The rise of automation and artificial intelligence (AI) has transformed industries, affecting everything from production processes to customer service. Digital Transformation: The shift to digital platforms has revolutionized marketing, enabling more precise targeting, personalization, and engagement with consumers. e. Legal Environment Regulatory Framework: Companies must navigate a complex legal landscape, including laws related to consumer rights, antitrust regulations, labor laws, and intellectual property rights. Industry Standards: Compliance with industry-specific regulations is crucial to avoid legal issues and maintain customer trust. f. Environmental (Ecological) Environment Sustainability: Increasing awareness of environmental issues has led to greater demand for sustainable products and practices. Companies are increasingly focusing on reducing their carbon footprint, managing waste, and using renewable resources. Climate Change: Changes in climate patterns can affect agricultural production, supply chains, and the availability of natural resources, influencing business operations. 35 INTERRELATIONSHIP BETWEEN MICRO AND MACRO ENVIRONMENTS While the micro and macro environments are distinct, they are interconnected. For example, a change in the macroenvironment, such as a new regulation (political factor), can directly impact suppliers (microenvironment), which in turn affects a company’s ability to deliver products to its customers. Similarly, technological advancements (macroenvironment) can create new competitive pressures (microenvironment). 36 CONCLUSION Understanding both the micro and macro environments is essential for businesses to thrive in a competitive marketplace. By monitoring these environments, companies can anticipate changes, adapt their strategies, and maintain a competitive edge. This awareness allows businesses to not only react to external forces but also to proactively shape their marketing strategies to align with the evolving landscape. 37  THANK YOU 38