Marketing Management - Chapter 1 PDF

Marketing Management Sangameshwar College, Solapur Chapter 1: Introduction to Marketing Management What Is Marketing? Marketing refers to activities undertaken by a company to promote the buying or selling of a product or service. Marketing...

Marketing Management Sangameshwar College, Solapur Chapter 1: Introduction to Marketing Management What Is Marketing? Marketing refers to activities undertaken by a company to promote the buying or selling of a product or service. Marketing includes advertising, selling, and delivering products to consumers or other businesses. Professionals who work in a corporation's marketing and promotion departments seek to get the attention of key potential audiences through advertising. Promotions are targeted to certain audiences and may involve celebrity endorsements, catchy phrases or slogans, memorable packaging or graphic designs and overall media exposure. Define Marketing: "The action or business of promoting and selling products or services, including market research and advertising." “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” According to Philip Kotler, “Marketing management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target markets for the purpose of achieving organisational objectives. # Core Concepts of Marketing: Marketing is a management process. Marketing creates the value for customers. For this reason, the marketers need to find, anticipate and satisfy the customer requirements at profit. Marketing is the name of large task like create ideas, brand, how to communicate with customers, how to design, research of consumer behavior etc all count as part of marketing. There are top 5 core concepts of marketing. These are given and explain below. 1. Needs, Wants and Demands: Most basic or core concept of fundamental marketing is that of human needs, wants and demands. These are explaining below. A. Needs: Identifying of unfulfilled needs is the pre-condition of making successful of marketing activities. Marketers try to satisfy the needs of customers. A need is a thinking of mind that reflects the lackness of something. For example, needs are food, clothing, warmth, safety, shelter etc. B. Wants: Wants are the options of satisfying needs that shaped by culture and individual personality. Human beings must require food but what type of food they will take that is depended on cultural and social of individually. One person may like a burger but another person might like rich food. Maximum satisfaction of customers need depends on the quality of a product. Our assets are limited but our wants are many, for the reason marketers try to fulfill on creating satisfying of unlimited wants by limited assets. C. Demands: When needs arise, wants became for specific products that are backed by the ability and willingness of consumers to buy the products that is called demands. In demand, there is a vital relation with time. Not all wants are transfer into demand. The wants become demand when the wants are supported by ability and willingness to buy. Need is a one kind of wish, want is a selected process of need and the selected thing when it fulfill the ability and willingness then it become the demand. 2. Marketing Offerings: Marketing Offering is that making ensuring of consumers satisfaction. Marketing offer is one kind of offer that marketer makes as per requirements of a consumer. The marker try to offer standard product that satisfy the need of a consumer in terms of quality, quantity, price etc. Marketing offering can be ‘tangible’ or intangible’. 1 Gaurav Jugdar 9890355331  Marketing Management Sangameshwar College, Solapur A. Products: Product is a thing that gives the satisfaction of customers. It is provided the satisfaction of physical and psychological both. Actual, product features are color, branding, packaging, labeling etc. There are two kinds of product is available that are tangible and intangible. Marketing consider product benefits and services. B. Services: All kinds of things that are offered to a market to satisfy human needs or human wants or consumers that is called Services. Service is a work or benefit that is given to one party to other part y. Service is intangible. For example service of doctor, lawyer, mason, tailor, hotel service, training service, security service, entertainment service, beauty parlor service etc. C. Experiences: Experience is to do, to see, to feel something by acquired knowledge or skilled. The company wants his experience to do better in future. By using experience company ordered to manager to make marketing process. Normally in business, experience is very important. Some kind of business organization does not want to appoint their employee without having experience of this job. A company provides more facility or increase salary or gives promotion of manager or other employee only for experience. 3. Value and Satisfaction: Value and satisfaction is very important on marketing core concept. They are explained below in details. A. Value: Value is the capacity of a product or service. Normally value is determined by the level of satisfaction of customers. If satisfaction level is low, it means the value of the product is low and consumer will leave this product. Customers always think about value of a product when they go to buy this product. It is ever-present in their minds about value of a product. B. Satisfaction: Satisfaction is like a desire of mind that cannot be measured or it cannot be quantified. Actual, the purpose of marketing is the satisfaction of customers by creating value of a product and make a long-term relationship to customers. The satisfaction of customer is also depended on quality of the product or the quality of the service provided. 4. Exchanges and Relationships: Exchange and relationship is always very important in core concept of marketing. Exchanges and relationships are explained in below in details. A. Exchanges: Exchange is very basic concept of marketing. In fact, another name of marketing is exchange. Producers and manufactures are trying to make available all sorts of goods that are needed by the society. Exchange is one kind of activity that creates value and this value is provided to other party. In exchange money is always needed. Without money the exchange process is not possible B. Relationship Marketing: Customer is the king in the business. If you want to grow up your business, you have to create a good relationship to customer. You have to keep always busy to make happy of customers by satisfying his or her needs in terms of quality, price, time, quantity, regularly in supplying. In relationship, the quality of product is very important. 5. Market: Marketing follows market. Market is a set of present and future buyer. Market is a place where buyers and sellers come in touch with detailed information about what sellers are offer and what buyers are ready to buy. Some people do not say that in market a place should stay. But a market is where different types of transactions happen that is also call market. In market, the goods flow from the sellers to the buyers and money flow from buyer to reach sellers to complete the exchange. # Difference in Selling and Marketing 1. Marketing is about customer satisfaction. It starts with customer needs and demand and ends with customer satisfaction. It is a customer oriented approach. Sales, on the other hand, are about selling what the company produces. It doesn’t care about the need of the customer but about the profits. 2 Gaurav Jugdar 9890355331  Marketing Management Sangameshwar College, Solapur 2. Marketing is about providing quality products and consumer satisfaction. Selling is about generating by maximizing sales and is a money oriented approach. 3. In marketing, emphasis is given on the wants of the consumer. Whereas in selling, emphasis is on the company’s products. 4. Marketing is different from selling because here the company first determines customers’ needs and wants and then decides how to deliver a product to satisfy these wants. In selling, it is the other way round. 5. In marketing the emphasis is on innovation in existing technology and providing better value to the customer by adopting a superior technology. Selling emphasizes on staying with existing technology and reducing costs. 6. Marketing views the customer as the very purpose of the business. Selling views customer as a last link in business. 7. Planning in marketing is long-term-oriented in today’s products and in terms of new products, tomorrow’s markets and future growth. Planning in selling is short-term-oriented in terms of today’s products and markets. 8. Marketing follows customer oriented approach. Selling uses production oriented approach. 9. Consumer determines price and price determines cost of marketing. In selling, cost determines price. 10. Marketing makes use of long-term strategies to get sales – examples, value-added service, customer education, meeting objectives. Selling makes use of short-term tactics to get sales – examples are free gifts, discounts, rebates, bribes, etc. 11) Marketing is an indirect activity. Sales are a direct activity. # Importance of Marketing: 1.Increase in the standard of living: Importance of marketing, modern society is divided into three classes (1) Rich Class (2) Middle Class and (3) Poor class. Standard of living of society is mainly depends on purchasing power of these classes. Better standard of living needs fulfillment of various wants, which is possible with the help of marketing. Hence, it can be stated that standard of living is a gift of marketing. In simple words, marketing improves the standard of living of society. 2. Employment opportunities: Importance of marketing, marketing is a prominent instrument of employment. This process includes various activities such as buying, selling warehousing, transportation, grading, finance, risk undertaking, etc., which provides employment to the number of persons. Thus marketing generates sufficient scope for employment to thousands of people and improve their income levels. 3. Economic stability: Marketing plays a vital role, in the economic stability of a country. Economic growth depends on economic stability. Economic stability depends on balance between production and consumption, i.e. demand and supply. To maintain balance in production and consumption marketing is necessary. Marketing maintains this balance and stabilizes the economy. 3 Gaurav Jugdar 9890355331  Marketing Management Sangameshwar College, Solapur 4. Creates utility: Marketing is an economic activity. It creates ownership, place and time utility in goods and services. Marketing creates demand. Various activities of marketing create utility. E.g. Exchange of goods offered,s ownership, time utility and place utility is created due to warehousing and transportation. Thus, marketing provides value to the goods and services. It also provides goods at the right time at right place and at reasonable price. 5. Satisfaction of human wants: Marketing plays a significant role in the distribution of goods and services to the consumer satisfaction of their wants. It is the activity which transfers goods and service from the place of consumption to satisfy the needs of society. Thus, marketing has great importance in providing goods necessary to fulfill human needs. #Functions of Marketing Management We need to understand the major functions of marketing management in order to understand and groom our organization. The following are some of the major functions of marketing management − 1. Selling: Selling is the crux of marketing. It involves convincing the prospective buyers to actually complete the purchase of an article. It includes transfer of ownership of products to the buyer. Selling plays a very vital part in realizing the ultimate aim of earning profit. Selling is groomed by means of personal selling, advertising, publicity and sales promotion. Effectiveness and efficiency in selling determines the volume of the firm’s profits and profitability. 2. Buying and Assembling: It deals with what to buy, of what quality, how much from whom, when and at what price. People in business purchase to increase sales or to decrease costs. Purchasing agents are much tempted by quality, service and price. The products that the retailers buy for resale are selected as per the requirements and preferences of their customers. Assembling means buying necessary component parts and to fit them together to make a product. ‘Assembly line’ marks a production line made up of purely assembly functions. The assembly operation includes the arrival of individual component parts at the work place and issuing of these parts for assembling. 3. Transportation: Transportation is the physical means through which products are moved from the places where they are produced to those places where they are needed for consumption. It creates location utility. Transportation is very important from the procurement of raw material to the delivery of finished products to the customer’s places. Transportation depends mainly on railroads, trucks, waterways, pipelines and airways. 4. Storage: It includes holding of products in proper, i.e., usable or saleable, condition from the time they are produced until they are required by customers in case of finished products or by the production department in case of raw materials and stores. Storing protects the products from deterioration and helps in carrying over surplus for future consumption or usage in production. 5. Standardization and Grading: Standardization means setting up of certain standards or specifications for products based on the intrinsic physical qualities of any item. This may include quantity like weight and size or quality like color, shape, appearance, material, taste, sweetness etc. A standard gives rise to uniformity of products. Grading means classification of standardized items into certain well defined classes or groups. It includes the division of products into classes made of units possessing similar features of size and quality. Grading is very essential for raw materials; agricultural products like fruits and cereals; mining products like coal, iron and manganese and forest products like timber. 6. Financing: Financing involves the application of the capital to meet the financial requirements of agencies dealing with various activities of marketing. The services to ensure the credit and money needed 4 Gaurav Jugdar 9890355331  Marketing Management Sangameshwar College, Solapur and the costs of getting merchandise into the hands of the final user are mostly referred to as the finance function in marketing. Financing is required for the working capital and fixed capital, which may be secured from three sources — owned capital, bank loans and advance & trade credit. In other words, different kinds of finances are short-term, medium-term, and long-term finance. 7. Risk Taking: Risk means loss due to some unforeseen situations. Risk bearing in marketing means the financial risk invested in the ownership of goods held for an anticipated demand, including the possible losses because of fall in prices and the losses from spoilage, depreciation, obsolescence, fire and floods or any other loss that may occur with the passage of time. They may also be due to decay, deterioration and accidents or due to fluctuation in the prices induced by changes in supply and demand. The different risks are usually termed as place risk, time risk, physical risk, etc. 8. Market Information: The importance of this facilitating function of marketing has been recently marked. The only sound foundation on which marketing decisions depend is timely and correct market information. The importance of this facilitating function of marketing has been recently marked. The only sound foundation on which marketing decisions depend is timely and correct market information. # Types of Markets 1. Physical Markets - Physical market is a set up where buyers can physically meet the sellers and purchases the desired merchandise from them in exchange of money. Shopping malls, department stores, retail stores are examples of physical markets. 2. Virtual markets - In such markets, buyers purchase goods and services through internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is done through internet. Examples – Flipkart, Amazon etc. 3. Auction Market - In an auction market the seller sells his goods to one who is the highest bidder. 4. Market for Intermediate Goods - Such markets sell raw materials (goods) required for the final production of other goods. 5. Black Market - A black market is a setup where illegal goods like drugs and weapons are sold. 6. Knowledge Market - Knowledge market is a set up which deals in the exchange of information and knowledge based products. 7. Financial Market - Market dealing with the exchange of liquid assets (money) is called a financial market. Financial markets are of following types: a. Stock Market - A form of market where sellers and buyers exchange shares is called a stock market. b. Bond Market - A market place where buyers and sellers are engaged in the exchange of debt securities, usually in the form of bonds is called a bond market. A bond is a contract signed by both the parties where one party promises to return money with interest at fixed intervals. c. Foreign Exchange Market - In such type of market, parties are involved in trading of currency. In a foreign exchange market (also called currency market), one party exchanges one country’s currency with equivalent quantity of another currency. 5 Gaurav Jugdar 9890355331  Marketing Management Sangameshwar College, Solapur # Kinds of Goods: There are different types of goods that are enjoyed in our day-to-day life. the brief description of description of different types of goods are as follows, 1. Consumer goods: The goods that consumers use for consumption purpose are consumer goods, like food, clothing, jewelry etc. are examples of consumer goods. 2. Producer goods: Producer goods are Raw materials are intermediate goods essential to make or produce consumer goods. Therefore producer’s goods are also known as semi finished products used as inputs in the production of other final goods. Producer goods can be converted into the final or part of the final product or drop their separate character in the manufacturing stream. 3. Capital goods: Capital goods are those goods that needed to produce other goods and services and services and particularly they are tangible and physical goods used for further production. They include tools, pieces of equipment, machinery, vehicles, working machines and so on. They are not purchased for final consumption rather they are Used by entrepreneurs and producers to produce further final goods and services. 4. Normal goods: Normal goods are those goods whose Quantity demanded increases as the consumer’s income increases and vice versa. They have a positive relationship between the consumer’s income and the quantity they demand. For example if the income of the consumer increases then he or she will purchase more nutritious food. 5. Inferior goods: Inferior goods are those goods whose quantity demanded decreases when consumer income rises and vice versa. It means that it is one of which the consumer purchases less with an increase in income. An inferior good is the opposite of normal good. An inferior good is the opposite of normal good. It can be viewed as anything a consumer would demand less even if they had a higher level of income. In reality there is not a particular or specific example of an inferior good. 6. Substitute goods: When a person can use one good instead of the next good then such goods are substitution goods. It means the goods that at least partly satisfy the same needs of the users and thus can be used to replace other goods are called substitute goods. For example goods such as tea and coffee, ink pen and ball pen, sun silk soap or Dove soap etc. 7. Complementary Goods: When a person uses one good along with the next one they are complementary goods. In this case the use of complementary goods is necessary for the use of first good. Therefore, these two goods are strongly related to each other. For example cups and saucers, cars and petrol, mobile and sim, etc 8. Public goods: In the simplest sense of understanding public goods are those goods that are available free to everyone, they are provided without the motive of earning profit from all the members of society. So obligators are common to all and their ownership remains with the society they are available to are available to all members of society either by the government or any individual or organization. Public goods may be financed by tax revenue and available to all in equal quantity. 9. Private goods: A private good is good when the purchased by one consumer reduces the quantity available to others. Privately owned businesses produce private goods and consumer purchases to increase the utility or satisfaction. The majority of the goods and services in the market are private goods and the measurement of their prices is subject to some degree of the market forces of supply and demand. 6 Gaurav Jugdar 9890355331