Principles Of Marketing PDF - 5th Revised Edition, B.Com. (Hons.)

G_MANI MAN40 Fifth Revised Elitivn Syllabus B.Com. (Hons.): Semester-V PAPER BCH 5.1: PRINCIPLES OF...

G_MANI MAN40 Fifth Revised Elitivn Syllabus B.Com. (Hons.): Semester-V PAPER BCH 5.1: PRINCIPLES OF [cBCS] MARKETING UNIT-I 1. Introduction: Nature, Scope and factors. Importance of marketing: Evolution of marketin9 concepts, Marketing mix; Marketing environment. Micro and Macro environmental Principles of Marketing 2. Consumer Behaviour-An overview: Consumer buying process; Factors Consumer buying decisions. influencing With Case Studies UNITI 3. Market Selection: Makret segmentation concept, importance and bases; Target market selection; Positioning concept, importance and bases; Product differentiation vs. market segmentation. 4. Product: Meaning and impor tance. Product classifications; Concept of product mix; Branding. packaging and labeling; Afte-sales services; Product New oroduct development. Life-Cycle; UNIT- Dr. T.N. Chhabra 5. M.Com., Ph.D. (Delhi University) Pricing: Significance; Factors affecting price of a product; Major pricing methods; Pricing policies and strategies. 6. Promotion: Nature and importance of promotion; Promotion tools: advertising, personal selling, public relations; sales promotion and publicity - concepts and their distinctive characteristics; Promotion mix; Factors affecting promotion mix decisions; Integrated Marketing Communication Approach. UNITIM 7. Distribution: Channels of distribution- meaning and importance; Types of distribution channels; Wholesaling and retailing: Factors affecting choice of distribution channel; Distribution logistics: Meaning, importance and decisions. 8. Retailing: Types of retailing store based and non-store based retailing, chain stores, specialty stores, supermarkets, retail vending machines, mail order houses, retail cooperatives; Management of retailing operations: an overview; Retailing in India: changing scenario. UNIT V 9. Developments and lssues in Marketing: Rural marketing, Social marketing. Online marketing, Direct marketing. Services marketing. Green marketing, Relationship marketing. Marketing ethics. SUN INDIA PUBLICATIONS NEW DELHI-2 SUN INDIA PUBLICATIONS ARKETNG 20 No part of this book may be xeroxed or reproduced in any other fom without the written permission of the author and the publishers. 012 2013 Vssd one 2015 SedFItOntily201 35000 SUN NDIAPUBEICATIONS 4382148,1st FloogMurar LASreel Ansan Road aGan NeWDelhi 110002. one 65921263 Mob:9810716327 [email protected]  Preface to the 5th Edition Preface to the 1st Edition We are pleased to bring out the present revised edition of Principles of Marketing. Several changes have been made al appropriate places in the book and a large number of new examples An Introduction to Marketing have been added. In particular, chapters No. 1, 15, 16 and 17 have been Management is an introductory text for the beginners to thorougly revised. the field of Marketing. For the logical understanding of the subject, this volume has been divided into five units as per the requirements of the The salient features of this edition include the following syllabi of different Universities. The first unit discusses the Concept and Importance of Marketing. Marketing Mix and Marketing Adequale emphasis has been laid on conceptual clarity and application of basic Environment. Besides, it also gives an overview of Consumer Behaviour. The second unit concepts to satisty the basic learning objectives, ie., Knowledge, Understanding deals with Segmentation, Positioning and Differentiation. It also covers Product Life Cycle and Application. and New Product Development. a The subject-matter has been presented in beginners to the discipline of marketing. a simple language for the benefit of The third unit is devoted to Pricing and Promotion whereas the fourth unit deals with Distribution and Retailing decisions. The last unit describes the intricacy of Rural Marketing, Social Marketing, Marketing Ethics, Direct Marketing. Services à Diagrams, tables and boxes have been extensively used to make various topics Marketing and Relationship self-explanatory. Marketing. a Summary has been given at the end of each chapter for quick recapitulation. While writing this book, I was very ably assisted by Mr. Ankur Chhabra who has not only contributed to the text of this volume but also edited it. I also had the benefit of à Small Case Studies have been incorpor ted at the end of various chapters and expertise of Dr. S.K. Grover, who is a well known in the Appendix 1 of this book to develop analytical and decision-making skills personality in the frield of Marketing Management. lam really grateful to him for sharing his innovative ideas with me and among the students. helping me in ways more than one. A large number of colleagues and friends have extended their à Recent examination papers of Principles of Marketing of Delhi University have been cooperation and good wishes given in Appendix 2 for se-appraisal by the students. inpreparing the scripts of this volume. In particular, I am grateful to Dr. R.K. Dr. R.L. Gupta, Dr. Manju Bhatia, Ms. Romila Suri While revising this volume, I had the benefit of constructive suggestions from Prof. Sanjay Jain, Agarwal, Ms. Sharda Garg. Dr. Rajendra P Maheshwari, Dr. Namita Rajput, Dr. Harpreet Kaur, Dr. G.C. Kasturi, Dr. Anand Saxena, Dr. Vipin Agarwal. Dr. Renu Sobtl, Dr. Padmasai Arora, Dr. Manju Bhatia, Dr. Anita Verma, Sh. Sukesh Grover, Dr. Renu Sobti, Ms. Kavita Dr Aastha Dewan, Dr. Renu Agarwal, Dr. Namita Rajput, Mr. Nitin Navin and Dr.Anupama Mahajan, Sanghi, Ms. Alka Goyale and Ms. Anita Prof. DPS Verma has always been a source of inspiration to me. Bajaj for persuading me to come out with a basic text on Principles of Marketing. The contribution of Prof. P.K. Ghosh and Prof. R.K. Grover to my thinking has been My dear Colleagues Shalini, Vandna, Deepak, Abha, Hem Chand, Nisha, Anand, Pawan, Renu, immense. Prof. B.P. Singh has always been a great source of inspiration to me. I also Sunil, Meghna and Deepti deserve special mention for theirkind words of encouragement. Ialso wish to acknowledge the encouragement received from Prof. D.P.S, Vema and Prof. Y.P. wish to acknowledge the keen interest taken by Dr. S.K. Garg, Principal, Deen Dayal Upadhyaya Singh. College, in my academic pursuits. I am grateful to Dr. S.K. Garg, Principal, Deen Dayal Upadhyaya College for his keen Iwish to express my deep gratitude to my family members Usha, Kavita, Chhabra, Ankur, nterest in my writings and also for continuous encouragement Monica and baby Amyra for the sacrifice they have made to enable me to undertake this academic of Sun India Publications for the venture.I am also grateful to Mr. Kapil Singh and Mr. K.V. Singh support provided by them. T.N.Chhabra the further improvement of the quality of this volume Views, comments and suggestions for shall be highly appraciated and gratefuly acknowledged. T.N. Chhabra [email protected]  Brief Contents UNITI P INTRODUCTION 1. Nature, Scope and Importance of Marketing 3 34 2. Marketing Mix 47 3. Marketing Environment 68 4. Consumer Behaviour 69-87 ORTERARKETSELECTIONANDAND PRODUCTDEVELOPMENT 5. Segmentation, Targeting and Positioning 89-112 6. Product Decisions 113-144 7. Product Life Cycle and New Product Development 145-166 UNT PRGNGLNDROMOTONT 8. Pricing Policies and Strategies 169-192 9. Promotion and Integrated Marketing Communication 193-208 10. Advertising and Public Relations 209-234 11. Personal Selling and Sales Promotion 235-254 UNTT V DISTRIELTONAND RETALING 12. Channels of Distribution 257-282 13. Distribution Logistics 283-290 14. Retailing 291-316 BNEFN DEVEKOPUaS NDSSUESN AREUNG Rural Marketing 319-330 16. Direct Marketing, Services Marketing and Relationship Marketing 331-346 (ic) 7 Social Marketing, Green Marketing and Ethics 347-357 Detailed Contents Appendix: 1. Case Studies UNIT I:NTRODucTION A-3-A-18 1. Nature, Scope and Importance of Marketing 3-34 2. Sample Question Papers A-19-A-25 1.1 Meaning of Marketing 1.3 Index 1.1.1 Market and Marketer 1.4 -(v) 1.5 1.2 Marketing as a Process 1.3 Nature of Marketing 1.9 1.3.1 Scope of Marketing.10 1.3.2 Meta Marketing 1.11 1.3.3 Micro and Macro Marketing 1.12 1.4 Functions of Marketing 1.12 1.16 1.5 Importance of Marketing 1.5.1 Role of Marketing in the Economy 1.17 1.18 V 16 of Marketing Concepts and Philosophies Evolution 1.18 1.6.1 The Production Concept 1.6.2 The Product Concept 1.18 1.19 1.6.3 The Seling Concept 1.19 1.6.4 The Marketing Concept 1.6.5 The Societal Marketing Concept 1.20 1.7 The Marketing Concept 1.22 1.25 N1e 1.8 1.7.1 Distinctionbetween Marketing and Seling Marketing Management Process : An Overvlew 1.27 1.9 Challenges and Opportunities of Marketing 1.28 1.9.1 Recent Developments in Marketing 1.29 2. Marketing Mix 35-47 35 2.1 Concept and Importance of Marketing Mix 37 Components.of Marketing Mix 2.2 1 Criticsm of Marketing Mix 2.3 1 2.3.1 Marketing Mix from Customers' Point of View 42 2.3.2 Expanded Marketing Mix 43 2.4 Detemining the Marketng-Mix 44 2.5 Factors influencing Market Mix Decision 3. Marketing Environment 49-68 49 3.1 Concept of Marketing Environment 51 3.2 Environmental Scanning 53 3.3 Micro Environment 56 3.4 Macro Environment 57 3.4.1 Demographic Environment 3.4.2 Economic Environment 58 3.4.3 Natural/Physical Environment 59 3.4.4 Technological Environment 59 3.4.5 Politico-legal Environment 0 3.4.6 Socio-cultural Environment 3.5 Stategies to deal with Marketing Environment  (xin Crii 4. Consumer Behaviour me 69-87 6.4.2 Product Standardisation and Simplification 125 4.1 Consumer Behaviour and Related Terms 4.2 Importance of Studying Consumer Behaviour 69 6.5 Product Mix Strategies 125 4.3 Models of Consumer Behaviour 1 6.6 Branding 126 4.3.1 Rational Economic Model of Consumer 2 6.6.1 Brand Loyalty 130 Behaviour 72 6.6.2 Brand Equity 30 4.3.2 Stimulus-Response Model of 4.4 Buying Motives of Consumers Consumer Behaviour 73 6.6.3 Brand Development wb rpil 131 45 ConsumerBuying Decision Process no Sytage d e l 73 6.6:4 Branding Decisions S u t t a e 131 A6 Factors 6.6.5 Qualities of a Good Brand Name 132 influencing Consumer Buying Decision 77 6.7 Packaging 132 4.6.1 Cultural Factors 6.7.1 Requisites of a Good Package 135 4.6.2 Social Factors 4.6.3 8 6.7.2 Materials Used in Packaging 137 Personal Factors 79 6.7.3 Innovative Packaging 37 4.6.4 Psychological Factors 80 6.8 Labelling 137 6.9 After-Sales Service/Customer Support Service 140 UNr IMARKET SELECTONAND PRODUCT DEVELOPMENT 7. Product Life Cycle and New Product Development 145-166 5. Segmentation, Targeting and Positioning 89-112 7.1 Concept and Significance of Product Life Cycle (PLC) 145 5.1 Market Segmentation J 2 Stages in Product Life Cycle 5.2 92 Saain 147 Major Bases for Segmentation 94 7.2.1 Factors affecting Life-Cycle of a Product 51 52.1 Demographic Segmentation 7.3 Product Planning 151 94 5.2.2 Geographic Segmentation 74 Product Positioning: Differentiation and Segmentation 153 95 52.3 Psychographic Segmentation 7.5 Concept and Significance of New Product Development 155 96 52.4 Behavioural Segmentation 7.6 Stages in New Product Development 156 97 5.2.5 Value-based Segmentation 7.6.1 Concept Testing and Test Marketing 159 98 5.2.6 Volume Segmentation 7.7 Causes of Product Failure 160 98 5.2.7 Benefit Segmentation 7.7.1 Product Modification 99 7.7.2 Product Withdrawal ha o o msduel, la 162 V L5:3 Requirements/Crtera of Efective Segmentation 99 162 54 Targeting 100 5.5 Selection of Target Market Segment 5.5.1 Concentrated Marketing or Niche Marketing 100 NTNTMEPRICINGANDPROMOTON 101 5.5.2 Diferentiated Marketing 101 8. Pricing Policies and Strategies 169-192 5.5.3 Undifferentiated Marketn9 102 8.1 Concept and Significance of Pricing 169 5.5.4 Micro-Marketing and Local Marketing 103 8.2 Objectives of Pricing 171 5.6 Product Positioning : Concept and Strategy 104 8.3 Factors affecing Price Determination 172 5.7 Major Bases of Positioning a Product 106 8.4 Pricing Policies 175 5.8 Product Diferentiation 107 8.5 Demand-Oriented Pricing 175 8.6 Cost Oriented Pricing 176 6. Product Decisions 113-144 8.7 Competition-Oriented or Market Driven Pricing 179 8.8 Value-based Pricing 179 6.1 Meaning of Product 113 6.1.1 Product Attributes 8,9 Major Pricing Methods/Strategies 180 116 8.9.1 Price Adjustment Strategy 6.1.2 Product Policies 186 117 8.10 Product Life Cycle and Pricing 187 6.2 Importance of Product 117 el 6.3 Product Classification 118 9. Promotion and Integrated Marketing Communication 193-208 6.3.1 6.3.2 Consumer Products : Nature and Types Industrial or Producer Products Nature and Types 118 9.1 Ppromotion: Nature and Importance 193 121 9.2 Promotion Mix 6.4 Product Mix 122 196 9.2.1 Promotional Planning 64.1 Factors infiuencing Product Mix 124 197 9.2.2 Factors Infuencing Promotion Mix 198  (xiv) (v) 93 Marketing Communication 12.9 Wholesalers 200 275 9.3.1 Integrated Marketing Communication 202 12.10 Retailers 277 9.32 Hurdles or Difficulties in Marketing Communication 12.11 Elimination of Intermediaries 279 203 94 Pull and Push Promotion Strategies 204 13. Distribution Logistics 95 Online Promotion 283-290 206 13.1 Concept and Nature of Logistics 283 10. Advertising and Public Relations 209-234 13.2 Major Logistics Functions 285 10.1 Concept and Nature of Advertising 209 14. Retailing 291-316 10.2 Functions of Advertising 212 14.1 Retailing: Nature and Types 291 10.3 Role and Importance of Advertising 213 14.2 Departmental Store 296 10.4 Criticism of Advertising 215 14.3 Chain Stores or Multiple Shops 297 10.5 Kinds of Advertising 217 14.4 Mail Order House (Catalogue Retailing) 300 10.6 Media of Advertising 218 14.5 Consumers' Cooperative Store 302 10.7 Choice of Advertising Media 224 14.6 Super Market (Self-service Store) 303 10.8 Advertisement Copy 14.6.1 Hyper Market 305 226 10.9 Advertising Appeals (Themes of Adverising) 14.7 Recent Trends in Retailing 305 229 14.7.1 Malls 306 10.10 Publicity 230 14.7.2 Franchising 308 10.11 Public Relations 231 14.7.3 Telemarketing (Direct Response TV Marketing) 309 14.74 Automatic Vending Machines 309 11. Personal Selling and Sales Promotion 235-254 14.7.5 Etailers 310 14.8 Management of Retaling Operaüons 310 11.1 Concept and Nature of Personal Selling 235 14.9 Challenges of Retailing 312 11.2 Role and Importance of Personal Selling 238 11.3 Kinds of Salespersons 239 11.4 Personal Selling Process 241 11.5 Requisites of Efective Personal Selling 242 15. Rural Marketing9 319-330 11.6 Concept and Nature of Sales Promotion 244 15.1 Nature of Rural Marketing 15.319 11.7 Need and lmportance of Sales Promotion 245 15.2 Importance of Rural Marketin9 15.321 11.8 Types of Sales Promotion Programs 247 15.3 Changing Trends in Rural Markets and Emerging Opportunities 15.324 11.9 Methods/Techniques of Sales Promotion 248 15.4 Issues in Rural Marketing 15.325 11.10 Techniques of Trade Promotion 250 15.5 Challenges for Rural Marketing9 15.326 15.327 E KUNTV EDISTRIBUTIONANDREALNG A 16. 15.6 Adaptation of Marketing Mix for Rural Markets Direct Marketing, Services Marketing and Relationship 12. Channels of Distribution 257-282 331-346 12.1 Nature and Functions of Channels of Distribution 257 Marketing 12.2 Significance of Channel Decisions 260 16.1 Direct Marketing 16.331 16.2 Online Marketing 16.334 12.3 Factors affecting Choice of Distribution Channels 261 12.4 Intensity of Distribution 264 16.3 Services Marketing9 16.336 266 16.3.1 Marketing Mix in Service Marketing 16.339 12.5 Strategic Relationship and Partnership 12.5.1 Vertical Marketing System (VMS) 266 16.3.2 Devaloping Marketng Strategies for Services 16.342 12.5.2 Horizontal Marketing System (HMS) 269 16.4 Relationship Marketing 16.343 12.6 Multi-level Marketing 270 16.4.1 Customer Relations Management (CRM) 16.345 272 12.7 Franchising Types of Intermediaries 274 12.8  (v) 17. Social Marketing, Green 17.1 Social Marketing Marketing and Ethics 347-357 17.347 17.2 Green Marketing.349 17.3 Sustainability marketing '.350 17.4 Marketing Ethics 17.352 Appendix: 1. Case Studies A-3-A-18 2. Sample Question Papers Index A-19-A-25 9-(iv) Unit INTRODUCTION Nature and importance of Marketing Marketing Mix Marketing Environment Consumer Behaviour  1 Nature and and Importance of Marketing Chaptan Ontlik 1.1 Meaning of Marketing 1.2 Marketing as a Process 1.3 Nature of Marketing 1.4 Functions of Marketing 1.5 Importance of Marketing 1.6 Evolution of Marketing Concepts and Philosophies 1.7 The Marketing Concept 1.8 Marketing Management Process : An Overview 1.9 Challenges and Opportunities of Marketing Marketing is the process of understanding customers' needs and wants and creating, pricing promoting and distributing goods and services to satisfy customers' needs and wants and building lasting relationships with them to revenues for the survival and of the business. Thus, generate growth marketing involves an essential set of activities for business operating in a competitive environment. This is why, the study of marketingany as a distinct subject is an integral part of the course curriculum of any undergraduate or program in Commerce or Management. This chapter is devoted to an postgraduate understanding of the concept, nature and importance of marketing, the philosophies of marketing, the evolution of marketing and the challenges of marketing in the present era. 1.1 MEANING OF MARKETING In olddays, marketing was considered a process of 'telling and selling, ie, advertising and selling goods and services produced by a business. It had a narrow focus on the sale of goods and services by the marketers to the consumers or users. It ignorned the needs, wants and expectations of the customers. That is considered insufficient in the why, the traditional concept of marketing is present day world characterized by digitalisation, liberalisation, globalisation and knowledge explosion. Today, marketing is understood in the sense of satisfying customer needs and wants. It involves determining the the products to requirements of potential customers and creating and supplying satisfy their requirements. To quote Stanton, "Marketing is total system of a 3  PRINCIPLES OF MARKETING NATUREAND AND IMPORTANCE interacting business activities designed to plan, price, promote and distribute want satisfying Kamla Nagar Market, OF MARKETING 5 Consumer-oriented marketing ensures that products services to present and potential customers". and Janpath Market and other markets in Delhi. The buyers to the activites revolve around the customer. all business market to purchase the go According to American Marketing Association, goods of their choice. marketing involves creating, communicating and delivering value to customers These days the term 'markee has acquired a broader potential buyers of a product or service, whom the sellers can meaning. refers to actual and and managing It relationships in a way that benefits both the organisation and the stakeholders. Philip Kotler and Gary Armstrong (2016) have given a broad definition of of communication and transport. For approach through various means which runs as follows: marketing example, a marketer can approach prospective buyers Marketing is a social and managerial process by which individiduals through web advertising and a customer can placing order on telephone or cell phone or purchaseinternet goods from his residence or officeby and organisations obtain what they need and want through creating and exchanging value with others. between the parties to using and e-mail. Physical meeting buy and sell is not necessary eting? The essence of marketing is the exchange process. Marketing is an interactive Marketingis anorganlsatiónal function and setofprocessesforcreating.communlcating between a firm and its customers. The firm offers exchange vaue tocUstomersand for managingrelationshlpsina and delvering money in exchange. To facilitate goods and services and customers offer Slakeholders way thatbenefts.both the organisation and the exchange value, the seller communicates with customers of in different ways and the customers merican Marketing Association provide feedback to the seller as shown in Fig.1.1. Modem Defintion Marketng is a social and managenal processiby which individiuáls and Communication neediand want through creatingand eXchangin9.value witTotiers organisalions obtain what they R Kotter and Gary Amstron Goods and Services Seller Marketing has both soxial and managerial implications. It satisfies the needs of individuals Buyer by providing them the required goods and services. It also satisfies the need of the which gets value from the customers by organisation Money that helps in satisfying their needs. Thus, marketing is a process exchanging value with others. Feedback Elements of Marketing Fig. 1.1. Mechanism of Exchange in the Market 0 Two Parties.Th aHeastwo parties BuyertoricUstomer.op the one hand: and seller.or Who is a Marketer? arketer on he other Botn the parties are reerto nteractand DNeeds and WansTie tocot marketing is on identii acceptorreject the ofer of each other and satisfaction of the needsand Marketer or seller is the provider of wantsotbuyersiWio couid&beindividuals.and.organisations person or organisation who makes available,satisfaction the to customers. A marketer can be a customers with an intention of products or services and nMarket offeringtHTelers toproduct ot servicethaving certainfeatures(size, shape quality, etc:) Oferedaoi5uyersatatparticülar priceAgood marketofer is developed afterranalysingthe.needs to satisfy the customers' satisfying their needs and wants. For example,offers need for food by them to the McDonald tries Company satisfies customers' providing and wants ot custmers hecustomer.mustperceive the ooods offered by the seller of value in Titan Watch them with an assortment of need for fast foods. salisyng is needsand waptsln:otherwordsthe ellergmustiofer value or money 1to the buyer range of watches. Some marketers keeping time by services to customers and so providing them with a Exchange ofValuerEXChange ofgoods and services betweenithe seller and the buyer lakes place marketers. For example, State Bankoffer of India and Life they are known as service toravauable.consIderationinotherwords, the parties have something viewed valuableby each services to their customers or clients. Insurance Corporation of India offer otiertHatmeanstDelbuyercarofervalue and therseller can ofer goods which are perceived to be a e y therbuyer 1.2 MARKETING AS A Satsacion. Markatng saisieSthe heeds of both the partes.hesconsumergets want PROCESS satisfying goodsanidsenices andneselletpelts valuen terms otmoney for his offenng According to Kotler and Amstrong "Marketing is the process by which create value for customers and build strong customer companies 1.1.1 Market and Marketer value from customers in returm." Mareting starts withrelationships in order to capture involves understanding the needs and creating value for customers. It What is a Market ? wants of customers and such needs and wants. The denote 'market designing products to satisfy provide total satisfaction to products Traditionally, the term 'market refers to the place where buyers and sellers meet for offered offering' which is marketer's association with theintended to the customers. The exchange of goods and services. It is in this sense that we refer to Chandni Chowk Market, continue even after the sale of the product which leads to customers building strong customer  1 5 PRINCIPLES OF MARKETING relationships. The end result of marketing is NATUREANO ANO IMPORTANCE OF MARKETING capturing value fronm the customers in the form Understand the markel and customer How are customers' needs and wants satisfied? A business can of sales, market share and profits. needs and wants and wants through market offering, i.e., a combination of satisfy customers' nees As shown in Fig. 1.2, the experiences offered to a market to products, services, information or process of should be given the satisfy a need or want. In this process, customer needs marketing involves the following interrclated Design the product to satisfy customer greatest attention and marketing offering should be created or recreated steps: needs and wants to satisfy the customer needs. Some sellers suffer from marketing the mistake of paying more attention to the products offered by them mayopia as they commit () Understund the market and than customer necds and wants. produced by the products. But the customers are interested in benefits thatto the benefits Develop an integrated marketng program that needs. satisfy their () Design the product to satisfy delivers superior value to the customer Customer needs and wants. 2Designing the Product to Create Customer Value (i) Devclop an integrated marketing After understanding the needs and wants of the program that delivers superior Build profitable relationship with customers and customers, the marketer should design and offer 'customer delight. develop a product to satisfy their wants. This step basically involves creating value value to the customer. proposition for the customers. (io) Build profitable relationships with, (Avalue proposition is the set of benefits (or the customers to satisfy their needs For example,values) a company customers and ofler 'customer Capture value from customers to create profits promises to deliver to delight' and customer loyalty machine". Value proposition BMW promises "the ultimate driving be used to brands and get competitive advántage in thedifferentiate can brand from the competing a () Capture value from customers to target markets. Therefore, the marketers create profits and customer FiG. 1.2. The Process of Marketing. must design strongvalue loyalty. propositions for the customers. They can communicate value The first four steps are aimed at understanding the needs and wants of customers, proposition to the customers through various promotional activities like advertising creating superior customer value and building strong customer relationships. It is un the publicity, sales promotion, etc. and arrange for distribution of want final step that the marketers reap the reward of the customers. satisfying products to creating superior value, ie., they capture stomers in the fom of sales, profits and vah:e trom i customerloyalty. Building Customer Relationships iCustomei Needs,vva Cnands Marketing enables people to satisfy their needs and wants through exchange Marketing begins w ith identification of human needs and wants. Needs are feelings of relationships. Exchange is the act of obtaining desired product (or benefit) a from company by offering money value in return. Marketing also involves actions taken the marketer a deprivation of some satisfaction. People need food, air, water, clothing and shelter to survive. by to build and maintain desirable These needs exist in the very nature of human biology and marketers do not create them. build strong relationships by exchange relationships with target customers. Marketers try to Wants are desires for satisfaction of needs. Human necds are few but wants are many. Human consistently delivering superior customer value. Besides wants are continually shaped and reshaped by families, social institutions and cultural factors. attracting new customers, basic goals of modern they also try to retain the existing customers. These are the two A want is something one would like to have. It is not absolutely necessary, but it would marketing The key to building lasting customer relationships is to () éreate be good to have. For exan1ple, your body needs liquid to survive. Water is a good liquid to value and (deliver satisfaction. A customer superior customer ould buy from the fim that offers the drink when you feel thirsty. But at times you may want milk, fruit juice or some cola drink to satisfy this need. Milk and fruit juice are good because they give you vitamins and minerals tuighest customer perceived value, i.e., the customer's evaluation of the difference between all the benefits and all the costs of a market your body requires without giving you the fat and excess sugar found in a cola drink. Still, offering (i.e., product) relative to those of other firmms. Many people prefer to buy sweets from Haldiram's store as you may prefer Thumps Up, Pepsi or Coke as it tastes good. But you don't need cola drink to because of higher perceived value. compared to other sweet shops survive. Customer satisfaction depends upon the product's perceived performance relative to his Peop!e may require a product to satisfy a need. a specific brand However, they purchase expectations. If the performance exceeds expectations, the customer would be delighted. He or from a certain company based on their wants. In other words, need defines the total would become a "loyal customer and place repeat orders with the fim. That is why, modem market and wants define the market segments. marketers place greater emphasis on Customer Relationship Management (CRM). Demands are wants for specific products and services. They are backed by the ability and willingness to buy. Wants which are supported by purchasing power become demands. Marketers influence wants and demands by making products attractive, affordable and easily available to the target group of consumers. For example, a marketer might promote the idea the need for social status. that a certain brand of pen (e-g., PARKER) would satisfy  9 AND IMPORTANCE OF MARKETING PRINCIPLES OF MARKETING NATUREAND Developing Integrated Marketing Strategy Capturing Value from Customers Strategic marketing is a system of integrated business activities designed to developp strategic Marketing is an exchange process. As the business creates and delivers customer value, plans (in the form of marketing mixes) leading to the satisfaction of needs and wants ofcustomers of itcapturesvalueoffrom the customers in fhe form ofsales,marketshare and profitkThe select market segments. It has a sharp focus, i.e., customer wants of selected market segments. major outcomes creating customer value are customer loyalty, and retention market share, To achieve its objective, it lays down strategies in four areas, namely product,price, promotion and profits(Customer loyalty is obtained by creating satisfied customers and also creating and place as shown in Fig. 1.2. the business and also customerrelations., Satisfied customers make repeated purchases from Business Firm give it word of mouth publicity which creates new customers for the business. Customers are attracted towards a business that creates superior customer value. But if a customer is not satisfied with a firm, he will shfit to some other firm. Losing a customer means losing Customer Need ldentification more than a single sale. It implies losing the entire stream of sales that could have accrued (of selected market segments) from a loyal customer in future. Strategic Plans 1.3 NATURE OF MARKETING (Marketing Mix Strategies) Marketing involves performance of various activities in an integrated manner to satisfy needs of present and potential customers. The nature of marketing will be further clear the the Product Mix Price Mix Promotion Mix Place Mix by following points: 1. Customer-focused. Marketing intends to satisfy and delight the customer. The Strategy Strategy. Strategy Strategy achivities of marketing must be directed and focused at the customer. Marketing should start with the identification of customer needs and requirements. Product Core Product Basic Price oPersonal Selling Distribution development, pricing promotion and distribution should concentrate of customers. on the need Branding Credit Advertising Transport o Sales Promotion 2 Based on Systems Approach. Marketing concept is based on systems approach to o Colour Designing Discount Warehousing Warranty Public Relations marketing/t requires intelligent coordination of the four Ps' of marketing_mix. namely, prbdiuct, price, place (channel or distribution) and promotion. Price should Packaging o Service be made price consistent with the and and nature of product quality,made the channel made consistent with the product promotion consistent with product quality, price and channel. Fig. 1.3. Integrated Marketing Strategy 3. Integrated Process. Marketing is an integrated process rather than a fragmented MCarthy has called product, price, promotion and place as four Ps of marketing àssortment of functions. It not just one activity/it involves the interactio0 of is Collectivity, these Ps constitute the marketing mix of the organisation. Marketing mix is, in many activities such as product planning pricing promotion, physical distribution, fact, a mix of mixes in the areas of product, price, promotion and place. The management has packaging, etc.)Further, marketing as a whole is integrated with other business to develop separate strategy for each of the four P[. Again operational strategies have to be functions like production, personnel, financing, research and development, etc. devéloped in each of the four areas. For instance, product mix strategy ay be bifurcated into 4. Mutually Béneficial Exchange. It means the buyer gets want and services and the seller gets value (money)in exchange of goods satisfying goads sub-strategies based on branding, colour, design, packaging, service, etc. Thus, both the parties are Bbenefitted. However, there is and serTvices. participating in the exchange process. The no compulsion parties can either accept or reject ór the Customer Satisfaction and Delight offer of each other. The extent of customersatisfaction depends on the product's perceivedperformance 5. Interaction with External Environment. Marketing operates within the framework relative to the customer's expectatiog. Thus, a customer would be dissatisfied if the produce's of lexternalenvironment which comprises performance falls short of expectations. If gxpectations are fulfilled, the customer would be and õther forces. Changes in the environmenteconomic, natural social, legal, influence marketing activities. political would be highly is, therefore, a dynamic process it keeps Marketing satisfied and if produce's performance exdeeds expectations, the customer as on adjusting to the changing environment who give repeat orders to the business 6. Creative. Marketing performs the delighted customers satisfied or delighted, It ismouth certain crucial functions which create time, place firm and also give word of publicity to the firm's product. The survival and growth of and possession utilities. Time utility is created by preserving a business firm depends to a great extent on the creation of highly satisfied or delighted Place goods for use in future. utility created by carrying goods to places where they are is creates pOssession utility by needed. Marketing customers. custome. transterring products and services from producer to  10 c 11 PRINCIPLES OF MARKE TING NATUREAND AND IMPORTANCE OF MARKETING (i) Ideas. An Idea is a mental concept and is intangible in nature. A marketer may Multi-discriplinary Discipline. The discipline of marketing has emerged out of market an idea to change the behaviour or perception of the target people in some commercewhich has derived its existence from economics. Further, marketing has way. For example, pulse polio campaign, and anti-smoking campaignare intended got its strength from related areas- psychology, anthropology, sociology, law, statistics, and mathematics because the related problems impinge heavily on to promote specific ideas intended to alter the behaviour or perception of the target consumer behaviour, legal aspects of marketing, research on consumer needs, groups of people.Nhe and first one suggests people to administer polio drops to their to avoid smoking which could advertising media, pricing, promotion tools, etc. small children second persuades people cause