imp lesson

CHAPTER 11 - MARKETING

MARKET

  • Definition of Market:

    • The term market originates from the Latin word 'marketus', meaning merchandise, wares, or trades.

    • Traditionally, the market is a place where the exchange of products occurs. Examples include local markets such as Chala market and Chenganassery market.

  • Contexts of Markets:

    1. Product Markets:

    • Different markets based on the product type, e.g., Cotton market, Vegetable market, Share market, etc.

    1. Geographical Markets:

    • Divided based on location: Local market, National market, International market.

    1. Based on Types of Buyers:

    • Consumer market vs. Industrial market.

    1. Based on Quantity of Goods:

    • Wholesale market vs. Retail market.

  • Modern Concept of Market:

    • The market is no longer strictly a physical place; it encompasses the aggregate demand from potential buyers for a commodity or service.

    • As defined by Duddy: “Markets are people with money to spend and desire to spend it.”

MARKETING

  • Definition and Description:

    • Marketing explains the functions involved in the movement of goods from producers to consumers, including the creation of place, time, and possession utilities.

    • American Marketing Association: Defines marketing as concerned with people and activities involved in the flow of goods and services from producer to consumer.

    • Converse: Describes marketing as involving business activities that facilitate the flow of goods and services from production to consumption.

  • Activities Involved in Marketing:

    • Includes: Product designing, Merchandising, Packaging, Warehousing, Transportation, Branding, Selling, Advertising, Pricing, etc.

  • Nature of Marketing:

    • It's a social process where goods and services are exchanged for something valuable.

    • Focuses on satisfying customers' needs and achieving profits through that satisfaction.

    • Marketing activities extend beyond production, starting even before any goods are made and continuing post-sale.

FEATURES OF MARKETING

  1. Needs and Wants:

    • Marketing bridges customer needs with organizational goals. Marketer's role is to identify customer needs and develop satisfying products.

  2. Creating Market Offering:

    • The offering should include product features like size, quality, and taste along with details regarding price and availability.

  3. Customer Value:

    • Buyer decisions are based on their perception of value against competing products.

    • Marketer's role is to enhance product value for consumer preference.

  4. Exchange Mechanism:

    • Involves the exchange of products for money or other valuables, requiring both buyer and seller, communication ability, freedom to accept/reject offers.

  5. Relevance Beyond Business:

    • Marketing is pertinent to non-profits and social institutions too.

  6. Scope of Marketing:

    • Anything with value can be marketed, including products, services, ideas, people, experiences, places, and organizations (e.g., DVDs, Insurance, Polio vaccination, Candidates).

MARKETER

  • Definition:

    • A marketer is anyone actively participating in the exchange process, understanding buyer needs, and selling goods or services.

    • Example entities include Tata, Hindustan Unilever, and KSRTC, as well as buyers who advocate for products in scarce supply.

MARKETING MANAGEMENT

  • Definition:

    • Involves the management of marketing functions, planning and directing marketing activities for customer satisfaction.

    • American Management Association: Defines it as planning, executing conception, pricing, promotion, and distribution to create exchanges that meet goals.

  • Goals of Marketing Management:

    1. Creation of Demand: Identify customer needs and produce accordingly.

    2. Customer Satisfaction: Fundamental to modern marketing.

    3. Market Share: To face competition effectively by capturing market share.

    4. Goodwill: Build a good reputation through quality and service.

    5. Improving Standard of Living: By integrating production with consumption effectively.

MARKETING Vs. SELLING

  • Comparison:

    • Focus:

      • Marketing: Customer needs.

      • Selling: Seller's needs.

    • Timing:

      • Marketing: Before production.

      • Selling: After production.

    • Orientation:

      • Marketing: Customer-oriented.

      • Selling: Product-oriented.

    • Primary Objective:

      • Marketing: Profit through customer satisfaction.

      • Selling: Profit through volume sales.

    • Principles:

      • Marketing: Caveat Venditor (let the seller beware).

      • Selling: Caveat Emptor (let the buyer beware).

    • Approach:

      • Marketing: Integrated approach involving planning through to selling.

      • Selling: Fragmented approach focusing solely on pushing the product.

    • Profit Maximization:

      • Marketing: Long-term stability and growth.

      • Selling: Short-term volume increases.

    • Scope:

      • Marketing: Broad scope including selling.

      • Selling: Narrow scope.

MARKETING MANAGEMENT PHILOSOPHIES (MARKETING CONCEPTS)

  • Marketing philosophies evolve based on understanding consumer needs. Different concepts include:

  1. Production Concept:

    • Emphasizes low-cost production and availability; succeeds if demand exceeds supply.

  2. Product Concept:

    • Focuses on superior quality and performance; oversights other marketing mix elements.

  3. Selling Concept:

    • Emphasizes aggressive sales techniques for convincing customers.

  4. Marketing Concept:

    • Focus on customer satisfaction and needs; product development aligned with consumer insights.

    • Pillars of Marketing Concept: Identifying market, understanding needs, developing suitable products, better satisfaction than competitors with profitability.

  5. Societal Marketing Concept:

    • Extends beyond customer needs to consider social goods; products should be eco-friendly and ethically produced.

FUNCTIONS OF MARKETING

  • Marketing Functions:

    1. Gathering and Analyzing Market Data:

    • Identifying customer needs through data from customers, salesmen, etc., important for SWOT analysis.

    1. Market Planning:

    • Developing plans that include production levels, product promotion, and new introductions based on market conditions.

    1. Product Planning and Development:

    • Identifying customer needs and designing products accordingly.

    1. Standardization and Grading:

    • Ensuring quality and consistency; grading helps classify products, especially in agriculture.

    1. Packaging and Labeling:

    • Designing product packaging to create market opportunities and consumer awareness; labeling provides informative guidelines.

    1. Branding:

    • Creating a distinctive name or symbol to set products apart from competitors.

    1. Pricing of Product:

    • Setting appropriate prices based on production costs, market demand, and competition.

    1. Customer Support Services:

    • Providing after-sales services and addressing customer needs post-purchase.

    1. Promotion:

    • Includes all communication efforts to persuade potential customers about a company's offerings.

    1. Physical Distribution:

    • Movement of goods from production to consumers ensuring timely availability.

    1. Transportation:

    • Facilitate efficient movement of goods through various transport modes.

    1. Storage and Warehousing:

    • Holding goods until needed ensures time utility and stabilizes prices.

ROLE OF MARKETING

  • Role in a Firm:

    • Directs company activities towards satisfying customer needs, fostering growth and survival.

  • Role in the Economy:

    • Catalyzes economic development by addressing consumer needs, enabling effective production, and raising societal standards of living.

MARKETING MIX

  • Definition and Development:

    • Coined by N.H. Borden; refers to tools and strategies for achieving marketing objectives: product, price, promotion, and place.

  • Significance:

    1. Links business with customers.

    2. Enhances sales and profits.

    3. Equitable focus on all marketing elements.

    4. Ensures proper integration.

    5. Drives customer satisfaction.

COMPONENTS OF MARKETING MIX

  1. Product Mix:

    • Refers to the bundle of utilities comprising the good or service offered, including considerations for size, design, and branding.

  2. Price Mix:

    • Involves strategies to determine appropriate pricing while addressing cost, demand, and competition factors.

  3. Place or Physical Distribution Mix:

    • Encompasses activities ensuring product availability at the right time and place, creating time and place utility.

  4. Promotion Mix:

    • Involves communication strategies used to inform and persuade customers including advertising and sales techniques.

PRODUCT

  • Product Definition:

    • Goods or services offered to satisfy customer needs.

    • Viewed as a bundle of utilities (physical, functional, psychological).

  • Classification of Products:

    • 1. Consumer Products: Products for personal use (e.g., soap, food).

      • A. Shopping Basis:

      • 1. Convenience Products: Easily accessible, regularly purchased (e.g., toothpaste).

      • 2. Shopping Products: Involves comparative analysis before purchasing (e.g., furniture).

      • 3. Specialty Products: Unique items requiring special efforts (e.g., antiques).

      • B. Durability Basis:

      • 1. Durable Products: Long-lasting items (e.g., appliances).

      • 2. Non-Durable Products: Short lifespan and frequent purchases (e.g., food).

      • 3. Services: Intangible offerings (e.g., repairs, consulting).

    • 2. Industrial Products:

      • Used as inputs in production, categorized into raw materials, supplies, installations, and accessory equipment.

BRANDING

  • Definition:

    • Process of identifying a product through names, symbols, or designs.

    • Brand is key for differentiation and repeat sales.

  • Brand Components:

    1. Brand Name: Vocalizable part of a brand (e.g., Coca-Cola).

    2. Brand Mark: Recognizable part that is not verbal (e.g., logos).

    3. Trademark: Legal protection of brand names or marks.

  • Advantages of Branding:

    • Distinct product imagery, aids marketing, fosters loyalty, simplifies introduction of new products.

  • Characteristics of a Good Brand:

    • Should suggest quality, be simple, pronounceable, visually appealing, legally protected, and unique.

PACKAGING

  • Definition:

    • The container that protects and markets a product, essential for safe transport and storage.

  • Levels of Packaging:

    1. Primary Packaging: Immediate container (e.g., toothpaste tube).

    2. Secondary Packaging: Additional wrapping (e.g., toothpaste box).

    3. Transportation Packaging: For storage and transport (e.g., cases of beverages).

  • Functions of Packaging:

    1. Product identification.

    2. Product protection.

    3. Attractiveness and differentiation.

    4. Convenience in handling.

    5. Prevents adulteration.

LABELING

  • Definition:

    • The label communicates essential product information.

  • Functions of Labeling:

    1. Provides usage instructions.

    2. Aids product identification.

    3. Specifies contents.

    4. Standardization and price maintenance.

    5. Advertising and promotional tool.

  • Essentials of a Good Label:

    • Should include producer information, product size/quality, ingredient list, usage directions, packing/expiry dates, and pricing.

PRICING

  • Definition:

    • The process of setting product prices, critical to marketing.

  • Functions of Pricing:

    1. Ensures profit for owners.

    2. Covers production costs.

    3. Increases competitiveness.

    4. Attracts demand.

  • Factors Affecting Price Determination:

    1. Pricing objectives.

    2. Product costs (fixed and variable).

    3. Utility and demand elasticity.

    4. Competition.

    5. Government regulations.

    6. Marketing strategies.

PLACE

  • Definition:

    • Concerns distribution and ensuring product availability.

  • Components of Physical Distribution:

    1. Order processing.

    2. Transportation methods (road, rail, etc.).

    3. Warehousing decisions.

    4. Inventory control techniques including EOQ and JIT.

  • Channels of Distribution:

    1. Direct Channel: Manufacturer sells directly to consumers.

    2. Indirect Channels: Includes intermediaries (wholesalers, retailers).

    • One-level, Two-level, and Three-level channel systems.

  • Factors Influencing Channel Choice:

    1. Product characteristics.

    2. Market size and nature.

    3. Company specifics.

    4. Competitive landscape.

    5. Environmental conditions.

PROMOTION

  • Definition:

    • Communication strategy to inform and persuade customers about products.

  • Promotion Mix Components:

    1. Advertising: Paid, non-personal communication; creates awareness and demand.

    2. Personal Selling: Direct acknowledgment influencing customer decisions.

    3. Sales Promotion: Short term incentives to boost sales.

    4. Publicity and Public Relations: Build favorable public impressions without direct costs.

ADVERTISING

  • Definition: Paid form of communication through mass media to promote products.

  • Features:

    1. Non-personal message.

    2. Paid communication.

    3. Identified sponsorship.

  • Merits of Advertising:

    1. Establishes steady demand.

    2. Attracts new customers.

    3. Builds company image.

    4. Facilitates sales processes.

    5. Lowers distribution costs.

PERSONAL SELLING

  • Definition: Face-to-face communication with customers aiding purchase decisions.

  • Benefits:

    1. Flexibility in engagement.

    2. Education on product use.

    3. Building lasting relationships.

SALES PROMOTION

  • Definition: Special incentives to stimulate product sales.

  • Methods:

    1. Discounts and rebates.

    2. Free samples and gifts.

    3. Sales contests.

PUBLICITY

  • Definition: Unpaid communication generating consumer interest via media.

  • Public Relations: Strategic communication enhancing company image and public engagement.


MARKET

Definition of Market:

  • Originates from Latin 'marketus' meaning merchandise.

  • A market is where products are exchanged, such as Chala and Chenganassery markets.

Contexts of Markets:

  1. Product Markets: Based on product type (e.g., Cotton, Vegetable, Share markets).

  2. Geographical Markets: Based on location (Local, National, International markets).

  3. Types of Buyers: Consumer market vs. Industrial market.

  4. Quantity of Goods: Wholesale vs. Retail market.

Modern Concept of Market:

  • Encompasses the overall demand from potential buyers for goods/services, not just a physical place.

  • As defined by Duddy: "Markets are people with money to spend and desire to spend it."

MARKETING

Definition and Description:

  • Marketing involves moving goods from producers to consumers by creating utility in place, time, and possession.

  • The American Marketing Association states it concerns activities in the flow of goods and services.

  • Converse describes it as business activities aiding the flow of goods/services from production to consumption.

Activities Involved in Marketing:

  • Includes product design, merchandising, packaging, warehousing, transporting, branding, selling, advertising, pricing, etc.

Nature of Marketing:

  • A social process involving exchanges for value, focused on satisfying customer needs while achieving profits.

  • Marketing starts before goods are made and continues after the sale.

FEATURES OF MARKETING

  1. Needs and Wants:

  • Marketing connects customer needs with organizational goals.

  1. Creating Market Offerings:

  • The offering includes product features and pricing details.

  1. Customer Value:

  • Buyer choices depend on perceived value compared to competitor products.

  1. Exchange Mechanism:

  • Involves exchanging products for money or other valuables, needing both buyers and sellers.

  1. Relevance Beyond Business:

  • Marketing applies to non-profits and social institutions.

  1. Scope of Marketing:

  • Anything valuable can be marketed, including products, services, ideas, etc.

MARKETER

Definition:

  • A marketer engages in the exchange process, understanding buyer needs and selling goods/services.

  • Examples include companies like Tata, Hindustan Unilever, and individual advocates for products.

MARKETING MANAGEMENT

Definition:

  • Managing marketing functions to plan and direct activities for customer satisfaction.

Goals of Marketing Management:

  1. Creation of Demand: Identify and produce what customers need.

  2. Customer Satisfaction: Key to modern marketing.

  3. Market Share: Compete by capturing market share.

  4. Goodwill: Build a good reputation with quality and service.

  5. Improving Standard of Living: Effectively integrating production and consumption.

MARKETING Vs. SELLING

Comparison:

  • Focus: Marketing focuses on customer needs; Selling focuses on seller's needs.

  • Timing: Marketing is before production; Selling is after.

  • Orientation: Marketing is customer-oriented; Selling is product-oriented.

  • Primary Objective: Marketing aims for profit through customer satisfaction; Selling aims for profit through more sales.

  • Principles: Marketing: Caveat Venditor (let the seller beware); Selling: Caveat Emptor (let the buyer beware).

  • Approach: Marketing is integrated from planning to selling; Selling is focused solely on pushing products.

  • Profit Maximization: Marketing seeks long-term stability; Selling focuses on short-term volume.

  • Scope: Marketing has a broad scope; Selling is narrower.

MARKETING MANAGEMENT PHILOSOPHIES (MARKETING CONCEPTS)

  • Marketing philosophies change with consumer understanding.

  1. Production Concept: Focus on low-cost production and availability.

  2. Product Concept: Focus on quality and performance.

  3. Selling Concept: Aggressive sales tactics to convince customers.

  4. Marketing Concept: Customer satisfaction drives product development.

  5. Societal Marketing Concept: Considers social goods; products should be eco-friendly and ethical.

FUNCTIONS OF MARKETING

  1. Gathering and Analyzing Market Data: Focus on customer needs through data.

  2. Market Planning: Develop plans based on market conditions.

  3. Product Planning and Development: Design products around customer needs.

  4. Standardization and Grading: Ensure quality and consistency.

  5. Packaging and Labeling: Design for market opportunities and provide guidelines.

  6. Branding: Create distinct names or symbols for product differentiation.

  7. Pricing of Product: Set prices based on costs and demand.

  8. Customer Support Services: Offer post-purchase services.

  9. Promotion: Persuasive communication about offerings.

  10. Physical Distribution: Ensure timely availability of goods.

  11. Transportation: Efficient movement of goods.

  12. Storage and Warehousing: Keep goods until needed.

ROLE OF MARKETING

In a Firm:

  • Directs activities towards customer satisfaction for growth and survival.

In the Economy:

  • Promotes economic development by addressing consumer needs and improving societal standards.

MARKETING MIX

Definition and Development:

  • Introduced by N.H. Borden; includes tools for achieving marketing goals: product, price, promotion, and place.

Significance:

  1. Links business with customers.

  2. Enhances sales and profits.

  3. Balances focus on marketing elements.

  4. Promotes integration.

  5. Drives customer satisfaction.

COMPONENTS OF MARKETING MIX

  1. Product Mix: Bundle of utilities comprising goods/services, including size and branding.

  2. Price Mix: Strategies for determining prices based on costs and competition.

  3. Place Mix: Activities ensuring product availability when and where needed.

  4. Promotion Mix: Communication strategies for informing customers.

PRODUCT

Product Definition:

  • Goods or services satisfying customer needs, seen as a bundle of utilities.

Classification of Products:

  1. Consumer Products: For personal use (e.g., soap, food).

    • Shopping Basis:

    1. Convenience Products: Easily accessible (e.g., toothpaste).

    2. Shopping Products: Require comparison (e.g., furniture).

    3. Specialty Products: Unique items needing effort (e.g., antiques).

  2. Durability Basis:

    • Durable Products: Long-lasting (e.g., appliances).

    • Non-Durable Products: Short lifespan (e.g., food).

    • Services: Intangible offerings (e.g., repairs).

BRANDING

Definition:

  • Identifying a product through names, symbols, or designs.

  • A key for differentiation and repeat business.

Brand Components:

  1. Brand Name: The verbal part (e.g., Coca-Cola).

  2. Brand Mark: The recognizable non-verbal part (e.g., logos).

  3. Trademark: Legal protection of brands.

Advantages of Branding:

  • Aids marketing, builds loyalty, and simplifies introducing new products.

Good Brand Characteristics:

  • Suggest quality, simple, visually appealing, legally protected, and unique.

PACKAGING

Definition:

  • The container protecting and marketing a product, crucial for transport and storage.

Levels of Packaging:

  1. Primary Packaging: Immediate container (e.g., toothpaste tube).

  2. Secondary Packaging: Additional wrapping (e.g., toothpaste box).

  3. Transportation Packaging: For storage/transport (e.g., cases of beverages).

Functions of Packaging:

  1. Identification.

  2. Protection.

  3. Attractiveness.

  4. Convenience.

  5. Prevention of adulteration.

LABELING

Definition:

  • Labels provide crucial product information.

Functions of Labeling:

  1. Usage instructions.

  2. Product identification.

  3. Contents specification.

  4. Standardization.

  5. Advertising tool.

Good Label Essentials:

  • Producer information, size/quality, ingredients, usage directions, expiry dates, and pricing.

PRICING

Definition:

  • Setting product prices, crucial for marketing.

Functions of Pricing:

  1. Generate profit.

  2. Cover production costs.

  3. Increase competitiveness.

  4. Attract demand.

Factors Affecting Pricing:

  1. Objectives.

  2. Product costs (fixed and variable).

  3. Demand elasticity.

  4. Competition.

  5. Regulations.

  6. Marketing strategies.

PLACE

Definition:

  • Distribution ensuring product availability.

Physical Distribution Components:

  1. Order processing.

  2. Transportation methods.

  3. Warehousing.

  4. Inventory control techniques.

Channels of Distribution:

  1. Direct Channel: Manufacturer to consumer.

  2. Indirect Channels: With intermediaries.

Factors Influencing Channel Choice:

  1. Product characteristics.

  2. Market nature.

  3. Company specifics.

  4. Competition.

  5. Environmental conditions.

PROMOTION

Definition:

  • Communication to inform and persuade customers about products.

Promotion Mix Components:

  1. Advertising: Paid communication for awareness.

  2. Personal Selling: Direct engagement with customers.

  3. Sales Promotion: Special short-term incentives.

  4. Publicity and Public Relations: Enhance company image without costs.

ADVERTISING

Definition:

  • Paid communication through mass media to promote products.

Features:

  1. Non-personal message.

  2. Paid nature.

  3. Identified sponsorship.

Merits of Advertising:

  1. Establishes steady demand.

  2. Attracts new customers.

  3. Develops company image.

  4. Facilitates sales.

  5. Lowers distribution costs.

PERSONAL SELLING

Definition:

  • Face-to-face communication aiding purchase decisions.

Benefits:

  1. Flexibility in engagement.

  2. Product education.

  3. Customer relationship building.

SALES PROMOTION

Definition:

  • Special incentives to boost sales.

Methods:

  1. Discounts and rebates.

  2. Free samples.

  3. Sales contests.