MBA I SEMESTER

FUNDAMENTALS
OF

MARKETING

NOTES
MODULE –
I
What is marketing?

Marketing is an organizational function and a set of processes for creating, communicating, and

delivering value to customers and for managing customer relationships in ways that benefit the

organization and its stakeholders.

Marketing Management is the art and science of choosing target markets and getting, keeping,

and growing customers through creating, delivering, and communicating superior customer

value.

Types of markets

Consumer Markets

Consumer markets include individuals and households who buy consumer goods and services for
their own personal use. They are not interested in reselling the product or setting themselves up
as a manufacturer.

Industrial Markets

The industrial market consists of organizations and the people who work for them, those who
buy products or services for use in their own businesses or to make other products. For example,
a steel mill might purchase computer software, pencils, and flooring as part of the operation and
maintenance of their business.

Institutional Markets

The institutional market is made up of various types of profit and nonprofit institutions, such as
hospitals, schools, churches, and government agencies. Institutional markets differ from typical
businesses because they are motivated by satisfying esoteric, often intangible, needs rather than
profits or market share. Because institutions operate under different restrictions and employ
different goals, marketers must use different strategies to be successful.
Market space – The online market space with websites such as Ebay, Amazon and others is
known as Market spaces.

Market Places – Markets of physical goods and products is known as Market places. The

market places has presence of companies which manufacture their own products.

Meta Markets – An online website such as the Maruti suzuki website for second hand cars
which promotes the purchase of physical goods (Maruti suzuki cars) is known as a meta market.
Lets take a look at the automobile industry. Whatever company it may be, an automobile
company would involve suppliers, channels, service providers so and so forth. Thus the meta
market will bring all these buyers and sellers online in one place for one purpose only. Rather
than giving multiple products to one customer, the meta market brings together different
customers of the same product.

What is marketed?

Goods: Physical goods that may be manufactured, produced in farms or mined. These account
for the bulk of the marketing efforts in most of the countries.

Services: These are intangible products that involve performing some service for the customers.
This may be service performed on the customer, like a haircut, on customer's possessions, like
servicing of car, or for the customer, like screening of a movie. Services account the maximum
marketing effort after products in most of the countries. In many developed countries the volume
of services has exceeded that of goods.

Events: Time based shows such as new year celebration, or a sporting event.

Experiences: Experiences which results from a combination of products and services. The
customer is interested in the total experience such as an organized holiday tour package rather
than the individual products and services included in the package.

Persons: Like marketing of a celebrity or of a candidate in a public election.

Places: Like cities, state, nations, for purposes such as attracting tourists and investment.

Properties: This could be physical properties like real estate or intangible rights in properties.

Organizations: This basically refers to building positive image of organizations, such as

companies, universities, and charitable organizations.
Information: Books are the traditional means of selling information, but there are many other
type of information marketed. For example market intelligence, economic analysis and mailing
lists.

Ideas: Every market offering includes a basic idea. In addition ideas may be marketed by
themselves. For examples, some religious bodies try to promote their ideas of what constitutes
the right behavior.
 Company Orientation towards the Market Place

i) Production concept: This concept is the oldest of the concepts in business. It holds that
consumers will prefer products that are widely available and inexpensive. Managers focusing on
this concept concentrate on achieving high production efficiency, low costs, and mass
distribution. They assume that consumers are primarily interested in product availability and low
prices. This orientation makes sense in developing countries, where consumers are more
interested in obtaining the product than in its features. Consumers will favor those products that
are widely available and low in cost. Hence, focus is on efficiency and wide distribution.

It’s applicable when:

- Product demand is more than product supply.

- Product cost is to be lowered to expand market through scale economies.

Scale economies are economics of production achieved through higher level of production due to
fixed cost(overheads) getting distributed over a larger market share.

Eg, – Maruti Udyog Ltd. At the time of launch of M800.

ii) Product concept: This orientation holds that consumers will favor those products that offer the
most quality, performance, or innovative features. Managers focusing on this concept concentrate on
making superior products and improving them over time. They assume that buyers admire well-made
products and can appraise quality and performance.

Consumer will favour those products that offer superior quality, innovation, performance
features.

Eg.- Gillete, Nokia, Intel, Sony, Toyota.

iii) Selling concept: This is another common business orientation. It holds that consumers and
businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The
organization must, therefore, undertake an aggressive selling and promotion effort. This concept
assumes that consumers typically sho9w buying inertia or resistance and must be coaxed into
buying. It also assumes that the company has a whole battery of effective selling and
promotional tools to stimulate more buying. Most firms practice the selling concept when they
have overcapacity. Their aim is to sell what they make rather than make what the market wants.

Consumers, if left alone, will ordinarily not buy enough of the organization product. Hence,
focus is on aggressive selling & promotion effort.
Assumptions:

– Customer shows buying inertia.

- Company has effective selling & promotion tools to stimulate buying.

Used when:

– Goods that buyers normally do not think of buying. Eg.- insurance, credit cards.

- Companies have over capacity.

iv) Marketing concept: This is a business philosophy that challenges the above three business
orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its
organizational goals (goals of the selling company) consists of the company being more effective
than competitors in creating, delivering, and communicating customer value to its selected target
customers. The marketing concept rests on four pillars: target market, customer needs,
integrated marketing and profitability. Integrate marketing activities towards determining &
satisfying needs/ wants of target market more effectively than competition.

Marketing Activities – Activities to create/ deliver/ consume the product to satisfy/ identify need/
want.

Four Pillars of Marketing concept –

(a) Target market.

(b) Customer needs.

(c) Integrated market.

(d) Profitability.

(a) TARGET MARKET: Normally, any company may not be able to operate in every market
to satisfy every need.

- Needs/ Wants are/ can be quite special/ different for different conditions

- Hence, a company needs to identify specific target market which it can address or whose
specific needs it can fulfill.

Need – Thirst- thirst satisfier.

Want – Bottled drink/ Packaged drink.

Product – Pepsi- carbonated artificial flavoured.

Fruity- non carbonated/ fruit based.

Energy- non carbonated/ milk based.

(b) CUSTOMER NEEDS: Customers needs need to be fully understood. This may involve,

- going deeper into needs

- Understanding possible trade- off.

Needs could be (Inexpensive Car).

1. Stated Need- Inexpensive car

2. Real Need- Good fuel economy

3. Unstated Need- Good service from dealer

4. Delight Need- Free accessories

5. Secret Need- Seen in good light by friends

Customer needs could be a range of attributes of product features at low price. This may not be
possible. Hence, trade off need to be understood. Company need to understand customer need/
tradeoff and meet them better than competition.

Responsive Marketing: Find stated Need & fulfill it.

Creative Marketing: Discover/ produce solution that customer did not ask for but Customer
response is enthusiastic. Eg.- cell phones, ATM’s.

(c) INTEGRATED MARKETING: All departments within an organistion work together to

serve customer’s interest.

It occurs at two levels:

-Within marketing department/ functions. Like, Services/ advertising / sales /

product management/ market research

-Marketing department with other company department.

Like Purchase / production / finance / HR / R & D.

Internal Marketing – Directed at people within organization.

External Marketing – Directed at people outside organization.

Every staff member must be conscious of how his/ her work impacts other customers.

(d) PROFITABILITY:
Ultimate Purpose: – Achieve organizational goals(profit).

Key : – Do job well and achieve profits as a by-product.

Doing job well: – Satisfying customer needs better than competition.

In Reality: Many/ Most organizations embrace marketing concept due to situation.

Situation could be

- Declining sales.

- Slow growth.

- Changing buying pattern.

- Increase in competition.

- Increase in marketing expenditure.

While converting to a marketing oriented organization, a company faces/ may face internal
hurdles.

These could be,

- Organized Resistance – Perception of erosion of power of outer departments such

as production/ finance/ R & D.

- Slow Learning – Resistance to change/ old habits die hard.

- Fast Forgetting – Small success leading to forgetting key success factors.

(v) Societal marketing concept: This concept holds that the organization’s task is to determine
the needs, wants, and interests of target markets and to deliver the desired satisfactions more
effectively and efficiently than competitors (this is the original Marketing Concept).
Additionally, it holds that this all must be done in a way that preserves or enhances the
consumer’s and the society’s well-being.

Organization’s task is

- To determine Needs/ Wants/ Demands/ interests of target market.

- To deliver desired satisfaction more efficiently & effectively than competition.

- To preserve/ enhance consumers/ societies well being while doing so.

i.e., build social/ ethical considerations int marketing practice.

Emerged in the background of :

– Environmental deterioration.

– Resource shortage.

– Consciousness of social services or social awareness.

Eg.- Chemical companies – Effluent management systems.

- Use of Bio- degradable paper bags in lieu of plastics.

- Two way (reusable) soft drinks bottle in lieu of disposable bottles.

Holistic Marketing: “A marketing strategy that is developed by thinking about the business as a
whole, its place in the broader economy and society, and in the lives of its customers. It attempts
to develop and maintain multiple perspectives on the company’s commercial activities.”

Relationship marketing : Relationship marketing was first defined as a form of marketing developed
from direct response marketing campaigns which emphasizes customer retention and satisfaction,
rather than a dominant focus on sales transactions.

Integrated marketing : Integrated marketing is a marketing strategy that stresses the importance of
a consistent, seamless, multi-dimensional brand experience for the consumer. This means that each
branding effort – across television, radio, print, Internet, and in person – is presented in a similar style
that reinforces the brand’s ultimate message.

Internal Marketing: Internal Marketing is the ongoing process whereby an organization aligns,
motivates and empowers employees at all functions and levels to consistently deliver a positive
customer experience that helps achieve business objectives.

Performance marketing: Performance marketing included search advertising, pay per acquisition, email
marketing and more.

Reverse Marketing (Demarketing) : In general demarketing is defined as reducing demand for a

product with barriers and higher prices for a number of reasons, like. The marketer cannot meet all
the demand

Core Marketing Concepts

 Needs
A need is something that is
necessary for organisms to
live a healthy life.

Water Food Shelter

“Basic Requirements of Human Being”

wants
Wants are often distinguished
from needs. A need is something
that is necessary for survival
(such as food and shelter),
whereas a want is simply
something that a person would
Mineral Water Burger R C C House
like to have
 Demands
Demand is the desire to own
anything, the ability to pay for
it, and the willingness to pay

Pepsi’s Acuafina Mcdonalds Burger House @ Dollars Colony

PRODUCT: Anything that can be offered to someone to satisfy a need or want is a

product .

 Product refers to physical object

 Services refer to intangible object

Customer Value: Value is the customers’ estimate of the Product’s capacity to satisfy a set of goals.

 Value is the ratio between what the customer gets and what he gives (V=B/C)

 WHEN :Customer Expectance=Performance (satisfied)

 Customer Expectance>Performance (dis-satisfied)

 Customer Expectance<Performance (Highly satisfied)

Customer satisfaction is a term frequently used in marketing. It is a measure of how products and
services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined
as "the number of customers, or percentage of total customers, whose reported experience with a firm,
its products, or its services (ratings) exceeds specified satisfaction goals."

Marketing channel is a set of practices or activities necessary to transfer the ownership of

goods from the point of production to the point of consumption. It is the way products and
services get to the end-user, the consumer; and is also known as a distribution channel.

Supply chain is the network of all the individuals, organizations, resources, activities and
technology involved in the creation and sale of a product, from the delivery of source materials
from the supplier to the manufacturer, through to its eventual delivery to the end user.

Competition is the rivalry between companies selling similar products and services with the
goal of achieving revenue, profit, and market-share growth.