Introduction

to
Marketing
 Nature, Scope and Importance of Marketing
 Evolution of Marketing;
◦ Core marketing concepts; Company orientation - Production concept,
Product concept, Selling concept, Marketing concept, Holistic marketing
concept.
 Marketing Environment:
◦ Demographic, economic, political, legal, socio cultural, technological
environment (Indian context),
 Segmentation,
◦ Levels of Market Segmentation, Basis for Segmenting Consumer Markets,
 Targeting
 Positioning Variables
FEW MARKETING
TERMS
 Who is customer?
 Who is consumer?
 Are both same or different?
 WHAT IS MARKETING?
 “The aim of marketing is to make selling superfluous. The aim is
to know and understand the customer so well that the
product/service provided fits him/her and sells itself.
Drucker

 “…..a social & managerial process by which individuals &

organisations obtain what they need and want through creating
and exchanging products and value with others. Kotler
 “The management process responsible for identifying,
anticipating and satisfying customer requirements profitably.”
 What is Market?
 What is Market Place ?
 What is Market Space ?
 What is Product?
 What is Brand?
 Are both same or different?
 What is marketing?
NEED, WANT AND DEMAND
THIS IS A NEED

Needs
Needs are basic human
requirements
MASLOW’S
HIERARCH
Y OF NEEDS
THIS IS A WANT

Wants
Wants are needs directed
to specific objects/services
that might satisfy the
need

form that a human need

takes, as shaped by
culture and individual
personality.
 THIS IS DEMAND

Wants Buying Power

“Demand”

This is the wants for specific products backed by an

ability to pay.
 SOME CONCLUSION

 Basic needs exist in the biological condition of the human being.

These are needs for our survival, beyond this we aspire to have
good education, some recreation and would like to have certain
services.
 Marketer can’t create Need.
 The best a marketer can do is to identify the unsatisfied or
partially satisfied need and try to satisfy these need better then
the other.
 Our needs feel us deprived of some basic satisfaction. To satisfy
our basic needs, we show strong preferences for certain product
versions, i.e. wants. Examples are….
 South Indian prefer rice while north Indian prefer wheat, few
want Pizza (American) and few want something else.
 we can say that the basic need for all the people are same but
the wants, are different.

 Marketers task is to create these wants

 Needs and Wants Fulfilled through a;
 Marketing Offer :
 Some combination of products, services, information, or
experiences offered to a market to satisfy a need or want
PRODUCT VS BRAND
 Product
 Anything that satisfies needs and wants qualifies to become a
product.
 Anything that possesses utility is described as goods. A product
is both what a seller has to sell and what a buyer has to buy
 Brand
 A brand is a name, term, design, symbol or any other feature that
identifies one seller's good or service as distinct from those of
other sellers.
 VALUE

 To satisfy a single need a no of products are available. We have to

choose from among them depending upon our willingness and
ability to pay for it and feasibility
 E.g.

Bus

Bike College Auto

Car
 Which product customer will select from this choice set is
largely depend on three things- Cost, Value and Price associated
with that product.
Value= Benefits/Cost
 Primarily value can be seen as the combination of quality, price
and service (QSP), called “customer value triad”.
 CUSTOMER PERCEIVED VALUE

 Customer’s evaluation of the difference between all the benefits

and all the costs of a marketing offer relative to those of
competing offers.
 CUSTOMER SATISFACTION

 Dependent on the product’s perceived performance relative to a

buyer’s expectations.
Expectation Performance Expectation Performance

8 10 10 8

If performance is lower than expectations,

satisfaction is low.
If performance is higher than expectations,
satisfaction is high.
 PHILOSOPHY OF MARKETING

 What should guide manager’s action?

 PRODUCTION CONCEPT

 The Production Concept holds that – Customer will prefer

products that are widely available and inexpensive.

 Manager’s Focus
 High production efficiency
 Low costs and mass distribution.
 Is it applicable today?
 It is mostly applicable in least developing country, where
consumers are more interested in obtaining the product then
its features because of low disposable income.
 It is used when company wants to expand its market.
 Monopoly market.
▪ Same way some of the government agencies like the License
Bureau and employment exchange, GEB, Indian Railway can go
for mass production because they know Customer don’t have
any choice and they have to purchase what they provide.
 Peculiar characteristics
 Inward looking orientation
 Management becomes cost focused
 Objective is cost reduction
 Business mission is focused on current production capabilities
 Manufacture products and aggressively sell them to customers
 PRODUCT CONCEPT

 The Product Concept holds that – Customer will prefer products

that offer the most quality, performance or innovative features.
 Managers in these companies believe in making superior
product and making improvement time to time.
 They assume that consumer admire well-made products and can
evaluate them over time.
 They believe that their engineer can develop exceptional
products, which is all likely to be a successful one.
 They make little or no customers interrupt and very often never
examine the competitors’ product.
 The product concept can lead to what Theodore Levitt called-
“Marketing Myopia”
 He pointed out that customers do not buy drill bits – they buy the
ways to make the holes.
 People do not buy Peter Parker Pen they buy smooth writing
with conspicuousness.
 Coca Cola focused on soft drink business and forget the
competition by the coffee bar, fresh fruit juice and eventually
impinged its soft drink business- because customer didn’t
wanted coke they wanted liquid which satisfy their thrust need.
 Railroad management thought that travelers wanted trains and
overlooked the growing competition for transportation from
airlines, buses, trucks and automobiles.
 These organizations failed because these organizations
were looking into mirror when they should look out of the
window.
 What we can conclude is that making superior product alone is
not enough; you must have demand (need and want) for the
product and should have some advantage over competitor’s
product in order to get success.
 SELLING CONCEPT

 The Selling Concept holds that – Consumers and business if left

alone will not buy enough of the organization.
 Therefore the organization must have to undertake some aggressive
selling and promotion efforts.
 The concept assumes that consumers typically show buying
apathy or resistance and must be persuade into buying.
 It also assumes that company has the whole battery of effective
selling and promotion tools to stimulate more buying.
 The purpose of marketing is to sell more stuff to more people
more often for more money in order to make more profit.
 E.g. Cadbury Dairy milk to Cadbury Dairy milk Celebration.
 When Applicable?
 Most firm practice-selling concept they are overcapacity.
 The selling concept is practiced most aggressively with unsought
goods and goods that buyer do not normally think of buying
such as encyclopedia, insurance.
 Limitation
 The concept assumes that the customers who are persuaded
buying will like it and if not won’t spread the negative word of
mouth about the product/company.
 MARKETING CONCEPT

 Emerged in mid 1950s.

 Instead of product centered “make and sell” philosophy,
business shifted to customer centered “sense and response”
philosophy.
 Instead of “hunting” marketing is “gardening”.
 The job is not to find the right customer for the product but its
making right products for your customer.
 The marketing concept holds that the key to achieving
organizational goals consist of company being more
effective than competitors in creating, delivering and
communicating superior customer value to its chosen target
markets.
 Theodore Levitt of Harvard drew a perceptive contrast between
the selling and marketing concepts:
 “Selling focuses on the needs of the seller; marketing on the
needs of the buyer.
 Selling is preoccupied with the seller’s need to convert his
product into cash; marketing with the idea of satisfying the
needs of the customer by means of the product.
 The marketing Concept rests on four pillars:
1. Target market
2. Customer needs
3. Integrated marketing and
4. Profitability.
 Target Market
 Companies do best when they choose their target market(s)
carefully and prepare tailored marketing programs.
 Customer Needs
 A company can carefully define its target market yet fail to
correctly understand the customers’ needs. Clearly,
understanding customer needs and wants is not always simple.
 Integrated Marketing
 When all of the company’s departments work together to serve
the customers’ interests, the result is integrated marketing.
 Integrated marketing takes place on two levels.
 First, the various marketing functions—sales force, advertising,
customer service, product management, marketing research—
must work together. All of these functions must be coordinated
from the customer’s point of view.
 Second, marketing must be embraced by the other departments.
 To foster teamwork among all departments, the company must
carry out internal marketing as well as external marketing.
 External marketing is marketing directed at people outside the
company.
 Internal marketing is the task of hiring, training, and motivating
able employees who want to serve customers well.
 In fact, internal marketing must precede external marketing. It
makes no sense to promise excellent service before the
company’s staff is ready to provide it.
 Profitability
 Private firms should aim to achieve profits as a consequence of
creating superior customer value, by satisfying customer needs
better than competitors.
 MARKETING VS SELLING

Selling Marketing

1. Emphasis on the needs of the seller. Emphasis on the needs of the buyer.

2. Emphasis on the Product. Emphasis on the Customer’s wants.

3. Sales are the primary motive. Satisfaction of customer is the primary

motive.

4. Internal, Company orientation. External, Market orientation.

 Selling Marketing

1. First, a product is made. Then efforts are First, target market and its wants are
taken to sell it.(Make and Sale Philosophy) identified. The product is made to satisfy
these wants. (sense and Respond Philosophy)
2. “Selling” views customer as the last link in “Marketing views the customer as the very
the business. purpose of the business.
3. Activity that converts goods into cash. It is a function that converts the consumer
needs into products.
4. Short-term results are expected from Long run strategic planning. New products
planning. Only current products and markets and new markets are considered. Future
are considered. growth is an ultimate aim.
 THE SOCIETAL MARKETING CONCEPT

 The societal marketing concept holds that the organization task

is to determine the needs, wants and interests of target markets
and deliver the desired satisfaction more effectively and
efficiently then competitors in a way that preserves and
enhances the consumer and society’s well being.
 The Societal marketing concept calls upon marketers to build
social and ethical consideration into their marketing practices.
 Cigarette mfg. co. writes “Its injurious to health” on the pack to
show their concern for the customer and the society.
 CUSTOMER CONCEPT

 In marketing concept company works on segments, group of

customer, Customer concept focus on need of the individual
customer.
 The ability to deal with one customer at a time has become
practical which lead to the origin of concept like “Mass
Customization”.
 Where product is prepared keeping in mind an individual
customer’s Need.
 For example: Assembled PC, DTH
HOLISTIC MARKETING CONCEPT
WHAT IS A BRAND?
 A brand is a name, term, design, or other feature that
distinguishes one seller's product from those of others
MARKETING ENVIRONMENT
 The market environment is refers to factors and forces that
affect a firm’s ability to build and maintain successful
relationships with customers.
 Demographic Environment
 Demography means the study of the population - as people
makes the market study about the people has drawn the
attention in the competitive environment.
 The population in the country and its growth rate,
 The vast untapped rural market with peculiar characteristics,
 The occupational and age wise composition of population.
 The lifestyle of people.
 Economic environment.
 Purchasing power is as important as one who makes purchase.
Marketer is interested in knowing the purchasing power of the
people of respective market in which they operate.
 Political and Legal environment
 It is composed of laws, government agencies and pressure group
that Influence and limit business.
 Consumer Protection Act,
 Socio Cultural Environment
 Culture is a complex wholly made up of knowledge, belief, art,
morals, laws, customs and habits. Culture is acquired by people
as a member of society.
 Business cannot afford to neglect cultural trends. Culture differs
over space, time and societies.
 Technological Environment:
 Because of high R&D budget and improved facilities provided by
the big MNCs today’s technology is very rapidly changing
compare to the past scenario.
 E.g. TV took 45 years to spread in 80% of the home all over the
world but mobile took less then 15 years to spread all over the
world,
 Increased regulation on technology change: Due to its adverse
effects many countries has started banning some of the
technologies because of its adverse impact.
 Natural Environment:
 There is environmental damage to water, earth and air caused by
industrial activity of certain kinds. This has led to formation of
various groups of environmentalists.
 Management must be alert to that regulatory development and
the opportunities that open up with the efforts to protect the
natural environment.
 SCOPE OF MARKETING

 Physical Goods:
 Physical goods constitute bulk of most countries’ production and
marketing effort. E.g. Car, Television sets.
 Service:
 Growing economy is concentrating on service production.
Service includes Banking, Finance, Airline, Restaurant and Hotel,
Courier.
 Experience:
 By orchestrating several services and goods, a firm can create,
stage and market experience. E.g. Walt Disney, Essel World.
 Events:
 Marketer promotes time based events, such as Olympic, FIFA
World Cup etc.
 Persons:
 Celebrity marketing is a major business.
 Places:
 Places like – cities, states, regions and whole nations- compete to
attract tourism, investment and residence. E.g. Malaysia- Truly
Asia, Go Goa.
 Properties:
 Properties are intangible rights of ownership of either real
property (real estate) or financial property (stocks and bonds).
Properties are bought and sold and this requires marketing. E.g.
DLF – Building India
 Organizations:
 Organizations actively work to build a strong, favorable image in
the mind of their target customer. Company spends money to
build their corporate identity. E.g. Aditya Birla Group.
 Information:
 Information can be produced and marketed like a product.
Essentially what schools and universities do. E.g. Employment
News
 Ideas:
 Every market offering includes s a basic idea. In the factory we
make product but in the market we sell hope. Whenever you
purchase something you do not purchase that physical product
but you purchase the ides behind that product or service. E.g.
You buy Fair & Lovely with the hope that you will get fair skin
and beautiful look
MARKET
 Traditionally, a “market” was a physical place where buyers and
sellers gathered to exchange goods.
 The marketplace is physical, as when one goes shopping in a
store; marketspace is digital, as when one goes shopping on the
Internet.
 METAMARKET

 The metamarket, a concept proposed by Mohan Sawhney,

describes a cluster of complementary products and services that
are closely related in the minds of consumers but are spread
across a diverse set of industries.
 The automobile metamarket consists of automobile
manufacturers, new and used car dealers, financing companies,
insurance companies, mechanics, spare parts dealers, service
shops, auto magazines, classified auto ads in newspapers, and
auto sites on the Internet.
 Car buyers can get involved in many parts of this metamarket.
MARKETERS AND PROSPECTS
 A marketer is someone who is seeking a response (attention, a
purchase, a vote, a donation) from another party, called the
prospect.
EXCHANGE
 Exchange, involves obtaining a desired product from someone by
offering something in return.
 For exchange to exist, five conditions must be satisfied:
 There are at least two parties.
 Each party has something that might be of value to the other
party.
 Each party is capable of communication and delivery.
 Each party is free to accept or reject the exchange offer.
 Each party believes it is appropriate or desirable to deal with the
other party.
RELATIONSHIPS MARKETING
 Relationship marketing aims to build long-term mutually
satisfying relations with key parties— customers, suppliers,
distributors in order to earn and retain their long-term
preference and business.
 MARKETING CHANNELS

 To reach the customer marketer uses three kinds of marketing

channels.
 Communication Channel delivers and receives message from
target buyers. It includes newspaper, magazine, radio, television,
mail, telephone, billboards, fillers, CD and the Internet.
 Distribution Channels is the physical place where buyer and
seller meet. It includes distributors, retailers, wholesalers and
agents.
 Service channel is the channel, which facilitates the
transactions with potential buyer. It includes warehouse,
transportation companies, banks and insurance companies.
 SUPPLY CHAIN

 Whereas marketing channels connect the marketer to the target

buyers, the supply chain describes a longer channel stretching
from raw materials to components to final products that are
carried to final buyers.
 This supply chain represents a value delivery system.
 Each company captures only a certain percentage of the total
value generated by the supply chain.
 When a company acquires competitors or moves upstream or
downstream, its aim is to capture a higher percentage of supply
chain value.
 COMPETITION

 Competition includes all the actual and potential rival offerings

and substitutes that a buyer might consider. There are four levels
of competition.
 Brand Competition
 The competition between the companies who offer similar
products and services to the same customers at similar prices.
E.g. Mercedes VS BMW VS Audi, Pepsi Cola VS Coca Cola, Slice Vs
MAZA.
 Industry Competition
 A company sees its competitors as all companies making the
same product or class of product. E.g. For Toyota the industry
competitors are all other automobile manufacturers.
 Form Competition
 A company sees its competitors as all manufacturing products
that supply the same service. E.g. For Toyota the form
competitors are not only other automobile manufacturers, but
also manufacturer of motorcycle, bicycle and trucks etc.
 Generic Competition
 A company sees its competitors as all companies that compete
for the same consumer rupees. E.g. For the car manufacturer, its
generic competition will be, foreign vacation and new home.
MARKETING MANAGEMENT PROCESS
MARKETING MANAGEMENT PROCESS
 HOW BUSINESS AND MARKETING ARE
CHANGING
1. Customers increasingly expect higher quality and service and
some customization.
2. Brand manufacturers are facing intense competition from
domestic and foreign brands, which is resulting in rising
promotion costs and shrinking profit margins.
MARKETING MIX
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 A Market segment
consists of a group of
customers who share a
similar set of want.

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 Customer
 So, a car market Who want

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can be luxuriousness
segmented like,
Customer
Customer Who want
Who want Small car
Mileage

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 THE TWO-WHEELER MARKET
 Married People who generally look for fuel-efficiency, price and

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safety.

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 Young People who generally settle for aesthetics or good looks.

 The Low Income Group prefers mopeds primarily because they

provide individual mobility at lowest possible cost.

 The Rural Buyers are primarily concerned about

manoeuvrability through rough terrain.
 LEVELS OF MARKET SEGMENT

 Mass Marketing:

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 In mass marketing the seller engages in mass production, mass
distribution and mass promotion of one product for all buyers.

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(Henry Ford 1st invented this concept). Coca Cola also used to
use this concept.
 Micro marketing
 Segment marketing
 Nische marketing
 Local marketing
 Individual customer marketing/ customization
1. Segment marketing:

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2. Nische marketing:
 Market segments are normally large identifiable group within

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a market.
 A nische is more narrowly defined group seeking a distinctive
mix of benefits whose needs are not well served.
 E.g. Chartered Plane, Modified car, Ferrari, Ten Golf
 Marketers usually identifies niche by dividing segments in sub
segments.
 While segments are fairly large and thus normally attract several

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competitors, niches are fairly small and normally don’t attract
much competitor.

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 Customer are willing to pay premium price.
3. Local Marketing

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 When the marketing mix is altered to suit the local conditions
 Hollywood movies getting dubbed in Hindi and some regional
languages

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 E.g. Five rupee coke
 Sachet shampoo
4. Individual Marketing
 When the firm deals with each customer on a one – to – one basis
 When products are customized for the customer
 Limousine
 Signature shoes made for Michael Jordan - “Air Jordan”
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 BENEFITS OF SEGMENTATION
 The organization can assess the needs of major consumer

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groups in a better manner.
 The organization can accordingly find suitable target market

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segment to offer products and can position its brand in such a
way that it can generate advantage of competitive situation
 Helps to separate two or more brands of the same company to
minimize overlapping. (MSIL)
 Identify gaps in the market which represent new product
opportunities by identifying groups or divisions of the market
which are not served at all or not served properly by existing
product offering.
 CRITERIA FOR EFFECTIVE SEGMENTATION

1. Measurable: The size, purchasing power and characteristics of

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the segments can be easily measured.
2. Substantial: Should be large and profitable enough to serve.

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3. Accessible: Should be effectively reached and served.
4. Differentiable: Should have something different from others.
5. Actionable: Effective program can be formulated.
 PATTERNS OF MARKET SEGMENTATION

 Market segment can be built up in many ways. One way is to

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identify the preference segments. E.g. suppose Ice cream buyers
were asked about their preference regarding Ice cream about

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how much they want sweetness, creaminess etc. Three different
patterns can emerge.
 BASES FOR SEGMENTATION

 Geographic –territory demarcations

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 Demographic
 Age and life cycle stage

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 Family size
 Gender
 Income
 Psychographic
 Lifestyle
 Personality
 Behavioral

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 Occasions
 Benefits

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 [Link] business, vacation
 User status
 non users, ex users, first time users, regular users
 Usage rate
 light, medium, heavy
BASES FOR SEGMENTING BUSINESS MARKET
 Demographic Variable

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 Industry type: Which industry to serve? E.g. Educational or commercial for
PC
 Company size: What size of company we will serve? E.g. Small, medium or

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large
 Location: What geographical area should we serve? E.g. Local or global
 Operating variables: It includes,
 Technology: which customer technologies should be focus on?
 User or non user status: heavy users, light users, medium or non user.
 Customer capabilities: Customer need of services.
 Who need many services?
 Who need few services?
 Purchasing approaches

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 Purchase function organization: should we serve centralized or
decentralized purchasing organization.

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 Power structure: which company to serve_ engineering
dominated or financial dominated.
 Nature of existing relationship: strong relationship or new
customer.
 General purchase policy: leasing or bidding etc.
 Purchasing criteria: Which company to serve? quality, service or
price conscious company.
 Situational factors

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 Urgency: should we serve company who need quick or sudden
services.

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 Size of orders:
 Buyer characteristics
 Value of both buyers and sellers similarities
 Loyalty level
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 Once the firm has identified its market segment opportunities, it

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has to decide how many and which ones to target.
 Targeting is a process of selecting one or few segments out of

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identified segments.
 SELECTING AND EVALUATING TARGET MARKET

 Single segment concentration

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 Selective specialisation
 Product specialisation

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 Market specialisation
 Full Market coverage
 Single Segment Selective Product
Concentration Specialization Specialization

M1 M2 M3 M1 M2 M3 M1 M2 M3

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P1 P1 P1

P2 P2 P2

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P3 P3 P3

Market Full Market

Specialization Specialization

M1 M2 M3 M1 M2 M3

P1 P1

P2 P2

P3 P3
 POSITIONING
 Al Ries and Jack Trout in their bestseller book "Positioning: The
Battle for Your Mind", defines Positioning as "an organized system

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for finding a window in the mind.

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 It is the process by which marketers try to create an image or
identity in the minds of their target market for its product, brand, or
organization.
 Positioning is the act of designing the company’s offering and
image to occupy a distinctive place in the mind of the target market.
 The end result of positioning is the successful creation of a
customer-focused value proposition, a cogent reason why the target
market should buy the product.
 Positioning is not what you do to a product. Positioning is what

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you do to the mind of the prospect. That is, you position the
product in the mind of prospect.

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 Each brand has thus to be 'Positioned' in a particular class or
segment. For example, Mercedes is positioned as a luxury brand,
and Volvo is positioned for safety.
 The position of the brand has to be carefully maintained.
 When Marlboro reduced its prices, sales dropped immediately
because its customers began associating it with the generic
segment.
 Rolex watches are even more dramatically positioned as a luxury
items, and have become a symbol for accomplishment in life. If
Rolex reduces its prices, it will reduce brand status and sales.
 Positioning requires every tangible aspect of product, price,
place, and promotion to support the chosen to positioning
strategy
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 POSITIONING POSSIBILITIES

(POSITIONING VARIABLE)
Attribute Positioning
 A company positions itself on an attribute, such as size or number of years
in existence. Disneyland can advertise itself as the largest theme park in the

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world.

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 Benefit Positioning
 The product is positioned as the leader in a certain benefit.

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 Use or application Positioning

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 User Positioning
 Positioning the product as best for some user group.

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 Competitor Positioning

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 E.g. IIPM-Think beyond IIM

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 Quality or price Positioning
 The product is positioned as offering the best value.

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 Product Category Positioning
 The product is positioned as the leader in a certain product category.

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