Foundation of Commerce - I

1th Semester|[Link]|Mangalore University

 CHAPTER 3

INTRODUCTION TO MARKETING

Market – Meaning

The term market is derived from the Latin word ‘mercatus’ which means trade or a place
where business is conducted.
Trade means buying and selling of goods and services.
Goods include food, commodities, clothing and housing.
Services include hotels, work of airlines, professionals such as accountants, lawyers,
engineers, doctors, management consultants etc.
Place means where goods are bought or sold, it need not be a physical place.

Market is a place where the buyer and seller exchange the goods and services for monetary benefit.

Market – Definition

According to Philip Kotler “A market consist of all the potential customers sharing a particular need or
want who might be willing and able to exchange goods and services to satisfy the need or want”.

Marketing – Meaning

Marketing refers to all those activities which helps in the flow of goods and services from a
producer to consumer. It refers to all the activities involved in the exchange of goods and services between
a buyer and a seller.

Marketing – Definition

According to Philip Kotler, “Marketing is a social and managerial process by which individuals and
groups get what they need and want through creating and exchanging products of value with others”

According to Converse, “Marketing includes those business activities which are involved in the flow of
goods and services from production to consumption”.

FEATURES OF MARKETING

1. Human Activity: Marketing is a human activity, under which the human needs are satisfied by
human efforts. It is a human action for human satisfaction.
2. Consumer-Oriented: Business exists to satisfy customer’s needs and wants; hence it must find out
what the customer desires and produce goods or services accordingly.
3. Art as well as Science: In this era, Marketing is an Art as well as a Science as it is a technique of
making the goods available at right time, right place, into right hands, right quality, in right form
and at right price.
4. Exchange Process: All marketing activities revolve around commercial exchange between the
buyers and the sellers.
5. Starts and ends with the customers: Marketing activities starts with identifying the requirement
of a customer and ends with supplying the goods and services that satisfies those requirements.
6. Creation of Utilities: Marketing creates a. Place utility, by moving goods from production place to
consumption place. b. Time Utility, by making the product available to customers when they need.
 c. Possession Utility, by selling the goods to the customer, the possession or ownership of the
product is transferred from the seller to the buyer.
7. Goal Oriented: Marketing helps the customer achieve the goal of
satisfaction and it helps the marketer to achieve their goals of
generating profits.
8. Guiding elements of Business: Marking is the heart of a business. It
tells what, when and how to produce. It guides and controls the
business activities.
9. System of Interacting Business Activity: Marketing is a system that
interacts with the customers with the objective of earning profits,
customer satisfaction and long-term customer relationship.
10. Marketing is a dynamic process: Marketing is a series of inter-related functions. It is complex and
continuous process.

IMPORTANCE OF MARKETING (Explain each point in detail)

1. Helpful in communication between producers and consumers: Marketing acts as a bridge

between businesses and customers, helping producers understand what consumers want and
informing consumers about products and services.
2. Helpful in Decision Making: Marketing provides essential information about market trends,
consumer preferences, and competition, which helps businesses and consumers make informed
choices.
3. Helpful in Profit Maximization: By promoting products effectively and attracting customers,
marketing helps businesses increase their sales and earn higher profits.
4. Helps in increasing Standard of Living: Marketing ensures that goods and services are available
and accessible to people, improving their quality of life and satisfaction.
5. Helps in providing Employment Opportunity: Marketing activities such as advertising, sales,
distribution, and research create job opportunities in various sectors.
6. Helps in increasing National Income: Active marketing boosts trade and business activities,
contributing to the growth of the national economy.
7. Protection against Business Risks: Marketing helps businesses understand demand, customer
preferences, and competition, reducing the chances of losses and business risks.
8. It serves as a source of Market Information: Marketing collects and provides data about
customer behavior, preferences, and market conditions, which is vital for planning and strategy.
9. It stimulates division of labour: Marketing encourages specialization in production, sales, and
services, which increases efficiency and productivity.
10. It helps in optimum Utilization of resources: By identifying what products are in demand,
marketing ensures that resources like raw materials, labor, and capital are used effectively.
11. It is the ‘Eye and Ear of Business’: Marketing continuously observes market trends, customer
needs, and competitor activities, providing crucial insights for decision-making.
12. Helps in increasing the level of economic activity: Marketing stimulates buying and selling,
leading to more business transactions and overall economic growth.
13. Marketing integrates the various sectors of the economy: Marketing links various sectors such as
production, trade, and services, ensuring coordination and smooth functioning of the economy.

CORE CONCEPTS OF MARKETING

Core Concept refers to those concepts that are clear-cut, definite and acceptable to understand the
process of marketing and which helps in the flow of goods and services from producers to the consumers.
The 5 identified and acknowledged concepts of customer and marketplace are.,
 Needs, Wants &
1. Needs, Wants & Demands Demands
Need
➔ Human Needs are states of felt deprivation.
➔ They are not created by marketers. Products &
➔ Basic Physical needs are food, clothing, shelter & Safety. Services
Want
➔ Human Wants are the desire to have some products.
Value, Satisfaction
➔ Human Wants are unlimited, but resources are limited.
& Quality
➔ People choose goods & services against the money.
➔ Eg: French Fries, Burger
Demand Exchange,
➔ Demand is, want for a specific product backed by the ability and Transaction &
willingness to buy. Relationship
➔ Demand arises by making the product affordable, attractive,
available and appropriate
➔ Eg: Need – Transportation, Want – Car, but able to buy only Maruti Markets
so demand – Maruti Car
2. Products and Services
Products
➔ Anything that is offered in the market for consumption and that satisfies that the needs
and wants of the buyer is a product.
➔ It includes Tangible goods like products and intangible goods like services.
➔ Eg: Physical objects, services, people, organization and ideas.
Service
➔ Any benefit that one party offer to another that is intangible in nature is called service.
➔ In service, exchange does not result in change of ownership.
3. Value, Satisfaction and Quality

➔ Customer Value refers to the, (Value = Product Cost – Value gained by owning the
product)
➔ Customer Satisfaction = Products Perceived Performance greater than Customer’s
Expectation
➔ As quality is closely related to Customer Satisfaction, plannings are made to constantly
improve the quality of products and services
4. Exchange, Transaction and Relationship
➔ Its an exchange of good and services with Monetary benefits between two parties. Each
party should have value to the other.
➔ A transaction happens between 2 parties involving 2 things of value, agreed-upon
conditions, time of agreement and place of agreement. A trade need not always involve
money as value, trade can happen vis barter system too.
➔ Relationship Marketing refers to the process of creating, maintaining and enhancing
strong, value-laden relationship with customers and other stakeholders.
5. Market
➔ Market is a place where there are a set of actual and potential buyers of a particular
product.
➔ It’s the place where transaction happens between a buyer and a seller.

APPROACHES OF MARKETING

1. Product or Commodity Approach

o Under this approach, the focus is on the product.
o This approach, study the flow of a certain commodity from the original producer to
 the final consumer.
o Eg: If the commodity is Rice, The study of source of rice, location, people involved,
financing, storage, transportation, packaging, branding. Price fixing, problems
handling, middlemen, selling it to final consumer is called commodity approach.
2. Institutional Approach
o Here the focus is on Institutions – Middlemen, Wholesalers, Retailers, Agents,
Dealers etc.
o This approach is engaged in marketing during the movement of goods
o Its also called as Middlemen Approach.
o This approach understands and analyses the functions of Institutions who are
discharging their marketing functions.
3. Functional Approach
o This approach focuses on the various functions of Marketing.
o The functions like buying, selling, pricing, standardization, storage, transportation,
warehousing, advertising etc are studied and analyzed in detail.
4. Management Approach
o It focus on the role of decision making at the management level.
o This approach is latest and scientific.
o This approach is mainly concerned with how managers handle specific problems and
situations which are both controllable and un-controllable in nature.
5. System Approach
o This approach focuses on marketing linkage inside as well as outside the firm.
o The balanced co-ordination between external and internal factor will result in
customer satisfaction.
6. Societal Approach
o Here the focus is on society’s well-being.
o The marketing process is regarded as a means by which society meets its own
consumption needs.
o Attention is paid only to the ecological factors like, sociology, culture, legal etc.
7. Holistic Approach
o It focuses on looking at everything as a whole.
o An organization will function properly when every department of its works in unison
and harmony to achieve the organizational goal.

MARKETING PHILOSOPHY / MARKET ORIENTATION/ MARKETING CONCEPT

❖ Management philosophy or Management Concept is a set of rules used by managers to help them
make decisions.
❖ A good management philosophy gives direction to the organization.
❖ This philosophy is used to identify and fulfill the need of customers, benefiting both the customer
and the company.
❖ There are 5 Marketing Concepts:

1. The Production Concept

❖ The production concept of marketing management philosophy is one of the oldest marketing concept
guiding the marketing activities of an organization.
❖ The production concept believes and operates that consumers will prefer those products which are
available in time and at right places, and in adequate quantities, and at low prices (i.e., fair prices).

Features of Production Concept:

The important features of production concept are:
 1) There are two important aspects of production marketing concept (i) the product availability
and (ii) the low price of product
2) As consumers will favour products that are available in right quantities at affordable prices, the
management should try to produce goods on a large scale so as to meet the demand.
3) The management should bring down the cost of production and the price by increasing
productivity and cutting costs.
4) If there is product availability and fair price consumers’ response will be favourable, so
marketing effort is not necessary to promote sales.

Drawbacks of or Criticisms against Production Concept:

1) Consumers may complain that they are not given personal attention and the management is
not responsive to consumers’ views.
2) Consumers buy goods which satisfy their wants even at high prices.
3) It does not give importance to quality consideration of the product, which is an important factor
in marketing.

Utility of Production Concept:

1. This concept is best suited for mass consumption products like food articles, fertilizers, stationery,
etc.
2. It is useful for service and marketing organizations in their marketing efforts.

2. The Product Concept

❖ This philosophy or concept believes and operates on the principle that quality and good
performance attracts consumers to buy the products by paying higher prices.
❖ Management must concentrate on the production of goods of good quality and performance, and
improving them over time.

Features of Product Concept:

1. Quality and performance of the products make the consumers willing to pay even more than
what they are actually willing to pay in normal conditions.
2. Management must concentrate on the production of products of good quality and good
performance and improving them over time.
3. Improvement of product quality and performance calls for continuous product planning and
development.
4. This concept implies that marketing efforts are not required as long as the product is of good
quality.

Criticisms against Product Concept:

1. Even good quality product requires marketing efforts in terms of advertising and distribution
etc.
2. Over-emphasis on product quality and performance (i.e., product excellence) may make the
marketers ignore many other needs and desires of consumers.

Utility of Product Concept:

a. The product concept encourages product innovation, research and
development and quality assurance.
b. Service-oriented product and non-product organisations follow the product concept in
marketing their products.
c. The product concept is practiced in areas like fashionable and expensive ready-made
 garments, shoes, watches, restaurants and hotels, clinics, premium educational institutions,
transport services, courier services, etc.

3. The Selling Concept

❖ This concept assumes that any product does not sell itself. It has to be sold.
❖ For selling the product, the consumers have to be educated and effectively convinced to
buy the product.

Features of Selling Concept:

1. The selling concept assumes that consumers, if left alone, will not ordinarily buy an
organization’s products. Therefore, the organization must undertake effective promotional
technique to sell the product.
2. Marketer have to be creative; consumer have to be educated and effectively convinced to
buy the product.
3. Selling concept is practiced more aggressively for unsought-for products in comparison to
popular products.
4. The selling concept gives emphasis on increasing sales volume even at the cost of
customer-satisfaction.

Criticisms against the Selling Concept:

1. It concentrates more on increasing sales rather than consumer satisfaction.
2. It attempts to narrow down marketing to the function of selling.
3. Hard selling or forcing consumer to buy the product involves greater risk in long run.
4. In hard selling, there will be always complaint from customers and their dissatisfaction in
relation to product move faster among prospective consumers.

Utility of Selling Concept:

The selling concept is, generally, practiced in the following areas:
1. Insurance business where people are not ready to insure until and unless they are suitably
motivated by insurance agents.
2. New products like liquid soaps, moisturizing cream and lotion etc
3. Low demand Products like carpets, wall, paper, microwave ovens etc.
4. Technical products like electrical and mechanical equipment.
5. Other products like automobiles, books etc.
[Link] Marketing Concept
❖ The marketing concept is a philosophy which believes that organizations should assess and
understand the needs and wants of customers, and make relevant marketing efforts to
satisfy their wants and needs more effectively than competitors.
❖ The marketing concept is a customer-oriented concept.

Features of Marketing Concept:

1. Organizational goals are to determine the needs and wants target customers, and delivering the
desired satisfaction more effectively than competitors.
2. It is not just putting sales efforts, but also understanding the needs and wants of customers,
before making relevant sales efforts.
3. The marketing concept believes in themes like: “The customer is the boss". “We are satisfied
if our customers are satisfied". “Have it your way”. “Have the customer and not the product".
4. Consumers can be identified and grouped into coherent unit of market segments depending
 upon their characteristics and buying behaviour.
5. Consumers have definite preference towards products or brands which match with their
perceived value or attributes.

Criticism against Marketing Concept:

1. Most of the firms do not practice this concept though theoretically they accept.
2. Manufacturer have to keep on changing product according to changing consumer
characteristics.
3. While meeting the customers’ needs and wants firms have neglected society’s needs. For
example, industrialization has resulted in the availability of products to satisfy customers, but
it has added to pollution problems.

Utility of Marketing Concept:

1. Long-term success to an organization that provides satisfaction to consumers.
2. It suggests that marketing risks can be reduced only by knowing and understanding the market.
3. This concept is applicable to businessmen who want to achieve maximum sales and profits
through consumer satisfaction.
4. It assures effective marketing, which ensures the achievement of organizational goals.

Differences between selling concept and marketing concept

Selling Concept Marketing Concept
1. It focuses on the needs of seller 1. It focuses on the needs of the
Buyer
2. Selling concept is pre-occupied 2. It is concerned with the idea of
with sellers needs to convert product satisfying needs of the customers through
into cash. product.
3. Seller is interested in selling 3. Seller is interested in selling product to
products to earn maximum profit. maximize profit but after studying needs and
wants of customer and offering such
products which would meet the customers’
requirement.
4. The consumer demand is influenced to adjust to 4. Company adjusts its supply to the consumer
company’s supply. demand.
5. Aggressive selling plays a major role. 5. Aggressive selling plays minor role.
6. Involves greater risk for 6. Avoids risk involved in
marketer. aggressive selling.
7. Aims at profit through sales. 7. Aims at profit through serving
customer demand.

5. Societal Marketing Concept

❖ Societal marketing concept believes in giving products that satisfies the customers more
effectively than the competitors and also enhances the society’s well-being.
Features of Societal Marketing Concept:
1. Societal marketing concept preserves or enhances the customers as well as society’s well-
being.
2. Societal marketing concept is based on assumption that marketer has to fulfill customer
 demand and also contributes to enrichment of quality of his life.
3. It is based on the assumption that marketer should not offer a product to consumers if it is
not in the best interest of consumers.
4. It is based on the assumption that marketer should look after long term consumer and public
welfare.
5. Based on assumption that marketing plans and programs should duly consider consumer
wants, social welfare and corporate needs.

Utility of Societal Marketing Concept:

1. It is a human marketing concept.
2. It is helpful in creating an intelligent consumption pattern, serving the ecological needs, and
helping the industry to grow and prosper.
3. It serves the business world as well as the society as a whole.
6. Holistic Marketing Concept
❖ It is a marketing strategy which considers the business as a whole and not as an entity with
various departments.
❖ The departments must work together to project a positive & united business image in the
minds of the customer.
❖ The concept involves interconnected marketing activities to ensure the customer is likely
to purchase their product rather than competition.
❖ Thus, you get the right product at a right price with the right profits. Along with this you
get the right people who will market your product in the right manner.
❖ If these are done, you are sure to get the right customer to your doorstep.
❖ By doing the right things together as an organization, your product and brand stands a far
better chance in being successful than your competitors who are working without any
holistic vision.

MARKETING MANAGEMENT

Meaning

Marketing management is the analysis, planning, organizing, directing and controlling all the activities
relating to the marketing of goods to satisfy customers’ wants and to maximize profits for the enterprise

Definition

According to Philip Kotler, “Marketing management is the analysis, planning, implementation

and control of programmes designed to create, build, maintain mutually beneficial exchanges and
relationships with target markets for the purpose of achieving organizational objectives."

According to William J. Stanton, “Marketing management is the marketing concept in action.”

Features/ Objectives of Marketing Management (Explain in your own words)

1. Determination of Customer’s needs: A key feature of marketing management is to understand
what customers want. Businesses study customer preferences, demands, and buying behavior to
produce products and services that meet their requirements. This ensures that the right products are
offered to the right people.
2. Creation of Demands: Marketing management not only meets existing customer needs but also
creates demand for products and services. Through advertising, promotions, and awareness
campaigns, businesses can influence customers to desire and buy their products. This helps expand
the market and attract new customers.
 3. Customer Satisfaction: One of the main objectives of marketing management is to ensure that
customers are happy with the products and services they receive. Satisfied customers are more
likely to return, recommend the business to others, and develop loyalty, which is crucial for long-
term success.
4. Generation of profits: Marketing management aims to increase business profits by attracting
customers and encouraging sales. By understanding customer needs and creating effective
marketing strategies, businesses can sell more products, reduce costs, and achieve financial growth.
5. Contribution to National Income: Successful marketing activities lead to more production and
sales, which contribute to the overall economic growth of a country. By promoting trade and
business, marketing helps increase national income and supports economic development.
6. Raising the standard of living of the people: Marketing management ensures that products and
services are available, affordable, and of good quality. This improves people’s daily lives by
providing access to necessities, conveniences, and luxury items, thereby raising their standard of
living.

Importance/Benefits of Marketing Management

1. Better Customer Understanding: Marketing management helps businesses identify what

customers want. For example, a smartphone company studies customer preferences for screen size,
battery life, and camera quality before launching a new model. Understanding customer needs
ensures the right products are developed.
2. Increases Sales and Profits: Effective marketing strategies attract more buyers, increasing sales
and profits. For instance, online promotions by e-commerce platforms like Amazon encourage
customers to buy more, boosting revenue.
3. Customer Satisfaction and Loyalty: Satisfied customers are more likely to return and recommend
the brand to others. For example, if a restaurant provides good service and quality food, customers
are likely to visit again and give positive reviews.
4. Creates Demand: Marketing generates interest in products through advertising and promotions.
For example, a new cola brand running TV ads and social media campaigns can attract customers
who may not have tried it otherwise.
5. Efficient Use of Resources: Marketing management helps in planning production and distribution
according to demand. For example, a clothing company can produce more winter jackets if
marketing research shows high demand during winter, avoiding wastage of materials.
6. Market Expansion: Marketing identifies new opportunities and markets. For example, a cosmetics
brand entering international markets after understanding local preferences can expand its customer
base.
7. Economic Contribution: By increasing sales and production, marketing management contributes
to national income and creates jobs. For instance, the growth of online marketplaces like Flipkart or
Amazon provides employment in logistics, marketing, and customer service.
8. Supports Business Planning and Strategy: Marketing provides data about competition, customer
behavior, and market trends, helping businesses make informed decisions. For example, a car
company uses marketing research to decide whether to launch an electric vehicle.
9. Encourages Innovation: Marketing insights push companies to improve or create new products.
For example, food brands introducing healthier snack options after consumer surveys show demand
for nutritious alternatives.
10. Improves Standard of Living: By making quality products available and accessible, marketing
enhances life quality. For instance, online grocery delivery services save time and provide
convenience to busy families.