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UNIT1- INTRODUCTION
EVOLUTION OF MARKET
The concept of marketing is as old as other professions of the world. Marketing is indeed an ancient art. It has been practiced in one form or the other. The traditional objective of marketing had been to make the goods available at places where they are needed. This idea was later on changed by shifting the emphasis from “exchange” to “satisfaction of human wants” which is known as modern marketing. However in order enrich the views of marketing it is better to trace out the evolution. The following are the stages of evolution:- 1) The Barter System:- At this stage, human beings were in nomadic hunter stage. In this primitive period, the human beings were nothing more than hunters or food gathers. The human beings with his surplus products approached and tried to exchange his products by accepting the products he needed- exchange of products for products. 2) The New Stone Age: - This stage is known as Agrarian period. In this stage human beings developed a sense of belongingness and developed family units. As time passed, the division of labour began to play its role and man started producing more than he needed and specialized in activities like carpenters, weavers, agriculturalist etc. To disposed of the excess producing, people assembled in places called local markets and later, it developed into shops, bazaars etc. 3) The pre-industrial period:- The difficulties of barter system were removed by adopting common mediums of exchange like copper, iron etc and later this medium of exchange was changed to silver, gold etc. At this stage, producers began to produce the products in larger quantities, employed the services of labourers in their factories; and middlemen, through whom sales were conducted, appeared. 4) The Industrial Period: - In this stage, home production was replaced by factory system and hand operations were replaced by machines. Because of the introduction of new inventions along with the new machines, the production was on large scale. Mass productions were followed by large-scale consumption. In order that the products may reach the hands of the ultimate user, new methods of marketing appeared.
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Decentralized Exchange
Centralized Exchange
MEANING AND DEFINITION OF MARKET
The term ‘market’ is derived from Latin word called ‘marcatus’ which means trade, merchandise, traffic or place of business. In ordinary language, the term market refers to a certain place where buyers and sellers personally meet each other and make their purchases and sales. According to Cornot , “Market is meant not any particular place in which things are bought and sold, but the whole of any region in which the buyers and sellers are in such free intercourse with one another, that the price of the same goods tends to equality easily and quickly”. According to Chapman , the term market refers “not to a place but to a commodity or commodities and buyers and sellers who are in direct competition with one another”.
FARMER FISHERMAN
POTTER FRUIT-SELLER
FARMER FISHERMAN
MARKET
POTTER FRUIT-SELLER
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MARKETING ARENA
The word “ARENA” is derived from Latin word “HARENA” which means smooth or fine. Marketing arena is a process of composing of a large open space surrounded on most or all sides by varieties of products and brands.
a. Seeking:- The purpose of seeking is to discover the customer and customer needs. The marketing opportunity is revealed through an analysis of the environment. b. Matching:- Marketing is a matching process. Customer demand has to be matched with organizational resources and environmental limitations, such as competition, government regulations, general economic conditions and so on. c. Programming:- The marketing programme, called the marketing mix, covering product, price, promotion and distribution strategies will be formulated and implemented to accomplish the twin objectives of customer satisfaction and profitability.
OBJECTIVES OF MARKETING
The following are the most significant objectives of marketing and are:- 1) Creation of Demand The objective of marketing is to create demand through various means. A conscious attempt is made to find out the preferences and tastes of the consumers. Goods and services are produced to satisfy the needs of the customers. Demand is also created by informing the customers the utility of various goods and services. 2) Customer Satisfaction The marketing manager must study the demands of customers before offering them any goods or services. Selling the goods or services is not that important as the satisfaction of the customers’ needs. Modern marketing is customer-oriented. It begins and ends with the customer.
Marketing Arena
Seeking Matching Programming
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3) Market Share Every business aims at increasing its market share, i.e. the ratio of its sales to the total sales in the economy. For instance, both Pepsi and Coke compete with each other to increase their market share. For this, they have adopted innovative advertising, innovative packaging, sales promotion activities etc. 4) Generation of Profits The marketing department is the only department which generates revenue for the business. Sufficient profits must be earned as a result of sale of want satisfying products. If the firm is not earning profits, it will not be able to survive in the market. Moreover, profits are also needed for the growth and diversification of the firm. 5) Creation of Goodwill and Public Image To build up the public image of a firm over a period is another objective of marketing. The marketing department provides quality products to customers at reasonable prices and thus creates its impact on the customers. 6) Apply effective and intelligent modern marketing policies Changing growth rate, rapid technological change and new aggressive rivals all made every marketing firm to adopt and respond to change for survival and prosperity. So it is necessary for the firms to scrutinize its expenditure and make maximum profits by adopting themselves to viable and matching methodologies, techniques and practices. For example, Time Management, Just-in-time etc.
IMPORTANCE OF MARKETING
Raise Standard of Living
Creates Employment
Development of Economy
Towards Company
Source of Revenue
Source of New Ideas
Marketing
Towards Society
Helps in transfer & movement of goods
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APPROACHES OF MARKETING
The following are the most significant approaches of marketing and are:- 1) Commodity Approach In this approach the focus of study is on specific commodity. Under this approach the study focuses on the flow of a certain commodity and its journey from the original producer right upto the final customer and it includes conditions of supply, nature and extent of demand, the distribution channels used etc. Agricultural products like wheat, jute, cotton represent the commodity approach. 2) Institutional Approach Under this approach, the interest of marketer centers around the marketing agencies i.e. transport and service agencies viz., wholesalers, retailers, banks, transport undertakings, insurance companies etc., who participate in discharging their marketing responsibilities during the movement of distribution of goods. 3) Functional Approach Under this approach, marketer concentrates his attention on the specialized functions or activities like buying, selling, storage, risk bearing, transport, finance etc. These functions are also studies in relation to given commodities and marketing institutions in terms of their operational methods and systems. 4) Managerial Approach This approach is also known as Decision- making approach. The focus of this approach is on the decision-making process. The study encompasses discussion on planning, organizing, controlling, directing etc. This approach is considered the most useful way of studying marketing activities. 5) Societal Approach This approach focuses on the social contributions and costs created by various marketing activities and institutions. In this approach the focus of study will be on the interactions between the various environmental factors and their impact on the well-being of society. 6) System Approach The approach recognizes the inter-relations and inter-connections among the components of a marketing system in which products, services, money, equipments and information flow from marketers to consumers. The focus of this approach will be on the analysis of marketing flows and communication.
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MARKETING CONCEPT/PHILOSOPHY/ORIENTATION
According to Prof. Robert F Hartley , Marketing concept/philosophy/orientation is “an integration of marketing activities directed towards customer satisfaction”. This marketing philosophy undergone a thorough and gradual change since the Industrial Revolution. This gradual change can be traced under four periods and are explained below:- 1) Production Orientation Philosophy This production-oriented marketing concept was built on “Good wine needs no push.” This philosophy states that if the product is really good and the price is reasonable, there is no need for special marketing efforts. The assumptions of this concept are:- Anything that can be produced can be sold. The most important task of management is to keep the cost of production down. A firm should produce only certain basic products.
2) Sales Orientation Philosophy The essence of this philosophy is “Goods are not bought but sold.” That means mere making available the best product is not enough; marketing becomes fruitful only when they get into aggressive salesmanship. Effective advertisement, sales- promotion and public relations etc are top most important for creating demand. The assumptions of this philosophy are:- Producing the best possible product. Finding the buyer for the product. The management’s main task is to convince the buyers through high pressure tactics, if necessary.
Good Product
Good Sales
Product (^) Promotion Sales
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DIFFERENCES BETWEEN SELLING AND MARKETING
Sl.No. Selling Marketing
1 Selling is mere the exchange of goods for money between the seller & the buyer
Marketing is more comprehensive term. It includes not only selling but also all other activities which help the movement of goods from the center of production to the center of consumption 2 Selling comes at the end of the manufacturing cycle
Marketing comes at beginning of the manufacturing cycle 3 Selling is concerned with the creation of mere possession or ownership utility
Marketing is concerned with creation of place, time and possession utility
4 Selling focuses on the product Marketing focuses on the customers
5 Selling is product-Oriented Marketing is Consumer-Oriented
6 It emphasis on the needs of Sellers It emphasis on the needs of Buyers
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DIFFERENCES BETWEEN TRADITIONAL AND MODERN
MARKETING
Sl.No. Traditional Marketing Modern Marketing
1 It is concerned with the performance of activities necessary to secure the distribution and sale of goods which the producer has
It is concerned with the performance of activities necessary to secure the distribution and sale of goods as are needed by the consumer 2 It focuses on sellers needs as it is Sales-Oriented Marketing
It focuses on consumers’ needs as it is Consumer-Oriented Marketing
3 The selling efforts of a concern are Company-Oriented
The selling efforts of a concern are Market-Oriented
4 It aims at profit through increased sales volume i.e. more sales
It aims at profit through increased sales to the satisfaction of the consumers and profit to the sellers 5 It aims at short-term objectives i.e. short-term profits
It aims at long-term objectives i.e. long-term profits
6 It can be successful only in a country where there is a seller’s market
It can be successful only in a country where there is a buyer’s market
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2. SELLING
Selling is the sum total of all those activities that push the commodities to the buyers at a profitable price. This includes the following:- a) Product Planning: Product-planning refers to planning or forecasting of consumer wants and desires in terms of price, quality, quantity, time etc to meet the requirements of consumers as demanded by them. b) Contractual: In this function, the seller finding out and locating the consumers and establishing and maintaining relation with them. c) Demand Creation: This includes all efforts of sellers to induce buyers to purchase their products. In order to increase sales, demand creational efforts like personal selling, advertising etc are undertaken by seller. d) Negotiation: Negotiations as to terms of quality, quantity, price of the product, time and mode of transport, payments etc are to be made with the prospective buyers.
B. FUNCTIONS OF PHYSICAL SUPPLY
1) Transportation: Transportation refers to the physical movement of goods from places of production to places of consumption. The transport function of marketing involves the selection of particular mode of transport, depending upon the speed and cost. 2) Storage: Storage refers to the holding and preserving of goods between the time of their production and the time of their sale. It facilitates the steady and continuous flow of commodities to the market throughout the year and it also helps to adjust the supply of goods to the demand.
C. FACILITATING FUNCTIONS
1) Financing: The service of providing the credit and money needed to meet the financial requirements of the various agencies engaged in the various marketing activities. Even though finance smoothens the process of exchange and acts as a lubricating oil to the wheel of marketing. 2) Risk Bearing: Marketing involves a number of risks. The risk may be loss of goods due to fire, flood, cyclone, earthquake, theft etc. Some of this risk can be avoided through proper planning like insurance and hedging. 3) Market Information: The function of marketing information refers to the collection, analysis and interpretation and communication of marketing information to the concerned people for efficient marketing.
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4) Standardization: Standardization is a measure of designation for quantity. It consists of list of specifications based on size, colour, appearance, shape, amount of moisture etc. In other words, it is refers to the act of grading. 5) Pricing: Pricing is the process of determining the value of a product or service in terms of money before it is offered to the market for sale. 6) Branding: Branding is the process of identifying the name of a producer with his product by affixing to the product the trade name represented by words or designs. For example, HUL branded Vanaspathi as DALDA. 7) Packaging: Packaging is the use of containers and wrapping materials plus decoration and labeling to protect the product, to help and promote its sales, and to make it convenient for the customers to use the product. In short, it is the art of designing and producing the package for a product. 8) Salesmanship: Salesmanship is the process of understanding, appreciating and influencing customers to buy a commodity or service for mutual benefit. 9) Advertising: Advertising means informing the public about the existence of a particular product or service, stimulating their desire for the product or service and inducing them to buy the same.
MARKETING ENVIRONMENT
Marketing does not exist in vaccum. It exists in a world of concrete places and things, natural resources, important abstractions, and living persons. It has to interact and transact with its environment. The term Marketing Environment refers to the forces and factors that affect the organization ability to built and maintain good relationship with its customers. In other words, marketing environment refers to “all those internal and external factors which impact the performance of a product or firm for its decision- making.”
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3) Financial Resource: Financial factors like financial policies, apparatus, financial position and capital structure are also important internal elements affecting marketing activities, performance strategies and decisions. 4) Production Resource: Raw materials of the company and their utility also affect the decision of the company. Productive capacity, technology and efficiency of productive apparatus, distribution logistics etc are all the factors influence the competitiveness of a business firm. 5) Research and Development: Effective decision-making may be possible when there is a mind of innovation in the organization. In this fast moving corporate world, it is needed for a company to make decisions to suit changing environment and also for sustain ability of the organization for a prolong period.
B. External Environment The external environment is composed of all the outside factors or influences that impact the operation of business. The business must act or react to keep up the flow of operations. In other words, they are generally uncontrollable factors because the factors are beyond the control of the company. The external environment can be divided into two types:- Micro environment Macro environment
i. MICRO ENVIRONMENT Micro environment is also called as a task and operating environment where it studies the small part or individual unit of the business. It includes:- 1) Competitors No company can enjoys monopoly in this business world. Today’s competitive environment consists of certain basic things which every firm has to take note of. A firm’s competitors’ includes not only the other firms in which they also market the similar products but also those who compete for the discretionary income of the consumers. Competition has two different sense in today’s market and are:- Brand Competition , for example, Philips TV faces competition from other companies like Videocon, Onida, BPL etc this is called brand competition. Product form competition, for example, if consumer wants to purchase two- wheeler, the next question in his mind is with gear or without gear; self-starter or quick-starter etc this is called product form competition.
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2) Customers According to Peter.F.Drucker, “there is only valid definition of business purpose, that is to create a customer” and thus the major task of a business is to create and sustain customers because business exists only because of its customers. Customers may be of difference categories like individuals, households, industries and other commercial establishments and government. Monitoring the customer sensitivity leads to business success. 3) Suppliers Suppliers are those who supplies the inputs to the company. Supplier behaviour and attitude may also affect the company. Hence, multiple sources of supply often help to reduce such risks of the business concern. For example, Toyota always have some precautionary measure on suppliers so they prints “Suppliers Guide.” 4) Marketing intermediaries It includes middlemen such as agents and merchants who help the company to find customers and sell the product to them. They are vital links between the company and the final consumers. A wrong choice or dislocation of the link may cost the company heavily. Both the company and the intermediary are responsible for the following aspects:-
- The company should review the performance of middlemen periodically.
- Middlemen always help the company to overcome the discrepancies in quantities, place, time and possession. 5) Public Literally word ‘public’ refers to people in general. According to Philip kotler, “A public is any group that has an actual or potential interest in or impact on a company’s ability to achieve its objectives.” Companies must put their primary energy into effectively managing their relationships with their various public like supplier, customer, media, competitor, distributors, investors, bankers etc. 6) Workers & their Union Workers are the pillars of the company. So the workers now prefer to join trade unions where it protects their interests, improve their working conditions etc. from the company’s point of view, industrial relation is more important to improve the company, otherwise conflict between labour and management leads to sick unit.
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MARKET SEGMENTATION
Market Segmentation is the strategy of ‘divide’ and ‘ conquer.’ i.e. dividing the market in order to conquer them. So, it is refers to the division of total market into a sub-market is called as market segmentation. According to Philip Kotler , Market Segmentation refers to “the process of classifying customers into groups with different needs, characteristics, age, sex or behaviour etc.” According to W J Stanton , Market Segmentation consists of “taking the total heterogeneous market for a product and dividing it into several sub-markets or segments each of which tends to be homogeneous in all significant aspects.” By analyzing the above definitions we can define the term market segmentation as the process of dividing the larger market into several sub-markets.
STRATEGIES OR STRATEGIES OPTIONS OF MARKET
SEGMENTATION
1) Concentrated Marketing A firm may decide to concentrate all available resources on one chosen segment within the total market. It selects a market area where there is no strong competition and it can do best in that area. For example: a publishing house may be concentrate only on text books; Rolex watch company concentrated only on costly, quality and high-priced watches. However, it is an “all-the-eggs-in-one-basket” strategy. It demands innovation in order to ensure customer patronage continuously.
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2) Differentiated Marketing An organization under differentiated marketing strategy, enters many marketing segments but has a unique marketing mix appropriate for each segment. It wants to do business successfully in several segments. For example: Hindustan Unilever Limited has one brand of bath soap for each market segment. However, differentiated marketing has one disadvantage viz., higher production and higher marketing costs.
3) Undifferentiated Marketing Marketing firm does not prefer to segment the market but just makes an attempt to design a product and a marketing programme that appeals to the broadest number of buyers. In this strategy market is concerned with mass marketing. For example: Coco-Cola Company followed such a strategy of – one brand, one product, one bottle, for one big market.
It uses the “Scatter Shot Philosophy” i.e. production of product in large in disorganized way rather than focusing on particular segment.
