Marketing Concept

Marketing- The most crucial word in the world of business today, but it has been practiced in
one form or the other since ages. Marketing is indeed a very ancient art. Marketing exists in any
type of economic system and any stage of economic development.

Evolution of Marketing
Marketing as we all know it today began in the 1970s with the birth of the "marketing
orientation". During the first stage of capitalism business had a production orientation.
Business was concerned with production, manufacturing, and efficiency issues. By the mid
1950s a second stage emerged, the sales orientation stage. Business's prime concern was to
sell what it produced. By the early 1970s a third stage, the marketing orientation stage
emerged as businesses came to realize that consumer needs and wants drove the whole
process. Marketing research became important. Businesses realized it was futile putting a
lot of production and sales effort into products that people did not want. Some
commentators claim that we are now on the verge of a fourth stage, one of a personal
marketing orientation. They believe that the technology is available today to market to
people on an individual basis (see personalized marketing, permission marketing, and mass
customization). They feel it is no longer necessary to think in broad aggregated terms like
market segments or target markets.

Concepts of Marketing:
Different firms do business with different orientations and perceptions which leads to the
following marketing concepts:
The Exchange Concept
The Production Concept
The Product Concept
The Sales Concept
The Marketing Concept
The Exchange Concept:
Exchange is the oldest form of marketing. It is the process of satisfying human wants via trade
(barter, purchase, swap etc.). Marketing is a much broader concept than exchange. Exchange
takes into account only the pricing and distribution aspects of marketing but misses out on
the most crucial idea of customer orientation and satisfaction.
The Production Concept:
This Management philosophy believes that buyers prefer goods and services which are
cheap and widely available. Goods are produced without taking into consideration the
choices or tastes of your customers.

The Product Concept:

This concept seeks to win the market through product attributes but fails to understand the
consumer preferences. The main focus is on product quality and differentiation. The
concept assumes that market success can be achieved via product excellence, improved
products, new products and specially engineered products.

The Sales Concept:

The concept believes that the company would not only focus on production but also
aggressively promote and push the products through advertising and personal selling. This pays
little attention to whether the product is really needed by the consumers. The main focus is to
beat the competition with regards to sales.
The Marketing Concept:
This involves focusing on customer needs before developing the product, aligning all
functions of the company to focus on those needs and realizing profits by successfully
meeting customer needs over a long term. The concept puts the consumer at both the
beginning and the end of the business cycle. Every department, every worker and manager will
think customer and act customer.
The Societal Marketing Concept:
The societal marketing concept is an enlightened marketing that holds that a company
should make good marketing decisions by considering consumers' wants, the company's
requirements, and society's long-term interests. The concept has an emphasis on social
responsibility and suggests that for a company to only focus on exchange relationship with
customers might not be in order to sustain long term success. Rather, marketing strategy
should deliver value to customers in a way that maintains or improves both the consumer's and
the society's well-being.

Customer vs. Consumer

A customer - purchases and pays for a product or service.
A consumer - is the ultimate user of the product or service; the consumer may not have
paid for the product or service.
Marketing Concept and Philosophy
The marketing concept and philosophy is one of the simplest ideas in marketing, and at the
same time, it is also one of the most important marketing philosophies. At its very core are the
customer and his or her satisfaction. The marketing concept and philosophy states that the
organization should strive to satisfy its customers' wants and needs while meeting the
organization's goals. In simple terms, "the customer is king".
The implication of the marketing concept is very important for management. It is not

something that the marketing department administers, nor is it the sole domain of the
marketing department. Rather, it is adopted by the entire organization. From top
management to the lowest levels and across all departments of the organization, it is a
philosophy or way of doing business. The customers' needs, wants, and satisfaction should
always be foremost in every manager and employees' mind.
The marketing era started to dominate around 1970, and it continues to the present. The
marketing concept recognizes that the company's knowledge and skill in designing
products may not always be meeting the needs of customers. It also recognizes that even a
good sales department cannot sell every product that does not meet consumers' needs.
When customers have many choices, they will choose the one that best meets their needs.

What is Marketing?
The term marketing has changed and evolved over a period of time, today marketing is
based around providing continual benefits to the customer, these benefits will be provided and a
transactional exchange will take place.
The Chartered Institute of Marketing define marketing as The management process
responsible for identifying, anticipating and satisfying customer
requirements profitability
If we look at this definition in more detail Marketing is a management responsibility and
should not be solely left to junior members of staff. Marketing requires co-ordination,
planning, implementation of campaigns and a competent manager(s) with the appropriate
skills to ensure success.
Marketing objectives, goals and targets have to be monitored and met, competitor strategies
analysed, anticipated and exceeded. Through effective use of market and marketing
research an organisation should be able to identify the needs and wants of the customer and
try to delivers benefits that will enhance or add to the customers lifestyle, while at the same
time ensuring that the satisfaction of these needs results in a healthy turnover for the
organisation.
Philip Kotler defines marketing as satisfying needs and wants through an exchange process.
Within this exchange transaction customers will only exchange what they value (money) if they
feel that their needs are being fully satisfied; clearly the greater the benefit provided the higher
transactional value an organisation can charge.
Following are the important characteristics of Marketing:
It is a total system of business strategies and activities which are consumer oriented. It is an
integrated
processa
result
of
interaction
of
many
activities.
It starts with understanding consumer needs and then catering to those needs.
It should consistently increase the profits over the long run.

Core Marketing Concepts:

Needs: States of felt deprivation. Needs may be physiological, e.g. - need for food,
clothing, warmth, shelter and safety. Social needs are craving for belongingness and
affection. These are basic requirements of any individual.
Wants: Wants are the forms human needs take as they are shaped by culture and individual
personality characteristics. While human needs are limited, wants are unlimited.
Demand: When human wants are backed by purchasing power and willingness to buy they
become demands.
Marketing Offers: Combinations of products, services, information, or experiences
offered to a market to satisfy a need or want.
Customer value: difference between the value the customer gains from buying and using a
product and the cost of buying the product.

Customer Satisfaction: Depends on how well the products performance lives up to the
customers expectations.
Market: A set of actual and potential buyers of a product.

SWOT ANALYSIS

Ref diag slides.

SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and
Threats. SWOT analysis is an important tool for auditing the overall strategic position of a
business and its environment.
The Key Distinction - Internal and External Issues

Strengths and weaknesses are Internal factors. For example, a strength could
be your specialist marketing expertise. A weakness could be the lack of a new product.
Opportunities and threats are external factors. For example, an opportunity could
be
a
developing distribution channel such as the Internet, or changing consumer lifestyles that
potentially increase demand for a company's products. A threat could be a new competitor
in an important existing market or a technological change that makes existing products
potentially obsolete.
It is worth pointing out that SWOT analysis can be very subjective - two people rarely
come-up with the same version of a SWOT analysis even when given the same information
about the same business and its environment. Accordingly, SWOT analysis is best used as a
guide and not a prescription. Adding and weighting criteria to each factor increases the
validity of the analysis.

Marketing Environment

Organizations do not operate in isolation. Although managers may be able to direct internal
resources, many things that affect an organization are beyond a managers control. Here, the
term- Marketing Environment comes into picture. It refers to all of the forces surrounding and
affecting a firms ability to do and grow business successfully over a long period of time.

The success of Marketing Management fully depends on the knowledge of marketing

environment. A firm should know the current environment and upcoming trends in it to so that it can
respond to the changes accordingly. A detailed study of marketing environment helps in
developing strategic response to the environment. It also enables the firm to gauge the
opportunities and threats ahead.
The marketing environment consists of the macro environment, microenvironment and internal
environment. The figure given below shows the different components of the marketing
environment:
Micro Environment- The microenvironment refers to the forces that are close to the
company and affect its ability to serve its customers. It includes suppliers that deal directly or
indirectly, consumers and customers, and other local stakeholders. Micro tends to
suggest small, but this can be misleading. In this context, micro describes the relationship
between firms and the driving forces that control this relationship. It is a more local
relationship, and the firm may exercise a degree of influence.

Macro environment- The macro environment refers to all forces that are part of the larger
society and affect the microenvironment.It includes all the factors that influence the firm but
are not in its direct control. A company does not generally influence any laws (although it is
accepted that they could lobby or be part of a trade organization). It broadly includes
concepts such as demography, economy, natural forces, technology, politics, culture and
Govt. policies. The macro environment is continuously changing, and the company needs to
be flexible to adapt. There may be aggressive competition and rivalry in a market.
Globalization means that there is always the threat of substitute products and new entrants.
The wider environment is also ever changing, and the marketer needs to compensate for
changes in culture, politics, economics and technology.

Demographic Environment:
No business can run without people, so it becomes important to study the population- its size,
growth rate, age distribution, religious composition and literacy level. This is a very important
factor to study for marketers and helps to divide the population into market segments and target
markets
Socio-Cultural Environment:

Consumer buying behavior is closely related to the socio-cultural setup. In any society, the
culture, traditions, beliefs, values and lifestyles of the people largely influence their consumption
patterns and purchase decisions. Culture relates to religion, language, education etc. whereas
social class is determined by income, occupation location of residence etc. The values can also
be further categorized into core beliefs, which passed on from generation to generation and very
difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it
is important to know the difference between the two and to focus your marketing campaign to
reflect
the
values
of
a
target
audience.

Economic Environment:
It relates to the both the general economic conditions as well as segment wise economic
conditions of the population with respect to - their disposable income, purchasing power etc.. It
also includes the growth rate of the economy, tax rates, inflation rates, credit availability and
interest rates, price of important materials, labour rates, energy scene etc. This refers to the
purchasing power of potential customers and the ways in which people spend their money.
Within this area are two different economies, subsistence and industrialized. Subsistence
economies are based more in agriculture and consume their own industrial output. Industrial
economies have markets that are diverse and carry many different types of goods. Each is
important to the marketer because each has a highly different spending pattern as well as
different
distribution
of
wealth.
important

aspect

for

marketer

to

monitor.

Political
Environ
ment:
This plays a very important role in case of a business/industrial firm. The political
environment
includes all laws, government agencies, and groups that influence or limit other
organizations
and individuals within a society. The political environment of a nation directly
influences its
economic status thus affecting the industrial growth. In fact, the economic and
political
environments are closely knit and they have a major role in structuring the
industrial setup.
Political environment may include- the type of government in the country, its
stability, media,
social and religious organizations etc..It is important for marketers to be aware of
the political
scenario as it can be complex. Some products are regulated by both state and federal
laws. There
are even restrictions for some products as to who the target market may be, for
example,
cigarettes should not be marketed to younger children. There are also many
restrictions on
subliminal messages and monopolies. As laws and regulations change often, this
is a very important aspect
for
a
marketer
to
monitor.

Natural environment:

This covers the aspects of climate, ecology and availability of natural

resources.
This
includes
the natural resources that a company uses as inputs and affects their
marketing
activities.
The
concern in this area is the increased pollution, shortages of raw
materials
and
increased
governmental intervention. As raw materials become increasingly
scarcer,
the
ability
to
create
a
companys product gets much harder. Also, pollution can go as far
as
negatively
affecting
a
companys reputation if they are known for damaging the
environment.
The
last
concern,
government intervention can make it increasingly harder for a

company
to
fulfill
requirements get more stringent.

their

goals

as

Technological Environment:

For a business firm, technology affects not only its final products,
but
also
its
raw
materials,
processes, and operations as well as its customer segments. The
technological
environment
is
perhaps one of the fastest changing factors in the
macroenvironment.
This
includes
all
developments from antibiotics and surgery to nuclear missiles
and
chemical
weapons
to
automobiles and credit cards. As these markets develop it can create
new
markets
and
new
uses
for products. It also requires a company to stay ahead of others and
update
their
own
technology
as it becomes outdated. They must stay informed of trends so they
can
be
part
of
the
next
big
thing, rather than becoming outdated and suffering the consequences
financially.

Legal Environment:

Businesses should have a thorough understanding of the implications

of all the legal provisions relating to their business. Business
legislation is classified into categories like- corporate affairs, consumer
protection, employee protection, corporate protection etc.
Fad, Trend and Megatrend
Enterprising companies are always keen on understanding the
unmet
needs
and
wants
of
customers and manage to create solutions to them. A proper analysis
of
marketing
environment
helps in understanding fads, needs and trends. A Fad is an event
which
is
unpredictable,
short
lived and without social, economic and political significance. Earning
profit
out
of
a
fad
is
more

a matter of luck and good timing than anything else. A trend is a

direction
or
sequence
of
events
that has some momentum and durability than fad. A trend tells
about
the
shape
of
the
future
giving us many marketing opportunities. Mega trends are large
social,
economic,
political
and
technological change that are slow to form, and once in place, they
influence
us
for
sometimearound seven to ten years or even longer. Many marketing programs
or
new
product
launch
are
likely to be more successful if trends and mega trends are taken into
consideration.
But
all
such
opportunities do not ensure success and market research is
necessary
to
analyze
the
actual
potential.

Market Research and Marketing

information Systems
Information is vital to Marketing
Without Information, companies of the 21st century will find it
more difficult to grow or even survive in an environment that is
getting fiercer and fiercer : Information for dealing with its
customers, data about its own performance, about its markets, and
more and more, information about its whole environment (including
social, political, economic and cultural factors; 'MacroMarketing' in
other words).
The complexity of management decision making has increased greatly
during
recent
years,
it
is
much more significant for the firms marketing management because it
is
located
at
the
interface
between the firm and ever changing character of most markets
a
growing
concern
for
environmental quality; the ever increasing competition from other
brands
and
substitute
products
, growing shortages of certain raw materials, the volatility of
international
political
relationships
and rapid changing technology results in growing difficulties in
making
efficient
marketing
decisions .
Today, in case of most of the business firms, the management
groups
remain
far
from
their
customers-the individual who is the key to business success. A
complicated
distribution
system
intervenes between managers and widely scattered customers, yet
they
must
know
who
their
customers are and what their expectations are. The managers must
also
have
complete
market
intelligence and competitor knowledge for sound decision making. For
most
of
such
information,
executives rely upon their sales representatives and dealers, but
increasingly
the
final
link
in
the
communication channel through which the consumers communicate
with
the
company
is
market

research. It enables the manufacturer or producer or service

provider
to
what
the
consumers
want, at what time they want, in how much quantity they want,
how
many
of
them
want
a
particular commodity, how it could be made available and how many
other
customers
would
be
attracted by the producer or a dealer. Proper assessment of the market
demand
can
be
made
and
market risk can be reduced.
With the increasing complexity of business activity, the magnitude of
marketing problem is also increasing. As a result the costs involved
are also huge, this is why management is turning more and more to
rigorous market information as a way of reducing the
uncertainties inherent in decision making.

Marketing Research vs. Market Research

These terms often are used interchangeably, but technically there is a difference.
Marketing research is sort of a communication link between company
and
customers,
market
and
environment: marketing research generates and gives company
information to help companies
make
better
marketing
strategies
plans.
Market research (compared to marketing research) is the part of
marketing research that is about researching the market place
(customer needs, competition, opportunities, and changes in the
marketplace).

and

Definition- Market research is the process of systematically

gathering, recording and analyzing data and information about
customers, competitors and the market.
Its uses include to help create a business plan, launch a new
product or service, fine tune existing products and services, and
expand into new markets. Market research can be used to determine
which portion of the population will purchase a product/service,
based on variables like age, gender, location and income level.
The key idea behind Marketing Research is:
1. it is the research on the manifold problem of marketing
2. Its purpose is to aid decision making in marketing
3. Systematic gathering and analysis of information is what it does in achieving its

mission.
A list of questions that can be answered through market research:
What is the current status of the market? What are the
ongoing trends? Who are the competitors and what are
their strategies?
What is the product feedback in the market?
Which needs are important? Are the needs being
met by the current products? What are the
customer preferences and expectations?
The steps in market research are as follows:
Define the Problem and the research objectivesProblem should not be defined either too broadly or too
narrowly.
Following
questions
help
in formulating a problem--What is purpose of study solve a problem? Identify
opportunity? Is additional background info necessary? What
information is needed to make decision? How will information
be utilized? Should research be conducted?
Develop the research PlanThis is to efficiently gather information. It involves decisions on
the data sources, research approaches, research instruments,
sampling plan and contact methods.
1. Data sources:
Primary data -Primary research entails the use of immediate data in determining the
survival of the market. The popular ways to collect primary data consist of surveys,
interviews and focus groups, which shows that direct relationship between potential
customers and the companies
Secondary data- secondary research is a means to reprocess and reuse collected
information as an indication for betterments of the service or product. Information
relates to a past period.
2. Research Approaches:
Observational research- It is a social research technique that involves the direct
observation of phenomena in their natural setting
Focus Group Research- A focus group is a form of qualitative research in which a
group of people are asked about their attitude towards a product, service, concept,
advertisement, idea, or packaging. Questions are asked in an interactive group
setting where participants are free to talk with other group members.
Survey Research- The broad area of survey research encompasses any measurement

procedures that involve asking questions of respondents to understand their

knowledge, beliefs, preferences and satisfaction. A "survey" can be anything from a
short paper-and-pencil feedback form to an intensive one-on-one in-depth
interview.
Behavioral Data- data that reveal the buying behavior of our customers and prospects.
Experimental research- The general procedure is one or more independent variables are
manipulated to determine their effect on a dependent variable.
3. Research Instruments:
Questionnaires- It is a common instrument for collection of primary data. It consists of a
set of questions presented to respondents.
Qualitative measures- These are research techniques, in which data is obtained from
a relatively small group of respondents and not analyzed with statistical techniques.
Mechanical devices- Galvanometers, eye cameras, brain wave scanners etc. are
used.
4.
a)
b)
c)

Sampling Plan- This calls for three decisions

Sampling unit: who is to be surveyed
Sample Size: how many people should be surveyed
Sampling Procedure: How should the respondents be chosen?

5. Contact Methods
Mail Questionnaire- It is the best way to reach people who would not give personal
interviews or whose responses might be biased or distorted by the interviewers
Telephone Interview- It is the best method for gathering information quickly. The
response rate is typically higher than in the case of mailed questionnaires.
Personal Interview- It is the most versatile method. The interviewers can ask more
questions and record additional observations about the respondent, such as dress
and body language. But it is more expensive and requires more planning and
supervision.
Online Interview- A company can include a questionnaire on its website and offer
an incentive to answer the questionnaire or it can place a banner on a frequently
visited site, inviting people to answer some questions and possibly win a prize.
Collect the Information- This phase is the most error prone and most expensive. At times
some of the respondents cannot be contacted again while some others are reluctant to
cooperate. In some cases the respondents give dishonest answers and certain
interviewers
are also biased.
Analyze the Information- The collected data is then tabulated and frequency
distributions
are developed. Different statistical techniques and decision models are used to get the
findings.

Present the findings-the findings are presented to the management for making major
marketing decisions.
Make the decision- Research provides the required information to the managers.
Depending upon the reliability of the findings, it is accepted or rejected.

Marketing Information Systems

For any business to excel, knowledge changes in the market
place is very critical and it is the foremost responsibility of the
marketers to keep a track of these changes. Companies study
their managers information needs and design marketing
information systems to meet these needs. A marketing
Information Systems consists of people, equipment, and
procedures to gather, sort, analyze, evaluate and distribute
needed, timely and accurate information to marketing decision
makers.
A marketing information system (MIS) is intended to bring
together
disparate
items
of
data
into a coherent body of information. An MIS is, as will shortly be
seen,
more
than
raw
data
or information suitable for the purposes of decision making. An
MIS
also
provides
methods
for interpreting the information the MIS provides. Moreover, as
Kotler's1
definition
says,
an MIS is more than a system of data collection or a set of
information technologies:
"A marketing information system is a continuing and
interacting structure of people, equipment and procedures to
gather, sort, analyse, evaluate, and distribute pertinent, timely and
accurate information for use by marketing decision makers to
improve their marketing planning, implementation, and control".
Internal reporting systems: All enterprises which have been in operation for any period
of time have a wealth of information. However, this information often remains underutilized because it is compartmentalized, either in the form of an individual entrepreneur
or
in the functional departments of larger businesses. That is, information is usually
categorized according to its nature so that there are, for example, financial, production,
manpower, marketing, stockholding and logistical data. Often the entrepreneurs, or
various
personnel working in the functional departments holding these pieces of data, do not see
how it could help decision makers in other functional areas. Similarly, decision makers
can
fail to appreciate how information from other functional areas might help them and

therefore do not request it.

The internal records that are of immediate value to marketing decisions are: orders
received, stockholdings and sales invoices. These are but a few of the internal records
that can be used by marketing managers, but even this small set of records is capable of
generating a great deal of information.
By comparing orders received with invoices an enterprise can establish the extent to
which it is providing an acceptable level of customer service. In the same way,
comparing stockholding records with orders received helps an enterprise ascertain
whether its stocks are in line with current demand patterns.
Marketing research systems: Marketing research is a proactive search for information.
That is, the enterprise which commissions these studies does so to solve a perceived
marketing problem. In many cases, data is collected in a purposeful way to address a
welldefined problem (or a problem which can be defined and solved within the course of the
study). The other form of marketing research centres not around a specific marketing
problem but is an attempt to continuously monitor the marketing environment.
Marketing intelligence systems: Whereas marketing research is focused, market
intelligence is not. A marketing intelligence system is a set of procedures and data
sources used by marketing managers to extract information from the environment that
they can use in their decision making.