MARKETING CONCEPTS

Marketing is a social process by which individuals and groups obtain what they need and want through creating
and exchanging products and values with others’. This definition of marketing rests on the following concepts:

NEEDS, WANTS AND DEMANDS

A human need is a state of felt deprivation of some basic satisfaction. People require foods, clothing,
shelter, safety, belonging, esteem etc. these needs exist in the very nature of human beings.

Human wants are desires for specific satisfiers of these needs. For example, cloth is a needs but
Raymonds suiting may be want. While people’s needs are few, their wants are many.

Demands are wants for specific products that are backed up by an ability and willingness to buy them.
Wants become demands when backed up by purchasing power.

Products

Products are defined as anything that can be offered to some one to satisfy a need or want.
Value and Satisfaction

Consumers choose among the products, a particular product that give them maximum value and
satisfaction.
Value is the consumer’s estimate of the product’s capacity to satisfy their requirements.

Exchange and Transactions

Exchange is the act of obtaining a desired product from someone by offering something in return. A
transaction involves at least two thing of value, conditions that are agreed to, a time of agreement and a place
of agreement.

Market

A market consist of all the existing and potential consumers sharing a particular need or want who might
be willing and able to engage in exchange to satisfy that need or want.

IMPORTANCE OF MARKETING

1. Marketing process brings goods and services to satisfy the needs and wants of the people.
2. It helps to bring new varieties and quality goods to consumers.

3. By making goods available at al places, it brings equipment distribution.

4. Marketing converts latent demand into effective demand.

5. It gives wide employment opportunities.

6. It creates time, place and possession utilities to the products.

7. Efficient marketing results in lower cost of marketing and ultimately lower prices to consumers.
8. It is vital link between production and consumption and primarily responsible to keep the wheel of
production and consumption constantly moving.

9. It creates to keep the standard of living of the society.

CONCEPTS OF MARKETING

There are five distinct concepts under which business organisation can conduct their marketing activity.

PRODUCTION CONCEPT

In this approach, a firm is considered as the central point and all goods and commodities produced were sold in
the market. The major emphasis was on the production process and control on the technical perfections while
producing the goods.
The production concept holds that consumers will favour those products that are widely available and low in
cost. Management in production oriented organisation concentrates on achieving high production efficiency and
wide distribution coverage.

Marketing is a native form in this orientation and it was assumed that a good product sells by itself. Only
distribution and selling were considered to be ‘marketing’. The technologists thoughts that amenability and low
cost of the products due to the large scales of production would be the right ‘Marketing Mix’ for the consumers.

But, they do not the best of customer patronage. Customers are in fact motivated by a variety of considerations
in their purchase. As a result, the production concept fails to serve as the right marketing philosophy for the
enterprise.

PRODUCT CONCEPT

The product concept is somewhat different from the production concept.

The product concept holds that consumer’s will favour those products that offer the most quality, performance
and features. Management in these product-oriented organizations focus their energy on making good products
and improving them over time.

Yet, in many cases, these organizations fail in the market. They do not bother to study the market and the
consumer in-depth. They get totally engrossed with the product and almost forget the consumer for whom the
product is actually meant; they fail to find our what the consumers actually need and what they would accept.

SALES CONCEPT

The sales concept maintains that a company cannot expect its products to get picked up automatically by the
customers. The company has to consciously push its products. Aggressive advertising, high-power personal
selling, large scale sales promotion, heavy price discounts and strong publicity and public relations are the
normal tools used by organisation that rely on this concept. In actual practice, these organizations too do not
enjoy the best of customer patronage.

The selling concept is thus undertaken most aggressively with ‘unsought goods’, i.e. those goods that buyers
normally do not think of buying, such as insurance, encyclopedias. These industries have perfected various
techniques to locate prospects and with great difficulty sell them as the benefits of their products.

MARKETING CONCEPT

The Marketing concept was born out of the awareness that marketing starts with the determination of
consumer wants and ends with the satisfaction of those wants. The concept puts the consumer both at the
beginning and at the end of the business cycle. The business firms recognize that “there is only one valid
definition of business purpose: to create a customer”. It proclaims that “the entire business has to be seen
from the point of view of the customer”. In a company practicing this concept, all departments will recognize
that their actions have a profound impact on the company’s to create and retain a customer. Every
department and every worker and manager will ‘think customer’ and ‘act customer’.

Societal Marketing concept

The societal marketing concept holds that the organization’s task is to determine the needs,
wants and interests of target markets and to deliver the desired satisfaction more effectively and
efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well
being.

A-few magazines such as Kalki, Ananda Vikadan, do not accept any dvertisements for Cigarettes
or alcoholic liquors though it is loss of revenue for them. This is a typical example of societal marketing
concept.

Marketing Myopia

At this stage, it would be appropriate to explain the phenomenon of ‘marketing myopia’. The term ‘marketing
myopia’ is to be credited to Professor Theodore Levitt. In one of his classic articles bearing the same title, in the
Harvard Business Review, Professor Levitt has explained ‘marketing myopia’ as a coloured or crooked
perception of marketing and a short-sightedness about business. Excessive attention to production or product or
selling aspects at the cost of the customer and his actual needs, creates this myopia. It leads to a wrong or
inadequate understanding of the market and hence failure in the market place. The myopia even leads to a
wrong or inadequate understanding of the very nature of the business in which a given organisation is engaged
and thereby affects the future of the business. He further explained that while business keep changing with the
times, there is some fundamental characteristic in each business that maintains itself through the changing
times, which invariably relates to the basic human need which the business seeks to serve and satisfy through
its products. A wise marketer should understand this important fact and define his business in terms of this
fundamental characteristic of the business rather than in terms of the products and services manufactured and
marketed by him. For instance, the Airways should define their business as transportation the Movie makers
should define their business as entertainment, etc.

MARKET SEGMENTATION

According to William Stanton, “Market segmentation is the process of dividing the total heterogeneous market
for a product into several sub-markets or segments each of which tend to be homogeneous in all significant
aspects.

Bases of Market Segmentation

There are a number of bases on which a firm may segment its market

1. Geographic basis

a. Nations

b. States

c. Regions

2. Demographic basis

a. Age

b. Sex

c. Income

d. Social Class

e. Material Status

f. Family Size

g. Education

h. Occupation

3. Psychographic basis

a. Life style

b. Personalities

c. Loyalty status

d. Benefits sought

e. Usage rate (volume segmentation)

f. Buyer readiness stages (unaware, aware, informed, interested, desired, intend to buy)
g. Attitude stage (Enthusiastic, positive, indifferent, negative, hostile)

Geographical Segmentation

When the market is divided into different geographical unit as region, continent, country, state, district, cities,
urban and rural areas, it is called as geographical segmentation. Bajaj has sub-divided the entire country into
two distinct markets. Owing to the better road conditions in the north, the super FE Sector is promoted better
with small wheels; whereas in the case of south, Bajaj promotes Chetak FE with large wheels because of the bad
road conditions.
Demographic Segmentation

Demographic variables are relatively easy to understand and measure, and they have proven to be excellent
segmentation criteria for many markets. Demographic segmentation refers to dividing the market into groups
on the basis of age, sex, family size cycle, income, education, occupation, religion, race, cast and nationality. In
better distinctions among the customer groups this segmentation helps. The above demographic variables are
directly related with the consumer needs, wants and preferences.

Age: Some aspects of age as a segmentation variable are quite obvious. For example, children constitute the
primary market for toys and people 65 years and older are major users of medical services.

Sex segmentation is applied to clothing, cosmetics, magazines and hair dressing. The magazines like Women’s
Era, Femina, (in Malayalam), Mangaiyar Malar (in Tamil) are mainly segmented for women. Recently even a
cigarette exclusively for women was brought out. Beauty Parlours are not synonyms for the ladies.

Income segmentation: Wealthy people, for example, are more likely to buy expensive clothes, jewelleries, cars,
and to live in large houses. In addition, income has been shown to be an excellent segmentation correlate for an
even wider range of commodity purchased products, including household toiletries, paper and plastic items,
furniture, etc.

Social Class segmentation: This is a significant market segment. For example, members of different social
classes vary dramatically in their use of bank credit cards. People in lowe4r social classes tend to use bank
credit cards as installment loans, while those in higher social classes use them for convenience purposes.

Psychographic Segmentation

On the basis of the life style, personality characteristics, buyers are divided and this segmentation is known as
psychographics segmentation. Certain group of people reacts in a particular manner for an appeal projected in
the advertisements and exhibit common behavioural patterns. Marketers have also used the personality
variables as independent, impulsive, masculine, aggressive, confident, naïve, shy etc. for marketing their
products.

Behavioural Segmentation

Buyer behavioural segmentation is slightly different from psychographic segmentation. Here buyers are divided
into groups on the basis of their knowledge, attitude, use or response to a product.

Benefit segmentation: The assumption underlying the benefit segmentation is that markets can be defined
on the basis of the benefits that people seek from the product it has also been shown that the relative
importance that people attach to particular benefits varies substantially.
The firm indentifies the benefit or set of benefits that prospective customers want from their purchases and
then designs products and promotional strategies to meet those needs.Buyers can be divided based on their
needs, to purchase product for an occasion.

Life-Style Segmentation

Life-style segmentation is a relatively new technique that involves looking at the customer as a “whole” person
rather than as a set of isolated parts. It attempts to classify people into segments on the basis of a broad set of
criteria”.
The most widely used life-style dimensions in market segmentation are an individual’s activities, interests,
opinions, and demographic characteristics. Individuals are analyzed in terms of (i) how they spend their time, (ii)
what areas of interest they see as most important, (iii) their opinions on themselves and of the environment
around them, and (iv) basic demographics such as income, social class and education.

Requirements for effective segmentations

1. Measurability – the degree to which the size and purchasing power of the segments can be measured.
2. Accessibility – the degree to which the segments can be effectively reached and served.
3. Substantiality – the degree to which the segments are large and/or profitable enough.
4. Actionability – the degree to which effective programmes can be formulated for attracting and serving
the segments.

BENEFITS OF MARKET SEGMENTATION

 1. To design product lines that are consistent with the demands of the market and that do not ignore
important segments.
2.
3. To spot the first signs of major trends in rapidly changing markets.
4.
5. To direct the appropriate promotional attention and funds to the most profitable market segments.
6.
7. To determine the appeals that will be most effective with each market segments.
8.
9. To select the advertising media that best matches the communication patterns of each market segment.
10.
11. To modify the timing of advertising and other promotional efforts so that they coincide with the periods
of greatest market response.

FEATURES OF CONSUMER MARKETING

Consumer goods are destined for use by ultimate consumers or house-holds and in such form that they can be
used without commercial processing.
1. Consumer goods and services are purchased for personal consumption.
2. Demand for consumer goods and services are direct demand. Consumer buyers are individuals and
households.
3. Impulse buying is common in consumer market.
4. Many consumer purchases are influenced by emotional factors. The number of consumer buyers is
relatively very large.
5. The number of factors influencing buying decision-making is relatively small.
6. Decision-making process is informal and often simple. Relationship marketing is less significant.
7. Technical specifications are less important. Order size is very small.
8. Distribution channels are generally lengthy and the numbers of resellers are very large.
9. Vendor loyalty is relatively less important..
10. Consumers are dispersed geographically.
11. Demand for consumer goods is price elastic.

FEATURES OF INDUSTRIAL MARKETING

In industrial marketing, the markets is concerned with the marketing of industrial goods to industrial users. The
industrial goods are those intended for use in producing of other goods roe rendering of some service in
business

1. Industrial goods are services are bought for production of other goods and services.
2. Demand for industrial goods and services is derived demand Industrial buyers are mostly firms and other
organizations. Impulse buying is almost absent in industrial market.
3. The number of business buyers is relatively small.
4. The number of factors influencing buying decision-making is relatively large.
5. Decision-making process tends to be complex and formal. Relationship marketing is more relevant and
significant. Technical specifications are more important.
6. Order size is often very large.
7. Service aspects and performance guarantees are very important. Direct marketing and personal selling
are highly important
8. Distribution channels are generally tend to be direct or short and the number of resellers are small.
9. Vendor loyalty tends to be high.
10. Conformity to product specifications and reputation of the manufacturer supplier are more important.
11. Business buyers in many cases are geographically concentrated.
12. Price sensitivity of demand for industrial goods is low.

TARGET MARKETING

Target marketing refers to selection of one or more of many market segments and developing products and
marketing mixes suited to each segments.

STEPS IN TARGET MARKETING

Target marketing essentially consist of the following steps:

 1. Define the relevant market

The market has to be defined in terms of product category, the product form and the specific brand.
2. Analyze characteristics and wants of potential customers

The customers wants and needs are to be analyzed in terms of geographic location, demographics,
psychographics and product related variable.

3. Identify bases for segmenting the market

From the profiles available identify those has strength adequate to a segment and reflection the wants to
4. Define and describe market segments

As any one basis, say income is meaningless by itself, a combination of various bases has to be arrived as
such that each segment is distinctly different from other segments in buying behaviour and wants.
5. Analyze competitor’s positions

In such segment by the consumers are to found consumers and the list of attributes which they consider
important is determined.

6. Evaluate market segments

The market segments have to be evaluated in terms of revenue potential and cost of the marketing effort.
The former involves estimating the demand for the product while the latter is an estimate of costs involved in
reaching each segment.

7. Select the market segment

Choosing dfkjgdfkjgfd the available segments in the market one has to bear in mind the ksdfjgksjgkjd and
resources, the presence or absence of competitors in the sdkjgksjdf and the capacity of the grow in size.

8. Finalise the marketing mix

This involves decisions on product, distribution, promotions and price. Product decisions will gkjsdf into account
product attributed fdgkdjf wanted by consumers, choice of appropriate brand name and image will help in
promoting the product to the chosen segment and pricing can be done keeping the purchase behaviour in mind .

Marketing Environment
‘A company’s marketing environment consists of the actors and forces external to the marketing management
function of the firm that impinge on the marketing management’s ability to develop and maintain successful
transactions with its target customers’.The company’s marketing environment consists of micro environment and
macro environment. The micro environment consists of the actors in the company’s immediate environment that
affects its ability to serve the markets: the company, suppliers, market intermediaries, customers, competitors
and publics. The macro environment consists of the larger societal forces that affect all of the actors in the
company’s micro environment the demographic, economic, physical, technological, political, legal and socio-
cultural forces.

ACTORS IN THE COMPANY’S MICRO ENVIRONMENT

Every company’s primary goal is to serve and satisfy a specified set of needs of a chosen target market. To
carry out this task, the company links itself with a set of suppliers and a set of marketing intermediaries to
reach its target customers. The suppliers – company – marketing-intermediaries – customers chain comprises
the core marketing system of the company. The company’s success will be affected by two additional groups
namely, a set of competitors and a set of publics. Company management has to watch and plan for all these
factors.

SUPPLIERS

Suppliers are business firms who provide the needed resource to the company and its competitors to produce
the particular goods and services. Any sudden change in the ‘suppliers’ environment will have a substance
impact on the company’s marketing operations. Sometimes some of the inputs to the company might cost more
and hence managers have continuously monitored the fluctuations in the suppliers side. Sudden supply
shortage labour strikes and other events can interfere with the fulfillment of delivery promise customers and
lose sales in the short run and damage customer goodwill in long run
COMPANY
Marketing management at any organisation, while formulating marketing plans have to take into consideration
other groups in the company, such as top management, finance, R&D, purchasing, manufacturing and
accounting. Finance department has to be consulted for the funds available for carrying out the marketing plan
apart from others. R&D has to be continuously doing new product development. Manufacturing has to be
coordinated based on the market demand and supply of the products. According has to measure revenues and
costs to help marketing in achieving its objectives. Usually marketing department has to face the bottlenecks
put up by the sister departments while designing and implementing their marketing plans.

MARKETING INTERMEDIARIES

They are the people who connect the company with the customers. There are number of middle men who
operate in this cycle. Agent middle men like brokers and agents find customers and establish contacts,
merchant middlemen are the wholesalers, retailers, who take title to and resell the merchandise. Apart from
these channel members, there are physical distribution firms who assist in stocking and moving goods from the
original locations to their destinations.

COMPETITORS

If one company plans a marketing strategy at one side, there are number of other companies in the same
industry doing such other calculations. Coke has competitors in PepsiSometimes competition comes from
different forms. Airlines have to overcome competitions not only from the other Airlines but also from Railways
and Ships. Basically every company has to identify the competitor, monitor their activities and capture their
moves and maintain customer loyalty. Hence every company comes out with their own marketing strategies.

PUBLICS

A public can facilitate or seriously affect the functioning of the company, Philip Kotler defines public as any
group that has an actual or potential interest or impact on a company’s ability to achieve its objectives. Kotler
notes that there are different types of publics, Government publics, citizen action publics, local publics, general
public and internal publics. Since, the success of the company will be affected by how various publics view their
activity, the companies have to monitor these publics, anticipate their moves dealing with them in constructive
ways.

CUSTOMERS

Customers are the fulcrum around whom the marketing activities of the organisation revolve. The marketer has
to face the following types of customers.

Customer Markets: Markets for personal consumption.

Industrial Markets: Goods and services that could become the part of a product in those industry.
Institutional Buyers: Institutions like schools, hospital, which buy in bulk.
Reseller Markets: The organizations buy goods for reselling their products.
Government Markets: They purchase the products to provide public services.
International Markets: Consists of Foreign buyers and Governments.

MACRO ENVIRONMENT

Macro environment consists of six major forces viz, demographic, economic, physical, technological, political/
legal and socio-cultural. The trends in each macro environment components and their implications on marketing
are discussed below:

DEMOGRAPHIC ENVIRONMENT

Demography is the study of human population in terms of size, density, location, age, gender, occupation etc.
The demographic environment is of major interest to marketers because it involves people the people make up
markets.

The world population and the Indian population in particular is growing at an explosive rate. This has major
implications for business. A growing population means growing human needs. Depending on purchasing
powers, it may also mean growing market opportunities. On the other hand, decline in population is a threat so
some industrial and the boon to others.
The increased divorce rate shall also have the impact on marketing decisions. The higher divorce rate results in
additional housing units, furniture, appliances and other house-hold appliances. Similarly, when spouses work at
two different places, that also results in additional requirement for housing, furniture, better clothing, and so on.
ECONOMIC ENVIRONMENT
Markets require purchasing power as well as people. Total purchasing power is functions of current income,
prices, savings and credit availability. Marketers should be aware of four main trends in the economic
environment.

(i) Decrease in Real Income Growth

(ii)Continued Inflationary Pressure

(iii) Low Savings and High Debt
(iv) Changing Consumer Expenditure Patterns

PHYSICAL ENVIRONMENT

There are certain finite renewable resources such as wood and other forest materials which are now dearth in
certain parts of world. Similarly there are finite non-renewable resources like oil coal and various minerals,
which are also not short in supply. In such cases, the marketers have to find out some alternative resources. For
instance, the marketers of wooden chairs, due to shortage and high cost of wood shifted to steel and later on
fiber chairs. Similarly scientists all over the world are constantly trying to find out alternative sources of energy
for oil due to dearth in supply.

SOCIO CULTURAL ENVIRONMENT

The socio-cultural environment comprises of the basic beliefs, values and norms which shapes the people. Some
of the main cultural characteristics and trends which are of interest to the marketers are:

(i) Core Cultural Values

(ii)Each Culture Consists of Sub-Cultures

TECHNOLOGICAL ENVIRONMENT
Technology advancement has benefited the society and also caused damages. Open heart surgery, satellites all
were marvels of technology, but hydrogen bomb was on the bitter side of technology. Technology is
accelerating at a pace the many products seen yester-years have become obsolete now. Alvin Toffler in his book
‘The Future Shock’ has made a remark on the accelerative thrust in the invention, exploitation and diffusion of
new technologies. There could be a new range of products and systems due to the innovations in technology.

POLITICAL AND LEGAL ENVIRONMENT

Marketing decisions are highly affected by changes in the political/ legal environment. The environment is made
up of laws and government agencies that influence and constraint various organizations and individuals in
society.

When the government changes, the policy relating to commerce, trade, economy and finance also changes
resulting in changes in business. Very often it becomes a political decisions. For instance, one Government
introduce prohibition, and another government lifts the prohibition. Also, one Government adopts restrictive
policy and another Government adopts liberal economic policies. All these will have impact on business.

Consumer buying process

The buying process thus, is composed of a number of stages and is influenced by a individual’s psychological
framework composed of the individual’s personality, motivations, perceptions and attitudes. The various stages
of the buying process are:

1. Need Recognition

2. Information Search

3. Evaluation of Alternatives

4. Purchase Behaviour

5. Post-Purchaser Evaluation

1. Need Recognition
The recognition of need its likely to occur when a consumer is faced with a problem, and if the problem is not
solved or need satisfied, the consumer builds up tension. Example: A need for a cooking gas for busy house
wife. The needs can be triggered by internal (hunger, thirst, sex) and external stimuli (neighbor’s new Car or
TV). The marketers need is to identify the circumstance that trigger the particular need or interest in
consumers. The marketers should reach consumers to find out what kinds of felt needs or problem arose, what
brought them about how they led to this particular product.

2. Information Search

The consumer will search for required information about the product to make a right choice. How much search
he undertakes depends upon the strength of his drive, the amount of information he initially has, the ease of
obtaining additional information, the value he places on additional information and the satisfaction he gets from
search.

The following are the sources of consumer information:

Personal Sources:Family, friends, neighbours, past

experience.
Commercial Sources: Advertising, sales people, dealers, displays
Public Sources:Mass media, consumer welfare organisation.

3. Evaluation of Alternatives
When evaluating potential alternatives, consumers tend to use two types of information (i) a list of brands from
which they plan to make their selection (the evoke set) and (ii) the criteria they will use to evaluate each brand.
The evoke set is generally only a part – a subject of all the brands of which the consumer is awares.

The criteria used by the consumers in evaluating the brands are usually expressed in terms of product
attributes that are important to them. The attributes of interest to buyers in some familiar products are:

Two-wheeler:Fuel economy, pulling capacity, price

Computers:Memory capacity, graphic capability, software availability

Mouthwash:Colour, effectiveness, germ-killing, capacity, price, taste/flavour

Consumers will pay the most attention to those attributes that are concerned with their needs.

4. Purchase Behaviour

Consumers make two types of purchases trial purchases and repeat purchases. If he product is found
satisfactory during trial, consumers are likely to repeat the purchase. Repeat purchase behaviour is closely
related to the concept of brand loyalty. For certain products such as washing machine or refrigerator, trial is
not feasible and the consumer usually moves directly from evaluation to actual purchase. A consumer who
decides to purchase will make brand decision, quantity decision, dealer decision, timing decision and
payment method decision.

5. Post-Purchase Evaluation

The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behaviour. There are
three possible outcomes of post-purchase evaluations by consumers in light of their experience with the product
trial purchase.

that the actual performance matches the standard leading to neutral feeling;

that the performance exceeds the standards leading to positive disconfirmation, i.e. satisfaction; and
that the performance is below the standard, causing negative disconfirmation, i.e. dissatisfaction.

If the product lives up to expectations of the consumers, they will probably buy it again. If the products
performance is disappointing, the will search for more suitable alternative brand. Whether satisfied or
dissatisfied with the product, the consumer will pass on their opinion on others.The marketers can send a
letter congratualating the consumers for having selected a fine product. They can place advertisements
showing satisfied owners. They can solicit customers suggestions for improvements. At last, the marketers
can also help the consumers to dispose of the used brand, for example, by Buy-back-method.