Geethanjali Institute of PG Studies, Nellore

MARKETING MANAGEMENT
MBA II Sem
Study Material
Prepared by: M. Sandeep Kumar, Asst. Professor, Department of Management Studies
sandeepmachavolu@gmail.com

UNIT-1
INTRODUCTIO TO MARKETING MANAGEMENT

In this chapter we will discuss:

• Definition of marketing
• Evolution of marketing
• Marketing myopia
• Marketing dynamics
• Significance of marketing

Marketing is as old as mankind. A young child trying to persuade his mother to buy him candy, a
politician trying to convince people to cast their vote in his favor, or a person trying to persuade an
employer to hire him are all practicing marketing. In a more formal setup, business and non-business
organizations are also involved in marketing. The products that are marketed can be goods or services. A
place, an idea, an individual, or even a cause, can be marketed.

In this period of globalization, factors like economic crises, differences in standards of living,
imbalances in income distribution, environmental degradation, political unrest and a plethora of other social,
economic, and technological problems tend to increase the challenges and threats faced by companies and
nations. While these factors can be threats to a business, marketers try continuously to convert them into
opportunities. Thus, marketing plays a significant role in successfully running a business.

DEFINITION OF MARKETING
The American Marketing Association (AMA) defines marketing as
“The process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services
to create exchanges that satisfy individual and organizational goals.”
Marketing deals with products. A product can be a good, service or an idea. Marketers must adopt
different marketing approaches when selling intangible products (service and ideas) as they have no
physical form. A good is a physical entity i.e. it is a tangible product, which we can touch and feel. A CD-
ROM of Encyclopedia Britannica, a shirt, or a bar of chocolate, are examples of a good. A service is created
when human efforts are clubbed with mechanical efforts to provide intangible benefits to the customer; it
gives some value to the recipient, e.g. healthcare, laundry, transportation, banking, etc. Ideas provide
intellectual or spiritual benefits to customers. They include issues, philosophies and concepts, e.g. a
blueprint of a business plan, computer software. Similarly, a politician who is contesting an election tries to
sell ideas ranging from the protection of human rights to political activities.
A marketing transaction is one in which the buyer and the seller, irrespective of the nature of the
product, experience mutual satisfaction – the seller on selling the product and making a profit, and the
buyer on purchase and subsequent consumption of the product.

CONCEPT OF EXCHANGE
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 A person can satisfy his needs and wants by producing the goods himself, stealing them, coercing
someone to provide them, or through exchanges with other persons who are willing to part with their
goods voluntarily.
In the olden days, people used the barter system to exchange goods and services. Today, we exchange
products with money. Regardless of its nature, the conditions necessary for an exchange to take place are:
i. At least two parties must be involved.
ii. Each party must have something that interests the other.
iii. The parties must involve themselves voluntarily and each party must consider the other desirable
or at least acceptable to deal with.
iv. Each party must be in a position to communicate and deliver the product.
v. Each party must be free to accept or reject any offer from the other party.
From the point of view of business, exchange takes place when the customers have needs and
wants and the company has products to fulfill those needs and wants.

Needs and Wants

Needs constitute the basic requirements for the existence of life, such as food, clothing, shelter,
and belongingness. A want, on the other hand, arises when the basic needs are satisfied. It is important
for a marketer to understand whether his product falls in the needs category or in the wants category and
devise his marketing strategies accordingly. However, it is possible that a product which is perceived by
one customer as a want may be perceived as a need by another customer. Regardless of how customers
choose to view the difference between needs and wants, the ultimate aim of marketers should be to
motivate customers to consider their products in the first place.

ECONOMIC UTILITY
Marketing lays emphasis on providing the product to customers at the right place, at the right
price, at the right time and in the right form. Communication of information about the product helps
customers determine whether the product satisfies their needs. Marketers must focus on customer needs
and wants to ensure customer satisfaction. The extent to which a product satisfies customer needs and
wants is called utility. It is the amount of satisfaction a customer derives by consuming the product.
Marketers can provide four types of utility to their target customers - form utility, time utility, place utility
and possession utility.
Form utility
Form utility is created when raw material is converted into a finished product. For example, Manish
Malhotra, a dress designer, provides form utility by converting design concepts and fabric into a wide
range of clothing. Similarly, Britannia Industries converts wheat, sugar and other ingredients into biscuits
and cookies and provides form utility to its customers.
Time utility
Marketers provide time utility to their customers by providing their products when the customers want
them. For example, Automated Teller Machines (ATMs) installed by banks provide customers access to
banking services around the clock. By using technology that allows people to buy products over the
Internet whenever they want them, companies like Amazon.com and Dell are providing time utility to their
customers.
Place utility
Place utility is provided when a marketer provides the product at locations preferred by the customer. Domino’s
Pizza delivered at your doorstep, is an example of place utility. Apart from providing time utility, Amazon.com
and Dell also provide place utility by allowing customers to place orders from all over the world, and ensuring
the delivery of the products at the place desired by them.

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Possession utility
Possession utility allows a buyer to use the product as he wishes. It is the value that a buyer obtains from
the product. For example, a customer who has purchased a car may use it for whatever purpose he
desires. He may use it to commute to and from his office, or go on vacation with his family, or even rent it
out as a taxi.

EVOLUTION OF MARKETING
Although the concept of marketing emerged after the industrial revolution, the change in businesses
in terms of adapting to the concept came about gradually. It took many years for businesses to realize that
satisfying customers is the key for making sales and profits in the long run. Businesses have gone through
different phases or stages of marketing over the years. These stages can be classified as the production,
product, sales and marketing eras.

Production Era
The industrial revolution of the seventeenth century brought about the production era, which continued till
the late 1920’s. Say’s law – supply creates its own demand – was truly applicable in this era. The market
was a sellers’ market, as the demand for the products was more than the supply. Companies focused on
manufacturing processes and they looked for ways and means to produce the goods faster, more efficiently
and at low prices. Product features were not given any importance because it was felt that customers were
concerned only about the availability of the product, and not about its features.

Sales Era
The sales era began in the late 1920s and lasted till mid 1950s. The economic depression of the late 1920s
proved that producing the goods was not everything; a company also had to sell them. By that time, most
companies had made their production processes efficient, which paved the way for competition.
Manufacturers believed that the success of their business depended on outselling the competition.
Companies realized the need for product promotion and distribution. In this era, marketers focused their
efforts only on selling their products to the customers.
Companies realized that they could use information on the likes and dislikes of customers in developing
advertisements to stimulate demand. Therefore, many of them created market research departments to
collect and analyze market data.

Marketing Era
During the sales era, companies ignored consumer wants and needs. They focused simply on selling their
products. Critics of sales era believed that products in sales era were sold without looking at consumer
needs and wants. By the early 1950s, companies began to realize that they would fail if they did not
satisfy consumer needs.
The marketing era began in the mid 1950s. Companies, for the first time, identified the importance of
consumer needs and wants in the exchange process between the buyer and the seller. Thus, a period of
customer-orientation began. At this stage, companies focused on marketing, rather than on selling; they
also embraced the concept of coordinated marketing management, which was directed toward the twin
goals of customer orientation and profitability.
Companies changed from pushing products down to the customers, and began attempting to fulfill
customers’ needs according to their preferences. The focus of the companies was not to achieve
manufacturing goals as was the case earlier, but to satisfy customer needs and wants.

Marketing Concept
Marketing starts with identifying customer needs and wants and ends with satisfying them through a
coordinated set of activities that also allows a firm to achieve its own goals. Awareness of this fact gave rise
to the marketing concept. The marketing concept embraces all the activities of a firm. It aims at matching
the company’s offering with customer needs, to achieve the desired level of customer satisfaction and
generate profits for the company. The marketing concept is based on the belief that a) the company’s
planning and operations are customer-oriented, b) the goals of the company should be profitable sales
volume and not just volume, and c) all marketing activities should be coordinated effectively.

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Societal Marketing Concept (SMC)
According to the marketing concept, marketers focused on customer needs and wants in their marketing
decisions, for long-term profitability. However, they realized that unless they include societal interests in
their marketing decisions, they will not be able to make profits in the long run.

Exhibit 1.2
Kodak’s Gratitude to Mother Earth
As a social corporate citizen, Kodak had always taken initiatives to protect the
environment. Since the 1920s, Kodak has been implementing the practice of recovery
and reuse of silver and manufacturing solvents. Kodak started the practice of recycling
acetate film in its plants in 1950s and has built the first polyester plastic recycling
facility as early as in 1970s.
In the early 1990s, Kodak started a worldwide recycling program for its container and
disposable single-use camera and had recycled more than 250 million cameras by mid
1999.
It has always been Kodak’s policy to conduct all its business in a manner that is
consistent with health, safety and environmental management practices.
Source: “Eastman Kodak,” Global Strategic Management Case Studies on
Fortune 500 Companies, Volume IV, USA: Transworld University, January 2000.

The customer and society are interrelated; therefore, whatever the company offers to the customer
has a direct bearing on the society. According to the societal marketing concept, apart from determining
needs, wants and interests of the target market and providing quality products, organizations must also
help maintain and improve the society’s well being. It questions the adequateness of company’s marketing
efforts towards addressing pressing environmental and economic problems, such as shortages of resources
and increase in the global population. The pure marketing concept overlooks the conflict between short-
term wants and long-term welfare. The societal marketing concept calls for striking a balance between the
company’s profit, the customer’s wants and society’s interest (Refer Exhibit 1.2).

Societal marketing managers believe that companies that act in socially responsible manner gain
goodwill, apart from reaping profits. Customers react unfavorably to companies which they do not perceive
as good corporate citizens. This gives socially responsible companies a competitive edge over their
competitors. Companies like HLL are successfully achieving their commercial goals and fulfilling their social
responsibilities while serving the society (Refer Exhibit 1.3)

MARKETING MYOPIA
Myopia means short-sightedness. Theodore Levitt, in his classic article “Marketing Myopia” in the
Harvard Business Review, argues that industries fail not because markets are saturated but because of the
failure and short-sightedness of the management. For example, the railroad industry did not flourish as it
could have because the players in the industry defined their business rather narrowly - as a railroad
business rather than transportation business. The railroad industry faced problems not because other
players like airlines, bus operators, etc., fulfilled the need of customers better but mainly because railroads
could not fulfill customer needs. They focused on products instead of customer requirements. This lack of
vision and the customer dissatisfaction paved the way for the success of the auto industry on the
highways. Further, the construction of super highways has created a better medium for freight and
passenger traffic, posing a formidable competition for the railways.
Similarly, when small cars were introduced in the US market by the Japanese companies, they
became a hit in the first year of their introduction. Though there had been major researches going on for a
long time in the US, none of them were able to find out what exactly the customers wanted.
They focused on what was the best alternative available for a customer of the available options. They
totally ignored customer requirements. Their researches focused on the product, not on customer
requirements.

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 Marketing myopia occurs when a marketer is excessively preoccupied with product development,
manufacturing or selling and ignores customer needs, wants and interests. Marketing is a long-term
function that involves anticipating a change in the future, and planning for it accordingly.
Another example that can be quoted for marketing myopia is that of the pager industry and radio
broadcasting. Pager companies could not foresee technology changes and changing customer expectations
and adapt themselves to fulfil customer expectations while mobile companies fulfilled the needs and
succeeded in the market. Most companies that did not consider customers’ needs and preferences have
suffered losses. With the changing times, a good marketer needs the vision to be on top of the changes
and trends.

CUSTOMER SATISFACTION
In a world of cut-throat competition, companies can survive only when they outsmart competition;
adapt themselves to the changing marketing environment rather than just pushing the sales. But how do
marketers do this? The answer is simple, yet very complex - customer satisfaction.
Satisfaction – fulfillment or gratification of need, desire or appetite.

Customer satisfaction or dissatisfaction is the feeling derived by the consumer when he compares the
product’s actual performance with the performance that he expects of it. Customers form their expectations
on the basis of past buying experiences, advice of their reference group and the promises of the marketers
and their competitors. When the product performance matches the expected performance, the customer
experiences satisfaction; when it falls short of the expectation, he experiences dissatisfaction. And when the
performance exceeds expectations, the customer is highly satisfied or delighted. It becomes much easier for
a company to serve a delighted customer. As delighted customer may become loyal, bringing more business
to the firm, he will be less likely to switch to a competitor’s product; and so, he becomes brand loyal. Xerox
Corporation, for instance, believes that a very satisfied customer is worth 10 times as much as a satisfied
customer. It believes that a very satisfied customer will stay with the company for more years and will bring
more business to the firm.

Exhibit 2.1
Customer Satisfaction – The HPCL Way
In a bid to take on Reliance and Essar, Hindustan Petroleum Corporation Ltd.,
(HPCL) has introduced a new way of reaching out to its customers and enhancing
their experiences - through Club HP petrol pump outlets. HPCL has reworked its
retail strategy focusing on its dealers. It is holding detailed discussions with
individual dealers, setting higher targets and identifying a complete action plan to
realize the potential/target and launch a system of measuring the customer
satisfaction index (CSI).
HPCL has launched a nationwide training program for its dealers and their
employees who interact constantly with the customers. The training is based on
the research done by HPCL which concluded that more sensitivity is required on
the part of workers, i.e., better communication, eye contact and personalized
service. It identified eight centers for training dealers and over 20 to train their
staff.
HPCL provides the dispensing units, good fuel, driveway, yard lighting, dealer
staff uniform and backup for standardization of services at the retail outlet. The
dealer advisory group was allowed to enter the supply locations of the corporation
at any point of time and check the quality control procedures for themselves.
HPCL offers a list of incentives to its dealers like sales competitions, accident
insurance, assistance for their children’s education, etc. It tied up with Hughes
Escort to organize day-long teleconferences connecting all the centers, at which
dealers exchange experiences.

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CONCEPT OF CUSTOMER VALUE

Different customers look for different benefits from the same product. Therefore, the value of a
product differs from one customer to other. Value to a customer refers to the difference between the
benefits he derives from the product or service and the cost of acquiring the product. The cost of acquiring
the product involves not only the cost of the product but also other economic and non-economic costs. The
customer is happy when the benefits and the cost match. The wider the gap between the derived benefits
and the cost of acquisition, the happier the customer is. Firms identify and build as many benefits as
possible into their offer and ensure that the customer’s expectations are met at the end of the buying
process. For example, Godrej GE encouraged its existing customers to give a feedback on adding value to
its products and the result was a 400 liter fridge, manufactured by the company, with an inbuilt curd
maker. Tools like buyer analysis, market research and marketing planning are helpful in identifying and
measuring the value customers expect. Marketers need to communicate the value their products deliver to
the customers through their communication programs. If customers are convinced about the value that a
product can deliver, the chances that they will be attracted to buy the products are high. Federal Express
allows its customers to track their packages through its website, and customers can even check the name
of the person who actually took delivery of the product. There is no additional cost involved in getting
these additional services. These additional features increase the value of the services and therefore,
customer loyalty. A high customer value plays a vital role in generating customer loyalty, because
customers compare the value-cost gaps of the competing offers and select the products that deliver the
maximum value to them.
Value Chain
Every firm performs a set of activities that helps in designing, producing, marketing, delivering and
supporting its products. These activities form a process. At every stage of the process, the firm adds
value. The chain of activities from raw material procurement to the after-sales service is called the value
chain. It identifies nine strategic activities, i.e. five primary and four support activities, to create value, as
shown in Figure 2.2. Primary activities are the activities that are involved in creating, distributing, selling
and providing after sales assistance for a product. Primary activities are those activities that are involved
in the physical creation of the product, marketing and after-sales support. The primary activities involve
buying and bringing the materials into the firm (inbound logistics), manufacturing the product
(operations), shipping the goods which includes warehousing, order processing, scheduling, distribution
etc., (outbound logistics), advertising, promotion, sales force management and pricing (marketing and
sales), and providing services like installation, training, repair, etc., (service).
Support activities assist primary activities by providing infrastructure that allows them to take place
on an ongoing basis. Support activities such as procurement, hiring the personnel, R&D, infrastructure
(i.e. general management, planning, government activities and quality management), accounting, and
legal activities, etc., are handled by various departments. The value chain includes a profit margin,
creating value that exceeds cost so as to generate a return for the effort. A proper coordination of all
activities between the various departments enhances the performance of various activities in the value
chain, leading to the enhanced overall performance of the firm.
A company’s operations should be divided into specific activities or business processes to conduct
value chain analysis. Then the cost incurred on carrying out each activity is calculated to measure the
performance. The value chain of an organization differs from that of other organizations. The way in which
activities are performed in the value chain provides a competitive advantage for a company. However, the
organization should measure the performance of every activity in the value chain with that of the
competitors. If the performance of activity of a competitor is better, the organization should benchmark it
and try to improve its performance continuously.

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 Figure 2.2: The Generic Value Chain

Source: Michael E Porter, “Competitive Advantage – Creating and Sustaining Superior Performance,”
The Free Press – New York, 1985, 37.

MARKETING ENVIRONMENT

The marketing environment consists of the forces that are external to the marketing function of an
organization but influence its marketing abilities, in dealing with customers. A variety of internal and
external forces impinge on an organization and its marketing system. Internal forces are inherent to the
firm and can be controlled by the management. External factors cannot be controlled and usually affect
the industry as a whole, rather than individual players. Figure 3.1 illustrates the micro and macro
environments of a firm. The external forces are divided into microenvironment and macro-environment.
The microenvironment consists of the suppliers, marketing intermediaries, and customers while the
macro-environment consists of the demography, socio-cultural, political, technological, and legal
environments. In the chapter we discuss the macro environmental forces in detail.
Environmental forces are dynamic and any change in them brings uncertainties, threats and
opportunities for the marketers. Changes in the environmental forces can be monitored through
environmental scanning, that is, observation of secondary sources such as business, trade, and
government, and environmental analysis, that is, interpretation of the information gathered through
environmental scanning. Marketers try to predict what may happen in the future with the help of tools like
marketing research and marketing information/intelligence system, and continue to modify their marketing
efforts and build future marketing strategies.
An analysis of the external environment and identification of opportunities and threats is extremely
important for the survival of a firm in the long run. Managers, who fail to recognize the changes, leave
their companies vulnerable. These companies fail to capitalize on the opportunities provided by or cope
with the threats posed by the environmental changes. In the 1980s, industry leaders lost their competitive
advantage to relatively new entrants due to the lack of proper analysis of the external environment. In the
automobile industry, Hindustan Motors, and Premier Automobiles lost out to Maruti Udyog Ltd, which was
successful in understanding the environment and assessing the needs of customers. In the watch
segment, Titan with its vast range of products and marketing strategies took away HMT’s market share.
Similarly, in the detergent industry, a local brand Nirma, managed to shake up the giant HLL (Surf). The
big players lost out to other players primarily because they were not able to anticipate the changes, scan,
and analyze the environment. Therefore, it is very important for organizations to understand the
environment, and the forces that may affect them and change the competitive scenario.

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 Figure 3.1: Business Environment of a Firm

Macro Environmental Factors

Macro environmental forces do not affect the operations of a company and its relationship with its
customers and suppliers, directly and immediately. However, they affect the company in the long run. They
also affect all the players in the industry. The player who is able to anticipate the changes or adapt to
changes quickly will be the winner. For example, the changes in demographics may not affect a
manufacturer immediately. However, it will definitely have an impact on target customers because the
number of target audience may change over a period of time. The macro environmental forces are complex
in nature and interdependent.

Demographic Environment
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 Demographics is a branch of sociology that deals with the study of the characteristics of human
population such as size, growth, density, distribution, gender, and marital status. Marketers are keenly
interested in studying the demography, ethnic mix, educational levels, and standard of living of different
cities, regions and nations because changes in demographic characteristics have a bearing on the way
people live, spend their money and consume. For example, one of the demographic characteristics is the
size of the family. With the number of small families increasing in India, the demand for smaller houses and
household items has increased significantly. Similarly, the number of children in a family has reduced
significantly over the years. Therefore, per child spending in a family has increased significantly. There is a
great demand for designer clothes for children, which was almost negligible a decade back. As cities have
become crowded and there is no space left for expansion, suburban areas are developing. This has led to an
increase in the demand for automobiles to commute and the demand for stores in suburban areas.
As more and more women are taking up professions, the average income of the family is on the rise.
As the size of the family has also decreased, the amount that can be spent on each person in a family has
increased significantly. With the increase in their spending capacity, people are looking for more lifestyle
products.
Consumer groups
Demographic variables help in distinguishing consumer groups, that is, people having homogenous
needs according to their specific wants, preferences and usage rates. For example, teenagers usually have
similar needs. Therefore, marketers develop products to target specific consumer groups. The youth are
being targeted through advertisements and promotional campaigns, stores are being designed with
‘youthful’ features, youth events are being sponsored, and even new technology/design is developed with
their tastes in mind. Consumer groups that attract the attention of marketers can be classified as infants,
children, young adults, adults (35-50), Senior citizens.
Apart from age, other demographic factors that influence a marketer’s decisions are Women, singles,
occupation and literacy, location, cultural diversity:

Political Environment
Government policies shape the economic conditions and trade relationships and are influenced by
the political environment. Government policies influence the marketing decisions and strategies of a firm.
Many marketers view the political environment as uncontrollable and try to adjust their strategies
accordingly, while others seek to influence the political forces. Organizations should closely monitor the
political environment of the countries in which they operate or are planning to operate. The political
stability of a country affects the level of investment in it. Foreign investment is lower in less stable
countries. Recently, bills have been passed in many US states to curb or ban outsourcing of jobs to the
Third World countries. This step has adversely affected the companies operating in countries like India.
Similarly, Coke was moved out of India in 1977 due to political pressure on it.
Organizations try to maintain good relations with elected political officials because of the following
factors: (a) politicians are less likely to vote for laws that negatively affect the firms that support them,
(b) politicians exercise power over trade relations and they can create a favorable environment for
international trade, and (c) they influence government spending and can help in acquiring trade contracts.

Political unrest in a country is a major concern and business is adversely affected by an outbreak of
war. Companies are forced to postpone or drop major decisions due to such events. The recent war in Iraq
affected the post war planning of many companies in the US, with senior managers fearing that political
anti-Americanism abroad may turn into commercial anti-Americanism. The Indian tea business has been
severely affected by the Iraq War (see Exhibit 3.2 for details).

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 Exhibit 3.2
Impact of War on Indian Tea
India has been one of the largest growers and exporters of tea in the
world market. As India exports approximately 23% of its total tea
exports to Iraq, it is one of the key markets for exports. During Jan-
Nov 2002, CIS, Russia and Iraq purchased 52 million kgs, 40.22 million
kgs and 40.25 million kgs respectively. According to NK Das, Chairman
Tea Board of India, Iraq has been one of the important tea markets for
India, with exports increasing substantially.
The outbreak of war in Iraq created an uncertainty in the Indian tea
industry. The consignment shipped in March 2003 consisted of only
19.5 million kgs. The decline in tea exports is a major concern for tea
exporters and experts believe that the post war scenario will determine
the fate of Indian tea in Iraq.
Adapted from Ishita Ayan Dutt, “Iraq War Kills Key Market for Tea Exporters”,
Business Standard, 1 April 2003.

Economic Environment
The economic performance of a country is measured by its Gross Domestic Product (GDP). The gap
in GDP between rich and poor countries has increased primarily due to higher population growth in poor
countries. Purchasing power parity (PPP) is used to compare incomes across nations. The PPP takes into
account the cost of standard basket of products (in US dollars) for each country but does not consider the
subsidies provided by a government for essential goods like food, agriculture, utilities, and medical care.
The PPP analysis helps in determining the relative purchasing power of two countries. The higher the PPP
of a country, the more buying power it enjoys.

Socio-Cultural
Socio-cultural forces refer to the attitudes, beliefs, norms, values, and lifestyles of individuals in a
society. These forces can change the market dynamics and marketers can face both opportunities and
threats from them. For example, as the lifestyles of people have changed significantly in the last one-
decade, with both husband and wife in a family earning, the market for readymade foods and garments
has increased significantly. Similarly, if both the partners are earning, the time they spend on shopping is
reduced significantly. This has given a boost to shopping malls, supermarkets, and hypermarkets where
such individuals can get everything under one roof, and their time can be saved. Similarly, the average
income level of a family, in general, has gone up and the dependents, that is, the number of kids in a
family has reduced to one or two. Therefore, parents now spend more on their kids, because even if the
total amount that they spend on their kids is same, they can spend more on each kid compared to when
there were more kids.
Changes in the lifestyle of people affect the marketing environment. As health problems in people
have increased primarily because of significant changes in their lifestyle, they have become concerned
about their food. They prefer to eat low fat, low or no cholesterol food. This is especially true for people
above 40 years. To a great extent, social forces determine what customers buy, how they buy, where they
buy, when they buy, and how they use the products.

Technology
Technology is regarded as the use of scientific knowledge and tools to solve specific problems and
perform tasks in an effective manner. Technology can be regarded as both beneficial as well as dangerous
for the very existence of mankind depends on the use or abuse of technology.
Today, technology guides the way we lead our lives. For instance, our eating habits, sleeping patterns,
health care, and work style, are all influenced by technology. With the advent of the Internet, people can
work from their homes at their convenience or a remote location using a computer. Advancement in
technology has a direct impact on economic growth, and businesses that ignore or do not keep pace with
technological advancement often fail to survive in the market. Therefore, it is important for marketers to

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know the type of technology used, level of technological development in the country in general, type of
R&D used by the company and its competitors, speed with which technology is adapted and disposed

Natural
It is man’s duty to maintain the ecological balance. Technological developments have led to
ecological imbalances. Examples are, global warming, Ozone layer depletion, and increase in harmful
gases due to pollution. Many companies have now realized their responsibility towards maintaining the
ecological balance. Refrigerator manufacturing companies are indicating on the packaging that their
products are CFC (Chloro Fluoro Carbon) free.
Resources: Organizations consume natural resources for the production of goods and services.
Sometimes, companies locate their production plants near the natural resources because the
transportation costs may increase the overall cost of their products. Companies now realize that natural
resources are limited and they need to be consumed judiciously. Otherwise, they will deplete fast.
Therefore, some companies are demarketing their products. For example, Indian Oil Corporation tries to
reduce the demand for its products by airing ads like “Save oil – save India”.
Weather: Weather and climatic conditions create opportunities for marketers by increasing the demand.
During summer, the demand for water coolers, air conditioners, cotton clothes, water, soft drinks, and ice
creams goes up. Likewise, in winter or relatively cold regions, the demand for room heaters, woolen
clothes, and spicy food is more. In regions like Delhi where the weather is cold in winter and excessively
warm in summers, demand for seasonal products is significant. When organizations move to other
countries, weather and climatic conditions require product modifications.
Pollution: Industrialization brought with it the hazards of pollution, air, water, noise, bio non-degradable
wastes, and CFC, causing environmental degradation. Individuals, in general, are realizing the ill effects of
environmental degradation and are using environment friendly products. They are using recycled paper,
paper bags and gunny bags instead of polyethylene bags.
Government intervention: The policies of government, regarding the natural environment varies from
one nation to another. Some countries restrict the import of goods that cause ecological damage. For
example, the exports of countries like India has been hit by the policy of the US government to ban the
import of shrimp that has been harvested without the use of turtle excluder devices.

Legal
The laws and regulations of a country have a major impact on the way a company conducts its
business. Marketing activities in particular are greatly influenced by legislation. Ignorance of law is
considered no excuse. Therefore, marketers must be updated with the important rules, regulations and
Acts that have a significant effect on their businesses. Important legal Acts with regard to India are given
below in Table 3.3.
Table 3.3: Important Legal Enactments in India
Name of the Act Year
Prevention of Food and Adulteration 1954
Drugs Control Act 1954
Company Act 1956
Standard Weights and Measurement Act 1956
MRTP – Monopoly and Restrictive Trade Practices 1969
Display of Price Order 1963
Indian Patents Act 1970
Packaged Commodities (regulation) Order 1975
Consumer Protection Act 1986
Water (Prevention and Control of Pollution) Act 1974

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 Air (Prevention and Control of Pollution) Act 1981
Environment (protection) Act 1986
MARKETING STRATEGY
All marketing strategies revolve around the elements of marketing mix. The concept of marketing
mix is discussed below
Marketing Mix
Also known as the Four P's, the marketing mix elements are price, place, product, and promotion.
The concept is simple. Think about another common mix - a cake mix. All cakes contain eggs, milk, flour,
and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it.
So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to you customer can be altered by varying the
mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given
to price. Another way to think about the marketing mix is to use the image of an artist's palette. The
marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour.
Every hand painted picture is original in some way, as is every marketing mix. The term was coined by Neil
H. Borden in his article The Concept of the Marketing Mix in 1965.

Price
It is the only element of the marketing mix that brings revenues to the company for which customers pay.
Place
Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel, distribution, or
intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/
service provider to the user or consumer.
Product
It is the bundle of tangible and intangible benefits offered to the customers.
Promotion
Another one of the 4P's is promotion. This includes all of the tools available to the marketer for 'marketing
communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions
mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the
amounts of one of the ingredients, the final outcome is different.

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Especially, for marketing of services, 3 additional P’s are considered. They are:

Physical Evidence
Physical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a
service, so a consumer tends to rely on material cues. There are many examples of physical evidence.
Consider the services of a doctor. Physical evidence include the cleanliness of the surroundings, reception of
the staff, treatment of the doctor, the equipment used by the doctor, the certifications of the doctor etc.

People
People are the most important element of any service or experience. Services tend to be produced and
consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual
needs' of the person consuming it.

Process
Process is another element of the extended marketing mix, or 7P's.Process is the group of functions carried
out by a marketer in delivering the good or service to the customer. Example, the process followed by
public sector banks and private sector banks differ from each other. One finds it simple to transact with a
private sector bank when compared with that of a public sector bank, because of the simplest processes.

*** End of the Unit-1 ***

Notes:

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