IMDR/Basic

mktg/ Lec
note1/GD-2015

Introduction to Marketing

Context:
Marketing as a concept and as a sphere of practice has its roots in the process of
exchange in which individuals and groups of individuals have engaged in for centuries.
Primitive societies were self-sufficient groups we still have remnants of these in our
adivasis and other tribal groups. They could satisfy all their basic needs of food, clothing
and shelter by simultaneously producing and consuming products to satisfy these needs,
within the group. Perhaps some rudimentary form of exchange did exist, but for most
part the activities of producing and consuming took place in a group setting.

As members of modern societies we are incapable of producing goods and services

(tangible and intangible products) to satisfy our needs. (As a small exercise think of the
numerous goods and services you have consumed today since you got up in the morning)
As members of modern societies we are also not content with providing for our basic
needs of food, clothing and shelter. We would also like to feel secure in our surroundings
and ensure that our basic needs are met day after day. We would like to belong to group/s
that enrich our lives and relationships. We would like to secure a position of
esteem/prestige in the group/s that we associate with. We are incapable of providing for
all these needs on our own.

It must be noted that as we try to enter into exchanges to satisfy the above needs, all these
exchanges may not be equated in monetary terms. And again, in the case of those
exchanges which can be equated in money terms, we may/may not be paying for the
goods/services that we consume with our own money!

At the other end of this exchange process are individuals and organizations that create
goods and services to satisfy our needs. One must realize that to create even a very basic
product would require complex set of exchanges between many organizations. Let us
take the example of the humble toothpaste. There would be organizations manufacturing
the raw materials that go into making the paste itself, its outer plastic covering, the
printing on it, bar coding etc., then there would be those who actually convert these raw
materials into the finished product. Then there would be organizations transporting,
storing and distributing this product. There would be organizations insuring this product
and supplying funds for all the activities mentioned earlier.

The demand for and supply of goods and services is influenced by a variety of factors
such as size and composition of population, tastes and fashions, economic conditions,
politics and regulatory conditions and technology.

At a very basic level marketing is about how firms decide what to offer in the exchange
process and how this should be made available for consumption.

Definitions of Marketing:
Academicians and practitioners have defined marketing in different ways. One view is
that it deals with meeting human and social needs profitably. (Marketing Management by

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Philip Kotler). Here needs have been classified as human or physiological needs and
mans needs as a social animal that include the need for belonging and esteem. It is also
essential that these needs be satisfied profitably; therefore creating a surplus through the
exchange process is at the core of any marketing activity.

Another view is that the essence of marketing is exchange of value and that marketing
consists of activities designed to generate and facilitate exchanges intended to satisfy
needs and wants. (Fundamentals of Marketing by Stanton, Futrell and Walker) Value
here would mean that which a party to the exchange process would hope to gain from the
exchange process.

Marketing as a function
The above perspectives talk about the process of marketing. Marketing as a function is
concerned with all activities that take place in an organization as it enters into exchange
to satisfy needs and wants.

According to Kotler Marketing is typically seen as the task of creating, promoting and
delivering goods and services to consumers and businesses.
The marketing function seeks to influence the level, timing and composition of demand
for a companys products to meet organizational objectives.

According to the American Marketing Association: Marketing is 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.

According to Stanton: Marketing is a total system of business activities designed to plan,

price, promote and distribute want satisfying products to target markets to achieve
organizational objectives.

Obviously, the marketing function concerns itself with achieving organizational

objectives (share growth/profits) through the four elements of the marketing mix: product,
price, distribution and promotion.

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 Basic Concepts in Marketing and orientations towards the market place

Context: Since Marketing has its roots in the process of exchange, it follows that the
conceptual framework of this subject is also derived from this very process. The process
of exchange implies that
- there are at least two parties involved in this process (producers and consumers)
- they have objects of value to offer in this process (products and money)
- there is a purpose for which both parties engage in this exchange (need
satisfaction, profits)
- Both parties voluntarily engage in this process. In other words, both have the
option of engaging with other parties to achieve their purpose (competing
products and producers, different ways to satisfy needs)
- Both parties hope to gain something from entering into exchange (value creation)

The following then are some of the core or basic concepts in Marketing:
A need is a basic human requirement.
A want is a desire for a specific way in which to satisfy a need by consuming specific
objects
Do marketers create needs and get people to buy what they dont want? One line of
thinking is that marketers do not create needs but they definitely influence wants.
Each time a person decides to consume something, he inadvertently makes a decision to
not consume something else, simply because monetary resources are limited. Do
marketers influence the importance attached to different types of needs?

Demand is a want for a specific product backed by the ability to buy it (purchasing
power).
A product is any thing that can be offered to satisfy a need or want. This includes
physical goods, services and ideas. Since a consumer is faced with making a choice
between competing product offerings that satisfy the same need; the producing
organization has to enhance the chance of its product being selected. This is done
through the process of branding.
Value is the consumers estimate of the products capacity to satisfy a need. A consumer
always estimates a products value through two aspects, namely, costs and benefits.
Costs include monetary costs as well as costs incurred in terms of time and effort and
psychic costs. Benefits would include benefits in terms of product attributes as well as
service and image associated with using that product. Therefore value is the ratio
between costs and benefits.
The real question is how do we measure non-monetary costs and how do we attach a
monetary value to benefits such as product attributes, service, image etc.
Also, the underlying assumption here is that value can be enhanced by either increasing
benefits or reducing costs. But there could be transactions where higher monetary costs
or psychic costs or time costs actually lead to a higher perception of value. Can you think
of any such transactions?

Satisfaction represents the feelings of pleasure or disappointment, which result from

comparing expectations about product performance with actual or perceived

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performance. If expectations are exceed perceptions this leads to dissatisfaction. If
expectations equal perceptions it leads to satisfaction. If perceived performance is better
than expected this results in a high degree of satisfaction.
Can expectations and perceptions change through out the process of consumption?
Is satisfaction sequential in nature?
What about products consumed in a group? Is there a social dimension to satisfaction?

The most difficult job for a marketer is to fathom needs.

Abraham Maslow tried to explain how people are driven by different needs at
different times. He put these in the form of a pyramid or a hierarchy of needs.
Self-development
And realization
Esteem
Social or
Belonging needs
Safety needs
Physiological needs

Do you think consumers simultaneously try to satisfy needs at different levels in the
hierarchy? Do you think a single product offering can satisfy needs at different levels in
the hierarchy?

A market can be defined as a set of customers joined by similar needs. No

company through its product can hope to satisfy the need of all the customers in the
market. It need to find/focus on customers whose needs it can best satisfy given the
resources at its disposal. Therefore it decides to divide or segment the market into
groups of customers whose needs the company can effectively serve and who are
likely to exhibit similar purchase behaviour.

Organisations orientation towards the marketplace:

Organisations differ in their orientation towards the marketplace in terms of customers,
internal organization and society at large. This difference in orientation is brought out
in the following ways in which companies choose to approach the marketplace:

1. The Production concept: Organisations that follow this concept believe that
achieving high production efficiency is of paramount importance. They believe
that consumers will buy those products that are widely available and cost less.

The production concept is suitable for products that are mass-produced and
distributed. It is also suited to markets and economies where consumers do not
have access to a lot of products either due to lack of availability or affordability or
both.

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 2. The Product Concept: Organisations following this concept believe that the
focus should be on making superior products and improving them through R&D
over time. .

3. The Selling Concept: Organisations who hold this concept believe that unless
the organization undertakes aggressive selling and promotion customers will not
buy their products. Here the focus is on the product rather than the needs of
the customer.

4. The Marketing Concept: Organisations following this concept believe that they
should first assess the needs and wants of their customers and offer products
which are solutions for those needs and wants. Also the organization should be
more effective than competitors in doing this. The focus here is on needs of
customers and profits along with customer satisfaction.

One of the questions we need to ask is: are these orientations mutually exclusive?

Does the subject matter of marketing as we see it today address itself to the needs of only
large business organizations? Do organizations that follow traditional or indigenous
patterns of management also market themselves differently?

Consider this:
All modern branded retail outlets in the business of food (Mac Donalds, Pizza Hut,
Barista) focus on aspects such as ambience, smiling, courteous staff, et al. Yet there are
traditional retailers such as Dorabjees Biryani, Blue Nile, Bedekar Misal, Janaseva, etc
which focus on none of the above.
Do you think they are able to achieve the desire exchange outcomes with their
customers?
How do you explain this?
What orientation do they have towards the marketplace?

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