MARKETING : MEANING AND CONCEPT
What is the meaning and concept of marketing, marketing mix and
marketing strategies ?
In USA, 300 college administrators were
asked about the meaning of marketing. As many as 90 per cent said that
marketing was selling, advertising and/or public relations. It is no wonder
that the Americans are bombarded with TV commercials, newspaper advertising,
sales calls, etc.
The American Marketing Association defines marketing as follows:
"Marketing is the
performance of business activities that directs the flow of goods and services
from producer to consumer or user."
The entrepreneur has first to decide what
product he should select. This he can do only if he can identify the needs, which require satisfaction
among human beings. Once he has identified the need of a group of human beings
(called market segment), he can determine the product, which can help to
satisfy that need. This is a part of the modern philosophy of marketing or the marketing concept.
We
would now like you to fill in what you think come before a product comes into
existence in the box marked (a) in Figure I. Also complete the box marked (c)
with what you think should happen when the product or service has reached the
consumer or user.
Let us now analyse
what could have been written in box (a) in Figure I, for what comes before the
product. You must remember that if you are an entrepreneur who wants to start a
new business, you do not have a product. In fact you will have to decide what product
you should manufacture and sell. How do you decide this? The answer to this
question helps you in filling up (a). Please do so. The entrepreneur has first
to decide what product he should select. This he can do only if he can identify
the needs, which require satisfaction among human beings. Once he has identified
the need of a group of human beings (called market segment), he can determine
the product, which can help to satisfy that need. This is a part of the modern
philosophy of marketing or the marketing
concept.
Marketing
concept: It emphasizes consumer-orientation and
satisfaction as well as profitability for the organisation.
Philip
Kotler, a well-known author in the area of
marketing, defines marketing as "A
human activity directed at satisfying needs and wants through exchange
processes.”
Thus
the most fundamental concept, which must be realised as being the basis of all
marketing activities, is the existence of human needs.
The
human need is a state in which a person feels deprived of something. There are
many human needs described in many ways. Briefly, these needs can be divided
into two types.
1 Physiological needs; and
2 Psychological and Sociological needs.
The physiological needs consist of the need
for food, clothing, shelter and even sex. Similarly, there are social needs for
belonging, affection and love from others. Of course, there are higher order
psychological needs of self-actualization.
It is important to understand that at any time some needs in a
human being are dormant and unsatisfied whereas others are active and are being
satisfied. A marketing man may thus devise a product or service aimed at
satisfying a certain dormant need and thus provide satisfaction to the user.
This is why a man is often described as `a bundle of dormant wants'. The need
exists but these have to be converted into `wants' by a marketing strategy.
In a socially
competitive society, people may have unlimited wants but the ability to buy may
be restricted on account of their economic background. They will, therefore,
select from among those products, which give satisfaction or are needed more.
Thus, when they are backed by ability to buy, the wants are converted into demand for your product.
Therefore, when people decide to satisfy their needs and wants, in terms of
marketing activities, exchange takes place. This explains in detail the
definition given by Kotler.
A
process-oriented definition of marketing is "the process of
ascertaining consumer needs, converting them into products or services, and
then moving the product or service to the final consumer or user to satisfy'
certain needs and wants of specific consumer segment or segments with emphasis
on profitability, ensuring the optimum use of the resources available to the
organisation".
In practice, often, separate departments
with their own way of thinking perform the business functions, such as
production, finance and marketing. Production is often considered the more
important function as compare to marketing. This practice is, gradually losing
ground and it is being recognised that unless you can sell a product, you
should not manufacture it.
THE MARKETING MIX
Marketing
is performed within a certain environment which itself is always changing. The
marketing activities have, therefore, to change in consonance with environment
to be continuously effective. In order to appreciate this process it is easier
to divide the marketing activities into four basic elements, which are together
referred to as the marketing mix. These four basic elements are:
-
Product,
-
Price,
-
Promotion, and
-
Place (or physical
distribution).
As
all these four start with the letter `P' they are, at times, referred to as the
four Ps of the marketing mix or the 4Ps in marketing.
The
word product stands for the goods or services offered by the
organisation: Once the needs are identified, it is necessary to plan the
product and after that keep on analysing whether the product still satisfies
the needs which were originally planned for, and if not, to determine the
necessary changes. You will learn this in greater detail when we talk about
product strategies, about how new products are introduced, how they have to be
modified in due course to continue to be successful in sales and why marginal
or non-profitable products should be removed, unless they are contributing in
some way to the overall benefit of the organisation.
Price refers to the money value that the customer has to pay. The
product has to be adequately priced. This involves considerations of the profit
margin, the cost, the possibility of sales at different prices and the concept
of the right price.
Promotion
is the aspect of selling and advertising,
or communicating the benefits of the product or service, to the target
customers or the market segment involved in order to persuade them to purchase
such products or services. It includes
selling through advertising as well as the sales force. Besides, a certain
amount of promotion is done through special seasonal discounts, competitions,
special price reductions, etc. collectively called sales promotion.
Finally,
physical distribution refers to the aspect of the channels of
distribution through which the product has to move before it reaches the
consumer. It also includes the logistics aspects of distribution such as warehousing,
transportation, etc. needed for geographical distribution of the products.
It
is also concerned with the selection of distribution channels. The
organisation must decide whether it should sell through wholesalers (who buy in
large quantities and sell to retailers) and then to retailers (i.e., the
shopkeepers, who ultimately sell to consumers), or whether directly to the
consumers. There are many ways in which a product can be moved from the
producer to the consumer. The optimum method has to be determined in terms of
both consumer satisfaction and profitability to the organisation, or optimum
use of the organisation's resources.
THE MARKETING STRATEGY
Having
now understood the importance of consumer orientation as well as the elements
of the marketing mix, it should be remembered that the marketing strategy
consists in directing a proper marketing mix towards a target group of
customers or market segment. This is illustrated in Figure II. It will be
noticed that the "Four Ps" are decided and directed at the
consumers on the basis of proper diagnosis of firm-market system arrived through
the process of marketing research.
This
chart also gives you a bird's eye view of marketing:
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