Introduction to Marketing (Defining Marketing for the Twenty-First Century) Defining Marketing Marketing, more than any other

business activities deals with customers. Although there are a number of detailed definitions of marketing perhaps the simplest definition of marketing is managing profitable customer relationship. We can distinguish between a social and a managerial definition for marketing. According to a social definition, marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and services of value freely with others. As a managerial definition, marketing has often been described as the art of selling products. ut !eter "rucker, a leading management theorist, says that the aim of marketing is to make selling superfluous. #he aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Marketing is the management process that identifies, anticipates and satisfies customer re$uirements profitably % The Chartered Institute of Marketing (CIM). #he American Marketing Association &offers this managerial definition'( Marketing (management) is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organi)ational goals. Marketing Management: Marketing Management is the process of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value and satisfaction. Difference between e!!ing and Marketing #he old sense of making a sale is telling and selling, but in new sense it is satisfying customer needs. *elling occurs only after a product is produced. y contrast, marketing starts long before a company has a product. Marketing is the homework that managers undertake to assess needs, measure their extent and intensity, and determine whether a profitable opportunity exists. Marketing continues throughout the product+s life, trying to find new customers and keep current customers by improving product appeal and performance, learning from product sales results, and managing repeat performance. #hus se!!ing and ad"ertising are on!y #art of a !arger marketing mi$ %a set of marketing tools that work together to affect the marketplace.

%rocess of Marketing: #he marketing process involves five steps( #he first four steps create value for customers and build strong customer relationships in order to capture value from customers in return. At the primary stage, marketers must assess and understand the marketplace and customers needs and demands. ,ext, marketers design a customer driven marketing strategy with the goal of getting, keeping and growing target customers. #his stage includes market segmentation, targeting and position. #he third step involves designing a marketing program that actually delivers the superior value. #his step includes designing products and services, pricing the product, distribution and finally promoting the product. . #he first three steps provide the basis for the fourth step that is building profitable customer relationships and creating customer satisfaction. And finally, the company reaps the reward of strong customer relationship and satisfaction by capturing value from customers.
Value creation for customers Understand the market place and customer needs and wants Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer delight

Capture Value from customers in return

Figure 1: Marketing Process

M&'()TI*+ T& ( According to market experts -ohn .vans / erry ergmen% there are nine functions of marketing. #hese are( 0. 2. 3. 4. 5. 6. 7. 8. :. 1ustomer analysis uying supplies *elling products and services !roduct and service planning !ricing "istribution Marketing research 9pportunity analysis *ocial responsibility.

co#e of marketing: ,ow a day, marketing offers are not confined into products and services. #he scope of marketing is now becoming larger. Marketing people are involved in marketing several types of entities( Goods: !hysical goods constitute the bulk of most countries+ production and marketing effort. Most of the country produces and markets various types of physical goods, from eggs to steel to hair dryers. ;n developing nations, goods< particularly food, commodities, clothing, and housing<are the mainstay of the economy. Services: As economies advance, a growing proportion of their activities are focused on the production of services. #he =.*. economy today consists of a 7>?3> services%to%goods mix. *ervices include airlines, hotels, and maintenance and repair people, as well as professionals such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and services. Experiences: y orchestrate several services and goods, one can create, stage, and market experiences. Walt "isney World+s Magic @ingdom is an experience. Event: Marketers promote time%based events, such as the 9lympics, trade shows, sports events, and artistic performances. Persons: 1elebrity marketing has become a maAor business. Artists, musicians, 1.9s, physicians, high profile lawyers and financiers, and other professionals draw help from celebrity marketers. Place: 1ities, states, regions, and nations compete to attract tourists, factories, company head$uarters, and new residents. !lace marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. Properties: !roperties are intangible rights of ownership of either real property &real estate' or financial property &stocks and bonds'. !roperties are bought and sold, and this occasions a marketing effort by real estate agents &for real estate' and investment companies and banks &for securities'. Organizations: 9rgani)ations actively work to build a strong, favorable image in the mind of their publics. !hilips, the "utch electronics company, advertises with the tag line, Bet+s Make #hings etter. #he ody *hop and en / -erry+s also gain attention by promoting social causes. =niversities, museums, and performing arts organi)ations boost their public images to compete more successfully for audiences and funds. Information: #he production, packaging, and distribution of information is one of society+s maAor industries. Among the marketers of information are schools and universitiesC publishers

of encyclopedias, nonfiction books, and speciali)ed maga)inesC makers of 1"sC and ;nternet Web sites. Ideas: .very market offering has a basic idea at its core. ;n essence, products and services are platforms for delivering some idea or benefit to satisfy a core need. Core Conce#ts of marketing: ,. *eeds- .ants and Demands: #he successful marketer will try to understand the target market+s needs, wants, and demands. *eeds: #he most basic concept of marketing is the human needs. Duman needs are states of felt deprivation. Duman needs can be physical needs &Dunger, thirst, shelter etc' social needs &belongingness and affection' and individual needs &knowledge and self%expression'. #here are five types of needs. #hese are% *tated need &Minimum price' Eeal need &!sychological price' =nstated need &*ervice for post purchase' "elighted need &*upplementary%Fift' *ecret need &*how up, gesture'. .ants: ;t is the form of human needs shaped by culture and individual personality. ,eeds become wants when they are directed to specific obAects that might satisfy the need. Gor example, An American needs food but wants hamburger, Grench fries and soft drink but a ritish wants fish, chicken, chips and soft drinks. *o, it differs. Demands: Wants become demand when backed by purchasing power. 1onsumers view products as bundles of benefits and choose product that add up to the most satisfaction. "emand comprises of three steps first, desire to ac$uire something, second, willingness to pay for it, and third, ability to pay for it. Many people want a MercedesC only a few are able and willing to buy one. 1ompanies must measure not only how many people want their product, but also how many would actually be willing and able to buy it. Dowever, marketers do not create needsC ,eeds preexist marketers. Marketers, along with other societal influences, influence wants. Marketers might promote the idea that a Mercedes would satisfy a person+s need for social status. #hey do not, however, create the need for social status. /. %roduct or 0ffering and 1a!ue %ro#osition !eople satisfy their needs and wants with products. A product is any offering that can satisfy a need or want, such as one of the 0> basic offerings of goods, services, experiences, events, persons, places, properties, organi)ations, information, and ideas. y an offering customer get the value proposition to use or consume the deliver product or services. *o 1a!ue #ro#osition is the set of benefits or values it promises to deliver to

customers to satisfy their needs. ;t is actually the answer of customer+s $uestion( HWhy should ; buy your productI+ 2. 1a!ue and satisfaction: 1a!ue can be defined as a ratio between what the customers get and what they give in return. #he customers gets benefit and assumes costs. Jalue K enefits L 1osts. Marketers+ concern should be to raise the value in the minds of the customers. When value of the products or services is high, customers are willing to pay more for the products. #husC Gunctional enefitM .motional enefit Jalue K Monetary costs M#ime costs M .nergy costs M!sychic costs Customer satisfaction is the extent to which a product+s perceived performance matches a buyer+s expectation. ;f performance matches expectation level, the customer becomes satisfied but if the product+s performance falls short of expectations, the customer will be dissatisfied. ;f performance exceeds expectation, the customer will be highly satisfied or delighted.

3. )$changes and Transactions: )$change: Marketing occurs when people decide to satisfy needs and wants through exchange. .xchange is defined as the act of obtaining a desired obAect from someone by offering something in return. Gor exchange potential to exist, five conditions must be satisfied( #here are at least two parties .ach party has something that might be of value to the other party .ach party is capable of communication and delivery .ach party is free to accept or reAect the exchange offer .ach party believes it is appropriate or desirable to deal with the other party. Transaction: ;f exchange is the core concept of marketing, transaction is the marketing+s unit of measurement. #wo parties are engaged in exchange if they are negotiating% trying to arrive at mutually agreeable terms. When an agreement is reached, we say the transaction takes place. #hus, a transaction is a trade of values between two or more parties. When the exchange is made, it results into transaction. A transaction involves several dimensions( at least two things of value agreed%upon conditions a time of agreement and

 a place of agreement. 4. 'e!ationshi#s and *etworks #ransaction marketing is part of a larger idea called relationship marketing. Relationship marketing aims to build long%term mutually satisfying relations with key parties <customers, suppliers, distributors<in order to earn and retain their long%term preference and business. .ffective marketers accomplish this by promising and delivering high%$uality products and services at fair prices to the other parties over time. Eelationship marketing builds strong economic, technical, and social ties among the parties. ;t cuts down on transaction costs and time. #he ultimate outcome of relationship marketing is the building of a uni$ue company asset called a marketing network. A marketing network consists of the company and its supporting stakeholders &customers, employees, suppliers, distributors, university scientists, and others' with whom it has built mutually profitable business relationships. 5. Market: Grom the view point of modern marketing, market doesn+t stand for a place where buyers and sellers gathered to buy or sell goods. A market is the set of actual and potential buyers. More specifically, a market is an arrangement of all customers who have needs that may be fulfilled by an organi)ation+s offerings. #he si)e of a market depends of the number of people who exhibit the need, have resources to engage in exchange and are willing to offer these resources in exchange for what they want. #he key customer markets can be( Consumer market, Business Market, Global Market and Non-profit and Government market. ,ow marketers view the sellers as the industr and the buyers as the market. #he sellers send goods and services and communications &ads, direct mail, e%mail messages' to the marketC in return they receive money and information &attitudes, sales data'. #he inner loop in the diagram in Gigure 0%0 shows an exchange of money for goods and servicesC the outer loop shows an exchange of information.

Gigure 2( Modern Market *ystem #oday we can distinguish between a marketplace, a marketspace and metamarket. #he marketplace is physical, as when one goes shopping in a storeC marketspace is digital, as when one goes shopping on the ;nternet. . commerce<business transactions conducted on% line<has many advantages for both consumers and businesses, including convenience, savings, selection, personali)ation, and information. Gor example, on%line shopping is so convenient that 3> percent of the orders generated by the Web site of E.;, a recreational e$uipment retailer, is logged from 0> !.M. to 7 A.M., sparing E.; the expense of keeping its stores open late or hiring customer service representatives. Dowever, the e%commerce marketspace is also bringing pressure from consumers for lower prices and is threatening intermediaries such as travel agents, stockbrokers, insurance agents, and traditional retailers. #he metamarket concept describes a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. #he automobile metamarket consists of automobile manufacturers, new and used car dealers, financing companies, insurance companies, mechanics, spare parts dealers, service shops, auto maga)ines, classified auto ads in newspapers, and auto sites on the ;nternet. 1ar buyers can get involved in many parts of this metamarket. #his has created an opportunity for metamediaries to assist buyers to move seamlessly through these groups. 6. Marketing Channe!s: Marketing channels means the parties that help the company to promote, sell and distribute its goods to final buyers. #o reach a target market, the marketer uses three kinds of marketing channels( ,. Communication channe!s: deliver and receive messages form target buyers and include newspapers, maga)ines, radio, television, mail, telephone and the internet. /. Distribution channe!s: #he marketers use this channel to display, sell or deliver the physical products or services to the buyer or user. #hey include distributors, wholesalers, retailers and agents. 2. er"ice channe!s: #he marketer also uses service channels to carry out transaction with potential buyers. *ervice channels include warehouses, transportation companies, banks and insurance companies that facilitate transaction. 7. egmentation- Target market and %ositioning: Market egmentation means dividing a market into smaller groups of buyers on the basis of different needs, characteristics or behavior. Market segments can be identified by examining geographic, demographic, psychographic and behavioral differences. #he marketer then

decides which segments present the greatest opportunity which is its target market. Gor each chosen target market, the firm develops a market offering. #he offering is #ositioned in the minds of the target buyers as delivering some central benefits. #hus, product positioning is the way a product occupies a place in the minds of the customers relative to competing products. Bike, Jolvo, positions its car as the safest a customer can buy, where Gord positioned on economy and Mercedes and 1adillac positioned on Buxury. 8. u##!y Chain ;t is the channel stretching from raw materials to components to final products that are carried to final buyers. #he supply chain of women+s+ purse starts with hides and moves through tanning, cutting, manufacturing, and the marketing channels to bring to bring products to final customers. #his supply chain represents a value deliver s stem. .ach company captures only a certain percentage of the total value generated by the supply chain. When a company ac$uires competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply chain value. ,9. Com#etition: 1ompetition includes all the actual and potential rival offerings and substitutes a buyer might consider. #here are several possible level of competition( :rand com#etition( A company sees its competitors as other companies that offer similar products and services to the same customers at similar prices. Jolkswagen might see its maAor competitor as #oyota, Donda and other manufacturers of medium period automobiles. ;t would not see itself to compete with Mercedes or Dyundai. Industry com#etition: A company sees its competitors as all companies that make the same product or class of products. Jolkswagen would see itself competing against all other automobile manufacturers. Form com#etition( A company sees its competitors as all companies that manufacture products that supply the same service. Jolkswagen might see itself as competing against not only other auto mobile but also against manufacturers of motor cycle, bicycles and trucks. +eneric com#etition: A company sees its competitors as all companies that compete for the same consumer dollars. Jolkswagen might see itself competing with companies that sell maAor consumer durables, foreign vacations and new homes as substitutes of spending on a Jolkswagen. ,,.Marketing )n"ironment 1ompetition represents only one force in the environment in which all marketers operate. #he overall marketing environment consists of the task environment and the broad environment. #he task environment includes the immediate actors involved in producing, distributing, and promoting the offering, including the company, suppliers, distributors, dealers, and the target customers. Material suppliers and service suppliers such as marketing research agencies, advertising agencies, Web site designers, banking and insurance companies, and transportation and telecommunications companies are included in the supplier group. Agents,

brokers, manufacturer representatives, and others who facilitate finding and selling to customers are included with distributors and dealers. #he broad environment consists of six components( demographic environment, economic environment, natural environment, technological environment, political-legal environment, and social-cultural environment. #hese environments contain forces that can have a maAor impact on the actors in the task environment, which is why smart marketers track environmental trends and changes closely. ,/. The marketing #rogram and marketing mi$ & marketing #rogram consists of numerous decisions on the mix of marketing tools to use for their target market. #he marketing mi$ is the set of marketing tools the firm uses to pursue its marketing obAectives in the target market. Mc1arthy classified these tools into four broad groups that he called the four !+s of marketing( product, price, place and promotion. a. !roduct( !roduct means the combination of goods and services that the company offers to the target market. b. !rice( !rice is the amount of money customers have to pay to obtain the product. c. !lace( !lace includes company activities that make the product available to target consumers. d. !romotion( !romotion means the activities that communicate the merits of the product and persuade target customers to buy it.

Product Variety Quality Design Brand name Packaging Target Market Place Channels Coverage ocations !nventory "ransportation

Price ist Price Discounts #llowances Credit terms

Promotion #dvertising $ales Promotion Personal $elling Direct marketing Public %elation

Marketing Mix: 4 Ps

Figure 2 The Four % Com#onents of the Marketing Mi$

Gour !+s represent the sellers view of the marketing tools available for influencing buyers. Grom a buyer+s point of view, each marketing tool is designed to deliver a customer benefit. Eobert Bauterbom suggested that the seller+s four !+s corresponded to the customer+s four 1+s. Four %;s Four C;s !roduct %%%%%%%%%%%%%% 1ustomer solution !rice %%%%%%%%%%%%%% 1ustomer cost !lace %%%%%%%%%%%%%% 1onvenience !romotion %%%%%%%%%% 1ommunication #he latest way to view four !+s from buyers+ perspective is I1& which stands for o!ution( Dow can ; get a solution of my problemI &Eepresents the product' Information( Where can ; learn more about itI &Eepresents promotion' 1a!ue( What is m total sacrifice to get this solutionI &Eepresents !rice' &ccess: Where can ; find itI &Eepresents place'. )$tended Marketing Mi$ (2 %s) ,ow a days three more !s have been added to the marketing mix namely %eo#!e- %rocess and %hysica! )"idence. #his marketing mix is known as extended marketing mix. !eople(% All people involved with consumption of a service are important. Gor example workers, management, consumers etc !rocess(% !rocedure, mechanism and flow of activities by which services are used. !hysical .vidence(% #he environment in which the service or product is delivered, tangible are the one which helps to communicate and intangible is the knowledge of the people around us.