Unit 1 Marketing) 1

By:
Mirza Rashid Mehmood

MBA (Marketing / Finance)
Administrator: Apple Science Academy
Mandi Bahauddin, Cell: 0333 – 801 8756
“A biggest fool can draw a picture but a genius one required to sell it.”
T r u s t C o l l e g e o f C o m m e r c e
Mandi Bahauddin
Principals of Marketing 2 M.Com. I
Compiled By: Mirza Rashid Mehmood, MBA (Marketing 2/ Finance), Trust College of Commerce, Mandi Bahauddin.
Principal, Apple Science Academy, Mandi Bahauddin, Cell: 0333 – 801 8756
Marketing Concepts
Introduction of Marketing
What image comes to mind when you hear the word “marketing”? Some people think of advertisements or
brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk
shows). The truth is, all of these—and many more things—make up the field of marketing.
“The Knowledge Exchange Business Encyclopedia” defines marketing as:
“Planning and executing the strategy involved in moving a good or service from producer to
consumer.”
Philip Kotler looks marketing as:
"Marketing is a social and managerial process by which individuals and group obtains what
they need and want through creating offering and exchanging products of value with others."
With these definitions in mind, it’s apparent that marketing and many other business activities are related
in some ways. In simplified terms, marketers and others help move goods and services through the
creation and production process; at that point, marketers help move the goods and services to
consumers. But the connection goes even further: Marketing can have a significant impact on all areas of
the business and vice versa.
Understanding Marketing
Marketing: It is the process of creating consumer value in the form of goods, services, or ideas that can
improve the consumer’s life. Marketing is the organizational function charged with defining customer
targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and
business buyers face an abundance of suppliers seeking to satisfy their everyday need, companies and
nonprofit organizations cannot survive today by simply doing a good job. They must do an excellent job if
they are to remain in the increasingly competitive global marketplace. This is what we say that survival of
the fittest. Many studies have demonstrated that the key to profitable performance is to know and satisfy
target customers with competitively superior offers. This process takes place today in an increasingly
global, technical, and competitive environment.
What is marketing?
”The aim of marketing is to know and understand the customer so well the product or service fits him and
sells itself.” Peter Drucker
Marketing is not only restricted to selling and advertising as is perceived but is More than it advertising it
identifies and satisfies customers needs. It functions revolve around wide variety and range of tasks and
activities mostly termed as functions related to 4ps i.e. Product, price, place and promotion. Marketing is:
a. Creating customer value and satisfaction are at the very heart of modern marketing thinking
and practice.
b. A very simple definition of marketing is that it is the delivery of customer satisfaction at a profit.
c. Sound marketing is critical to the success of every organization.
Marketing can also be defined as:
“Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods,
and services to create exchanges that satisfy individual and organizational objectives.”
The definitions of marketing rest on the following core concepts:
• Needs
• Wants
• Demands
• Products
• Value
• Cost
• Satisfaction
• Exchange
• Transaction
• Relationship
• Markets
• Marketing and marketers
Needs
Marketing thinking starts with the fact of human needs and wants. People need food, air, water, clothing
and shelter to survive. Besides this, people have a strong desire for recreation, education and other
services. They have strong preferences for peculiar versions and brands of basic goods and services.
People need food, clothing shelter etc. Society or marketers do not create these needs. They exist on the
very texture of human biology.
Wants
"Wants are desires for specific satisfiers for deeper needs" Needs for travel in a rich country may be
meeting with automobile where as in a poor country the same need may be satisfied by a bicycle. An
American needs food and wants hamburger, French fries and coke and in another country this need and
want may be satisfied with other items. Although people’s needs are few and their wants are many,
human wants are continuously shaped and reshaped by social forces and institution.
Demands
"Demands are wants for specific products that are backed by an ability and willingness to buy them."
Wants become demands when supported by purchasing power. Many people want a Mercedes and few
of them are able to buy one. Companies must know when many people would actually be willing and able
to buy rather than how many people want their product.
We can now see that marketers do not "create NEEDS" Needs pre-exist marketers. Marketers get people
to buy thing they don't want.
Products
People satisfy people’s needs and wants with goods (Tangible) and services (Intangible). The term
“product” covers both. The importance of physical products lies not so much owning them but in obtaining
the services they render. We buy microwave oven as it supplies cooking service and car for supplies
transportation service. In fact Services are also supplied through other ways such as persons, places,
activities, organizations etc. For example, if we are bored we can go to a comedy show and watch a
comedian (person) or do some walking activity. A physical product is a package of services and a
marketer’s job is to sell the benefits or services built in that product.
Value, Cost & Satisfaction
How customers choose a product among many products that might satisfy a required need?
Suppose Mr. X needs to travel 3 km every day. A number of products can satisfy his need:
• A bicycle
• A motorcycle
• An automobile
• A taxicab
• A bus
Now each product can satisfy various needs.
The X has to decide which product will give the most total satisfaction. The guiding concept is "Customer
Value". Suppose X is mainly interested in speed and ease of getting to work and all products are offered
free of cost. He will choose automobile. Since each product involves cost he may not buy automobile.
Therefore he will consider the product value and price before making a choice. He will, therefore, buy the
product that produces most value per Rupee.
According to DeRose:
“Value is the satisfaction of customer requirements at the lowest possible cost of acquisition,
ownership, and use”
Exchange, Transactions & Relationships
The fact that people have needs and wants and can place value on products does not fully define
marketing. Marketing emerges when people decide to satisfy needs and wants through exchange.
Exchange in one of the four ways through people can obtain products:
1. Self-production - People can relieve hunger through hunting or fruit gathering
2. Coercion - Hungry people can fight or steal food from others
3. Begging - Nothing to offer back except gratitude
4. Exchange - Hungry people can approach others and offer resources in exchange such as money,
another good or service
Marketing arises from the last approach. Exchange is in the act of obtaining a desired product from
someone by offering something in return.
Conditions for Exchange:
1. They are at least 2 parties willing for exchange
2. Each party has something of value to the other party has
3. Each Party is capable of communication & delivery
4. Each party is free to accept or reject the offer
5. Each party believes it is appropriate or desirable to deal with the other party.
Thus, Marketing is a human activity directed in satisfying needs and wants through exchange process.
Simple Marketing System
The concept of Marketing System brings one full circle to the concept of marketing. Simple marketing
system comprises of different actors and factors like producer/seller, product/service something valuable
to exchange in return of product/service (money), consumer/customer, communication process to have
two way communication like to provide information about product or service to customer or consumer and
to have feedback in same regard from the customer. Fig presents an example of a very simple marketing
system. Marketing system has following basic activities:
1. Sellers must search for buyers, identify their needs, design good products and services, set prices
for them, promote them, and store and deliver them.
2. A modern marketing system includes all of the elements necessary to bring buyers and sellers
together. This might include such activities as product development, research, communication,
distribution, pricing, and service.
3. Each of the major actors in a marketing system adds value for the next level of the system. There
is often critical interdependency among network members.
To learn more about marketing first we should learn about some basics that are some time termed as
4P’S (Product, price, place, promotion) and some times even 6 or 7ps (Product, price, place, promotion,
position, personal relations, people and profit) lets have some definitions in this regard:
• Product—what are you selling? (It might be a product or a service.)
• Price—what is your pricing strategy?
• Place or distribution—how are you distributing your product to get it into the marketplace?
• Promotion—how are you telling consumers in your target group about your product?
It Identifies the 4 marketing variables i.e. product, price, promotion, and distribution it also states that the
public, the customer, and the client determine the marketing program. Marketing mainly emphasizes on
creating and maintaining relationships and applies for both non-profit organizations and profit oriented
businesses. Major activities that are performed in marketing process include: Personal selling Advertising,
Making products available in stores and maintaining inventories. Any thing like goods, services,
experiences, events, persons, places, organizations, information and ideas can be marketed to the
customers in return of something of value.
How Does an Organization Create a Customer?
Organizations (producer/ seller) can create the customers by Identifying customer needs, designing goods
and services that meet those needs than communicating information about those goods and services to
prospective buyers Making the goods or services available at times and places that meet customers’
needs Pricing goods and services to reflect costs, competition, and customers’ ability to buy and finally
providing for the necessary service and follow-up to ensure customer satisfaction after the purchase
How is Marketing Done?
According to Peter F. Drucker 1, If we want to know what a business is, we have to start with its purpose.
And its purpose must lie outside the business itself. In fact, it must lie in society since a business
enterprise is an organ of society. There is one valid definition of business purpose: to create a customer.
Reasons for Studying Marketing:
Marketing is part of all of our lives and touches us in some way every day. To be successful each
company that deals with customers on a daily basis must not only be customer-driven, but customer-
obsessed. The best way to achieve this objective is to develop a sound marketing function within the
organization. Major reason to study marketing is:
• Marketing plays an important role in society
• It is Vital to business
• Marketing offers outstanding career opportunities
• Marketing affects our life every day
What do Marketers think about?
To have clearer concept in this regard lets consider an example of Opening a Book Shop on campus. To
do so we have to answer different questions like:
1. Is there a need? (Of having bookshop)
2. What is my target market? (Who will be buying products from your book shop)
3. What is my product? (Basic items to be sold)
4. How can I produce and deliver a “product” better than my competitors?
5. How shall I promote my product?
6. How can I insure customer loyalty?
1
The Man Who Invented Management (born in Vienna, the capital of Austria & died on November 11, 2005 Claremont, California,
USA)
Mostly before starting any activity of above-mentioned type marketer performs an analysis termed as
SWOT (Strength, Weakness, Opportunity and Threat). Marketing is a process of getting the right products
to the right people at the right price and at the right place and time with the right promotion. But this
requires solution to certain simple question: like
Simple Questions, Hard Answers:
1. Who are our customers? (Target Market)
2. What important & unique benefits do we provide? (Product/service)
3. Are these benefits sustainable? (Long-term competitive advantage)
These questions are apparently very simple but are very difficult to be answered theses questions like it is
really difficult to define basic characteristics to be produced in product and services as per demands and
requirements pf the customers; and then to precisely define your target market and to have long-term
competitive advantage through customer satisfaction.
♣ Quote:
The productivity of work is not the responsibility of the worker but of the manager.
Peter F. Drucker
Types of Marketing:
If you want your company to succeed, at some point you will need to begin marketing your products or
services. The old proverb that the worst type of advertising is no advertising is still true. No matter what
your marketing budget may be, there are many different types of marketing that you can take advantage
of. Let's take a look at a few of the more proven techniques that combine low cost with major results.
Online Marketing:
Online marketing has opened up incredible avenues for small businesses. Thanks to companies like
Goggle and Yahoo, you can place ads for your company right along side the big guns at competitive
prices. Never before has it been easier to market your business than it is right now.
New forms of online marketing are also making headway. Online video ads are easy and cheap to shoot
and give you the kind of exposure that was previously limited to expensive national television campaigns.
With low production costs and reasonable pricing, you can run an online video campaign at a fraction of
the cost of traditional advertising.
Offline Marketing:
The benefits of traditional marketing cannot be overlooked in our digital age. Many companies are reaping
the benefits of combining online and offline marketing techniques. For example, you can use direct mail or
local advertising to drive potential customers to your site. This is a great and proven combination that
results in increased traffic and better conversions.
You can actually save money on print campaigns by relying on your website to do the actual selling while
the print ad can function as a pointer. You'll save money using less words while building brand
awareness. Radio ads are still a proven way to increase awareness of your company. If you are new to
radio marketing, try placing a sample ad with a local station. They'll be able to assist you in producing
your first ad until you get the hang of the process.
Word of Mouth Marketing:
Word of mouth is still one of the most powerful forms of advertising on the planet. The best word of mouth
comes from satisfied customers. Go the extra mile for them, and really work towards building relationships
with your customers. This will result not only in more leads but they'll keep coming back to you in the
future. Try running special promotions or coupons for these regular customers to help them feel that they
are special and you'll really be able to continue to build on these relationships in the future.
The best marketing strategies take advantage of all the different types of advertising. By spreading your
ad dollars around you can be assured of greater success and better interaction with the public. Start small
by combining a special promotion that will run both in print and online avenues at the same time. You can
keep track of the success of each method by using coupon codes to see which form suits your company
the best.
Marketing Management & Marketing Concepts
Definition - By American Marketing Association 1985
"Marketing management is a process of Planning and executing the conception, pricing,

promotion and distribution of goods, services and ideas to create exchanges that satisfy
individual and organizational goals”
This definition recognizes that marketing management is a process involving analysis, planning,
implementation and control. It rests on a notion of exchanges and that the goal is to produce satisfaction
for the parties involved. Many of these jobs involve managing particular marketing resources such as
advertising, sales promotion or marketing research. The marketing manager’s task is primarily to stimulate
demand for the company’s product. There are five competing concepts under which organizations
conduct their marketing activity.
• Production concept
• Product concept
• Selling concept
• Marketing concept
• Societal marketing concept
1) Production Concept
The production concept holds that:
“Consumers will favour those products that are widely available and low in cost.
Production-oriented organizations’ manages concentrate on achieving high production efficiency and wide
distribution coverage.
2. The Product Concept
The product concept holds that
“Consumers will favour these products that offer the most quality performance or innovative
features. Product-oriented organizations’ managers focus their energy on making superior
products and improving them over time".
Those managers who follow this concept assume that buyers admire well-made products. Product-
oriented companies often design their products with little or no customer input. They trust that their
managers can design the products with little or no customer output.
3. The Selling Concept
The selling concept holds that
“Consumers, if left alone, will ordinarily not buy enough of the organizations’ products. The
organization must therefore undertake an aggressive selling and promotion effort."
The concept assumes that consumes typically show resistance and has to be directed to buy and that the
company has available a whole battery of effective selling and promotion tools to stimulate more buying.
The selling concept is practiced most aggressively with unsought goods, those goods that buyers
normally do not think of buying such as insurance, encyclopedias etc.
Most firms practice the selling concept when they have overcapacity. Their aim is to:
"Sell what they make rather than make what the market wants."
4. The Marketing Concept
The marketing concept is a business philosophy that challenges the previous three concepts.
"The marketing concept holds that the key to achieving organizational goals consists in
determining the needs and wants of target markets and delivering the desired satisfactions more
effectively and efficiently than competition."
The marketing concept holds that the key to achieve the organizational goals consists of determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently
than competitors.
The marketing concept has been expressed in many colorful ways:
• Meeting needs profitably
• Find wants and fill them
• Love the customers and not the product
• Have it your way
• You are the boss

2
Therefore, Prof Levitt drew a perceptive contrast between the selling and marketing concepts. Selling
focuses the needs of the seller and the marketing on the needs of the buyer. Selling in preoccupied with
the sellers need to convert his product into cash and marketing with idea of satisfying the needs of the
customer by means of product.
The marketing concept rests on 4 pillars:
1. Target Market
2. Customer Needs
3. Integrated marketing
4. Profitability
Here we can examine how each pillar of the marketing concept contributes to more effective marketing.
Target Market
Every company cannot run its operations in every market and satisfy each need of customers. Nor can it
always do job within on broad market. Companies do best when they define their target market (s)
carefully and prepare a tailored marketing program.
Customer Needs
A company can define its target market but fail to fully understand the customer’s needs. Consider the
following example. A major chemical company invented a new substance that hardened into a marble like
material. Looking for an application, the company created a few model bathtubs and exhibited them at a
bathroom tradeshow. They hoped to convince bathtub manufacturers to produce tubs with a new material.
Although bathtub manufacturers thought the new bathtubs were attractive, none signed up. The reason
was obvious. The bathtub would have to be priced at USD 2000; the consumers could buy bathtubs made
of real marble for USD 500. In addition, the new bathtubs were so heavy that house owners had to
reinforce their floor. Further more, the chemical company chose a target market but failed to understand
the customers. Customer oriented thinking requires the company to define customer needs from customer
point of view. In general a company can respond to customer’s requirements by giving customers what
2
Distinguished Service Professor of Economics at the University of Chicago
Compiled By: Mirza Rashid Mehmood, MBA (Marketing10 / Finance), Trust College of Commerce, Mandi Bahauddin.
they want or what they need, or what they really need. The key to professional marketing is to meet the
customers real needs better than any competitor can.
Why it important to satisfy the target customer? Basically because a company's sale each period comes
from two groups, new customers & repeat customers. Attracting a new customer is five times costlier than
pleasing an existing customer. Customer retention, therefore, is more important than customer attraction
A satisfied customer:
• Buys more and stays "loyal" longer
• Buys additional products as the company introduces and upgrades its products
• Talk favorably about the company and its products
• Pay less attention to competing brands and advertising and is less price sensitive
• Offers product / service ideas to the company
• Costs less to service than new customers
Delighted customers are more effective advertisers than all the paid advertisements placed in the media.
Listening is not enough. The company must respond constructively to the complaints. A customer-
oriented company would track its customer satisfaction level each period and set improvement goals.
Integrated Marketing
When all the departments of a company work together to serve the customers’ interest, the result is
integrated marketing. Generally, all employees are not trained and motivated to work for the customer.
Each Head of Department (HOD) will pay attention on different areas, production Manager on volume,
Engineer on service, Finance Manager on cost. But all these functions must be coordinated from the
customer’s point of view. Marketing must be well coordinated with other company departments. Managers
should realize that customer is the key to profitability.
Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of
private firms, the major goal is profit. In the case of nonprofit organizations, it is surviving and attracting
enough funds to perform their work. A company should make profit by satisfying customer needs better
than its competitors.
The 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 satisfactions more effectively and efficiently than
competitors in a way that preserves or enhances the consumer’s and society’s well-being.

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By:

Mirza Rashid Mehmood

“The Knowledge Exchange Business Encyclopedia” defines marketing as:

Philip Kotler looks marketing as:

c. Sound marketing is critical to the success of every organization.

Marketing can also be defined as:

The definitions of marketing rest on the following core concepts:

• Marketing and marketers

Value, Cost & Satisfaction

Now each product can satisfy various needs.

Exchange, Transactions & Relationships

1. Self-production - People can relieve hunger through hunting or fruit gathering

2. Coercion - Hungry people can fight or steal food from others

3. Begging - Nothing to offer back except gratitude

Conditions for Exchange:

1. They are at least 2 parties willing for exchange

2. Each party has something of value to the other party has

3. Each Party is capable of communication & delivery

4. Each party is free to accept or reject the offer

Simple Marketing System

• Product—what are you selling? (It might be a product or a service.)

• Price—what is your pricing strategy?

How Does an Organization Create a Customer?

How is Marketing Done?

Reasons for Studying Marketing:

• Marketing plays an important role in society

• Marketing offers outstanding career opportunities

• Marketing affects our life every day

What do Marketers think about?

1. Is there a need? (Of having bookshop)

3. What is my product? (Basic items to be sold)

4. How can I produce and deliver a “product” better than my competitors?

5. How shall I promote my product?

6. How can I insure customer loyalty?

Simple Questions, Hard Answers:

1. Who are our customers? (Target Market)

2. What important & unique benefits do we provide? (Product/service)

3. Are these benefits sustainable? (Long-term competitive advantage)

Word of Mouth Marketing:

Marketing Management & Marketing Concepts

Definition - By American Marketing Association 1985

"Marketing management is a process of Planning and executing the conception, pricing,

• Societal marketing concept

The production concept holds that:

2. The Product Concept

The product concept holds that

3. The Selling Concept

The selling concept holds that

4. The Marketing Concept

The marketing concept has been expressed in many colorful ways:

• Meeting needs profitably

• Find wants and fill them

• Love the customers and not the product

• Have it your way

• You are the boss

The marketing concept rests on 4 pillars:

• Buys more and stays "loyal" longer

• Talk favorably about the company and its products

• Offers product / service ideas to the company

• Costs less to service than new customers

The Societal Marketing Concept

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