Module 1: Core Marketing Concepts and the Marketing Environment.

Definition of marketing:
1,According to the American Marketing Association (AMA) Board
of Directors, Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and
society at large.

2.Dr. Philip Kotler defines marketing as “the science and art of

exploring, creating, and delivering value to satisfy the needs of a
target market at a profit. Marketing identifies unfulfilled needs and
desires. It defines, measures and quantifies the size of the identified
market and the profit potential. It pinpoints which segments the
company is capable of serving best and it designs and promotes the
appropriate products and services.”

What Is Marketing?
Marketing refers to activities undertaken by a company to promote
the buying or selling of a product or service. Marketing includes
advertising, selling, and delivering products to consumers or other
businesses.

What is marketing management?

Definition of marketing management:

Marketing management is 'the art and science of choosing target

markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer value’
(Kotler and Keller).

According to Philip Kotler, “Marketing management is the analysis,

planning, implementation and control of programmes designed to
bring about desired exchanges with target markets for the purpose of
achieving organisational objectives.”
Marketing Challenges:

In such a rapidly changing marketing environment it is really difficult

for business organizations to make quick and sound decisions, and
facing various marketing challenges.

1.Rapidly changing customer needs, wants, and expectations;

2.Increasing domestic and global competition;

3.Heterogeneous and fragmented market

4.Increasing popularity of Internet;

5.Rapid technological changes;

6.Challenge of selecting among too many options; and

1.Rapidly Changing Customer Needs, Wants, and Expectations

Today, the needs, wants, and expectations of customer is changing

rapidly. It is a great challenge not only for small marketers but for big
players too. It requires extensive study of market trends and consumer
behaviour while developing new product or updating existing product.

2. Global and Domestic Competition

Competition today is global rather than just domestic. Marketers have

to compete not only with domestic players but with global players
too. The intense and global competition is a great challenge for
marketers to deal with.

3.Increasing Popularity of Internet

With the increase in popularity of Internet a new spectrum of

marketing channel is emerged. The worldwide increase in number of
Internet users brought a shift from traditional print-based media to
new online platforms. It presents a new set of marketing challenges -
challenge of deciding how much to allocate to digital v/s print-based
media; challenge of using social media marketing largely because of
regulatory issues and concerns over its measurability; and challenge
of doing more with less money as the rise of Internet made
communication cheaper and efficient .

4.Challenge of Selecting Among Too Many Options

The greatest challenge the marketers facing today is simply too many
options. Too many potential customer segments. Too many product or
service options. Too many communication tools. It is really difficult
and challenging for marketers to choose among too many options.
The marketers today doesn't suffer from lack of opportunities or
options. The picture is totally opposite today. Now they suffer from
too many opportunities or options.

5. Heterogeneous and fragmented market

If a market is characterized by heterogeneous needs and

heterogeneous means to satisfy those needs, the resulting structure is
likely to be fragmented markets consisting of many specialists who
cater to unique market segments.

Trends in Marketing:

1. More Emphasis on Quality, Value, and Customer Satisfaction:

Today’s customers place a greater weight to direct motivations
(convenience, status, style, features, services and qualities) to buy
product. Today’s marketers give more emphasis on the notion, “offer
more for less.”

2. More Emphasis on Relationship Building and Customer Retention:

Today’s marketers are focusing on lifelong customers. They are
shifting from transaction thinking to relationship building. Large
companies create, maintain and update large customer database
containing demographic, life-style, past experience, buying habits,
degree of responsiveness to different stimuli, etc., and design their
offerings to create, please, or delight customers who remain loyal to
them. Similarly more emphasis is given to retain them throughout life.
Marketers strongly believe: “Customer retention is easier than
customer creation.”

3. More Emphasis on Managing Business Processes and Integrated

Business Functions:
Today’s companies are shifting their thinking from managing a set of
semi independent departments, each with its own logic, to managing a
set of fundamental business processes, each of which impact customer
service and satisfaction. Companies are assigning cross-disciplinary
personnel to manage each process.

Marketing personnel are increasingly working on cross- disciplinary

terms rather than only in the marketing department. This is the
positive development, which broadens marketers’ perspectives on
business and also leads to broaden perspective of employees from
other department.

4. More Emphasis on Global Thinking and Local Market Planning:

As stated earlier, today’s customers are global, or cosmopolitan. They
exhibit international characteristics. This is due to information
technology, rapid means of transportation, liberalization, and mobility
of people across the world. Companies are pursuing markets beyond
their borders. They have to drop their traditions, customs, and
assumptions regarding customers.

They have to adapt to their offering as per the cultural prerequisites.

Decisions are taken by local representatives, who are much aware of
the global economic, political, legal, and social realities. Companies
must think globally, but act locally. Today’s marketers believe: “Act
locally, but think globally.”

5. More Emphasis on Strategic Alliances and Networks:

A company cannot satisfy customers without help of others. It lacks
adequate resources and requirements to succeed. Company needs to
involve in partnering with other organisations, local as well as global
partners who supply different requirements for success

Senior manager at top-level management spends an increasing

amount of time for designing strategic alliance and network that
create competitive advantages for the partnering firms. Merger,
acquisition, and partnering are result of a strong thirst for strategic
alliance and networks.

6. More Emphasis on Direct and Online Marketing:

Information technology and communication revolution promise to
change the nature of buying and selling. Companies follow direct
channel in term hiring salesmen, setting own distribution network,
designing network marketing, applying online marketing, and
contracting with giant shopping/retailing malls.

People anywhere in the world can access the Internet and companies’
home pages to scan offers and order goods. Via online service, they
can give and get advice on products and services by chatting with
other users, determine the best values, place orders, and get next-day
delivery.

As a result of advances in database technology, companies can do

more direct marketing and rely less on wholesale and retail
intermediaries. Beyond this, much company buying is now done
automatically through electronic data interchange link among
companies. All these trends portend a greater buying and selling
efficiency.

7. More Emphasis on Services Marketing:

As per general survey, about 70% people are, either directly or
indirectly, involved in service marketing. Because services are
intangible and perishable, variable and inseparable, they pose
additional challenges compared to tangible good marketing.
Marketers are increasingly developing strategies for service firms that
sell insurance, software, consulting services, banking, insurance, and
other services.

8. More Emphasis on High-tech Industries:

Due to rapid economic growth, high-tech firms emerged, which differ
from traditional firms. High-tech firms face higher risk, slower
product acceptance, shorter product life cycles, and faster
technological obsolescence. High-tech firms must master the art of
marketing their venture to the financial community and convincing
enough customers to adopt their new products.

9. More Emphasis on Ethical Marketing Behaviour:

The market place is highly susceptible to abuse by those who lack
scruples and are willing to prosper at the expense of others. Marketers
must practice their craft with high standards. Even, governments have
imposed a number of restrictions to refrain them from malpractices.
Marketers are trying to sell their products by obeying and observing
moral standards or business ethics.
Difference Between Needs and Wants

We all know that economics is a

social science, which deals with production, distribution and
consumption functions. It is all about making choices regarding the
allocation of scarce resources, so as to make their best possible use
and satisfy human wants and needs. In economics, we often go
through the terms needs and wants, but have you wondered about
their differences. Needs point out the something you must have for
survival.

On the other hand, wants refers to something which is good to have,

but not essential for survival. For the purpose of spending and saving
money wisely, every person must know the difference between needs
and wants.

Content: Needs Vs Wants

1. Comparison chart
2. Definition
3. Key differences
4. Conclusion
Comparison Chart

BASIS FOR
NEEDS WANTS
COMPARISON

Meaning Needs refers to an Wants are described as the

individual's basic goods and services, which
requirement that must an individual like to have,
be fulfilled, in order as a part of his caprices.
to survive.

Nature Limited Unlimited

What is it? Something you must Something you wish to

have. have.

Represents Necessity Desire

Survival Essential Inessential

Change May remain constant May change over time.

over time.

Non-fulfillment May result in onset of May result in

disease or even death. disappointment.

Definition of Needs

By the term needs, we mean those requirements which are extremely

necessary for a human being to live a healthy life. They are personal,
psychological, cultural, social, etc that are important for an organism
to survive.

In ancient times the three basic needs of the man are food, clothing
and shelter but with the passage of time, education and healthcare also
became integral, as they improve the quality of life. They are a
person’s first priority as they are the things, that they keep us healthy
and safe. Therefore, if needs are not satisfied in time, it may result in
illness, inability in functioning properly or even death.

Definition of Wants

In economics, wants are defined as something that a person would

like to possess, either immediately or at a later time. Simply put,
wants are the desires that cause business activities to produce such
products and services that are demanded by the economy. They are
optional, i.e. an individual is going to survive, even if not satisfied.
Further, wants may vary from person to person and time to time.

Conclusion

With the above discussion, on these two concepts of economics, it

concluded that needs and wants are separate forces, that compels
actions for satisfaction. If needs are not met on time, the survival of a
person is at stake whereas wants are something which a person is
craving for, that does not challenge a person’s survival if not satisfied.

So, needs can be distinguished from wants on the basis of their level
of importance. Hence, the distinction is between what is required and
what is desired.

THE INFLUENCE OF THE ENVIRONMENT ON

MARKETING DECISIONS:

There are two kinds of external marketing environments; micro and

macro. These environments’ factors are beyond the control of
marketers but they still influence the decisions made when creating a
strategic marketing strategy.

Micro Environment Factors

 The suppliers: Suppliers can control the success of the business

when they hold the power. The supplier holds the power when
they are the only or the largest supplier of their goods; the buyer
is not vital to the supplier’s business; the supplier’s product is a
core part of the buyer’s finished product and/or business.

 The resellers: If the product the organisation produces is taken

to market by 3rd party resellers or market intermediaries such as
retailers, wholesalers, etc. then the marketing success is
impacted by those 3rd party resellers. For example, if a retail
seller is a reputable name then this reputation can be leveraged
in the marketing of the product.

 The customers: Who the customers are (B2B or B2C, local or

international, etc.) and their reasons for buying the product will
play a large role in how you approach the marketing of your
products and services to them.

 The competition: Those who sell same or similar products and

services as your organisation are your market competition, and
they way they sell needs to be taken into account. How does
 their price and product differentiation impact you? How can you
leverage this to reap better results and get ahead of them?

 The general public: Your organisation has a duty to satisfy the

public. Any actions of your company must be considered from
the angle of the general public and how they are affected. The
public have the power to help you reach your goals; just as they
can also prevent you from achieving them.

Macro Environment Factors

 Demographic forces: Different market segments are typically

impacted by common demographic forces, including
country/region; age; ethnicity; education level; household
lifestyle; cultural characteristics and movements.

 Economic factors: The economic environment can impact both

the organisation’s production and the consumer’s decision
making process.

 Natural/physical forces: The Earth’s renewal of its natural

resources such as forests, agricultural products, marine products,
etc must be taken into account. There are also the natural non-
renewable resources such as oil, coal, minerals, etc that may
also impact the organisation’s production.

 Technological factors: The skills and knowledge applied to the

production, and the technology and materials needed for
production of products and services can also impact the smooth
running of the business and must be considered.

 Political and legal forces: Sound marketing decisions should

always take into account political and/or legal developments
relating to the organisation and its markets.

 Social and cultural forces: The impact the products and services
your organisations brings to market have on society must be
considered. Any elements of the production process or any
products/services that are harmful to society should be
 eliminated to show your organisation is taking social
responsibility. A recent example of this is the environment and
how many sectors are being forced to review their products and
services in order to become more environmentally friendly.

Micro and macro environments have a significant impact on the

success of marketing campaigns, and therefore the factors of these
environments should be considered in-depth during the decision
making process of a strategic marketer. Considering these factors will
improve the success of your organisation’s marketing campaign and
the reputation of the brand in the long term.

RELATION OF MARKETING TERMS TO REAL WORLD

SITUATIONS

The Michelin Guide by Michelin

The Michelin Guide launched all the way back in 1900. It's still
available today in print. At first sight, it may seem weird that A TIRE
COMPANY HAS A TRAVEL GUIDE offering information about
hotels, restaurants and roadways. But, upon deeper analysis, it's a
really smart piece of print marketing.
Much like The Furrow, which has always covered the rural
lifestyle, The Michelin Guide is a great example of content marketing
because it connects to Michelin customers. In the beginning, Michelin
used its guide as a way to encourage travel via the car (which would
lead to more tire purchases). Now, it's a quintessential guidebook for
those in search of fresh experiences.
The Michelin Guide has been influential in helping establish Michelin
as a premium brand. It's also even turned the company into a FINE
DINING AUTHORITY which certainly elevates opinions about its
tires.
2 . Pizza Hut & Foursquare Team Up During the Super Bowl
People who checked in to the game unlocked a 'Super Swarm Sunday'
badge with an offer: "spend $10, get $5 off" at Pizza Hut when paying
with American Express. As of 6:20pm EST, 175,365 people had
checked in (the number was growing by 1,000 per minute). By the
time the badge expired, 303,445 people had checked in.

Business orientation towards marketplace from production to

holistic marketing
Production Marketing Concept –
In this concept the company mainly
tries to increase production irrespective of demands of the customer.
The concept is mainly based on the principle that, “as the
productivity levels increase, cost of production decreases, and
as a result, customer will be able to purchase a product at a
cheaper rate, which in turn accelerates the sales of the
company.”The production concept is almost extinct now with
companies paying more and more attention to the customer.
Holistic Marketing Concept - it can be defined as a
marketing strategy which considers the business as a
whole and not as an entity with various different parts.
According to holistic marketing concept, even if a business is
made of various departments, the departments have to come
together to project a positive & united business image in the
minds of the customer. Holistic marketing concept involves
interconnected marketing activities to ensure that the customer
is likely to purchase their product rather than competition.
Business orientation towards marketplace from production to
holistic marketing is taking place due to following reasons-
Consistency
Consistency is important to stay in the market for long.
Since holistic marketing concept involves marketing the
brand to all the stakeholders and through unified
communication strategies, consistency is maintained.
Efficiency
When every aspect of the business is taken care of, it
becomes easier to reduce (and even eliminate) repetition,
become more efficient, and save company’s time and
money. The efficiency can also be seen in tapping
opportunities and spotting potential threats.
Effectiveness
Holistic marketing philosophy, by focusing on the big picture,
creates a synergy that effectively reinforces the brand
message, brand image, and positions the brand uniquely in
the minds of the customers.

Core Marketing Concepts

1. Needs:
Existence of unmet needs is precondition to undertake marketing
activities. Marketing tries to satisfy needs of consumers. Human
needs are the state of felt deprivation of some basic satisfaction. A
need is the state of mind that reflects the lack-ness and restlessness
situation.
Needs are physiological in nature. People require food, shelter,
clothing, esteem, belonging, and likewise. Note that needs are not
created. They are pre-existed in human being. Needs create
physiological tension that can be released by consuming/using
products.
2. Wants:
Wants are the options to satisfy a specific need. They are desire for
specific satisfiers to meet specific need. For example, food is a need
that can be satisfied by variety of ways, such as sweet, bread, rice,
sapati, puff, etc. These options are known as wants. In fact, every
need can be satisfied by using different options.
Maximum satisfaction of consumer need depends upon availability
of better options. Needs are limited, but wants are many; for every
need, there are many wants. Marketer can influence wants, not
needs. He concentrates on creating and satisfying wants.
3. Demand:
Demand is the want for specific products that are backed by the
ability and willingness (may be readiness) to buy them. It is always
expressed in relation to time. All wants are not transmitted in
demand. Such wants which are supported by ability and willingness
to buy can turn as demand.
Marketer tries to influence demand by making the product
attractive, affordable, and easily available. Marketing management
concerns with managing quantum and timing of demand.
Marketing management is called as demand management.
4. Product:
Product can also be referred as a bundle of satisfaction, physical and
psychological both. Product includes core product (basic contents or
utility), product-related features (colour, branding, packaging,
labeling, varieties, etc.), and product-related services (after-sales
services, guarantee and warrantee, free home delivery, free
repairing, and so on). So, tangible product is a package of services
or benefits. Marketer should consider product benefits and services,
instead of product itself.
Marketer can satisfy needs and wants of the target consumers by
product. It can be broadly defined as anything that can be offered to
someone to satisfy a need or want. Product includes both good and
service. Normally, product is taken as tangible object, for example,
pen, television set, bread, book, etc.
However, importance lies in service rendered by the product. People
are not interested just owning or possessing products, but the
services rendered by them. For examples, we do not buy a pen, but
writing service.
Similarly, we do not buy a car, but transportation service. Just
owning product is not enough, the product must serve our needs
and wants. Thus, physical product is just a vehicle or medium that
offers services to us.
As per the definition, anything which can satisfy need and want can
be a product. Thus, product may be in forms of physical object,
person, idea, activity, or organisation that can provide any kind of
services that satisfy some needs or wants.
5. Utility (value), Cost, and Satisfaction:
Utility means overall capacity of product to satisfy need and want. It
is a guiding concept to choose the product. Every product has
varying degree of utility. As per level of utility, products can be
ranked from the most need-satisfying to the least need-satisfying.
Utility is the consumer’s estimate of the product’s overall capacity to
satisfy his/her needs. Buyer purchases such a product, which has
more utility. Utility is, thus, the strength of product to satisfy a
particular need.
Cost means the price of product. It is an economic value of product.
The charges a customer has to pay to avail certain services can be
said as cost. The utility of product is compared with cost that he has
to pay. He will select such a product that can offer more utility
(value) for certain price. He tries to maximize value, that is, the
utility of product per rupee.
Satisfaction means fulfillment of needs. Satisfaction is possible
when buyer perceives that product has more value compared to the
cost paid for. Satisfaction closely concerns with fulfillment of all the
expectations of buyer. Satisfaction releases the tension that has
aroused due to unmet need(s). In short, more utility/value with less
cost results into more satisfaction.
6. Exchange, Transaction, and Transfer:
Exchange is in the center of marketing. Marketing management
tries to arrive at the desired exchange. People can satisfy their needs
and wants in one of the four ways – self-production, coercion/
snatching, begging, or exchanging.
Marketing emerges only when people want to satisfy their needs
and wants through exchange. Exchange is an act of obtaining a
desired product from someone by offering something in return.
Obtaining sweet by paying money is the example an exchange.
Exchange is possible when following five conditions are
satisfied:i. There should be at least two parties
ii. Each party has something that might be of value to the other
party
iii. Each party is capable of communication and delivery
iv. Each party is free to accept or reject the exchange offer
v. Each party believes it is desirable to deal with the other party
Evolution of Marketing Concept
Ever since the primitive days, mankind had been
engaging in the act of giving and taking in the form of
barter. This physical phenomenon of giving and receiving was
defined in marketing as 'exchange'. This process of exchange
in its evolutionary path resulted in the emergence of fourmarketing
concepts which are discussed below.
Production and Distribution Orientation. Since the exchange
process involved physical movement of the 'object' the word
'distribution' was highlighted as the "primary concern' of
marketing. Cox, Mc Cormick, Shaw and Ford, Grether, Mc
Garry and Alderson (1930 - 59) themed that marketing is
concerned with the movement and distribution of economic
goods for maximising production and profit.
Peter F. Drucker, Management Task, Responsibilities and
Practices, Bombay: Allied Publishers, 1975, p.35
According to this concept, it is assumed that consumers
will favour those products which are available and
affordable and therefore, the marketing task of management is
to pursue improved production and distribution efficiency.

The production approach is considered appropriate under the

following situations: (i) when the demand for products
exceeds supply, (ii) when the product cost is high and has
to be brought down to expand the market, and (iii) when
there is no need for vigorous marketing efforts. In
short it is based on the dictum "we sell what we make'. A
variant of the same theme is practised in socialistic
world: Planners know better what is good for the people than
consumers themselves.

Sales Orientation. Subsequently the attention gradually

shifted from the producer to the consumer who possesses
purchasing power and whose needs the exchange process has to
satisfy. It is assumed under the selling concept that
consumers either not buy at all or not buy enough of the
organisation's product unless the organisation makes a
substantial effort to stimulate their interest in its
products. The marketer holds the view that products are
not bought but they have to be sold with the help ot"
salemen, advertising, sales promotion and publicity. This
concept is based on the premise 'we make what we can sell'.

Consumer Orientation. Economists like Galbriaith and Rostow

moved a step further and suggested that the problems o£
distribution of the total product to the different sections
of society should be given more attention. Subsequently
consumer preference got a place of pride in economics. Me
Kltterick, King and Bartels (1960-69) viewed marketing as a
total business philosophy centering around the consumers'
need and satisfaction.
The consumer-oriented marketing concept holds that the
key task of the organisation is to determine the needs and
wants of target markets, and to adapt the organisation to
delivering the desired satisfaction more effectively and
efficiently than its competitors. 1 2 The essential elements
of this concept are: customer needs and wants orientation,
John Mc Kitterick, 'What is the Marketing Management
Concept .The Frontiers of Marketing Thought and Action,
Chicago: American Marketing Association, 1957, pp.71-82.
organisational goals. It is based on the dictum -we market
what customers need'. Customer is the foundation.
This concept acquired newer dimensions and wider vision
due to the efforts of its ardent exponent (Kotler, 1973)
through: (i) broadening the nature of the product exchanged
from economic goods and services to anything of value;
Cii)broadening the objectives of the exchange from profit to
any type of pay off; and (iii) broadening the target
audience of an organisation or institution from customer to
any concerned -public".

Societal Orientation. Marketing theorists like Bart els,

Kotler, Levy, Zaltman, Ralph Nader and Arndt (1970-79) took
the lead in looking beyond the firm and focused on society
and environment. They conceived marketing as a means by
which the distributive needs of economic goods and services
of society is met.
The central task of a business organisation under this
concept is to generate customer satisfaction and long run
customers' and society's well being as the key to achieving
organisational goals. It is based on the premise that 'we
market what customers want and use, keeping in mind long
term social well being'.
While all these concepts recognise the need for the
organisation to satisfy their specific goals, the route
through which those goals can be achieved and the assumption
about the consumer and the key task of the organisation are
different under each of these concepts. It is also
recognised that each of these concepts can be a valid
orientation under different market conditions. Successful
organisations have moved from product concept to the other
three higher order orientations with a change in the market
environment, while societal marketing concept is still a
distant dream for most organisations even in the developed
world.

Importance of Marketing
Marketing as a modern field of knowledge affects
everyone, irrespective of the fact whether one is citizen, a
customer or a member of the work-force. Marketing pervades
every aspect of life: It manages demand for product,
generates consumers enthusiasm, and maximises consumer
satisfaction.
It provides ample opportunities and thus it
delivers standard of living to the society and maximises
life quality.
Marketing plays a critical role in respect of underdeveloped
countries. Indeed marketing is the most important
"multiplier' of development. Its development makes possible
economic integration and the fullest utilisation of whatever
assets and productive capacity an economy already possesses.
It mobilizes latent economic energy. It contributes for the
rapid development of entrepreneurs and managers, and above
all for the greater satisfaction of human needs.
Marketing Management

Marketing Management is a vehicle with which the

business achieves the goals of marketing. In other words
marketing management is marketing concept in action. While
marketing concept is a philosophy, marketing management is
a means for evolving strategies to accomplish the same.
Marketing management is the analysis, planning and
Implementation and control of programmes designed to create,
build and maintain mutually beneficial exchange
relationship with target markets for the purpose of
achieving organisational objectives. It relies on a
disciplined analysis of the needs, wants, perception and
preferences of target and intermediary markets as the basis
for effective product design, pricing, communication and
distribution. Hence the task of marketing management is
regulating the level, timing and character of demand in a
way that will help the organization in achieving its
objectives of creating customer satisfaction and realising
targeted profit.

Marketing Management Process

The marketing management process should be understood
as an integrated effort involving intra-organisat1onal
factors like product, price, promotion and channels of
distribution as well as extra-organisational environmental
factors like consumers, competitive conditions, trade
behaviour, technological and economic development. In as
much as, the marketing management process consists o£: (1)
analysing market opportunities; (ii) selecting target
markets; (lii) developing the marketing mix; and (lv)
managing the marketing efforts
Example Conceptual Framework on
Marketing Research
One of the popular marketing research activities focuses on product
quality and services. I illustrate product and service research with a
personal experience below.
A few years back, I answered a simple questionnaire soliciting my
feedback on the product and services of a pizza shop. The
questionnaire sought my rating of pizza taste, service speed, and
the courtesy of the server.
We can plot the paradigm of the study as follows:
The paradigm of the pizza study showing the independent and the
dependent variables.
The paradigm above shows the conceptual framework of the study.
It is an abstract representation of what the pizza manager or
consultant has in mind. It shows the variables that the researcher
shall examine to determine which of the three variables correlate
most with customer satisfaction.
Why were the three independent variables namely pizza taste,
service speed, and waiter courtesy selected? A review of the
literature on customer satisfaction may have revealed that these
variables are determinants of customer satisfaction. But in the
particular location where the pizza restaurant operates, any of these
variables may be more important than the other. A study found out
that customer preferences vary geographically. This finding implies
that clients in one place may prioritize courtesy over taste. In one
location, customers may put a premium on service speed. In
another location, customers may not mind much either the speed or
courtesy but the taste.
So how will the marketing manager use the findings of the study in
the given example? If for example, customers in the location I’m in
prioritizes service speed, then the appropriate action should be to
improve the speed of pizza delivery without compromising taste and
courtesy.
This example illustrates the importance of marketing research in
making decisions that can help businesses grow. Research findings
guide marketing managers on what steps to take to improve their
business operations.
Major Environmental Developments that have impacted
business
Every business, whether large or small, is affected not only from
internal organizational factors but, from several external factors.
Company have no control on external environment. Developing
marketing strategies should include considering environmental
factors so an accurate picture of the market trends and environment
can be presented and to understand as to where the company is
standing. Ignoring environmental aspects is similar to walking on a
path where there are unsuccessful marketing and lost revenues
which can ultimately impact the health of the business brand.
Major developments
Environmental Policies. Environmental policies are another
external factor that can impact the strategy of a business.
Environmental policy is the commitment of a business to the
regulations, laws as well as other policy mechanisms that are
concerned with environmental issues. Environmental policy impacts
businesses because the law implies organizations to change their
operational procedures and equipment so as to meet those
standards which can cost businesses some good amount of money.
Climate Change. Climate change became an insidious threat to
businesses as its pace can be recognized only when it is taken into
consideration on the basis of decade-after-decade. Increasing issue
of global warming and adverse weather conditions in the recent few
years, it is difficult for companies and organizations to operate
equally in every type of weather condition. Businesses that are
directly dependent upon adequate water supply e.g., field sports or
agriculture will be affected adversely if climatic changes resulted in
reduced rainfalls. Even consumers are becoming aware and keen
about this factor and are prone towards those brands which are
saving the environment or supporting this cause.
Green Agenda. Business-related activities impact the environment;
however, the environment also has an effect on businesses and
the market environment. Now enterprises have realized that in
order to achieve business goals, there is a need to draft
environmental-friendly policies. Green agenda is a plan where
enterprises manage their operations in such a way so that there is
minimal negative impact on the local or global environment. In order
to be environmentally responsible, corporations need to devise
plans and procedures in their operations and activities which is
beneficial not only company but, for the overall environment as well.
Pollution. Pollution can also have an impact over business
strategies. Pollution may cause some major environmental events
which can result in the disruption of supply chains or an increase in
the cost of raw material. Organizations need to monitor such events
and develop contingency plans so as to deal with them.
Availability of natural resources. Amongst external environment
factors, this factor refers to the physical environment of a business.
Natural resources are very important for most businesses and many
corporations have natural resources as their major raw material.
Lack of natural resources can hinder an organization’s producing
ability and hence its output.
Recycling. Recycling is another aspect of a greener environment.
The cost of dumping waste in landfills is increasing and is resulting
in not only shortage of wastages but, it also provides harm to the
environment. Recycled materials not only results in making the
production process cost-effective but, it also helps the business to
save some money and helping the environment.
Waste Disposal. Although, there has been a positive trend towards
recycling of waste materials, still there is several businesses which
dump wastage in landfills. This not only increases their cost of
dumping waste but, is also harmful to the environment in which the
business operates. Businesses, in order to meet their bottom line,
should first look at producing less waste and use fewer resources
which will reduce their production cost along with making the
corporation sustainable.
Examples of How Environmental Factors
Affect Tesco
Companies are facing increased pressure by government agencies
to address environmental issues. furthermore, companies must
respond to these issues in ways that benefit society.
Now Tesco encourages its consumer to shop at tesco.com. Tesco
Van Drivers will not only use fuel-saving routes but also collect
unwanted plastic bags from customers and recycle them.
Also, Tesco is committed to use renewable sources and generate
100% of its electricity by 2030. The company promises to minimize
upto 50% carbon footprint by 2020.
Competition in industry concept vs market concept
Industry concept of competition or Brand Competition –
Industry is the group of organisations that offers products or services
that
serve the same needs and wants of the target market. These offerings
can be
similar to the company’s offering, or can be each other’s substitutes.
This
concept is also referred as Brand competition wherein various brands
with
same product types compete against each other in the same market.
The factors to be considered are –
• Industry size and growth gives the marketer an idea of the
demand. Information on the sales, profits, costs, number of
firms and employees helps a marketer do the analysis on the
growth of the industry in recent years. The life cycle of the
industry, demand in the market, and industry size help in
formulating strong marketing strategies.
• Industry structure is the nature and competition intensity
among the firms basis their numbers, their size, and
differentiation of the offerings.
• Entry, Mobility and Exit barriers refer to the barriers a firm
faces at different stages in the industry. Entry into a retail
business is different as compared to an airline business.
Major entry barriers are investments, brand image, access to
resources like raw-materials, suppliers, distributors, skilled
staff, legal or political environment, patents, and licensing.
Mobility is the entry of the firm within the segments inside the
industry. For example, Samsung electronics entering into
Laptop manufacturing. There can be challenges that a
company can face from other competitors like manufacturing
facility, opening service centres in target markets, skilled staff
for presentations, distributor’s agreement, etc. Exit barriers
are in the form of legal issues, moral obligations to investors,
customers, recovery on investments, government policies,
etc. For example, if an automobile manufacturer shuts down
its operations, in some countries it is an obligation for that
firm to provide the automobile parts for 15 years after shut
down.
• Cost structure refers to the costs involved in investment of
plant, equipment, manufacturing, distribution, employees,
direct labour, etc. The cost structure for an airline industry is
different from that of a hotel industry.
• Degree of Vertical integration is the forward or backward
integration within the supply chain. For example, a firm can
have its own access to raw materials and distribution apart
from manufacturing. This offers advantages as there is
complete control on various functions
• Marketing strategies in the industry also help a marketer
make correct decisions. These are the marketing objectives
most relevant to the industry, target market segments (local,
international, sub-segments, etc.), and marketing mix
variables like product features and characteristics, commonly
used terms, price variations, promotion tools used, and
channels used.
The industry analysis provides framework for handling various
market
opportunities and designing a strong marketing strategy.
Market concept of competition/ Product-type competition –
Under the Market concept the perspective of competition goes beyond
the
industry concept and looks at potential and existing competitors at a
broader
level.
A competitor to a firm can be any other firm that satisfies the same
need and
wants of a customer in the target market. For example, a customer
who
wants to buy a scooter can also be lured by a motorbike manufacturer
to fulfill
his/her need.
Market concept of competition is also referred to as Product-type
competition.
Customers can see a need fulfilled from any product available in the
market.
A smart phone with a camera fulfils a need of a teenager who has a
need to
buy a basic camera for daily photo shots. Similarly, banks compete
with
mutual funds, internet is competing with cable and digital television
service
providers, and railways compete with airlines.
We can say that product-type competition is a competition between
brands
which offer dissimilar benefits or product-types to customers. A
marketing
manager has to clearly define the needs and wants of the customers in
the
market place first. Secondly, the study of various brands which can be
offering similar or dissimilar product-types, needs to be done for a
successful
marketing strategy.
Responding to competition and
building competitive Advantage
Understanding what your customers want and reacting to their
needs quicker than your competitors can give you a crucial
advantage in a tough market. To be competitive, you must ensure
the main focus of your business is on your customers.
You must also understand your competitors' strengths and
weaknesses and how they will react to customer needs and
changes in the industry, so you can stay one step ahead. At the
same time you must make sure your business complies with
relevant competition laws.
This guidelines will explain how to use your competitive strengths to
respond quickly and effectively to market trends and competitors.
Understand your market and
competitors
Growing your business without understanding your competitors is
risky. Market research can prepare you for changing markets and
prevent your business being left behind by the competition.
Conduct market research
Market research involves collecting and analysing information about
your market, including your customers and competitors. It is vital to
research any new market you are moving into to avoid wasting time
and money on failed projects.
There are 3 main ways to conduct market research:
• desk research - using existing information from the internet
and industry associations
• field research - gathering the information yourself using
surveys, questionnaires and other research tools
• commercial agencies - hiring external organisations that carry
out the research for you.
Assess what competitors offer
Researching your competitors is easier than it may seem - for
example, you can simply collect any flyers and price lists they
produce for customers, read their online material, or even buy their
products and services to compare them with your own.
Analyse what they do better than you:
• Are their prices lower?
• Are their products of a higher quality?
• Is their customer service highly regarded?
• Is their marketing material more engaging?
Ask yourself these questions to see where you can improve. Being
critical of your own business and taking inspiration from your
competitors can help you be more competitive.
Undertake a competitor profile.
SWOT analysis
A SWOT analysis can be a useful way to assess where you stand in
your market in relation to your competitors. It is a common and
easily used business analysis tool. A SWOT analysis can help you
to:
• build on strengths (S)
• minimise weaknesses (W)
• seize opportunities (O)
• counteract threats (T).
Find a unique selling proposition
The most effective way to stand out among a field of competitors is
to have a unique selling proposition (USP).
Undertaking market research is an important first step to creating a
USP. Once you have carried out your market research, analyse it
closely to see if you can spot a gap or opportunity in the market that
none of your competitors are currently exploiting. This could be:
• a product or service not currently offered by your competitors
• a group of customers not currently catered for by your
competitors
• an aspect of your business that makes it stand out from the
competition.
Consider what your customers are looking for. What 'need' or 'want'
are they really trying to satisfy?
Once you have a USP, and verified that your market research backs
it up, you will need to find the most effective way of communicating
it to your customers. Businesses often communicate by creating:
• a new or unique marketing campaign
• an engaging and memorable advertisement
• a slogan that customers will remember.
It's important to make your USP memorable so that potential
customers will think of your product or service before a competitor's.
Learn more about creating and communicating your USP.
Innovation
A fast-track to creating a USP is through innovation. By creating
new products and services, or producing better designs for existing
ones, you can ensure customers retain an interest in your business.
This can also give you a boost in profits when new products are
brought to market.
Using strategies to compete
Competition exists in every successful market, and you must be
able to employ the strongest competition strategies to make the
most of your business.
Pricing
Market research should provide evidence of your competitors'
prices and the price customers are willing to pay for your products
and services. It is vital to set your prices at a level that ensures your
business remains profitable yet prevents your customers from
looking elsewhere.
Pricing strategies can include:
• discounting - temporarily lowering prices or offering two for the
price of one
• image pricing - where the perceived image of the product
outweighs the actual price, such as in luxury goods.
There are pros and cons to each pricing strategy.
Learn more about pricing products and services.
You can also get guidance on setting prices from the Australian
Competition and Consumer Commission (ACCC).
Price wars
Engaging in a price war with your competitors is risky business.
When prices are low, customers are often willing to buy more;
however, there is no guarantee your product will be the one
customers choose. Price wars also often lead to reduced profit
margins and lower prices across the market.
To ensure the stability of your business, a sensible strategy that
avoids price wars is almost always a better approach. If a
competitor engages you in a price war, it can be better to try to
reinforce your unique selling proposition to sidestep the challenge.
Quality and service
Though many customers will see a product's price as the crucial
factor in deciding where to spend their money, in the long term a
business can benefit more from creating good-quality products and
offering excellent customer service.
If your customers have a positive buying experience, they are far
more likely to come back. Customer retention is important for
competition and gives your long-term business prospects a boost.
It is vital to maintain high levels of quality and service - if standards
begin to slip, customers may be unforgiving and switch to your
competitors. Read more about providing excellent customer
service.
Sales and marketing
A good sales team and a solid marketing plan are excellent ways to
communicate the benefits of your products and services to
customers. Businesses grow by securing new customers, and
effective sales and marketing strategies can help you succeed.
Using fair and legal competitive
practices
When competition is fierce in an industry, it is important to
remember the laws every business must follow when securing their
place in the market.
The most important law to be aware of is the Competition and
Consumer Act 2010, which aims to give businesses a fair and
competitive operating environment. The Act covers:
• contract law and unfair contract terms
• consumer rights when buying goods and services
• product safety law and enforcement
• unsolicited consumer agreements, including laws on door-todoor
sales and other direct marketing
• penalties, enforcement powers and the rights of consumers to
seek compensation.

Questions:-
 Define marketing
 What do mean by marketing?
 Explain what is a need
 Explain what is a want
 Differentiate between a need and a want
 What are the challenges in marketing?
 Explain the trends in marketing
 Explain the issues in marketing
 Explain the core concepts in marketing
 Explain the conceptual framework of marketing
 Explain the influence of the environment of marketing decisions
 Difference between competition in industry concept and market
concept
 How can organization respond to competition ?
 How can companies build competitive advantage ?