Marketing: The development of a concept

Chapter-1

What is Marketing?
According to the American Marketing
Association (AMA), marketing is The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. A marketing transaction is one in which the buyer and the seller, irrespective of the nature of the product, experience mutual satisfaction.

Concept of exchange
A major function of marketing is to create
an environment of exchange. Exchange is when one person gives something of value, in return for something of value from another person

Needs and wants

Needs comprise the basic requirements
for the existence of life, such as food, clothing, shelter, and belongingness. A want arises when the basic needs are satisfied. Marketers should understand the needs and wants of the customer and devise appropriate marketing strategies.

Economic utility
The extent to which a product satisfies
customer needs and wants is called utility. Marketers can provide four types of utility to their target customers form utility, time utility, place utility, and possession utility.

Evolution of marketing
Production Era (From 17th century to the
late 1920s) Sales Era (From the late 1920s to mid 1950s) Sales Era (From the late 1920s to mid 1950s) Marketing Era (From mid 1950s onwards)

Production Era (From 17th century to the late 1920s)

Manufacturing was given importance. Product features were not a priority as it
was believed that customers were concerned only about the availability of the product.

Sales Era (From the late 1920s to mid 1950s)

Businesses realized the importance of
selling their products using advertising, promotion and distribution strategies

Sales Era (From the late 1920s to mid 1950s)

Businesses realized the importance of
selling their products using advertising, promotion and distribution strategies

Marketing Era (From mid 1950s onwards)

Companies changed their approach from a
selling perspective to a marketing approach. Instead of merely selling their products, companies began to understand the needs of the customer and attempt to satisfy them.

Marketing Concept
Marketing concept aims at matching the
companys offering with customer needs, to achieve the desired level of customer satisfaction and generate profits for the company. The main features of the marketing concept are Customer orientation Long term Profitability

Customer orientation
The firm needs to constantly change,
modify its existing products or develop new products to satisfy the changing needs and preferences of the customer

Long term Profitability

Firms should undertake a detailed analysis
in areas of market research, product development, promotion and related areas with the objective of ensuring long term profitability.

Functional Integration:
There should be proper coordination
between the marketing department and other departments in the organization like Research and Development, Human Resource Management, Finance, and Manufacturing

Societal Marketing Concept (SCM)

The concept of SCM deals with
maintaining equilibrium between the organizations profit making objectives, customer satisfaction, and the societys interest.

Marketing Myopia
Marketing myopia occurs when a marketer is excessively
preoccupied with product development, manufacturing or selling and ignores customer needs, wants, and interests. Theodore Levitt mentioned that industries fail not because markets are saturated but because of the failure and short-sightedness of the management. Levitt further proposed a few ways to overcome marketing myopia. They are Be customer led, not product oriented Market orientation should permeate throughout the organization Managers need to be proactive and visionary

Marketing Dynamics
Companies need to keep abreast of the
constant changes in the business environment. Rapid technological advancements have resulted in dynamic changes in products and markets. Increasing usage of the same technology by different companies has made it difficult for them to create and maintain competitive advantage in the long run

Company responses and adjustments

Reengineering- The process of redesigning the organization

structure, business processes, and associated systems to achieve a dramatic improvement in business performance. Outsourcing- The company focuses on its core activities and outsources the remaining activities to other firms which have the required competencies. E-Commerce- Companies can provide customers more information about their products and services, allow them to place orders and make payments over the Internet. Benchmarking Companies can set their own benchmarks and measure their performance against these benchmarks. Suppliers- Problems of storage, lead time, economic order quantity, etc., can be eliminated to a great extent when the company and its suppliers share a cordial relationship. Global and local markets Companies need not only cater to local markets and can tap business opportunities in global markets. Decentralization With organization structures becoming flatter, companies are giving more emphasis on cross functional

 Customization Marketers invite inputs from customers

and seek their ideas to design more suitable and customized products. Building a good relationship with customers- It is profitable for a company to build a long-term relationship with its existing customers. Target marketing- Identification of target markets and promoting their products in these markets has helped marketers increase their profits. Customer Database Marketers use the information available in their customer database to understand the customers needs and buying behavior. The marketer can then design effective marketing and product development strategies. Integrated Marketing Communication Marketers can use different communication channels or media to reach their target customer.

Marketer response and adjustments

Importance of marketing
Marketing has become an important activity for
the sustenance of an organization. Given the ever changing market environment, the production, distribution and consumption activities have to be aligned with these market forces. Factors like customer service, quality assurance and price competitiveness determine the success of an organization.

The Airlines Industry

Characteristics of the Airline Industry Highly competitive Industry growth is closely linked to
economic growth Perishable product Price elasticity of demand Optimum utilization of flight capacity

Marketing of Airlines
Customer needs have to be understood on
a proactive basis. Promotional activities like frequent flyer schemes, festival season offers and access to club lounges are important in building the image of the airline. Quality of service in terms of helpful and efficient crew is a competitive advantage in the airlines business.

Marketing Strategies of Airline industry

Eliminate costs that do not add value. Niche market. Establish marketing tie-ups with travel agents
and offer commission to them. Offer competitive frequent flyer schemes, discounted packages etc. Enter into trade alliances with other businesses. Operational agreement and code-sharing with other airlines.

The Banking Industry

Definition of bank marketing The aggregate of functions, directed at
providing services to satisfy customer needs and wants, more effectively and efficiently than the competitors, keeping in view the organizational objectives of the bank.

Banks and marketing

In India, there is still some amount of
regulation in the price structure of banks. Despite this, pricing loans in banks is a competitive advantage for banks. For distributing their products, banks use a variety of channels like, ATMs, Internet, home banking, mobile phones, etc. Promotion undertaken by banks may take the form of brochures, mailers and others

The Education Industry

Product: Education services can design their services

based on consumer benefits, service concept and service delivery. Place: Location of the educational institute coupled with good infrastructure facilities attracts students. Price: In most cases, price is regulated by public policy. However, depending on the demand for their services, a higher tuition fees can be charged by educational institutions. Promotion: Market share in this industry can be obtained by providing better facilities like library, laboratory, study material, and others. Physical infrastructure: This refers to the tangible aspect of education services which are usually the campus, buildings, laboratories and hostel facilities provided by an institute.

Marketing Strategy of Education services

Clarity on the objectives of the service. Identify the target segment and their
preferences for the service. Design strategy that would attract the intended customers.