Principles of Marketing Notes

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Principles of Marketing Notes

Unit 1 Introduction
WHAT IS MARKETING?
 Marketing is managing profitable customer relationships. The
twofold goal of marketing is to attract new customers by
promising superior value and to keep and grow current customers
by delivering satisfaction.
 For eg.: Wal-Mart and Big-Bazaar has become world’s largest
retailer, and one of the world’s largest companies, by delivering
on its promise, “Always low prices, Always!”
DEFINITION
“ The process by which companies create value for customers and
build strong customer relationships in order to capture value from
customers in return”.
-By
Philip Kotler
 Many people think of marketing only as selling and advertising.

However, selling and advertising are only the tip of the marketing
iceberg.
 Today, marketing must be understood not in the old sense of
making a sale- “telling and selling”- but in the new sense of
satisfying customer needs.
 If the marketer understands consumer needs; develops products
and services that provide superior customer value; and prices,
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distributes and promotes them effectively, these products will sell

easily.
THE MARKETING PROCESS

The marketing process involves five steps.
1. Understand the market place and customer needs and wants.
2. Design a customer-driven marketing strategy.
3. Construct an integrated marketing program that delivers superior
value.
4. Build profitable relationships and create customer delight.
5. Capture value from customers to create profits and customer
equity.
Under the market Design a Construct an Build profitable Capture value

place and customer-driven integrated relationships and from customers
customer needs marketing marketing create customer to create profits
and wants strategy program delight and customer
equity
Research Select customers Product and Customer

Customers and the to serve- market service design- relationship Create satisfied,
Market Place segmentation and build strong brand management loyal customers
targeting (CRM): build
strong relationship
with chosen
customers
Pricing- create Capture
real value customer
Manage Decide on value lifetime value
Marketing proposition-
Information and differentiation and
Customer Data positioning
Distribution-
manage demand
Partner Increase share of
and supply chain
relationship market and share
management: of customer
build strong
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marketing
partners
Promotion-
communicate the
value proposition
Step1-
 Understand the market place and customer needs and wants-
(Core Concepts of Marketing)
 As a first step, marketers need to understand customer needs and
wants and the market place within which they operate which
includes understanding of five core customer and market place
concepts-
1. needs, wants and demands
2. Market offerings- products, services and experiences
3. Value and satisfaction
4. Exchanges and relationships
5. Markets.
Needs, Wants and Demands- Core Concepts of Marketing:

 Needs are states of felt deprivation which includes physical needs
for food, clothing, warmth and safety, social needs for belonging
and affection, and individual needs for knowledge and self
expression.
 Wants are the form that human needs take as shaped by culture
and individual personality. For e.g. one needs food but want
hamburger, French fries and a soft drink.
 Demands are human wants that are backed by buying power.
Given their wants and resources, people demand products with

benefits that add up to the most value and satisfaction. Outstanding
marketing companies go to great lengths to learn about and understand
their customers’ needs, wants and demands. They conduct consumer

research analyze mountains of customer data. Their peoples at all
levels-including top management-stay close to customers. For eg.
Banking industry.
Market Offerings- Products, Services and Experiences

 Consumers’ needs and wants are fulfilled through a market
offering.
 Market offering is nothing but some combination of products,
services, information or experiences offered to a market to satisfy
a need or want.
 Market offerings are not limited to physical products. They also
include services, activities or benefits offered for sale that are
essentially intangible and do not result in the ownership of
anything. Eg. banking, airline, hotel, tax preparation and home
repair services.
 However, many sellers make the mistake of paying more
attention to the specific products they offer than to the benefits
and experiences produced by these products i.e. they suffer from
marketing myopia.
 Smart marketers look beyond the attributes of the products and
services they sell.
Value and Satisfaction

 Customers form expectations about the value and satisfaction that
various market offerings will deliver and buy accordingly.
 Satisfied customers buy again and tell others about their good
experiences.
 Dissatisfied customers often switch to competitors and disparage
the products to others.
 Marketers must be careful to set the right level of expectations.
 If they set expectations too low, they may satisfy those who buy
but fail to attract enough buyers. Whereas if they raise
expectations too high, buyers will be disappointed.
 Customer value and customer satisfaction are key building blocks
foe developing and managing customer relationships.
Exchange and Relationships

 Marketing occurs when people decide to satisfy needs and wants
through exchange relationships.
 Exchange is the act of obtaining a desired object or response from
someone by offering something in return.
 Marketers want to build strong relationships by consistently
delivering superior customer value.
Markets
 The concepts of exchange and relationships lead to the concept of
a market.
 A market is the act of actual and potential buyers of a product or
service.
 These buyers share a particular need or want that can be satisfied
through exchange relationships.
 Sellers must search for buyers, identify their needs, design good
market offerings, set prices for them, promote them and store and
deliver them.
 Activities such as product development, research,
communication, distribution, pricing and services are core
marketing activities.
Elements of a modern marketing system

 Although we normally think of marketing as being carried on by
sellers, buyers also carry on marketing.
 Consumers do marketing when they search for the goods they

need at prices they can afford.
 Company purchasing agents do marketing when they track down
sellers and bargain for good terms.
 In the usual situation, marketing involves serving a market of
final consumers in the face of competitors.
 The company and the competitors send their respective offers and
messages to consumers, either directly or through marketing
intermediaries.
 All of the actors in the system are affected by major
environmental forces- demographic, economic, physical,
technological, political/ legal and social/ cultural.
 Each party in the system adds value for the next level. All of the
arrows represent relationships that must be developed and
managed.
 Thus, a company’s success at building profitable relationships
depends not only on its own actions but also on how well the
entire system serves the needs of final consumers. For eg. Wal-
Mart cannot fulfill its promise of low prices unless its suppliers
provide merchandise at low costs. And Ford cannot deliver high
quality to car buyers unless its dealers provide outstanding sales
and service.
Step 2-
Designing a Customer-Driven Marketing Strategy
 Once it fully understands consumers and market place, marketing
management can design a customer-driven marketing strategy.
 Marketing Management can be defined as the art and science of
choosing target markets and building profitable relationships with
them.
 The marketing manager’s aim is to find, attract, keep and grow

target customers by creating, delivering and communicating
superior customer value.
 To design a winning marketing strategy, the marketing manager
must answer two important questions-
 What customers will we serve? i.e. what’s our target market?
 How can we serve these customers best? i.e. what’s our value
proposition?
Selecting customers to serve-

 The company must first decide who it wills serve.
 It does this by dividing the market into segments of customers
(market segmentation) and selecting which segments it will go
after (target marketing).
 Some people think of marketing management as finding as many
customers as possible and increasing demand. But marketing
managers know that they cannot serve all customers in every way.
 By trying to serve all customers, they may not serve any
customers well.
 Instead, the company wants to select only customers that it can
serve well and profitably.
 Thus, marketing managers must decide which customers they
want to target and the level, timing and nature of their demand.
 Simply put, marketing management is customer management and
demand management.
Choosing a Value Proposition-

 The company must also decide how it will serve targeted
customers- how it will differentiate and position itself in the
marketplace.
 A company’s value proposition is the set of benefits or values it

promises to deliver to consumers to satisfy their needs.
 Such value propositions differentiate one brand from another.
They answer the customer’s question- “Why should I buy your
brand rather than a competitor’s?
 Companies must design strong value propositions that give them
the greatest advantage in their target markets.
 Eg. Fair & Lovely’s punch line says “Kale ko bhi gora bana de”,
Daag- the fire…indicating that its an action movie, also kuch
kuch hota hai.. with punch line someone somewhere is made for
each other…stating that it’s a love story, move-aaahhh se aahhhhh
tak…etc.
Step 3-
Preparing an Integrated Marketing Plan and Program
 So, the company’s marketing strategy outlines which customers
the company will serve and how it will create value for these
customers.
 Next, the marketer develops an integrated marketing program that
will actually deliver the intended value to its target customers.
 The marketing program builds customer relationships by
transforming the marketing strategy into action.
 It consists of the firm’s marketing mix, the set of marketing tools
the firm uses to implement its marketing strategy.
 The major marketing mix tools are classified into four broad
groups, called the four Ps of marketing: product, price, place and
promotion.
 To deliver on its value proposition, the firm must first create a
need-satisfying market offering (product).
 It must decide how much it will charge for the offer (price) and
how it will make the offer available to its target consumers
(place).
 Finally, it must communicate with target consumers about the
offer and persuade them to its merits (promotion).
 Thus the firm must blend all these marketing mix tools into a
comprehensive, integrated marketing program that communicates
and delivers the intended value to chosen customers.
Step 4-
Building Customer Relationships
 The first three steps in the marketing process- understanding the
market place and customer needs, designing a customer-driven
marketing strategy and constructing marketing programs- all lead
up to the fourth and the most important step: i.e. building
customer relationships.
 Customer relationship management (CRM) is perhaps the most
important concept of modern marketing.
 Until recently, CRM has been defined narrowly as a customer
data management activity.
 By this definition it involves managing detailed information about
individual customers.
 In this broader sense, CRM is the overall process of building and
maintaining profitable customer relationships by delivering
superior customer value and satisfaction.
 It thus deals with all aspects of acquiring, keeping and growing
customers.
Step 5-
Capturing Value from Customers
 The first four steps in the marketing process involve building

customer relationships by creating and delivering superior
customer value.
 The final step involves capturing value in return, in the form of
current and future sales, market share and profits.
 By creating superior customer value, the firm creates highly
satisfied customers who stay loyal and buy more. This in turn
means greater long-term returns for the firm.
So, what is marketing? Pulling it all together…

 Simply put, marketing is the process of building profitable
customer relationships by creating value for customers and
capturing value in return.
 The first four steps of the marketing process focus on creating
value for customers.
 The company first gains a full understanding of the market place
by researching customer needs and managing marketing
information.
 It then designs a customer-driven marketing strategy based on the
answers to two simple questions:
 The first question is “What consumers will we serve?” (Market
segmentation and targeting). Good marketing companies know
that they cannot serve all customers in every way. Instead, they
need to focus their resources on the customers they can serve best
and most profitably.
 The second marketing strategy question is “How can we best
serve targeted customers?” (Differentiation and positioning).
Here, the marketer outlines a value proposition that spells out
what values the company will deliver in order to win target
customers.
 With its marketing strategy decided, the company now constructs

an integrated marketing program- consisting of a blend of the four
marketing mix elements or the four Ps- that transforms the
marketing strategy into real value for customers.
 The company develops product offers and creates strong brand
identities for them.
 It prices these offers to create real customer value and distributes
these offers to make them available to target consumers.
 Finally, the company designs promotion programs that
communicate the value proposition to target consumers and
persuade them to act on the market offerings.
 Throughout the process, marketers practice CRM to create
customer satisfaction and delight.
 In creating customer value and relationships, however, the
company cannot do it alone. It must work closely with marketing
partners both inside the company and throughout the marketing
system.
 Thus, beyond practicing good CRM, firms must also practice
good partner relationship management.
 Thus, in the first four steps the company creates value for
customers and in the final step it reaps rewards of its strong
customer relationships by capturing value from customers. This
helps the company to capture customer lifetime value and greater
share of customer. The result is increased long-term customer
equity for the firm.
MARKETING CONCEPTS
Business enterprises conduct their marketing activity around these five
concepts:
1. The Production Concept
2. The Product Concept
3. The Selling Concept

4. The Marketing Concept
5. The Societal Marketing Concept.
The Production Concept

 The production concept emerges out of the production orientation
of the firm.
 It is based on the idea that the more we make, the more profitable
we become. So let us go out and make customers buy our
products.
 The basic proposition is that customers will choose products and
services that are widely available and are of low cost.
 So managers try to achieve higher volume by lowering
production costs and following intensive distribution strategy.
 Application of this concept however leads to poor quality of
service and higher level of impersonalization in business.
 This seems to be a viable strategy in a developing market where
market expansion is the survival strategy for the business.
The Product Concept

 The product concept has the proposition that consumers will
favour those products that offer attributes like quality,
performance and other innovative features.
 Managers focus on developing superior products and improving
the existing product lines over a period of time.
 The problem with this orientation is that the managers forget to
read the customer’s mind and launch products based on their own
technological research and scientific innovations.
 Many times it is observed that innovations enter in the market
before the market is ready for the product.
 Innovative products are launched without educating the

customers about them and the probable benefit or value that the
customer is likely to get by using the new products.
The Selling Concept

 The selling concept proposes that customers, be the individuals or
organizations will not buy enough of the firm’s products unless
they are persuaded to do so through the selling effort.
 So companies should undertake selling and promotion of their
products for marketing success.
 This approach is applicable in the cases of unsought goods like
life insurance, vacuum cleaner, fire fighting equipments including
fire extinguisher, etc.
 These industries are seen having a strong network of sales force
 Firms with high capacity apply this orientation, in which their
goal is to sell what they produce than what the customer really
wants.
 The problem with this approach is the assumption that the
customer will certainly buy the product after persuasion and if
dissatisfied will not complain.
 In reality this does not happen and companies pursuing this
concept often fail in business.
The Marketing Concept

 The marketing concept proposes that the reason for success lies in
the company’s ability to create, deliver and communicate a better
value proposition through its marketing offer, in comparison to
the competitors for its chosen target segment.
 Selling focuses on the needs of the seller and marketing focuses
on the needs of the buyer.
 Selling is preoccupied with the seller’s need to convert his

product into cash whereas marketing deals with the idea of
satisfying customer needs by offering a quality product and the
whole cluster of things associated with creating, delivering and
finally consuming it.
 The marketing concept is thus an elaborative attempt to explain
the phenomenon that rests on four key issues like target market,
customer need, integrated marketing communication and
profitability.
The Societal Marketing Concept

 The societal marketing concept proposes that enterprise’s task is
to determine the needs, wants and intentions of the target market
and to deliver the expected satisfaction more effectively and
efficiently than the competitors in a way to preserve or enhance
the consumer’s and society’s well being.
 For eg.: the fruit juice companies like Tropicana, real, cloud 9,
etc. takes into consideration the health of the consumers. They
provide energy drinks which will help the consumers to quench
their thirst as well as remain healthy whereas companies like
coca-cola, Pepsi, etc provide soft drinks which are harmful for the
health. So they lay focus only on the marketing aspect and not on
the societal marketing aspects.
 The societal marketing concept is thus an extension of the
marketing concept to cover society in addition to the consumers.
SIGNIFICANCE/ IMPORTANCE OF MARKETING/

RELEVANCE OF MARKETING IN A DEVELOPING
ECONOMY-
Importance of marketing is mainly attributed to the following

category:
A. Importance to society:
1. Delivery of goods as per standard of living- The main object of
marketing is to provide goods and services to the society according to
their needs and taste at reasonable and affordable prices. In order to
satisfy the various wants of people new inventions are made.
Marketing creates and increases demand for the new and existing
products and thus raises the standard of living of the people.
2. Provides employment- Sound marketing system helps in providing

employment in different marketing processes such as marketing
research, retail and wholesale business, transport, storing and
warehousing, publicity work, etc.
3. Reduction in distribution cost- Marketing aims at reducing the cost

of distribution as far as possible, so that the commodities might be
within the reach of maximum number of consumers. Marketers use
marketing channels to reach its end users.
4. Increase in national income- Sound marketing system is associated

with creation of increased demand for goods and services. An
increased demand stimulates production activity in the country which
in turn increases the national income.
5. Protection against business slump- Trade cycles causes fluctuations

in prices. Sometimes there is a period of depression followed by a
period of boom. A period of depression and low prices is very harmful
to the economy. With the decrease in demand many small units stop
production, leading to wide spread unemployment and a chain of other
evils. A sound marketing system can give protection against business
slump by discovering new markets, reducing cost of distribution,

making it acceptable to customer, modifying or improving he existing
product and suggesting alternative uses.
B. Importance to the Firms:

1.Business planning and decision-making- Marketing is helpful not
only to plan the production but also in business planning and taking
various decisions regarding business. In today’s economy, production
is planned according to the sales forecasts and not according to the
production capacity of the firm. All activities such as planning,
production, purchase, finance or design revolve around the marketing
decisions. Thus, marketing decisions influence the business decisions.
2. Increasing profits- Every business is carried on with the profit

motive. Marketing helps in increasing the business profits by reducing
the selling cost on one hand and increasing the demand of the product
on the other hand through advertising and sales promotion activities.
3. Source of information- Business collects various information

regarding customer’s changing behaviors from time to time through
marketing. Marketing also provides information to the firm about the
competitors, products, production, marketing and price policies. It
helps the firm in framing its own policies or making necessary
adjustments therein accordingly.
C. Importance to underdeveloped economy- Marketing has a special

significance in underdeveloped economies. A rapid development of the
economy is possible only by adopting the modern methods of
marketing. An effective marketing system will help mobilize modern
and innovative techniques of marketing.
D. Importance to Developed Economy- In developed countries, the

volume of production with all its up-to-date technology is generally
more than the demand. In order to maintain the level of production, it
is absolutely necessary that the quantity produced must be disposed off
rapidly within the country itself or abroad which is possible only by a
very sound and advanced “Marketing System”.
E. Importance in Buyer’s and Seller’s Market- When the supply of

goods exceeds the demand, it is called buyer’s market. On the other
hand when the demand for the goods and services exceeds supply, it is
called seller’s market. In such a situation only those firms succeed
which adopts, “Marketing System”.
FUNCTIONS OF MARKETING
A. Exchange Functions:
1. Buying- Buying is the one part of exchange process, other being the
selling. Buying is the first step in the process of marketing. A
manufacturer has to buy raw materials for production, a wholesaler has
to buy goods to sell to the retailer, and a retailer has to buy goods to be
sold to the consumer. Buying involves transfer of ownership of goods.
2. Assembling- Assembling means creation and maintenance of the

stock of goods, purchased from different sources. The goods have
sometimes to be collected and assembled at one place. Buying and
assembling are two distinct processes which involve elements such as
kind, quality, and price, date of delivery and other terms and
conditions. All this requires specialized knowledge on the part of the
buyers.
3. Selling-Selling is important from the point of view of the seller as

well as the consumer. The profit making object of a business concern
is achieved only through the sale of goods. This function involves

product planning and development, creation of demand, market
research, selection of channel of distribution, negotiation of terms of
sale such as quality, quantity and price of product, etc.
B. Physical Supply Functions:

1. Transportation- Transportation is he movement of goods from the
centre of production to the centre of consumption. Marketing system
requires an economical and effective transportation system. A god
system of transportation increases the value of goods by the creation of
place utility. The opening of new markets have been possible by the
quick transportation &communication. It has resulted in the extension
of markets, regular supply, lower price and improved services to the
consumers.
2. Storage and Warehousing- When production is seasonal but

consumption is annual or when production is continuous but
consumption is seasonal storage becomes necessary. Storage involves
holding and preserving of goods between the time of their production
to the time of their consumption.
C. Facilitating Functions:
1. Standardization- Standardization has now been accepted as an
ethical basis of marketing. A standard is a measure that is generally
recognized as a model for comparison. Standards are determined on
the basis of colour, weight, quality and other factors of a product. It
facilitates purchase and sale of goods. Goods are purchased by brand
name.
2. Grading- Grading is the act of separating or sorting out goods into a

number of grades according to established specifications, such as
quality and size of the product. Grading is required for the products
like food grains, fruits, cosmetics, etc.
3. Branding- Branding is the art of marketing. It is the measurement of

giving a particular name, term, sign or symbol to a product/ service for
specific identification of one seller or group of sellers. The
identification creates consumer awareness, which in turn helps to build
good product image and enhance chances of repeat purchases. A brand
is essentially a sellers promise to provide specific features, benefits
and services consistently to the buyers.
4. Packaging- Package is the external wrapper or container of the

product. Packaging may be defined as the general group of activities
which involve designing and producing the container or wrapper for a
product. A good package protects the product against deterioration,
preserves the freshness and flavor of the product, provides
convenience to the customers, increases economy and communicates
information about the product. A good package makes the handling of
the product easier for both the consumer as well as the dealer. Good
packaging also helps in inventory control.
5. Labelling- A label is a small slip placed on the product. It gives

information regarding the nature, contents, price, batch no., ownership,
etc. of the product. A label is medium through which the manufacturer
gives necessary information to the consumer about the product. The
label is usually affixed on the package. A label plays an important role
in making the package and branding function meaningful. Labelling
thus helps in the identification of the product. It stresses the features of
the product which are advertised. And by mentioning the price of the
product, labeling helps in curtailing defraudation of consumers by the

retailers.
DIFFERENT APPROACHES OF MARKETING

1. Commodity Approach
2. Institutional Approach
3. Functional Approach
4. Management Approach or Decision-Making Approach
5. Legal Approach
6. Economic Approach
1. Commodity Approach
 This approach studies marketing on the basis of “commodity”.
 The marketing situation of each product is studied as regards to
its sources of supply, marketing organization and policies
involvement of middlemen, extent of market, etc.
 This approach is also called as descriptive approach.
 In this method, commodity serves as a focus around which other
aspects of marketing are studied.
 Its main defect is that it is repetitive and time consuming.
 Sometimes the classification of products also becomes difficult.
2. Institutional Approach
 Under this approach, the description and analysis of the different
institutions engaged in marketing are undertaken.
 Here we not only study products but also analyze the various
functions and activities of the producers, wholesalers, agents,
retailers, transporters, etc.
 The different institutions serve as separate “cells” of the

marketing body and the functions performed by each cell form
part of whole marketing.
 This approach is also considered defective as it fails to bring out
effectively the inter-relations of all the institutions.
Here the marketing process is split up into three important factors i.e.
Concentration-
 In a highly developed and a large economy, many a times,
particular products are produced at one place and customers may
be located thousands of miles away, say at distant places.
 Then it becomes necessary to bring accessibility in making goods
available for consumption as and when demanded by those
ultimate consumers.
 Therefore, the product should be available at centre point from
where the product can be purchased by the consumers.
 As countries develop and multinational trade increased due to
globalization, then activities like storage, transportation,
assembling, inventory management, standardization and grading
and handling of customers order brings more importance in the
marketing process.
 All these activities are included in the process of concentration
including financing and risk-bearing also.
Equalization-
 Equalization is the intermediate activity which occurs between
the process of concentration and dispersion.
 The process of equalization involves proper adjustment of supply
at all centers of distribution, where the supply of goods has to be
balanced with the demand for goods on the basis of time, quality
and quantity.
 Thus it can be said that equalization is the process of making

available the goods in a particular place or market just in
accordance to the actual demand so that the chances of loss might
be minimized.
 The process involves storage and transportation of goods in
required quantities, where transport equalizes supply place-wise
and warehousing equalizes it time-wise.
Dispersion-
 Dispersion is that process through which goods and services
produced are delivered to their real consumers at the right time
and right place in the right quantity, through the most appropriate
channels of distribution.
 The assembled stock of goods is sub divided into smaller lots
required to meet the needs of buyers.
 The intermediaries like wholesalers, retailers, middlemen etc are
engaged in this activity as the goods are distributed through these
different channels for sale to consumers.
3. Functional Approach
 It splits down the field of marketing into separate functions.
 Specific functions are those concerned with buying, selling,
transportations, storage, standardization, grading, financing, risk
taking and marketing research etc.
 This approach is definitely an improvement over the former ones
but not entirely free from defects.
4. Management Approach
 It combines certain features of the other earlier mentioned three
approaches.
 The basis of this approach is that marketing is purely a

management function.
 However changes in marketing are brought about by two types of
factors i.e. controllable and uncontrollable.
 Controllable forces are those marketing forces which are within
the control of the firm. These internal factors are adjustments in
prices, advertising, personal selling, etc.
 Uncontrollable forces are those marketing forces which are
beyond the control of a business firm unless it is forecasted well
in advance. These are external environmental forces such as
economic, social and political forces.
5. Legal Approach
 This approach is very narrow and it is a part of a political
environment as it concentrates only on one aspect i.e. the effect of
transfer of goods or title in a legal way.
 In India this aspect has a particular significance.
 There are many enactments past under legislation which regulates
and controls the entire business activities.
6. Economic Approach
 Under this approach marketing is concerned with creation of
value demand, demand, supply and price.
 Such an approach is incapable of giving the complete idea of
marketing. Hence it requires market study from various points of
views.
 One has to analyze the market from the consumer’s point of view
such as their needs, taste, acceptability, purchasing power, etc.
 Also the business has to evaluate the product from the
competitor’s point of view, how their marketing strategies are,
their approach to customers; methods adopted, price policy, etc.
 It should try to understand its weaknesses, modify its strategies to

pull the customers by creating greater demand.
 It may be possible by improving the utility of the product or with
attractive and useful packaging and various other marketing
gemics.
Role of Marketing Manager:

 Formulation of marketing plans and policies in consultation with
the chief executive or managing director.
 Development of marketing mix and marketing program for all
products of the company.
 Supervision and control over sales manager, advertising manger,
product manager and marketing services manager who are
responsible for implementing marketing program.
 Development of new markets, new products, new channels and
new innovations in the field of marketing.
 Growth of existing markets for company’s products.
 Selection management and control of channels of distribution.
 Modification of marketing plans and programs on the basis of
feedback of information from customers and channel members.
 Management of change due to changing customer needs,
competition, etc. and maintaining good public relations.
Functions of Marketing Manager:

1. Integrated Marketing- The marketing manager has to take decisions
on the various elements of the marketing mix in an integrated way. For
a customer does not purchase a product just because of its price or
utility or appearance. Thus the marketing manager has to integrate all
the elements of the marketing mix in such a way that the consumer
finds the final deal very attractive. While doing this he should try to
reduce the cost of marketing the products and at the same time win the
goodwill of the customers.
2. Determining Objectives- It is the function of the marketing manager

to determine the marketing objectives of the company. The marketing
objectives must be fixed keeping in mind the overall objectives of the
firm. Not only does he have to fix the marketing objectives, but he has
to crystallize the product objective, pricing objectives, promotion
objectives and physical distribution objectives. He has to integrate and
direct all these objectives towards the overall marketing objectives.
3. Product Policy- The marketing manager must be very clear as to the

type of customer who will use his product. He should be clear on
whether his company wants to produce a single product or a line of
products. Thus his product policy objective must be consumer oriented
and in keeping with the overall marketing objective.
4. Pricing Policy- It is the duty of the marketing manager to fix the

pricing policy in keeping with the marketing and over all company
policy. The pricing policy and product policy are interrelated. The
marketing executive should fix the price in such a way that it results in
maximum profit for the company from the volume of sales secured at
that particular price.
5. Distribution Strategy- The marketing manager has to decide upon

the distribution strategy that he has to adopt. Does he want a limited
distribution or a widespread distribution, will have to be decided and
then he will have to organize for the channels of distribution and will
have to select the channel accordingly.
6. Advertising and Sales Promotion- The marketing executive has to

decide upon the advertising and sales promotion policy as well. He
will have to decide whether the advertising will be done by a separate
department in his organization or it would be better to entrust the work
of advertising to the outside professionals, or to use a combination of
both these methods.
7. Proper Planning- Planning is deciding in advance what is to be

done. All companies carry out planning for the smooth functioning of
its organisation. The marketing manager has to plan as to how the
objectives that have been determined will be implemented. For proper
planning the marketing manager has to carry out functions like
marketing research, planning the sales policies, planning the long term
marketing programme, planning for product diversification, etc.
8. Selling- The marketing manager has to perform the following

functions in regard to selling: to direct the sales manger to regulate
sales, to organize sales territories and fix sales quotas, to select and
train personnel for the sales department, to motivate the sales
personnel and to organize and develop the channels of distribution.
9. Service- After sales service is regarded as an integral part of modern

marketing management. In fact in today’s competitive business world
if a company has to survive, it has to be consumer oriented and has to
take care to see maximum satisfaction is given to the customers. Thus
a marketing manager must see to it that proper after sales services are
given to the customers. Any complaints and problems of the customers
are to be dealt with at once.
UNIT 3- MARKETING MIX
“Marketing Mix is a set of controllable variables and their levels that

the firm uses to influence the target market”.
-Phillip Kotler
Thus, according to this definition any variable under the control of the
firm that can influence the customer demand is a marketing mix
variable.
The Marketing Mix has four main sub mixes. They are as follows:
 The Product Mix- product planning & development, branding,

packaging & labeling.
 The Price Mix- price policies, discounts & credit facilities.
 The Place Mix or Physical Distribution Mix- channel of
distribution, transportation & warehousing.
 The Promotion Mix- advertising, personal selling, sales
promotion & publicity.
IMPORTANCE/ ULITLITY OF MARKETING MIX
 Attracting customers-to face competition & to promote its

company’s sales it needs to attract customers by providing the
best mix.
 Better use of resources- Marketing Mix promotes better
utilization of limited resources as it helps the marketing manager
to understand his customer and invest in the areas in which the
customer is interested.
 Precision- Marketing Mix provides precision (accuracy) to the
study of marketing.
 Balanced Approach- Marketing Mix helps in reminding the

marketing manager that on one hand, he should be careful to
consider the market forces and on the other hand think of a total
marketing program instead of relying on any one aspect.
 Collectively Effective- The components of marketing mix are

individually important but their significance lies in the mix or
blend so as to make them collectively effective in the dynamic
marketing environment.
 Applicable to business as well as non-business organization-
Marketing Mix is applicable to business as well as non-business
organisation, such as clubs, colleges, associations, etc.
FACTORS AFFECTING MARKETING MIX
 MARKET FACTORS-
1. Consumer Behavior
2. Competition
3. The Pattern of Distribution System
4. Government Control
 MARKETING FACTORS-
1. The 4 P’s- Product, Price, Place & Promotion Planning.
2. Market Research.
PRODUCT MIX
Definition- “ Product is a bundle of utilities consisting of various

product features and accompanying services”. By-W. Alderson.
 A product is anything that can be offered to a market to satisfy a
want or need.
 Products that are marketed includes physical goods, services,
events, people, ideas, information, places, properties and
organizations.
 Products are tangible, intangible or both.
 In fact a ‘product’ means not just the physical product but

includes all the services before and after sales service, and the
prestige that is felt upon the ownership of the product.
 Thus a product is a bundle of all kinds of satisfaction both
material and non-material ranging from economic utilities to
socio-psychological satisfaction.
 In simple words, a product is anything that can be offered to a
market to satisfy a want or a need.
PRODUCT LEVELS- The Customer Value Hierarchy
 In planning its market offering, the marketer needs to address five

product levels. Each level adds more customer value and all five
constitute a customer value hierarchy.
 The fundamental level i.e. the 1st level is the core benefit i.e. the
service or the benefit the customer is really buying. For eg. A
hostel guest buys “rest and sleep”.
 At the second level, the marketer has to turn the core benefit into
a basic product. Thus a hotel room includes a bed, bathroom,
towels, desk, dresser and closet (a small cupboard).
 At the third level, the marketer prepares an expected product, a
set of attributes and conditions which buyers normally expect
when they purchase a product. Eg. Hotel guest expects a clean
bed, fresh towels, working lamps and a relative degree of quiet.
 At the fourth level, the marketer prepares an augmented product
that exceeds customer expectation i.e it tries to offer customer
delight. However it should be noted that each augmentation adds
cost and augmented benefits soon become expected benefits.
 At the fifth level, stands the potential product which encompasses
all the possible augmentations and transformations the product or
offering might undergo in the future. Here is where companies

search for new ways to satisfy customers and distinguish their
offer.
PRODUCT CONCEPT- Consists of 3 dimensions
 Managerial Dimension- It includes the related product features

and services i.e. the brand name, package, type, safety
components, delivery, installation, maintenance and repair,
warranty, etc.
 Consumer Dimension- A product conveys a message indicating a
bundle of expectations to a buyer. It the expectations are fulfilled
its repeat demand is the result.
 Social Dimension- These presume that the society too is offered
desirable or salutary product which brings not only an immediate
satisfaction but also yields in the long run consumer welfare and
best use of scanty resources, safety to users, quality of life,
concern for a cleaner and better environment, etc.
PRODUCT CLASSIFICATION
 On the basis of Durability & Tangibility:

1. Durable Goods- gds which are long lasting-clothes, electronic
items, etc.
2. Non-durable Goods- gds which are not long lasting-vegetables,
eatables, drinks, cosmetics, day to day usage items like soap,
paste etc.
3. Services- gds which are intangible, inseparable, variable and
perishable- haircuts, legal advice, appliance repairs, etc.
 Consumer Goods Classification:

1. Convenience Goods- gds purchased without any planning or

search effort- chocolates, biscuits, etc. Also emergency gds like
umbrella, raincoat, sweaters, etc.
2. Shopping Goods- gds purchased after enough search on such
basis as suitability, quality, price, style, fashion, etc.
3. Speciality Goods- gds having unique characteristics or brand
identification for which buyers are willing to make special
purchasing effort. Eg. Mercedes Benz.
4. Unsought Goods- gds about which the consumer is not much
aware of or does not normally think of buying- life insurance,
encyclopedia, smoke detectors, etc.
 Industrial Goods Classification:

1. Raw Material-
2. Unfinished Goods-
3. Finished Goods-
The Product Mix- product planning & development, product

design, branding, packaging & labeling.
 Product Planning & Development- It includes proper market

research and understanding the consumer needs and then
designing the product accordingly.
 Product Design- Another way to add customer value is through
distinctive product design. Good design can attract attention,
improve product performance, cut production cost and give the
product a strong competitive advantage in the target market.
 Branding- Perhaps the most distinctive skill of professional
marketers is their ability to create, maintain, protect and enhance
brands of its products and services. A brand is a name, term, sign,
symbol or design or a combination of these that identifies the
maker or seller of the product or service. Branding has become so

strong that hardly anything goes without branding. Eg. White
Linen perfume, fruits, vegetables.
 Packaging- It includes the activities of designing and producing
the container or wrapper for a product. The package may include
the product’s primary container ( the tube holding the toothpaste),
a secondary package that is thrown away when the product is
about to be used ( cardboard box containing the tube) and
shipping package to store, identify and ship the product.
 Labelling- Labels may range from simple tags attached to the
products to complex graphics that are part of the package.
Labelling gives information regarding the nature, name, content,
MRP, etc.
 Product Support Services- Customer service is another element of
product strategy. A company’s offer to the market place usually
includes some services which can be a minor or a major part of
the total offer. Product support services are the one’s that augment
actual products. A company should therefore design its products
and support services in such a way as to profitably meet the needs
of target customers. It can then develop a package that will both
delight customers and yield profits to the company.
PRODUCT MIX DECISSIONS
 An organization with several product lines has a product mix. A

product mix consists of all product lines and items that a
particular seller offers for sale.
 Eg. Wipro is into food, household items, bulbs, furniture,
computer solutions, etc.
 A company’s product mix has 4 dimensions- width, length, depth
and consistency.
 Product Mix “width” refers to “number” of different product lines

the company carries. Eg. Width of colgate- Palmolive is fairly
narrow with only oral care, personal care.
 Product Mix “length” refers to the “total no. of items” the
company carries within its product lines. Eg. Colgate has a big
product mix length with almost 12 toothpastes and 8
toothbrushes.
 Product Mix “depth” refers to the “no. of versions” offered of
each product in the line. Eg. Colgate Max Fresh comes in 3
flavours and 3 sizes.
 Finally the “consistency “ of the product mix refers to how
closely related the various product lines are in end use,
production requirement, distribution channels or some other way.
Eg. Colgate Palmolive have consistency where distribution
channels are same.
PRODUCT LIFE CYCLE
INTRODUCTION STAGE- In this stage the product is new and

distinctive. Here, a new product means “a product that opens upon
entirely new market, replaces an existing product or significantly
broadens the market for an existing product.
This stage is characterised by:
 slow rise in sales and profit margins
 limited competition
 high income group buyers (innovators)
 frequent product modifications
 high production and marketing costs
 narrow product line
 high prices
 limited distribution and primary demand cultivation.
GROWTH- In this stage, the product achieves considerable and

widespread approval in market. Sales increases sharply and at an
increasing rate. The number of competitors increase considerably. This
stage is characterised by:
 Increase in competition
 Increased volume of sales
 Improvement in the quality of the product
 Price reduction
 Reduction in the promotional expenditure to sales ratio.
MATURITY- In this stage, the maturity of product is reflected in terms

of its capacity to face competition. In this stage, sales do rise but at a
decreasing rate, profit margins however decline. This stage is
characterised by:
 Increase in sales at a decreasing rate
 Cut throat competition
 Exit of poor competitors
 New changes in the product
 Increase in promotional efforts.
DECLINE STAGE- This is the phase when sales decline because

customer preferences have changed in favour of more efficient and
better products. The number of competing firms also gets reduced and
generally the industry now has limited product versions available to
the customer. This stage is characterised by:
 A drastic reduction in sales
 Decline in profits
 Exit of the product from the market.
IMPORTANCE OF PLC
1. Predictive Tool- Since a product has a predictive life pattern and

the problems likely to be encountered in different stages of PLC
are known, the management is pre-warned of the likely changes
in the product position. For eg., behaviour patterns of sales,
profits, dealers, competitors, in different stages are known.
Although it is difficult to forecast these changes with any degree
of exactness, it undoubtedly provides a preview of the broad
spectrum of product events likely to occur.
2. 2. Planning Tool- Once product life pattern and behaviour of
forces lying on it are known, management is better placed to plan
its strategy in advance so as to fully exploit the product potential.
Product modification, promotion and pricing strategies and dealer
motivation program may be planned much earlier than the market
conditions warrant.
3. 3. Control Tool- In case of a multi-product company when a
number of products are simultaneously offered in the market, not
all of them fair identically. Some fare better, some not. When
their position in the PLC is monitored, it may indicate the types
of changes required in the marketing strategy so as to fully
exploit their potential and attain maximum market share. Thus, it
serves as an important market tool.

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 Many people think of marketing only as selling and advertising.

distributes and promotes them effectively, these products will sell

THE MARKETING PROCESS

Under the market Design a Construct an Build profitable Capture value

Research Select customers Product and Customer

Needs, Wants and Demands- Core Concepts of Marketing:

Given their wants and resources, people demand products with

their customers’ needs, wants and demands. They conduct consumer

Market Offerings- Products, Services and Experiences

Value and Satisfaction

Exchange and Relationships

Elements of a modern marketing system

 Consumers do marketing when they search for the goods they

 The marketing manager’s aim is to find, attract, keep and grow

Selecting customers to serve-

Choosing a Value Proposition-

 A company’s value proposition is the set of benefits or values it

 The first four steps in the marketing process involve building

So, what is marketing? Pulling it all together…

 With its marketing strategy decided, the company now constructs

3. The Selling Concept

The Production Concept

The Product Concept

 Innovative products are launched without educating the

The Selling Concept

The Marketing Concept

 Selling is preoccupied with the seller’s need to convert his

The Societal Marketing Concept

SIGNIFICANCE/ IMPORTANCE OF MARKETING/

Importance of marketing is mainly attributed to the following

2. Provides employment- Sound marketing system helps in providing

3. Reduction in distribution cost- Marketing aims at reducing the cost

4. Increase in national income- Sound marketing system is associated

5. Protection against business slump- Trade cycles causes fluctuations

slump by discovering new markets, reducing cost of distribution,

B. Importance to the Firms:

2. Increasing profits- Every business is carried on with the profit

3. Source of information- Business collects various information

C. Importance to underdeveloped economy- Marketing has a special

D. Importance to Developed Economy- In developed countries, the

E. Importance in Buyer’s and Seller’s Market- When the supply of

2. Assembling- Assembling means creation and maintenance of the

3. Selling-Selling is important from the point of view of the seller as

is achieved only through the sale of goods. This function involves

B. Physical Supply Functions:

2. Storage and Warehousing- When production is seasonal but

2. Grading- Grading is the act of separating or sorting out goods into a

3. Branding- Branding is the art of marketing. It is the measurement of

4. Packaging- Package is the external wrapper or container of the

5. Labelling- A label is a small slip placed on the product. It gives

product, labeling helps in curtailing defraudation of consumers by the

DIFFERENT APPROACHES OF MARKETING

 The different institutions serve as separate “cells” of the

 Thus it can be said that equalization is the process of making

 The basis of this approach is that marketing is purely a

 It should try to understand its weaknesses, modify its strategies to

Role of Marketing Manager:

Functions of Marketing Manager:

2. Determining Objectives- It is the function of the marketing manager

3. Product Policy- The marketing manager must be very clear as to the