Unit 1 introduction to marketing - Class 11 - CBSE - 2016/17

Unit 1 introduction to marketing - Class 11 - CBSE - 2016/17

1. Unit 1: Introduction to Marketing
Meaning, nature and scope of Marketing; Importance of Marketing; Difference between
Marketing & sellings; Concepts of Marketing: Production concept, product concept, Sales
concept & Marketing concept; Marketing Philosophies: marketing & societal marketing
Session I
What is marketing?
To a lay man, the marketing means promoting and selling things. As evident also in the
Definition of marketing given by Cundiff and Still – Marketing is the term used to
describe collectively those business functions most directly concerned with
demand stimulating and demand fulfilling activities of the business enterprise.
Stimulating and fulfilling demand, however, is possible only when ‘things’ to be promoted or
sold are meeting consumers’ needs and wants, else consumers would not buy things.
Needs are basic human requirements.
For example: everyone needs food, water, recreation etc. These needs can be fulfilled in many
ways. One may want to have a cake, a burger or biscuits for the need of food. What one wants
to fulfill the needs are his/her wants. One may want to have a cake for satisfying the need for
food, but may not be able to buy it. When these wants are backed by the ability to buy, wants
become demand.
Therefore, for successful stimulation and fulfillment of the demand, a marketer must address
the needs and wants of the consumers. Noted marketing guru
Philip Kotler defines marketing as – ‘exchange’ of products and transactions to
satisfy human wants or needs.
Hence, in true sense, marketing does not only means promoting and selling things but also
understanding consumers’ needs and wants, and then offering things that fulfill these needs
and wants.
Because the primary objective of any commercial business is to earn profit, the meaning of
marketing can be summarized for commercial business as “meeting needs profitably” in the
words of Philip Kotler.
Following characteristics of marketing are worth revisiting for clear understanding of
‘What does marketing mean?’
•At the core, marketing is set of activities that fosters and facilitates exchange between
two parties (say individuals or institutions).
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2. •The exchange essentially constitutes flow of ownership of things from seller to buyer,
therefore marketing can be termed as set of activities or the process of flow of
ownership.
•Marketing is more than promoting or selling things as it requires understanding needs
and wants of consumers also.
Nature of marketing
•Marketing is both science as well as art.
•Marketing is art because many marketing functions like sales and advertising require people
with certain personality traits in order to be able to do justice to the functional role.
Salespersons for example, should have extrovertive personality and flair for interaction with
people, and not just the good knowledge of the products and sales processes etc. Also, a
good advertisement can come from highly creative minds. Therefore, a good marketing calls
for certain innate traits that cannot be transferred easily, and hence it is an art.
•On the other hand, good marketing can be classified as science as well. Because many
marketing processes like distribution, and setting prices are quite standardized and scientific.
Besides this, the marketing on the whole can also be described as the standard process of
understanding consumer needs and wants, creating things aimed at satisfying these needs and
wants, and making such things available to consumers in exchange of profit. Because of these
standard and scientific processes of marketing, that can be transferred easily, marketing can be
termed as scientific. Marketers’ performance can markedly improve by receiving formal training
on this body of knowledge.
Assessment
1.In your own words, explain what is marketing?
2.Clearly differentiate between needs, wants, and demand.
3.Is marketing an art or science? Explain.
4.What challenges marketing being an art poses for an organization.
Fill in the blanks
1.Marketing is set of activities that fosters and facilitates
_________ (options: need, wants, demand, exchange)
2.Marketing is more than promoting or selling things as it requires understanding of
________also. (options: products, needs and wants, consumers)
3.Marketing is _______because many marketing functions like sales and advertising
require people with certain__________. (options: science, art, personality traits,
knowledge, qualification)
4.Because of __________and scientific processes of marketing, that can be
__________easily, marketing can be termed as scientific. (options: transferred, standard,
flexible, established, understood)
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3. Session II
Scope of marketing:
The definition of marketing as discussed under the heading ‘What is marketing’ in last session,
can be summarized as the exchange of things that satisfy needs and wants of the consumers;
where the terms ‘exchange’ and ‘things’ have broad connotations today.
•Marketing ‘things’ include not only physical goods (e.g. biscuits) but also :
1.People (e.g. physicians),
2.Places (e.g. Kerala – God’s own country),
3.Property (e.g. shops in malls or financial bonds),
4.Events (e.g. common wealth games),
5.Experiences (e.g. fun worlds),
6.Organizations (e.g. schools),
7.Information (e.g. encyclopedia),
8.Services (e.g. legal services), and
9.Ideas (e.g. innovative concept) etc.
•Also, the ‘exchange’ need not necessarily be a physical one.
For example: employers promoting their organizations to employees may get better
productivity and longer retention in return.
Therefore, the scope of marketing is not limited to the physical goods, and dealing with the
consumers but includes virtually anything on the offer that may not necessarily be addressing
to consumers per se.
Importance of marketing:
Imagining life without marketing today is a costly proposition, because of many important
contributions like –
•Revenue generation: of all the functions of management like financing, production,
and resourcing etc. , only marketing is the function that produces revenue directly. In
this sense, it is indispensable function for any organization.
•Easy availability of products: goods are today available wherever and whenever you
want. This is possible only because of intense distribution in widely existing markets.
•Consumer education: it is only due to successful marketing function (e.g. sales demo,
promotional leaflet etc.) that consumers learn in great detail about many complex
products like insurance policies and high-end technology products. The ease with which
you make purchase decision for a particular model of the product is possible only
because of consumer education.
•Reduction in unit cost: although marketing activities are perceived to be adding to the
cost of goods to be sold, the per unit cost in most of the markets actually comes down
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4. because of market development and mass consumption, that results from increased
awareness and acceptance through advertising and mass communication.
•Improved standard of living: In the words of Paul Mazur – Marketing is the delivery of
a standard of living to the society. This statement can not be neglected because
marketing indeed improves the standard of living by - (i) it is because of marketing only
that so many products catering to almost all our needs and wants are available in the
market today, making our life easy and satisfying; and (ii) producing these goods, and
processes of exchange create opportunity for employment to many in society.
Assignment
1.Is marketing relevant to an NGO? What an NGO exchanges for a donation?
Assessment
1.Explain the importance of marketing for an individual, an organization, and an
economy?
2.Enlist all what can be subjected to marketing?
Fill in the blanks
1.A marketing exchange _________ be necessarily a ________. (options: need to, need not
to, physical, virtual)
2.Per unit cost in most of the markets actually ________because of _______market and
mass consumption, that results from ______ awareness and acceptance. (options: goes
up, comes down, increased, decreased, development of, reduction of)
3.Of all the functions of management, which one generates revenue?
a.Finance
b.Accounts
c.Human resource
d.Marketing
e.operations
Session III
Philosophies / Concepts of marketing:
Marketing, as it exists today, has evolved from many perspectives and thoughts. Broadly we
can classify these schools of thoughts in to following five philosophies of marketing:
1.The production concept:
The production concept is followed by the organizations believing that consumption of
their product would increase if they make it available widely at lower price.
Remaining profitable even after providing products in far and wide locations at lower
cost is possible only when firms achieve economies of scale due to increased demand.
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5. As the scale of operation increases the personalization reduces, and focus on reducing
cost leads to lower quality products. Therefore, this concept suits to the organizations
which have very large production capacities and are dealing in un-differentiated and
commoditized products. It is not very rare to find firms dealing in mostly
undifferentiated industrial goods that still use this concept.
2.The product concept:
The production concept was very much in practice till early 1920s, until it was realized
that lowering unit price beyond a point is not possible, and to be able to command
higher price offering better product is necessary. This very logic gave birth to the
product concept.
The firms following this concept try to continuously innovate to come up with better
products, and are often caught in the ‘better mouse trap fallacy’ believing that a better
mouse trap will make consumers to beat the path to the seller’s doorsteps. The ‘better
mouse trap fallacy’ comes in to picture when firms start offering so much innovative
features and better functionalities in improved products that are not required by the
consumers.
3.The selling concept:
In the early 1930s, the firms following the product concept started realizing that the
‘better products’ that are not much in demand can be sold if consumers are persuaded
to buy through selling efforts.
This realization founded the selling concept that assumes that if consumers are
persistently persuaded, they will start liking the product and would eventually buy it.
Firms still use this concept that are either selling unsought goods (e.g. insurance, fire
extinguisher etc.), or operating in saturated markets which are characterized by either
overcapacity or less demand.
4.The marketing concept:
Few decades later, in 1960s, sellers observed that even selling effort is not enough to
sell the goods that are not sought by the consumers, the focus started shifting to first
understanding the needs and wants and then produce goods instead of conventional
approach of first producing goods and then trying to sell them somehow.
In other words instead of finding right consumers for already produced goods, find the
right products for your consumers.
This concept was major shift in the evolution of the concept of marketing today, as the
focus shifted from the goods or seller to the consumer.
5.The societal marketing concept:
1990s witnessed focus on consumer reaching a step further when marketers started
ensuring societal good for securing higher acceptability of their goods.
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6. The societal marketing concept advocates that even though a firm’s products may be
satisfying needs and wants of a group of consumers, the firm should not offer any thing
that is not in the best interests of consumer or society at large.
In other words the seller should behave in socially responsible manner and should care
for the environment, quality of life, and public health etc. over and above just satisfying
needs and wants for profit.
For example: major snacks brands today try to ensure that their products have no
harmful contents like preservatives, cholesterol or trans-fat; and many retail store chains
have stopped providing plastic carry bags even though it might mean reduced
convenience to shoppers.
Difference between selling and marketing:
Of all the philosophies explained above, it is of particularly importance to understand
the difference between two most widely used concepts i.e. selling and marketing; which
incidentally are often are misunderstood as synonyms.
As it is evident from the discussion on (i) the meaning of marketing, and (ii) the
philosophies of marketing; the difference between selling and marketing can be
summarized as follows:
Fill in the blanks
1.The production concept suits to the organizations which have _______production
capacities and are dealing in ___________products. (options: small, large, un-
differentiated, differentiated)
Selling Marketing
Focus on product and seller.Focus here is on the consumer.
Selling emphasizes on meeting
sellers’ profit motive.
Marketing emphasizes on customers’ needs and
satisfying them, profit follows customer satisfaction.
Goods are already produced and
seller somehow wants to sell
them to consumers.
Marketing concept requires products to be made to
meet the needs and wants of the consumers.
Short term orientation of
reaching sales volume or
targeted profit.
Long term orientation and continuous association
with consumer for repeated transactions/ purchase.
Price is decided by unit
production cost.
Price is determined by consumers, that in-turn
determines the unit cost.
Selling ends with closing the
deal.
Selling is a small function of marketing. After-sale
feedback from consumer forms the basis for
improved product in future.
Selling means exchanging
products for a price.
Marketing means obtaining consumer and retaining
them.
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7. 2.Societal marketing argues that a marketer should care for ________________. (options:
what consumers like, what is in consumers’ interest.)
3.Match the following statements with the relevant philosophies being followed in the
statement:
Note :
4 P’s of marketing are :
•Product
•Place
•Promotion
•Price
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