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Meaning of Market
The meaning of market can be understood in two ways, namely- in traditional sense and in modern
In the traditional sense, a market refers to the place where buyers and sellers interact with each
other in order to exchange goods and services.
In the modern sense, it refers to the set of potential buyers of a good or a service who actually
want to purchase the good or service.
Marketing refers to all the activities and functions performed in order to move the goods and
services from producer/manufactures to consumers. In other words, the entire process wherein the
buyers and sellers interact with each other for the purchase and sale of various goods and services is
known as marketing.
Activities Included in Marketing
Earlier, marketing was described as either a post-production or pre-production process that
involved only a specific set of activities. However, today, marketing is a much wider concept
and includes a gamut of activities that are involved in the process of exchange of goods and
services between producers and consumers.
The activities included in marketing are planning, designing the product, packaging and
labelling, standardising, branding, warehousing, transportation, advertising, pricing and
distribution. In addition, marketing includes activities that are performed even after the sale of
product such as maintaining customer relations and collecting feedback.

Features of Marketing

Wants and needs of the customer- Satisfying the wants and needs of the customers (both
individuals as well as organisations) is the prime motive of marketing.
Creation of market offering- Market offering refers to the entire process of offering or
introducing a product in the market keeping in consideration the needs of the buyers. The
main purpose of creating a market offer is to induce customers towards purchasing the
Process of exchange: Exchange refers to the process wherein two or more parties come
together for the purpose of exchange of goods and services. In other words, one obtains the
desired goods and services from the other by offering something in return. This process of
exchange can be said to be the basic crux of marketing.
Value judgment by customer- Often before purchasing a product, a consumer attaches a
value or benefit that the product would provide as against the cost paid by him. This
anticipated benefit should be greater than the price of the product. In this regard, a marketer
must continually work towards adding value to the product.
Necessary Conditions for Exchange
For the process of exchange to be completed, the following conditions must be satisfied:
The presence of two or more parties, i.e., the buyer and the seller.
Each party should offer something of value to the other.
Effective communication should be there between the concerned parties.
Each party should deliver its own will in accepting or rejecting the offer, i.e., the exchange
should be at will.
Freedom to each party regarding whether to accept or reject the offer made by the other.

What can be Marketed?
The answer to the above question includes products (anything that has some value to the buyer,
whether it is a good or a service), ideas, places, events, persons, experiences, etc.

A marketer is a person who plays a comparatively more active role in the process of exchange. He
can either be the buyer or the seller depending on the role played by each.
Marketing Management
According to American Management Association, marketing management is defined as the process
of planning and executing the conception, pricing, promotion and distribution of ideas, goods and
services to create exchanges that satisfy individual and organisational goals.
Activities involved in marketing management comprise planning, organising, directing and

Steps involved in Marketing Management
The following steps are involved in marketing management:
i. Choosing a target market
ii. Creating demand for the target consumers
iii. Creating superior values
Marketing Management Philosophies

Production concept- This is one of the oldest concepts of marketing. The concept believes that
producing on a large scale would reduce the average cost of production and in turn, would
increase profits. Thus, firms must emphasise on improving the efficiency in production and
distribution so that a large volume of goods can be produced.
Product concept- It is based on the belief that consumers highly favour those products that are
of high quality. Thus, firms must emphasise on continuously improving the quality and features
of the product so as to attract greater number of customers.
Selling concept- According to this concept, a consumer would purchase the product only when
he is sufficiently convinced regarding the features, quality, etc., of the product. Thus, firms must
focus on rigorous selling and promotion techniques so as to increase the sale of their product.

Marketing concept- The marketing concept believes that customer satisfaction plays a vital role
in the long-run success of any organisation. Thus, organisations must aim towards appropriately
identifying such needs of customers and satisfying them in an effective manner.
The marketing concept is based on the following five pillars:
1. The efforts of all the marketing activities must be directed towards a particular segment of
market or a group of customers.
2. The organisations must clearly identify the needs and requirements of their target customer
3. Firms should develop such products and services that satisfy the needs of the customers.
4. A firm should not just independently work towards customer satisfaction, but also aim at
satisfying the customers better than its competitors.
5. The crux of all efforts of marketing is profit.
Societal concept- According to this concept, organisations should not only identify the
immediate needs of the target market, but also aim at long-term well-being and interests of the
consumers. In this regard, the organisation should pay due consideration to social and
environmental problems such as pollution, deforestation, population explosion and inflation.
Functions of Marketing
1) Analysing the market- The marketer must appropriately analyse the market so as to identify the
best opportunities. This is done by collecting various information related to the target market
segment including the size of the market as well as behaviour, culture, needs and wants of the
2) Planning- This involves creating a market plan in order to accomplish the marketing goals and
objectives of the organisation.
3) Designing the product- The producers should bear in mind that the design of a product acts as a
vital factor for attracting customers to the product. A good design helps in attracting a large
number of customers to the product. Thus, the producers should pay great attention towards the
design and development of the product.
4) Standardisation and grading of product- Standardisation implies the production of goods with
certain specific qualities such as durability, safety and utility so that uniformity is maintained in
the output. On the other hand, grading implies the classification of the product as per certain
characteristics such as size, quality, etc.

5) Packaging and labelling- Packaging refers to developing a cover or a package for the product
to protect it from damage. In contrast, labelling refers to developing a label or slip that is to be
put on the package. This label provides the necessary information about the product.
6) Branding- Under this function, the producers decide the name of the product. In this regard,
they may opt for a generic name (i.e., general name used for an entire category of product) or a
brand name (i.e., name specific to that particular product).
7) Support services- It involves handling complaints and feedbacks of the customers. This is done
by developing customer care services such as credit, maintenance or technical services.
8) Pricing the product- Price refers to the amount of money that is to be paid by the consumers for
purchasing the commodity. Pricing a product is an important decision as it affects the demand
of the product and thereby the profit of a business. Thus, it is imperative for the producers to
judiciously quote the price.
9) Promoting the product- Promotion includes encouraging and convincing the customers to
purchase the product. Herein, various promotional techniques such as sales promotion, personal
selling, advertising, maintaining public relation, etc. are used by the producers.
10) Managing physical distribution- It involves deciding the channels of distribution through
which the products would be moved from the place of production to the place of consumption.
11) Transportation- It involves actual movement of the goods from the manufacturers place to the
place where they will be consumed or used. Good transportation helps in increasing the reach of
the product to a large area.
12) Storage-Generally, there exists a time gap between the production of a good and its sale. Thus,
it becomes necessary to store the goods properly till the time they are sold in the market. In
addition, storage of goods in adequate amounts ensures smooth flow of supply of goods.
Marketing Mix
Marketing mix refers to the set of marketing tools that are used to achieve the various desired
objectives of marketing. A marketing mix combines four elements namely, product, price, place
and promotion in a manner that will meet organisational objectives. These elements are discussed

Elements of Marketing Mix

Product- Any good or service that offers value to the customer and satisfies his needs is
regarded as a product. Besides this, marketing also includes after-sale services as a part of a
Consumption of a product offers the following benefits to a consumer:
1. Functional benefits;
2. Social benefits; and
3. Psychological benefits.
Price- It refers to the money paid by the customers to obtain a product. The demand for a
product has an inverse relationship with its price. That is, higher the price, lower will be the
demand and vice versa. In this regard, the marketers must properly analyse the various
factors that determine the price, and accordingly decide the best suitable price for the
Place- This involves the decisions regarding availability of the product to the target
customers, deciding on dealers or intermediaries for the distribution of goods, managing
inventory, warehousing, storage and transportation of the goods.
Promotion- It comprises those activities that inform the customers regarding the availability
of a product, its features, qualities, etc., so as to influence them to purchase the product.
Advertising, sales techniques, personal selling, etc. are some of the common promotional
activities undertaken by the organisations.

Product- A Mixture of Tangible and Intangible Attributes
In marketing, a product relates not only to physical or tangible attributes but also to certain
intangible attributes. That is, a consumer purchases a product not just for its functional utility but
for other factors as well, such as its brand name, reputation, social satisfaction, etc.
Product- As a Bundle of Utilities
Any product provides three types of benefits/utilities to a consumer, namely functional benefits,
psychological benefits and social benefits. For instance, when a consumer purchases a car, it
provides him functional benefit as a means of transport. In addition, he receives psychological
benefit in the form of pride and self-esteem from the purchase of the car. Besides, he also
receives social benefit in the form of social acceptance and recognition.

Branding refers to the process of giving a unique name, sign, symbol or term for the
identification of a product.
Terms Related to Branding
The following are some of the important terms related to branding:
1) Brand- A sign, symbol, design or name given to the product.
2) Brand name- The verbal part of the brand that is, the part of a brand that can be spoken.
3) Brand mark- The part of a brand that can be identified but cannot be pronounced.
4) Trade mark- The part of a brand that has legal protection.


Advantages of Branding
Branding provides benefits to both the marketer and the consumers of the product.
Benefits to Marketer
1) Branding enables a firm to clearly distinguish its product from the product of other firms.
2) It facilitates easy advertising of the product.
3) Good branding helps in creating loyalty and habituality for product among the customers.
The firm can take advantage of this and charge a different price (generally a higher price)
for its product.
4) A good and established brand forms a base for the launch of a new product under the same
brand name. That is, a good brand name helps in providing an initial boost to the demand of
the new product.
Benefits to Customers
1) Branding enables consumers to clearly distinguish the product from various other
available products.
2) Consumers see a good brand as a mark of authenticity and genuinity.
3) Established and famous brands act as status symbols for the consumers, thereby providing
them psychological and social benefits.

Characteristics of a Good Brand Name
1) A brand name should be simple and short such that it is easy to spell, pronounce and
2) It should clearly suggest the benefits or qualities of the product and also suit its specific
3) The name should be unique.
4) It should be adaptable to packaging and labelling requirements.
5) A brand name should be versatile and should be able to adapt to the new products if
introduced under the same brand.
6) It must be capable of being legally protected.
7) It must have the staying power and should not get outdated very soon.
Packaging refers to the process of designing or making the outer container/package of a product.
Levels of Packaging
Packaging of a product is done at three levels, namely primary level, secondary level and
transportation level.

1) Primary level- It forms the immediate container/package of the product. For example,
toothpaste tubes, bottles of medicines, cigarette packets, match boxes, etc.
2) Secondary level- It basically refers to the next or additional layer of packaging that is used
for the protection of the product until it is utilized by the consumer. For example, the
cardboard box in which tube of toothpaste is packed.
3) Transportation level- This level of packaging is mainly done so as to further protect the
product from wear and tear or damage while it is transported or stored. Wooden boxes,
cartons, cardboard boxes, plastic boxes are some examples.

Importance of Packaging
1) Packaging helps in differentiating a product from other similar products.
2) New and advanced packaging techniques have widened the scope of marketing. For
instance, packaging of fruit juices in tetra packs allow them to be stored for a few days
before they are consumed.
3) As the standard of living of people has risen, they have increasingly become conscious of
their health. In such a scenario, the demand for properly packaged products has increased
4) Nowadays, with the rise in self-service outlets, the importance of packaging has increased
all the more and some of the functions as performed under personal selling for the
promotion of the product have come under the purview of packaging.
Functions of Packaging
1) Identification: It helps the consumers to differentiate their preferable products from various
other available products.
2) Protection: It helps in protecting the contents of the product from spoilage, breakage,
leakage or any other kind of damage.
3) Facilitates usage: Good packaging enables easy and convenient handling of the product by
4) Promotion: A good and appealing package helps in attracting greater number of customers
to the product and thereby helps marketers in promoting the product.
It basically provides the information about the product in the form of tags or graphics.
Functions of labelling


1) Description of use and contents- One of the basic functions of labelling is to provide
information about the product regarding its use, application, cautions, content, etc.
2) Identification and differentiation- A label helps in easy identification of the product. It
helps the consumers to differentiate their favourite products from other available ones.
3) Standardisation and grading- A label helps marketers to classify the product in different
categories based on certain specific qualities or features.
4) Product Promotion- A good label helps marketers in promoting the product and attracts
more customers towards the product.
5) Information required by law- It also provides information which are mandatorily required
as per the law.
Price refers to the money that is to be paid by the customers to obtain a product.
Factors Affecting Price Determination of a Product or a Service
1) Cost of product- The cost involved in producing a product sets the basic minimum price for
it. This cost comprises of the cost involved in production, distribution and sale of the
product. The costs of a product can be classified in three categories namely, fixed costs,
variable costs and semi-variable costs.
Fixed costs refer to those costs that do not vary with the level of output produced.
Variable costs refer to those costs that vary in direct proportion with the volume of
production. As the volume of production increases, the variable costs also increase.
Semi-variable costs refer to those costs that vary with the level of output, but not in
direct proportion. As the level of output increases, semi-variable costs also increase (but
less than the increase in the level of output).
2) Price elasticity of demand for the product- In case the demand for a product is price elastic,
the firm cannot charge a higher price. This is because in such a case, a slight rise in the price
would result in a large fall in the demand. As against this, if the demand is price inelastic,
then the firm has the privilege of charging a higher price. This is because for such products
even at a high price, the demand would not fall much.


3) Degree of competition in the market- If a firm faces high competition (i.e., if a large
number of similar products are available in the market), this suggests that a firm cannot
even slightly increase the price of its product. This is because by doing so, it would lose its
customers to the competitors.
4) Government regulations- At times, to protect the interest of public at large, the government
intervenes in the determination of price.
5) Objectives of pricing- Every firm has various pricing objectives which it considers while
deciding a price. The following are some of the objectives of pricing:
Acquiring market share: If the objective of the firm is to capture a greater share of the
market, then the firm would keep the price of its product at a lower level.
Surviving competition: In case a firm faces difficulty in surviving in the market due to
availability of a larger number of similar products, then it keeps the price of the product
low and even resorts to offering discounts and other such promotion techniques.
Focus on quality leadership: If the firm aspires to attain leadership in terms of quality of
the product, it charges a higher price to cover the huge costs involved in the use of
sophisticated machinery, research and development.
6) Methods of marketing- Methods of marketing used by the firm such as distribution,
advertisement, customer services and branding also affect the determination of prices. If a
firm incurs a huge cost on marketing of a product, then it would generally charge a higher
Channels of Distribution
Channels of distribution refer to the individuals, institutions or agents who facilitate the process of
distribution of the product.
Functions of Distribution Channels
Arrangement- The middlemen or intermediaries obtain the goods from various sources and
then arrange or sort them into homogeneous groups based on their specific features,
characteristics, quality, etc.
Collection- This involves accumulating the goods and maintaining them in large stock so as
to ensure a continuous and smooth flow of supply.
Allocation and packing- The whole lot of goods are then broken into small, marketable
units and repacked into convenient packages.

Building variety- The intermediaries acquire goods not just of a single kind, rather they
obtain a large variety of goods from different sources and assemble them at a single place.
Promotion of product- They assist in the promotion activities undertaken by the
Mediation- They form a link between the producers and the customers. They negotiate on
matters related to price, quality, etc., and work towards appropriately satisfying the needs of
both the parties.
Bearing risk- They acquire goods from various sources and keep them in their possession
till the final sale takes place. However, in the process, they have to bear the risk of
fluctuations in demand, price, spoilage, etc.
Types of Distribution Channels
The channels of distribution can be divided into two categories, namely direct channels and
indirect channels. The indirect channels can be further bifurcated into three categories as onelevel channel, two-level channel and three-level channel.
Direct Channels

Number of

Indirect Channels
One- level

Two- level















Suitable for

Industrial or
complex products

Perishable products

Consumer goods

Where the product

line is small or a
large market is to
be covered.





Factors Determining the Choice of Distribution Channels

1) Product type- Products are checked on the basis of whether they are perishable or nonperishable, industrial or consumer product, whether their unit value is high or low and the
degree of complexity of the product.
Type of Product

Channel of Distribution







Low unit value


High value product






2) Characteristics of the company- Characteristics of a company that affect the choice of

channel are its financial strength and the degree of control that the company wishes to hold
on the intermediaries.
Characteristic of

Channel of

Strong financial strength


Weak financial strength


Objective of greater control

over intermediaries


Exercising lesser control over



3) Competitive factors- The degree of competition and the channels opted by other competitors
affect the choice of a channel of distribution. Depending on its policies, a company may
adopt a similar channel as chosen by its competitors or opt for a different channel.
4) Environmental factors- Environmental factors such as economic constraints and legal
policies play an important role in the choice of channel of distribution.
5) Market factors- Factors such as size of the market, geographical concentration of buyers,
quantity demanded, etc. also affect the choice between the channels.
Characteristics of

Channel of



Small size of market (less number of

Large size of market (Large number
of buyers)



Buyers concentrated in a small area


Buyers distributed over a large area


Small order size


Large order size


Promotion Mix
It refers to the mixture/combination of promotional tools such as advertising, personal selling,
sales promotion and public relations that can be used by an organisation to inform customers of
its product.


Advertising refers to the technique used by the companies to attract customers towards their
product and induce them to purchase it. Some of the common modes of advertising are advertising
in newspapers, magazines, television, etc.
Features of Advertising
Cost involved- It is a paid form of promotion. The various costs involved in advertising are
borne by the sponsors.
Impersonal mode- It lacks face-to-face interaction between the customer and the advertiser.
In this sense, it can be said to be a one-way communication.
Specific sponsors: There are always some identified individuals or sponsors who undertake
the responsibility of designing the advertisement and bearing the cost involved in it.
Objections to Advertising
The practice of advertising is criticised on several grounds. However, the supporters of
advertising have their own counter arguments.
The following points present the arguments of supporters and opponents of advertising on
several grounds:


1) Higher cost
Against: Advertising adds to the cost of the company, which in turn is passed on to the
consumers in the form of higher prices.
For: Advertising helps in attracting a large number of customers which in turn, increases
the demand and thereby the production of the product. Production in large volumes
helps in reducing per unit cost.
2) Weakens social values
Against: Advertising weakens social values and instead promotes materialism in the
society by inducing customers towards purchasing products which sometimes they dont
even require.
For: Advertisements merely inform the buyers about the availability of various
products. However, the final decision to purchase the product rests with the consumer.
3) Creates confusion
Against: A large number of advertisements on similar products tends to confuse the
customers as to which product or brand should he purchase.
For: Advertisement provides a wider choice to the consumers. The consumers are
rational enough and can make an informed choice for themselves after analysing various
factors such as price, style, quality, etc.
4) Promotes inferior goods
Against: Through extensive advertisement, demand for even the inferior goods can also
be induced.
For: Quality is a relative concept. What is inferior to one consumer can be superior to
5) Objectionable advertisements
Against: Advertisements often undermine social values and are in bad taste. Sometimes
the language, images and the content of the advertisement may not appeal to the society
at large.
For: The good or bad taste is a subjective phenomenon and varies from person to
person. What may be acceptable by one may be offensive to another.


Personal Selling
It consists of oral presentation of the message (i.e., the information about the product) by the seller
to the consumers.
Features of Personal Selling
1) Personalised form- It involves the personal presence of both buyers and sellers.
2) Personal relationships- It provides the chances of developing a personal relationship
between the buyer and the seller.
Merits of Personal Selling
1) Flexible- The sale presentation of the product can be adjusted according to the need and
preferences of the customer.
2) Proper feedback- Due to personal presence of the seller and buyer, proper feedback is
3) Minimising wastage- Less wastage of efforts as there are specific targeted customers.
Qualities of a Good Salesman

The following are the qualities of a good salesman:

1) Amiable- He should be friendly and amiable in the sense that he should be able to create
such an environment as to gain favourable attention and interest of the customers.
2) Skilful- To be a good salesman, the person should always be updated about the features and
qualities of the product and also about the company for which he is working.
3) Communication skills- He must know how to strike up the right conversation with his
customers so as to gain their interest.

4) Courteous- He should be courteous and generous in nature so as to convince his customers
to purchase the product. That is, he should be polite in his conversations.
5) Determined- A salesman should be determined and consistent with the work given to him.
In other words, he should never give up or back away from the basic task given to him, i.e.,
of persuading the customers.
6) Physically fit- A salesman who is well-dressed, smart and physically fit creates a good first
impression to initiate the talk.
7) Honest- He must be honest in his dealings and be sincere towards his duty.
Sales Promotion
Sales promotion refers to the incentives that are offered to buyers so as to encourage them to purchase
the product. Such activities particularly prove useful at the time of launch of a new product.
Techniques of Sales Promotion
The following are some of the techniques of sales promotion as used by the organisations:
1) Rebate- Here, products are offered at a special low price for a specific period of time.

2) Discount- Products are offered at a price that is lower than the market price.



3) Refunds- It involves giving back some amount of the price paid to the customer on
presentation of some proof of purchase.

4) Combination of products- Offering a product as a gift on the purchase of some other

product. Usually, in this technique, related products are offered as a gift with the other.

5) Quantity gift- Here, additional quantity of the product is offered at the same price.


6) Draws and assigned gifts- Here, a scratch card or a gift coupon is offered to the customer
on purchase of the product. The consumer gets the gifts as mentioned on the scratch card.

7) Lucky draw- Offering products to a selected few as a part of lucky draw.

8) Usable benefits- Offering gift vouchers for later use.

9) Full finance at 0%- Offering goods in easy instalment schemes.


10) Sampling- Free samples of the product in the form of small packets are provided to the
potential customers at the time of launch of the product.

11) Contests- Events and contests are organised comprising games and activities while
promoting the product to attract maximum number of customers.

Public Relations
Public relations refers to the activities undertaken by an organisation to promote and protect the
image of an organisation or its products. It aims at strengthening the relations of the organisation
with its customers, shareholders, employees, investors, etc.
Techniques Used Under Public Relations


Under Public relations, a wide variety of tactics and tools are used by a company to manage and
promote its reputation. Some of these techniques are discussed below:
1) Press releases- In this technique, the company makes an announcement about the events,
functions or any newsworthy item in the press. It can be in the form of story lines,
messages, etc. that can be circulated through radio, television, internet or any other such
means of communication.
2) Brochures- It refers to a booklet that is published by the company providing information
such as background of the company, its ethics, objective and future projects.
3) Conferences and seminars- Conferences and seminars are conducted to make people aware
of the company and to attract prospective clients.
4) Websites- Companies often develop websites from where the members as well as nonmembers can get useful information about the company.
5) Newsletters- These are printed publications written in a less formal style that contain
detailed information regarding the achievements of the company, its future prospects, past
events, work towards social responsibilities, etc.
6) Press support and events- The company may organise an event along with the press support
in the form of luncheons, speeches, etc.
7) Press kits- It involves a package of information regarding the company and the product
especially designed for the members of the press. The press then circulates the information.