Marketing Principles

Contents:
9.0 Unit Overview & Description Overview Skill and knowledge outcomes Resource Material Duration Learning outcomes Assessment Plan 9.1 Introduction 9.2 Fundamental of Business Relevant knowledge and Exercise 9.3 Concept of Marketing Relevant knowledge and Exercise 9.4 Definition of Marketing Relevant knowledge and Exercise 9.5 Origin of Marketing Relevant knowledge and Exercise 9.6 Scope of Marketing Relevant knowledge and Exercise 9.7 Characteristics of Marketing Relevant knowledge and Exercise 9.8 Marketing Objectives Relevant knowledge and Exercise 9.9 Marketing Functions Relevant knowledge and Exercise 9.10 Summary 9.11 Suggested Reading/References 9.12 Website References

UNIT 9: Unit Description:

MARKETING PRINCIPLES

The chapter discusses the basics fundamentals of business enterprise and its impact on retailing. Further it also discuses what are the scopes and characters of marketing? What are the functions and objectives of Marketing. This unit will impart following Skills & Knowledge: Fundamentals of business enterprise engaged in marketing with special reference to retailing. Concept of marketing Definition of marketing Origin and development of marketing 117

Marketing Principles

Scope of marketing activities Characteristics of marketing enterprise Objectives of marketing and Marketing functions

Resource Material:
Materials needed: a set-up of stationary store, One copy of the Role-Play Scenarios for each participant and Copies of the Observers Sheetfor each group and teacher, Pen set, A full set of paint brushes.

Duration: Total 30 hrs (Theory 20 hrs Learning Outcomes:

Unit-9 Marketing Principles 9.2 Fundamentals of Business 9.3 Concept of Marketing

Practical 10 hrs)

Outcomes The students will be able to understand the basics of business and the concept of SWOT analysis The students will be able to understand the Marketing concept Various approaches Marketing research The students will be able to learn the definition of marketing The students will be able to understand the origin of marketing concept and how it has evolved The students will be able to understand the scope of marketing and the activities which are part of marketing. The students will be able to understand the characteristics of marketing including Operative function of business Marketing as an Integrated Approach Consumer Satisfaction aspect Impact of Social Influence on marketing Using marketing for Maintaining Relationships

9.4 Definitions of Marketing 9.5 Origin Of Marketing 9.6 Scope of Marketing 9.7 Characteristics of Marketing

118

Marketing Principles 9.8 Marketing Objectives The students will be able to understand Marketing as a matching process Marketing objectives The students will be able to understand Marketing functions Product Life Cycle (PLC) concept

9.9 Marketing Functions

Assessment Plan:
Unit-9 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 Topic Fundamentals of Business Concept of Marketing Definition of Marketing Origin Marketing Scope of Marketing Characteristics of Marketing Marketing Objectives Marketing Functions Assessment Method Exercise: Match the following Exercise: Explain in Short Exercise: State True or False Exercise: Nil Role Play Activity Exercise: Nil Activity Due Date Performance remarks

9.1

Introduction

The objective of all business enterprises is to satisfy the needs and wants of the society as identified by marketing persons. Marketing is, therefore, a basic function of all business firms. When a salesperson sells washing machines, a doctor treats a patient or a Government asks people to take their children for getting polio drops, each is marketing something to the target peoples. Traditionally, small firm owners did not give as much importance to marketing as they have to other functions such as accountancy, production and selling. Training programmes, enterprise development and the current thrust for competitiveness have now given high priority to promoting marketing awareness among small business owners. Therefore, marketing is now assuming its rightful place along with other business functions. Since early 1990s there has been a change in the thinking of businessman from product orientation approach to consumer orientation approach. Modern business concerns lay emphasis on Selling Satisfaction and not merely on selling products. The activities are coordinated in such a way so as to provide maximum satisfaction to the customers. That is why marketing research and product planning occupy an important role in marketing. The other important functions of marketing include: buying and assembling, selling, standardisation, packing, storing, transportation, promotion, pricing and risk bearing. Thus, the scope of marketing is very wide and no more

119

Marketing Principles restricted to merely selling of products.

9.2

Fundamentals of Business:

Once complete information about market environment and policies is collected by the entrepreneur/retailer, it is necessary to carry out an analysis, called SWOT analysis. It refers to analyse Strength, Weakness, Opportunities and Threats. Only after analyzing the SWOT elements, a retailer would be able to take right decision for establishment of any retail business. A brief description is given below: Strength: With proposed retail organization i.e. financial, physical, skill etc.

Weaknesses: As anticipated in relation to market demand, customer needs skilled manpower availability etc. Opportunities: Different type of opportunities open and available for expansion, diversification, merger, acquisition. Threats: Anticipated problems and difficulties, external as also internal likely to be faced. The different aspects covered under fundamentals of retail business are given in Table 9.1. Table 9.1: Different aspects of SWOT Strengths (S) Financial ability Image/reputation Branch network Technology in use Skill & Professionalism & education ,among manpower Weaknesses (W) Poor service offered Brand image High over heads due to location factors Conveniences and facilities inadequate Working hours not suitable to Consumers Threats (T) IT Techniques, E retailing Encroachment by competitors & neighbors International situations, financial, business related Traditional competitors

Opportunities (O) Expansion of resources and financial services Creation and developing CRM (consumer Relationship Management) System Technology in use Marketing relationship and development strategies

120

Marketing Principles Utilize professional and more experienced manpower i.e. superannuated as also young encouraged people Revival and development of lost marketing segments.

Exercise:
Match the following: 1. Strength 2. Weakness 3. Opportunity 4. Threat a. traditional competitors b. development of CRM c. latest Technology d. poor service offered

9.3

Concept of Marketing:

Concept of marketing started with the origin of human civilization which created need to procure, produce and distribute different items for use of human beings. Barter system where product exchanged for product, was the first stage of distributive marketing. Since then the concept/ approach of marketing has been changing to meet the needs of producers, sellers and buyers, as explained below: Product orientation approach-It believes that product is qualitative and superior and the customer would favorably respond. Functional approach-It is sales oriented with purchase and sale strategy.

Institutional approach-Where different marketing institutions are established to facilitate sale of goods/products using the services of buyers and sellers. Marketing information system approach-Where all market, environment, product, buyers etc related data is collected for use in policy making. Integrated marketing activities approach-Where all marketing activities are coordinated. Customer orientation approach-Here, the company collects orders from market to produce, procure and supply as per need of consumers. This is the latest and modern concept of marketing. The important characteristics of marketing can be summarised below: Based on consumer needs 121

Marketing Principles Development of integrated marketing system Earning surplus through consumer satisfaction Merchandizing i.e. matching the product to the needs of purchasers/consumers Take up promotional activities, persuading buyers to favor the product and the company Establishing effective marketing channel The old and new concept of marketing is shown in Fig. 9.1. Old concept: Product Selling and promotion Integrated marketing Profit through sales value Profit through satisfaction of consumer or customer

New concept: Customer needs

Fig. 9.1: Old and New Concepts of Marketing The key to achieving organizational goals consists of determining the needs and wants of target markets and also in delivering the desired satisfactions more effectively and efficiently than their competitors. Under marketing concept, the emphasis is on buying satisfaction and not merely on the selling a product. Thus, the objective of marketing is not the maximization of profitable sales volume, but profits through the satisfaction of customers. Consumer is the pivot point and all marketing activities operate around this central point. It is, therefore, essential that the entrepreneurs identify the customers, establish a rapport with them, identify their needs and deliver the goods and services that would meet their requirements. The components of marketing concept are as under: Satisfaction of customers: The customer is the focus of the organization. The organisaiton should aim at producing those goods and services, which will lead to satisfaction of customers. Integrated marketing: The functions of production, finance and marketing should be integrated to satisfy the needs and expectations of customers. Profitable sales volume: Marketing is successful only when it is capable of maximizing profitable sales and achieves long-run customer satisfaction. The Concept of Distribution of Goods and Services This concept is related to the old and traditional approach focused mainly on the distribution of goods and services. Marketing can also be defined as the part of business activities that directs the flow of goods and services from the producer to the end user. It implies that the marketing process begins when the production is complete and ends when goods are delivered and sold to customers 122

Marketing Principles or consumers. This approach believes in earning profit with focus on sales. This is shown in Fig. 9.2.

Producer

Goods

End User

Profit

Fig. 9.2: Concept of Distribution of Goods and Services The new approach is based on the production of goods based on the needs, culture and attitudes of users. The production plan is tailored to provide and improve the standards of living. This is illustrated in Fig.9.3. Needs of User Products Users Profit

Fig.9.3: New Distribution approach based on Consumer Needs. Marketing Research Marketing research is the means by which the information necessary to run a business is obtained. It helps an entrepreneur to take decisions concerning the type of product, the price policy, the channel of distribution and sales promotion. It is the gathering, recording, and analyzing all facts about problems relating to the transfer and sale of goods and services from producer to consumer. For example, a hotel should find out what all services are needed to satisfy its customers. The soft toy manufacturer making teddy bears needs to find out if children really want purple teddy bears and so on. Every company, irrespective of size, must research its market, customers and competition; initially to set it on the right course. Small-scale firms are often unable to afford continuous marketing research. However, they can use personal contacts and other informal methods for collecting required information about markets. Marketing information can be collected from the sources given in Table 9.2. Table 9.2: Sources used in getting Marketing Information Primary Sources Customers: A representative sample of consumers may be selected. The information may be obtained regarding the quality, design, package, price, etc. of the firms products. Secondary Sources Press: Newspapers like the Economic Times and Magazines like Business Today and trade directories regularly publish data about various industries. Government Publications: Bulletins,

123

Marketing Principles periodicals, journals and magazines of different ministries and departments of the Central and State Government. Publications of financial institutions: Publications of Reserve Bank of India, public financial institutions and commercial banks. Foreign governments and international agencies: Publications of agencies like the United Nations, the World Bank, the ILO, UNCTAD and the IMF. Publications of trade associations: Trade associations and Chambers of Commerce collect and publish useful data for the benefit of their members. Private concerns and research institutions: Business data published by research institutes like National Council of Applied Economic Research, Indian Institute of Foreign Trade, etc.

Dealers: The dealers can provide information about the marketing policies of the competitors. Salesman: Salesmen remain in personal contact with the customers. They can supply data to the marketing manager relating to the buying habits and preferences of customers.

Exercise:
1. Explain in Short a. Difference between Old and New concept of Marketing. b. What are the components of marketing concept? c. What do you mean by Market Research? d. Name the primary sources used in Marketing Information. e. Name the secondary sources used in Marketing Information.

9.4

Definiation of Marketing:

The marketing is defined by different people in different ways. Some of the widely used definitions are: As the process of planning, executing the concept, pricing promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organization objectives. As creation and delivery of standard of living to society. This is more consumer/customer oriented, providing satisfaction to them. As journey of goods from producer to consumer.

124

Marketing Principles Marketing is also defined as a system of over all business activities designed to develop strategies and plans to the satisfaction of consumer wants of selected market segments or targets. The important elements in the definition of marketing are: Marketing is a total system of business It is a ongoing (continuous) process It translates the needs of consumers It creates demand for product & services It proposes expansion of market to cover all consumers.

Exercise:
1. a. b. c. Sate True or False Marketing is a process where consumer demands of a target market are met. Marketing is the journey of goods from consumer to producer. Modern marketing begins with the customer and ends with the customer.

9.5

Origin of Marketing:

Formal marketing system, in India was started in early 20th century. During the evolution period, the concepts of management and related techniques were introduced to develop marketing further. Earlier marketing was production oriented, however now the focus is on satisfaction of consumer needs. The important features of modern marketing system are: Producers and sellers started knowing about profit which was value based Establishment of pricing system Sales promotion techniques-advertisements publicity Good knowledge of product and its use Behaviour of consumers Establishment of different marketing channels Study of life styles, needs and alternatives of consumers Innovative techniques of packaging, storage & warehousing Market studies

Studies of market environment has suggested for expansion of marketing activities by: Selling goods in common places like hats, bazaars, etc. Selling products through malls and other big stores Selling through telemarketing techniques Supply at your door e- marketing techniques 125

Marketing Principles

Exercise: NIL 9.6 Scope of Marketing:

Scope of marketing includes all marketing functions performed in a business enterprise. The following are included. Buying, assembling and selling Transportation, inventory management, warehousing and material handling Financing, risk taking & Insurance, standardisation and after sale service. Marketing assessment and sales forecasting Market policies and environment Sales promotion techniques Costing and budgeting

From the above it can be concluded that scope of marketing is not specific but a group of activities.

Exercise:
Role Play For successful retailing, marketing of a product or store is extremely important. On the other hand competition becomes a big threat which affects the business. Lets do a role play to understand how marketing can help in fighting competition. Materails Required: chart papers, colored sketch pens Objectuve: The objective is to use marketing efforts to create customer satisfaction. Participants: 1. Apparel Store: (Students to decide the name of their store) a. Store A 2 salespersons who are the owner of the store, 1 customer visiting the store individually.
b. Store B- 1 store manager, 1 merchandiser, 2 salespersons, 2 customers

Both the stores are in same market, giving competition to each other

2. Confectionary Store : (Students to decide the name of their store) a. Store A 1 owner and 1 salesperson, 2 customers a small store
b. Store B 1 owner, 3 salesperson, 2 customers A big store selling imported

chocolates and candies Both the stores are in same market, giving competition to each other 126

Marketing Principles Total no. of participants: 20 Scenario: Step 1: Create two sections of Apparel: a. Store A is a non-branded local apparel store ,
b. Store B is a Branded apparel store

Both the stores have to role play and market the product to attract the customer. Then convince and sell the product to create customer satisfaction. The participants can draw poster to use as branding or write any promotional offer. They need to maintain the display as well to make the store look appealing . Step 2: The participants perform the role play while audience and teacher watch the performance and make their notes for later discussion Step 3: Change the group and create two sections of Confectionary a. Store A A small store b. Store B A big store selling imported chocolates and candies Both the stores will put their best effort in marketing their products. They can make any type of promotional offer and write on the chart paper to draw the attention of the customers towards their store Step 4: The participants perform the role play while audience and teacher watch the performance and make their notes for later discussion Step 5 Discussion: The teacher and students to discuss on the how effectively the participants used marketing to sell the product and boost their brand.

9.7

Characteristics of Marketing

Marketing has all focus on consumer satisfaction and as such it is consumer as also competitors oriented. It is the journey of product from producer to consumer, all steps/functions falling in between. It will be useful for you to understand important characteristics of marketing. The characteristics of marketing are shown in Fig. 9.4 and are listed below: It is the operative function of the business enterprise. It believes in interaction and coordination with the other activities of the business. Its sole object is to provide utmost satisfaction to the customer. It has a definite influence and effect on the social system. It is one of the important systems or functions in the whole managerial system. It establishes regular contact and relationship with customer, the user or consumers. 127

Marketing Principles A brief description of various characteristics is given below:

As Operative Function of Business As explained earlier, marketing is a management function covered under the coined word 7Ms. The whole business relating to production and services is based on marketing. It collects related information for use to inform the organization about the need, culture, design and size of the products and services required by consumers. Marketing also provides the detailed knowledge of specialised skills and complete market environment along with behaviour of consumers. Maintaining Relationships Consumer satisfaction Marketing Management

Impact of Social Influence

Operative Function of Business Managerial System

Integrated Approach

Fig. 4: Operative Functions of Business

As an Integrated Approach No one in business can exist independently and as such it has to ensure the support and collaboration of other business activities. Accordingly, the other functions like transport, personnel, warehousing, packaging, pricing and production are all equally important. Consumer Satisfaction The customer or consumer is The King in a business enterprise. Marketing is based on his/her choice and satisfaction on which the profitability of a business solely depends much. Impact of Social Influence

128

Marketing Principles The economic activity depends upon the needs of society, which are conditioned by the socioeconomic and political environment. One has to produce the products or provide services as are needed by the society. Similarly, marketing techniques like innovative promotional approaches, publicity, experiments and new lifestyle trends have a big impact on consumer behavior. Marketing research is another activity taken up for the purpose. For Maintaining Relationships The existence, development and continuation of marketing management process depends mainly on attracting the customer i.e., buyer through regular contacts after sale service, inviting in enterprise activity, celebrations, functions etc. Consumer or buyer retention would be the sole focus of this effort.

Exercise: Activity: The role of marketing is to create customer satisfaction. In other words it is customer
oriented, now that you have understood the meaning of marketing and its characteristics, answer the following questions. Explain how marketing can bridge the gap from producer to consumer for: a. Chart papers b. Notebooks c. Pencils To find the answer visit a stationary shop 1. Name of brands available for the above mentioned products. a. Chart Papers _______________________________ b. Notebooks:________________________________ c. Pencils:______________________________________
2. What marketing efforts the salesperson puts in to sell these products? 3. Is there any marketing support given by the producer to help the sale of the products?

9.8

Marketing Objectives

Marketing is not one activity. It is combinations of various inter related activities focusing on the satisfaction of the purchaser/consumer. Marketing is a matching process where: Producer provides marketing mix of 4 Ps Consumers demand of target market are met Goals and capabilities of business house have been assessed properly 129

Marketing Principles

Marketing process bring s producer and consumer on one platform and at one place.

It is widely accepted that every business established for production will undertake production activities being its main activity. However, it is risky to start production with out studying comparative and competitive objectives. This is also accepted that the earning profit is the main purpose of the company. Even then, the industry/establishment has to lay down objectives which may be as under: The objectives be laid down for the whole organization and not unit, branch or section wise. Increasing profit through various strategies (to be decided by the company) Reduction in the cost of production to suit consumers demand without affecting the quality contents etc. Strategies regarding market segmentation, channels, also need be laid down to achieve the objectives

Exercise: NIL 9.9 Marketing Functions

After studying the various important aspects of marketing system, it is necessary to learn and understand the functions of marketing. In general, all function areas of marketing have been covered while explaining the scope of marketing, some of more important ones are placed below: Assessment of consumer demand and their behavior Detailed study of market environment Financial capability Effective marketing and distribution channels Price fixation policy and techniques Alternative sales promotion techniques Introduction and application of IT techniques Merchandising matching to customer needs

Product Life Cycle: Concept and Significance: Every product passes through four stages in its life, namely, introduction, growth, maturity and decline. The concept of product life cycle (PLC) highlights that sooner or later all products die and that if an entrepreneur wishes to sustain its revenues, he must replace the declining products with the new ones. With the product passing through different stages, the small scale entrepreneur faces varying challenges, opportunities and problems. Smaller businesses have a good reputation for innovation. Their greatest advantage is the speed at which they can respond to the demands of the market, but only if they understand the market. Every firm makes sales forecasts during introduction, growth, and maturity stages. To achieve the sales target, it formulates promotional, pricing and distribution policies. Thus the concept of PLC 130

Marketing Principles facilitates integrated marketing policies relating to product, price, promotion and distribution. The advantages of forecasting the life cycle of a product to a firm are as follows: When the PLC is predictable, the entrepreneur must be cautious in taking advance steps before the decline stage, by adopting product modification, pricing strategies, distinctive style, quality change, etc. The firm can prepare an effective product plan by knowing the PLC of a product. The entrepreneur can find new uses of the product for the expansion of market during growth stage and for extending the maturity stage. The entrepreneur can adopt latest technological changes to improve the product quality, features and design.

Exercise: Activity: Think of a product in the following categories with which you are
familiar and answer the following questions. a. Confectionary b. Stationary c. Apparel

1. Product Name:_________________________________________________ 2. Product Use:___________________________________________________ 3. Describe the typical consumers of the product:___________________________ 4. What raw materials are used to make this product?__________________________ 5. How is the product processed?___________________________________ 6. How is the product transported?_____________________________ 7. Where is it sold?_________________________________________ 8. How is the product promoted and advertised?__________________________ 9. How much does the product cost?______________________________________ 10. Each item above is part of the marketing process. Many other activities are considered to be part of marketing. How many you can list?

131

Marketing Principles

9.10 Summary
It is necessary to carry out SWOT analysis to take a right decision for establishment of any Retail Business. Old concept of marketing is product based and looks for profit through sales value, whereas the new concept is Customer Need Based and looks for profit through customer satisfaction. Market Research gives us the information necessary to run a business. It helps to take decisions about the type of product to be kept, price, sales promotion etc. Marketing can be defined as a journey of goods from producer to consumer including all in between steps. Marketing has all its focus on consumer satisfaction.

9.11 Suggested Reading/References:

9.12 Websites:

132