Nature and Scope of

Marketing
Maxwell Ranasinghe
B.Sc. ( Business Administration) Hons.
MAAT, Attorney at Law, CPM ( New HavenUSA) , MSLIM

Nature and Scope of Marketing

The History of Marketing
What is Marketing
Definitions of Marketing
Development of Marketing
Marketing Management Orientations
Why do organisations needs to be Marketing
Oriented?
Relationship Marketing

History of Marketing
Early humans had only basic requirements such as food and
shelter
They themselves obtained them collecting, growing and hunting.
They lived under trees or in caves. Therefore they were selfsufficient.
Once the needs became more, the man could not obtain them on
his own.
Then he had to exchange for what he has with others. Eg. A
farmer exchanged his rice with fisherman's fish.
It was called the Barter System
However, Barter system was not efficient. There were many
problems with the barter system. E.g. Person could not easily
find another person who had his need and who wanted his
surplus.
Then came the introduction of medium of exchange called
money.

 The birth of selling goods and services started

with the use of money as a medium of exchange.
People started producing more items than that
they want and sold them in the market for money
and obtained their other requirements from the
money they received,
That gave birth to markets. Markets are places
where customers and suppliers met. They were
geographical places. It was a pre-planned place
at a pre-planned time to exchange goods.

Markets
The excess items were sold in the market and
markets became very competitive
Producers met the buyers directly at the market
place.
After some time the producers could not handle
selling effectively.
There were problems of sharing time for
production and selling and many other practical
problems.
As a results specialist sellers were born. They are
called the middlemen.

 The focus shifted to sales, retaining customers,

finding new customers
Selling could not be done well without really
understanding the needs and wants of customers
Therefore customers became more important
A customer oriented approach had to be used
That paved the way to form businesses as
marketing organizations

What is Marketing?
Marketing is a societal and managerial
process where people and organisations
( customers) obtain what they need and want
by exchanging products and services of value
with each other
Marketing focuses on the needs and wants of
customers.
It is concerned about satisfying customers
through supply of goods and services
Many think marketing is only advertising and
selling. But marketing is almost a way of life
that everybody needs to know.

Iceberg Theory
M
A

Selling &

advertising

K
E
T
I
N
G

Iceberg- under
water

Water

Real Icberg

All profit and non profits are using marketing

Marketing is not only used by commercial profit oriented
organisations but also by other organizations such as temples,
churches and many other not for profit organizations and
persons.
For example : Temple/Church provide their service ( product) to
its congregation( customer) It announcers its activities
( promotion) to its congregation (target market). It depends on
funds of congregation ( price/payment) for its survival. Further it
is located where their congregation can have easy access
( place).
Therefore customer would be the most important element of any
marketing organization.
Marketer needs to strive to satisfy its customers as No
customers means No business

Few definitions of Marketing

Marketing is not a science and there is
no single universally adopted definition.
Lets discuss about some widely used
definitions.
Adams Smith( 1776) Consumption is the
sole purpose of all production and interest
of product ought to be attended to, only so
far as it may be necessary for promoting
that of the consumer

Phillip Kotler( The Millennium Edition 2000)

Marketing is a societal process by which
individuals and groups obtain what they want
through creating, offering and freely exchanging
products and services of value with others
Chartered Institute of Marketing UK
Marketing is a management process, which is
responsible in identifying, anticipating and
satisfying customer needs and wants at a profit

 American Marketing Association

Marketing Management is the process of planning and
executing the conception, pricing, promotion, and distribution
of ideas, goods and services to create exchanges that satisfy
individual and organisational goals
Dibb, Simkin,Pride and Ferrel
Marketing Consists of individual and organizational activities
that facilitate and expedite satisfying exchange relationships
in dynamic environment through the creation, distribution,
promotion and pricing of goods, services and ideas

Core ingredients of various definitions indicate the key

functions and activities of marketing

Customer is the center of all Marketing activities.

Marketing focuses on the needs and wants of customers.
Identifying favorable emerging market opportunities
It is concerned about satisfying customers through supply of
goods and services
Marketing involves analysis planning and control
Marketing is concerned about staying ahead with competition
and making profits
Marketing has a heavy emphasis on relationships
Creating value to both the customer and organization

Development of Marketing
Marketing as an exchange process
exchange is the act of obtaining something by offering
something in return ( money, services, goods or a
combination)
For an exchange to take place following conditions
must exists:
1. Two parties
2. Each party must possess something of value that
the other party likes
3. The parties must be involved voluntarily
4. Parties must be able to communicate about their
value proposition

Is Marketing a function of management or a

business philosophy ? Discuss
It is a function of management as well as a business
philosophy
It is considered as a function of management as it
uses management techniques in satisfying
customers.
Businesses has various divisions that handles
different functions such as human resource,
financial, operations and marketing.
In a typical Marketing Department there are
marketing managers, product managers, sales
managers, sales representatives, sales persons,
delivery assistants etc.

As a function, marketing is involved in several activities

Identifying customer requirements through research
Study about customer perception and products, set
prices, involved in distribution systems, promo
activities, etc.
Anticipate customer demand by forecasting
Work with other functional departments to develop
products and services to satisfy customer needs
Simply analyzing, planning, implementation and
control of all the marketing activities.

 Marketing as a business philosophy

Marketing is considered as a overall business
philosophy which runs through all departments of an
organisation and embedded in all the activities of a
marketing organization. It is a way of business
thinking.
The idea rooted in satisfying customers through the
supply of goods and services does not restrict to one
department or function.
It is the purpose of the whole business. Everyone
should have the customer oriented attitude in an
organisation.

 Marketing is running like a silver lining in all

aspects of the business.
Therefore it is considered as an attitude of
mind rather than a specific function or
discipline.
A marketing integrated approach is required in
all departments and functions of a company
Peter Drucker- Business success is not
determined by the producer but by the
customer

Marketing Management Orientations in the

Evolution of Marketing?

Production Concept: Consumers will prefer

products that are widely available and
inexpensive
- Concentrates on high production efficiencylow cost- mass distribution
Example : Ford T- Model

: Govt Hospital and other Service Depts

Heavy focus on the Price and Place on M.Mix

Ford T Model

 Product Concept
Consumers will favor those products that offer
most quality, performance or innovative features
Just making superior products will make
customers seek and buy them
More focus on Product in the M. Mix.
Better mouse trap of Woolworth Co. Made a very
effective reusable mousetrap that the existing
ones but price was more than double. It did not
sell well. People did not want to spend twice as
they used to throw the mousetrap also with the
catch.
Marketing Myopia- shortsightedness of not
considering customer needs and behavior

Woolverths mouse trap

 Selling Concept
If consumers are left along, will ordinarily not buy
enough of the organisations products. Therefore
the organisations must undertake aggressive
selling and promotional effort
Consumers have buying inertia and have to be
persuaded
Practiced more on unsoughted goods
Sell what is made or available rather than what
consumer wants.
Heavy focus on Promotion on the M.Mix

Consumers have to be persuaded

 Marketing Concept
Key to achieving organisational goals
consists in determining the needs and
wants of target market and delivering the
desired satisfaction more effectively than
competitors
Focus on all Ps of the Marketing mix.
To apply marketing concept three conditions
should be met

Key Components of the Marketing

Concept Marketing Concept
achieving organizational goals
consists in determining the
needs and wants
of target market and
delivering the
desired satisfaction more
effectively than competitors
Customer Orientation
Corporate activities
Are focused on
Customer satisfaction

Integrated Effort
All staff should accept
The responsibility of
Creating customer
satisfaction

Goal Achievement
The belief that
corporate
goals can be achieved
Through customer
Satisfaction

Selling Vs. Marketing

Starting Point- focus-

Factory

Target
Market

Product

Customer
needs

Means-

Promotion

Coordinated
- Mktg

End

Profits through sales

volume

Profit through customer

satisfaction

 Societal Marketing Concept

Organisations task is to determine the needs, wants

and interest of consumers of target markets and to

deliver the desired satisfaction more effectively and
efficiently than competitors in a way that preserve or
enhances the customers and the societies well
being
They must balance often conflicting position of
company profits, consumer wants and public interest
Societies well being is the public interest which
includes Ecological ( Green Marketing), Human
( Ethical Marketing) and The Intelligent Consumption

What is Green Marketing?

This stems from how marketer responds to the
environment. The marketers have been practicing
very environmental destructive activities.
Resource depletion and degradation - Genetic
engineering- Pollution- Harmful emissions and
products- health hazards
Barriers to Green M- Cost- Technological problemsless innovation -less commitment and ignoranceconsidering world as bundle of raw materials for the
benefit of the current generation.

What is ethical Marketing?

Ethical Marketing are the rules of conduct and moral
principals regulating marketing.
- The limit of Claims/Promises that can be made as to
product benefits
- Discriminating competing products
- Marketing of products like cigarettes, alcohol
- Limitations in Marketing products to children
- Religious/racially susceptible Brand names and images
- Unaccepted Promotional methods
- Using women in unaccepted manner
- Purposeful deception
-

Relationship Marketing
Customer retention has
become a major problem in
the competitive world of
business
Relationship Marketing is
the process of creating,
building and managing long
term relationship with
customers, distributors and
suppliers. Life Time Value of
a customer is emphasized
more than a value of a
single transaction

 Traditional Marketing is
concerned with the
exchanges with customers.
The emphasis was to
develop products that will
satisfy customers and focus
was basically on (single)
transaction.
Not much effort was kept on
keeping the customer for a
long time and Life Time
Value was not considered
much.

 Types and Levels of Relationship

Transactional approach- Marketer concludes a
transaction of selling a product. The marketer, in
offering the product, is looking for a response.
Transaction based marketing is on individual
transaction
Relationship approach- The concluded transaction is
not the end of a process, but start of a long term
relationship with the customer.

 Benefits of relationship marketing

Retaining existing customers is cheaper than getting new
ones
Repeat customers are costing less to service as they are
familiar with the company
Reduce customer deflection and bad word of mouth
Keep customer databases and service more effectively
Small changes in retention rates have large effects on
revenue

Identify and explain the anticipated benefits of

introducing marketing orientation to an organisation.
If a company to be successful in the long run the
most important philosophy they should follow is the
marketing orientation/ concept
The mere survival of a company in the modern
globalised world depends on how much of customer
satisfaction that it can offer.
Therefore the customer focus should be an integral
part of the organisation
All the departments in the company should have an
integrated approach towards satisfying customers

 Further it would be able to reduce the

number of dissatisfied customers.
Dissatisfied customers will tell others
Research confirms it takes six times of
effort and cost to make anew customer
than keeping the existing ones.
It would make the organisation gain a
competitive advantage

If an organisation can adopt a marketing

oriented approach it would be able to get
Increased customer satisfaction
Increased customer loyalty
Increased reputation
Increased motivation among staff
Increased market share
Reduction of waste
Combat threats from competitors

Difficulties in Developing the

Marketing Orientation
The main problem is with the differences of
emphasis of other branches of the organisation.
Engineering, production, Finance, R&D, HR etc.
Lack of committed leadership and vision
Failure of managers to understand the true concept
Inability to to adapt to change
Difference in attitudes/culture
Autocratic leadership
Lack of customer knowledge
Lack of infrastructure- required technology