Business Studies Chapter 2.2 - Marketing

Chapter 2.2 – Marketing

Business Studies Chapter 2.2 – Marketing

1. Marketing: Definition and Meaning

The term marketing is often misunderstood by many, being confused with shopping, selling, or merchandising. However, marketing is a much broader concept that involves numerous activities, such as designing, packaging, branding, and selling a product or service to satisfy consumer needs.

Traditional View of Marketing

Traditionally, marketing is seen as the performance of business activities that direct the flow of goods and services from producers to consumers. These activities include:

Product designing
Packaging
Warehousing
Transportation
Branding
Selling
Advertising
Pricing

Modern View of Marketing

In modern times, marketing is viewed as a social process where people exchange goods and services for money or something of value. According to Philip Kotler, marketing is defined as a social process by which individuals or groups obtain what they need through the creation, offering, and exchange of valuable products and services.

2. Understanding the Market

The term market traditionally referred to a place where buyers and sellers physically gathered to exchange goods and services. Today, however, the term has evolved, and it refers to the set of actual and potential buyers for a product or service.

Types of Markets

Consumer Market: Markets where consumers buy goods for personal use.
Industrial Market: Markets where companies buy goods or services for business purposes.
Product Market: For specific products like cotton, steel, or gold.
Geographic Market: Local, national, or international markets.
Retail Market vs Wholesale Market: Retail markets deal with small quantities for end consumers, while wholesale markets involve large quantities for resellers.

Marketing is viewed as a social process, where marketers satisfy customer needs in exchange for profit.

3. Key Features of Marketing

Needs and Wants:

Needs are basic human requirements, like food, water, and shelter.
Wants are specific preferences shaped by cultural and societal factors. For example, while hunger is a need, a want might be for a pizza or a specific dish like dosa.
Market Offering:
This refers to a complete product or service offering, developed based on customer needs and preferences. For example, a mobile phone might come with various models and price points.
Customer Value:
Consumers evaluate products based on the value they receive in relation to the price they pay. A marketer’s job is to ensure that customers perceive the product as delivering superior value compared to competing products.
Exchange Mechanism:
Marketing works through exchange, where individuals and companies trade goods and services for money or something valuable. For an exchange to occur, several conditions must be met:
- Both buyer and seller must offer something of value.
- Both parties must be able to communicate and deliver.
- There must be freedom to accept or reject the offer.
- The exchange must benefit both parties.

4. Marketing Management

Marketing Management involves planning, organizing, directing, and controlling the activities involved in marketing goods and services. The focus is on achieving desirable exchange outcomes with target markets. According to Philip Kotler, marketing management is “the art and science of choosing target markets, getting, keeping, and growing customers by creating, delivering, and communicating superior customer value.”

5. Marketing Management Philosophies

There are five key marketing management philosophies that guide business practices:

Production Concept:
Focuses on large-scale production and cost efficiency. Businesses assume customers will prefer products that are widely available and inexpensive.
Product Concept:
Emphasizes the importance of product quality. Companies focus on continuously improving their products to meet customer needs.
Selling Concept:
Assumes customers will not buy enough products unless they are aggressively promoted. The company focuses on pushing products through sales techniques like advertising, personal selling, and sales promotions.
Marketing Concept:
Focuses on identifying and meeting customer needs better than competitors. The customer is at the heart of all business decisions, and the goal is customer satisfaction.
Societal Marketing Concept:
Extends the marketing concept by considering the long-term welfare of society. Businesses must balance customer satisfaction with the long-term impact on society and the environment.

6. Functions of Marketing

Marketing serves several vital functions:

Gathering and Analyzing Market Information:
Marketers collect and analyze data to identify customer needs, market trends, and potential opportunities. This information helps businesses make strategic decisions.
Marketing Planning:
Involves setting objectives and creating plans to achieve them. For example, a company might plan to increase market share by enhancing product features or launching a new advertising campaign.
Product Design and Development:
The design of a product impacts its performance and appeal. A well-designed product that meets customer needs will have a competitive advantage.
Standardization and Grading:
Standardization ensures that products conform to consistent quality and specifications, while grading involves classifying products based on their quality.
Packaging and Labeling:
Packaging protects the product and serves as a tool for marketing and branding. Labels provide essential information, such as ingredients, usage instructions, and health warnings.
Branding:
Establishing a brand differentiates a product from competitors and builds customer loyalty.
Customer Support Services:
Services like after-sales support, complaint handling, and maintenance enhance customer satisfaction.
Pricing:
Price setting involves determining the right price for a product, based on production costs, demand, competition, and other factors.
Promotion:
Promotion involves communicating the benefits of a product to customers. Key promotional tools include advertising, personal selling, sales promotions, and publicity.
Physical Distribution:
Refers to the movement of products from the producer to the consumer. This includes inventory management, warehousing, and transportation.

7. Marketing Mix (4 Ps)

The Marketing Mix consists of four core components:

Product: The goods or services offered, including design, features, quality, and packaging.
Price: The amount customers pay for the product. Pricing strategies depend on cost, competition, and consumer demand.
Place: The distribution channels used to make the product available to customers.
Promotion: The strategies used to inform, persuade, and remind customers about the product, including advertising, sales promotions, and personal selling.

8. Product Classifications

Consumer Products: Goods purchased for personal use.

Convenience Products: Frequently purchased with minimal effort, like toothpaste and soap.
Shopping Products: Purchased after comparing price, quality, and style, like clothing and electronics.
Specialty Products: High-end products with unique features, like luxury cars or designer clothes.
Industrial Products: Goods used for business purposes.
Includes machinery, raw materials, and equipment used in the production of other goods.

9. Branding

Branding helps distinguish a product from its competitors. It involves creating a brand name, brand mark, and trademark.

Brand Name: The part of a brand that can be spoken (e.g., “Nike”).
Brand Mark: A symbol or design that visually identifies the brand (e.g., the Nike “swoosh”).
Trademark: Legal protection for a brand name or mark.

A good brand name should be easy to pronounce, memorable, and reflective of the product’s benefits.