Concept and functions of marketing
Marketing is a social process where people get what they need by creating and exchanging products and value with others. In business, it means finding what customers want and supplying it better than rivals, at a profit. A market used to mean a place; now it means the set of buyers and sellers.
Features: needs and wants, creating an offer, customer value, exchange, and it is a two-way process between marketer and customer.
Functions of marketing
- Gathering and analysing market information (market research).
- Marketing planning: setting sales targets and plans to reach them.
- Product designing and development.
- Standardisation and grading: fixed standards of quality; sorting goods into groups by size or quality.
- Packaging and labelling.
- Branding.
- Customer support services: after-sale service, complaints, credit.
- Pricing.
- Promotion.
- Physical distribution.
- Transportation and storage (warehousing).
Marketing philosophies
A marketing philosophy is the main idea that guides a firm's marketing.
| Philosophy | Main idea | Focus |
|---|---|---|
| Production concept | Buyers want cheap, easily available goods | Mass production, low cost |
| Product concept | Buyers want the best quality | Product improvement |
| Selling concept | Buyers will not buy enough unless pushed | Aggressive selling and promotion |
| Marketing concept | Find customer needs first, then satisfy them | Customer satisfaction |
| Societal marketing concept | Satisfy needs and also care for society and nature | Customer + social welfare |
Marketing vs selling
- Selling is only a part of marketing; marketing is wider.
- Selling moves the product to the buyer; marketing satisfies the buyer's needs.
- Selling starts after production; marketing starts before production and continues after sale.
- Selling aims at profit through volume; marketing aims at profit through customer satisfaction.
Marketing mix (the 4Ps)
The marketing mix is the set of tools a firm controls and mixes to get the response it wants from the market. The four elements are the 4Ps: Product, Price, Place and Promotion. A change in one often needs a change in others: a premium product needs a higher price, a fancy shop and classy ads.
Product, branding, labelling and packaging
A product is anything of value that is offered to satisfy a need: goods, services, even ideas. It includes its features, package, brand and after-sale service. Products are classified as consumer products (convenience, shopping, speciality; durable and non-durable) and industrial products (materials, capital items, supplies).
Branding
Giving a product a name, sign or symbol. Brand name = the part you can speak; brand mark = the symbol you can see but not speak; a trademark is a brand given legal protection.
- Benefits to marketer: helps tell products apart, supports advertising, allows a slightly higher price, makes new products easy to launch.
- Benefits to customer: easy to identify, shows quality, adds status.
- A good brand name is short, easy to say and remember, suggests the use, and can be registered.
Packaging
Designing and making the container or wrapper. Levels: primary (touches the product, like a toothpaste tube), secondary (extra layer, like the box) and transportation packaging (big cartons for shipping). Functions: product identification, product protection, easy use, and product promotion. It also matters for health (hygiene), self-service shops and brand image.
Labelling
A label is the slip or print on the package that gives information. Functions: describes the product and its contents, identifies the product or brand, grades it, helps promote it, gives legally required facts (MRP, weight, date of making and expiry, maker's name and address, batch number, warnings such as "smoking is injurious").
Price and the factors that decide it
Price is the money a customer pays for a product. It directly decides the firm's income and profit.
Factors affecting price
- Product cost: fixed, variable and semi-variable costs set the lowest price in the long run.
- Utility and demand: the buyer pays up to the use (utility) he sees; when demand is less elastic, a higher price is possible.
- Extent of competition: close rivals keep prices near theirs; a monopoly has more freedom.
- Government and legal rules: prices of essential goods (like some medicines) may be controlled.
- Pricing objectives: profit maximisation in the short run, getting market share, surviving competition, or being seen as a quality leader.
- Marketing methods used: distribution system, ad spending, packaging, credit and after-sale service all change the price.
Place: channels and physical distribution
Place (distribution) covers the activities that make the product available to buyers where and when they want it. It has two parts: channels of distribution and physical distribution.
Channels of distribution
- Direct (zero level): maker → consumer (door-to-door, own outlets, online store).
- Indirect: one level (maker → retailer → consumer), two level (maker → wholesaler → retailer → consumer), three level (maker → agent → wholesaler → retailer → consumer).
Choice of channel depends on the product (perishable, technical), the company (money, control wanted), competition, market size and location, and environment (law, economy).
Components of physical distribution
- Order processing: handling orders fast and correctly.
- Transportation: moving goods from where they are made to where they are sold.
- Warehousing: storing goods until they are needed; creates time utility.
- Inventory control: deciding how much stock to hold; too much locks money, too little loses sales.
Promotion: advertising, personal selling, sales promotion, public relations
Promotion means informing and persuading buyers to buy. The mix of tools used is the promotion mix.
Advertising
A paid, impersonal message about a product by an identified sponsor through mass media (TV, newspapers, internet, hoardings). Merits: reaches a huge audience, cheap per person, makes buyers confident, gives the message the same way every time. Limits: less forceful (no personal touch), costly overall, hard to measure results, not flexible. Objections: it may raise costs, confuse buyers, push people to buy things they do not need, and some ads are in bad taste. Supporters answer that it increases sales and so lowers cost per unit, informs buyers and helps them compare.
Personal selling
Face-to-face presentation by a salesperson to one or a few buyers. It is flexible, gives direct feedback, builds relationships, and suits costly or technical products. Good qualities of a salesperson: good personality, polite, knows the product and the buyer, good at talking, confident.
| Advertising | Personal selling |
|---|---|
| Impersonal | Face to face |
| Same message for all | Message fitted to each buyer |
| Reaches many at once | Reaches few at a time |
| Low cost per person | High cost per person |
| Feedback slow | Feedback immediate |
Sales promotion
Short-term offers that push quick buying: rebates, discounts, refunds, product combinations (buy one get one), quantity gifts, instant draws and assured gifts, lucky draws, usable benefits (coupons), full finance at 0%, samples, and contests. Merits: attracts attention, useful for a new product, gives quick results. Limits: too many offers may make the brand look cheap or in trouble.
Public relations
Planned efforts to build and keep goodwill with the public, customers, government, media and society. Tools: news releases, press conferences, events, sponsorships, speeches, annual reports, social work (CSR), websites. PR helps the firm's image, launches new products, handles bad news and wins public support.
Key formulas and definitions
- Marketing mix = Product + Price + Place + Promotion (4Ps)
- Promotion mix = Advertising + Personal selling + Sales promotion + Public relations
- Physical distribution = Order processing + Transportation + Warehousing + Inventory control
- Profit = (Price − Cost per unit) × Units sold
- Brand = brand name (spoken) + brand mark (seen); legally protected brand = trademark
- Philosophies in order: Production → Product → Selling → Marketing → Societal
Worked examples
1. A firm thinks, "Customers will buy our shoes only if our salespeople push them hard." Which philosophy is this?
The selling concept. Its focus is aggressive selling and promotion, not finding customer needs first.
2. A detergent company makes a soap that is gentle on skin and safe for rivers, and tells buyers to use less water. Which philosophy?
The societal marketing concept: it satisfies customer needs and also cares for society and nature.
3. Which element of the marketing mix is being decided? (a) Selling through kirana shops (b) Giving a 20% festival discount (c) Adding a new flavour.
(a) Place (channel). (b) Promotion (sales promotion). (c) Product.
4. A pen costs ₹12 to make. The firm sells 5,000 pens at ₹20. What is its profit?
Profit per pen = 20 − 12 = ₹8. Total = 8 × 5,000 = ₹40,000.
5. A jam jar has a paper stuck on it with ingredients, MRP, weight, date of making and best-before date. Name this and two of its functions.
It is a label. Functions: it describes the product and its contents, and it gives legally required information (MRP, dates). It also helps identify and promote the product.
6. The marketer of a ₹60,000 industrial machine must choose between TV advertising and personal selling. Which should be the main tool? Why?
Personal selling. The product is costly and technical, buyers are few, and they need demos and answers to doubts face to face. TV ads reach many people who will never buy such a machine.
Common mistakes
- Saying marketing and selling are the same. Selling is only one part of marketing.
- Mixing labelling with packaging. Packaging is the container; the label is the information on it.
- Calling a discount "advertising". Short-term offers like discounts are sales promotion.
- Thinking price depends only on cost. Demand, competition, government rules, objectives and marketing methods also matter.