Marketing and Marketing Mix - Study Notes
Lesson summary
Marketing covers all activities in markets that bring about exchanges to satisfy human needs and wants. It is the performance of activities that move goods and services from producer to ultimate user. Selling only puts goods into buyers' hands for a price, but marketing is much wider than selling. Marketing has developed by evolution rather than revolution; it is as old as the Himalayas and one of the oldest professions. Its emphasis has shifted from "exchange" to "satisfaction of human wants".
14.02 Evolution of marketing
- Barter system: goods exchanged against goods, without money.
- Production orientation: mass production for profit; little care for customers.
- Sales orientation: selling became dominant, with no effort to satisfy consumer needs.
- Marketing orientation: customers mattered only as a means of disposing of goods; competition stiff; personal selling and large scale sales promotion used to boost sales.
- Consumer orientation: only products that satisfy consumers' tastes, preferences and expectations are brought to market.
- Management orientation: marketing takes a managerial role, co-ordinating all business activities to plan, promote and distribute want-satisfying products.
14.03 Marketing concept
- Make what you can sell, but do not try to sell what you can make.
- First create a customer, then create products.
- Love your customers and not the products.
- The customer is supreme or king.
- Customer's preferences shape your decisions.
14.04 Definition of marketing
"Marketing is concerned with the people and the activities involved in the flow of goods and services from the producer to the consumer." - American Marketing Association.
14.05 Objectives of marketing
Baker and Anshen: "The end of all the marketing activities is the satisfaction of human wants." Profit is the reward for satisfying wants. Objectives include intelligent application of modern marketing policies, developing the marketing field, framing guiding policies, solving marketing problems, finding sources of market information, reviving marketing functions when shortcomings are found and taking appropriate action.
14.06 Importance of marketing
| To society | To individual firms |
|---|---|
| Connecting link between consumer and producer | Generates revenue |
| Raises living standards and national income | Marketing section informs top management on production decisions |
| Increases employment; creates modern cultivators | Marketing and innovation are the two basic functions of all businesses |
| Moves surplus to deficit areas through better transport | Develops business and creates employment |
| Stability and rapid development in developing countries; lower marketing cost benefits society |
14.07 Functions of marketing
G.B. Giles - seven functions: marketing research, marketing planning, product development, advertisement and sales promotion, selling and distribution, after sale services, public relations.
Clark and Clark - three types:
| Type | Functions |
|---|---|
| Functions of exchange | Buying and assembling; selling |
| Functions of physical supply | Transportation (place utility; land, water, air); storage and warehousing (warehouses create time utility) |
| Facilitating functions | Financing (long, medium, short term), risk bearing, market information, standardization, grading, branding, packing, pricing |
Risks: time, place, competition, change in demand, natural calamities, human and political risks.
- Market information (Clark and Clark): all the facts, estimates, opinions and other information used in marketing of goods.
- Standardization: standards based on intrinsic qualities such as size, colour, taste and appearance.
- Grading: classification of standardized products into well defined classes.
- Branding: a name or symbol that differentiates a product from competitors.
- Packing: wrapping and crating goods to protect against breakage, leakage, spoilage and damage.
- Pricing: perhaps the most important decision; success or failure of the enterprise depends on it.
14.08 Marketing mix
Jerome McCarthy: "Marketing mix is a pack of four sets of variables namely product variable, price variable, promotion variable and place variable." It is the marketing programme offered by a firm to its target consumers to earn profits by satisfying their wants.
14.09 Elements of marketing mix
- Product: the main element; without a product there is no marketing.
- Price: value of the product expressed in money.
- Place (physical distribution): moves products to the place of consumption at the right time.
- Promotion: conveys features and benefits to potential consumers. Advertisement media: internet, television, radio, print, newspaper, billboard, magazine.
14.10 Marketing mix matrix
Marketing decisions fall into four controllable categories (4P): product, place, price and promotion. The modern marketing mix adds people, process, programme and performance.