Marketing Concepts and Philosophies - Marketing Management | Marketing Management - B Com PDF Download

Introduction

Marketing plays a crucial role in management and is essential for the success of business organizations. A business primarily focuses on two functions: (a) producing goods and services, and (b) making them available to potential customers. The success of an organization depends on how efficiently its products and services are delivered and how customers perceive this delivery compared to competitors.

This principle applies to all types of businesses, from large multinational companies like Sony, Unilever, and General Motors to small local shops. Both quality production and effective marketing are fundamental for creating a sustainable competitive advantage.

In this introductory unit on Marketing Management, we will explore the meaning of marketing, various marketing concepts, the evolution of marketing management philosophy, the difference between selling and marketing, and the importance of marketing in a country like India. We will also discuss some contemporary issues related to marketing.

Understanding Marketing Management

• Marketing involves predicting, creating, and fulfilling the demand for products and services through the conception, promotion, and distribution of goods and services within a social system.
• The American Marketing Association views marketing as the activities guiding the flow of goods and services from producers to consumers, focusing on products that are already made. This perspective suggests that marketing begins with the product.
• Kotler defines marketing as a societal process where individuals and groups meet their needs and wants by creating, offering, and exchanging products and services of value. It’s about continuously identifying and translating consumer needs into products and services, serving consumers through various marketing channels while facing competition.
• Mazur describes marketing as creating and delivering a societal standard of living. This broader view sees marketing as an organized system aimed at providing value to consumers. It involves developing and efficiently delivering goods and services to selected consumers, with profitability achieved through customer satisfaction.
• Marketing activities start with new product ideas and designs tailored to specific consumer needs. This comprehensive view of marketing includes various organizational activities beyond distribution. A successful marketing effort aligns with ethical business practices and benefits both society and the individual firm. The effectiveness of marketing depends on the distribution’s nature, type, and efficiency, which are influenced by the marketing environment. The marketing program is determined by the consumers identified for satisfaction through the firm’s production and marketing activities before actual production begins.
• There are several misconceptions about marketing, often arising from hearsay rather than solid research. It’s important for students to challenge these misconceptions before delving deeper into the subject. 

The American Marketing Association defines marketing as the performance of business activities that direct the flow of goods and services from producers to consumers. This definition highlights the role of marketing in guiding the flow of products, encompassing activities beyond selling.

Marketing is process-oriented, focusing on identifying consumer needs, transforming them into products or services, and delivering them to consumers. This approach ensures profitability while optimizing available resources.

Marketing Management Philosophies

Production Concept:

• The Production Concept is based on the idea that customers prefer products that are widely available and affordable.
• Managers focusing on this concept aim for high production volumes, low costs, and intensive distribution.
• This approach is effective in developing markets where market expansion is crucial for business survival.
• Companies adopting this strategy seek to benefit from economies of scale.
• However, it may lead to issues with product quality and customer relations.

Product Concept:

• The Product Concept suggests that consumers prefer products with the most attributes, such as quality, performance, and innovative features. Managers focus on developing superior products within existing product lines over time. This approach is known as the "Technology Push Model," where innovations from scientific laboratories are commercialized and introduced to consumers.
• However, there is a problem when managers fail to understand customers' needs and preferences. Often, innovations are introduced to the market before it is ready for them. Innovative products are launched without educating customers about the innovation and the potential benefits they will receive. For example, Golden Eye Technology was introduced by a television company, but the market could not perceive its benefits. Later, when the market was more receptive, LG successfully marketed the technology as a selling proposition.

Selling Concept:

• The Selling Concept suggests that customers, whether individuals or businesses, may not purchase enough of an organization's products unless they are actively persuaded to do so through selling efforts. Therefore, organizations should focus on selling and promoting products for marketing success. Consumers are often passive and need to be prompted into buying by transforming their passive needs into a buying persuasion and selling action.
• This approach is relevant in cases of unsought goods, such as life insurance and fire safety equipment, including fire extinguishers. Industries dealing with such products typically have a strong sales force. The concept is also applicable in situations of overcapacity, where the goal is to sell what is produced, regardless of whether it aligns with what the customer truly wants.
• In modern marketing, buyers are presented with a variety of choices, and customers are constantly exposed to a barrage of advertising. There is a common misconception that marketing is solely about selling. The flaw in this belief is that while a customer may be persuaded to buy a product through selling efforts, if they are dissatisfied, they are unlikely to recommend it to others. In reality, pursuing this concept often leads to business failures.

Marketing Concept:
The marketing concept emphasizes that a company's success hinges on its ability to create, deliver, and communicate a superior value proposition to its target market compared to competitors.

• Selling vs. Marketing: Theodore's perspective highlights the difference between selling and marketing. Selling focuses on the seller's need to convert a product into cash, while marketing is about satisfying the customer's needs through the product and its associated services.
• Key Elements: The marketing concept is built on four key elements: target market, needs, integrated marketing, and profitability.
• Target Market: Companies are shifting from broad market approaches to identifying specific markets where their product fits best. Understanding the needs of the target market is crucial for designing an effective marketing offer.
• Needs: Needs are inner states of felt deprivation, and identifying both explicit and implicit needs is important. Consumer research techniques are used to understand these needs. Satisfying existing customers is more cost-effective than acquiring new ones.
• Integrated Marketing: The entire organization needs to be aligned with the goal of customer satisfaction. Integration starts at the marketing department level, where key functions like product design, distribution, advertising, promotion, customer service, and marketing research should work together towards a common goal.
• Internal Marketing: Internal marketing focuses on training and equipping internal staff to serve customers better.
• Profitability: While profit is essential, it's also important to benchmark the effort and cost required to achieve profitability. Efficient marketing is key to success, and profitability is seen as a result of creating superior value and understanding customer needs better.

Societal Concept:
The Societal Concept suggests that a business should focus on understanding and fulfilling the needs, wants, and intentions of its target audience while ensuring that this is done in a way that preserves and enhances society's well-being.

• This concept combines effective marketing with the goal of bringing about social change, using communication technology and marketing strategies.

• It aims to build social and ethical considerations into marketing practices, aligning profit maximization with goals of customer satisfaction and responsible corporate citizenship.

• Social marketing, often referred to as related marketing, involves using research, product development, testing, and communication to target adopters and encourage their response.

• As awareness of the social impact of business grows, there is a shift towards making marketing practices relevant to society. This shift is necessary due to issues like resource exploitation, environmental degradation, and consumer movements.

• The societal concept extends the marketing concept by emphasizing the importance of societal well-being alongside consumer satisfaction.

Difference Between Selling and Marketing

• Selling vs Marketing: While many managers use the terms 'marketing' and 'selling' interchangeably, there is a significant difference between the two concepts. Understanding these differences is crucial for a successful marketing manager.
• Selling: Focus on Product Selling is primarily focused on the product and is often driven by the producer. It is a short-term approach aimed at achieving market share. The emphasis is on price variations to close the sale, with the objective being to sell the product to the customer as quickly as possible.
• Short-Term Goals Selling does not consider long-term planning for building a brand or gaining a competitive advantage through customer loyalty. The ultimate goal of selling is to maximize profits through sales in the short run.
• Aggressive Sales Tactics When the focus is on selling, it is assumed that the sales force's job begins after production is complete. Aggressive sales methods are used to meet this goal, often overlooking the actual needs and satisfaction of customers. Selling is about converting products into cash for the company in the short term.
• Marketing: Consumer-Centric Approach Marketing is a broader and more dynamic concept than selling. It focuses on the needs and interests of the consumer rather than the manufacturer. Marketing involves meeting and satisfying consumer needs through various activities such as pricing, promoting, and distributing products or services.
• Long-Term Focus The marketing process begins with identifying consumer needs and continues until feedback on consumer satisfaction is received. It involves a long chain of activities, including production, promotion, pricing, distribution, and selling. While profits are important, they are built over the long term.
• Creating Value Marketing is about creating value by discovering, creating, arousing, and satisfying customer needs. It views the entire business as a process of integrating these activities to benefit the consumer. Unlike selling, which focuses on getting customers to exchange cash for products, marketing is about value satisfaction.

Key Differences Between Selling and Marketing

• Focus: Selling emphasizes the product, while marketing focuses on consumer needs and wants.
• Approach: Selling involves producing a product first and then trying to sell it, whereas marketing starts with understanding customer needs and wants before deciding how to produce and deliver a product.
• Management Goals: Selling is oriented towards sales volume, while marketing is profit-oriented.
• Planning: Selling plans based on current products and markets, while marketing looks at new products and future markets.
• Focus: Selling stresses the seller's perspective, while marketing emphasizes the buyer's needs and wants.
• Business View: Selling views business as a product-oriented process, while marketing sees it as a consumer-oriented process.
• Technology: Selling focuses on existing technology and cost reduction, while marketing emphasizes innovation and superior technology to provide better value to customers.
• Departmental Integration: Selling departments work in isolation, while marketing departments work in an integrated manner with the goal of consumer satisfaction.
• Pricing: Selling determines price based on cost, while marketing sets price based on consumer perceptions, which in turn influences cost.
• Customer Role: Selling views the customer as the end of the business process, while marketing sees the customer as the link that drives the business.

Evolution of Marketing Management Philosophy

Marketing management has evolved from the prehistoric times when people lived in communities with a division of labor. As it was not possible for everyone to meet all their needs individually, a system of mutual cohabitation led to this division of labor. This eventually gave rise to the barter system, where goods and services were exchanged between parties for mutual benefit, marking the beginning of modern-day marketing.

With the growth of individual and community consumption, intermediaries emerged in the social system to facilitate trade. These intermediaries helped in the transfer of ownership between producers and consumers at different times. Initially, producers needed their output for survival and business, while consumers were not ready to own the final products immediately. Intermediaries took ownership, stored products, and distributed them to consumers at a later time, earning a profit in the process.

The industrial revolution, along with advancements in transportation and communication, expanded marketing beyond geographic borders, making it a significant economic activity.

Phases of Marketing Management

• Production Concept: In the early stages of the Industrial Revolution, producers focused on higher production because they could sell whatever they produced. This phase was characterized by the production concept, where the emphasis was on increasing production capacity.
• Product and Selling Concepts: As competition increased, producers faced challenges in selling their products, leading to the need for product improvement. This shift marked the emergence of the product concept and the selling concept, where the focus was on enhancing product quality and aggressive selling techniques.
• Marketing Concept: With growing competition, producers realized the importance of understanding consumer needs and preferences. This led to the marketing concept, where the focus shifted to producing what consumers wanted rather than just selling what was produced.
• Social Marketing Concept: As industries were expected to contribute to societal welfare, the social marketing concept emerged. This concept emphasizes producing goods and services that benefit society while making a profit, reflecting the role of businesses as corporate citizens.
• Co-existence of Concepts: In developed countries, the marketing concept is predominant. In developing countries, all five concepts coexist due to heterogeneous markets. The evolution of marketing concepts is closely linked to economic development.

Factors Contributing to the Evolution of Marketing:

• Growth of Civilization: Improvement in living standards, changing lifestyles, and technological advancements have created new wants that can only be satisfied with a variety of new goods and services.
• Globalization: The globe is now seen as a single market, with many players manufacturing and delivering products on a global scale. This has led to economies of scale and lower prices for customers. Global lifestyles and tastes have also emerged, making brands like Coca-Cola and Honda global in nature, transcending their country of origin.
• Shift from Manufacturing to Service Industry: In some developed economies, the focus has shifted from manufacturing to services. Customers now prioritize better service facilities and product support, making the quality of support services a key determinant of a company's success.

Marketing Management Process: Overview

• Marketing Analysis: It involves assessing the company’s current position in terms of market share, strengths, weaknesses, and opportunities. Tools like SWOT analysis and environmental scanning are used to identify potential marketing opportunities.
• Target Market Selection: This step involves segmenting the market into homogeneous groups and selecting one or more segments to target. It also includes positioning the product in the minds of consumers relative to competitors.
• Developing the Marketing Mix: The marketing mix consists of four elements: product, price, promotion, and physical distribution (place). These elements are blended to produce the desired response in the target market.
• Implementation and Control: This final step involves putting the marketing plan into action and monitoring its effectiveness. Adjustments may be made based on performance and changing market conditions.

1. Analyzing the Marketing Environment
Step 1: Identify Consumer Needs

• The marketing process begins by understanding and identifying consumer needs.
• Marketers need to find out what consumers want, whether these needs are new, existing but unmet, or can be satisfied in a better way.

Step 2: Analyze Marketing Opportunities

• Marketers should scan the marketing environment to identify opportunities.
• This involves looking for new needs or better ways to meet existing needs.

Step 3: Conduct Marketing Analysis

• Assess the company’s current position in the market.
• Evaluate market share, strengths, weaknesses, and potential opportunities.
• Use tools like SWOT analysis and environmental scanning techniques to gather insights.

2. Selecting Target Markets
Step 1: Segment the Market

• Divide the heterogeneous market into smaller, homogeneous segments.
• Each segment should respond similarly to a set of marketing efforts.

Step 2: Evaluate and Select Segments

• Assess each segment for its potential to generate value and sustain it over time.
• Select one or more segments to target, known as market targeting.

Step 3: Position the Product

• Determine how to position the product in relation to competitors.
• Create a unique perception of the product in consumers’ minds.

3. Developing the Marketing Mix
(i) Product

• Refers to the goods or services offered by the organization.
• Involves planning, branding, packaging, and after-sale service.
• Continuous analysis is necessary to ensure the product meets the identified needs.

(ii) Price

• Represents the amount consumers have to pay for the product.
• Pricing should reflect the product’s value and be considered reasonable by consumers.
• Factors to consider include costs, profit margins, and potential sales at different price levels.

(iii) Promotion

• Involves communicating the benefits of the product or service to target customers to persuade them to make a purchase.
• Includes advertising, selling, and sales force efforts, as well as promotional activities like discounts and competitions.

(iv) Physical Distribution

• Concerns the channels through which the product reaches the consumer.
• Involves logistical aspects like warehousing and transportation.
• Decisions need to be made regarding distribution channels, such as selling through wholesalers, retailers, or directly to consumers.
• The goal is to find the most efficient and profitable distribution method that satisfies consumer needs.

Implementation and Control

• The final stage in the marketing planning process involves putting the plan into action and monitoring its progress. This stage is crucial because without proper implementation, the marketing plan is just a theoretical exercise.
• During the implementation phase, marketing managers translate the strategy into operational plans that are achievable within a specific timeframe. This involves allocating resources, assigning tasks, and setting deadlines to ensure that the marketing goals are met.
• Marketing control is also a key component of this stage. It involves comparing the actual efforts and resources expended with the set goals to determine if the marketing strategy is on track. Feedback from the market is essential at this stage to assess whether consumers are receiving the expected level of satisfaction from the product.
• Based on this feedback, adjustments may be necessary to improve consumer satisfaction or address any deficiencies in the product offerings. The achievements are evaluated against the objectives set during the planning stage to identify any shortcomings and make necessary modifications for future efforts. The aim is to increase the efficiency of resources used and ultimately translate these efforts into profit.
• To successfully implement and control a marketing plan, it is important for the entire organization to be aligned with the marketing objectives. Marketing should not be confined to a specific department but should be integrated into the overall organizational structure. This ensures that there is a clear understanding of customer needs and a collective effort to meet those needs.
• The relative importance of the marketing department within the organization and its relationships with other departments and external players in the supply chain are also critical factors to consider. By fostering a culture of market orientation and collaboration, organizations can enhance their effectiveness in meeting customer demands and achieving marketing success.
• In summary, the implementation and control stage of the marketing planning process involves translating the strategy into actionable plans, monitoring progress, and making necessary adjustments based on feedback. It requires the involvement of the entire organization and a focus on collaboration to ensure success.

Marketing Management in Context

Phase 1: Pre-Independence Era (Before 1947)

• Market Characteristics: India was primarily a subsistent economy. The imperial government controlled output, and most consumers lacked adequate purchasing power.
• Consumer Base:. large portion of the population had limited income, with only a few salaried individuals working for the British.
• Product Availability: Most products were British-made, and ownership stakes in large enterprises were held by the British. Consumers had no choice as there were few alternatives.
• Market Dynamics: It was a seller's market focused on product orientation. Consumer welfare was not a consideration.

Phase 2: Post-Independence Era (1947 onwards)

• Initial Phase: After independence, India adopted socialistic principles with the public sector dominating large enterprises.
• Government Control: The government implemented rationing and a quota system, controlling production and market access.
• Market Conditions: The market remained a seller's market, with the seller in a dominant position due to government protection.
• Consumer Rights: Consumers had limited rights and options until the Consumer Protection Act of 1994.
• Economic Conditions: Per capita income was low, and the majority of people spent money on necessities, leading to slow market growth.
• Urban-Rural Divide: Urban areas began to grow due to large manufacturing establishments, while rural markets lagged due to lower purchasing power and lack of infrastructure.
• Emergence of Middle Class: The urban Indian market transformed with the rise of a middle class with stable incomes, leading to increased consumption and demand for new products.
• Global Awareness: By the early 1990s, both industry and consumers became aware of global standards and practices.

Phase 3: Liberalization and Global Integration (Early 1990s onwards)

• Public Sector Role: The role of the public sector as both seller and buyer diminished. Efficiency and competition became crucial for survival.
• Regulatory Changes: Abolishment of the Monopoly Restrictive Trade Practice allowed firms to grow organically and inorganically. Quota restrictions were lifted, enabling higher production capacities.
• Mergers and Acquisitions: This period saw the rise of large conglomerates and new business models in the Indian market.
• Foreign Investment: The government allowed foreign equity participation, attracting global players like Hindustan Lever, Procter and Gamble, Ford, and Honda. Joint ventures facilitated the smooth flow of foreign capital and technology.
• Financial Support: Foreign financial institutions invested in Indian industry, providing long-term funding through debt and equity.
• Legislative Reforms: The government revised outdated legislations, improving the business environment.
• Market Response: Indian companies responded by offering a variety of products and services, improving quality to global standards. Marketers began catering to diverse consumer segments across urban and rural divides.
• Technological Advancements: Innovations in distribution channels, supply chain management, and productivity enhanced market efficiency.
• Marketing Strategies: The advent of cable television and digital media expanded marketing reach, pushing companies to adopt shorter product cycles and higher quality standards.

Importance of Marketing as a Subject of Study

• Marketing plays a crucial role in the success of a business and the economy as a whole. According to Peter Drucker, marketing is central to an organization, with other activities being supportive. In a developing economy like India, marketing is not just about meeting needs but also about driving development. The success of a business is measured by its market share and return on investment in marketing.
• Marketing is important for consumers as it provides more choices, regulates prices, and helps balance income and consumption. It contributes to the economic progress of a country by fostering product innovation and improving quality of life. Marketing generates resources that are reinvested, accelerating the country’s development. Over time, the significance of marketing has been recognized by industry, government, and academia, leading to specialized study in areas such as consumer behavior, marketing of services and industrial products, and the impact of advertising and sales on consumers.
• Marketing not only brings revenue and goodwill to manufacturers and marketers but also offers consumers a variety of goods and services, facilitates income redistribution, and creates additional employment through manufacturing and trade, ultimately raising the standard of living. It addresses business management challenges such as environmental scanning, identifying marketing opportunities, formulating programs, and evaluating consumer preferences and responses. Marketing empowers consumers by providing choices and control over their purchases. An efficient marketing system ensures the availability of quality goods and services at competitive prices, creating place and possession utility. Marketing is essential for generating employment, increasing per capita income, and contributing to the overall progress of the economy. Per capita availability of essential goods is a key indicator of consumption levels and poverty in an economic system.