NCERT Textbook - Financial Market | Business Studies (BST) Class 12 - Commerce PDF Download

 Page 1


chapter 
10
Where Do Companies Do Their Business ?
In the Markets or in the Society?
It is an undisputed fact that a company’s survival 
does not depend upon its consumers alone, but a 
diverse set of stakeholders like the government, 
religious leaders, social activists, NGOs, media, 
etc. Hence, earning the satisfaction of these 
segments is also as imperative as they add to the 
power of the brand by word of mouth.
The social concern adds to the strength of the 
brand. Corporates that embraced the deepest 
social values, have been successful in building 
powerful brand, and, eventually, robust customer 
relationship. The area of corporate social justice 
fall under two broad categories. The issues such 
as the nutrition of children, child care, old-age 
homes, amelioration of hunger, offering aid to 
those affected by natural calamities, etc. needing 
instant attention with humanitarian perspective, 
comes under the first category.
The issues that contribute to making society a 
pleasant place to live in the long run, may be grouped 
under the second category. The issues which come 
under this category are health awareness and aid, 
education, environmental protection, women’s 
employment and empowerment, preventing unjust 
discriminations (on the basis of caste, community, 
religion, ethnicity, race, and sex), eradication 
of poverty through employment, preservation 
of culture, values, and ethics, contribution to 
research, etc.
Procter and Gamble’s (P&G) philosophy is that it 
should lead the industry in implementing a global 
environmental programme. P&G is one of the 
first companies in the world to actively study the 
influence of consumer products on the environment 
and introduce concentrated products, recycled 
plastic bottles, and refill packages to the industry. 
P&G contributes to sustainable development 
and addresses environmental and social issues 
connected with its products and services.
Source: Adapted from ‘Effective Executive’
Learning Objectives
After studying this chapter, 
you should be able to:
 ¾ explain the meaning of 
‘marketing’;
 ¾ distinguish between 
‘marketing’ and 
‘selling’;
 ¾ list out important 
functions of marketing;
 ¾ examine the role of 
marketing  in the 
development of an 
economy in a firm, 
to the society and to 
consumers;
 ¾ explain the elements of 
marketing-mix;
 ¾ classify products into 
different categories;
 ¾ analyse the factors 
affecting price of a 
product;
 ¾ list out the types 
of channels of 
distribution; and
 ¾ explain the major 
tools of promotion, viz. 
advertising, personal 
selling, sales promotion 
and publicity.
m arke Ting Ch_10.indd   242 10-08-2022   10:04:27
2024-25
Page 2


chapter 
10
Where Do Companies Do Their Business ?
In the Markets or in the Society?
It is an undisputed fact that a company’s survival 
does not depend upon its consumers alone, but a 
diverse set of stakeholders like the government, 
religious leaders, social activists, NGOs, media, 
etc. Hence, earning the satisfaction of these 
segments is also as imperative as they add to the 
power of the brand by word of mouth.
The social concern adds to the strength of the 
brand. Corporates that embraced the deepest 
social values, have been successful in building 
powerful brand, and, eventually, robust customer 
relationship. The area of corporate social justice 
fall under two broad categories. The issues such 
as the nutrition of children, child care, old-age 
homes, amelioration of hunger, offering aid to 
those affected by natural calamities, etc. needing 
instant attention with humanitarian perspective, 
comes under the first category.
The issues that contribute to making society a 
pleasant place to live in the long run, may be grouped 
under the second category. The issues which come 
under this category are health awareness and aid, 
education, environmental protection, women’s 
employment and empowerment, preventing unjust 
discriminations (on the basis of caste, community, 
religion, ethnicity, race, and sex), eradication 
of poverty through employment, preservation 
of culture, values, and ethics, contribution to 
research, etc.
Procter and Gamble’s (P&G) philosophy is that it 
should lead the industry in implementing a global 
environmental programme. P&G is one of the 
first companies in the world to actively study the 
influence of consumer products on the environment 
and introduce concentrated products, recycled 
plastic bottles, and refill packages to the industry. 
P&G contributes to sustainable development 
and addresses environmental and social issues 
connected with its products and services.
Source: Adapted from ‘Effective Executive’
Learning Objectives
After studying this chapter, 
you should be able to:
 ¾ explain the meaning of 
‘marketing’;
 ¾ distinguish between 
‘marketing’ and 
‘selling’;
 ¾ list out important 
functions of marketing;
 ¾ examine the role of 
marketing  in the 
development of an 
economy in a firm, 
to the society and to 
consumers;
 ¾ explain the elements of 
marketing-mix;
 ¾ classify products into 
different categories;
 ¾ analyse the factors 
affecting price of a 
product;
 ¾ list out the types 
of channels of 
distribution; and
 ¾ explain the major 
tools of promotion, viz. 
advertising, personal 
selling, sales promotion 
and publicity.
m arke Ting Ch_10.indd   242 10-08-2022   10:04:27
2024-25
MArke TING
243
The term marketing has been described 
by different people in different ways. 
Some people believe that marketing is 
same as ‘shopping’. Whenever they go 
out for shopping of certain products or 
services, they describe it as marketing. 
There are some other people who 
confuse marketing with ‘selling’ and 
feel that marketing activity starts 
after a product or service has been 
produced. Some people describe it to 
mean ‘merchandising’ or designing a 
product. All these descriptions may be 
partly correct but marketing is a much 
broader concept, which is discussed 
as follows:
Traditionally, marketing has been 
described in terms of its functions or 
activities. In this respect, marketing 
has been referred to as performance of 
business activities that direct the flow 
of goods and services from producers 
to consumers.
As we know, most of the 
manufacturing firms do not produce 
goods for their own consumption 
but for the consumption or use 
by others. Therefore, to move 
the goods and services from the 
producer to consumers, a number of 
activities, such as product designing 
or merchandising, packaging, 
warehousing, transportation, 
branding, selling, advertising and 
pricing are required. All these activities 
are referred to as marketing activities.
Thus, ‘merchandising’, ‘selling’ and 
distribution are all parts of a large 
number of activities undertaken by 
a firm, which are collectively called 
marketing.
It may be noted here that marketing 
is not merely a post- production 
activity. It includes many activities 
that are performed even before goods 
are actually produced, and continue 
even after the goods have been 
sold. For example, activities such 
as identification of customer needs, 
collection of information for developing 
the product, designing suitable product 
package and giving it a brand name are 
performed before commencement of 
the actual production. Similarly, many 
follow up activities are required for 
maintaining good customer relations 
for procuring repeat sale.
In modern times, emphasis is placed 
on describing marketing as a social 
process. It is a process whereby people 
exchange goods and services for money 
or for something of value to them. Taking 
the social perspective, Phillip kolter has 
defined marketing as, “a social process 
by which individual groups obtain what 
they need and want through creating 
offerings and freely exchanging products 
and services of value with others”.
“Business is not financial science, it’s about trading, buying and selling. It’s about 
creating a product or service so good that people will pay for it.”
— anta r oddick 
“Marketing takes a day to learn. Unfortunately it takes time to master.”
         — Philip Kotler
Ch_10.indd   243 10-08-2022   10:04:27
2024-25
Page 3


chapter 
10
Where Do Companies Do Their Business ?
In the Markets or in the Society?
It is an undisputed fact that a company’s survival 
does not depend upon its consumers alone, but a 
diverse set of stakeholders like the government, 
religious leaders, social activists, NGOs, media, 
etc. Hence, earning the satisfaction of these 
segments is also as imperative as they add to the 
power of the brand by word of mouth.
The social concern adds to the strength of the 
brand. Corporates that embraced the deepest 
social values, have been successful in building 
powerful brand, and, eventually, robust customer 
relationship. The area of corporate social justice 
fall under two broad categories. The issues such 
as the nutrition of children, child care, old-age 
homes, amelioration of hunger, offering aid to 
those affected by natural calamities, etc. needing 
instant attention with humanitarian perspective, 
comes under the first category.
The issues that contribute to making society a 
pleasant place to live in the long run, may be grouped 
under the second category. The issues which come 
under this category are health awareness and aid, 
education, environmental protection, women’s 
employment and empowerment, preventing unjust 
discriminations (on the basis of caste, community, 
religion, ethnicity, race, and sex), eradication 
of poverty through employment, preservation 
of culture, values, and ethics, contribution to 
research, etc.
Procter and Gamble’s (P&G) philosophy is that it 
should lead the industry in implementing a global 
environmental programme. P&G is one of the 
first companies in the world to actively study the 
influence of consumer products on the environment 
and introduce concentrated products, recycled 
plastic bottles, and refill packages to the industry. 
P&G contributes to sustainable development 
and addresses environmental and social issues 
connected with its products and services.
Source: Adapted from ‘Effective Executive’
Learning Objectives
After studying this chapter, 
you should be able to:
 ¾ explain the meaning of 
‘marketing’;
 ¾ distinguish between 
‘marketing’ and 
‘selling’;
 ¾ list out important 
functions of marketing;
 ¾ examine the role of 
marketing  in the 
development of an 
economy in a firm, 
to the society and to 
consumers;
 ¾ explain the elements of 
marketing-mix;
 ¾ classify products into 
different categories;
 ¾ analyse the factors 
affecting price of a 
product;
 ¾ list out the types 
of channels of 
distribution; and
 ¾ explain the major 
tools of promotion, viz. 
advertising, personal 
selling, sales promotion 
and publicity.
m arke Ting Ch_10.indd   242 10-08-2022   10:04:27
2024-25
MArke TING
243
The term marketing has been described 
by different people in different ways. 
Some people believe that marketing is 
same as ‘shopping’. Whenever they go 
out for shopping of certain products or 
services, they describe it as marketing. 
There are some other people who 
confuse marketing with ‘selling’ and 
feel that marketing activity starts 
after a product or service has been 
produced. Some people describe it to 
mean ‘merchandising’ or designing a 
product. All these descriptions may be 
partly correct but marketing is a much 
broader concept, which is discussed 
as follows:
Traditionally, marketing has been 
described in terms of its functions or 
activities. In this respect, marketing 
has been referred to as performance of 
business activities that direct the flow 
of goods and services from producers 
to consumers.
As we know, most of the 
manufacturing firms do not produce 
goods for their own consumption 
but for the consumption or use 
by others. Therefore, to move 
the goods and services from the 
producer to consumers, a number of 
activities, such as product designing 
or merchandising, packaging, 
warehousing, transportation, 
branding, selling, advertising and 
pricing are required. All these activities 
are referred to as marketing activities.
Thus, ‘merchandising’, ‘selling’ and 
distribution are all parts of a large 
number of activities undertaken by 
a firm, which are collectively called 
marketing.
It may be noted here that marketing 
is not merely a post- production 
activity. It includes many activities 
that are performed even before goods 
are actually produced, and continue 
even after the goods have been 
sold. For example, activities such 
as identification of customer needs, 
collection of information for developing 
the product, designing suitable product 
package and giving it a brand name are 
performed before commencement of 
the actual production. Similarly, many 
follow up activities are required for 
maintaining good customer relations 
for procuring repeat sale.
In modern times, emphasis is placed 
on describing marketing as a social 
process. It is a process whereby people 
exchange goods and services for money 
or for something of value to them. Taking 
the social perspective, Phillip kolter has 
defined marketing as, “a social process 
by which individual groups obtain what 
they need and want through creating 
offerings and freely exchanging products 
and services of value with others”.
“Business is not financial science, it’s about trading, buying and selling. It’s about 
creating a product or service so good that people will pay for it.”
— anta r oddick 
“Marketing takes a day to learn. Unfortunately it takes time to master.”
         — Philip Kotler
Ch_10.indd   243 10-08-2022   10:04:27
2024-25
BUSINe SS  STUDIe S
244
Understanding Market
In the traditional sense, the term ‘market’ refers to the place where buyers and sellers 
gather to enter into transactions involving the exchange of goods and services. It is 
in this sense that this term is being used in day to day language, even today. The 
other ways in which this term is being used is in the context of a product market 
(cotton market, gold or share market), geographic market (national and international 
market), type of buyers (consumer market and industrial market) and the quantity 
of goods transacted (retail market and wholesale market).
But in modern marketing sense, the term market has a broader meaning. It refers 
to a set of actual and potential buyers of a product or service. For example, when a 
fashion designer designs a new dress and offers it for exchange, all the people who 
are willing to buy and offer some value for it can be stated to be the market for that 
dress. Similarly, market for fans or bicycles or electric bulbs or shampoos refers to 
all the actual and potential buyers for these products.
Thus, marketing is a social process 
where in people interact with others, 
in order to persuade them to act in 
a particular way, say to purchase 
a product or a service, rather than 
forcing them to do so. A careful analysis 
of the definition shows the following 
important features of marketing:
1. needs and Wants: The process 
of marketing helps individuals and 
groups in obtaining what they need 
and want. Thus, the primary reason or 
motivation for people to engage in the 
process of marketing is to satisfy some 
of their needs or wants. In other words, 
the focus of the marketing process is 
on satisfaction of the needs and wants 
of individuals and organisations.
A need is a state of felt deprivation 
or feeling of being deprived of 
something. If unsatisfied, it leaves a 
person unhappy and uncomfortable. 
For example, on getting hungry, we 
become uncomfortable and start 
looking for objects that are capable of 
satisfying our hunger.
Needs are basic to human beings 
and do not pertain to a particular 
product. Wants, on the other hand, 
are culturally defined objects that are 
potential satisfiers of needs. In other 
words, human needs shaped by such 
factors as culture, personality and 
religion are called wants. A basic need 
for food, for example, may take various 
forms such as want for dosa and rice 
for a South Indian and chapatti and 
vegetables for a North Indian person.
A marketer’s job in an organisation 
is to identify needs of the target 
customers and develop products and 
services that satisfy such needs.
2. creating a Market Offering: On 
the part of the marketers, the effort 
involves creation of a ‘market offering. 
Market offering refers to a complete 
offer for a product or service, having 
given features like size, quality, taste, 
etc; at a certain price; available at a 
given outlet or location and so on. Let 
us say the offer is for a cell phone, 
available in four different versions, 
Ch_10.indd   244 10-08-2022   10:04:27
2024-25
Page 4


chapter 
10
Where Do Companies Do Their Business ?
In the Markets or in the Society?
It is an undisputed fact that a company’s survival 
does not depend upon its consumers alone, but a 
diverse set of stakeholders like the government, 
religious leaders, social activists, NGOs, media, 
etc. Hence, earning the satisfaction of these 
segments is also as imperative as they add to the 
power of the brand by word of mouth.
The social concern adds to the strength of the 
brand. Corporates that embraced the deepest 
social values, have been successful in building 
powerful brand, and, eventually, robust customer 
relationship. The area of corporate social justice 
fall under two broad categories. The issues such 
as the nutrition of children, child care, old-age 
homes, amelioration of hunger, offering aid to 
those affected by natural calamities, etc. needing 
instant attention with humanitarian perspective, 
comes under the first category.
The issues that contribute to making society a 
pleasant place to live in the long run, may be grouped 
under the second category. The issues which come 
under this category are health awareness and aid, 
education, environmental protection, women’s 
employment and empowerment, preventing unjust 
discriminations (on the basis of caste, community, 
religion, ethnicity, race, and sex), eradication 
of poverty through employment, preservation 
of culture, values, and ethics, contribution to 
research, etc.
Procter and Gamble’s (P&G) philosophy is that it 
should lead the industry in implementing a global 
environmental programme. P&G is one of the 
first companies in the world to actively study the 
influence of consumer products on the environment 
and introduce concentrated products, recycled 
plastic bottles, and refill packages to the industry. 
P&G contributes to sustainable development 
and addresses environmental and social issues 
connected with its products and services.
Source: Adapted from ‘Effective Executive’
Learning Objectives
After studying this chapter, 
you should be able to:
 ¾ explain the meaning of 
‘marketing’;
 ¾ distinguish between 
‘marketing’ and 
‘selling’;
 ¾ list out important 
functions of marketing;
 ¾ examine the role of 
marketing  in the 
development of an 
economy in a firm, 
to the society and to 
consumers;
 ¾ explain the elements of 
marketing-mix;
 ¾ classify products into 
different categories;
 ¾ analyse the factors 
affecting price of a 
product;
 ¾ list out the types 
of channels of 
distribution; and
 ¾ explain the major 
tools of promotion, viz. 
advertising, personal 
selling, sales promotion 
and publicity.
m arke Ting Ch_10.indd   242 10-08-2022   10:04:27
2024-25
MArke TING
243
The term marketing has been described 
by different people in different ways. 
Some people believe that marketing is 
same as ‘shopping’. Whenever they go 
out for shopping of certain products or 
services, they describe it as marketing. 
There are some other people who 
confuse marketing with ‘selling’ and 
feel that marketing activity starts 
after a product or service has been 
produced. Some people describe it to 
mean ‘merchandising’ or designing a 
product. All these descriptions may be 
partly correct but marketing is a much 
broader concept, which is discussed 
as follows:
Traditionally, marketing has been 
described in terms of its functions or 
activities. In this respect, marketing 
has been referred to as performance of 
business activities that direct the flow 
of goods and services from producers 
to consumers.
As we know, most of the 
manufacturing firms do not produce 
goods for their own consumption 
but for the consumption or use 
by others. Therefore, to move 
the goods and services from the 
producer to consumers, a number of 
activities, such as product designing 
or merchandising, packaging, 
warehousing, transportation, 
branding, selling, advertising and 
pricing are required. All these activities 
are referred to as marketing activities.
Thus, ‘merchandising’, ‘selling’ and 
distribution are all parts of a large 
number of activities undertaken by 
a firm, which are collectively called 
marketing.
It may be noted here that marketing 
is not merely a post- production 
activity. It includes many activities 
that are performed even before goods 
are actually produced, and continue 
even after the goods have been 
sold. For example, activities such 
as identification of customer needs, 
collection of information for developing 
the product, designing suitable product 
package and giving it a brand name are 
performed before commencement of 
the actual production. Similarly, many 
follow up activities are required for 
maintaining good customer relations 
for procuring repeat sale.
In modern times, emphasis is placed 
on describing marketing as a social 
process. It is a process whereby people 
exchange goods and services for money 
or for something of value to them. Taking 
the social perspective, Phillip kolter has 
defined marketing as, “a social process 
by which individual groups obtain what 
they need and want through creating 
offerings and freely exchanging products 
and services of value with others”.
“Business is not financial science, it’s about trading, buying and selling. It’s about 
creating a product or service so good that people will pay for it.”
— anta r oddick 
“Marketing takes a day to learn. Unfortunately it takes time to master.”
         — Philip Kotler
Ch_10.indd   243 10-08-2022   10:04:27
2024-25
BUSINe SS  STUDIe S
244
Understanding Market
In the traditional sense, the term ‘market’ refers to the place where buyers and sellers 
gather to enter into transactions involving the exchange of goods and services. It is 
in this sense that this term is being used in day to day language, even today. The 
other ways in which this term is being used is in the context of a product market 
(cotton market, gold or share market), geographic market (national and international 
market), type of buyers (consumer market and industrial market) and the quantity 
of goods transacted (retail market and wholesale market).
But in modern marketing sense, the term market has a broader meaning. It refers 
to a set of actual and potential buyers of a product or service. For example, when a 
fashion designer designs a new dress and offers it for exchange, all the people who 
are willing to buy and offer some value for it can be stated to be the market for that 
dress. Similarly, market for fans or bicycles or electric bulbs or shampoos refers to 
all the actual and potential buyers for these products.
Thus, marketing is a social process 
where in people interact with others, 
in order to persuade them to act in 
a particular way, say to purchase 
a product or a service, rather than 
forcing them to do so. A careful analysis 
of the definition shows the following 
important features of marketing:
1. needs and Wants: The process 
of marketing helps individuals and 
groups in obtaining what they need 
and want. Thus, the primary reason or 
motivation for people to engage in the 
process of marketing is to satisfy some 
of their needs or wants. In other words, 
the focus of the marketing process is 
on satisfaction of the needs and wants 
of individuals and organisations.
A need is a state of felt deprivation 
or feeling of being deprived of 
something. If unsatisfied, it leaves a 
person unhappy and uncomfortable. 
For example, on getting hungry, we 
become uncomfortable and start 
looking for objects that are capable of 
satisfying our hunger.
Needs are basic to human beings 
and do not pertain to a particular 
product. Wants, on the other hand, 
are culturally defined objects that are 
potential satisfiers of needs. In other 
words, human needs shaped by such 
factors as culture, personality and 
religion are called wants. A basic need 
for food, for example, may take various 
forms such as want for dosa and rice 
for a South Indian and chapatti and 
vegetables for a North Indian person.
A marketer’s job in an organisation 
is to identify needs of the target 
customers and develop products and 
services that satisfy such needs.
2. creating a Market Offering: On 
the part of the marketers, the effort 
involves creation of a ‘market offering. 
Market offering refers to a complete 
offer for a product or service, having 
given features like size, quality, taste, 
etc; at a certain price; available at a 
given outlet or location and so on. Let 
us say the offer is for a cell phone, 
available in four different versions, 
Ch_10.indd   244 10-08-2022   10:04:27
2024-25
MArke TING
245
on the basis of certain features such 
as size of memory, television viewing, 
internet, camera, etc., for a given price, 
say between ` 5,000 and ` 20,000 
(depending on the model selected), 
available for sale at say firm’s exclusive 
shops in and around all metropolitan 
cities in the country. A good ‘market 
offer’ is the one which is developed after 
analysing the needs and preferences of 
the potential buyers.
3. customer value:  The process 
of marketing facilitates exchange of 
products and services between the 
buyers and the sellers. The buyers, 
however, make buying decisions on 
their perceptions of the value of the 
product or service in satisfying their 
need, in relation to its cost. A product 
will be purchased only if it is perceived 
to be giving greatest benefit or value 
for the money. The job of a marketer, 
therefore, is to add to the value of the 
product so that the customers prefer it 
in relation to the competing products 
and decide to purchase it.
4. e xchange Mechanism: The process 
of marketing works through the 
exchange mechanism. The individuals 
(buyers and sellers) obtain what they 
need and want through the process of 
exchange. In other words, the process 
of marketing involves exchange of 
products and services for money or 
something considered valuable by  
the people.
exchange refers to the process 
through which two or more parties 
come together to obtain the desired 
product or service from someone, 
offering the same by giving something 
in return. For example, a person 
feeling hungry may get food by offering 
to give money or some other product 
or service in return to someone who 
is willing to accept the same for food.
In the modern world, goods are 
produced at different places and are 
distributed over a wide geographical 
area through various middlemen, 
involving exchanges at different levels 
of distribution. e xchange is, therefore, 
referred to as the essence of marketing. 
For any exchange to take place, it is 
important that the following conditions 
are satisfied:
(i) Involvement of at least two parties 
viz., the buyer and the seller.
(ii) each party should be capable 
of offering something of value to 
the other. For example, the seller 
offers a product and the buyer, 
money.
(iii) e ach party should have the ability   
to communicate and deliver the 
product or service. No exchange 
can take place if the buyers and 
sellers are not able to communicate 
with each other or if they can not 
deliver something of value to  
the other.
(iv) e ach party should have freedom to 
accept or reject other party’s offer.
(v) The parties should be willing to 
enter into transaction with each 
other. Thus, the acceptance or 
rejection of the offer takes place on 
voluntary basis rather than on the 
bases of any compulsion.
Ch_10.indd   245 10-08-2022   10:04:27
2024-25
Page 5


chapter 
10
Where Do Companies Do Their Business ?
In the Markets or in the Society?
It is an undisputed fact that a company’s survival 
does not depend upon its consumers alone, but a 
diverse set of stakeholders like the government, 
religious leaders, social activists, NGOs, media, 
etc. Hence, earning the satisfaction of these 
segments is also as imperative as they add to the 
power of the brand by word of mouth.
The social concern adds to the strength of the 
brand. Corporates that embraced the deepest 
social values, have been successful in building 
powerful brand, and, eventually, robust customer 
relationship. The area of corporate social justice 
fall under two broad categories. The issues such 
as the nutrition of children, child care, old-age 
homes, amelioration of hunger, offering aid to 
those affected by natural calamities, etc. needing 
instant attention with humanitarian perspective, 
comes under the first category.
The issues that contribute to making society a 
pleasant place to live in the long run, may be grouped 
under the second category. The issues which come 
under this category are health awareness and aid, 
education, environmental protection, women’s 
employment and empowerment, preventing unjust 
discriminations (on the basis of caste, community, 
religion, ethnicity, race, and sex), eradication 
of poverty through employment, preservation 
of culture, values, and ethics, contribution to 
research, etc.
Procter and Gamble’s (P&G) philosophy is that it 
should lead the industry in implementing a global 
environmental programme. P&G is one of the 
first companies in the world to actively study the 
influence of consumer products on the environment 
and introduce concentrated products, recycled 
plastic bottles, and refill packages to the industry. 
P&G contributes to sustainable development 
and addresses environmental and social issues 
connected with its products and services.
Source: Adapted from ‘Effective Executive’
Learning Objectives
After studying this chapter, 
you should be able to:
 ¾ explain the meaning of 
‘marketing’;
 ¾ distinguish between 
‘marketing’ and 
‘selling’;
 ¾ list out important 
functions of marketing;
 ¾ examine the role of 
marketing  in the 
development of an 
economy in a firm, 
to the society and to 
consumers;
 ¾ explain the elements of 
marketing-mix;
 ¾ classify products into 
different categories;
 ¾ analyse the factors 
affecting price of a 
product;
 ¾ list out the types 
of channels of 
distribution; and
 ¾ explain the major 
tools of promotion, viz. 
advertising, personal 
selling, sales promotion 
and publicity.
m arke Ting Ch_10.indd   242 10-08-2022   10:04:27
2024-25
MArke TING
243
The term marketing has been described 
by different people in different ways. 
Some people believe that marketing is 
same as ‘shopping’. Whenever they go 
out for shopping of certain products or 
services, they describe it as marketing. 
There are some other people who 
confuse marketing with ‘selling’ and 
feel that marketing activity starts 
after a product or service has been 
produced. Some people describe it to 
mean ‘merchandising’ or designing a 
product. All these descriptions may be 
partly correct but marketing is a much 
broader concept, which is discussed 
as follows:
Traditionally, marketing has been 
described in terms of its functions or 
activities. In this respect, marketing 
has been referred to as performance of 
business activities that direct the flow 
of goods and services from producers 
to consumers.
As we know, most of the 
manufacturing firms do not produce 
goods for their own consumption 
but for the consumption or use 
by others. Therefore, to move 
the goods and services from the 
producer to consumers, a number of 
activities, such as product designing 
or merchandising, packaging, 
warehousing, transportation, 
branding, selling, advertising and 
pricing are required. All these activities 
are referred to as marketing activities.
Thus, ‘merchandising’, ‘selling’ and 
distribution are all parts of a large 
number of activities undertaken by 
a firm, which are collectively called 
marketing.
It may be noted here that marketing 
is not merely a post- production 
activity. It includes many activities 
that are performed even before goods 
are actually produced, and continue 
even after the goods have been 
sold. For example, activities such 
as identification of customer needs, 
collection of information for developing 
the product, designing suitable product 
package and giving it a brand name are 
performed before commencement of 
the actual production. Similarly, many 
follow up activities are required for 
maintaining good customer relations 
for procuring repeat sale.
In modern times, emphasis is placed 
on describing marketing as a social 
process. It is a process whereby people 
exchange goods and services for money 
or for something of value to them. Taking 
the social perspective, Phillip kolter has 
defined marketing as, “a social process 
by which individual groups obtain what 
they need and want through creating 
offerings and freely exchanging products 
and services of value with others”.
“Business is not financial science, it’s about trading, buying and selling. It’s about 
creating a product or service so good that people will pay for it.”
— anta r oddick 
“Marketing takes a day to learn. Unfortunately it takes time to master.”
         — Philip Kotler
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Understanding Market
In the traditional sense, the term ‘market’ refers to the place where buyers and sellers 
gather to enter into transactions involving the exchange of goods and services. It is 
in this sense that this term is being used in day to day language, even today. The 
other ways in which this term is being used is in the context of a product market 
(cotton market, gold or share market), geographic market (national and international 
market), type of buyers (consumer market and industrial market) and the quantity 
of goods transacted (retail market and wholesale market).
But in modern marketing sense, the term market has a broader meaning. It refers 
to a set of actual and potential buyers of a product or service. For example, when a 
fashion designer designs a new dress and offers it for exchange, all the people who 
are willing to buy and offer some value for it can be stated to be the market for that 
dress. Similarly, market for fans or bicycles or electric bulbs or shampoos refers to 
all the actual and potential buyers for these products.
Thus, marketing is a social process 
where in people interact with others, 
in order to persuade them to act in 
a particular way, say to purchase 
a product or a service, rather than 
forcing them to do so. A careful analysis 
of the definition shows the following 
important features of marketing:
1. needs and Wants: The process 
of marketing helps individuals and 
groups in obtaining what they need 
and want. Thus, the primary reason or 
motivation for people to engage in the 
process of marketing is to satisfy some 
of their needs or wants. In other words, 
the focus of the marketing process is 
on satisfaction of the needs and wants 
of individuals and organisations.
A need is a state of felt deprivation 
or feeling of being deprived of 
something. If unsatisfied, it leaves a 
person unhappy and uncomfortable. 
For example, on getting hungry, we 
become uncomfortable and start 
looking for objects that are capable of 
satisfying our hunger.
Needs are basic to human beings 
and do not pertain to a particular 
product. Wants, on the other hand, 
are culturally defined objects that are 
potential satisfiers of needs. In other 
words, human needs shaped by such 
factors as culture, personality and 
religion are called wants. A basic need 
for food, for example, may take various 
forms such as want for dosa and rice 
for a South Indian and chapatti and 
vegetables for a North Indian person.
A marketer’s job in an organisation 
is to identify needs of the target 
customers and develop products and 
services that satisfy such needs.
2. creating a Market Offering: On 
the part of the marketers, the effort 
involves creation of a ‘market offering. 
Market offering refers to a complete 
offer for a product or service, having 
given features like size, quality, taste, 
etc; at a certain price; available at a 
given outlet or location and so on. Let 
us say the offer is for a cell phone, 
available in four different versions, 
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on the basis of certain features such 
as size of memory, television viewing, 
internet, camera, etc., for a given price, 
say between ` 5,000 and ` 20,000 
(depending on the model selected), 
available for sale at say firm’s exclusive 
shops in and around all metropolitan 
cities in the country. A good ‘market 
offer’ is the one which is developed after 
analysing the needs and preferences of 
the potential buyers.
3. customer value:  The process 
of marketing facilitates exchange of 
products and services between the 
buyers and the sellers. The buyers, 
however, make buying decisions on 
their perceptions of the value of the 
product or service in satisfying their 
need, in relation to its cost. A product 
will be purchased only if it is perceived 
to be giving greatest benefit or value 
for the money. The job of a marketer, 
therefore, is to add to the value of the 
product so that the customers prefer it 
in relation to the competing products 
and decide to purchase it.
4. e xchange Mechanism: The process 
of marketing works through the 
exchange mechanism. The individuals 
(buyers and sellers) obtain what they 
need and want through the process of 
exchange. In other words, the process 
of marketing involves exchange of 
products and services for money or 
something considered valuable by  
the people.
exchange refers to the process 
through which two or more parties 
come together to obtain the desired 
product or service from someone, 
offering the same by giving something 
in return. For example, a person 
feeling hungry may get food by offering 
to give money or some other product 
or service in return to someone who 
is willing to accept the same for food.
In the modern world, goods are 
produced at different places and are 
distributed over a wide geographical 
area through various middlemen, 
involving exchanges at different levels 
of distribution. e xchange is, therefore, 
referred to as the essence of marketing. 
For any exchange to take place, it is 
important that the following conditions 
are satisfied:
(i) Involvement of at least two parties 
viz., the buyer and the seller.
(ii) each party should be capable 
of offering something of value to 
the other. For example, the seller 
offers a product and the buyer, 
money.
(iii) e ach party should have the ability   
to communicate and deliver the 
product or service. No exchange 
can take place if the buyers and 
sellers are not able to communicate 
with each other or if they can not 
deliver something of value to  
the other.
(iv) e ach party should have freedom to 
accept or reject other party’s offer.
(v) The parties should be willing to 
enter into transaction with each 
other. Thus, the acceptance or 
rejection of the offer takes place on 
voluntary basis rather than on the 
bases of any compulsion.
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The points listed above are the 
necessary conditions for an exchange 
to take place. Whether the exchange 
actually takes place or not depends on 
the suitability of the act of exchange to 
both the parties, whether it makes the 
parties better off or at least not worse off.
Another important point to be 
noted is that Marketing is not merely a 
business phenomena or confined only 
to business organisations. Marketing 
activities are equally relevant to non- 
profit organisations such as hospitals, 
schools, sports clubs and social and 
religious organisations. It helps these 
organisations in achieving their goals 
such as spreading the message of 
family planning, improving the literacy 
standards of people and providing 
medication to the sick.
m arke Ting m anagemen T
Marketing management means 
management of the marketing function. 
In other words, marketing management 
refers to planning, organising, directing 
and control of the activities which 
facilitate exchange of goods and services 
between producers and consumers or 
users of products and services. Thus 
the focus of marketing management 
is on achieving desired exchange 
outcomes with the target markets. 
Taking a management perspective, the 
term marketing has been defined as 
“the process of planning and executing 
What can be Marketed?
Physical Products : DVD player, Motor cycle, ipods, Cell phone, Footwear, 
Television, r efrigerator.
services : Insurance, Health Care, Business Process Outsourcing, 
Security, easy Bill service, Financial Services 
(Investment),Computer e ducation, Online Trading.
ideas : Polio Vaccination, Helpage, Family Planning, Donation of 
Blood (r ed cross), Donation of money on Flag Day (National 
Foundation for Communal Harmony).
Persons : For e lection of Candidates for Certain Posts.
Place : ‘Visit Agra – ‘City of Love’, ‘Udaipur – ‘The City of Lakes’, 
‘Mysore – The City of Gardens’, ‘When Orisa celebrates, 
e leven the God Join In’. 
events : Sports events (say Olympics, Cricket series), diwali mela, 
fashion show, music concert, film festival, elephant race 
(kerala Tourism).
information : Production packaging and distribution of information by 
organisations such as by universities, research organisation, 
providing information as market information (marketing 
research agencies), technology information.
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