NCERT Textbook - Marketing Management Commerce Notes | EduRev

Business Studies (BST) Class 12

Created by: Nipuns Institute

Commerce : NCERT Textbook - Marketing Management Commerce Notes | EduRev

 Page 1


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Ø explain the meaning of
‘marketing’;
Ø distinguish between ‘marketing’
and ‘selling’;
Ø list out important functions of
marketing;
Ø examine the role of marketing in
the development of an economy
in a firm, to the society and to
consumers;
Ø explain the elements of
marketing-mix;
Ø classify products into different
categories;
Ø analyse the factors affecting
price of a product;
Ø list out the types of channels of
distribution; and
Ø explain the major tools of
promotion, viz. advertising,
personal selling, sales
promotion and publicity.
CHAPTER
11
M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
W W W W WHERE HERE HERE HERE HERE     DO DO DO DO DO C C C C COMPANIES OMPANIES OMPANIES OMPANIES OMPANIES     DO DO DO DO DO     THEIR THEIR THEIR THEIR THEIR
B B B B BUSINESS USINESS USINESS USINESS USINESS? ? ? ? ?
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.
2015-16(21/01/2015)
Page 2


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Ø explain the meaning of
‘marketing’;
Ø distinguish between ‘marketing’
and ‘selling’;
Ø list out important functions of
marketing;
Ø examine the role of marketing in
the development of an economy
in a firm, to the society and to
consumers;
Ø explain the elements of
marketing-mix;
Ø classify products into different
categories;
Ø analyse the factors affecting
price of a product;
Ø list out the types of channels of
distribution; and
Ø explain the major tools of
promotion, viz. advertising,
personal selling, sales
promotion and publicity.
CHAPTER
11
M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
W W W W WHERE HERE HERE HERE HERE     DO DO DO DO DO C C C C COMPANIES OMPANIES OMPANIES OMPANIES OMPANIES     DO DO DO DO DO     THEIR THEIR THEIR THEIR THEIR
B B B B BUSINESS USINESS USINESS USINESS USINESS? ? ? ? ?
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.
2015-16(21/01/2015)
MARKETING
297
Let us consider a typical day in our life.
Right from the time we get up in the
morning to the time we go to bed, we
use number of products to satisfy our
different needs. Beginning with the
breakfast, we take such items as bread,
butter, milk, and rice, to satisfy our
hunger; use the services of a bus or an
auto or a cycle to reach to our school
or place of work; read books, magazines
and newspapers, to keep ourselves
informed and acquire knowledge; use
computers, cell phone, television and
other gadgets for communication/
entertainment; and purchase many
other products like gifts, shoes,
clothing, furniture, etc., from market
to satisfy our different needs.
Who makes these products and
why? These products are manufactured
and marketed by different firms. For
example, Lifebouy soap, Closeup
toothpaste, Surf detergent powder are
manufactured by Hindustan Lever;
Ariel detergent powder by Procter and
Gamble, Dairy Milk Chocolate by
Nestle, Atlas Cycles by Atlas cycle
company, Kwality Ice-creams by
Kwality Walls, LG Televisions by LG
Electronics and so on. These firms are
called marketers. These firms
undertake various activities to
stimulate the demand for their
products and earn profit by satisfying
customer’s needs and wants. People
purchase products because these
satisfy some of their needs.
Number of activities are performed
by the marketers to facilitate exchange
of goods and services between
producers and the users of such
products. These activities are referred
to as marketing activities.
For a proper understanding of
marketing, number of questions need
to be answered. These include: What
do we mean by a market? What can be
marketed? Is it products or services or
something more? Who is a marketer?
What is marketing management?
These points have been taken up for
discussion in the following sections.
Infosys Technologies, the leading software consulting service provider, has been
certified ISO 14001, compliant by Det Norske Veritas for its development centers in
Pune, Chennai, Bangalore, Bhubaneshwar, Hyderabad, Mangalore, Mohali, and
Mysore, for its ‘Ozone Initiative’. Through this initiative, Infosys has committed for
continual improvement.
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. The overall packaging per case has been reduced by an average of
27% and a reduction of 37% in air, waste, and water emissions has been achieved
consistently since 1990. P&G contributes to sustainable development and addresses
environmental and social issues connected with its products and services.
Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006
2015-16(21/01/2015)
Page 3


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Ø explain the meaning of
‘marketing’;
Ø distinguish between ‘marketing’
and ‘selling’;
Ø list out important functions of
marketing;
Ø examine the role of marketing in
the development of an economy
in a firm, to the society and to
consumers;
Ø explain the elements of
marketing-mix;
Ø classify products into different
categories;
Ø analyse the factors affecting
price of a product;
Ø list out the types of channels of
distribution; and
Ø explain the major tools of
promotion, viz. advertising,
personal selling, sales
promotion and publicity.
CHAPTER
11
M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
W W W W WHERE HERE HERE HERE HERE     DO DO DO DO DO C C C C COMPANIES OMPANIES OMPANIES OMPANIES OMPANIES     DO DO DO DO DO     THEIR THEIR THEIR THEIR THEIR
B B B B BUSINESS USINESS USINESS USINESS USINESS? ? ? ? ?
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.
2015-16(21/01/2015)
MARKETING
297
Let us consider a typical day in our life.
Right from the time we get up in the
morning to the time we go to bed, we
use number of products to satisfy our
different needs. Beginning with the
breakfast, we take such items as bread,
butter, milk, and rice, to satisfy our
hunger; use the services of a bus or an
auto or a cycle to reach to our school
or place of work; read books, magazines
and newspapers, to keep ourselves
informed and acquire knowledge; use
computers, cell phone, television and
other gadgets for communication/
entertainment; and purchase many
other products like gifts, shoes,
clothing, furniture, etc., from market
to satisfy our different needs.
Who makes these products and
why? These products are manufactured
and marketed by different firms. For
example, Lifebouy soap, Closeup
toothpaste, Surf detergent powder are
manufactured by Hindustan Lever;
Ariel detergent powder by Procter and
Gamble, Dairy Milk Chocolate by
Nestle, Atlas Cycles by Atlas cycle
company, Kwality Ice-creams by
Kwality Walls, LG Televisions by LG
Electronics and so on. These firms are
called marketers. These firms
undertake various activities to
stimulate the demand for their
products and earn profit by satisfying
customer’s needs and wants. People
purchase products because these
satisfy some of their needs.
Number of activities are performed
by the marketers to facilitate exchange
of goods and services between
producers and the users of such
products. These activities are referred
to as marketing activities.
For a proper understanding of
marketing, number of questions need
to be answered. These include: What
do we mean by a market? What can be
marketed? Is it products or services or
something more? Who is a marketer?
What is marketing management?
These points have been taken up for
discussion in the following sections.
Infosys Technologies, the leading software consulting service provider, has been
certified ISO 14001, compliant by Det Norske Veritas for its development centers in
Pune, Chennai, Bangalore, Bhubaneshwar, Hyderabad, Mangalore, Mohali, and
Mysore, for its ‘Ozone Initiative’. Through this initiative, Infosys has committed for
continual improvement.
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. The overall packaging per case has been reduced by an average of
27% and a reduction of 37% in air, waste, and water emissions has been achieved
consistently since 1990. P&G contributes to sustainable development and addresses
environmental and social issues connected with its products and services.
Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006
2015-16(21/01/2015)
BUSINESS STUDIES
298
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS     A A A A A M M M M MARKET ARKET ARKET ARKET ARKET
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.
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
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,
“ “ “ “ “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 Roddick — Anta Roddick — Anta Roddick — Anta Roddick — Anta Roddick
“ “ “ “ “Marketing takes a day to learn. Unfortunately it takes time to master.” ” ” ” ”
— Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler
2015-16(21/01/2015)
Page 4


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Ø explain the meaning of
‘marketing’;
Ø distinguish between ‘marketing’
and ‘selling’;
Ø list out important functions of
marketing;
Ø examine the role of marketing in
the development of an economy
in a firm, to the society and to
consumers;
Ø explain the elements of
marketing-mix;
Ø classify products into different
categories;
Ø analyse the factors affecting
price of a product;
Ø list out the types of channels of
distribution; and
Ø explain the major tools of
promotion, viz. advertising,
personal selling, sales
promotion and publicity.
CHAPTER
11
M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
W W W W WHERE HERE HERE HERE HERE     DO DO DO DO DO C C C C COMPANIES OMPANIES OMPANIES OMPANIES OMPANIES     DO DO DO DO DO     THEIR THEIR THEIR THEIR THEIR
B B B B BUSINESS USINESS USINESS USINESS USINESS? ? ? ? ?
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.
2015-16(21/01/2015)
MARKETING
297
Let us consider a typical day in our life.
Right from the time we get up in the
morning to the time we go to bed, we
use number of products to satisfy our
different needs. Beginning with the
breakfast, we take such items as bread,
butter, milk, and rice, to satisfy our
hunger; use the services of a bus or an
auto or a cycle to reach to our school
or place of work; read books, magazines
and newspapers, to keep ourselves
informed and acquire knowledge; use
computers, cell phone, television and
other gadgets for communication/
entertainment; and purchase many
other products like gifts, shoes,
clothing, furniture, etc., from market
to satisfy our different needs.
Who makes these products and
why? These products are manufactured
and marketed by different firms. For
example, Lifebouy soap, Closeup
toothpaste, Surf detergent powder are
manufactured by Hindustan Lever;
Ariel detergent powder by Procter and
Gamble, Dairy Milk Chocolate by
Nestle, Atlas Cycles by Atlas cycle
company, Kwality Ice-creams by
Kwality Walls, LG Televisions by LG
Electronics and so on. These firms are
called marketers. These firms
undertake various activities to
stimulate the demand for their
products and earn profit by satisfying
customer’s needs and wants. People
purchase products because these
satisfy some of their needs.
Number of activities are performed
by the marketers to facilitate exchange
of goods and services between
producers and the users of such
products. These activities are referred
to as marketing activities.
For a proper understanding of
marketing, number of questions need
to be answered. These include: What
do we mean by a market? What can be
marketed? Is it products or services or
something more? Who is a marketer?
What is marketing management?
These points have been taken up for
discussion in the following sections.
Infosys Technologies, the leading software consulting service provider, has been
certified ISO 14001, compliant by Det Norske Veritas for its development centers in
Pune, Chennai, Bangalore, Bhubaneshwar, Hyderabad, Mangalore, Mohali, and
Mysore, for its ‘Ozone Initiative’. Through this initiative, Infosys has committed for
continual improvement.
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. The overall packaging per case has been reduced by an average of
27% and a reduction of 37% in air, waste, and water emissions has been achieved
consistently since 1990. P&G contributes to sustainable development and addresses
environmental and social issues connected with its products and services.
Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006
2015-16(21/01/2015)
BUSINESS STUDIES
298
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS     A A A A A M M M M MARKET ARKET ARKET ARKET ARKET
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.
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
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,
“ “ “ “ “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 Roddick — Anta Roddick — Anta Roddick — Anta Roddick — Anta Roddick
“ “ “ “ “Marketing takes a day to learn. Unfortunately it takes time to master.” ” ” ” ”
— Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler
2015-16(21/01/2015)
MARKETING
299
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”.
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. 1. 1. 1. 1. Need Need Need Need Needs s s s s and Want and Want and Want and Want and Wants s s s s: : : : : 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.
2015-16(21/01/2015)
Page 5


LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES LEARNING OBJECTIVES
After studying this chapter, you
should be able to:
Ø explain the meaning of
‘marketing’;
Ø distinguish between ‘marketing’
and ‘selling’;
Ø list out important functions of
marketing;
Ø examine the role of marketing in
the development of an economy
in a firm, to the society and to
consumers;
Ø explain the elements of
marketing-mix;
Ø classify products into different
categories;
Ø analyse the factors affecting
price of a product;
Ø list out the types of channels of
distribution; and
Ø explain the major tools of
promotion, viz. advertising,
personal selling, sales
promotion and publicity.
CHAPTER
11
M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
W W W W WHERE HERE HERE HERE HERE     DO DO DO DO DO C C C C COMPANIES OMPANIES OMPANIES OMPANIES OMPANIES     DO DO DO DO DO     THEIR THEIR THEIR THEIR THEIR
B B B B BUSINESS USINESS USINESS USINESS USINESS? ? ? ? ?
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.
2015-16(21/01/2015)
MARKETING
297
Let us consider a typical day in our life.
Right from the time we get up in the
morning to the time we go to bed, we
use number of products to satisfy our
different needs. Beginning with the
breakfast, we take such items as bread,
butter, milk, and rice, to satisfy our
hunger; use the services of a bus or an
auto or a cycle to reach to our school
or place of work; read books, magazines
and newspapers, to keep ourselves
informed and acquire knowledge; use
computers, cell phone, television and
other gadgets for communication/
entertainment; and purchase many
other products like gifts, shoes,
clothing, furniture, etc., from market
to satisfy our different needs.
Who makes these products and
why? These products are manufactured
and marketed by different firms. For
example, Lifebouy soap, Closeup
toothpaste, Surf detergent powder are
manufactured by Hindustan Lever;
Ariel detergent powder by Procter and
Gamble, Dairy Milk Chocolate by
Nestle, Atlas Cycles by Atlas cycle
company, Kwality Ice-creams by
Kwality Walls, LG Televisions by LG
Electronics and so on. These firms are
called marketers. These firms
undertake various activities to
stimulate the demand for their
products and earn profit by satisfying
customer’s needs and wants. People
purchase products because these
satisfy some of their needs.
Number of activities are performed
by the marketers to facilitate exchange
of goods and services between
producers and the users of such
products. These activities are referred
to as marketing activities.
For a proper understanding of
marketing, number of questions need
to be answered. These include: What
do we mean by a market? What can be
marketed? Is it products or services or
something more? Who is a marketer?
What is marketing management?
These points have been taken up for
discussion in the following sections.
Infosys Technologies, the leading software consulting service provider, has been
certified ISO 14001, compliant by Det Norske Veritas for its development centers in
Pune, Chennai, Bangalore, Bhubaneshwar, Hyderabad, Mangalore, Mohali, and
Mysore, for its ‘Ozone Initiative’. Through this initiative, Infosys has committed for
continual improvement.
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. The overall packaging per case has been reduced by an average of
27% and a reduction of 37% in air, waste, and water emissions has been achieved
consistently since 1990. P&G contributes to sustainable development and addresses
environmental and social issues connected with its products and services.
Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006 Source: Adapted from ‘Effective Executive’, Feb. 2006
2015-16(21/01/2015)
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298
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS     A A A A A M M M M MARKET ARKET ARKET ARKET ARKET
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.
W W W W WHAT HAT HAT HAT HAT     IS IS IS IS IS M M M M MARKETING ARKETING ARKETING ARKETING ARKETING
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,
“ “ “ “ “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 Roddick — Anta Roddick — Anta Roddick — Anta Roddick — Anta Roddick
“ “ “ “ “Marketing takes a day to learn. Unfortunately it takes time to master.” ” ” ” ”
— Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler — Philip Kotler
2015-16(21/01/2015)
MARKETING
299
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”.
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. 1. 1. 1. 1. Need Need Need Need Needs s s s s and Want and Want and Want and Want and Wants s s s s: : : : : 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.
2015-16(21/01/2015)
BUSINESS STUDIES
300
2. 2. 2. 2. 2. Creating a Market Offering: Creating a Market Offering: Creating a Market Offering: Creating a Market Offering: 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, on
the basis of certain features such as
size of memory, television viewing,
internet, camera, etc., for a given price,
say between Rs. 5,000 and Rs. 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: 3. Customer Value: 3. Customer Value: 3. Customer Value: 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. Exchange Mechanism: 4. Exchange Mechanism: 4. Exchange Mechanism: 4. Exchange Mechanism: 4. Exchange 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. Exchange 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) each 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.
2015-16(21/01/2015)
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