CONTENTS

UNIT – I

Lesson 1.1 Introduction to marketing

Lesson 1.2 Marketing concepts
Lesson 1.3 Marketing process
Lesson 1.4 Marketing environment
Lesson 1.5 Buyer Behaviour
Lesson 1.6 Market segmentation, targeting and positioning
Lesson 1.7 Introduction to marketing mix

Answer key
Glossary of terms
References

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 Unit – I

Lesson 1.1
Introduction to Marketing

Objectives

In this lesson, we will introduce you to the business function of marketing. After you
work out this lesson, you should be able to:

 Define marketing and the utility (value) it creates for the customer
 Trace the origin of marketing and explain how it has evolved
 Describe the elements of a marketing strategy
 Understand the scope of marketing

In this lesson, we will discuss the following:

 What is marketing?
 Evolution of marketing
 Marketing framework
 Extending the traditional boundaries of marketing
 Functions of marketing

Introduction

Production and marketing of goods and services are the essence of economic life in any
society. All organizations perform these two basic functions to satisfy their commitments
to their stakeholders – the owners, the customers and the society, at large. They create a
benefit that economists call utility which is the want-satisfying power of a good or
service. There are four basic kinds of utility – form, time, place and ownership utility.
Form utility is created when the firm converts raw materials and component inputs into
finished goods and services. Although marketing provides important inputs that specify
consumer preference, the organization’s production function is responsible for the actual
creation of form utility. Marketing function creates time, place and ownership utilities.
Time and place utility occur when consumers find goods and services available when and
where they want to purchase them. Online retailers with 24*7 format emphasize time
utility. Vending machines focus on providing place utility for people buying snacks and
soft drinks. The transfer of title to goods or services at the time of purchase creates
ownership utility.

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 Type Description Examples Responsible
function
Form Conversion of raw Pizza made from Production
materials and several ingredients
components into finished
goods and services
Time Availability of goods and Dial-a-pizza; Marketing
services when consumers delivery guaranteed
want them in 30 min.
Place Availability of goods and Delivery at your Marketing
services where doorstep
consumers want them
Ownership Ability to transfer title to Pizza sales (in Marketing
(possession) goods or services from exchange for rupees
marketer to buyer or credit card
payment)

To survive, all organizations must create utility. Designing and marketing want-
satisfying goods, services and ideas is the foundation for the creation of utility.
Management guru, Peter F.Drucker emphasized the importance of marketing in his
classic book, The Practice of Management as:

‘If we want to know what a business is, we have start with its purpose.
And its purpose must lie outside the business itself. In fact, it must lie in
society since a business enterprise is an organ of society. There is one
valid definition of business purpose: to create a customer’.

How does an organization create a customer? Guiltinan and Paul explain it this
way:

Essentially, ‘creating’ a customer means identifying needs in the

marketplace, finding out which needs the organization can profitably serve
and developing an offering to convert potential buyers into customers.
Marketing managers are responsible for most of the activities necessary to
create the customers the organization wants, These activities include:
 Identifying customer needs
 Designing goods and services that meet those needs
 Communication information about those goods and services to
prospective buyers

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  Making the goods and services available at times and places that
meet customers’ needs
 Pricing goods and services to reflect costs, competition and
customers’ ability to buy
 Providing for the necessary service and follow-up to ensure
customer satisfaction after the purchase

Activity 1.1.1

Think of a recent purchase you made. How did the company provide you with the
following utilities?

Form _________________________
_________________________

Time _________________________
_________________________

Place _________________________
_________________________

Ownership _________________________
_________________________

What is Marketing?

Continuous exposure to advertising and personal selling leads many people to link
marketing and selling, or to think that marketing activities start once goods and services
have been produced. While marketing certainly includes selling and advertising, it
encompasses much more. Marketing also involves analyzing consumer needs, securing
information needed to design and produce goods or services that match buyer
expectations and creating and maintaining relationships with customers and suppliers.
The following table summarizes the key differences between marketing and selling
concepts.

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Table 1.1.1 Selling Vs. Marketing

Point of difference Selling Marketing

Starting point Factory Marketplace
Focus Existing products Customer needs
Means Selling and promoting Integrated marketing
End Profits through volume Profits through satisfaction

The difference between selling and marketing can be best illustrated by this popular
customer quote: ‘Don’t tell me how good your product is, but tell me how good it will
make me’.

The American Marketing Association, the official organization for academic and
professional marketers, defines marketing as:

Marketing is the process of planning and executing the conception,

pricing, promotion and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational objectives

Another definition goes as ‘ … process by which individuals and groups obtain what they
need and want through creating and exchanging products and value with others’. Simply
put: Marketing is the delivery of customer satisfaction at a profit.

The notion of exchange as central to marketing is reinforced by many contemporary

definitions such as ‘marketing is the process of creating and resolving exchange
relationships’ and ‘marketing is the process in which exchanges occur among persons and
social groups’. The essence of marketing is the exchange process, in which two or more
parties give something of value to each other to satisfy felt needs. In many exchanges,
people trade tangible goods for money. In others, they trade intangible services.

Exchanges in marketing are consummated not just between any two parties, but
almost always among two or more parties, of which one or more taken on the role of
buyer and one or more, the role of seller. A common set of conditions are present in the
marketplace, viz.,

1) Buyers outnumber sellers

2) Any individual buyer is weaker than any individual seller economically, but