GENERAL BUSINESS MANAGEMENT

MODULE 1: INTRODUCTION TO MANAGEMENT

Introduction
People are often found busy because they are engaged in a number of activities. When these
activities are motivated towards making profit or gain, they are called business activities. Thus,
business means engaging in business activities. Business includes all those activities that are
concerned with production or purchase of goods and services. The object of these activities is to
make profit.
Management plays a pivotal role in the operation of business enterprises. A business is composed
of seven elements, viz., men, materials, money, machines, methods, markets and management. Of
these seven Ms, Management' stands at the apex of the enterprise pyramid and it determines and
controls all other factors of business operations.

Meaning
Management is a general term. It refers to the organising and directing of human activities for
attaining a definite objective. It is a process through which all the resources are organised and
utilised to attain maximum efficiency. In the words of Dr. James Lundy, it is principally a task of
planning, co-ordinating, motivating and controlling the efforts of others towards the specific
objectives.

Definitions of Management
In management literature, we find a large number of definitions of management given by different
scholars who had different orientations. Some of these definitions are given below:
1. Harold Koontz: "Management is the art of getting things done to through and with people
in formally organised groups.
2. Henry Fayol: "To manage is to forecast and to plan, to organise, command, to co-ordinate
and to control."
3. J.N. Schulze: "Management is the force which leads, quides and directs an organisation
in the accomplishment of a pre-deternined object."
4. S. George: "Management consists of getting things done through others. Manager is one
who accomplishes the objectives by directing the efforts of others."
Management has been defined in different senses emphasising different aspects of management.
In its broad sense, management may include the following:
(a) Formulation of plans, policies and objectives
(b) Securing men, material, machinery, money and methods for this achievement,
(c) Putting all of them into operation,
 (d) Directing and motivating the men at work,
(e) Supervising and controlling their performance, and
(f) Providing maximum satisfaction and service to employer employees and public at large.

Business Management
Human activities may be carried out with profit motive or service motive. When human activities
are motivated towards making a proit they are called business activities. The organising as well as
directing of business activities is known as business management. In other words, the management
of business organisations or business units is called business management.

Non-business Management
Human activities may be carried out with service motive also. The organisations which engage in
service activities are called non-business organisations. Eg. hospitals, clubs, associatíons,
educational institutions, etc. The process of organising, directing and controlling the activities of
non-business organisations is called management of non-business organisations or non-business
management.

Nature and Characteristics of Management

Management means different aspects to different scholars. The nature of management can be
described as follows:
1. Multidisciplinary
Management is basically multidisciplinary. It draws knowledge and concepts from various
disciplines like sociology, psychology, economics, ecology, statistics, operations research,
etc. Management integrates ideas and concepts from these disciplines and uses them for
improving the efficiency of the organisation.

2. Goal-oriented
Management aims at achieving some definite goals or objectives. It co-ordinates the efforts
of workers to achieve the goals of the organisation. The success of management is
measured by the extent to which the organisational goals are achieved. The organisational
goals must be well defined and properly understood by the managers of various levels.

3. Economic Resource
Management is a factor of production. It is the force which assembles and integrates other
factors of production like labour capital and material. These factors do not by themselves
ensure production. They require management to produce goods and services.
4. Dynamic Nature of Principles
The principles of management are flexible in nature. They change with the changes in the
environment in which an organisation exists. Because of the continuous development in
the field, many of the old principles are replaced by new principles. In fact, there is nothing
permanent in the field of management.

5. System of Authority
Authority is the power to get the work done from others and to compel them to work in a
certain manner. Management cannot perform in the absence of authority. It is a rule-making
and rule enforcing body. There is a chain of authority and responsibility among people
working at different levels of the organisation.

6. Universal Application
Management is applicable in all types of organisations. Wherever there is human activity,
there is management. The basic principles of management have universal application. In
the words of Henry Fayol, “Be it a case of commerce, politics, religion, war... in every
concern there is management function to be performed."

7. A Science and an Art

Management is a science because it has developed certain principles which are of universal
application. But, the results of management depend upon the personal skills of managers
and in this sense, management is an art. Thus, management is both a science and an art.
However, the science of management is not as exact as physical science. It may better be
called as a social science.

8. A Profession
Management is, now, recognised as a profession. It has a systematic and specialised body
of knowledge consisting of principles, techniques and laws. It can be taught as a separate
discipline or subject. Now, due to the advent of 1arge scale business, the management is
entrusted in the hands of professional managers.

9. Results Through Others

The managers cannot do everything themselves. They must have the necessary ability and
skills to get work done through the efforts of others. They must motivate the subordinates
for the accomplishment of the tasks assigned to them.

10. A Social Process

Management is a social process which consists of getting things done through others. The
management has to direct, co-ordinate and regulate the efforts of the human beings to
achieve the desired results. In this sense, management is regarded as a social process. It
also has a social obligation to make optimum use of scarce resources for the benefit of the
society.
 11. Intangible Force
Management is an unseen or invisible force. It can not be seen but its presence can be felt
everywhere in the form of results. However, the managers who carry out the managerial
functions are tangible and visible.

12. A Separate Identity

Management is a separate identity. It is the scientific method of getting things done through
and with the people. But the identity of the Thinkers is quite different from the identity of
the Doers.

Objectives of Management
The primary objective of management is to run the organisation smoothly. It should keep in mind
the profit earning objective of a business while undertaking various functions. Management has
the following objectives:
1. To organise the effective carrying out of work,
2. To organise the expert personnel for work,
3. To utilise all the resources economically,
4. To assess and evaluate the performance of work periodically.
5. To improve the performance of each and every factor of production.
6. To draft policies for promoting industrial peace,
7. To provide for expansion of business,
8. To prepare plans for future development,
9. To promote economic development, and
10. To maintain a proper environment to attract specialists in various field

Scope and Functional Areas of Management

It is difficult to define precisely the scope of management. It is an all-pervasive function since it is
required in all types of organized endeavor.
Management process consists of several functions or activities. These activities may be classified
as managerial functions and organisational functions. A distinction should be made between the
two. Organisational functions differ from organisation to organisation depending upon the nature
of the organisations, while managerial functions are common to all.

Functional Areas of Management

The organisational functions are called functional areas of management. They include the
following five broad functional areas:
1) Production Management,
2) Marketing Management,
3) Financial Management,
4) Personnel Management, and
5) Office Management.
These areas have their own organisations, policies, procedures and sub-activities.

1. Production Management
Production management refers to the management of the production function of an
organisation. It includes the production of the right goods, in right quantity, at the right time
and at the right cost. It consists of the following activities:
a) designing the product,
b) location and layout of plant and buildings,
c) operation of purchase and storage of materials,
d) planning and control of factory operations,
e) repairs and maintenance,
f) inventory control and quality control, and
g) research and development.

2. Marketing Management
Marketing management refers to the identification of consumers' needs and supplying them
the goods and services. It involves the following activities:
a) Marketing research to determine the needs and expectations of consumers,
b) Planning and developing suitable products,
c) Setting appropriate prices,
d) Selecting the right channels of distribution, and
e) Promotional activities like, advertising and salesmanship.

3. Financial Management
Financial management ensures the right amount and type of funds to business at the right time
and at reasonable cost. It comprises the following activities:
a) estimating both the long-term and short-term capital requirements of business,
b) selecting the appropriate sources of funds,
c) raising the required funds at the right time,
d) ensuring proper utilisation and allocation of raised funds.
e) ensuring a fair return to investors,
f) administration of earnings, and
g) laying down a proper dividend policy.
In short, financial management involves the planning, organising and controlling of the
financial resources.
4. Personnel Management
Personnel management deals with the effective control and use of manpower. The success of
an enterprise depends on the effective management of human resources. It consists of the
following activities:
a) Manpower planning,
b) Recruitment,
c) Selection,
d) Training and development of employees,
e) Appraisal of performance,
f) Compensation and promotion,
g) Employee welfare services and benefits, and
h) Personnel records and research.

5. Office Management
Office Management refers to the technique of planning, co ordinating and controlling office
activities with a view to achieve common business objectives. It includes the following
activities:
a) Planning the office activities,
b) Co-ordinating and controlling office activities,
c) Organising the office work so as to achieve the goals of business,
d) Working as a service department for other departments, and
e) Providing the required information to various departments in time.

Levels of Management
The term Levels of Management' stands for the arranged managerial positions in an organisation.
The number of levels of management increases when the size of the organisation and work force
increases. But, it is desirable to restrict the number of levels of management.
According to some scholars, management is a three-tier activity. The top tier centers round the
determination of mission, objectives and policies, the middle tier is concerned with the
implementation of the policies and the lower tier actively assists in the achievement of goals.
However, in big organisations, there are generally four levels of management viz, (1) top level
management, (2) upper middle level management, (3) middle level management and (4) lower
level or first line management.

Top Level Management

The top level management is the policy-making group responsible for the overall direction and
success of all company activities. It consists of the Board of Directors and the Chief Executive or
the Managing Director. It is the ultimate source of authority. It establishes goals and policies for
the company. It is accountable to the shareholders for the overall management.
Functions
The top management has to perform the following functions:
1. To lay down the objectives of the enterprise.
2. To prepare plans and policies for the enterprise.
3. To issue necessary instructions for the preparation of departmental budgets, schedules,
procedures, etc.
4. To co-ordinate the activities of different departments.
5. To build and maintain relations with the public.

Middle Level Management

Middle 1evel management consists of heads of functional departments. They are responsible to
the top management for the efficient functioning of their departments. They include branch
managers superintendents and heads of various sections.
Functions
Mary C. Niles has laid down the following functions for middle management:
1. To run the details of the organisation and leave the top managers as free as possible of their
responsibilities,
2. To co-operate in making a smooth functioning of the organisation.
3. To understand the interlocking of departments in major policies.
4. To achieve the co-ordination between the different parts of organisation
5. To develop leaders for the future by broad training and experience
6. To build up a team spirit where all are working to provide a products or a service wanted by
others.

Lower Level Management

It is also known as Supervisory Management. It refers to those executives whose work is to oversee
and direct operative employees This level includes supervisors, foremen, accounts officers, sales
officers, etc. Managers at this level are also known as first-line supervisors. They provide a link
between the management and the workers.
Functions
1. To plan and organise the activities of the group.
2. To arrange necessary materials, machines, tools etc for the workers
3. To provide the workers with the necessary working environment.
4. To give training to the workers
5. To supervise and guide the subordinates.
6. To communicate workers’ problems to the top level management
Nature Of Management
Management as a Science
Science is a systematically organised body of knowledge based on proper findings and exact
principles and is capable of verification. Any subject which is scientifically developed and consists
of universally accepted principles is a science. In this respect, management can be considered a
science. It satisfies the basic characteristics of a science. The following are the important features:-
1. Science is an organised body of knowledge comprising general principles. Management is also
an organised body of knowledge comprising general principles.
2. Science uses scientific and systematic methods for observations. Management also uses
scientific methods for observations and calculations.
3. The principles of science are derived from practice and are verified by competent people. The
management principles are also derived from practice and are proven to be true.
4. The scientific principles are exact and are universally applicable. The principles of
management are also exact and are universally applicable.
5. Science has a predictive power. A manager also can predict from practice that sales will
increase if advertisement expenses are increased.
Thus, management can rightly be called a 'science'. But, management is not a perfect science like
Astronomy, Physics, Chemistry or Biology. Management falls in the area of “Social Sciences."
Ernest Dale has called management a soft science.
Management as an Art
Art refers to the way of doing specific things. It indicates how an objective is to be achieved. It is
the know-how to accomplish a desired concrete result.
Management possesses many of the important qualities of an art. It can rightly be called an art due
to the following similarities:
1. Just like an art, the process of management requires the use of know-how and skills.
2. Management is also practical like an art because it aims at the achievement of concrete results.
3. There is always a risk regarding the success of an art. There is an uncertainty regarding the
success of a manager also.
4. The work of an art is highly personalised. The management is also personalised because every
manager has his own approach to the solving of problems.
5. Finally, like an art the management is undoubtedly an art, and that too a fine art.
From the above discussion, we can conclude that management is both a science and an art.

Management as a Profession
Management is regarded as a profession by many, although it does not possess all the features of
a profession. A profession is an occupation for which specialised knowledge, skills and training
are required. The use of these skills is not meant for self-satisfaction, but for larger interests of the
society. The success of the use of these skills is measured not in terms of money alone.
Management as a profession should possess the following
1. A profession involves the application of expert knowledge for solving problems. Management
also requires expert knowledge for solving problems.
2. A person must compulsorily acquire the expert knowledge to practise a profession. Those who
want to practise management as a profession must acquire expert knowledge.
3. Honesty and integrity are essential for a profession. They are equally essential for
management also.
4. The principal motive of any profession is service. Modern management aims at giving priority
to service to the customers.
5. Every profession has certain social responsibilities. The management has responsibilities to
the various sections of the society like, owners, creditors, customers, employees, the
government and the public at large.
Thus, we can conclude that management is a profession, although it is not a full-fledged profession.
It is this aspect that has raised the status of the manager.
To sum up, management is a trinity of science, art and profession.

Importance of Management
Management is the art of securing maximum prosperity with minimum effort. Management has
been significant to the daily lives of people in groups. Wherever there is an organised group of
people working towards some common goals, Some type of management becomes essential. In
the words of Koontz and O'Donnell, “There is no more important area of human activity than
management since its task is that of getting things done through others." There is no substitute for
management in modern organisations.
The importance of management will be more clear by going through the following points:
1. Determination of Objectives
The management determines the objectives of an organisation and communicates them to all
its employees. An organisation cannot succeed in its mission unless its objectives are identified
and well defined.
2. Achievement of Objectives
Management provides efficient leadership to the organisation to achieve its objectives.
Managing is not a mere exercise of authority. It involves scientific thinking, direction and
control to ensure better results.
3. Effective Use of Resources
Management tries to make effective use of resources. The resources are scarce in nature. The
effective use of resources increases the productivity which can lead the business towards
growth and prosperity.
4. Development of Resources
Management develops various resources. This is true with human as well as non-human
factors. Management improves the quality of lives of people in the society through
development of resources.
5. Incorporating Innovations
Changes occur very fast in both technology and social process. These changes need to be
incorporated to keep the organisations alive and efficient.
6. Integrating Various Interest Groups
In the case of a business organisation, there are various pressure groups like shareholders,
employees, government, etc. Management has to balance the pressure from various interest
groups.
7. Stability in the Society
Management provides stability in the society, by changing and modifying the resources in
accordance with the changing environment of the society
8. Co-ordination of Human Efforts
Management provides leadership and guidance to the workers. It reconciles their personal
interests with the organisational objectives. This leads to better co-ordination among human
efforts.
9. Meeting Challenges of Changes
Management keeps itself in touch with the current environment. It takes necessary steps to
ensure that the enterprise is able to meet the demands of changing environment.
10. Economic Development
According to Peter Drucker, "Management is the crucial factor in economic and social
development." India is the best example for this point. There was no lack of human and material
resources in India, but certainly there was lack of managerial personnel to exploit the resources
properly for development.

Management and Administration

Administration is a decision-making body of an organisation. It is concerned with the formulation
of policies and taking decisions. Hence, it is described as the policy making or decision- taking
body of a company. For example, in large companies the Board of Directors is considered to be
the administrative body. Administration, thus, may be defined as a top level management function.
Administration is a part of management. It is often referred to as the top management. It is
concerned with formulation and laying down of policies, co-ordinating and motivating of the
personnel. Management is a broad term which includes administration also. Administration is a
top level function of management. Administration represents the brain of an enterprise where as
the management proper represents the limbs. Thus, management and administration are closely
related and the former (management) is inclusive of the latter (administration).
In the initial stages of development of management thought, there was no distinction between the
two terms 'management' and 'administration. Both the terms were used interchangeably. At present
there are three strong view points. They are as follows:
1. Administration is above management
According to classical thinkers like Oliver Sheldon, William Spriegel, Milward and Florence,
management and administration are different. They have different functions in the
organisation. While administration is concerned with policy formulation, management is
concerned with policy execution. These two activities are not the same. Administration is a
determinative body and management is an active body. So, administration is above
management. The following figure illustrates how administration is above management

Top
Administration
Organisation Levels

(Policy formulation)

Management
(Policy execution)
Lower
Functions in the Organisation

2. Administration is a part of management

There is another school of thought that treats management as a comprehensive function which
comprises administration also. According to thinkers like E.F.L. Brech, administration is a part
of management. Management is an all inclusive function. Under this view, administration
becomes a subordinate function to overall management functions. Administration is concerned
with day-to day function and is a part of management. According to this approach, the previous
analysis that administration is above management, stands completely reversed.
3. Management and administration are same.
Some authors like, Henry Fayol, William Newman, etc. consider that management and
administration are the same. Both involve the same functions, principles and objectives. This
is the most popular and practical approach. According to Lepawsky, the difference between the
two terms lies mostly in their usage in different countries or different fields of human
organisations. In fact, management and administration are synonymous.
Functions of Management
The management of a business or non business organisation has to perform various functions for
the achievement of pre- determined objectives. Many scholars on management have discussed the
functions of management. But, there is no unanimity among them regarding the managerial
functions.
Among those who tried to analyse the functions of management, Henry Fayol's name is the most
outstanding. According to him "To manage is to forecast and plan, to organise, to co-ordinate and
to control.” Thus, Fayol suggests command, to the following five functions for management: (1)
Forecasting and planning, (2) Organising, (3) Commanding, (4) Co-ordination, and (5) Control.
William Fox describes planning, organising and controlling as the organic functions of
management.
Another authority in management, Mr. Gullick gave a formula word to indicate the principal
functions of management. According to him, management functions may be indicated by the word
POSDCORB wherein each letter indicates a particular function as mentioned below:
• P - Planning
• O- Organising
• S - Staffing
• D - Directing
 • Co - Co-ordinating
• R - Reporting
• B - Budgeting
The principal functions of management in most of the business and non-business enterprises are
as follows:
1. Planning:
Planning is the most basic or primary function of management. It precedes all other functions.
Planning involves determining the objectives and selecting a course of action to achieve them.
It implies looking ahead and deciding in advance what is to be done, when and where it is to
be done, and how and by whom it is to be done. The function of planning includes:
a) determination of objectives,
b) forecasting and choice of a course of action,
c) formulation of policies, programmes, budgets, schedules etc. to achieve the objectives,
and
d) laying down of procedures and standards of performance
Planning enables an organisation to do in an orderly and efficient manner
2. Organising:
Organising is the process of establishing harmonious authority-responsibility relationships
among members of an enterprise. It is the function of creating a structure of duties and
responsibilities.
The function of organising consists of the following:
a) determining and defining the activities needed to achieve the goals;
b) grouping the activities into convenient units
c) assigning duties and activities to specific positions and people,
d) delegating authority to these positions and people
e) defining and fixing responsibility for performance and
f) establishing authority - responsibility relationships throughout the organisation.
3. Staffing
Staffing is the process of filling all positions in the organisation with qualified personnel. It
includes a large number of activities like manpower planning, recruitment, selection,
communication, participation, appraisal, counselling, training, compensation, dismissal,
integration and maintenance of employees.
4. Directing
Directing is the executive function of management as it is concerned with the execution of
plans and policies. It involves guiding, supervising, motivating and leading the people towards
the achievement of targeted performance. The directing function includes the following
activities:
a) issuing orders and instructions,
b) supervising people at work,
c) motivating the employees to work for certain objectives
d) establishing communication with employees regarding plans and
 e) influencing the behaviour of employees.
5. Co-ordination
Co-ordination is the essence of management. It is the orderly synchronisation of the efforts of
the subordinates goals of the organisation. Co-ordination consists of unifying the activities of
different individuals and groups for the achievement of common objectives. It has the
following features:
a) It is an orderly arrangement of group efforts.
b) It intends to secure unity of action towards common objectives
c) It is needed at all levels of management.
d) It is the essence of managing.
6. Motivation
Motivation is a constructive force in management. A manager inspires the subordinates to do
what he wants them to do through motivation.
Motivation means inspiring the subordinates with a zeal to work for the accomplishment
objectives of the organisation. Different people are motivated by different types of rewards.
Some employees prefer financial incentives while others prefer non-financial incentives like
job security, job enlargement, freedom to work etc.
7. Control
The function of control deals with taking corrective action when the results do not conform to
plans. According to Henry Fayol, "control is verifying whether everything occurs in conformity
with the plan adopted, instructions issued and principles established'".
The process of control involves the following steps:
a) Establishment of standards,
b) Measurement
c) Appraisal of performance, of performance, and
d) Taking corrective action

Subsidiary Functions
1. Communication
Communication is the exchange of ideas, facts, opinions or emotions by two or more persons.
It helps in securing the largest participation or consultation in decision-making, planning . and
general administration. It provides democratic character to managerial process and strengthens
the morale of the people.
2. Decision-making
It is the most important function of management. A manager has to take numerous decisions.
It helps in the smooth running of the enterprise.
3. Innovation
Innovation relates to research and development, which is essential in this age of competition.
Big business units maintain Research and Development Departments to keep pace with
modern techniques.
Organisational Structure
Organisation structure represents an invisible frame work of the organisation. It can be described
like the architectural design of a building. The architect or the engineer who draws the plan has to
consider a number of factors before the actual drawing of a plan. The location, the availability of
area, the purpose, the financial resources etc. are a few factors that are usually considered by the
architect when a plan for a building is drawn. Similarly, in the case of organisation structure there
are a number of factors to be considered such as the object of the enterprise, attitude and nature of
the management, available personnel, size and location. These factors help to decide the type and
form of an organisation structure.
Types or Forms of Organisational Structure
1. Centralised structure
In a centralized organizational structure, decisions are made by high-level managers and are
distributed down the chain of command. Centralized organizational structures have a range of
advantages, like clear responsibilities, better process governance, and a straightforward chain
of command. It places decision-making responsibilities on leadership who can foresee the
long-term impact of important decisions.
The biggest drawback of a centralized organizational structure is the time the decision-making
process takes in large companies. For example, individual team managers must run requests
up the chain of command before going forward. This can slow down the customer experience,
resulting in missed opportunities and poor service. It can also hamper companies’ ability to
innovate, with centralized organizations being less agile and quick than decentralized ones.

2. Decentralised structure
In a decentralized structure, lower-level employees identify issues and make decisions without
communicating them up the chain of command to upper management. Greater autonomy
empowers employees to take action, eliminating process delays, enabling employees with
confidence to make decisions, and driving growth.
Even in decentralized organizations, clear hierarchies still exist. Leadership roles still operate
at a higher capabilities than new and entry-level employees. However, teams can make
 decisions without approval from centralized leadership, allowing them to act fast and take
ownership of their areas of expertise.
This type of structure is common for fast-growing companies, companies with regional
markets, and emerging industries. A decentralized structure makes it more accessible for
employees to navigate different roles and work on what’s most impactful at that time in a
company’s lifecycle.

3. Flat structure
Due to its simple nature, a flat organization structure, also called a “flatarchy” or a horizontal
structure, is typically used by small businesses and startups. Organizations often start with a
flat structure and then transition to a different type of organisational structure late in their
maturity.

In a flat organizational structure, there are few middle managers between employees and top
managers. The structure requires less supervision, increases employee involvement, and boosts
trust in the workplace.

4. Functional structure
It involves grouping of jobs of similar nature under functions and organizing these major
functions into separate departments. All departments report to a coordinating head. For
example – in a manufacturing concern division of work into key functions will include
production, purchases, marketing, accounts and personnel. These department may be further
divided into sections. Thus a functional structure is an organisational design that groups
 similar or related job together. It is companies that require a high degree of specialization and
efficiency within each department, like manufacturing firms.
Advantages
a) A functional structure leads specialization since emphasis is placed on specific functions. This
promotes efficient utilization of manpower as employees perform similar tasks within a
department .
b) It promotes control and coordination within a department due to similarity of tasks being
performed.
c) It helps in increasing managerial and operational efficiency and thus results in increased profit.
d) It makes training of employees easier as the focus is only on a limited range of skills.
Disadvantages
a) A functional structure may place more emphasis on objectives pursued by a functional head
and less emphasis on the overall objectives of the enterprise .
b) It may lead to problems in coordination as information has to be exchanged across functionally
differentiated departments.
c) There may be a conflict of interest between of two or more departments.

5. Divisional Structure
A divisional structure is usually found in large organisations which have more than one product
category or product line. It involves grouping of all functions required to produce a specific
product or product line into one division or department. Each division is headed by a president
or general manager who is responsible for the working of that division and is also accountable
for its profits or loss. Each division is self-contained with a separate business or profit center.
 These divisions are relatively independent and mainly follow a decentralized framework. Still,
the leaders of each department are likely to operate under centralized corporate management.
This means that the company culture is dictated by top management, but operational decisions
can be made independently by each division.
Advantages
a) Product specialization helps in the development of varied skilled in a divisional head and this
prepares him for higher positions. This is because he gains experience in all functions related
to a particular product.
b) It promotes flexibility because each division functions as an autonomous unit which leads to
faster decision making.
c) Revenues and costs related to different departments can be easily identified and assigned to
Divisional heads accountable for profits. This provides a proper basis for performance
measurement.
Disadvantages
a) Conflict may arise among different divisions with references to allocation of funds and
further a particular division may seek to maximize its profit at the cost of other divisions.
b) It may lead to increase in costs since there may be a duplication of activities across products.
c) There may be a conflict between organisational goals and divisional goals.

Matrix Structure
This is one of the latest types of organisational designs which makes an organisation structure
flexible. Matrix organisation is a combination of functional and divisional
organisation structures.
It is characterised by an overlapping command, control and behaviour patterns.
It is defined as “any organisation that employs a multiple command system that includes not only
the multiple command structure but also related support mechanism and |an associated
organisational culture and behaviour pattern
Advantages
1. It focuses attention and resources on a single project which facilitates better planning and
control.
2. It helps in completion of projects in time.
3. It is very flexible and so can be applied usefully to an organisation involved in small and
large projects.
4. It provides motivation to the personnel engaged in a project
5. It also improves communication and co-ordination by facilitating direct contact between the
project managers and the functional groups.
6. It helps to utilise the services of professionals as it stresses authority of knowledge rather
than status.
7. It helps to maintain high technical standards.
Disadvantages
1. It may result in power struggle and conflicts in the Organisation due to lack of unity of
command.
2. It creates confusion among personnel to identify their respective superiors as there are both
formal and informal relationships
3. It is very difficult to co-ordinate the personnel from different functional departments
4. It is not easily possible to take joint decision making and sharing of resources
5. The administrative costs are very high under it.
Line/Hierarchical structure
A line structure is the most common type of organizational structure. It is also known as military
or departmental organisation since it originated in military. In this type, the authority flows from
the man at the top level to the man at the lowest vertically in a line. The directions are issued
by the man in charge of the whole organisation and are directly conveyed to the person
responsible for the execution of the job.
Advantages
1. Directness: Every member knows to whom he is responsible.
2. Fixed Responsibility: Every member has a definite and fixed responsibility.
3. Simplicity: It is simple to explain to the employees and easy to establish. Lines of authority
and responsibility are direct, simple and clear.
4. Discipline: Since the men at lower levels are directly responsible to one authority there is a
greater discipline among the employees
5. Prompt decisions It facilitates quick and prompt decisions as authority and responsibility are
unified.
6. Flexibility: It is flexible and adjustable to changing conditions.
7. Co-ordination: It is easy to co-ordinate different activities in the organisation
8. Unified control: It ensures unity of control by conforming to the scalar principle of
organisation.
Disadvantages
1. Overloading: It overloads a few executives with difficult duties. Too much is expected of the
persons in authority. They do not get time tor innovations and independent thinking.
2. Discouraging co-operation It discourages large scale co-operation as undue importance given
to one executive.
3. Lack of specialization: There is no scope for specialisation of any type. But, specialisation is
inevitable in modern business due to its complex nature.
4. Scope for favouritism: Since only one person controls all the executive powers of a
department, there is much scope for nepotism and favouritism. As a result inefficient people
may get higher and better posts.
5. Lack of communication: There is usually no communication from the lower ranks to the
higher. So correct information cannot be obtained.
This system can be followed successfully in small business units, routine type concerns and
industries where automatic machinery is installed.
MODULE 2: MANAGEMENT AND ORGANISATION
Marketing is a customer-centered approach which aims at the satisfaction of their wants through
the distribution of valuable products and services. Marketing brings together customers, products
and services. The concept of marketing is based on identification of customer needs and their
satisfaction.
The process of marketing is a combination of four elements:
1. Development of Products
2. Determination of Price
3. Distribution channel to deliver the products at the customer's place, and
4. Promotion (Advertisement) strategy
Marketing is a significant business activity which contributes greatly to the success of an
organisation. It facilitates firms to understand customer needs and develop products and services
accordingly. Effective marketing strategies help organisations to differentiate their products and
services in a complex market environment. The success or failure of an organisation depends on
the quality of its marketing strategies. Firms without a marketing mindset move around their
products rather than their customers which may result in undesirable products.

Definitions
1. The American Marketing Association (AMA) defines marketing as "an organisational
function and a set of processes for creating, communicating, and delivering value to customers
 and for managing customer relationships in ways that benefit the organisation and its
stakeholders".
2. The famous marketing guru, Philip Kotler defines marketing as "a societal process by which
individuals and groups obtain what they need and want through creating and exchanging
products and value with others".
3. The Chartered Institute of Marketing (CIM), the world’s largest professional marketing body,
defines marketing as "the management process responsible for identifying, anticipating and
satisfying requirements profitably".
Features of Marketing
The salient features of marketing are as follows:
1. Marketing is an organizational function of creating, communicating and delivering value to the
customers.
2. It is a societal process by which people obtain what they want through creating and exchanging
products and value with others.
3. It is a management process which identifies and anticipates customer needs so as to generate
profits by satisfying them
4. It is a commercial function of transferring goods from producers to consumers.
5. It is a process of manufacturing the right product, in the right place, at the right time, at the
right price. In other words, marketing activities generate place and time utilities
(product/service in the right place, at the right time) which increase the value of a product or
service.
6. It is a process of utilising the resources of an organisation in order to meet the changing needs
of the customers.

Objectives of Marketing
1. To identify the target market (group of customers) where the produce can be marketed.
2. To identify the needs and wants of the target market.
3. To develop products sufficient enough to satisfy the needs of the target market.
4. To determine the price of the products on the basis of m manufacturing cost, competition,
market condition, and quality of the products.
5. To deliver/ distribute the products to the customers with the help of adequate distribution
channels.
6. To follow adequate promotion (advertisement) techniques for the purpose of informing or
influencing the purchasing decision of the customers.
7. To continuously take the effort to satisfy the changing needs of the customers.
8. To use a variety of channels to gain new customers and keep existing customers.
9. To undertake researches for modifying the existing products and developing new products.
Evolution of Marketing
Marketing is not a phenomenon and practice developed by the modern world. There are different
stages in the evolution of marketing. These stages are:
1. Barter Stage:
This stage is considered as the first phase in the evolution of marketing. During this period
people exchanged goods for goods without using any medium of exchange such as money. The
history of bartering can be traced back to 6000 BC. Barter services became popular during The
Great Depression in the 1930s, which witnessed a scarcity of money.
2. Production Stage:
Production-oriented marketing dominated at the beginning of capitalism to the mid-1950s. At
that time business enterprises were highly concerned with production issues. The salient
features of production stage are limited lines of products, pricing on the basis of costs of
production and distribution, limited research and low promotion and advertisement strategies.

3. Sales Stage
The sales orientation stage of marketing was estimated from the mid-1950s to the beginning
of the 1970s. This stage started after the completion of the production orientation. After the
Second World War, the accelerated demand for consumer products led to the development of
this stage. Advertisements and other sales promotion techniques were widely followed during
this period. Packaging and labeling were used for promotional purposes more than product
protection purposes. Pricing was based on comparisons with the prices of the competitors.

4. Marketing Stage
Marketing orientation replaced the previous sales orientation and production orientation of
marketing. It is considered as the modern stage or orientation of marketing. This orientation of
marketing was developed in the 1970s. The needs and wants of consumers govern the business
decisions of a marketing-oriented firm. The salient features of marketing orientation are as
follows:
a. Identification of the needs and wants of consumers.
b. Extensive market research.
c. Broad product lines.
d. Evaluation of the benefits of the products to the consumers.
e. After sales services
f. Modification and innovation of products.
g. Continuous improvement in the quality of the products.
h. Strategies for improving customer satisfaction and customer relations.

Importance/Benefits of Marketing
The importance of marketing can be well understood by studying its benefits to the society and to
the firm. These benefits are described below:
1. Benefits to the Society
According to Philip Kotler marketing is a societal process by which individuals and groups
obtain what they need and want through creating and exchanging products and value with
others. The definition clearly explains the significant role played by marketing in the society.
The focal point of marketing is the identification of societal needs and wants so as to satisfy
them through the creation and distribution of valuable goods and services. Marketing activities
offer great benefits to the society at large. Some of the major benefits are:
a. Developing goods and services to meet the needs of the society and thereby improves
its quality of life.
b. Act as a connecting link between the producers of goods and services and consumers.
c. Help people to obtain products at stable and fair prices by creating a competitive market
environment.
d. Increased marketing activities generate more employment opportunities for the people.
e. The distribution function of marketing makes the products available in different
geographic regions. People can buy products from all over the world.
f. The promotion function of marketing educates people about different products and
services available in the market.
g. Marketing offers a wide range of products and services to people and thereby helps
them to choose on the basis of their tastes and preferences.
In general, marketing functions offer valuable benefits to the society by creating products and
services with desired benefits at fair and stable prices in places convenient for customers.

2. Benefits to the Firm

Marketing helps firms to increase their revenues by attracting more customers. It helps to reach
the right customers at the right time and place. The following are the major benefits offered by
marketing to the firm:
a. Helps to identify the target market (right customers)
b. Develops suitable (right) products and services
c. Determines the demand for products
d. Gives adequate information to the customers about the products
e. Delivers the products to the customers by establishing suitable distribution channels
f. Identifies competitors and analyzes the competitive advantage of the firm's products in
the market
g. Identifñes new product areas
h. Identifies new target market or potential customers
Marketing efforts help firms to develop satisfying relationships with customers that benefit both
the customer and the firms. They provide all information related with the customers and the market
which form valuable inputs for decisions at all levels of the firm.
Role of Marketing in Economic Development
Marketing plays a crucial role in the economic development of a nation. Marketing activities help
in resolving the scarcity of goods and services in a nation. The following points clearly show the
significant role played by marketing in the economic development of a nation:
1. Marketing increases the entrepreneurial activities in a nation which result in the productive
utilisation of natural resources such as land, labour, capital and organisation. An effective
utilisation of these economic resources increases the national income of the country.
2. Marketing promotes the development of basic industries of a country such as agriculture,
mining and plantation by distributing their outputs to the customers. These industries are
considered as the backbone of economic development of a nation.
3. Marketing increases the foreign exchange earnings of the nation through exporting products
and services in which it enjoys competitive advantage over other nations.
4. Marketing helps in the growth of industrial sector of an economy by distributing industrial raw
materials, machines, equipment and tools.
5. Marketing earns capital for business projects through creation of demand and increased
consumption. Increase in business activities increases the pace of economic development of a
nation.
6. Increased marketing activities generate more employment opportunities for the people which
increase their purchasing power leading to the economic development of the country.

Role of Marketing in Business

Marketing has a direct influence on the sales and profitability of a business. More marketing means
more volume of sales and profits. It is a highly important functional area of a business whether big
or small. Marketing activities come first to production and other functions of a business and ends
only after delivering goods and services to the customers. This shows the relevance of marketing
in a business. The American Marketing Association considers marketing as an execution function
of a business which directs the flow of goods and services from manufacturer to final user.
Marketing function enables a firm/business to find an ideal market, identify the needs and wants,
relevant products and services, promote the products and finally deliver the products to the
customers. The entire business functions are dependent on the marketing area of a business.

Marketing Utilities
Professors Converse, Huegy and Mitchell define marketing as “Marketing includes all the
activities involved in the creation of place, time and possession utility". Marketing activities offer
some important utilities to the customers which are sufficient enough to explain the importance of
marketing in the society. The term utility means a state of being useful. Satisfaction of customer
needs and wants depends on the utilities offered by marketing. The major utilities of marketing are
as follows:
1. Form Utility: Form utility offers products to the customers in a usable form. This utility covers
the physical characteristics and shape of a product.
2. Place Utility: It offers products at the place of customers so as to ensure the easy availability.
3. Time Utility: Time utility ensures the availability of the products and services as and when
required by the customers.
4. Possession Utility It is the utility which gives the buyer the right to own and use a product or
service at his own will. As a result of marketing, the ownership and possession of a commodity
is transferred from the seller to the buyer.
Scope of Marketing
The core areas of marketing are identification of the target market, identification of its needs and
wants, creation of the product, promotion, distribution and customer relationship. Marketing
activities are performed to obtain a competitive advantage by utilising the organisational resources
in the best possible manner to satisfy customer needs. Marketing activities begin and end with the
customer. The basic concepts of marketing are needs, wants and demands which lead to the
identification of relevant customer values in the form of products and services. The firm creates,
communicates and supplies these products and services to the customers in return for a price and
builds a long-lasting relationship with them. Marketing activities are spread throughout the
following areas:
1. Identify and Select the Target Market:
This involves locating and selecting the most favourable customer group for marketing from a
large population of customers. Marketing firms may have to face many problems in addressing
the needs and wants of a large customer population. So identification of a target market help
firms to formulate and implement suitable marketing strategies for the selected customer
group.

2. Identify and Select the Customer Value:

Each market expects certain benefits in the form of products and services. After locating and
selecting the target market, the specific needs and wants of that market are identified for the
purpose of creating, communicating and delivering products and services.

3. Creation of Value:
The major areas in this phase are product planning, designing, packaging, branding and pricing.

4. Communicate the Value:

This involves product promotion strategies such as advertisement, personal selling, direct
marketing and other sales promotion methods.

5. Deliver the Value:

Establishing the channels of distribution, warehousing, transportation and all activities related
with the flow of goods from the point of origin to consumption are completed during this phase
of marketing.
6. Customer Relationship:
This is the most important dimension of marketing. It is nothing but maintaining long lasting
relationships with the customers by clearly identifying their expectations and giving more than
what they expect. All the efforts of marketing are waste if the firm lacks customer support. So
customer relationship is the critical element of marketing process.

7. Marketing Research
This is a pervasive function of marketing. It is through systematic marketing research a firm
identifies the target market, needs and wants of customers, develops, communicates and
delivers products and services. The nature of market environment, competition and the
competitive advantage of a firm in a market are revealed through marketing research.

Marketing Process
Marketing is a systematic process which encompasses through a sequence of stages or steps. The
distinct steps in a marketing process are described below:
1. Market Analysis:
A detailed analysis of the market give a clear picture of the unfulfilled customer needs and
wants to a marketing firm. In addition to needs and wants, the firm gets information related
with the market conditions, competitors, existing products, market regulations etc. through
market analysis. A proper market analysis helps a marketing firm to understand the problems
and prospects of the market.

2. Formulation of Marketing Strategy:

Strategy refers to a plan of action aim at achieving the desired goal. After identifying the
opportunities in the target market through market analysis, the next step is formulation of
adequate marketing strategies to select the target market and positioning the product in
the target market.

3. Decision regarding the 4 P's (Product, Price, Place and Promotion):

In this phase, the firm arrives at serious decisions regarding the type of product to be
produced/marketed, its price, distribution channels to move the product from the place of
production to the place of consumers and finally the promotional measures.

4. Implementation and Control

This is the last point in the marketing in where the product has been launched. The firm is
required to closely monitor the movement of the product in the market at this stage. This is
necessary to understand the strengths and weaknesses of the marketing efforts taken by the
firm in the target market. It also helps the firm to know the deficiencies of the product, price,
distribution network and promotion measures and take adequate steps to correct the
deficiencies.
Market and Marketing
The term market is derived from the Latin word Mercatus' which means a place of trade. A market
is referred to as a place where buyers and sellers meet and make transactions or exchanges directly
or through intermediaries. A market is an environment whereby buyers and sellers contact each
other directly or indirectly, to buy or sell goods. It is also studied as a group of individuals and
institutions that buy and sell products or services.
According to Philip Kotler, "market is an area or atmosphere for a potential exchange".
Marketing, on the other hand, is an organisational function and a set of processes that aim at serving
the market effectively and profitably. The following are the important areas of differences between
market and marketing:
Market Marketing
It is the total demand of a product or service. It is an organizational function that aims at
effectively meeting the needs and wants of the
customers.
In the market, exchange of goods and services It performs all functions related with the
takes place. physical movement of goods from the
manufacturer to the consumer. The functions
include functions of exchange, physical supply
and facilitating functions.
The ultimate objective of market is the The ultimate objective of marketing is
physical flow of goods from the buyer to seller. customer satisfaction.
Price, demand, supply and purchasing power Planning, designing, pricing, advertising,
are the major forces of market. storing and distribution are the important
elements of marketing.
It is a system of existing and potential buyers It is a process of making the market.
of a product or service.

Types of Market
Markets can be classified in different ways. Some of the important classifications of market are as
follows:
1. Place or Geographical Area Markets
On the basis of place or geographical area, markets can be of the following types:
a) Local Market
Market in a particular locality which offers goods and services to people in that area is
known as local market. For example, a city, town or village market. The customers of a
local market are residents of the area covered.
 b) Regional Market
The area of operation of a regional market is larger than the local market. A regional market
usually covers a particular area of the country. For example. northern or southern region of
a nation.
c) National Market
It is a marketing system which covers the whole nation. For example, a market which
concentrates on the needs and wants of people in India
d) International Market
It is a marketing system which crosses the borders of the nation and deals with the demand
of the customers in other nations. It is also known as global market.

2. Time Markets
On the basis of time, market is classified into:
a) Very Short Period Market
The market lasts for a very short time, for a single day, or for a very few days. The supply
of commodities in this market is limited to the existing stock. For example, the market of
certain perishable goods and money market instruments.
b) Short Period Market
The tenure of this market is short, which is more than very short period market. It lasts for
a week or few weeks. The supply in this market is able to adjust with the change in demand
compared to very short period market. Short term money market instruments, fruit markets
etc are examples of short period market.
c) Long Period Market
It covers durable goods. This market persists for a long time and adjusts production and
supply on the basis of demand.

3. Sales Markets
On the basis of sales, market is classified into:
a) Wholesale Market:
It is a market where goods are sold in bulk quantities to the customers. The
customers of this market are retailers who want to sell goods to the consumers in
small quantities.
b) Retail Market:
It is a market where goods are sold to consumers in small quantities. The customers
purchase goods from the retail market for their consumption.

4. Type of Goods and Markets

On the basis of type of goods, market can be of the following types:
a) Product Market
It is a market which delivers tangible goods or goods having a physical form are delivered
to the customers. For example, marketing of food products. vegetables, computers etc.
 b) Service Market
It is a market which delivers intangible products to the customers. The customers cannot
see and touch the services bought but they can experience the benefits of services. For
example, banking and insurance products.

5. Use of Goods and Markets

On the basis of the use of goods, market is classified into:
a) Consumer Market
In a consumer market, firms sell household goods for the personal consumption of the
customers. There are different types of consumer goods like consumer durables
(refrigerators, television, personal computers etc.), soft goods (clothes, shoes etc.) and
services (hair dressing, workshops etc.)
b) Industrial Market
It covers business to business transactions. The goods sold in an industrial market are not
for personal consumption but for the use in business as raw materials or components.

6. Nature of Goods and Markets

On the basis of nature of goods, market is classified into:
a) Financial Market
It is a market where financial instruments are bought and sold. The assets include shares,
debentures, currencies and derivatives. The financial market can be divided into capital
market and money market.
b) Commodity Market
It is a market where raw or primary products are bought and sold. It can be divided into
hard commodity market (gold, silver, oil etc.) and soft commodity market (agricultural
products or livestock).

7. Competition Markets
On the basis of competition, market is classified into:
a) Perfect Market
In a perfect competition market, no form enjoys absolute power over the market and no
firm can control or influence the price of the product it buys or sells. The important
characteristics of perfect competition market are unlimited number of buyers and sellers,
similar/identical products, free entry and exit-no restrictions for starting and closing a
business, complete information possessed by consumers regarding price, quality and profit,
absence of any costs in the exchange of goods and services, profit maximization and all
firms enjoy a relatively small market share.
b) Imperfect Market
It is a market situation of large number of buyers and sellers who deal with differentiated
products. The major difference between perfect competition and imperfect competition is
that the products in an imperfect market are highly differentiated.
 c) Monopoly Market
It is a market where there are large number buyers and a single seller. An individual or firm
enjoys absolute control over the production and distribution of a particular product or
services and determines the terms and conditions of buying and selling. The price of the
product is not determined on the basis of demand and supply forces, but it is unilaterally
fixed by the firm. Single seller and absence of competition are the important features of a
monopoly market.
d) Monopolistic Competition Market
It occurs when there are many sellers producing differentiated products which are closely
identical to one another. The characteristics of both monopoly and competition can be
identified in a monopolistic competition.
e) Oligopoly Market
It is a market dominated by a small number of sellers, The firms have a clear idea of the
actions of each other because they are small in number. The operations and decisions of
one firm depend on the operations and decisions of others. The existing firms create
barriers for the entry of new firms in the market.
f) Duopoly
It is a market situation of only two sellers/producers controlling a market. They are
independent of each other and can formulate their own policies of production and pricing.
But usually they operate on the basis of mutual understanding because the operations of
one may exercise great influence over the other.

8. Nature of Transactions and Market

On the basis of nature of transactions, markets is classified into:
a) Spot Market
When goods are sold for cash and delivered immediately, it is known as spot market.
Buying and selling in this market are immediately effective.
b) Future Market
The delivery and payment of goods in a future market are made on a future date. In the
future market goods are brought or sold for a specific price on a specific date in the
future.

Orientations/Concepts of Marketing
The concept of marketing has changed and evolved over time. In the contemporary marketing
scenario, the customer is given the top most priority. All marketing decisions revolve around the
customers. The major concepts of marketing in its different stages of evolution are as follows:
1. Production Concept
This concept focuses on reducing costs by way of mass production. The firm believes that by
attaining economies of scale the business can maximize. profits and reduce costs.
2. Product Concept
A firm following this concept tries to introduce the best product, based on quality and features.
It believes that customers can be better influenced by designing and marketing excellent
products. The firm utilizes its fullest energy and efforts in the continuous improvement of the
product. The concern for the improvement of the product precedes other factors of marketing.
3. Sales Concept
The focus of this concept is to manufacture the product, and then take maximum efforts to sell
it in the target market. The concept holds the view that sales volume cannot be increased by
introducing a superior product. Aggressive sales efforts by means of effective distribution
channels and advertisements are highly essential to increase sales volume. Firms which uphold
this concept concentrate on intense sales promotion efforts.
4. Market Concept
This concept views customer as the key element of the marketing process. Firms attempt to
know the needs and wants of the customers through market surveys and research. All marketing
activities revolve around customers and they are considered as the king of the business.
5. Societal Concept
The societal marketing concept holds that a firm should make good marketing decisions by
considering consumers' wants, firm's requirements, and the society's long-term interests. The
concept highlights social responsibility of a marketing firm. It states that a firm should balance
customer satisfaction, proits and long term welfare of the society. The concept emphasizes that
marketing activities should not harm the interests of the society.

Marketing Environment
The marketing environment is a group of factors comprised of both controllable and uncontrollable
forces that affect the ability of a firm to generate value and attract and serve consumers. Certain
factors in the marketing environment are internal and specific to the firm whereas certain factors
are outside the marketing enterprise. The internal and organisation specific factors affecting the
marketing activities are collectively known as micro factors. The larger societal forces that affect
the micro environment are commonly referred to as macro factors. A deep understanding of these
environmental factors is highly essential for the success of the marketing activities of a firm. The
marketing manager has to formulate the marketing policies and programmes of the company in
accordance with the marketing environment.

Micro Environment of Marketing

Micro environmental factors are related specifically to the marketing firm. They are close to the
organization and have a direct impact on the marketing operations. Organisations should carry out
a good analysis of their micro environment before deciding their marketing strategies. There are
five major components in the micro environment of a marketing firm. These components are
described below:
1. The Company
The type of organisation, its objectives, structure, management, vision and mission are
important factors influencing the marketing policies and programmes. The marketing
department of an organisation is not independent. It has to work in co-operation with the
top management and other departments of the organisation. Therefore the entire
organisation influences the marketing activities.
2. Suppliers
Suppliers are parties who deliver the raw materials for the production of goods or services.
The quality, quantity, cost and availability of the raw materials depend on the type of
suppliers. Therefore suppliers critically influence the marketing activities of an
organisation.

3. Marketing Intermediaries
Marketing intermediaries are parties assisting in the promotion and distribution of goods
and services of an organisation to consumers. Wholesalers, retailers and physical
distribution firms are some of the marketing intermediaries.
4. Competitors
The competitors are rival firms marketing products and services similar to that of a firm.
In a market situation all firms have to set their marketing strategies in accordance with the
nature and degree of competition they face. Competitor analysis and monitoring is crucial
for an organisation to maintain or improve its position within the market. So competition
is an important factor influencing the marketing activities of a firm.
5. Public
Public in the micro environment of marketing means any party who maintains an interest
in the marketing activities of a firm. Public can help or hinder the ability of a firm to market
its products or services. The major types of public are:
a) Financial Publics: Individuals or institutions who grant financial assistance to an
organisation for its marketing activities. For example, banks and other financial
institutions.
b) Government Publics: Central and state governments introduce and implement rules
and legislations which monitor, regulate and control the marketing activities.
c) Media Publics: Agencies that publish information, features and news about the
products and services of a firm. Media public includes newspapers, paper and online
magazines, blogs, social media, radio and television.
d) Citizen Publics: The marketing activities of organisations are influenced by the needs
and interests of the different citizen groups such as the consumer organisations and
environment associations. The citizen publics usually raise the various concerns of the
consumers, environment and society at large.
e) Local Publics: People and households in the proximity and vicinity of a marketing
firm who are directly or indirectly exposed to the benefits and shortcomings of the
marketing activities of a firm are referred to as local publics. Firms usually appoint
community relations officer to address and resolve the problems of local publics.
 f) General Publics: Public at large or the mass population comes under the purview of
general publics. A firm has to understand the attitude and perception of the general
publics towards its products and services. The perception and attitude of the public
directly influence the consumers buying habits.
g) Internal Publics: People inside the organisation come under internal publics. Internal
publics include employees, managers and board of directors. The attitude and
behaviour of internal publics influence the marketing activities of an organisation.
Firms use newsletters, memos, company meetings, intranets and other means to
motivate and educate the internal publics.
6. Customers
Firms have to examine the needs and interests of their target market. If the products and
services fail to address the needs of the customers in the target market, firms cannot survive
in the market. The characteristics of customers exercise considerable influence over the
marketing strategies of a firm.

Macro Environment of Marketing

The macro environment consists of a large number of unpredictable and uncontrollable external
factors that affect the environment as a whole. These outside forces greatly influence the marketing
decisions of an organisation. The following are some of the important macro
environment factors of marketing:
1. Demographic
Demography refers to the characteristics of the population chosen for marketing. It includes
the size, location, age, gender, race, and occupation of the population. These characteristics
of a population critically influence the buying habits of people. So a marketing firm has to
study in detail the demographic variables of the population.

2. Economic Factors
The economic environment consists of factors that influence the purchasing power of
consumers in the market. Income, savings, expenditure and consumption pattern are some
of the important elements that influence the buying decisions of people.

3. Cultural Factors
Cultural factors include values, norms and traditions of the society. The marketing
decisions of firms are greatly influenced by these factors in the cultural environment.

4. Natural Factors
Natural factors include the utilisation of natural resources for the manufacturing of
products. Wastages of raw materials and finished goods can cause harm to the environment.
Surplus production and environment pollution due to production and marketing activities
are some of the other issues affecting nature. Natural environment is a decisive factor of
the marketing operations.
 5. Technological Factors
Innovations and modifications in production and marketing are the outcomes of
advancements in technology. Marketing activities are subject to changes in technology.

6. Political Factors
Political factors include government policies and various rules and legislations affecting
the marketing operations. Companies have to frame their marketing activities in
accordance with the laws of the country.

Functions Of Marketing
Different marketing experts have identified and studied different functions of marketing. These
functions range from 5 to 120.Among the different lists of functions; Clark and Clark (Principles
of Marketing, 1947, pp.13-14) have analysed and classified marketing functions into three
categories which are widely accepted in the field of marketing. According to them marketing
performs three important functions;
1. Functions of Exchange
2. Functions of Physical Supply and
3. Facilitating Functions.

1. Functions of Exchange
This category of functions covers buying and assembling and selling functions during the
course of marketing goods and services. A short review of these functions are as follows;
a) Buying and Assembling: Buying is the first stage in the process of marketing. A
manufacturer has to purchase raw materials for producing goods. Similarly, a
wholesaler is required to buy goods from the manufacturer to sell them to the retailer.
A retailer has to buy goods from the wholesaler to sell it to the consumers. Assembling
is the process of bringing together similar goods purchased from different sources for
the purpose of selling. Assembling starts after the buying of goods. It is creation and
maintenance of the stock of goods purchased from different sources.
b) Selling: It is the stage where ownership and possession of the goods and services are
transferred from the seller to the buyer. It is the act of offering products and services to
the buyer in return for money.

2. Functions of Physical Supply

Physical supply function of marketing aims at ensuring that goods and services are offered
at the right place at the right time. The two important methods adopted in the physical
supply function are;
a) Transportation: In marketing, transportation means the movement of goods from
the place of origin to the place of customers. Place and time utilities are not possible
in the absence of adequate transportation facilities. Road, water and air are the
 important modes of transportation used for transporting goods from one place to
another.
b) Storage and Warehousing: Storage and warehousing facilities are used by
manufacturers, wholesalers and retailers for preserving the raw materials and
finished products to ensure an uninterrupted and smooth supply of goods to
consumers. Sufficient storage and warehousing facilities are necessary to meet the
seasonal changes in the demand for products. More volumes of commodities should
be stored for marketing during the periods of high demand.

3. Facilitating Functions
Facilitating functions are subsidiary functions that are considered as the supporting
functions of marketing. These functions are highly essential for conducting the whole
process of marketing. The major facilitating functions are;
a) Financing: Marketing is an economic process that requires money to perform all
its functions. The effectiveness of marketing functions depends on the availability
of funds. So procurement of money for financing different activities is a major
function of marketing.
b) Risk Bearing: Risk is inherent in every business. It is not avoidable in marketing
either. Risk starts from the first stage of the marketing process. An efficient
marketer can adopt certain measures to reduce or minimise the risk factors but it is
not possible to keep away from risk elements completely. There are risks like Loss
of goods in transit, theft, natural calamities like fire, flood etc. in marketing. So a
marketer has to be always prepared to face all the risks inherent in the marketing
process and risk taking is considered as an important function of marketing.
c) Standardisation and Grading: Standardisation refers to fixing and maintaining
the standards for quality, quantity, size and other features of the product. Standard
is a description of a product by authority. It is declaration by the acceptable level of
quality, features. size and shape of the product, Standardisation involves two phase:
i. Fixing the standards and
ii. manufacturing the products as per the standards fixed.
Standardisation is an important marketing function which makes the buying and
selling easy. A buyer can purchase a standardised product with a high level of
confidence because the manufacturer/marketer has certified its quality. There is a
better image for standardised product compared to non-standardised product.
Grading is a part of standardistion. It is a process of classifying the products on the
basis of quality, size, shape, colour, weight etc. Grading helps to determine the
value of the product as the best grade commands the highest price.

4. Market Information
Collection of relevant market information is an important function of marketing. A
marketer requires information regarding the needs and wants of the customers, market
 condition, competitors' products etc. to formulate adequate marketing strategies for his
products. Market information is the key input for all the marketing decisions. Market
surveys and customer feedback are necessary to collect relevant market information.

MARKETING MANAGEMENT
Marketing is the process of satisfying the needs and wants of the consumers whereas management
is the processes of planning, organising, staffing, directing, motivating, coordinating and
controlling of various activities of a firm. Management of marketing activities is ‘Marketing
Management'. Marketing management is an important functional branch of business management
which concentrates on the practical application of marketing techniques and the management of
an organisation's marketing resources and functions. It can be described as the process of carrying
out the tasks that achieve desired exchanges, between the firm and its customers. Marketing
management governs the marketing activities of a firm. The major functions of marketing
management are planning, organising, staffing, directing, co ordinating, budgeting, reporting and
controlling of marketing activities.

DEFINITIONS
• According to Philip Kotler, "marketing management is the process of planning and
executing the conception (marketing idea), pricing, promotion, and distribution of goods,
services, and ideas to create exchanges with target groups that satisfy customer and
organisational objectives".
• According to Still and Cundiff, "marketing management is concerned with the direction of
purposeful activities towards the attainment of marketing goals".

FEATURES
The salient features of marketing management are as follows;
1. It is a functional branch of business management.
2. It is a process of planning and executing marketing functions.
3. It attempts to achieve the marketing goals of a firm
4. It emphasises on optimum use of the resources of the firm and co-ordinates the efforts of its
people in order to effectively and efficiently attain the marketing goals of the firm.
5. The process of marketing management is carried out to put the marketing concepts into
practice.
OBJECTIVES
Marketing management attempts to achieve the following major
1. To plan, organise, direct and control all the marketing activities of a firm.
2. To give maximum satisfaction to the customers.
3. To carry out the marketing activities effectively and efficientlv so as to ensure optimum
utilisation of firm's resources and increase profits.
4. To expand the customer bases of the firm.
5. To formulate an ideal marketing mix for the firm.
6. To create and maintain a good image for the firm and its products in the market.

FUNCTIONS
Marketing Management discharges many functions in the field of marketing such as planning,
organising, directing, motivating, coordinating and controlling. These functions aim at achieving
the marketing goals of a firm. The important functions of marketing management are briefly
described below;
1. Determining the Marketing Objectives
The functions of marketing management begin with identifying and defining the marketing
objectives of the firm. The marketing objectives may be short term or long term. Whatever be
the nature of marketing objectives, it must be in accordance with the objectives of the
organisation.

2. Planning
After clearly specifying the marketing objectives, the important function of the marketing
management is to formulate plans to achieve those objectives. This includes formulation of
marketing programmes, marketing strategies and sales forecasting.

3. Organising
Organising function of marketing management involves the collection and coordination of
adequate resources to implement the marketing plan so as to achieve the specified objectives.
The organization function establishes a framework for performing marketing activities, fixes
duties, responsibilities and powers of people working to achieve the marketing objectives.

4. Co-ordinating
Coordination refers to the integration of the various activities of marketing. It involves
coordination among various activities such as sales forecasting, product planning, product
development, pricing, distribution, promotion, transportation, warehousing etc.
5. Directing
Direction in marketing management refers to leading and motivating the people associated
with the marketing efforts in the desired path to attain the objectives. It involves leadership
motivation, inspiration, guiding and supervision of the people.

6. Controlling
Control function aims at improving the effectiveness of the marketing activities. It involves
establishing standards for marketing activities and evaluation of actual performance to detect
the variations from the standards. Corrective measures are adopted when the actual results are
less than the standards fixed.

7. Staffing
Success in the marketing efforts depends on the efficiency of people employed in this process.
Staffing function of marketing management searches and selects competent people to perform
the marketing activities.

MARKETING MIX/4 P'S

Marketing mix is a popular usage in the study of marketing. The basis components of marketing
mix are product, price, place and promotion. It is also known as 4 P's of marketing. The marketing
strategies of a firm revolve around these four elements. The varying mix of these four ingredients
of influences the demand for a product and customer satisfaction. A firm has to prepare a mix of
right product, right price, right place and right promotion to attain success in marketing.

DEFINITIONS
According to Philip Kotler, "Marketing mix is the set of marketing tools that the firm uses to pursue
its marketing objectives in the target market".
According to Prof. Neil H. Borden, Harvard Business School,” The marketing mix refers to the
apportionment of the efforts, the combination, the designing and the integration of the elements of
marketing into a programme or mix which, on the basis of an appraisal of the market forces will
best achieve the objective of an enterprise at a given time. Thus marketing mic is an integration of
marketing elements.”
According to Stanton, "Marketing mix is the term used to describe the combination of the four
inputs which constitute the core of a company's marketing system. The product, the price structure,
the promotional activities and the distribution system".

FEATURES OF MARKETING MIX

The salient features of marketing mix are as follows;
1. It is a combination/integration of four important marketing variables such as product, price,
place and promotion. These four variables depend on each other.
2. It is a tool adopted by the firm to achieve marketing targets in terms of sales, profit and
consumer satisfaction.
3. The mixture or composition of the four elements is not rigid. It can be altered on the basis of
the changes in the target market.
4. Periodical adjustments and modifications in the marketing mix are necessary to improve
customer satisfaction and thereby attain the desired goals of the firm.
5. Marketing mix aims at giving maximum satisfaction to the customers. The objective of
marketing mix is to give the customers the right product at the right price, in the right place
through right promotional measures.

ELEMENTS OF MARKETING MIX

Marketing Mix is a relevant area in the study of marketing management. In order to attract
consumers and for b0osting sales, every firmn has to concentrate on the four marketing variables;
product, price, place and promotion. A suitable combination of these ingredients of marketing is
called Marketing Mix. It is the mixture of four 4 P's which govern the whole system of marketing.
The marketing mix is the tool used by a firm for attaining the goals of marketing. A brief
description of the four ingredients of marketing mix is as follows;
PRODUCT
A product is something a firm offers to give satisfaction to consumers. It is the final output of a
production process offered to consumers for satisfying their needs. Product is the most powerful
weapon in marketing. It is considered as the soul of the marketing mix. The major decisions based
on product in marketing include product development, branding, packaging, labeling and other
features of the product. The product manufactured for market should be in accordance with the
needs and expectations of the target market. All the marketing efforts of a firm are meaningless, if
the products offered are not attractive to the consumers. Best quality product with attractive
features is highly essential for ensuring success in marketing.

DEFINITIONS
According to Philip Kotler, "a product is anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want or need. It includes physical objectives,
services, persons, places, organisations and ideas"
According to W. Anderson, "a product should be considered as a bundle of utilities consisting of
various product features and accompanying services".
The major decision making areas based on product are as follows;
1. Product line- It refers to the collection of products to be offered to the customers.
 2. Style, shape, design, colour, quality and other physical features of a product
3. Packaging and labeling of a product
4. Branding and trade mark given to a product.
5. Product servicing and channel of distribution.
6. Product pricing.
7. Guarantees and warranties of the product.

PRODUCT MIX
Product mix refers to a group of products manufactured or traded by the firm to strengthen its
presence in the market, increase its market share and increase the sales turnover for more
profitability. It is defined as the overall products offered by a firm to its customers. According to
Philip Kotler, "product mix is the set of all product lines and items that a particular seller offers for
sale to buyers".

PRICE
Price is defined as the value that is required to purchase a specific quantity of a good or service. It
is the consideration given in exchange for the transfer of ownership and possession of goods and
services. Price is a critical element that strongly influences the position of the product in the
market. Marketing firms use pricing as a tool for achieving the targeted market share or sales
volume, Pricing is also used as a strong weapon for beating competition in the market. Pricing
decisions and strategies directly influence the sales volume and profits of the firm. Periodical
reviews and adjustments in the price of the product are necessary to manage the survival of the
product in the target market. The price fixed should be sufficient enough to generate desired profit
for the firm but reasonable for consumers to purchase the product. It should be capable enough to
overcome the competition posed by other similar products in the market.
OBJECTIVES OF PRICING
The following are the basic objectives of pricing in the marketing process;
1. Maximise profit
2. Increase sales volume
3. Increase market share
4. Growth of the firm
5. Discourage new entrants into the industry
6. Enhance the image of the firm and the product
7. Encourage customers to buy the product
8. Discourage competitors from cutting prices
9. Get competitive edge
PRICE MIX
Price mix is an umbrella term which is used to cover all the factors associated with pricing such
as unit price level to be adopted, discount to be offered, pricing strategies, price discrimination
(different prices for different groups of consumers for identical products offered by the firm) and
terms of credit to be allowed to customers. A firm has to make sure that it offers a rational mix of
prices to the customers. A rational mix of price is reasonable to the customers, gives the expected
return to the firm, and effectively handles competition in the market. A firm has to consider
different factors while determining the price of the product. Some of the important factors are cost
of production, cost of distribution, competitors' price, expected return (profit), demand of the
product, government policy, pricing regulations. and economic environment of the country.

PLACE
Place is defined as the location where a firm expects to find its customers and consequently, where
the sale is carried out. Place refers to the actual physical position of the customer in a geographic
area. Place in marketing means the area or location of the consumers and not the place of the
business. Place in marketing is also known as channel, distribution or intermediary. A firm has to
understand the place of the consumers and choose adequate distribution network or channel to
reach that place. A proper distribution network or channel is highly essential to deliver the goods
at the place of the customers. Place strategies facilitate the movement of goods from the place
of the manufacturer to the place of the consumers. For large-scale distribution the services of
wholesalers, retailers and other marketing intermediaries are required. A firm has to choose a
channel which is convenient, economical and suitable for the distribution of a specific product.
PLACE DECISION AREAS
The major areas covered in place decision making are;
1. Distribution channel
2. Transportation
3. Warehousing
4. Inventory management
5. Order processing
6. Logistics management.
PLACE MIX
Place mix refers to the combination of all decisions related with the flow of goods from the place
of manufacturers to the place of consumers. The two major components of place mix are channels
of distribution and physical distribution. A Channel of distribution is the route through which a
product moves from the producer to the ultimate consumer. The channel of distribution includes
the original producer, the final buyer middlemen who act in between the producer and the buyer
(wholesaler, retailer and other intermediaries Physical distríbution refers to the set of activities
involved in the movement goods from the producer to consumers via the distribution channel. The
major activities of physical distribution are transportation, warehousing, inventory. management
and order processing.

PROMOTION
Promotion is the communication link between the firm and the consumer. Promotional measures
are necessary to inform the consumers about a product and its features. Various methods of
promotion influence the purchase decision of a potential buyer. According to W.J.Stanton,
promotion encompasses all the tools in the marketing mix whose major role is persuasive
communication". Generation of sales is not possible if the customers are not informed about the
product and its benefits. Promotion fills the gap be the product and the customer.
OBJECTIVES OF PROMOTION
The basic objectives of promotion are as follows;
1. To inform the consumers about the product (product awareness).
2. To encourage the consumers to purchase the product (creation of interest).
3. To increase demand (building demand).
4. To differentiate a product from other similar products in the market (product differentiation).
5. Strengthening the image of the brand in the market (brand image).
There are different ways to promote a product in a market. Firms use both electronic and print
media to promote their products. Incentives like discounts, gifts etc. are offered to the customers
to increase the sales of a given product. etc.
PROMOTION MIX
The overall marketing communication programmes of a firm are known as promotion mix. The
major elements of a promotion mix are as follows;
1. Advertising It is defined as any paid form of non-personal communication of products through
electronic or print media in order to inform and influence customers. For example,
advertisements through television, newspapers etc.
2. Personal Selling: It is a process of helping and stimulating the consumers to purchase a
product or service through oral presentation. For example, canvassing. Customers personally
or through telephone and other electronic means, sales presentations etc.
3. Sales Promotion: It is providing incentives to the customers to encourage them to purchase
the product. For example, gifts, scratch cards, discount offers etc.
4. Publicity: It is giving favorable presentations and news about the product and its features in
the media. For example, articles and reports in newspapers and magazines, radio and TV
presentations, charitable contributions, seminars
IMPORTANCE OF MARKETING MIX
The marketing mix is an important aspect of the marketing plans and strategies. It covers in detail
all the elements of marketing from beginning to end. An effective marketing mix strategy
contributes to the success of the marketing activities of an organisation. The following points
clearly describe the importance of marketing mix;
1. Development of Effective Marketing Strategies
A clear understanding of the marketing mix contributes to the formation of an effective
marketing strategy for the firm concerned. It helps to analyse the feasibility and role of the
product, price, place and promotion in different market situations. Marketing mix provides a
clear direction to the marketing functions. The mix helps in determining the right marketing
strategy for the organisation.
2. Effective Communication
An ideal mix of marketing components helps the organisation to effectively communicate
relevant information to the target market. If the marketing mix is clear, consumers can be easily
informed about the product, price and availability.
3. Value Creation and Modification
Marketing mix helps companies study the merits and drawbacks of the product, price, place
and promotion strategies. Adequate changes and modificatíons can be made on the basis of the
examination of the marketing strategies followed by the company from time to time.
4. Customer Satisfaction
An ideal mix of marketing components helps to attract and retain customers. Customer
satisfaction can be easily attained through suitable marketing mix.
5. Competitive Advantage
Appropriate marketing mix increases the competitive strength of an organisation. Right
product, price, place and promotion help a firm to attain success in the market.

FACTORS AFFECTING MARKETING MIX

The following are some of the important factors which influence the marketing mix;
1. Availability of funds
The financial resource owned by a firm is an important factor that governs the marketing
mix of that firm. If the firm is in a position to spend more money in product research,
design, physical distribution and sales promotion then it can formulate a strong mixture of
4 P's.
2. Requirements of the target market
The needs of the customers strongly influence the proportion of the four basic ingredients
of marketing. For example, if the customers are rational and well informed about all the
available products in the market, then there is no use in spending more money on
advertisements and other sales promotíon methods.
3. Size of the market
 The proportion of the marketing mix varies on the basis of the size of the target market.
For example, a firm has to spend more money on distribution and promotion when the size
of the market is big.
4. Competition
The marketing mix formulated by the competitors strongly influences the marketing mix
of a firm. Firms use marketing mix as a response to the actions of competitors in the market.
5. Technology
Drastic changes have occurred in the marketing mix adopted by companies in the modern
world. Development of science and technology is the major reason behind these
revolutionary changes. Most firms now use hi-tech methods of production, distribution and
promotion.