Principles of Marketing (BBA 204) Unit 1

Principles of Marketing (BBA 204)

Unit I

Basics of Marketing Management

                                       

Q.1.     Define the following terms.

(i)                 Marketing Management

(ii)               Need

(iii)             Want

(iv)             Market

(v)               Product

(vi)             Customer

(vii)           Consumer

(viii)         Exchange

(ix)             Satisfaction

(x)               Demand

Ans :

(i)         Marketing Management:

“Marketing Management is the analysis , planning implementation and control of programmes designed to create build, maintain mutually beneficial exchanges and relationships with target market for the purpose of achieving organizational objectives”.

(ii)        Need:

“A state of felt deprivation”. Human needs are states of felt deprivation. They includes basic physical needs for food , clothing, warmth and safety. Social needs for belonging and affection; and individual needs for knowledge and self-expression.

(iii)       Want:

Want refers to what customer desires to have after fulfilling his basic needs. Customer wants to have something more than the need and then want is created. Wants are the objects used to satisfy the needs of customers. A customer has a need of food to satisfy the hunger but if needs only McDonalds’s burger or pizza, it is want.

(iv)       Market:

“A set of actual and potential buyers”. In modern marketing sense the term market has a broader meaning. It refers to “set of actual and potential buyers of a product or services”.

(v)        Product:

Product refers to the bundles of benefits. The product element of the marketing mix signifies the tangible or intangible product offered to the customer which is the satisfier of the needs. In simple word, a product is an offer.

(vi)       Customer:

People or an organization who want to satisfy their need and they actually buy a product. They are also called seekers of satisfaction.

(vii)      Consumer:  A consumer is the person who consumes the products. He may be the customer also if he/she buys  or may be separate from the customer if someone else buys for them.

(viii)  Satisfaction:

Satisfaction with a purchase depends on how well the product’s performance matches with the customer’s expectations. Customer satisfaction is a key influence on future buying behavior. Satisfied customers buy again and tell others about their good experience. Customer satisfaction results when actual performance of the products matches with the perceived quality of product expected by the customers.

(ix) Exchange:

Marketing occurs when people decides to satisfy needs and wants through exchange. Exchange is the act of obtaining a desired object from someone by offering something in return. For exchange four basic conditions must be satisfied; there must be two parties, both parties must have something valuable to each other, both must be willing to exchange, both must be free to accept or reject the offer. Whereas exchange is the core concept of marketing a transaction in turn is marketing’s unit of measurement. A transaction consists of trade of values between two parties.

(xi)    Demand:

When want is backed by purchasing power then it gets converted into demand. A customer may want to have a coke but he will demand it only when he has money to buy it, so want with the purchasing power is called demand and it is demand which is more important for marketing or seller.

Q 2. Explain the Nature, Objective and scope of marketing management in                 present business environment?

Ans.    Nature of marketing management

1.      Marketing is an economic growth. Marketing embraces all the business activities involved in getting goods and services from the hands of producer into the hands of final consumers. The business step through which goods progress on their way to final consumer is the concern of marketing.

2.      Marketing is a legal process by which ownership transfer. In the process of marketing the ownership is transfer from seller to purchaser or from producer to the end user.

3.      Marketing is a system of interacts business activity. Marketing is that process through which business enterprises, institution, or organization interacts with the customer and stakeholders with the objectives to earn profit, satisfy customers, and manage relationship. It is the performance of business activity that directs the flow of goods and services from producer to consumer or user.

4.      Marketing is managerial function. According to this approach the emphasis is on how the individual organization processes marketing and develop the strategic dimensions of marketing activities.

5.      Marketing is the social process. Marketing is the delivery of a standard delivery of living to society. According to Cunningham and Cunningham (1981) Societal Marketing performs their essential functions:-

·         Knowing and understanding the consumers changing needs and wants.

·         Efficiently and effectively managing the supply and demand of products and services.

Scope of Marketing Management

(i)                 Study of consumer want and needs

Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants motivates consumer to purchase.

(ii)               Study of consumer behavior

Marketer performs study of consumer behavior. Analysis of buyer behavior helps marketer segmentation and targeting.

(iii)             Production planning and development

Product planning and development Starts with the generation of product idea and end with the product development and commercialization. Product planning includes everything from branding and packaging to product line expansion and contraction.

(iv)             Pricing Policies

Marketer has to determine pricing policies for their products. Pricing policies differs from products to product. It depends on the level of competition, Product life cycle, marketing goals and objectives etc.

(v)               Distribution

Study of distribution channel is important in marketing for maximum sales and profit goods are required to be distributed to the maximum consumers at minimum cost.

(vi)             Promotion

Promotion includes personal selling, sales promotion and advertising. Right promotion mix is crucial in accomplishment of marketing goals.

(vii)           Consumer satisfaction

The product or services offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.

Objectives of Marketing Management

(i)          Creation of demand

The marketing management’s first objective is to create demand through various means. A conscious attempt is made to find out the preferences and tastes of the consumer. Goods and services are produced to satisfy the needs of the customer. Demand is also created by information the customers the utility of various goods and services.

(ii)               Creation of Goodwill and public image

To build up the public image of a firm over a period is another objective of marketing. The marketing department provides quality products to customers at reasonable prices and thus creates its impact on the customer.

(iii)             Customer satisfaction

The marketing manager must study the demand of customer before offering them any goods or services. Selling the goods or services is not that important as the satisfaction of the customer’s needs. Modern marketing is customer-oriented. It begins and ends with the customer.

(iv)             Market share

Every business aims to increasing its market share i.e. the ration of its sales to the total sales in the economy. For instance both pepsi and coke compete with each other to increase their market share. For this they have adopted innovative advertising, innovative packaging, sales promotion activities, etc.

(v)               Generation of profits

The marketing department is the only department which generates revenues for the business. Sufficient profits must be earned as a result of sale of want satisfying products. If the firm is not earning profits, it will not be able to survive in the market.

Q. 3) Explain the various philosophies of Marketing. Discuss the utility of each of the philosophies in the present marketing environment.

Ans. The various types of Marketing Philosophies are as follows:-

1.      Production Philosophy :  According to this philosophy, it was believed that profits could be maximized by producing at large scale, thereby reducing average cost of production. It was also assumed that consumers would favour those products which were widely available at an affordable price. Thus, availability & affordability of the products were considered to be the key to the success of a firm. Therefore, greater emphasis was placed on improving the production and distribution efficiency of the firms. The utility of this Philosophy is only when demand exceeds supply & vice versa.

2.      Product  Philosophy : As a result of emphasis on production capacity during earlier days, the position of supply increased over period of time. Thus, with the increase in the supply of the products, customers started looking for products which were superior in quality, performance and features. Therefore, the emphasis of the firms shifted from quantity of production to quality of products. The focus was on product improvement & it became the key to profit maximization, under the product philosophy. The utility of this philosophy applies to those customers who look for quality products no matter of price.

3.      Selling  Philosophy : With the passage of time, the product quality and availability did not ensure the survival and growth of the firms because of large number of sellers selling quality products. The business philosophy changed. It was assumed that customers would not buy, or not buy enough, unless they are adequately convinced or motivated to do so. Therefore, firms must undertake aggressive selling and promotional efforts to make customers buy their products. Thus, focus of business shifted to pushing the sale of products through aggressive selling techniques with a view to persuade the buyers to buy the products. In today’s market, it applies to those firms who need to maximize their sales or who are not famous enough & to those products which are not popular enough.

4.      Marketing Philosophy : Marketing orientation implies that focus on satisfaction of customer’s needs is the key to the success of any organisation in the market. It assumes that in long run an organisation can achieve its objectives of profit maximization by identifying the needs of its present and prospective buyers and satisfying them in an effective way. Thus, the focus of the marketing philosophy is on customer needs and wants and the customer’s satisfaction becomes the means to achieving the firms objective of maximizing profit.

In present market, it helps in generating demand and customer value at a profit. The greater the satisfaction, the happier the customer will be.

5.      Societal Marketing Philosophy : The societal marketing philosophy holds that the tasks of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner so that the long-term well-being of the consumer and society is taken care of. Thus, the societal marketing philosophy is the extension of marketing philosophy as supplemented by the long-term welfare of the society. Apart from the customer satisfaction, it pays attention to the social, ethical and ecological aspects of marketing. The utility of this philosophy is everywhere in today’s marketing environment & applies to all organisation whether small or big.

Q. 4) Differentiate between Marketing Concept and Selling Concept.

Ans: Before moving to conceptual differentiation, consider the following point- “Marketing refers to a large set of activities of which selling is just one part.” The major difference between marketing philosophy and selling philosophy is listed below:

1.      Transfer of Title vs Satisfying Customer Needs : The main focus of selling is on affecting transfer of title and possession of goods from sellers to consumers. In contrast, marketing activities put greater thrust on achieving maximum satisfaction of the customer’s needs and wants.

2.      Profit Through Maximising Sales vs Customer Satisfaction : All selling activities directed at maximizing sales and, thereby, the profits of the firms. Marketing on the other hand, is concerned with customer satisfaction and thereby increasing profits in the long run.

3.      Start  and End of the Activities : Selling activities start after the product has been developed while, marketing activities start much before the product is produced and continue even after the product has been sold.

4.      Difference in the Emphasis : In selling, the emphasis is on bending the customer according to the product while in marketing,  the attempt is to develop the product and other strategies as per the customer needs.

5.      Difference in Strategies : Selling involves efforts like promotion and persuasion while marketing uses integrated marketing efforts involves strategies in respect of product, promotion, pricing and physical distribution.

Q. 5) What do you mean by Marketing Environment? Discuss various factors affecting marketing environment.

Ans.  The marketing environment refers to all those forces and factors that affect the firm’s ability to build and maintain successful relationship with customers. The various factors affecting marketing environment are

1.      Internal Environment : This refers to the factors existing within an organisation and an organisation have control over them i.e. it can alter or modify them accordingly whenever required. They are usually linked with strengths and weakness of any organisation.

2.      External Environment : This refers to those factors which are beyond the control of a firm, its success depend to large extent on its adaptability to the environment. These are linked with opportunities and threats. External environment are consists of :

a)      Micro Environment : The environmental factors that are in its proximity. The factors influence the company’s non-capacity to produce and serve the market. They are different for different firms as they affect a particular firm only. The factors are :

i) Customers : Customers can affect any organisation at very large. They are the only source of demand. They plays very important role in any organisation.

ii) Suppliers : The suppliers to a firm can also alter its competitive position and marketing capabilities. These are raw material suppliers, energy suppliers, suppliers of labour and capital.

iii) Middleman : They play very important role for any producer for promoting, selling and distributing the goods and services to ultimate customers.  

iv) Public : A public is defined as ‘any group that has an an actual or potential interest in or impact on a company’s ability to achieve its objectives.’

v) Competitors : These are those who sell the goods and services of the same  and similar description, in the same market. Apart from competition on price, there are like product differentiation.

vi) Facilitators : These are those who provide services to business organisation, such as transport, banks, etc.

b) Macro environment : Macro environmental factors act external to the company and are quite uncontrollable. These factors do not affect the marketing ability of the concern directly but indirectly the influence marketing decision of the company. The factors are :

i) Demographic Environment : Here, the marketer monitor the population because people forms market. Marketers are keenly interested in size and growth rate of population in different regions.

ii) Economic Factors : These consists of macro-level factors related to means of production and distribution that have an impact on the business of organisation.

iii) Physical Forces : Components of physical forces are earth’s natural renewal and non-renewal resources, both of these often change the level and type of resource available to a marketer.

iv) Technological Factors : These consists of factors related to knowledge applied, and the materials and machines used in the production and that have an impact on the business of an organisation.

v) Political and Legal Forces : Development in the political and legal field greatly affect the marketing decisions. Sound marketing decisions cannot be taken without taking into account, the government agencies, political party in power & in opposition in their ideologies, pressure groups and laws of the land.

vi) Social and Cultural Forces : The social forces attempt to make the marketing socially responsible. It means that the business firms should take a lead in eliminating socially harmful products and produce only what is beneficial for the society.