Nature and Scope of Marketing

By: Kalpana Ambepitiya

PhD (Marketing) (Reading), MBA (Finance) (IGNOU-India), MPA (Colombo-Sri Lanka), PGD (Finance) (IGNOU-India), BBMgmt

Hons (Marketing) (Kelaniya-Sri Lanka)

Nature and Scope of Marketing

• The History of Marketing• What is Marketing• Definitions of Marketing• Development of Marketing• Marketing Management Orientations• Why do organizations needs to be Marketing Oriented?• Relationship Marketing

History of Marketing• Early humans had only basic requirements such as food and shelter• They themselves obtained them collecting, growing and hunting. They

lived under trees or in caves. Therefore they were self- sufficient.• Once the needs became more, the man could not obtain them on his

own. • Then he had to exchange for what he has with others. Eg. A farmer

exchanged his rice with fisherman's fish.• It was called the Barter System• However, Barter system was not efficient. There were many problems

with the barter system. E.g. Person could not easily find another person who had his need and who wanted his surplus.

• Then came the introduction of medium of exchange called money.

• The birth of selling goods and services started with the use of money as a medium of exchange.

• People started producing more items than that they want and sold them in the market for money and obtained their other requirements from the money they received,

• That gave birth to markets. Markets are places where customers and suppliers met. They were geographical places. It was a pre-planned place at a pre-planned time to exchange goods.

Markets• The excess items were sold in the market and markets

became very competitive• Producers met the buyers directly at the market

place.• After some time the producers could not handle

selling effectively. • There were problems of sharing time for production

and selling and many other practical problems.• As a results specialist sellers were born. They are

called the middlemen.

• The focus shifted to sales, retaining customers, finding new customers

• Selling could not be done well without really understanding the needs and wants of customers

• Therefore customers became more important• A customer oriented approach had to be used • That paved the way to form businesses as marketing

organizations

What is Marketing?• Marketing is a societal and managerial process

where people and organizations ( customers) obtain what they need and want by exchanging products and services of value with each other

• Marketing focuses on the needs and wants of customers.

• It is concerned about satisfying customers through supply of goods and services

• Many think marketing is only advertising and selling. But marketing is almost a way of life that everybody needs to know.

Iceberg Theory

Iceberg- under water

Selling &

advertising

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Water

All profit and non profits are using marketing

• Marketing is not only used by commercial profit oriented organizations but also by other organizations such as temples, churches and many other not for profit organizations and persons.

• For example : Temple/Church provide their service ( product) to its congregation( customer) It announcers its activities

( promotion) to its congregation (target market). It depends on funds of congregation ( price/payment) for its survival. Further it is located where their congregation can have easy access

( place). • Therefore customer would be the most important element of

any marketing organization. • Marketer needs to strive to satisfy its customers as “ No

customers means No business”

Few definitions of Marketing

• Marketing is not a science and there is no single universally adopted definition. Lets discuss about some widely used definitions.

• Adams Smith( 1776) “ Consumption is the sole purpose of all production and interest of product ought to be attended to, only so far as it may be necessary for promoting that of the consumer”

Phillip Kotler( The Millennium Edition –2000) “Marketing is a societal process by which individuals and groups obtain what they want through creating, offering and freely exchanging products and services of value with others

Chartered Institute of Marketing – UK“ Marketing is a management process, which is

responsible in identifying, anticipating and satisfying customer needs and wants at a profit”

• American Marketing Association“Marketing Management is the process of planning and executing the

conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational goals”

Dibb, Simkin,Pride and Ferrel“Marketing Consists of individual and organizational activities that

facilitate and expedite satisfying exchange relationships in dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas”

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SNegative Demand •Dental Work

•Vaccination

No Demand •Foreign Language Courses

Latent Demand •Harmless Cigarettes•Fuel-Efficient Cars

Declining Demand •Walkman•Cassette Players

Irregular Demand •Umbrella•Resorts

Full Demand •Changing Preference•Increasing Competition

Overfull Demand •Local Milk powder

Unwholesome Demand •Cigarettes•Alcohol

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TS Needs, Wants and Demands

• Needs – Basic Human Requirements• Wants – Directed at specific objects• Demands – Backed by ability to pay

Target Markets, Positioning & Segmentation

• STP Analysis

Offerings and Brands

• Offering – Value Proposition made Tangible• Brand – Offering from a known source

Value & Satisfaction

• Value – Benefits / Cost• Customer Value Triad – Quality, Service and Price• Satisfaction – Product’s perceived performance

Marketing Channel

• Communication Channel – Deliver & Receive message• Distribution Channel – Display, sell & Deliver• Service Channel – Carry out transactions

Core ingredients of various definitions indicate the key functions and activities of marketing

• Customer is the center of all Marketing activities.• Marketing focuses on the needs and wants of customers. • Identifying favorable emerging market opportunities• It is concerned about satisfying customers through supply of goods

and services• Marketing involves analysis planning and control• Marketing is concerned about staying ahead with competition and

making profits • Marketing has a heavy emphasis on relationships• Creating value to both the customer and organization

Development of Marketing

• Marketing as an exchange process• exchange is the act of obtaining something by offering

something in return ( money, services, goods or a combination)

• For an exchange to take place following conditions must exists:

• 1. Two parties2. Each party must possess something of value that the other party likes

• 3. Parties must be able to communicate about their value proposition

Is Marketing a function of management or a business philosophy ?

• It is a function of management as well as a business philosophy

• It is considered as a function of management as it uses management techniques in satisfying customers.

• Businesses has various divisions that handles different functions such as human resource, financial, operations and marketing.

• In a typical Marketing Department there are marketing managers, product managers, sales managers, sales representatives, sales persons, delivery assistants etc.

As a function, marketing is involved in several activities• Identifying customer requirements through research• Study about customer perception and products, set

prices, involved in distribution systems, promotion activities, etc.

• Anticipate customer demand by forecasting• Work with other functional departments to develop

products and services to satisfy customer needs• Simply analyzing, planning, implementation and control of

all the marketing activities.

• Marketing as a business philosophy

• Marketing is considered as a overall business philosophy which runs through all departments of an organization and embedded in all the activities of a marketing organization. It is a way of business thinking.

• The idea rooted in satisfying customers through the supply of goods and services does not restrict to one department or function.

• It is the purpose of the whole business. Everyone should have the customer oriented attitude in an organization.

• Customer is the King

• Marketing is running like a silver lining in all aspects of the business.

• Therefore it is considered as an attitude of mind rather than a specific function or discipline.

• A marketing integrated approach is required in all departments and functions of a company

• Peter Drucker- “Business success is not determined by the producer but by the customer”

Marketing Management Orientations in the Evolution of Marketing?

• Production Concept: “ Consumers will prefer products that are widely available and inexpensive”

• - Concentrates on – high production efficiency- low cost- mass distribution

• Example : Ford T- Model• : Govt Hospital and other Service Depts

• Price and place considered

Ford T Model

Product Concept• “ Consumers will favor those products that offer most

quality, performance or innovative features”• Just making superior products will make customers

seek and buy them• More focus on “Product” in the M. Mix. • Marketing Myopia- shortsightedness of not

considering customer needs and behavior

Selling Concept• “If consumers are left along, will ordinarily not buy

enough of the organization's products. Therefore the organizations must undertake aggressive selling and promotional effort”

• Consumers have buying lethargy and have to be persuaded

• Sell what is made or available rather than what consumer wants.

• Heavy focus on Promotion

Marketing Concept• “Key to achieving organizational goals consists

in determining the needs and wants of target market and delivering the desired satisfaction more effectively than competitors”

• Focus on all Product, Price, Place and Promotions

• To apply marketing concept three conditions should be met

Key Components of the Marketing Concept

Selling Vs. Marketing

• Starting Point- focus- Means- End

Factory Product PromotionProfits through sales volume

Target Market

Customer

needs Coordinated - Mktg

Profit through customer satisfaction

Societal Marketing Concept“Organisations task is to determine the needs, wants and

interest of consumers of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserve or enhances the customer’s and the societies well being”

• They must balance often conflicting position of company profits, consumer wants and public interest

• Societies well being is the public interest which includes – Ecological ( Green Marketing), Human

( Ethical Marketing) and The Intelligent Consumption

What is Green Marketing?

• This stems from how marketer responds to the environment. The marketers have been practicing very environmental destructive activities.

• Resource depletion and degradation - Genetic engineering- Pollution- Harmful emissions and products- health hazards

What is ethical Marketing?

• Ethical Marketing are the rules of conduct and moral principals regulating marketing.

- The limit of Claims/Promises that can be made as to product benefits

- Discriminating competing products- Marketing of products like cigarettes, alcohol- Limitations in Marketing products to children- Religious/racially susceptible Brand names and images- Unaccepted Promotional methods- Using women in unaccepted manner

Modern approach - Holistic Marketing

• The holistic marketing concept looks at marketing as a complex activity and acknowledges that everything matters in marketing

Holistic Marketing

Relationship Marketing

• Relationship marketing includes of building mutual satisfaction with customers long term relationships with key parties as well as go through profit of the business.

• Relationship marketing involves cultivating the right kind of relationship with right kind of groups.

• Outcomes of relationship marketing is to create marketing network which consist of customers, employees, supplies, distributors, retailers, agencies and so on.

• Benefits of relationship marketing–Retaining existing customers is cheaper than

getting new ones–Repeat customers are costing less to service as

they are familiar with the company–Reduce customer dissatisfaction and bad word

of mouth–Keep customer databases and service more

effectively– Small changes in retention rates have large

effects on revenue

Integrated Marketing

• The marketer task is to device marketing activities and assemble fully integrated marketing programmes to create, communicate and deliver value for customers.

• Marketing programmes are the combination of decisions on value enhancing marketing activities to use.

Example;

Internal Marketing

• Internal Marketing is the task of hiring, training and motivating to able employees who want to serve customers well.

• Internal Marketing must place on two levels; – At the level thinks the various marketing functions – sales

forcing, advertising, customer service, product management, marketing research and so on.

– Another level thinks about the customer wants, needs, demand and satisfaction.

Social Responsibility Marketing

• Social responsibility marketing concept build social and ethical consideration into their marketing parties.

• Focus on satisfying customers needs and wants while enhancing individual and societal well-being.

• Considering the collective needs of society as well as customer desires and the organization’s profits:.

If an organization can adopt a marketing oriented approach it would be able to get

• Increased customer satisfaction• Increased customer loyalty• Increased reputation• Increased motivation among staff• Increased market share• Reduction of waste• Combat threats from competitors

Difficulties in Developing the Marketing Orientation

• The main problem is with the differences of emphasis of other branches of the organization.Engineering, production, Finance, R&D, HR etc.

• Lack of committed leadership and vision• Failure of managers to understand the true concept• Inability to to adapt to change• Difference in attitudes/culture• Autocratic leadership • Lack of customer knowledge• Lack of infrastructure- required technology