What Is Marketing?

Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing
is meeting needs profitably. Marketing management as the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior customer value.
What Is Marketed?
Marketers market 10 main types of entities: goods, services, events, experiences, persons, places,properties,
organizations, information, and ideas.
Marketing Concepts
Target Markets and Segmentation: A marketer can rarely satisfy everyone in a market. Therefore, marketers start
with market segmentation. Theyidentify and profile distinct groups of buyers who might prefer or require varying
products and marketing mixes. Market segments can be identified by examining demographic, psychographic, and
behavioral differences among buyers. The firm then decides which segments present the greatest opportunitythose
whose needs the firm can meet in a superior fashion. For each chosen target market, the firm develops a market
offering. The offering is positioned in the minds of the target buyers as delivering some central benefit(s).
Needs, Wants, and Demands
Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans also have strong
needs for recreation, education, and entertainment. These needs become wants when they are directed to specific
objects that might satisfy the need.
Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are
able to buy one. Companies must measure not only how many people want their product, but also how many are
willing and able to buy it.
Exchange and Transactions
Exchange, the core of marketing, involves obtaining a desired product from someone by offering something in return.
For exchange potential to exist, five conditions must be satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to the other party.
3. Each party is capable of communication and delivery.
Offerings and Brands
Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs.
The intangible value proposition is made physical by an offering, which can be a combination of products, services,
information, and experiences.
Value and Satisfaction
The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the tangible and intangible
benefits and costs to her. Value, a central marketing concept, is primarily a combination of quality, service, and price
(qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price. We
can think of marketing as the identification, crcreation, communication, delivery, and monitoring of customer value.
Satisfaction reflects a persons judgment of a products perceived performance in relationship to expectations. If the
performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is
satisfied. If it exceeds them, the customer is delighted.
Supply Chain
The supply chain is a longer channel stretching from raw materials to components to finished products carried to final
buyers.
Competition
Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. An automobile
manufacturer can buy steel from U.S. Steel in the United States, from a foreign firm in Japan or Korea, or from a mini
mill such as Nucor at a cost savings,
Marketing Environment
The marketing environment consists of the task environment and the broad environment. The task environment
includes the actors engaged in producing, distributing, and promoting the offering.
The broad environment consists of six components: demographic environment, economic environment, social-cultural
environment, natural environment, technological environment, and political-legal environment. Marketers must pay
close attention to the trends and developments in these and adjust their marketing strategies as needed.



The Production Concept
The production concept is one of the oldest concepts in business. It holds that consumers prefer products that are
widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high
production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries such as
China, where the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic appliances giant
Haier take advantage of the countrys huge and inexpensive labor pool to dominate the market.Marketers also use the
production concept when they want to expand the market.

The Product Concept
The product concept proposes that consumers favor products offering the most quality, performance, or innovative
features. However, managers are sometimes caught in a love affair with their products. They might commit the
better-mousetrap fallacy, believing a better product will by itself lead people to beat a path to their door. A new or
improved product will not necessarily be successful unless its priced, distributed, advertised, and sold properly.

The Selling Concept
The selling concept holds that consumers and businesses, if left alone, wont buy enough of the organizations
products. It is practiced most aggressively with unsought goodsgoods buyers dont normally think of buying such as
insurance and cemetery plotsand when firms with overcapacity aim to sell what they make, rather than make what
the market wants.
Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not only wont return or
bad-mouth it or complain to consumer organizations but might even buy it again.

The Marketing Concept
The marketing concept emerged in the mid-1950s41 as a customer-centered, sense-and-respond philosophy. The job
is to find not the right customers for your products, but the right products for your customers. Dell doesnt prepare a
perfect computer for its target market. Rather, it provides product platforms on which each person customizes the
features he or she desires in the computer. The marketing concept holds that the key to achieving organizational goals
is being more effective
than competitors in creating, delivering, and communicating superior customer value to your target markets.

The Marketing Research Process
Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives
Marketing managers must be careful not to define the problem too broadly or too narrowly for the marketing
researcher. A marketing manager who says, Find out everything you can about first class air travelers needs, will
collect a lot of unnecessary information.
Step 2: Develop the Research Plan
The second stage of marketing research is where we develop the most efficient plan for gathering the needed
information and what that will cost. To design a research plan, we need to make decisions about the data sources,
research approaches, research instruments, sampling plan, and contact methods.
a. DATA SOURCES The researcher can gather secondary data, primary data, or both. Secondary data are data that were
collected for another purpose and already exist somewhere. Primary data are data freshly gathered for a specific
purpose or for a specific research project.
b. RESEARCH APPROACHES Marketers collect primary data in five main ways: through observation, focus groups,
surveys, behavioral data, and experiments. It is subdivided into Observational research, Focus-group research Survey
research Behavioral data Experimental research
Step 3: Collect the Information The data collection phase of marketing research is generally the most expensive and
the most prone to error. In the case of surveys, four major problems arise. Some respondents will not be at home and
must be recontacted or replaced. Other respondents will refuse to cooperate.
Step 4: Analyze the Information:The next-to-last step in the process is to extract findings by tabulating the data and
developing summary measures. The researchers now compute averages and measures of dispersion for the major
variables and apply some advanced statistical techniques and decision models in the hope of discovering additional
findings. They may test different hypotheses and theories, applying sensitivity analysis to test assumptions and the
strength of the conclusions.
Step 5: Present the Findings: As the last step, the researcher presents findings relevant to the major marketing
decisions facing management. Researchers increasingly are being asked to play a more proactive, consulting role in
translating data and information into insights and recommendations.
Step 6: Make the Decision

The Seven Characteristics of Good Marketing Research
1. Scientific method Effective marketing research uses the principles of the scientific method: careful observation,
formulation of hypotheses, prediction, and testing.
2. Research creativity In an award-winning research study to reposition Cheetos snacks, researchers dressed up in a
brand mascot Chester Cheetah suit and walked around the streets of San Francisco. The response the character
encountered led to the realization that even adults loved the fun and playfulness of Cheetos. The resulting
repositioning led to a double-digit sales increase despite a tough business environment.43
3. Multiple methods Marketing researchers shy away from overreliance on any one method. They also recognize the
value of using two or three methods to increase confidence in the results.
4. Interdependence of models and data Marketing researchers recognize that data are interpreted from underlying
models that guide the type of information sought.
5. Value and cost of information Marketing researchers show concern for estimating the value of information against
its cost. Costs are typically easy to determine, but the value of research is harder to quantify. It depends on the
reliability and validity of the findings and managements willingness to accept and act on those findings.
6. Healthy skepticism Marketing researchers show a healthy skepticism toward glib assumptions made by managers
about how a market works. They are alert to the problems caused by marketing myths.

Market segmentation divides a market into well-defined slices. A market segment consists of a group of customers
who share a similar set of needs and wants. The marketers task is to identify the appropriate number and nature of
market segments and decide which one(s) to target.
Geographic Segmentation: Geographic segmentation divides the market into geographical units such as nations,
states, regions, counties, cities, or neighborhoods. The company can operate in one or a few areas, or it can operate in
all but pay attention to local variations. In that way it can tailor marketing programs to the needs and wants of local
customer groups in trading areas, neighborhoods, even individual stores. In a growing trend called grassroots
marketing, such activities concentrate on getting as close and personally relevant to individual customers as possible.
Demographic Segmentation: In demographic segmentation, we divide the market on variables such as age, family size,
family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class.
One reason demographic variables are so popular with marketers is that theyre often associated with consumer
needs and wants. Another is that theyre easy to measure. Even when we describe the target market in
nondemographic terms (say, by personality type), we may need the link back to demographic characteristics in order
to estimate the size of the market and the media we should use to reach it efficiently.

Major Segmentation Variables for Business Markets
Demographic
1. Industry: Which industries should we serve?
2. Company size: What size companies should we serve?
3. Location: What geographical areas should we serve?
Operating Variables
4. Technology: What customer technologies should we focus on?
5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many or few services?
Purchasing Approaches
7. Purchasing-function organization: Should we serve companies with a highly centralized or decentralized purchasing
organization?
8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on?
9. Nature of existing relationship: Should we serve companies with which we have strong relationships or simply go
after the most desirable companies?
10. General purchasing policies: Should we serve companies that prefer leasing? Service contract? Systems purchases?
Sealed bidding?
11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
Situational Factors
12. Urgency: Should we serve companies that need quick and sudden delivery or service?
13. Specific application: Should we focus on a certain application of our product rather than all applications?
14. Size or order: Should we focus on large or small orders?
Personal Characteristics
15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours?
16. Attitude toward risk: Should we serve risk-taking or risk-avoiding customers?
17. Loyalty: Should we serve companies that show high loyalty to their suppliers?

Market Targeting: There are many statistical techniques for developing market segments. Once the firm has identified
its market-segment opportunities, it must decide how many and which ones to target. Marketers are increasingly
combining several variables in an effort to identify smaller, better-defined target groups. Thus, a bank may not only
identify a group of wealthy retired adults but within that group distinguish several segments depending on current
income, assets, savings, and risk preferences. This has led some market researchers to advocate a needs-based market
segmentation approach, as introduced previously.

Effective Segmentation Criteria: Not all segmentation schemes are useful. We could divide buyers of table salt into
blond and brunette customers, but hair color is undoubtedly irrelevant to the purchase of salt. Furthermore, if all salt
buyers buy the same amount of salt each month, believe all salt is the same, and would pay only one price for salt, this
market is minimally segmentable from a marketing point of view. To be useful, market segments must rate favorably
on five key criteria:
Measurable. The size, purchasing power, and characteristics of the segments can be measured.
Substantial. The segments are large and profitable enough to serve. A segment should be the largest possible
homogeneous group worth going after with a tailored marketing program. It would not pay, for example, for an
automobile manufacturer to develop cars for people who are less than four feet tall.
Accessible. The segments can be effectively reached and served.
Differentiable. The segments are conceptually distinguishable and respond differently to different marketing-mix
elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not
constitute separate segments.
Actionable. Effective programs can be formulated for attracting and serving the segments.



Five forces that determine the intrinsic long-run attractiveness of a market or market segment
1. Threat of intense segment rivalryA segment is unattractive if it already contains numerous, strong, or aggressive
competitors. Its even more unattractive if its stable or declining, if plant capacity must be added in large increments,
if fixed costs or exit barriers are high, or if competitors have high stakes in staying in the segment. These conditions
will lead to frequent price wars, advertising battles, and new-product introductions and will make it expensive to
compete.
2. Threat of new entrantsThe most attractive segment is one in which entry barriers are high and exit barriers are
low. When both entry and exit barriers are low, firms easily enter and leave the industry, and returns are stable but
low. The worst case is when entry barriers are low and exit barriers are high: Here firms enter during good times but
find it hard to leave during bad times. The result is chronic overcapacity.
3. Threat of substitute productsA segment is unattractive when there are actual or potential substitutes for the
product. Substitutes place a limit on prices and on profits. If technology advances or competition increases in these
substitute industries, prices and profits are likely to fall.
4. Threat of buyers growing bargaining powerA segment is unattractive if buyers possess strong or growing
bargaining power. To protect themselves, sellers might select buyers who have the least power to negotiate or switch
suppliers. A better defense is developing superior offers that strong buyers cannot refuse.
5. Threat of suppliers growing bargaining powerA segment is unattractive if the companys suppliers are able to
raise prices or reduce quantity supplied. Suppliers tend to be powerful when they are concentrated or organized,
when they can integrate downstream, when there are few substitutes, when the supplied product is an important
input, and when the costs of
switching suppliers are high. The best defenses are to build win-win relationships with suppliers or use multiple supply
sources.

Steps in the Segmentation Process
Description
1. Needs-Based Segmentation: Group customers into segments based on similar needs and benefits sought by
customers in solving a particular consumption problem
2. Segment Identification: For each needs-based segment, determine which demographics, lifestyles, and usage
behaviors make the segment distinct and identifiable (actionable).
3. Segment Attractiveness: Using predetermined segment attractiveness criteria (such as market growth, competitive
intensity, and market access), determine the overall attractiveness of each segment.
4. Segment Profitability: Determine segment profitability.
5. Segment Positioning: For each segment, create a value proposition and product-price positioning strategy based
on that segments unique customer needs and characteristics.
6. Segment Acid Test : Create segment storyboard to test the attractiveness of each segments positioning
strategy.
7. Marketing-Mix Strategy : Expand segment positioning strategy to include all aspects of the marketing mix: product,
price, promotion, and place.

The Marketing Intelligence System
A marketing intelligence system is a set of procedures and sources that managers use to obtain everyday information
about developments in the marketing environment. The internal records system supplies results data, but the
marketing intelligence system supplies happenings data. Marketing managers collect marketing intelligence in a
variety of different ways, such as by reading books, newspapers, and trade publications; talking to customers,
suppliers, and distributors; monitoring social media on the Internet; and meeting with other company managers.
Train and motivate the sales force to spot and report new developments. The company must sell its sales force on
their importance as intelligence gatherers.
Motivate distributors, retailers, and other intermediaries to pass along important intelligence. Marketing
intermediaries are often closer to the customer and competition and can offer helpful insights.
Hire external experts to collect intelligence. Many companies hire specialists to gather marketing intelligence.
Network internally and externally. The firm can purchase competitors products, attend open houses and trade
shows, read competitors published reports, attend stockholders meetings, talk to employees, collect competitors
ads, consult with suppliers, and look up news stories about competitors.
Set up a customer advisory panel. Members of advisory panels might include the companys largest, most outspoken,
most sophisticated, or most representative customers.
Take advantage of government-related data resources.
Purchase information from outside research firms and vendors. Well-known data suppliers include firms such as the
A.C. Nielsen Company and Information Resources Inc. They collect information about product sales in a variety of
categories and consumer exposure to various media.


Marketing information system: IT is a "system in which marketing data is formally gathered, stored, analysed and
distributed to managers in accordance with their informational needs on a regular basis." In addition, the online business
dictionary defines Marketing Information System (MkIS) as a system that analyzes and assesses marketing information,
gathered continuously from sources inside and outside an organization. An overall Marketing Information System can be
defined as a set structure of procedures and methods for the regular, planned collection, analysis and presentation of
information for use in making marketing decisions. MIS systems are composed on four components:
Internal reporting systems: All enterprises which have been in operation for any period of time nave a wealth of
information. However, this information often remains under-utilised because it is compartmentalised, either in the
form of an individual entrepreneur or in the functional departments of larger businesses. That is, information is usually
categorised according to its nature so that there are, for example, financial, production, manpower, marketing,
stockholding and logistical data. Often the entrepreneur, or various personnel working in the functional departments
holding these pieces of data, do not see how it could help decision makers in other functional areas.
Marketing research systems: The general topic of marketing research has been the prime ' subject of the textbook
and only a little more needs to be added here. Marketing research is a proactive search for information. That is, the
enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases, data is
collected in a purposeful way to address a well-defined problem.
Marketing intelligence systems: Whereas marketing research is focused, market intelligence is not. A marketing
intelligence system is a set of procedures and data sources used by marketing managers to sift information from the
environment that they can use in their decision making. Marketing intelligence is the province of entrepreneurs and
senior managers within an agribusiness. It involves them in scanning newspaper trade magazines, business journals
and reports, economic forecasts and other media. In addition it involves management in talking to producers,
suppliers and customers, as well as to competitors. Nonetheless, it is a largely informal process of observing and
conversing.
Marketing models: Within the MIS there has to be the means of interpreting information in order to give direction to
decision. These models may be computerised or may not. Typical tools are:
Time series sales modes
Brand switching models
Linear programming
Elasticity models (price, incomes, demand, supply, etc.)
Regression and correlation models
Analysis of Variance (ANOVA) models
Sensitivity analysis
Discounted cash flow
Macro Environment:
1. Demography: It is defined as the statistical study of the human population & its distribution. This is one of the
most influencing factors because it deals with the people who form the market. A company should study the
population, its distribution, age composition, etc before deciding the marketing strategies. Each group of
population behaves differently depending upon various factors such as age, status, etc. if these factors are
considered, a company can produce only those products which suits the requirement of the consumers. In this
regard, it is said that to understand the market you must understand its demography.
2. Economic Environment: A company can successfully sell its products only when people have enough money to
spend. The economic environment affects a consumers purchasing behavior either by increasing his disposable
income or by reducing it. Eg: During the time of inflation, the value of money comes down. Hence, it is difficult for
them to purchase more products. Income of the consumer must also be taken into account. Eg: In a market where
both husband & wife work, their purchasing power will be more. Hence, companies may sell their products quite
easily.
3. Physical Environment or Natural Forces: A company has to adopt its policies within the limits set by nature. A man
can improve the nature but cannot find an alternative for it.
Nature offers resources, but in a limited manner. A product manager utilizes it efficiently. Companies must find
the best combination of production for the sake of efficient utilization of the available resources. Otherwise, they
may face acute shortage of resources. Eg: Petroleum products, power, water, etc.
4. Technological Factors: From customers point of view, improvement in technology means improvement in the
standard of living. In this regard, it is said that Technologies shape a Persons Life.
Every new invention builds a new market & a new group of customers. A new technology improves our lifestyle &
at the same time creates many problems. Eg: Invention of various consumer comforts like washing machines,
mixers, etc have resulted in improving our lifestyle but it has created severe problems like power shortage.
Eg: Introduction to automobiles has improved transportation but it has resulted in the problems like air & noise
pollution, increased accidents, etc. In simple words, following are the impacts of technological factors on the
market:
a) They create new wants
b) They create new industries
c) They may destroy old industries
d) They may increase the cost of Research & Development.
5. Social & Cultural Factors: Most of us purchase because of the influence of social & cultural factors. The lifestyle,
values, believes, etc are determined among other things by the society in which we live. Each society has its own
culture. Culture is a combination of various factors which are transferred from older generations & which are
acquired. Our behaviour is guided by our culture, family, educational institutions, languages, etc.
Micro Environment:
1. Suppliers: They are the people who provide necessary resources needed to produce goods & services. Policies of
the suppliers have a significant influence over the marketing managers decisions because, it is laborers, etc. A
company must build cordial & long-term relationship with suppliers.
2. Marketing Intermediaries: They are the people who assist the flow of products from the producers to the
consumers; they include wholesalers, retailers, agents, etc. These people create place & time utility. A company
must select an effective chain of middlemen, so as to make the goods reach the market in time. The middlemen
give necessary information to the manufacturers about the market. If a company does not satisfy the middlemen,
they neglect its products & may push the competitors product.
3. Consumers: The main aim of production is to meet the demands of the consumers. Hence, the consumers are the
center point of all marketing activities. If they are not taken into consideration, before taking the decisions, the
company is bound to fail in achieving its objectives. A companys marketing strategy is influenced by its target
consumer. Eg: If a manufacturer wants to sell to the wholesaler, he may directly sell to them, if he wants to sell to
another manufacturer, he may sell through his agent or if he wants to sell to ultimate consumer he may sell
through wholesalers or retailers. Hence each type of consumer has a unique feature, which influences a
companys marketing decision.
4. Competitors: A prudent marketing manager has to be in constant touch regarding the information relating to the
competitors strategies. He has to identify his competitors strategies, build his plans to overtake them in the
market to attract competitors consumers towards his products.

The Consumer Buying Decision Process
I. Need recognition / Problem recognition :
The need recognition is the first and most important step in the buying process. If there is no need, there is no
purchase. This recognition happens when there is a lag between the consumers actual situation and the ideal and
desired one. However, not all the needs end up as a buying behavior. It requires that the lag between the two
situations is quite important. But the way (product price, ease of acquisition, etc.) to obtain this ideal situation has
to be perceived as acceptable by the consumer based on the level of importance he attributes to the need.
II. Information search: Once the need is identified, its time for the consumer to seek information about possible
solutions to the problem. He will search more or less information depending on the complexity of the choices to be
made but also his level of involvement. Then the consumer will seek to make his opinion to guide his choice and
his decision-making process with:
Internal information: this information is already present in the consumers memory. It comes from previous
experiences he had with a product or brand and the opinion he may have of the brand
External information: This is information on a product or brand received from and obtained byfriends or
family, by reviews from other consumers or from the press. Not to mention, of course, official business
sources such as an advertising or a sellers speech.
III. Alternative evaluation
Once the information collected, the consumer will be able to evaluate the different alternatives that offer to him,
evaluate the most suitable to his needs and choose the one he think its best for him.
In order to do so, he will evaluate their attributes on two aspects. The objective characteristics (such as the features
and functionality of the product) but also subjective (perception and perceived value of the brand by the consumer or
its reputation). Each consumer does not attribute the same importance to each attribute for his decision and his
Consumer Buying Decision Process.
IV. Purchase decision
Now that the consumer has evaluated the different solutions and products available for respond to his need, he will be
able to choose the product or brand that seems most appropriate to his needs. Then proceed to the actual purchase
itself. His decision will depend on the information and the selection made in the previous step based on the perceived
value, products features and capabilities that are important to him.
V. Post-purchase behavior
Once the product is purchased and used, the consumer will evaluate the adequacy with his original needs (those who
caused the buying behavior). And whether he has made the right choice in buying this product or not. He will feel
either a sense of satisfaction for the product (and the choice). Or, on the contrary, a disappointment if the product has
fallen far short of expectations. An opinion that will influence his future decisions and buying behavior. If the product
has brought satisfaction to the consumer, he will then minimize stages of information search and alternative
evaluation for his next purchases in order to buy the same brand. Which will produce customer loyalty.
On the other hand, if the experience with the product was average or disappointing, the consumer is going to repeat
the 5 stages of the Consumer Buying Decision Process during his next purchase but by excluding the brand from his
evoked set.