UNIT 1

INTRODUCTION
In today's world of marketing, everywhere you go you are being marketed to in one form
or another. Marketing is with you each second of your walking life. From morning to night you
are exposed to thousands of marketing messages everyday. Marketing is something that affects
you even though you may not necessarily be conscious of it.
After reading this you'll understand - what exactly the marketing is, to whom it is beneficial, and
what are the nature and scope of marketing.
DEFINITION OF MARKETING
According to American Marketing Association (2004) - "Marketing is an organisational
function and set of processes for creating, communicating and delivering value to customers and
for managing relationships in a way that benefits both the organisation and the stakeholder."
AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods
and services from producer to consumer or user."
According to Eldridge (1970) - "Marketing is the combination of activities designed to produce
profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a
selected segment of the market."
According to Kotler (2000) - "A societal process by which individuals and groups obtain what
they need and want through creating, offering, and freely exchanging products and services of
value with others."
NATURE OF MARKETING
1. Marketing is an Economic Function
Marketing embraces all the business activities involved in getting goods and services , from the
hands of producers into the hands of final consumers. The business steps through which goods
progress on their way to final consumers is the concern of marketing.
2. Marketing is a Legal Process by which Ownership Transfers
In the process of marketing the ownership of goods transfers from seller to the purchaser or from
producer to the end user.
3. Marketing is a System of Interacting Business Activities
Marketing is that process through which a business enterprise, institution, or organisation
interacts with the customers and stakeholders with the objective to earn profit, satisfy customers,
and manage relationship. It is the performance of business activities that direct the flow of goods
and services from producer to consumer or user.
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4. Marketing is a Managerial function

According to managerial or systems approach - "Marketing is the combination of activities
designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs
and/or wants of a selected segment of the market."
According to this approach the emphasis is on how the individual organisation processes
marketing and develops the strategic dimensions of marketing activities.
5. Marketing is a social process
Marketing is the delivery of a standard of living to society. According to Cunningham and
Cunningham (1981) societal marketing performs three essential functions:1.
Knowing and understanding the consumer's changing needs and wants;
2.
Efficiently and effectively managing the supply and demand of products and
services; and
3.

Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction

7. Marketing had dual objectives - profit making and consumer satisfaction
SCOPE OF MARKETING
1. Study of Consumer Wants and Needs
Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer
needs and wants. These needs and wants motivates consumer to purchase.
2. Study of Consumer behaviour
Marketers perform study of consumer behaviour. Analysis of buyer behaviour helps marketer in
market segmentation and targeting.
3. Production planning and development
Product planning and development starts with the generation of product idea and ends with the
product development and commercialisation. Product planning includes everything from
branding and packaging to product line expansion and contraction.
4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs form
product to product. It depends on the level of competition, product life cycle, marketing goals
and objectives, etc.

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5. 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.
6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is
crucial in accomplishment of marketing goals.
7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major
objective of marketing.
8. Marketing Control
Marketing audit is done to control the marketing activities.
http://www.enotesmba.com/2012/11/mba-notes-nature-and-scope-of-marketing.html

WHAT IS MARKET? MEANING

Usually, Market means a place where buyer and seller meets together in order to carry on
transactions of goods and services.
But in Economics, it may be a place, perhaps may not be. In Economics, market can exist even
without direct contact of buyer and seller. This fact can be explained with the help of the
following statement.

"Market refers to an arrangement, whereby buyers and sellers come in contact with each
other directly or indirectly, to buy or sell goods."
Thus, above statement indicates that face to face contact of buyer and seller is not necessary for
market. E.g. In stock or share market, the buyer and seller can carry on their transactions through
internet. So internet, here forms an arrangement and such arrangement also is included in the
market.

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CLASSIFICATION OR TYPES OF MARKET

The classification or types of market are depicted in the following chart.

Generally, the market is classified on the basis of:

Place,

Time and

Competition.

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On the basis of Place, the market is classified into:

Local Market or Regional Market.

National Market or Countrywide Market.

International Market or Global Market.

On the basis of Time, the market is classified into:

Very Short Period Market.

Short Period Market.

Long Period Market.

Very Long Period Market.

On the basis of Competition, the market is classified into:

Perfectly Competitive Market Structure.

Imperfectly Competitive Market Structure.

Both these market structures widely differ from each other in respect of their features, price, etc.
Under imperfect competition, there are different forms of markets like monopoly, duopoly,
oligopoly and monopolistic competition.

A monopoly has only one or a single (mono) seller.

Duopoly has two (duo) sellers.

Oligopoly has little or fewer (oligo) number of sellers.

Monopolistic competition has many or several numbers of sellers.

The suffix poly has its origin from Greek word Polus which means many or more than one

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MARKETING MANAGEMENT PHILOSOPHIES

The role that marketing plays within a company varies according to the overall strategy
and philosophy of each firm.
There are five alternative concepts under which organizations conduct their marketing
activities:
Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concepts
The philosophy that consumers will favour products that are available and highly affordable and
that management should therefore focus on improving production and distribution efficiency.

The philosophy that consumers will favour products that offer the most quality, performance, and
innovative features.

The idea that consumers will not buy enough of the organizations products unless the
organization undertakes a large scale selling and promotion effort.

The marketing management philosophy that holds that achieving organizational goals depends
on determining the needs and wants of target markets and delivering the desired satisfactions
more effectively and efficiently than competitors do.

The idea that the organization should determine the needs, wants, and interests of target markets
and deliver the desired satisfactions more effectively and efficiently than competitors in a way
that maintains or improves the consumers and societys well being.

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The Marketing Concept

MARKETING CHALLENGES INTO THE NEW CENTURY

GROWTH OF NON-PROFIT MARKETING
THE INFORMANTION TECHNOLOGY BOOM
RAPID GLOBALIZATION
THE CHANGING WORLD ECONOMY
THE CALL FOR MORE ETHICS AND SOCIAL RESPONSIBILITY
THE NEW MARKETING LANDSCAPE
The past decade taught business firms everywhere a humbling lesson. Domestic
companies learned that they can no longer ignore global markets and competitors.
Successful firms in mature industries learned that they cannot overlook emerging markets,
technologies, and management approaches. Companies of every sort learned that they
cannot remain inwardly focused, ignoring the needs of customers and their environment.
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Market environment
The market environment is a marketing term and refers to factors and forces that affect
a firms ability to build and maintain successful relationships with customers.
Three levels of the environment are :
1. Micro (internal) environment - small forces within the company that affect its ability
to serve its customers.
2. Meso environment the industry in which a company operates and the industrys
market(s).
3. Macro (national)
microenvironment.

environment

larger

societal

forces

that

affect

the

Micro-Environment
The micro environment refers to the business itself and to all the challenges that come
from inside the business. Businesses can therefore take control over all the challenges and
influences in the micro environment. Sometimes, the micro environment is also known as the
internal environment. The micro environment refers to the forces that are close to the company
and affect its ability to serve its customers. It includes the company itself, its suppliers,
marketing intermediaries, customer markets and public.
The company aspect of micro-environment refers to the internal environment of the
company. This includes all departments, such as management, finance, research and
development, purchasing, operations and accounting.
Each of these departments has an impact on marketing decisions. For example, research
and development have input as to the features a product can perform and accounting approves
the financial side of marketing plans and budget in customer dissatisfaction. Marketing managers
must watch supply availability and other trends dealing with suppliers to ensure that product will
be delivered to customers in the time frame required in order to maintain a strong customer
relationship.
Marketing intermediaries refers to resellers, physical distribution firms, marketing
services agencies, and financial intermediaries. These are the people that help the company
promote, sell, and distribute its products to final buyers. Resellers are those that hold and sell the
companys product. They match the distribution to the customers and include places such as WalMart, Target, and Best Buy. Physical distribution firms are places such as warehouses that store
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and transport the companys product from its origin to its destination. Marketing services
agencies are companies that offer services such as conducting marketing research, advertising,
and consulting. Financial intermediaries are institutions such as banks, credit companies
and insurance companies.
Another aspect of micro-environment is the customer market. There are different types of
customer

markets

including

consumer

markets,

business

markets,

government

markets, international markets, and reseller markets. The consumer market is made up of
individuals who buy goods and services for their own personal use or use in their household.
Business markets include those that buy goods and services for use in producing their own
products to sell. This is different from the reseller market which includes businesses that
purchase goods to resell as is for a profit. These are the same companies mentioned as market
intermediaries. The government market consists of government agencies that buy goods to
producepublic services or transfer goods to others who need them. International markets include
buyers in other countries and includes customers from the previous categories. Competitors are
also a factor in the micro-environment and include companies with similar offerings for goods
and services. To remain competitive a company must consider who their biggest competitors are
while considering its own size and position in the industry. The company should develop a
strategic advantage over their competitors.
The final aspect of the microenvironment is publics, which is any group that has an
interest in or impact on the organizations ability to meet its goals. For example, financial publics
can hinder a companys ability to obtain funds affecting the level of credit a company has. Media
publics include newspapers and magazines that can publish articles of interest regarding the
company and editorials that may influence customers opinions. Government publics can affect
the company by passing legislation and laws that put restrictions on the companys actions.
Citizen-action publics include environmental groups andminority groups and can question the
actions of a company and put them in the public spotlight. Local publics are neighborhood and
community organizations and will also question a companys impact on the local area and the
level of responsibility of their actions. The general public can affect the company as any change
in their attitude, whether positive or negative, can cause sales to go up or down because the
general public is often the companys customer base. And finally those who are employed within
the company and deal with the organization and construction of the companys product.

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Macro-Environment (external environment)

The macro-environment refers to all forces that are part of the larger society and affect
the micro-environment. It includes concepts such as demography, economy, natural forces,
technology, politics, and culture.
Factors affecting organization in Macro environment are known as PESTEL, that
is: Political, Economical, Social, Technological, Environmental and Legal.
Demography refers to studying human populations in terms of size, density, location,
age, gender, race, and occupation. This is a very important factor to study for marketers and
helps to divide the population into market segments and target markets. An example of
demography is classifying groups of people according to the year they were born. These
classifications can be referred to as baby boomers, who are born between 1946 and
1964, generation X, who are born between 1965 and 1976, and generation Y, who are born
between 1977 and 1994. Each classification has different characteristics and causes they find
important. This can be beneficial to a marketer as they can decide who their product would
benefit most and tailor their marketing plan to attract that segment. Demography covers many
aspects that are important to marketers including family dynamics, geographic shifts, work force
changes, and levels of diversity in any given area.
Another aspect of the macro-environment is the economic environment. This refers to
the purchasing power of potential customers and the ways in which people spend their money.
Within this area are two different economies, subsistence and industrialized. Subsistence
economies are based more in agriculture and consume their own industrial output. Industrial
economies have markets that are diverse and carry many different types of goods. Each is
important to the marketer because each has a highly different spending pattern as well as
different distribution of wealth.
The natural environment is another important factor of the macro-environment. This
includes the natural resources that a company uses as inputs that affects their marketing
activities. The concern in this area is the increased pollution, shortages of raw materials and
increased governmental intervention. As raw materials become increasingly scarcer, the ability to
create a companys product gets much harder. Also, pollution can go as far as negatively
affecting a companys reputation if they are known for damaging the environment. The last
concern, government intervention can make it increasingly harder for a company to fulfill their
goals as requirements get more stringent.
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The technological environment is perhaps one of the fastest changing factors in the
macro-environment. This includes all developments from antibiotics and surgery to nuclear
missiles and chemical weapons to automobiles and credit cards. As these markets develop it can
create new markets and new uses for products. It also requires a company to stay ahead of others
and update their own technology as it becomes outdated. They must stay informed of trends so
they can be part of the next big thing, rather than becoming outdated and suffering the
consequences financially.
The political environment includes all laws, government agencies, and groups that
influence or limit other organizations and individuals within a society. It is important for
marketers to be aware of these restrictions as they can be complex. Some products are regulated
by both state and federal laws. There are even restrictions for some products as to who the target
market may be, for example, cigarettes should not be marketed to younger children. There are
also many restrictions onsubliminal messages and monopolies. As laws and regulations change
often, this is a very important aspect for a marketer to monitor.
The final aspect of the macro-environment is the cultural environment, which
consists of institutions and basic values and beliefs of a group of people. The values can also be
further categorized into core beliefs, which passed on from generation to generation and very
difficult to change, and secondary beliefs, which tend to be easier to influence. As a marketer, it
is important to know the difference between the two and to focus your marketing campaign to
reflect the values of a target audience.
When dealing with the marketing environment it is important for a company to become
proactive. By doing so, they can create the kind of environment that they will prosper in and can
become more efficient by marketing in areas with the greatest customer potential. It is important
to place equal emphasis on both the macro and micro environment and to react accordingly to
changes within them.
Macro-Environment
Marketing intermediaries help to sell, promote, and distribute goods. Intermediaries take many
forms:

Resellers

Physical distribution firms

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Marketing services agencies

Financial intermediaries

Customer markets must be studied:

Market types

Consumer

Business

Government

Reseller

International

Various publics must also be considered:

Government

Media

Financial

Local

General

Internal

Citizen Action Groups

location

References
1. Kotler, Armstrong, Philip, Gary. Principles of Marketing. pearson education.
2. Kotler, Phillip and Gary Armstrong(2006), Principles of Marketing
12/E). Pearson Education Inc. New Jersey

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