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CHAPTER 3

What is marketing?
There are many different definitions of marketing. Consider some of the following
alternative definitions:
The all-embracing function that links the business with customer needs and wants
in order to get the right product to the right place at the right time
The achievement of corporate goals through meeting and exceeding customer
needs better than the competition
The management process that identifies, anticipates and supplies customer
requirements efficiently and profitably
Marketing may be defined as a set of human activities directed at facilitating and
consummating exchanges
Which definition is right? In short, they all are. They all try to embody the essence of
marketing:
Marketing is about meeting the needs and wants of customers;
Marketing is a business-wide function it is not something that operates alone from
other business activities;
Marketing is about understanding customers and finding ways to provide products or
services which customers demand.

To help put things into context, you may find it helpful to often refer to the following
diagram which summarises the key elements of marketing and their relationships:

Figure 1.2

Marketing Concept and Orientation

It is a fundamental idea of marketing that organisations survive and prosper through


meeting the needs and wants of customers. This important perspective is commonly
known as the marketing concept. The marketing concept is about matching a company's
capabilities with customer wants. This matching process takes place in what is called the
marketing environment. Businesses do not undertake marketing activities alone. They
face threats from competitors, and changes in the political, economic, social and
technological environment. All these factors have to be taken into account as a business
tries to match its capabilities with the needs and wants of its target customers. An
organisation that adopts the marketing concept accepts the needs of potential
customers as the basis for its operations. Success is dependent on satisfying customer
needs.
What are customer needs and wants?
A need is a basic requirement that an individual wishes to satisfy.
People have basic needs for food, shelter, affection, esteem and self-development. Many
of these needs are created from human biology and the nature of social relationships.
Customer needs are, therefore, very broad. Whilst customer needs are broad, customer
wants are usually quite narrow. A want is a desire for a specific product or service to
satisfy the underlying need.
Consider this example:
Consumers need to eat when they are hungry.
What they want to eat and in what kind of environment will vary enormously. For some,
eating at McDonalds satisfies the need to meet hunger. For others a microwaved readymeal meets the need. Some consumers are never satisfied unless their food comes
served with a bottle of fine Chardonnay. Consumer wants are shaped by social and
cultural forces, the media and marketing activities of businesses. This leads onto another
important concept - that of customer demands. Consumer demand is a want for a
specific product supported by an ability and willingness to pay for it.
For example, many consumers around the globe want a Mercedes. But relatively few are
able and willing to buy one.

Businesses therefore have not only to make products that consumers want, but they also
have to make them affordable to a sufficient number to create profitable demand.
Businesses do not create customer needs or the social status in which customer needs
are influenced. It is not McDonalds that make people hungry. However, businesses do try
to influence demand by designing products and services that are
Attractive
Work well
Are affordable
Are available
Businesses also try to communicate the relevant features of their products through
advertising and other marketing promotion.

MARKETING MIX
The marketing mix is generally accepted as the use and specification of the four Ps describing the strategic
position of a product in the marketplace. One version of the origins of the marketing mix starts in 1948 when
James Culliton said that a marketing decision should be a result of something similar to a recipe. This version
continued in 1953 when Neil Borden, in his American Marketing Association presidential address, took the
recipe idea one step further and coined the term 'Marketing-Mix'. A prominent marketer, E. Jerome McCarthy,
proposed a 4 P classification in 1960, which would see wide popularity. The four Ps concepts are explained in
most marketing textb
ooks and classes.

DEFINITION
Although some marketers[who?] have added other Ps, such as personnel and packaging, the fundamentals of
marketing typically identifies the four Ps of the marketing mix as referring to:
Product -An object or a service that is mass produced or manufactured on a large scale with a specific volume
of units. A typical example of a mass produced service is the hotel industry. A less obvious but ubiquitous mass

produced service is a computer operating system. Typical examples of a mass produced objects are the motor
car and the disposable razor.
Price The price is the amount a customer pays for the product. It is determined by a number of factors
including market share, competition, material costs, product identity and the customer's perceived value of the
product. The business may increase or decrease the price of product if other stores have the same product.
Place Place represents the location where a product can be purchased. It is often referred to as the distribution
channel. It can include any physical store as well as virtual stores on the Internet.
Promotion Promotion represents all of the communications that a marketer may use in the marketplace.
Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain
amount of crossover occurs when promotion uses the four principal elements together, which is common in film
promotion. Advertising covers any communication that is paid for, from television and cinema commercials,
radio and Internet adverts through print media and billboards. One of the most notable means of promotion
today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation
attached. This category has grown each year for the past decade while most other forms have suffered. It is the
only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are
where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about
the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth
momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product
above).
Broadly defined, optimizing the marketing mix is the primary responsibility of marketing. By offering the
product with the right combination of the four Ps marketers can improve their results and marketing
effectiveness.
Making small changes in the marketing mix is typically considered to be a tactical change. Making large
changes in any of the four Ps can be considered strategic. For example, a large change in the price, say from
$19.00 to $39.00 would be considered a strategic change in the position of the product. However a change of
$131 to $130.99 would be considered a tactical change, potentially related to a promotional offer.
CRITICISMS
Peter Doyle claims that the marketing mix approach leads to unprofitable decisions because it is not grounded
in financial objectives such as increasing shareholder value. According to Doyle it has never been clear what
criteria to use in determining an optimum marketing mix. Objectives such as providing solutions for customers
at low cost have not generated adequate profit margins. Doyle claims that developing marketing based
objectives while ignoring profitability has resulted in the dot-com crash and the Japanese economic collapse. He
also claims that pursuing a ROI approach while ignoring marketing objectives is just as problematic. He argues

that a net present value approach maximizing shareholder value provides a "rational framework" for managing
the marketing mix.
Some people claim the four Ps are too strongly oriented towards consumer markets and do not offer an
appropriate model for industrial product marketing. Others claim it has too strong of a product market
perspective and is not appropriate for the marketing of services.
An expanded system based on Seven Ps stresses the importance of Place, Product, Price, Promotion, People,
Process, and Physical evidence

MARKET RESEARCH
Market research is for discovering what people want, need, or believe. It can also involve
discovering how they act. Once that research is complete it can be used to determine
how to market your specific product. MR-Anywhere is a very good platform for market
research and analysis
For starting up a business there are a few things that are important:
Market information
Market information is making known the prices of the different commodities in the
market, the supply and the demand. Information about the markets can be obtained in
several different varieties and formats.
Examples of market information questions are:
Who are the customers?
Where are they located and how can they be contacted?
What quantity and quality do they want?
When is the best time to sell?
Market segmentation
Market segmentation is the division of the market or population into subgroups with
similar motivations. Widely used bases for segmenting include geographic differences,
personality differences, demographic differences, use of product differences, and
psychographic differences.
Market trends

The upward or downward movements of a market, during a period of time. The market
size is more difficult to estimate if you are starting with something completely new. In
this case, you will have to derive the figures from the number of potential customers or
customer segments. [Ilar 1998]
But besides information about the target market you also need information about your
competitor, your customers, products etc. A few techniques are:
Customer analysis
Choice Modelling
Competitor analysis
Risk analysis
Product research
Advertising research

Competitive strategies are the method by which you achieve a competitive advantage in
the market. A firm's relative position within its industry determines whether a firm's
profitability is above or below the industry average. The fundamental basis of above
average profitability in the long run is sustainable competitive advantage. Before
devising a competitive strategy, one needs to evaluate all strengths, weaknesses,
opportunities, threats in the industry and then go ahead which would give one a
competitive advantage. According to Michael Porter, competitive strategy is devised into
4 types:

Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The
sources of cost advantage are varied and depend on the structure of the industry. They
may include the pursuit of economies of scale, proprietary technology, preferential
access to raw materials and other factors. A low cost producer must find and exploit all
sources of cost advantage. If a firm can achieve and sustain overall cost leadership, then
it will be an above average performer in its industry, provided it can command prices at
or near the industry average.

Differentiation Leadership
In a differentiation strategy a firm seeks to be unique in its industry along some
dimensions that are widely valued by buyers. It selects one or more attributes that many
buyers in an industry perceive as important, and uniquely positions itself to meet those
needs. It is rewarded for its uniqueness with a premium price. Cost Focus In cost focus a
firm seeks a cost advantage in its target segment.

Cost focus
exploits differences in cost behavior in some segments. Such strategy helps firm to
satisfy sufficient consumers and gain popularity.

Differentiation Focus
In differentiation focus a firm seeks differentiation in its target segment. Differentiation
focus exploits the special needs of buyers in certain segments. This type of
differentiation is made to meet demands of border customers who refrain from
purchasing competitors products only due to missing of small features. It is a clear niche
marketing strategy.

TARGET MARKETING
Tata Solar targets the mass market with its products, but combines this broad scope with
a differentiation strategy based on design, branding and user experience that enables it
to reach the Indian common man. Tata Solar has a generic cost leadership and product
differentiation strategy in the solar energy industry. The current strategic goals of Tata
Solar are market diversification and operations expansion. Consumer categories:
-Domestic -Agricultural Solar powered equipment is more environmentally friendly and
economical in its operation compared to equipments powered by an internal combustion
engine (ICE) or nuclear power. For irrigation and drinking watersolar PV water pumping
systems are used in India. Solar water pumping system works on power generated using
solar photovoltaic system. The solar energy is converted in to electricity by using a photo
voltaic array. The residential consumer category contributes to about 29 percent of the
total Indian Power requirement; this is expected to increase to 34 percent by 2021-22,
according to KPMG report. It is expected that high-end residential consumers will be
proactive in adopting solar rooftop given their higher power tariffs. A large number of
these consumers are likely to start adopting solar power from 2017-18. However,
government involvement will be required in encouraging non-high-end residential and
agriculture consumers to use solar power. Solar Market Segment: -Grid Connected Solar
Potential -Off-Grid Connected Solar Application Potential -Solar Water Heater (SWH) Grid
Connected Solar Potential includes; Residential Rooftops and Utility Scale Solar power
(CSP and PV). And Off-grid connected Solar Application Potential includes; Solar Powered
Agricultural Pump sets and Solar powered Telecom towers. In the off-grid space, solar
power is already cost competitive with alternatives in certain applications. For example,
telecom towers are an attractive market for solar PV installations. And Solar Water
Heating (SWH) applications could be used in residential, commercial as well as industrial
sectors.

STATERGY USES IN MARKETING


Products

Goods panels, transformers, inverters, necessary construction equipment. In the proposal


include all the equipment needed, spec sheets, and warranty info to better inform the client of
what they are buying. Services and ideas: have expert and experienced salespeople, engineers,
and installers. Perform analysis of the property and financial implications of the purchase.
Perform maintenance at no charge if anything breaks.

Price
Give the customer a detailed accounting of all equipment and service fees, tally it up, and come
up with a total. This total is usually pretty high. Use marketing to get the client to think of the
purchase as an investment, rather than a huge expense.

Place
Salespeople need to be available to travel to the individual sites to perform the analysis, and go
wherever they need to close the sale.

Promotion
Tata BP Solar has embarked on an extensive retail distribution network, named Project Disha, to
reach out to customers across the country and overseas Advertising: newspaper, TV, radio,
billboards, anything to get your message across Personal Selling: very important. Solar Panels
are complex and customized. Meet face to face with the potential buyer to understand their
goals and resources. Give them immediate feedback. Public Relations: media is constantly
reporting about new developments in the renewable energy industry. Informs the public of the
benefits of solar without having to spend money on advertising. Sales Promotions.
Direct marketing: uses direct communication to generate a response in the form of an order or a
request for further information.

SWOT Analysis
Strength
First established manufacturer in the country. Beneficiary of major Solar lighting system schemes
Warranty of up to 5 years is a major benefit manufacturing plant based in the country Huge
supply network and service facilities. Quality of the products manufactured is durable

Weakness
Limited portability of products available. Products limited for indoor use mostly Poor efficiency of
the solar panels as compared to competitor products. Portable product market yet to be tapped.
Present systems utility limited to lighting and heating. High cost of the product.

Opportunity

Existing supplier network be strengthened. Supply from Tata subsidiaries for component could
improve margins To expand its product mix. Use of its R & D Centres for development of newer
cheaper products.

Threats
Chinese solar lighting products providing cheaper alternatives For water heating, biogas is
another cheaper option compared to solar water heating systems. Newer and bigger entrants like
Philips entering the solar lighting system market.