Marketing Management

PGDM (2011-13) Term I

Learning Objectives
Tracing the origin of the Concept of Marketing Defining Marketing. Understanding the Core Elements of Marketing. Describing the nature and scope of Marketing.

Origin of Marketing
Marketing is the worlds oldest business activity. The earliest civilization witnessed agriculture and handicrafts

as major economic activity.

Agricultural produce was exchanged with non-agricultural products. This exchange is known as Barter System. Gradually, barter system was replaced by money or currency.

By 1970s, service oriented firms also started using marketing

Exchange and Marketing

Pots

Hats

Baskets

Shoes

Knives

In very basic economic systems, each seller must meet directly with each buyer in order to exchange something of value. As needs increase, the number of exchanges can soon become unmanageable for one person.

Exchange and Marketing

In a centralized market, a buyer can go to one location to find many different products from many different sellers. By reducing the time both buyers and sellers must spend to complete an exchange, prices can be lowered.
Pots

Hats

Central market middleman

Baskets

Shoes

Knives

Exchange and Marketing

Pots Pots

Hats

Baskets

Hats

Central market middleman

Baskets

Hoes

Knives

Hoes

Knives

Ten exchanges required without central market

Five exchanges required with central market

Definitions of Marketing
Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably - The Chartered Institute of Marketing

The right product, in the right place, at the right time, and at
the right price. - Adcock et al Marketing is the human activity directed at satisfying human needs and wants through an exchange process. -Kotler1980

Marketing is a social and managerial

process by which individuals and groups obtain what they want and need through creating, products offering of and exchanging with others

value

- Kotler 1991

Core Elements of Marketing

1

3 2

Needs
Wants

Value
Cost Satisfaction

Products

Demands
4

6
5

Exchanges Transactions

Marketing

Markets Marketers

Elements of Marketing
Needs
describe basic human requirements. The needs are not
created by the marketer but are an inseparable part of human biology. People need food, air, water, clothing, and shelter to survive.

Wants

are desires for specific satisfiers of these needs. An

American needs food but wants burger & a soft drink. A person
in Mauritius needs food but wants rice & beans. Wants are shaped by the society & environment.

Demands

are wants for specific products backed by an ability

to pay. Many people want a Mercedes; only few are able and willing to buy

Product

is any offering that can satisfy a need or want .

A brand is an offering from a known source.

Value & Satisfaction.

The buyer chooses between different products on the basis

of which is perceived to deliver the most value.

Value is the ratio between what the customer gets and what
he gives. The customer gets benefits and assumes costs. The benefits include functional benefits and emotional benefits. The costs include monetary costs, time costs, energy costs etc.

Exchange

is the act of obtaining a desired product

from someone by offering something in return. 5 conditions must be satisfied for exchange potential to exist:

1. There are at least two parties.

2. Each party has something that might be of value to the

other.
3. Each party is capable of communication & delivery.

4. Each party is free to accept or reject the exchange

offer.
5. Each party is desirous of dealing with other party.

Transaction can be of two types:

a) In monetary transaction buyer offers cash or credit in exchange of products or services offered by the seller. b) In case of barter transaction products or services

are offered in exchange of products or services.

Market

consists of all the potential customers sharing a

particular need or want who might be willing & able to engage in exchange to satisfy that need or want.

Marketer

is someone seeking a response from someone

else & willing to offer something of value in exchange. He is not a producer. Marketer is one of the party to exchange.

Marketing

Marketing An Exchange Process

Basic idea in marketing is the Exchange Process Exchange can take place if there are a minimum of 2

parties.
One party offering something of value or utility (seller) The other party willing to pay or forego something (buyer) The exchange takes place when both the parties mutually agree to the terms and conditions.

Importance of Marketing
Marketing has gained importance due to following reasons : Changing consumer buying behaviour

Increasing competition
Declining sales

Slow sales growth

Decreasing profit & increasing expenditure Technology-induced changes Globalisation

Scope of Marketing
Many things can be marketed. These involve:

Goods Services Experiences Events Persons

Places Properties Organizations Information Ideas

A SIMPLE MARKETING SYSTEM

COMMUNICATION

GOODS & SERVICES INDUSTRY (A collection of sellers) MONEY

MARKET (A collection of buyers)

INFORMATION