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21
Marketing
21.1 Introduction
You have already learnt about the term ‘Business’ in your earlier lessons.
Business is an economic activity which involves production of goods
and services for the purpose of their distribution among customers with
the objective of making profit. Thus the basic activities of business are
production of goods and services and their sale.
You must have visited markets in your area and purchased various
goods. You may have also observed that normally after using these
goods some of your needs are fulfilled and you feel satisfied. In this
lesson, you will learn about the marketing activities of business firms
which enable their customers to buy goods and services and get
satisfaction for the money spent.
21.2 Objectives
After reading this lesson, you will be able to
l
state the meaning and role of marketing
l
enumerate the objectives of marketing
l
explain the nature of marketing
l
identify the marketing activities
l
explain the functions of marketing
l
describe the scope of marketing
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21.3 Meaning and role of marketing
The term marketing may be interpreted in the traditional sense and the
modern sense. Let us examine each one.
Traditional concept of marketing
According to this concept, marketing consists of those activities which
are concerned with the transfer of ownership of goods from producers
to consumers. Thus, marketing means selling of goods and services. In
other words, it is the process by which goods are made available to
ultimate consumers from their place of origin.
The traditional concept of marketing corresponds to the general notion
of marketing, which means selling goods and services after they have
been produced. The emphasis of marketing is on sale of goods and
services. Consumer satisfaction is not given adequate emphasis.
Viewed in this way, marketing is regarded as production/sales oriented.
Modern concept of marketing
According to the modern concept, marketing is concerned with creation
of customers. Creation of customers means identification of consumer
needs and organising business to satisfy these needs.
Marketing in the modern sense involves decisions regarding the following
matters
1.
Products to be produced
2.
Prices to be charged from customers
3.
Promotional techniques to be adopted to contact and influence
existing and potential customers.
4.
Selection of middlemen to be used to distribute goods & services.
Modern concept of marketing requires all the above decisions to be
taken after due consideration of consumer needs and their satisfaction.
The business objective of earning profit is sought to be achieved through
provision of consumer satisfaction.
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This concept of marketing is regarded as consumer oriented as the
emphasis of business is laid on consumer needs and their satisfaction.
Role of marketing
Marketing occupies an important place in business and society. The
role of marketing is discussed below.
Role of marketing in business
Marketing plays an important role in business. It is an important factor
in the success of business. Those firms which have ignored the
importance of marketing have suffered in the long run.
Marketing involves ascertaining the needs and requirements of customers.
This enables the firms to produce goods and services accordingly.
Demand for goods and services is created through the techniques of
advertising and personal selling. Goods and services are distributed
among consumers to meet the demand. Prices are fixed at a level
which customers can afford to pay. Goods are distributed at the place
and time convenient to customers. All these activities have to be
performed systematically to let business earn profits.
The role of marketing in business success has become vital because of
the following reasons.
1.
Technological changes are taking place at fast pace.
2.
Competition has become intense in the market.
3.
Consumer tastes and preferences are changing very fast.
4.
Production is organised on a large scale.
A business firm is required to remain familiar with market development
and adjust its activities according to changing conditions, due to the
reasons mentioned above. Marketing Plays an important role in making
these adjustments.
Role of marketing in society
Marketing has also an important role in society. It makes new and
better products available to people, increasing their standard of living.
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It helps in creation of new jobs. It bridges the gap between production
and sale of goods, making economic activity possible. It integrates
agricultural and industrial sectors. Overall it leads to economic
development of the country.
Intext Questions 21.1
Fill in the blanks:
1)
In the traditional sense marketing is _______________ oriented.
2)
In the modern sense marketing is _____________ oriented.
3)
Marketing occupies an important place in ______________.
4)
Marketing creates ___________ for goods and services.
5)
Marketing involves ____________ the need for and requirements
of consumers.
6)
Role of marketing has become vital because of _________
changes and increased ___________.
7)
In the modern sense, emphasis of marketing is on ____________
satisfaction.
21.4 Objectives of marketing
Marketing activities are organised to achieve the following objectives:
1.
Consumer satisfaction : Marketing activities are organised with
the objective of ensuring that consumers get maximum satisfaction
from the use of the product. Consumer satisfaction ensures steady
and growing demand for firm’s products.
2.
Product development : This objective aims at developing new
and better products, which may provide greater satisfaction to
consumers. Product development is necessary for the survival
and growth of the firm.
3.
Sustaining Customer loyalty : If customers continue to make
repeated purchases of goods and services, it is possible to sustain
the demand for the products of the firm.
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4.
Earning profits : Business must earn sufficient profit. Marketing
activities are organised with the objective of earning adequate
profits for the firm.
5.
To secure competitive advantage : This objective of marketing
ensures that a firm’s products are preferred over competitor’s
product. Competitive advantage is achieved through cost efficiency
and quality improvements of the products.
6.
Growth in Sales : Marketing aims at increasing the sale of
firm’s products. This is necessary to maintain or increase the
market share of the firm. Market share means percentage demand
satisfied by the firm for a particular product. Growth in sales
ensures survival of the firm in the long run.
7.
Creation of goodwill : This objective of marketing ensures that
a business firm is regarded as a useful part of society engaged
in satisfying consumer needs. This help business firms to survive
and grow.
Intext Questions 21.2
I.
Given below are words in two columns, A and B. You have to
match the words in column A with words in column B so that
the matched words describe an objective of marketing. Write the
serial number of words in column B against the matched words
of in column A:
1)
A
Consumer
i)
B
Advantage
2)
Product
ii)
Sales
3)
Earning
iii)
Development
4)
Competitive
iv)
Satisfaction
5)
Growth in
v)
Goodwill
6)
Creation of
vi)
Customer loyalty
7)
Sustaining
vii)
Profits
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II.
Five statements are given below. The statement may be true or
false. Answer by ticking true or false.
1.
Marketing aims at providing consumer satisfaction.
True/False
2.
Product development means production of goods.
True/False
3.
Marketing helps business in earning profits.
True/False
4.
Marketing does not create goodwill for firm.
True/False
5.
Product development means developing new and better
products.
True/False
21.5 Nature of marketing
Marketing is a crucial business function. It is essentially a managerial
activity. It involves decisions regarding product, prices, promotion and
place with the objective of providing satisfaction to consumers for the
money they pay and earning profits for the business firms.
Marketing starts with the identification of consumer needs. Once
consumer needs are identified, goods and services are designed and
developed to satisfy those needs. Goods are produced by production
department according to market requirements and as determined by the
marketing department. This requires proper co-ordination between the
two departments.
Advertising and personal selling are important tools of marketing, which
create an awareness among consumers of their needs for goods and
services and suggest means to satisfy the same. These activities help in
creating demand for products. This demand is met by distribution of
goods and services through various channels at prices which consumers
can pay and at the desired time and place. In case the goods are
durable, after-sale service is also provided to consumers.
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Intext Questions 21.3
Fill in the blanks
(1)
Marketing is essentially a _____________ activity.
(2)
Marketing starts with identification of ___________ needs.
(3)
Advertising creates ____________ among consumers.
(4)
Marketing distributes _____________ and services among
__________.
(5)
Marketing designs and develop goods and _______.
21.6 Marketing activities
Several activities are involved in marketing. These activities are as
follows:
1.
Product designing and development
Marketing is regarded as the starting point of business. Business provides
those goods and services to consumers which satisfy their needs. This
requires that the needs of consumers be identified and then goods and
services produced to satisfy these needs. Identification of consumer
needs and developing goods and services to satisfy these needs is the
first marketing activity.
The task of marketing to begin with is to conceive ideas, products or
services. The products are physically developed by the product planning
department in consultation with the marketing department as per the
needs and requirement of consumers.
If you look around, you will find many new products which have been
recently developed and introduced in our markets. An example of such
a product is the mobile phone.
2.
Pricing
Price is the amount of money which the buyer pays to the seller for
the transfer of ownership of goods to him.
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Pricing activity involves decisions regarding fixation of product prices,
Keeping in view product costs and the capacity of customers to pay.
Normally, prices are fixed at a level where by producers may be able
to earn reasonable profits.
Pricing decisions are important marketing decisions as they affect
business revenue and business profits.
3.
Promotional activities
Promotional activities include advertising, personal selling, sales
promotion and publicity.
All the promotional activities involve contact with the existing and
prospective customers whereby they are made aware of their needs and
informed about the availability of products to satisfy the needs.
The objective of promotional activities is to influence the customers to
buy the product or act as desired by the firm.
4.
Distributional Activities
Distributional activities include those activities which make it possible
for goods to reach the ultimate consumers from the place of their
origin. This involves decisions regarding channels of distribution.
Channel of distribution means the path through which goods travel
from producers to consumers.
The objective of distributional activities is to ensure that consumers get
the goods and services at the place and time most convenient to them
and in the desired quantity.
Intext Questions 21.4
(1)
Pricing activity involves _____________ of product prices.
(2)
Promotional activities include ___________________________.
(3)
Distributional
____________.
(4)
Promotional activities involve establishing contact with the
___________ and __________ customers.
activities
involve
decisions
regarding
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(5)
Two important considerations in price fixation are __________
and __________.
(7)
Marketing involves decisions regarding ______________,
__________, __________ and ____________.
21.7 Functions of marketing
Marketing involves distribution of goods from producers to ultimate
consumers. A number of operations need to be performed while carrying
out the function of distribution of goods. These operations are termed
as functions of marketing and have been discussed below.
1.
Buying and assembling
Buying
Buying is an essential activity both in a manufacturing concern as well
as in a trading concern. In a manufacturing firm raw materials and
components are purchased which are further worked upon with the
help of men and machine to convert them into finished good. In a
trading firm, goods are purchased for resale.
In both the cases, sales are made to customers to meet their demand.
It is therefore necessary that purchase of raw materials and finished
goods be made according to market requirement.
Assembling
Assembling involves bringing goods to one central place after buying
the same in small quantities from several places. This function is
particularly important in the case of retailers who have to make
purchases from a number of wholesalers. The goods collected at a
central place are moved to the place of business conveniently.
2.
Selling
Selling is an important marketing function. Sale implies transfer of the
ownership of goods and services by the seller to the buyer for a
consideration known as price. Selling is the end result of distribution
of goods and services.
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Selling involves a number of steps. In the first instance, a seller has to
inform the buyers that his goods are available in the market to meet
some of their important needs. He has to inform the buyers about the
nature and uses of products, their prices and the important needs of the
customers that may be satisfied by the product. The seller stresses the
price and quality and the advantages of using the products. Once demand
is created it is met by actual sale.
For effective selling it is necessary that products should provide
satisfaction to customers. For this purpose suitable goods and services
must be identified to satisfy those needs.
3.
Marketing research
Marketing research involves collection and analysis of relevant facts to
solve marketing problems. It is a logical method of solving marketing
problems.
We have seen earlier that marketing is essentially a managerial activity
and involves decisions regarding products, prices, promotion and
distribution. All these decisions should be taken on the basis of facts.
Marketing research gathers, records and analyses facts to reach rational
decisions.
Marketing research may consist of any or all of the following :
(1)
Research on markets : This is a study of customers and their
characteristics.
(2)
Research on Products : This is a study of products, which
involves development and introduction of new products,
improvement of existing products and withdrawl of old products
from the market.
(3)
Research on marketing methods and policies : This branch of
marketing research studies issues relating to advertising, personal
selling, pricing and channels of distribution.
4.
Pricing
Pricing is an important marketing function. It involves fixation of product
prices. Two important factors that influence price fixation are cost of
the product and the capacity of customers to buy the product. Normally
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price is fixed at a level which covers product cost and provides for
reasonable profits. The price of a product determines whether
customers will buy a product or not. Thus, price affects the demand
for a product and its sale.
5.
Transportation
The task of physical distribution of goods requires that goods be taken
from their place of production to their place of consumption.
Transportation performs this essential function of distribution.
Goods may be transported by different means. You are familiar with
roadways, railways, airways and waterways as means of transport. These
means of transport differ with respect to cost, speed, safety and flexibility.
Improvement in transportation helps in widening the markets for
products. It also helps in producing goods on a large scale.
6.
Storage
Normally, goods are produced much before the time they are consumed.
Sugar is produced in one season and consumed throughout the year.
Similar is the case with cotton. Woolens may be produced through out
the year but are used only in the winter season. In all such cases goods
are stored from their time of production till the time of their
consumption.
Storage involves making suitable arrangement for preserving the goods
till they are needed by consumers and are taken to the market place.
Storage results in creation of time utility as goods are preserved from
the time of their production to the time of their consumption.
7.
Financing
In a marketing organisation, provision of adequate finance is necessary
to be made to meet the selling and distribution expenses, costs of
product planning, marketing research, etc. Finance is required to meet
both fixed and variable costs involved.
8.
Standardisation
Standardisation involves production of goods of uniform quality with
12 :: Business Studies
respect to shape, design colour and other characteristics. Manufactured
goods produced on a large scale are generally standardised goods.
Standardisation helps the firm in advertising and selling its products.
Goods can be sold by sample or description. If products are standardised,
customers are able to identify a product and its characteristics very
well. In case of non-manufactured products grading is done to achieve
standardisation.
9.
Grading
Grading means separating products into different classes on the basis
of certain characteristics such as size and quality. Grading is done in
case of agricultural, forest and mineral products, such as cotton, sugar
cane, iron ore, coal, timber, etc.
10.
Branding
Branding means giving an attractive name to the product so that it is
known by that name. Surf, Lux, Hamam, Jay, Onida are some brand
names of various products. Surf is the brand name of washing powder
manufactured by Hindustan Lever Ltd.
The aim of branding is to distinguish firm’s product from other similar
products so that customer may purchased the designed product with
ease. Branding helps in advertising and personal selling.
11.
Packing and packaging
Packing means putting the goods in suitable containers to prevent damage
to the goods in the process of transit from one place to another or while
in storage. Packing is also helpful in proper handling of the goods.
Packaging is different from packing. Packaging involves putting the
goods in packets according to the convenience of consumers. Important
considerations to be kept in view in this connection are the size of the
package and the packaging material. Goods may be packaged in bottles
(plastic or glass), boxes (made of tin, glass, paper, plastic), cans or
bags. The size of the package generally varies from a few grams to a
few kilograms, one piece to a number of pieces of a product, or in any
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other suitable quantity in terms of weight, count, length etc. Packaging
influences the demand of the product in as much as goods are made
available to consumers in the desired quantity with proper & desirable
containers.
12.
Credit and collection
Goods and services may be sold to customers for cash or on credit. In
cash sales the buyer makes payment of the price in cash at the time of
sale. In case of credit sale, payment is made after a certain period
according to the terms and conditions of sale.
When goods are sold on credit, it is necessary and important that
payment is collected according to the terms of sale. It is the function
of collection department to collect payments due from customers and
take necessary steps in that connection.
A firm selling goods on credit has to take the following decisions :
(1)
The customers to whom credit sales are to be made.
(2)
The period of credit that will be allowed to customers.
(3)
The discount, if any, that will be offered to customers for prompt
payment.
13.
Risk management
Marketing is exposed to a number of risks due to which business may
suffer losses. The function of risk management is to minimise or
eliminate the impact of these risks on the firm.
Marketing risks are associated with declining prices of products, falling
demand, increased competition, change in the tastes and preferences of
consumers, etc.
Risk management involves proper planning and forecasting of demand,
monitoring changes in market, and taking measures so as to prevent or
minimise the impact of adverse situations.
Risk management is an important function of marketing as it saves
business from losses.
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Intext Questions 21.5
(1)
Assembly of goods mean bringing goods to a _______________
place.
(2)
Sale of goods involves ____________ of __________ of goods
and services from the seller to the buyer for a consideration
known as ____________.
(3)
Marketing research is a ____________ method of solving
marketing problems.
(4)
Marketing research _______________, records and ___________
facts to make rational decisions.
(5)
Price of a product affects its ______________
(6)
Transport involves ______________ goods from their place of
origin to the place of their consumption.
(7)
Storage involves making _________ _____________ for
maintaining goods in a desirable state.
(8)
In credit sales, payment of price is _________for ___________
after the sale takes place.
(9)
Grading means ____________ products into ____________
classes.
(10)
Risk management is an important function of ____________.
21.8 Scope of marketing
Marketing is an universal function found in all type of business
organisations. The scope of marketing may extend over local, regional,
national and international markets.
Some organisations are engaged in production activities. The basic
operations performed by these organisations are production and sale of
good. The goods may be consumer good or producers good, durable or
non-durable good, goods of high value or low value, occasionally
purchased or purchased on a regular basis, for rural areas or urban
areas, for local, regional, national or international markets, for rich or
poor, for male or female and for people of different age groups.
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Business organisations are also engaged in providing services to
customers. Services do not have physical shape as goods have. Services
may be of any type. You know about banking services, transport services,
insurance services, warehousing services, postal services, medical
services, educational services, employment services, security services
and many more. Business organisations try to satisfy specific needs of
customers through the provision of services. Services are provided to
customers living in different markets, belonging to different age groups,
sex and economic status.
The scope of marketing is not limited to satisfying existing human
needs. It extends to all those needs that can be created or identified
and satisfied through provision of good and services.
Intext Questions 21.6
1)
Marketing is an ___________________ found in all types of
business organisations.
2)
The scope of marketing is ___________.
3)
The goods may be consumer goods or ____________ goods,
________ goods or non-durable goods.
4)
Business organisations are engaged in providing __________ and
services to __________.
5)
Business organisation try to satisfy ____________ needs of
customers through the provision of services.
21.9 What you have learnt
Traditional concept of marketing
l
Marketing is sales oriented
l
Emphasis of marketing is on sale of goods and services.
l
Marketing means physical distribution of goods.
Modern concept of marketing
l
Marketing is consumer oriented
16 :: Business Studies
l
Emphasis of marketing is on consumer satisfaction
l
All business activities are organised to satisfy customers
l
Marketing decisions regarding product, price, promotion and place
are taken to provide consumer satisfaction.
l
Business earns profits through consumer satisfaction.
Role of marketing
l
Marketing plays an important role in business and society.
l
Marketing is an important factor determining the success of
business
l
Marketing is important for society as it leads to higher standard
of living for people.
l
Business firms which have ignored the importance of marketing
have suffered in the long run.
l
Two important reasons underlying the vital role of marketing are
technological changes and increased competition.
Objectives of marketing
l
To provide consumer satisfaction.
l
To develop new and better products.
l
To ensure customers’ loyalty.
l
To enable business firms to earn sufficient profits.
l
To gain competitive advantage.
l
To achieve growth in the sale of firm’s products.
l
To build reputation and goodwill.
Nature of marketing and its activities
l
Marketing is essentially a managerial activity.
l
Marketing involves decisions regarding product, price, promotion
and place.
l
Marketing is concerned with creation of customers.
Marketing :: 17
l
Creation of customer requires that needs of consumers be
identified and then business organised to satisfy those needs.
Functions of marketing
l
Marketing involves buying and assembly of goods.
l
It involves selling goods.
l
Advertising, personal selling, sales promotion and publicity are
used to create demand for products.
l
Marketing research helps solving marketing problems.
l
Grading, packaging, packing, storage, transport, branding and risk
management.
Scope of marketing
l
Marketing is an universal function performed in all type of
business firms.
l
Scope of marketing is unlimited.
21.10 Terminal Exercise
1.
Explain the following in one sentence each
(a)
Marketing in the traditional sense
(b)
Marketing in the modern sense
2.
Describe the role of marketing in business and society.
3.
Enumerate the objectives of marketing.
4.
Identify and explain various marketing activities.
5.
Explain the various functions of marketing.
21.11 Answers to Intext Questions
21.1 (1) Production/Sales
(3) business and society
(2) Consumer
(4) demand
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(5) ascertaining
(6) technological, competition
(7) consumer
21.2 I. 1. iv) 2. iii) 3. vii) 4. i) 5. ii) 6. (v) 7. vi)
II. 1. True, 2. False, 3. True, 4. False, 5. True.
21.3 (1) managerial
(4) goods, consumers
(2) consumer
(3) awareness
(5) services
21.4 (1) fixation
(2) advertising, personal selling, sales promotion, publicity.
(3) Channels of distributes.
(4) existing, prospective.
(5) product costs, capacity of consumers to pay.
(6) product design, pricing, promotion of product, distribution of
product.
21.5 (1) central
(2) transfer, ownership, price
(3) logical,
(4) gathers, analyses,
(5) demand
(6) taking
(7) suitable arrangements
(8) postponed, a period
(9) separating, different
(10) marketing
21.6 (1) Universal function
(3) producer, durable
(5) specific
(2) unlimited
(4) goods, consumers