DU SOL B.Com 3rd Year Marketing Management Notes Chapter 1 Introduction to Marketing Management
“Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user.” Explain?
Define and explain critically the term “Marketing” and describe its functions? ‘
Define Marketing and discuss its importance in modern world?
Write detailed note on functions of marketing?
Meaning Of Marketing
Marketing is a very popular but is widely misunderstood term. Even persons involved in marketing misunderstood the term. Generally, the purchase and sale of commodities is taken to mean marketing. Thus, a producer and businessman consider marketing a selling activity, whereas a purchaser feels that purchasing goods is marketing, But marketing not only purchase and sale of commodities. It is something more. In order to understand the correct meaning of marketing we have to understand different points of view, Mainly, there are two angles from which we can discuss the meaning of marketing.
- Product oriented view, or old concent.
- Customer oriented view or new or modern concept.
1. Product Oriented View. It is a traditional concept of marketing. This view is based on the assumption that the product whatever it be is d acceptable to the consumer. The producer is. concerned only with the I production without taking into account the choice or the behaviour of the consumer. A few definitions supporting this view are given below;
(a) “Marketing comprises both buying and selling activities.”
(b) “Marketing consists of those efforts which affect transfers in the ownership of goods and services and provide for their physical distribution.”
– Clark and Clark
(c) “Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user.”
– American Marketing Association
Adam Smith in his book Wealth of Nations’ held that “consumption is the sole end and purpose of all production and interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer” Under Mercantile System, the interest of the consumer was virtually sacrificed to that of the producer, They considered production and not consumption as the ultimate end and object of industry and commerce.
It was a stage when the role of marketing was ignored. With the dawn of Industrial Revolution major changes took place. There was a shift from agriculture to industry, the living standards of the people rose with the development of transport and communications, The importance of marketing concept was realised for the first time. However, no serious efforts were made to satisfy the wants of the consumers.
It was because the demand usually outstripped the production capacity. The above definitions of marketing are product-oriented because they lay more emphasis on the product rather than on the consumers. According to them the marketing process comes to an end as soon as the product reaches to the hands of the consumers: Infact, marketing is wider than this.
2. Customer Oriented View. Marketing is related to the needs of the buyer. Only such products are brought forward which can satisfy the wants and tastes of the consumers. Modern writers thus give more importance to the consumer. To please the consumer after-sales services are .needed. Here we quote some of the well known customer oriented definitions of marketing:
(a) ‘‘’Marketing is the business process by which products are matched with markets and through which transfers of ownership, are effected ”
– Cundiff and Still
(b) “Marketing is the delivery of a standard of living.”
– Paul Mazur
(c) “Marketing is the creation and delivery of a standard of living.”
– Malcomm McNair
‘(d) “Marketing is a total s stem of interacting business activities designed to plan. price, promote and distribute want satisfying products and services to present and potential customer.” – William J. Stanton
These definitions suggest that marketing is concerned with the movement of goods and services from the plant to the consumer. Marketing activities are directly concerted with the demand stimulating and demand fulfilling efforts of the enterprise. All these activities are interrelated and interact with one another. Hence it can be said that “Marketing is the managerial process by which products are matched with markets and through which transfers of ownership are effected ” The matching of services with markets to effect transfers of ownership is marketing.
With the changing of times and growing of intricacies, definitions of marketing also underwent modifications. The Institute of Marketing of the U.K.. defined marketing as :
“The creative management function which promotes trade and employment by assessing consumer needs and initiating research development to meet them. It coordinates the resources of production and distribution of .goods and services; determines and directs the nature and scale of the total efforts required to sell profitability, the maximum production to the ultimate user.”
Leslie Rodger made slight changes and put it as:
“Marketing is the primary management function which organizes and directs the aggregate of business activities involved in converting customer purchasing power into effective demand for a specific product or service and in moving the product Or service to the final consumer or user so as to achieve the company set profit or other objectives.”
An analysis of the above customer oriented definitions of marketing bring clearly the following points:
- Marketing is a system – a system of business activities.
- Marketing is designed to – plan, price, promote and distribute.
- Object of action – want satisfying goods and services the beneficiaries of which are the present and potential household consumers or industrial users.
- A managerial function – Marketing is one of the most powerful managerial functions.
- It takes into account the necessity of consumer orientation and emphasises innovations at the production stage.
- The dynamic innovation is. fully endorsed and its importance recognised.
- The supporters also point out that marketing is not only one activity, rather ft is result of the interaction of many activities.
- Marketing is incomplete without the satisfaction of consumer’s waits completely. Consumer’s satisfaction is the prime function of the marketing.
William J. Santos’s definition comprise ail the above-mentioned merits“ Marketing is a total system of interacting business activities designed to plan, price promote and distribute want satisfying products and services to present potential customers.”
Elements Or Functions Of Marketing –
The functional approach of marketing consist of a number of activities called marketing functions. A marketing function is, “an act or operation or service by which original product and the final consumer are linked together,” Sometimes it may not be possible to divide the whole marketing process into a few functions. At present no unanimity is found regarding a proper classification of marketing functions. F. W. Ryan lists 120 functional elements grouped into 16 categories, other writers suggest from as few as eight to as many as twenty or thirty such functions. We can group these various functions of marketing into three major heads :
- Merchandising Functions.
- Physical Distribution Functions.
- Facilitating Functions.
1. Merchandising Functions. The process of the passing of goods into the customer’s hands is called the ftinction of exchange. This process can be divided into buying and assembling and selling.
(a) Buying and Assembling. Buying is the first step in the process of marketing. A manufacturer has to buy raw materials for production; a wholesaler has to buy goods to sell them, to the retailer; a retailer has to buy goods to be sold to the consumer. Buying involves transfer of ownership of goods from seller the buyer. Assembling means creation and maintenance of the stock of goods, purchased iron, different sources, Generally, The dealer middleman purchases the goods from more than one seller In such a case, the goods have to be collected and assembled at one place. This buying and assembling are two distinct processes. Both these processes involve related elements such as, kind, quality, price, date of delivery and other terms and conditions, All these require specialised knowledge on the part of the buyers.
(b) Selling. Selling is important from the point of view of the seller as well as the consumer as the title to the goods is transferred from seller to buyer only through selling. The profit making object of a business concern is achieved only through the sale of goods. After Industrial Revolution and increasing use of machinery, mass production has become possible which in its turn requires mass selling of goods. Demand creation is a different job which is further complicated by the presence of legal restraints. This function involves creation of demand, market reasearch, selection of channel for distribution etc.
2. Physical Distribution System. This function relates to the process of transporting the goods from the place of seller to the place of buyer and includes two main functions ; (a) transportation, and (b) storage and warehousing.
(a) Transportation. Marketing system requires an economical and effective transportation system. A good system of transportation increases the value of goods by the creation of place utility. The opening of new markets has been possible by the quick development of transportation and communication. It has resulted in the expansion of markets, regular supply at lower price and improved services to the consumers.
(b) Storage and Warehousing. When production is seasonal but consumption is perennial or when production is continuous but consumption is seasonal, storage becomes necessary. Storage involves holding and preserving of goods between the time of their production and time of their consumption. It facilitates a steady flow of commodities in the market. Warehouses can be maintained at central places from where the distribution
can be made according to the needs of the consumers. Storage tends to adjust the supply to demand of the product and also holds the price line. Thus storage can be regarded as a function of equalisation. It creates time and place utilities.
3. Facilitating Functions. These functions make the marketing process easy and include financing, risk-bearing, standardisation, pricing, advertising, and sales promotion and market information, etc.
(a) Financing. It is very difficult to carry on marketing activities ; smoothly without the availability of adequate and cheap finance. Commercial Banks, Cooperative Credit Societies, and Government Agencies arrange for short-term finance; medium term finance, and long-term finance to facilitate marketing. Trade credit is also one of the important sources of finance.
(b) Standardisation. Standardisation has now been accepted as an ethical basis of marketing, A standard is a measure that is generally recognised as a model for comparison. Standards are determined on the basis of colour weight, quality, and other factors of a product It meditates purchase and sale of goods. Goods are purchased by brand name. Standardisation will relieve buyers from examining the product in terms of contents, quality, weight, size etc.
(c) Market Information. Importance of marketing information has been recognised with the extent of markets and mass production. Decisions on marketing are based on information regarding market conditions. A number of problems may be solved by careful interpretation of available data.
On the basis of the information, the seller comes to know where and when to sell, at what price he should sell, who are the purchasers and competitors of goods, and what are the prospects of the goods etc. Marketing information and its analysis led to marketing research which has how become an independent branch of marketing. –
(d) Risk-bearing. Marketing of goods involves innumerable risks due to theft, deterioration accidents, etc. The most important factor responsible for the risk is fluctuation in prices. The other factors may be change in fashion, competition in the market, change in habits of the consumers, natural calamities, etc.
Businessmen have to foresee the business risks and take concrete steps to avoid such risks like insurance and hedging. Still there are risks which are to be borne by the businessmen.
(e) Pricing. Pricing is also an important function which is closely allude to selling. Price policy of the concern directly affects the profit element and therefore, its successful functioning. In determining the price policy, several factors are to be borne in mind such as, cost of the product, competitors’ prices, marketing policies, government policy or customary or convenient prices etc.
An analytical study of the functions of marketing makes it clear that marketing is a very, wide term and includes all activities from the very beginning to the end i.e., satisfaction of wants of the ultimate ’consumers.
Discuss the significance of marketing in the context of Indian Economy.
State the importance of Marketing.
Importance Of Marketing –
Marketing is a potential force that commands high significance for the society as a whole. The main object of production, now-a-days, is distribution of goods and service through marketing and to make as much s profit as possible. According to Philip Cotier, “Marketing is analyzing, organising, planning and controlling of the firms customer – impinging, resources, policies, activities with a view to satisfying the needs and wants of chosen customer groups at a profit.
” William J. Santon mentions that “Marketing is a total system of interacting business activities designed to plan, price promote and distribute wants – satisfying products and services to present and potential customers. ” The president can not plan, the production manager can not manage, the purchasing agent can not purchase, the chief financial officer can not budget and the engineer and designer can not design until the basic marketing determination have been made. Vet another writer has remarked that “nothing happens in oi economy until somebody sells something.” We can discuss the importance of marketing under following heads :
(A) Importance of Marketing to Society.
1. Delivery of Standard of Living. The main object of marketing is to provide goods and services to the people in the society according to their needs, and taste at reasonable price. It is to salsify the wants of people by the discovery of needs of the society, produces goods and services accordingly, creates demand for these goods, encourage people to use them and thus improves the standard of living of the people. It is why Paui Mazur has said, “Marketing is the delivery of Standard of Living to Society.” Thus, marketing creates, maintains and increases the demand of new and existing products and thus raises the standard of living of the people.
2. Provides Employment. According to an estimate, 40 percent of the labour force in developed economies (U.S.A., Japan, Germany, etc.) is engaged in different marketing processes such as marketing research work, wholesale and retail business, transport, communications, storing, and warehousing, publicity work, etc. In underdeveloped economies like India, there is a great scope for increasing opportunities for employment by developing marketing processes.
3. Decreases in Distribution Cost. Marketing aims at reducing the cost of distribution as far as possible so that the commodities might be within the reach of maximum number of consumers. It increases the level of consumption in the society. Reduction in the cost of distribution directly affects the price, of the commodity and it will also be reduced. As a result, the product can now be purchased by customers which were unable to purchase it due to high prices. Even if, we assume that the price is not reduced, it will increase the profits of the producer, which will filter down to the shareholders, and debenture holders. A part of the profit may also be utilised for further research work. Thus indirectly the society is benefitted in the long run.
4. Increase in National Income. Sound marketing system is associated with creation of increased demand for goods and services. An increased demand-stimulates production activity in the country which in its turn increase the national income which is in the interest of the whole economy,
5. Protection against Business Slump. Trade cycles cause fluctuations in prices. Sometimes there is a period of depression followed by a period of boom. A period of depression and low prices is very harmful to the economy. With the decrease in demand many small units stop production leading to wide spread unemployment and a charm of other evils. A sound marketing system can give protection against business slump by discovering new markets, reducing cost of distribution, making it customer oriented, diversifying and improving the product, suggesting alternative uses.
(B) Importance of Marketing to the Firm
Marketing plays an important role for the well-being of a firm. This is evident from the following words of Peter F. Drucker, “Marketing is the distinguishing and the unique function of the business.” The importance of marketing to a business firm may be summarised under followings heads :
(а) Helpful in Business Planning and Decision Making. Marketing is helpful not only to plan the production but it is helpful also in business planning and taking various decisions regarding the business. In today’s economy, production is planned according to the sales forecasts and not according to the production capacity of the firm. A firm will produce what it can sell or as much quantity as it can sell and not what and how much it can produce. Thus,, marketing decisions affect the business decisions. All other activities such as planning, production, purchase, finance or design revolve around the marketing decisions.
(b) Helpful in increasing Profits, Every business is carried on with the profit motive. Marketing helps in increasing the business profits by reducing the selling cost on the one hand and by increasing the demand of the product through advertising and sales promotion activities on the other hand.
(c) Helpful in Communication between Firm and Society. Business collects various information regarding consumers’ behaviour and changes therein from time to time through marketing. Marketing also provides information to the firm of the competitors, price policies, production policies, advertising and sales promotion policies, and distribution policies. It helps the firm in framing its own policies or making necessary adjustments therein accordingly. Moreover, marketing provides extensive information of the product regarding its quality, price, utility and place of availability to the society. Thus, society comes to know about the new products.
(C) Importance of Marketing in Underdeveloped or Developing Economy
Marketing has a special significance in underdeveloped economies. A rapid development of the economy is possible only by adopting the modern methods of marketing. Marketing in underdeveloped economies is still in its infancy, industrialisation and organisation go hand in hand with application of modem refinements in the field of marketing. An effective marketing system alone can bring the fruits of production to the people. India provides the best example in this connection. One of the causes for recession is actually the result of recollecting the development of marketing. Marketing is the most important “multiplier” and an effective engine of development. It mobilise latent economic energy and thus is the creator of small business. It is the developer of standard for product and services as well as conduct, integrity and Liability. Besides/economic integration is made possible through proper distribution of products. Thus, the concept of marketing in underdeveloped economies has to go a long way to catch up with the requirements of rapid industrial growth.
(D) Importance of Marketingin Developed Economy
Rich economies or the economies of abundance the way of life itself connotes a certain degree of development in marketing. In such countries, the volume of production with all its up-to-date technology is generally more than the demand. In order to maintain the level of production it is absolutely necessary that the produced amount is disposed off readily in the country itself or abroad on the basis of non price competition. This is possible only by a very sound and advanced marketing system because of still competition in the market.
(E) Importance of Marketing in a Seller’s or Buyer’s Market
A seller’s market is one in which the demand for goods and services exceeds the supply. Ip such a situation there is tendency of growing monopolies. On the other hand buyer’s market is one in which the supply of goods exceeds the demand. Every firm is eager to sell its goods but only that firm succeeds which adopts the scientific ways of marketing of goods which means adopting the designs and quality of goods in accordance with the changing tastes and likings of the common consumers. Thus, the importance of marketing in both a sellers or a buyers market is great indeed.
Thus, marketing is a potential force that commands high significance. Briefly any increase in efficiency of marketing results in a lower cost of distribution. Lower prices to consumers mean a real increase in the national income. Low prices are a boon to the entire population. Marketing process brings new varieties of useful and quality goods to consumers. This helps to improve the standard of living. Marketing provides wide employment opportunities. It is marketing which has counted yesterday’s luxuries to today’s necessaries. It converts latent demand into effective demand.
Importance Of Marketing In India –
Indian economy is a developing economy. Economic environment in India has changed and has been acquiring greater dynamism and robustness. The functions of marketing have also undergone tremendous changes. The country has acquired a solid industrial base. Now the concept of marketing has undergone a revolutionary change. Marketing Managers have come to know the importance of consumer-oriented marketing to grow. For them, marketing means creation of demand and creation of consumers. In other, words, it means creation of demands through the satisfaction of customers’ ” wants and thus creation and delivery of standard of living of the people.
India has acquired a solid industrial base. The infrastructure required for further advancement of industry is right now being developed. The ‘opening up of the economy’ in the nineties as a sequel o the new economic policies and liberalisation measures has given a new impetus to the process, With the new programmes, the economic and industrial environment of India is moving further towards the forces of market place and away from controls and regulations.
There is a remarkable expansion and diversification in the manufacture and marketing of consumer goods. A number of multinationals have, entered the Indian consumer market and posed a threat to the very existence of Indian industries. Indian industries are facing stiff competition with them. They are now using new marketing techniques to survive. The Indian industries are prepared to review their marketing policies like production and sales policies, price policies, and other related policies and programmes to commensurate them with those of their foreign counterparts.
Thus, in the light of the above discussion, the marketing function in India has acquired a new dimension. It has become more important in the changing environment of India’s economy.
Distinguish between Marketing and Selling.
Distinction Between Marketing And Selling
Very often these two terms – ‘Marketing’ and ‘Selling’ – are used in the same sense but actually they differ in their meaning.
Meaning of Marketing. Marketing occupies the first place in all v business activities. According to modern marketing concept, marketing starts with the product-idea and ends with customer satisfaction.4 Marketing’, according to William Stanton, “is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying H products and services to present and potential customers.” Thus, the main idea behind the concept is customer-satisfaction.
Meaning of Selling. Selling is normally concerned with the transfer of goods and services to the consumers or prospective consumers for the exchange of money. It serves mainly the seller’s interest. It is one of the important functions of marketing. Selling includes all activities regarding passing of finished goods to the buyers.
Distinction Between Marketing and Selling. We can distinguish these two terms on the following grounds :
1. Scope. The scope of the term ‘marketing’ is much wider than that of the term ‘selling’. Marketing includes all activities starting with the idea of producing a product to satisfy the needs of the customers and ending with, the satisfaction of customer even after the product is sold. Thus, it involves planning, producing, selling and serving the customers. Changes in product line, quality, shape and design, price; channels of distribution, etc. are all made On the basis of information picked up from the market through constant and systematic research. On the other hand, selling refers to the functions and activities undertaken to secure the sale or distribution of the quality and design of the products already manufactured by the firm. It involves efforts to soil what has already been produced without taking the trouble of adapting production to consumer needs and preferences.
2. Object of Profit Earning. The object of marketing is to earn profits through satisfaction of customer’s needs while on the other hand, selling concentrates on sale volume and makes efforts to earn and maximise to profits by selling more quantity of products. Thus, profitability of a marketing-oriented firm depends very much on the quality of products as required by customers and their satisfaction while the profitability of a selling, oriented firm is concerned with the sale volume.
3. Relation. Marketing is related to customer satisfaction and therefore includes pre-production and post sale activities. Selling is concerned only with the physical transfer of goods from one person to another and includes activities relating to transfer of goods. Selling is not concerned with the satisfaction of customers’ needs and pre-production and postsales activities.
4. Orientation. Marketing is consumer oriented and more attention is paid on consumers needs. It calls upon the Corporation to choose products, prices, and methods of distribution and promotion that would meet the needs of the customers. Selling is basically production oriented and concentrates much on production and distribution of goods. It persuades the customers what is already has or can offer readily.
5. Solution of Problems. Solving the marketing problems is the main concern of the producers or businessmen while selling problems are solved – by other channels of distribution like retailer, wholeseller, etc.
6. Emphasis. Marketing emphasises on innovation in every sphere. It provides better values to customers by adapting the most innovative technology. Whereas in selling, emphasis is on staying with the existing technology and reducing the cost of production with a view to maximise profits.
Trace briefly the concept of marketing and marketing management at different stages of economic development?
The Concept Of Marketing At Different Stages Of Economic Development –
Marketing management is a subject of increasing interest to all organisations. As the society moves from one stage of economic development to another the concept of marketing and marketing management is also being redefined as the material, technological and cultural basis of society undergo change.
Economic life has evolved through different stages of economic development. Chronologically, it is different to state how long one stage lasted. For convenience, economic history can be divided into eight stages. The concept of marketing in each stage was different depending on the character of the economy.
1. The Stage of Economic Self-Sufficiency. In this earliest stage of economic development there were small family units, carrying out all the work to satisfy all their wants for food, clothing and shelter.’ There was no exchange at all. It was a stage of self-sufficiency devoid of a Concept of marketing. There was nothing to market.
2. The Stage of Primitive Communism, In this stage, the land was owned in common and the fruits of the labour were shared in common. The Eskimo hunter had no personal right to his’ catch; it had to be divided among the inhabitants of the whole village. The tools and provisions were the common property of all. There was no need of exchange in this type of society. The absence of exchange removes the basis for a concept of marketing.
3. The Stage of Simple Barter. Soon it was realised that some people are able to turn out; certain goods quickly than others. This led to economic specialisation. Gradually not only individuals and families but the whole tribes and communities turned to specialisation for its beneficial effects on human productivity. The family or tribe engaged in a particular trade and entered into bartering relationship with others for the goods it did not produce or possess Those who were in possession of surpluses bartered their goods with those who did not produce or possess the same goods. The agriculturist bartered the corn, cotton etc. produced by him for the-leather, hand tools, utensils and furniture produced by the craftsman. It involved some search and negotiations. Thus, personal selling practices originated at the time of barter.,
4. The Stage of Local Markets. Barter System ercouraged the emergence of local markets. Such markets were at first temporary affairs such as trade fairs taking place .only on certain days of the week or at times of festivals.They.wer, also based on Barter System.. Bui soon, they took on more permanent shape with stalls, shops and bazzars. The rise of these local markets led to specialisation for the first time of certain persons in mar keting as opposed to production. The appearance of specialisation in ‘Selling expanded the concept of marketing. Marketing then was the process of exchange of economic goods and the set of specialised institutions that facilitated the exchange.
5. The Stage of Money Economy. Simple barter system was an advance over economic self-sufficiency but it was wrought with certain difficulties. The economic goods offered for exchange were not always of equal values. The various difficulties of barter were the common measures of value, double coincidence, difficulties of storage and carrying goods from place to place in search of parties etc. The solution came through the development of a common medium exchange which was known as ‘money’.
Money took several forms. Several articles were used as medium of exchange such as fish, hooks, shells, pearls, beads, sheep, cows, slaves, etc. But ultimately they were given up in favour of metallic coins. The advent of a common circulating medium quickened the pace of trade and provided an even more durable base for the operation of local Markets. At this stage, there was no far-reaching or fundamental change in production and distribution of goods. The only change was the replacement of the Barter System with the money system. Now the pricing became the mechanism of exchange process.
6. The Stage of Early Capitalism, There were persons who were successful at accumulation by dint of their talent or force. They began to exchange goods and services that they had in surplus, for the labour. There arose a property class and a labour class. The early capitalists organized workers into productive units and sought markets to trade their output of course, there was-no brand, grading, packaging or advertising at that time. A merchant class arose, who facilitated the distribution of goods in large towns.
Peddlers and hawkers also carried goods from door to door. Early capitalism operated in an economy of scarcity. There was no serious effort to study the needs of consumers. The concept of marketing under early capitalism was that of the business activities specially involved in searching for customers or markets and moving goods from producer to consumers for the purpose of the seller’s gain. At this Stage, it was seller’s market.
7. The Stage of Mass Production. The industrial revolution, invention of machines, improvement in means of transportation and communication, growth of industrial towns etc. pushed, the growth of large-scale enterprises. A profession of management developed that increasingly understood how to organise men, machines, material and money to maximise the profitable, return on the invested resources. The producers sought means of increasing the stability of demand for their products, Out of this search various modern marketing practices originated, i.e., branding and packaging, advertising, agency system, sale promotion etc. These marketing activities became increasingly popular. Thus, in an economy of mass production, marketing becomes the name for a whole variety of business activities undertaken by sellers to improve and stimulate the new flow of goods and services from producers to consumers.
8. The Stage of Competition, The mass production and mass distribution Drought by the industrial revolution soon led to the stage of competition. The ever increasing number and size of the producing firms generated the phenomenon of competition. Earlier, the emphasis of the producing firm was disposal or distribution of their products, but now competition became the main issue. Now, the main thrust of the producing firms was to ensure that their, products were preferred by customers to those of their competitors.
9. The Stage of the Affluent Society. In highly developed economies producers and sellers of goods and services have to probe deep into the question of what people want rather than what they need and adjust their productive capacity and productions to meet these interpreted wants. Emphasis has to be laid on marketing research before decisions on product and product lines are ever made. Salesman are increasingly used to provide feedback on evolving customer wants. Advertising is used to inform buyers of new goods designed to meet new wants in the market place. Various marketing tools are used to give consumer oriented decisions to their business.
It was all because of the abundant choices were made available to the consumers. The industrial firms realised that it was no: enough to make one time sale of their products, they had to ensure repeated visits by the customers who had purchased their products once. The began to offer quality goods at reasonable prices due to competition. They had also to ensure that customer’s complaints were attended to promptly. Afi r sale service was provided and that meant the emergence of marketing.
Thus, in an affluent society the concept of marketing becomes increasingly that of interpreting consumer desires and creating the goods that will satisfy their desires. The affluent society is a society composed of huge organisations not only business organisations but also military, governmental and social and political organisations competiting for recognition and acceptance in the public mind.
Explain the different alternative concepts of marketing in brief.
Different Concepts Of Marketing
Marketing occupies an important position in the organisation of a business unit but marketing has been defined by different people in different ways. Different definitions represent different views and none has a quality of universal acceptability. Different concepts have been developed so far by the different authorities of management and we are discussing those alternative concepts one by one in the following lines :
1. Distribution of Goods and Services Concept. It represents traditional concept of marketing. According to this concept, marketing is an . economic activity that facilitates the flow of goods and services from producer to consumer. F.E. Clark has defined the marketing as “Marketing consists of those efforts which affect transfers in ownership of goods and care for their physical distribution”. The another definition under this category is that of American Marketing Association that says – “Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user.”
According to this concept marketing includes all activities relating to transfer of ownership in goods and services to the actual consumer, from their point of origin or production. It has no concern with the pre-production activity or after sale activity. According to this view marketing begins when production process is complete and ends when goods are sold. The producing firms, under this concept are more concerned with maximising their profits by making maximum sales.
This definition represents a narrow view?of marketing that insists much on the flow of goods and services and leaves the other important managerial aspects of marketing untouched.
2. Delivery of Standard of Living Concept. This concept is originated by Paul Mazur. According to him “Marketing is the delivery of standard of living to society.” Professor McNair made an important amendment in the definition of Paul Mazur. He added that “Marketing is the creation and delivery of a standard of living to the society.” According to this concept, marketing includes all those activities that create and give a better standard of living to the society. In this way, it may be said to be a consumer oriented concept and is much nearer to the modem concept of marketing.
Producer tries to know the customers’ needs and plans his production accordingly and directs the flow of goods and services to them. He tries to lower down the cost of production by making necessary changes in channels of distribution and taking up of sales promotion activities. In this way, customers get quality goods at cheaper rates and thus better standard of living is delivered to the society.
3. Creation of Utility Concept. Richard Buskirk has presented ah idea that marketing is an activity that creates form place, time, and ownership utility. According to him “Marketing is an integrated system of action of that creates value in goods through the creation of form, place, time, and ownership utility. This means :
(i) Product planning and development activities create from utility
(ii) Flow of goods through different distribution channels from producers to consumers from the place of abundant to the place of scarcity or where they are needed creates place utility.
(iii) After production, goods are stored by the manufacturer, wholesalers, or retailers till such time the demand of the product is created and such goods are made available to customer at the time when they are needed or demanded. Thus creating time utility for them.
(iv) Goods may be lying in a reliable state with the producer or the manufacturer or their agents while some other person need them. In such cases, possession utility is created by the transfer of possession of goods to the person who needs it. Marketing, therefore, consists in moving goods from the manufacturers, in a form in which it is required at a time when they required, to the place where they are to be used and for those who are to use them for various purposes. Thus, under this concept marketing creates different types of utilities in goods and make them valuable.
4. Generation of Revenue Concept. This concept presents that the main object of any business firm should be to generate revenue or income. The income can be generated only by selling the products. The product should be sold out at a price which allows a reasonable profit to the firm after meeting out the cost and all other reasonable expenses. Marketing should stress on increasing the profits of the firm by reducing various production and selling cost and not by increasing the selling price. Richard Buskirk has explained the concept as “It is marketing responsibility to generate revenue at a cost which will pillow a reasonable profit to be realised from operations. Thus, marketing consists of all activities which are performed with a view to allow the firm to earn a reasonable profit.
5. Social System Concept of Marketing. This concept was introduced by William J. Stanton. According to him this concept just like social system, marketing is not only one activity, it is a sum of several business activities and, rather interaction of many activities, the words of William Stanton, “Marketing is a total system of interacting business activities designed to plan, price, promote, and distribute want satisfying products and services to present and potential customers.” Thus, under this concept the entire system of business action is market oriented or customer oriented.
6. Concept of Customers Satisfaction – Modern Concept. The modern concept of marketing emphasises on the complete satisfaction of customers needs. This concept is also known and Marketing Concept. This concept integrates marketing function with the other functions of the management with this realisation that business is basically a marketing organisation. It is based on two fundamental concepts : (i) that the company policies and operations should be customer-oriented, and (ii) that the goal of the firm should be profitable sales. The philosophy behind the concept is the satisfaction of customer’s wants.
According to Peter F. Drucker, “The purpose of a business is to create a customer ” Creation of customer means the identification of consumer needs and organising the business to meet these needs. Firm makes the sincere efforts; to find find out the needs of the members of the community and tries to provide the maximum measure of satisfaction to them.
From this view, it appears that everything a firm does is marketing. However, it is convenient to separate marketing as a distinct activity. The marketing thus includes :
- Identification and assessment of markets and sales forecasting.
- Formulation of marketing policy to cater to the target market.
- The planning and operation o the marketing organisation to achieve the desired level of sales and to deal with customers.
- Organisation and conduct of sales promotion through salesmanship, advertising and other media.
- Costingund budgeting of marketing efforts.
- Review of the marketing efforts and to assess whether the desired level of consumer satisfaction is being achieved or not.
Discuss various approaches to the study of marketing.
Approaches To The Study Of Marketing
There is a feeling that marketing activity is concerned only with the flow of goods from the producer to the consumer. This concept has now changed as to include the flow of information from the consumer to the producer. To achieve maximum efficiency in marketing there must be a flow of information vis-a-vis the flow of goods. The information has to be collected even before a product is planned. Further information would enable the product to assess periodical changes that are required. That is why it is often remarked that “marketing starts and ends with the consumer.” It is logical to think that the marketing process begins and ends with the consumer, with information flowing from the consumer to the producer and goods flowing back to the Consumer from the producer.
With the beginning of mass production direct contact with the consumer is not possible. Under consumer oriented marketing, it is highly essential to know what the consumer actually wants. Today, they have a full-fledged function added to marketing, viz., Market Information and Marketing Research.
Therefore, it can be said that modern marketing starts and ends with the consumer.
Marketing Philosophy and Management. Marketing is highly strategic area in business management. Marketing management involves several points of decision making, It has been rightly said that marketing represents an attitude of mind. It is a creative adaptation by a company of its practices to its changing environment. The philosophy of marketing is the philosophy of consumer service. Modern marketing represents a movement in its approach to business economies.
Approaches to the Study of Marketing
1. Product of Commodity Approach. This approach studies marketing on commodity-wise basis. The marketing situation of each product is studied as regards its sources of supply, marketing organisation and policies, involvement of the middlemen, extent of the market, etc. This approach is also called as descriptive approach’. In this method the commodity serves as a focus around which other aspects of marketing are studied. Its main defect is that it is repetitive and time consuming. Sometimes the classification of products also becomes difficult.
2. Institutional Approach. Under this approach, the description and analysis of the different institutions engaged in marketing are undertaken. We study not the products but the producers, wholesalers, agents, retailers, transporters, storing institutions, etc. The different institutions serve’ as separate ‘cells’ of the marketing body. The functions performed by each cell form part of the whole area of marketing. The marketing process is split up into three chief factors, i.e, (i) Concentration ; (ii) Equalisation; and (iii) Dispersion. This approach is defective because it fails to bring out effectively the inter-relations of alf the institutions.
3. Functional Approach. A. W. Shaw was the pioneer for designing this approach. It was further developed by L.D.H. Weld. Functional approach splits down the field of marketing into separate functions. These specific functions are buying, selling, transportation, storage, standardisation, grading, financing, risk-taking, and marketing research, etc. This approach is definitely an improvement ovei the former ones but not entirely free from defects. The marketing functions are, so numerous that some times it is difficult to eliminate the unnecessary from the necessary functions.
4. Management Approach or Decision Making Approach. It combines certain features of. the other three approaches. The basis of this. approach is that marketing is purely a management function. The changes in marketing are brought about by two types of factors uncontrollable and controllable : (i) Uncontrollable factors include economic, sociological and political forces. The changes brought about by these factors in marketing conditions are beyond the control of a business firm. (ii) Controllable factors are those marketing forces which are well under the control of the firm. These are adjustment in prices, advertising, personal selling, etc. This approach lays emphasis on the application side of marketing problems.
5. Legal Approach. This approach is very narrow as it concentrates only one aspect, i.e., the effect of transfer of title in a legal, way. In India this aspect has particular significance. There are many enactments passed in India which regulate and control the marketing activities, e.g. sale of Goods Act, Contract Act, Common Carriers Act, etc.
6. Economic Approach. Under this approach marketing is considered from the economic point of view Le. creation of value, demand and price. Though these elements are very important in marketing mechanism, the narrow approach is incapable of giving idea of marketing.
7. Systems Approach. This approach may be said to be an advancement of management or decision making approach. Broadly defined, a system is an organised body of independent parts (sub-systems) that have separate but identifiable areas of operations. These sub-systems may further be split down further into sab-parts may be known as sub sub-system of the total body, for example, business as a whole is a body but is composed of many parts or functional are such as production, personnel engineering’ marketing etc. These functions could be split down further into smaller parts (sub-sub system) Thus, marketing is one of the sub-system of the total business system. It has product planning pricing, distribution, promotion etc, as sub¬sub-system of the total business system or sub-systems of marketing system. Each of these. Junctions is independent and inter-dependent also. They continually interact with each other.
This approach helps the management in planning the activities of each small group in detail and implement them effectively.
What do you understand by the new concept of Marketing? Discuss its main components. Describe its significance in the context of present situation in the country.
Someone said, “Marketing begins with consumers and ends with consumers.” Discuss.
A businessman recently said, “We are to produce what the people want, not what we can sell.” Explain. ’
“Marketing should aim at meeting a given customer heed rather than selling a given product.” Comment.
“Consumer is king.” Comment on the statement in the light of marketing concept.
Is consumer sovereignty a fact of fiction? Why so? Discuss.
William J. Stanton’s definition of marketing brings out clearly the modern concept of marketing. It states “In its fullest sense the market concept is a philosophy of business which states that the customers want satisfaction is the economic and socialjustification ofa company’s existence, Consec/uently all company’s activities in production, engineering, and finance as well as in marketing must be devoted to first, determining what the customer’s wants are and then, satisfying these wants still making a reasonable profit.” Arther P. Felton also emphasises the same customer oriented point of view.
According to him; “The marketing concept is ‘a philosophy applied to the operation of a business as which customer and consumer needs will be uppermost in importance, ^hese needs will govern the separate planning of each function of the business, as well as the overall an aimed at achieving it predetei mined profit objective.”
Again Philip Kotler expresses the same idea in other words: “The market concept is customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfy organisational goals.”
The call for a customer orientation has been expressed in many different ways: “We are not boss; the customer is.” or “What the consumer wants, the consumer gets ….. The customer is at the top of the organization chart”, or “A company should prefer a franchise over a market to a franchise over a plant”, or “Look at the company through the customer’s eyes”. “Consumer is king” or “we are to produce what the people want, not what we can sell” or “Consumer is sovereign” or ‘marketing begins with consumer and ends with consumer’ etc. etc. Instead of trying to market what is easiest for us to make, we must find out much more about what the consumer is willing to pay. In other words, we must apply our creativeness more intelligently to people and their wants and needs rather than our products. The modem, marketing concept emphasise the consumer’s sovereignty.
The consumer oriented idea has been supported by money authorities. A few of them are being reproduced as follows :
- “Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services It the present and potential customers.”- William J. Stanton
- “Marketing is the creation and delivery of standard of living to the
society.” – Malcolm McNair
- “ Marketing is the process of discovering and translating consumer needs and wants into product and service specifications creating demand for these products and services and then, in turn, expanding this demand.”
– H.L. Hanse
- “Marketing is the business process by which products are matched with the market and through which the transfer of ownership are affected.”
– Cundiff and Still
The above, views clearly explain that marketing is not only the physical distribution of goods and services but it relates to the whole process of satisfying the needs and wants of the people. The process starts well before production is carried out and ends with well after the sale takes place. It starts with the discovery of social needs and wants and the behaviour of consumers, them these needs and wants are translated into products, and services needed, then the demand is created for goods and services, then goods and services are physically distributed to the real end-consumers and finally, the after sale services are provided to satisfy the customer in the best possible manner. In this way, marketing may improve the standard of living of the masses. Marketing, thus, is the creation and delivery of standard of living. In other words, marketing starts and ends with, consumers.
Characteristics of New Conceptor Modern Concept or Consumer- oriented Concept of Marketing. The following characteristics of the new concept or consumer-oriented concept emerge from the above discussion.
(i) According to this concept, consumer is the king or sovereign of the market. It is the central theme of all marketing activities. The business concerns concentrate themselves on satisfying the needs and wants of the consumers.
(ii) Marketing is the entire process of understanding and satisfying the needs and wants of the people. First, the needs and wants of the – people are identified, through market research, then production is made to suit their needs, then demand is created and then physical distribution takes place. After sale services are also provided to make the consumer Satisfied.
(iii) The concept supports the View of maximising of profits by business firms but only after the needs of society are satisfied. The main aim of marketing, under the concept, is not maximisation of profits alone but it should be by satisfying the consumer needs and wants.
(iv) The concept creates and delivers the standard of living to the society.
Main Components of Modern Concept of Marketing. The basic features of the modern concept of marketing are :.
(a) Customer orientation, (b) Integrated marketing, (c) Profitable sales through customer’s satisfaction, and (d) Customer welfare.
(a) Customer Orientation. The marketing concept cedis for a basic reorientation of the company from looking inward towards its products,to looking outwards towards the consumer’s needs. According to Levitt, “Selling focuses on the needs of the seller; marketing on the needs of the buyers. Selling,is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.
The call for a customer orientation has been expressed aptly by Charles G. Mortimer. According to him. “Look at the company through the customer’s eyes. The customer is at the top of th organization chart. We are not the boss ; the consumer is. What the consumer wants the Consumer gets”.
A businessman has rightly observed ‘we are to produce, what the people want and not what we can sell’. Moreover, the businessman is always in search’ of such needs of customers*, which are not even known to them. The needs for pressure cooker, cooking gas, television, refrigerators were never thought of by the customers. The invention of such items is the result of customer-oriented attitude of the businessman.
For effective customer orientation, the firm is to decide, Firstly, the basic needs of customers, it can satisfy. Secondly, market segments, it can serve better, taking into account its limited resources. Thirdly, colour, size and design of the product, it can choose to satisfy the specific needs of specific customers and introduce it in the market through product differentiation. Consumer research should be carried on to study the new and changing needs of the consumers so that the firm may cope with them.
Thus, the concept assumes that all activities of a producer should go around the choice or behaviour of consumer. A producer must produce what the customer’s want at a price which they can afford and in sufficient quantity, they require and distribute the product through channel which are most suited to them and at a place and time most convenient to them.
The concept of consumer orientation assumes that :
(i) Consumer is the king of the market and the producer depends upon consumers.Consumer does not depend upon producers.
(ii) Producer produces only those goods which are according to tastes and liking of customers, and
(iii) The producer should produce new and new products which may attract the customers.
(5) Integrated Marketing. The second pillar of marketing concept is integrated marketing. Many companies agree with Drucker that “the purpose of the company is to create a customer ’ but fail to take the necessary organizational steps to implement the marketing concept. Integrated marketing means a number of things.
(i) The various-departments in the company must recognise that the action they take, and not just the actions of the sales and marketing people, may have a profound effect on the company’s ability to create and retain customers. Of course the Central logic of the business firm is profit. But some means must be developed to coordinate the impacts of ajl
the departments of the firm on the customer.
(ii) Integrated marketing also means that within the marketing function proper care is intelligent adaptation and coordination of the four P’s of produce, price, place, and promotion to built strong exchange relationships with customers. To achieve this type of integration many companies have created product managers and market managers. All said, the marketing oriented company is one which has developed effective mechanisms for coordinating the various customer^ impinging forces. It is reflected in satisfied and loyal company customers.
(c) Profits through Customers Satisfaction The main aim of every business is earning and maximising its profits. The Concept also assumes the maximisation of profits but through satisfaction of customer needs and wants. . The’ concept is based on the assumption that if customers are satisfied with company’s product, the demand of company’s product will go’ up and it will result in increase in sales and profits. Thus, the concept emphasises maximisation of profits through need satisfaction of customers and not through maximisation of sales alone.
(d) Customer Welfare. The third pillar of the marketing concept is the customer satisfaction. The firm should strive to maximise customer satisfaction.
To the same end in view the tillers and ofiicers try to be more friendly with their customers. But in their smiles, they miss the essential! point of the marketing concept. Happiness is best achieved by rendering substantial forms of assistance to others rather than by direct pursuit. The aim of the marketing concept is more to help them to please. It is interesting to note a few slogans that the employee of Marshall Field and Company, one of the world’s greatest department stores has constantly to keep in view :
- Customer is always right if she thinks she is right.
- We are more interested in pleasing a customer than in marketing sale,
- Every sale of merchandise or service includes the obligation to accept the article for credit refund, exchange for adjustment promptly and courteously to the customer’s satisfaction.
- We strive to give completely satisfactory service to every customer.
Therefore, we can safely say that modern marketing starts and ends
with the consumer.
Significance of Modern Concept of Marketing. The significance of modern concept of marketing may be described as under :
1. Helpful in Product Development. Modem concept emphasises that consumer is the king of the market and the producer produces what the consumer wants. His main aim is to satisfy the needs and wants of consumers. Thus, the producer, through intensive market research try to identify the needs, wants and behaviour of the consumers. Thus, modern concept Of marketing helps in the discovery and development of new products. The producer always tries to develop new and new products based on market research, so that he may increase the demand of his product.
2. More Social Satisfaction. The modern concept of marketing stresses upon the satisfaction of needs and wants of the consumers. The concept starts with the discovery of consumers need Every activity of industrial and business enterprise clusters around the customers’ needs. Under the concept only standard quality goods are produced and are provided to the consumers at reasonable price which can easily be afforded by The consumers, in sufficient quantity required by them, through fie channel which is most suited to them and at a time and place most suited to t5 em. The ‘ -best possible after sale service is also provided. The concept provides for the maximum social good. It, thus, by providing the quality goods at reasonable ” and affordable price as and when required by the consumers or public, creates and delivers the standard of living to the society.
3. Importance for National Economy. The modem concept of marketing is equally important to the national economy. The concept suggests selling of new and developed products satisfying the needs of the consumers. It thus increases the demand of the products and consequently increases the production of quality goods and services, it provide more employment, makes maximum exploitation of national resources, restricts the wastage to the minimum and up gears ie production. It provides new and more goods and services to the society. Government revenue increases with the increase in production and marketing of more goods and services. It also increase social good. Thus, this concept of marketing is very helpful in overall growth and development of society.
Discuss fully the New or Modern Concept of Marketing. Explain the difference between New and Old Concept of Marketing.
[Note : See the discussion of modern concept of marketing in question No. 6]
Difference Between Old And New (Modern) Concept OF Marketing
The old concept of Marketing is referred to a system where more and more emphasis was laid on production of commodities. It was based on the idea that consumer would-buy what the seller produces. The modern concept on the other hand concentrates on the satisfaction of the needs of customers and the seller produces what the buyer needs and thus new concept emphasises on customers and their need satisfaction. The main points of difference between these two concepts have been explained in the following lines.
1. Orientation. The old concept is production’ oriented because it emphasises on production. On the other hand new concept insists on consumer’s need satisfaction and therefore it is consumer-oriented.
2. Targets. In old marketing concept, the main target of the firm was to earn profits through more and more production and higher sales volume whereas in modern concept of marketing, and target of the firm is to earn more profits through customer satisfaction.
3. Scope to Marketing. Production and sales were the main activities included in the marketing function. Pre-production and post-sales problems were out of its scope. The scope of marketing under new concept has been widened to include the pre-production and after sales problems.
4. Inter-departmental Integration. Under old concept of marketing, different departments of the firm were independent and had no integration with the marketing department. They were mainly concerned with, the production and not with the sales. New concept of marketing has now changed the view. Now the activities of each department are directed by the marketing department and now the various departments are,better integrated with the marketing department.
5. Consumer Welfare: The new concept is fully dedicated to the consumer welfare. The main responsibility of marketing is to raise the standard of living of the society through consumer welfare and consumer satisfaction. There was no place of consumer welfare under old concept of marketing.
6. Market Research. There is no scope of market research in tId concept of market whereas in new concept of marketing, market research is a must to know of the needs, wants and behaviour of the consumers so as to produce goods and services accordingly.
Define Marketing Management and explain its importance in Indian economy.
Define Marketing Management, ar.d discuss its scope.
Definition Of Marketing Management
According to American Marketing Association, “Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user” -This definition of marketing management is product-oriented according to which the marketing management commences after the goods and services have been produced and its ends as soon as the products reach the hands of the users. It is based on narrow and old concept of marketing.
According to new and modern concept of marketing as we have already discussed earlier that in actual marketing many activities have to be carried out even before production, It involves the study and analysis of consumers tastes and likings, their demand, production of goods in conformity to the demand, packaging, publicity, taking decisions regarding prices, brand and after Saies services. According to William J. Santon, “Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential consumers.” This definition of marketing is quite comprehensive and customer-oriented. It includes both psychological and physical points of views. Thus, marketing activity starts long before production of the products and continues till the full satisfaction of the consumers.
Marketing management is a compound word ‘marketing plus management’. Marketing is the total system of business activities while managament is the art of getting things done in a coordinated and harmonious way.
According to Stanley Vance, “Management is simply the process of decision making and control.”
Definition of Marketing Management. We have explained above the meaning of marketing and management and now we shall present a few definitions of marketing management in order to be more clear in its philosophy :
1. According to William J. Stanton, “Marketing /management is the marketing concept in action.” Marketing in bis view is satisfaction of customers’ needs and therefore marketing management means carrying out of those activities by the management which aim at getting the customers satisfied and to earn maximum prof ,.
2. Cundiff and Still have defined the marketing management as “a branch of the broad area of management. Marketing management is concerned with the direction of purposeful activities towards the attainment of marketing goals. According to this definition, marketing management is the branch of management. There are three marketing goals : (i) satisfaction of customer’s needs. (ii) increase in sales volume, and (iii) increase in organisation profits. All these three goals are inter-related.
Thus, according to him marketing management involves direction of activities towards the attainment of predetermined goals.
3. Rustom S. Davar defines the marketing management as “The process of ascertaining consumer needs, converting them into products or services and moving the product or service to the final consumer or user to satisfy such needs and wants of specific customer segment or segments with emphasis on profitability ensuring the optimum use of the resources available to the organisation.” There are three main elements of this definition ; (i) It is customer oriented, (ii) Profitability through customer’s satisfaction, and (iii) Optimum use of available resources. This definition may be said to be an ideal definition from India’s point of view.
Scope of Marketing Management. On the basis of the above definitions it can safely be said that under marketing management marketing programme is prepared on the basis of needs, wants, tastes and fashion, of the customers. It involves decision making in regard to pricing of the products, publicity, distribution and after-sales service. Thus, marketing management is an action science consisting of principles for improving the effectiveness of exchange. It represents professional isation in the carrying out of exchange relationships.
In recent times marketing management has become a self conscious Craft It is the analysis, planning, implementation and control of programmes designed to bring about designed exchanges for the purpose of personal or mutual gain. It relies heavily on the adaption and coordination of product price, promotion, and place for achieving effective response.
Assumption of Marketing Management. The major working assumption of marketing management is that desired changes do not automatically come about through any process of nature Rather they require an expenditure of time, energy, skill and supervision. Designing, packaging, pricing and distributing require the use of managerial talents. Modem age is the age of cut throat competition and only those producers survive in this struggle who are able to compete successfully by envolving new techniques to reach the consumer.
As consumer orientation became the accepted marketing philosophy, the entire business philosophy underwent a subtle change. Marketing management has become most crucial in business planning and decision making. At present, there is a growing recognition of t’ e role of marketing management. Marketing today is a complex and complicated area for management. It has become a vital business philosophy, the value of which can not be ignored! Dynamic changes are taking place every moment and are likely to take place in future with the changes in attitudes and values of society.
Importance of Marketing Management in Indian Economy. Before independence no importance was attached to marketing management. India had always remained mainly an agricultural country. After independence steps were taken to industrialise the country rapidly. The government realized – . that for rapid development of the economy dependence only on agricultural was not enough. Just after independence large scale industries were set up both in the private as well as in public sector. Small and cottage industries showed a rapid development. The composition of India’s export and imports , – underwent a great change. Capital goods industries were also set up in the country for the first time under the new industrial policy of the government.
The national income and per capita income also went up. This brought about for goods in the market registered an upward trend. Now, it is the time of mass a great change in the consumption habits of the common man. The demand production and mass consumption. The production of consumer as well as industrial goods has increased many folds, and has been greatly diversified.
This has resulted in cut-throat competition in the market. Every produce is busy in selling ms product by trying to understand the customs well. All these changes in the economy are responsible for the growing importance of marketing management in India.
Importance of Rural Marketing. More than 80 percent our people live in rural areas but it is strange that most of the producers and sellers concentrate their attention to cater to the needs and wants of the urban population. Therefore, the Indian villages present great scope for the development of rural marketing. Recently the Green Revolution, increasing use of Chemicals fertilisers, mechanisation of agriculture, use of hybrid seeds and pesticides have helped a lot in the development of rural marketing. The cultivators are economically better of now-a-days. It has brought about a change in their habits of consumption.
Their standard of living is rising. Now the villagers freely use transistor radios, electronic appliances, T.V. sets and other articles of comfort. Rural marketing has not yet developed in India. It is expedient that more attention should be paid to the study and research of rural marketing so that the maximum number of wants of the people may be fulfilled and standard of living may rise.
Motivation to Export. There is a great need to increase our exports, Much of India’s economic development depends ‘ n development of her exports. Export promotion can only help in solving the various economic problems facing the country. Marketing Management development programme will go a long way in improving the economy. The market concept that has gained interest in recent years in.the global market concept. This concept is made possible by the development of international transportation and communication systems, India commands vast resources both in materials and man power.
Development of marketing techniques will help in finding new markets outside the country also; To increase our exports to foreign markets we need diversification in production, improvement in quality, reduction in costs of production by applying new techniques and methods and adopting new marketing strategies. Our exports have registered a marked increase in the recent years but this increase cannot be said quite satisfactory.
The reasons responsible for this slow increase are high costs of production and the lack of use of new marketing techniques. The need of the hour is to search for new markets by using the most advanced scientific methods of marketing management. We should be able to face the challenge of cut throat competition of the foreign producers by reducing substantially our costs. Marketing management can help us a lot in this direc in.
The responsibility of marketing management towards export has increased with the opening up of the economy, because the new trade policy has changed the country’s foreign trade scene totally. Most of the old age and unwarranted interventions in the export and import policy have been dismantled in one stroke. The new trade policy compels the companies to earn more foreign exchange for their exports. With the multinations entering India’s industrial scene, Indian firms are facing stiff competitions at home and now they are compelled to turn to foreign markets. They are increasing their capacities to export more in order to meet their import requirements. Almost all the companies in India, in their struggle for survival, will naturally have to look to export markets.
In this way, marketing management has to explore new foreign markets by making market surveys to market the products in competition with the foreign firms.
What are the main obstacles in the effective development of marketing management in India?
“Marketing management in India has not developed fully.” Why? Explain.
“India is facing some problems in the effective development of marketing management in the country.” Explain these problems.
Major Problems Of Marketing Management IN India
So far, India lagged behind in developing marketing management, techniques successfully, because proper attention was not paid in this direction. The main obstacles/problems responsible for this lack of development in this direction in our country are as follows :
Lack of Marketing Versonnel. The lack of well trained, efficient and experienced personnel stands in the way of development of marketing management in India. Of late, some institutions have been set up for imparting training in this important branch of knowledge and almost e”ery University have introduced management (including marketing management) courses in their curriculum. Recently, a number of institutions imparting management training leading to diploma in business management have started. But looking to the need of the country it requires larger number of such institutions to impart training and turn out larger number of well trained and competent personnel to handle the complex problems of marketing management ip fast developing economy of India.
2. Lack of Marketing Research Facilities. Very little has been done in India in the field of marketing research. Marketing decisions are a combination of judgement and information on facts. Marketing research helps in collecting the useful information. Today’s, executive has a difficult task in making-decisions and appraisals. Marketing research by providing the relevant facts can help the executive much to raise the level of their work.
Marketing research facilities decision making. In India, very little has been done in the field of marketing research. There is a great need of research in marketing management both for the development of domestic as well as international trade. There are special considerations which must be borne in mind whilst preparing the marketing strategy for penetrating markets abroad. country, there is lack of fundamental marketing research facilities. The number of institutions engaged in the field of marketing research which may their results to business and industries are negligible.
If an industry or business wishes to carry on its own research in the field, it faces the problem of trained and experienced researchers. This is why we are lagging behind in collecting relevant information for the purpose of marketing. This lack of marketing research has created a great set back in expanding our exports. Thus, for good marketing management, sufficient market research facilities are also needed.
3. Product Planning. Another hurdle in the way of marketing management in India has been the absence of scientific product planning. Proper prbduct planning is an act of marking out and supervising the research screening, development and commercialisation of new products, the modification of existing lines and the discontinuance of marginal or unprofitable items. In India, very little attention is paid toward product planning. Development in marketing management and product planning go hand in hand.
The consumers also fail to get the maximum satisfaction by their purchases when the products do not match their likings. There are three aspects of product planning which should always be kept in view developing, modifying or discontinuing products. Few products are developed in some companies as they are afraid of taking risks. Thus, opportunities are lost, Hence for marketing management development of product planning must be
4. High Marketing Costs. Marketing research, promotional strategy,” advertising effort, packaging, selling expenses transporting, warehousing, brand trade market etc. all are going up day by day. Sometimes their costs became forbidding and a great hurdle comes in the way of developing marketing management on scientific lines. These costs form part of selling price which also goes up and our consumers can- not afford for the products. For proper development of marketing management, these costs need to be kept well within control.
5. Attitude of Indian Industrialists. The attitude of our industrialists is not favourable to marketing management. Most of them never make effo/ts to apply new marketing techniques because they believe that it will unnecessarily increase the cost of their products or there will be no need of taking up new techniques of marketing management if their product’is of good quality and offered to consumers at reasonable prices. They do not care for marketing research also. In recent years, some signs of change in their attitude are visible.
6. Attitude of Indian Consumers. The another hurdle in the way of development of marketing management is- the attitude of Indian consumers. They do not cooperate in marketing research. Most of the consumers do not “cply to the questions of the researchers because they think that such survey benefits only to the producers. Such attitude of consumers does not produce effective results and conclusions.
With the growth of large scale industries in public sector and private sector after independence the need for development of marketing management is being specially felt in India. Efforts should be made to set up more and more institutions to impart training in the specialised fields df marketing research, product planning and marketing management. Our industrialists should take more interest in improving quality of their products and reducing costs so that India can have an access to foreign markets and successfully face- competition of the foreign producers. It will be possible by developing marketing management techniques.
Is there any difference between, “Marketing Management” and “Sales Management”? If so, explain how these two functions differ in scope and activities.
According to Dr. Rustam S. Davar, “Marketing Management is the. process of ascertaining consumer needs, converting them into products or services to the final consumer or user to satisfy such needs and wants of specific consumer segment or segments with emphasis on profitability ensuring the optimum of the services available to the organisations.” It is only recent times that marketing management has become a self-conscious craft. Marketing management involves analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target audiences for the purpose of personal or mutual gain. It relies on the adaptation and coordination of product, price promotion and place for ‘ achieving effective response.
Marketing management is a management process and as such includes analysis, planning, implementation and control. It is a purposive activity aimed at bringing about desired exchanges. The exchange includes both material goods, services and also psychological exchanges regarding organisations, pcsons, places and ideas.
Marketing management can be practised by either the seller or the buyer who ever seeks to stimulate the exchange process. Again marketing management is neutral rn moral content. It is carried on for personal or for mutual gain.
Finally, marketing management stresses the coordination of four factors – four P’s – Product, Price, Promotion and Place to achieve effective response. Thus, marketing management is the study of the activities involved from finding the needs of the consumer and providing satisfaction to them.
Meaning Of Sales Management –
According to American Marketing Association, “Sales management is the planning, direction and control of selling activities of a business Unit including recruiting, selecting, training, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the sales force,”
The two words ‘selling’ and ‘marketing’ are considered to mean the same thing. But selling is normally considered with the plans and ideas of trying to make the consumer exchange what he has (money) for what we have (goods or services). Selling gives stress on sales volume.
Marketing is related to the needs o# the buyer. While selling has the seller’s need to change his product into cash. Marketing is limited to the idea of satisfying a consumer’s requirements by means of product as well as by ! giving the customer with value satisfaction.
Marketing oriented concern tries to create value satisfying products and services that the consumer will like to purchase. This ensures the profitability of activities of the concern. In this way marketing is a view of the lull business with profitability and consumer satisfaction as the key note.
Thus, there is the difference between a marketing manager and sales manager. Sales manager’s functions are limited to planning, directing and controlling the activities of salesmen.
Marketing manager is superior to sales manager as he has to deal with supervising the work of the sales managers. But in India, marketing management and sales management are regarded synonymous terms. Hence whether a person is a marketing manager or a sales manage can only be determined by studying the functions he is expected to do. Selling and. marketing are the inter-related things. Selling refers to the producer while marketing is related to the needs of the buyer.
Difference Between Marketing Management And Sales Management –
Four points of differences between marketing management and sales management clearly emerge from the above discussion.;
(a) Scope. The scope of marketing management is wider than the scope of sales management. Under marketing management are included all the activities from the beginning of ascertaining the needs and requirements of the consumer to the consumers to the fulfillment and satisfaction of the wants of the actual users. Whereas the scope of the sales management is narrow as compared to the scope of marketing management. It includes the activities connected with transfer of ownership in goods and services from seller to the buyer. It deals . with the problems of seller.
(b) Concept. Marketing management is a modem concept while sales management is an old concept.
(c) Object. The object of marketing management is the satisfaction of the wants of the consumers or users to utilise the available resources in the best possible, way so as to maximise profitability. The object of sales management is to maximise sales. The emphasis is on volume and not on the satisfaction of the consumers.
(d) Performance of Activities. The activities of marketing management are superior and the activities Of sales management come under the jurisdiction ‘ of marketing management. In fact, sales management is only a part of a wider marketing management. In the opinion of E.F.L. Brech, ”the overfill manqgement of sales ‘referring to’ only a specialised application of the process of management as a whole.”
Explain the functions of Marketing Manager.
Functions Of Marketing Manager
Under the total marketing concept the objective is to manage the business in such a way as to make and self what the customer wants’ at a reasonable price that he is willing to pay and with product characteristics that he wants in the product. These product should be made available when and where the customer wants them to be made obtainable. In short all aspects of the business must be consumer oriented. The marketing manager must perform all such functions which are necessary to this objective.
A systematic marketing management requires the crystalising of the company’S overall objectives and determining consistent marketing Objectives.
The following are considered the basic functions of a marketing manager :
1. Integrated Marketing. The marketing manager has to take decisions in various elements of the marketing mix in an integrated way. The customer does hot pay attention only to the price of a product but there are Other factors also which affect his decision to purchase a particular product. He is * influenced by the firm’s advertising-and promotional strategy and the convenience of the distribution arranged from the customer’s, view point.
The marketing manager has to keep his company’s interests in mind. He tries to reduce the cost of marketing the products while at the some time winning the goodwill of the customers. He also strives to maximise the sales and profits for Ms company. The task is pretty difficult and requires constant control and evaluation resulting in improvements in planning of the marketing strategy.
The marketing manager coordinates the activities of all the departments in a productive unit. The production department, finance departments etc. adjust their policies oft the direction and suggestion Ofthe marketing executive. His task is therefore very important, Under integrated marketing, some of the important activities of the marketing management are as follows :
- Collection of necessary information regarding marketing. •
- Analysing the data and draw conclusions.
- Product development.
- Search and development of new marketing techniques.
- To chalk out detailed marketing programme.
- T. implement the marketing programme.
- To coordinate between the wants of the customers and their satisfaction. ‘ ‘
2. Determining Objectives. The marketing objectives should be broad enough and should be based on situational analysis, i. e., the position in which ; the company is operating and the nature of its customers. It is in the light of the overall company objectives that the overall marketing objectives have to be fixed. The chief executive must know in specific terms whether he wants a return on investment of say 12 percent after taxes or whether his company wants to be a price leader. He must also crystalise the product objectives, pricing objectives distribution strategy objectives and his promotional objectives. All these objectives should be integrated and directed towards his overall marketing objectives.
3. Product Policy, ‘the marketing executive should be very clear in his mind as to the type of customers for whom his products are intended. His product policy objectives must be in terms of customer orientation and are in conformity of the overall marketing objectives.
4. Proper Planning. Planning is deciding in the present what to do in the future. All firms carry out some sort of planning. The marketing:manager has to plan how the objectives that have been determined be implemented. For proper planning the marketing manager has to perform the following tasks:
- Marketing research, forecasting the defined and developing the marketing activities.
- Determining product line strategy and planning for product diversification. ;
- Planning sales policies and their implementation.
- Planning the long term marketing programme.
- Co-ordinating the activities of production, finance and service departments.
5. Selling. The marketing executive performs the following functions in regard to selling :
- To direct the sales manager to regulate sales. ,
- To organise sales territories and to fix their sales quota.
- To select and train personnel for the sales department and organise sales.
- To organise and develop distribution channels.
- To advertise and organise sales promotion and public relations.
6. Service. After sales service is regarded as an essential part of modem marketing management. In fact, all the functions of the management are integrated and it is realised that the company policies and operations should be customer oriented. The maximum satisfaction of the consumers should be the primary concern of marketing. Customer’s satisfaction should be considered to the first motto. The complaints and the suggestions of the customers should be promptly attended to by the marketing management division.
We can summarise the functions of a marketing manager thus :
- To work with top management and set the marketing policies ;
- To supervise and co-ordinate various activities;
- To find out new mark .s;
- To evaluate the product;
- Development of new products;
- To select the channels and methods of Distribution;
- To formulation, coordinate and supervise the marketing programme; (viii) To study economic and political conditions in context to their influences on the sale of the products.
Write a brief note oil Managerial Functions of Marketing.
Managerial Functions Of Marketing
Marketing management is the specific functional area of general management. In olden days, the scope of marketing was very limited. Marketing was used as synonymous of selling. But the concept of marketing has now changed. In modern times, all the activities of an organisation start and end with the marketing activity, because marketing activity starts much before the production is commenced and ends with the after-sale -service to the customers or till the customer is fully satisfied with the product even after the sale is complete.
So, the spope of marketing has been enlarged to include the activities like product planning, market research and development, pricing, advertising and tales promotions and channels of distribution decisions etc. so that the marketing objectives may be achieved. In order to achieve the objectives of Marketing, the marketing management has to perform the Various managerial functions such as planning, organisation, directing, controlling and coordinating etc. In short, the marketing management has to perform the following managerial functions:
1. Determining the Marketing Objectives. The first primary function of marketing management is to determine the marketing objectives or goals. Marketing goals may be short term or long term. Long term objecvives are not mucn clear such as capturing the market may be a long term goal but they fail to guide the marketing manager in planning his programmes. On the other hand, short term objectives are definite and clear. For example, to double the sale volume in the next year may be a short term objective. Short term objectives may be the means to achieve long term objectives. Marketing objectives must commensurate with the general objectives of the firm.
2. Planning. Having determined the objectives, one has to plan how to achieve diose objectives. The marketing manager has, to forecast the sales for the next session, prepare marketing programme, formulate policies regarding production, brand, price, credit, advertisement, channels of distribution etc. . to achieve the objectives. Under planning, marketing management has to answer the questions like what?, why?, when?, how?, where?, and who? for taking a decision on a particular problem. ’
3. Organising, Organising is one of the important functions of the managemen Various activities are determined. It is also decided how and who -will perform .those activities, various activities and persons assigned , those activities hre’ arranged in such a way, so as to attain the marketing objectives efficientlyaForfhis purpose,Organisation structure ofthe marketing department is determined. Power and duties and responsibilities of various authorities and then interrelations are also determined.
4. Coordinating. Coordination is an essence of any management process. All activities of an enterprise should be coordinated in such a manner that they can present a picture of unified unit and the objectives of the organisation may be attained in a better way. The activities of marketing . management, e., sale forecast, product planning and development, market research, sale, advertising, sales promotion, transport, etc. should be integrated so that they all unitedly can show the best results for the organisation. A part from this, coordination among activities of various departments should be maintained.
5. Staffing. People are the dynamic elements of management. Without them objectives and resources will remain unconnected and unutilised. So, Marketing manager recruits and selects the efficient marketing force. He also arranges for their training and formulates policies regarding their remuneration. Marketing manager may seek the expert advice of personnel manager in making the recruitment and selection of the marketing staff.
6. Operating and Directing. Management is essentially the art and process of getting things done. Marketing manager is also responsible not only for planning and organising the activities but also for guiding and supervising the subordinates. Marketing manager is the leader of the department and of the subordinates working under his leadership. He should motivate the subordinates through his leadership so that subordinates work sincerely to attain the marketing goals. The function of direction has three essential
- Issuing of orders, and instructions.
- Guiding,and teaching the,subordinates in the proper methods of work; and
- Supervising the subordinates to ensure that their performance confirms to the plans.
7. Analysing and Evaluating. This is also an important function of marketing manager. The marketing manager should collect the data regarding sales and other market activities in an explicit manner. He should also analyse and evaluate the performance of various plans and projects so that he may be sure how far the marketing goal have been accomplished. For this purpose he can analyse:
(i) The results of net sales and marketing costs, area-wise, product-wise, product line-wise, and customer-wise, A comparative study – s may be made of various areas, products and product lines and customers and important decisions may be taken in the light of such analysis. Uneconomic product lines, markets, or customers may be dropped or a new strategy should be developed to conform the marketing and the organisation objectives. In this way, he will be successful in increasing the profits of the concern by utilising the resources to the maximum extent;
(ii) The performance of individual salesman and evaluate, their productivity or efficiency;
(iii) Advertising programmes and evaluate their effects on the company’s sale; and
(iv) Evaluate the performance of various middlemen and he may be aware of the tastes, fashion, behaviour and nature of the customers.
8. Controlling. Controlling is the last but not the least important function of the management. There are four steps in controlling :
- Devising proper standards for measuring the process of work;
- Measuring the actual performance and work in progress;
- Comparing the actual performance with the set standards and note the deviations, variations and discrepencies, if any;
- Identifying the deviations, informing the concerned person and taking corrective actions so that the work may be brought back to the desired course.
The marketing manager also performs all these controlling functions. He fixes the sale standards for each of the market and for the’ individuals, analyses their actual performance, compares actual performance with the set standards and takes corrective action, wherever necessary. If deviation is positive, he tries to maintain it and if it is negative, he identifies the causes and removes them.
Discuss the following :
(A) Qualities of Marketing Manager.
(B) Objectives of Marketing.
(C) Principles of Marketing Management.
(A) Qualities Marketing Manager
A successful marketing manager should possess all the qualities of a sales manager and in addition he must also possess the following qualities:
1. Enthusiasm, Patience-Timing and Judgement. He should be able to emhuse the persons working under him. He should be able to take decisions at the appropriate time. At times of difficulties, he should be able to have sufficient patience. He should have a clear understanding of the needs and methods of motivation.
2. Liaison with Different Departments and Agencies. He should have a close and intimate liaison with different departments and agencies. The liaison work may include :
(a) Liaison with his own Departments. He should have a close and intimate liaison with different activities in his own department e.g. Purchase, Sales, Research, Advertisement, etc.
(b) Liaison with own Distributors. He should meet his distributors front time to time to understand their difficulties and various problems, their reactions to the products, competition in the market. It is only in this way that the sales can be increased by sound marketing policy which should not be rigid but undergo a change from time to time according to the circumstances. The distributors should also be insisted to the factory itself to familiarise them with the actual process of production.
(c) ‘Liaison with other Agencies. He should not only be in touch with his own departments and distributors but also have the quality of having liaison with other agencies like educational institutions, government etc. as to take full advantage of their experiences also.
(d) Liaison with other Departments. He should also be in touch with other departments which affect the marketing activities in the organisation such as production department, personnel department, finance department etc.
3. Thinking Objectively. He should have clear thinking about the objectives of his work. For this purpose, he should be able to carry programmes of training of his own staff. Instead of centralisation of duties, authorities should be delegated to others to increase the efficiency of the personnel and the work.
4. Loyalty towards Company. He should be faithful to the company and its basic policies. Even when he does not agree to any particular policy which has been imposed on him, he should cany on like a disciplined soldier expressing his disagreement and his point of view to his superiors in mild terms.
5. Sympathetic. A good marketing manager has the quality of being very sympathetic towards all persons who serve under him. 1. does not lean any leniency in executing routine work and following the directions in day
to day work.
(B) Objectives Of Marketing Mangement
The success of marketing management depends upon how and to what extent it has achieved its objectives. The main objectives of marketing management are :
1. Determination of Needs and Wants of Customers. The modern concept of marketing is based on the satisfaction of needs and wants of the consumers. All marketing activities revolve around these needs and wants. So, the first main objective of the marketing management is to know about these needs and wants. The marketing management can identify these needs with the help of marketing research.
2. Market Segmentation. An organisation cannot serve the whole market due to several limitations, so, the next objective of marketing management is to divide the whole market into several segments on some specific bases e.g. age, sex, education, income, caste, location etc. so that specific efforts can be made to serve that segment better and can meet the needs of the consumers of that segment.
3. Growth of the Enterprise. The other object of the marketing management is to achieve overall growth of the enterprise in terms of sales volume and net profits :
(a) Increase in Sales Volume. Marketing is basically selling. All activities of the marketing management must concentrate upon increasing the ‘ales volume of the company’s products. This can be achieved by fixing the specific targets in terms of sales volume and efforts should be made to achieve them. These targets may be short term and long term.
(b) Increase in Net Profits. Ultimate objective of every business is to earn and maximise its profits. So, the objects of marketing management is cannot be different. Therefore, all activities of the marketing management must concentrate upon increase or maximisation of net profits. But, it should be noted here that maximisation of profits should be through satisfaction of customers’ needs and wants.
4. Increase in Customer’s Satisfaction. Though the main object of a business is to earn and maximise its net profits, but this objective can be achieved only if the customers of the enterprise are satisfied. Thus, all marketing activities, programmes and policies should be framed towards satisfying the customer’s needs.
(C) Principles Of Marketing Management –
Marketing management has come to occupy a very important place in the modern large scale production units world wide. Marketing management is a science and every science depends upon certain principles Marketing management also depends upon certain principles which are as follows :
1. Principle of Planning. Proper planning is essential for the success of marketing management. All the marketing activities should be planned in such a way so as to achieve its objectives e.g. increase in sales volume and net profits, satisfaction of customer’s needs and wants etc. For this purpose, competitors’ policies, consumers’ behaviour, and other factors must be considered.
2. Principle of Organisation. To achieve the various objectives and goals the marketing ‘manager has to organise his department on the basis of sound modem principles of organisation. There should be a sound organisation structure so that there should be a clear-cut understanding of the duties and functions of the personnel engaged in the responsible task. As far as possible there should not be overlapping of responsibilities and obligations of the persons as it breeds confusion and slackness. Each individual should know exactly what responsibility is given to him.
3. Principle of Control. Marketing objectives can only be achieved if the various marketing activities are properly controlled. For this purpose, various steps to be taken are – (i) establishing the standards, (ii) evaluating the actual performance, (iii) comparing the actual results with the standards fixed and note the deviation if any, and (iv) taking the corrective action for achieving the standards. Control on various activities is necessary to keep the marketing costs within admissible limits.
4. Principle of Direction. The management executive issues necessary directions to his subordinates and coordinates all the activities under marketing divisions. He should also direct and coordinate the activities of other departments like personnel, finance and production, etc., so far as they are helpful in achieving the marketing goals.
5. Principle of Objectivity. All the activities of the marketing division are directed towards achieving the overall goals of the management. With a view of this end the marketing expert takes decisions objectively from time to time.
6. Principle of Sales Promotion. The ultimate objective of all the enterprises is to maximise sales. This aim should not be overlooked by the marketing executive and he should make all possible e, forts to promote the sales of the company. For this purpose, he should employ all the new techniques and methods of marketing.
7. Principle of Motivation. The success of the management executive can well be judged how far he is able to motivate the staff under him to maximise its efforts to achieve the targets of the enterprises, i.e. maximum sale and profits with the maximum satisfaction of customer.
8. Principle of Research and Development. Changes in the habits, tastes, preferences of the consumers are being taking place all the time. It is the duty of the marketing manager tc- study and carry on research and to adopt the product in conformity to the preferences of the final consumers. Any slackness in the research and development of the product might cause adverse effect on the total sales of the product or products.
9. Principle of Consumer’s Satisfaction. Modern marketing concept stands for full satisfaction of the consumers, it should always be borne in mind that the chief objective of the company to cam maximum net profit ultimately depends on the total volume of sales which in turn depends on the consumer’s satisfaction.
If the above principles are carefully followed by the marketing executive there is no doubt that the aims of the enterprise can be achieved easily.
Write a brief note on the factors influencing adoption of the marketing concept.
Discuss briefly how can the marketing executive resolve the conflict among departmental goals.
The marketing concept is a philosophy of management which influences the management of marketing efforts. Present significant changes in markets, in technology and in the ways of research and communicating with markets have intensified competition. These variations and the growing complexities of the business concerns have made it more important for concerns to adopt the marketing concept. The knowledge and understanding of its customers, needs, wants and desires has become matters of utmost importance. Upon these is based the concerns operations.
The organisation of operations is influenced greatly by the company’s overal l goals. Department heads have to look to the expectations of the top management. Marketing concept has three main features :
- A market or customer orientation outlook.
- A subordination of departmental aspirations to company’s overall goals. ‘
- A unification of company’s various operations.
Production, marketing and finance operations are interdependent and must coordinate in marketing relations. If a product is not liked by the consumers it will be difficult to sell it profitably. Present management has come to realise that marketing is not something that can be added on after manufacturing the product but it must be integrated with business management.
Factors Influencing The Adoption Of The Marketing Concept –
Marketing philosophy and organisation is influenced by various factors. Such as changes in population and income, technological advances, competition, communication-media etc. The developments in consumer market have been facing producers to adjust their operations to the marketing concepts. The following are the main factors that influence the adoption of the marketing concepts:
(i) Population Growth. Changes in markets are constantly taking place with the growing population day by day. Larger and growing potential markets exist for the widening stream of new consumer products being introduced to the market. New households are added every year and markets of many consumer durables can look forward to potential markets and grow faster than the consumer markets as a whole.
(ii) Growth in Disposable Personal Income. Total disposable income after tax payment rose from the past though the real income (purchasing power) has not been so great, yet the increase-is striking. Inspite of rising prices, the consumer on the whole has enjoyed, continuing increase in the purchasing power at his disposal. The households have now more discretionary income.
It is the money left once after the purchase of essential food, clothing and shelther. Incomes of this kind may be spent, saved, used for the purchase of non-necessities or combination of all these. A rise in discretionary income usually results in more spending on goods of non-necessity nature. It has led to the dramatic expansior of the markets for items like T.V. sets, transistors, coolers, Scooters, etc. With the affluency of them it is a choice as to what things they would prefer to buy and what things they would accept. The research in the field of consumer’s wants and desires has now becomes essential feature of marketing. The producer try to adjust their products on the basis of this kind of research,
(iii) Levelling of income Distribution Pattern. The modern trend of levelling off income distribution tends to the growth of mass markets for v luxury items which were possessed by few till recently. This trend is found in varying degrees among the rich, the middle and poor people. More and more products which were once regarded as luxuries have become necessities. With the spread of electricity fans, coolers, radios, television, etc. have become necessities.
Demonstration effect has also played its role in popular rising these products. The middle class people and even the poor always try to imitate the living standards of the rich. The growth of transport and communication facilities have also widened the scope of markets for products which use to have only limited market previously.
(iv) New Attitude towards Debt. With the increase of banking and credit facilities people try to purchase new items on credit or on hire purchase and instalment basis with minor payments every months. Many cash buyers take loan from banks, finance companies, insurance companies, chit funds, provident funds, etc. So, still they buy durables on credit but not from the seller. They pay cash to the sellers and make the payments in instalments to the lenders viz. banks, provident fund, insurance companies etc. Buying on credit has, thus become a way of life for millions.
Shrewd marketers of many products have accepted credit plans to accelerate the expansion of their market ‘buy now-pay later’ plans have even made air passage easy for a common man. The bank credit plans have made credit purchases easy even from those retailers who previously sold their goods for cash only. The changing attitude towards debts and the increasing ability of the consumers to receive credit has added more to the intensity of competition for the consumers money in hand.
(v) Technological Changes. Great technological changes are taking place. These technological changes have made the products, whole products- lines and even entire industrial concern obsolete. At the same time these changes have produced vast new market for other products and industries, Technological changes lead to the shortening of the products life cycle. In this way, technological changes is a key element in the competitive struggle among companies. An evergrowing number of new products is being forced to the market each year. The 1 ist of the products for the customers choice also grows longer.
(vi) Changes in Marketing Channels. Marketing channels have greatly changed than the changes in markets or their technologies. Once the manufacturer expected his marketing channels to be stable and proper for a long time, but new types of distributive institution shifts in operating methods of the older institutes and development and change in physical distribution has created new problems and opportunities. Many new types of distributive. institutions have come up; the consumer markets have also been invaded for some products by some marketers who did marketing at other places. Grocers in the streets now also sells patent medicines like aspirine, besides grocery. Hence the range of distribution open to the manufacturers has broadened.
(vii) Transport Facilities. Transport facilities have led to the distribution at fast pace, economic and extensive. Technological gains in design, manufacture and utilization of transport equipment in future will make still ‘ further gains so that the manufacturer will gain the global market. Manufacturers who are limited to arrarea find that they are confronted with the large number of competitions from elsewhere. Now, they can also move to new markets to sell their products.
(viii) Growth of Mass Communication Media. Newspapers, magazines, transistors, radios, and televisions are the various ways of mass communications. The spread of a new product through advertisement has become easier, faster, wider and more effectivethan in the past. Mass communication media plays a very big role in marketing these days. It has helped the extension of global markets and large scale production. It has become easier now to reach the potential buyers.
Conflict Among Departmental Goals –
Top managemnet in various companies concentrate to make their products better with advanced technical, mechanical and aesthetic views. They improve the production process and try to bring down the costs. They focus on ever more efficient manufacture. They danger before the product oriented company is that the management forgets that they are in business to serve the market and not only to dispose of the products. For their survival, companies must change if they like to remain business permanently.
Various functions like marketing, finance, and production, etc. are broken into smaller parts each going to the hands of the specialists. With the organizational growth, departmental walls come to grow higher and higher causing some tasks to be duplicated. The growth in the number of specialists tend to lessen the connection between them mutually. The management also lacks coordination and sometimes they work at cross purposes. It breeds inefficiency to the whole organization. One specialist does not understand the language of the other specialist hence the difficulty arises in communication. The top management keeps busy in technical aspects of the operations.
Sometimes there are conflicts among departmental goals. In the production division costs are uppermost in importance. It necessitates lengthening the interval between model changes and maximising the length of production runs.
The marketing division tends to revolve round the sales volume. Sales are pushed by all possible means. For this, wide variety of products are pressed, models are changed at short intervals.
Finance specialists justify their own positions to maximise short run returns to stockholders. They overlook customer’s wants and go against „ research and development projects necessary for the firms standing in competition. They even criticise the efforts of production and .marketing division to instal innovations that require money in the short run and pay off the long run and try to minimise costs and maximise revenues at the same time.
Thus, unification of company’s operation is essential. This can be done by accepting the modern concept of marketing where in all the functions of management are integrated. Modern concept of marketing is based on two basic things :
(a) That the company policies and operations should be customer oriented.
(b) That tlv goal of the firm should be sales on profitable basis.
Marketing concept is thus a philosophy of business which believes that the economic and social justification of a company’s existence is the satisfaction of the wants of the customers. In the words of P. Felton, “A marketing concept is a corporate state of mind that insists on the integration and coordination of all marketing functions, which in turn are welded with all other corporate functions, for the basic objective or producing maximum long range corporate profits.”
What are those bases upon which a marketing organisational structure can be built ? Discuss the each base. Describe the factors which should be taken into account while designing the marketing organisational structure.
“A variety of organisational structure exists for the management of marketing efforts.” What are these structures ? Explain.
Describe the various types of marketing organisational structures. and discuss under what situation each organisation structure would be most suitable ?
As a marketing manager of a large company selling all over India, a range of products, explain which of the structures you would select for v the company ? In your answer bring out the relative merits and demerits of the different types of organisational structures from which you have selected the one, you feel best for the company.
Marketing Organisational Structures
As Peter Drucker has said in his ‘The Practice of Management’ that “organisation is not an end in itself but a means to the end of business performance and business results.” Organisation structure is an indispensable means for good business performance. The structure must be put up so as to make it possible to attain the business objectives even five, ten and fifteen years hence.
In case of big organisations, they may have divisional type of structures with separate divisions. Each division may have its own separate executive directors, marketing manager and officials with staff. Tata’s have separate division for. Tata Iron and Steels, Tata Oils, Tata Soaps, etc. Marketing organization may be: (i) Function oriented; (ii) Product oriented; (iii) Market oriented; (iv) Customer oriented; and (v) The combined type, marketing organisation.
1. The Functional Division Type. Under this type of organisation, all the activities of an enterprise are grouped on the basis of functions to be performed. This is the most simple and common type of basic organization structures of marketing tasks. There are four management departmen s in an enterprise for separate functions like marketing, finance, production and personnel. Each main function is then sub-divided into various sub-functions to be performed to attain the objectives of each main function.
For example, the activities of marketing department may be sub-divided into sub-functions like product planning, marketing research, advertising, sales promotion, physical distribution and customer services, etc. The number of sub-functions varies from organisation to organisation taking into account its nature, size and area of its operation. Each sub-function, is delegated to a separate manager under the control of marketing manager and such managers are responsible to the marketing manager who reports to the higher executives. This type of organisation structure may be depicted in the following diagram:
Advantages, (i) As because the marketing function is divided into various sub-functions and each sub-function is performed under the supervision of an efficient manager, various activities in the enterprise are performed efficiently.
(ii) There is elasticity in the organisation. The sub-activities may further be divided with the increase in size of the organisation
Disadvantages. (i) This type of organisation is suitable only for small enterprises. As the firm grows in size, this type of structure will lose its importance.
(ii) Sub-division of marketing function is also a difficult task. Some activities are of such a nature that they cannot be associated with one type of sub-function or the other. The result is that such activities are performed by more than one departments and this duplication of work creates the problem of responsibility.
(iii) Marketing is an integrated function, The success of organisation depends very much on successful operation of all the sub-activities. It would be very difficult to fix the responsibility for the inefficiency.
2. Product Type Structure. In the field of production there are big companies as well as smaller concerns existing side by side. Large companies producing a number of product, adopt product-oriented structure of marketing function. This type of structure is adopted by the enterprises having a number of products of different types and nature requiring different marketing programmes and strategies. This form assigns to product managers or brand managers with the responsibility for marketing decisions of particular products or groups of products.
The product manager acts as a little marketing manager. Advertising, sales promotion, marketing research can be a centralised staff activity. The product manager takes and executes decisions regarding matters like advertising and sales promotion after taking necessary suggestions from the advertising manager and the sales promotion manager respectively.
There is a shift from a seller’s to buyer’s market in India and with this the importance of product management and the product manager is also growing. This type of structure with product manager enables concentration of attention on the performance of a particular brand. The product manager is specifically charged with planning regarding product. (See Fig. 2.2.)
- This type of structure is. best suited to industries producing different products or brands.
- Every department can be controlled efficiently by the department in charge.
- The performance of different departments may be evaluated and compared.
- It stresses on specialisation and helps in increasing the efficiency of the personnel.
Difficulties of the Product Structure.
- The product manager is sometimes confused with as to be familiar with different jobs. His own background may be too limited to enable him to take the total markeitng approach.
- Conflicts may even develop with other line of activities.
- It is suitable only for medium sized industries producing different products or different brand of a product.
3. Market Oriented Marketing Organization. This type of structure is used by big companies who serve large number of customers spread over very large territory. The structure is based on regional basis, duties and specific areas are assigned to different persons. The total area may be divided into four basic regions viz. East, West, North and South or in more divisions for sales points of view.
Each region is sub-divided under the Sales Supervisor. Their numbers depend upon the characteristics and requirements of the particular region. Each, supervisor is given the numbers of salesmen who are under his direct control. In this way, the market is fragmented, into sale territories which may be a district, division or region’. This type of structure has the greatest advantage that the regional manager and his staff become experts for the allotted regions as regards the customers. They become careful of the competitions that mark that area and so they act accordingly. The structure has been shown in Fig. 2.3.
- This types of structure is suitable for big concerns having their bales net throughout the country.
- It enjoys all the advantages of functional type organisation.
- There is much elasticity under this structure. As*the size of business grows, more territorial sub-divisions may be created. It facilitates better control.
- The organisation regularly is in touch with the customers. It comes to know the changing habits, fashion and needs of the customers of every region and therefore, can make necessary changes in its product within a short span of time.
- Responsibility can be fixed easily for any lapse.
- It is not fit for small organisations, as it is much expensive.
- Each territorial division has its separate entity for marketing the product in that area. The organisational policies for each region are different taking into account the nature of customers of the area. It is, therefore, very difficult to formulate or follow an integrated policy for all the regions.
4. Customer Oriented Marketing Organisation. Under this type of organisation structure, concentration is on the types .of customers and séparate groups are designated responsible for marketing programmes for their different classes of customers such as: (a) distributors, (b) retailers, and (c) customers. Sales managers for different classes, of customers are appointed.
Advantages. (i) Under this type of organisation, full attention can be paid to each class of customers and thejr problems can be well understood by the organisation.
(ii) The organisation comes in contact with the customers regularly. It then becomes easier to the organisation to estimate their demands and satisfy them.
Disadvantages. Although customer satisfaction is the main aim of the structure but, it is suitable in those organisations only where the nature of customers is different.
5. Combined Type of Organisation Structure. The above four types discussed above are basic concepts regarding organisation structures. Any structure in its original form is rarely found in an organisation. In practice, we normally come across a combination.
We can combine : (i) Functional structure with territorial structure : or (ii) Functional structure with the product oriented structure ; or (iii) Market oriented structure with the customer oriented strucuture; or (iv) Market oriented structure with the product structure.
Suitability Of The Organisation Structure –
We have discussed above the four basic concepts of marketing organisation structure and the combined form of organisation structure. Which one is suitable to a concern, though depends very much on the nature of the business and of its customers, yet we may conclude that :
- The functional type organisation structure is suitable for small enterprises which produce only one type of product.
- The product or the market type organisation structure :s suitable for a big concern having its sales-n2t throughout the country because due attention is paid under these two structures on each product and in all the territories. . .
- The customer oriented organisation structure is suited best to the organisations having different types of customers and where different marketing policies are followed for different class of customers.
Factors Affecting Marketing Organisation Structure. In taking decision about the marketing organisation structure, the following should be taker, into account –
- Main objects and policies of the enterprise.
- Size of the enterprise – produced or market type organisation is suitable for large enterprises.
- Geographical area of the enterprise.
- Organisational policy of the enterprise.
- Number or lines of product.
- Organisational structure of other enterprises of similar nature and size.
- Number, location and nature of consumers.
- Sales volume.
- Ability of marketing personnel.
- Marketing programmes and strategies.
What do you understand by Marketing Process? Briefly describe them?
We have already seen that marketing is the managerial process by which products are matched with markets and through which ownership is transferred from producer or seller to the buyer. Human wants were few in the beginning and the method of production and marketing was also very simple. There was direct relation between the producer and the consumer. The producer recognised his customers and the consumers also knew the producer from close quarters.
With the invention of money, improvement in transport facilities, warehousing, specialisation and division of labour, use of new production techniques and the use of power have all brought about a revolution in the fields of exchange in the marketing. Today marketing activities are not direct from the producer to the consumers but now the products reach the hands of the consumers through various intervening agencies. Hence, these marketing processes as are divided into many sub-processes which are more in number and complex in nature than before. Clark has divided the modem marketing process into three broad divisions:
1. Concentration. According to Pyle, “ We may think of concentration as that activity in which goods flow from many producers toward a central point or market.” In a highly developed and complex economy most of each producer’s customers, are located thousands of miles away and products must be transported to and stand at points more accessible to them. Further- more in developed countries such as in United States most manufacturers produce in anticipation of market demand and hold inventories until orders are received and filled. As countries develop and as multinational trade increases both storage and transportation as well as inventory management and the processing and handling of customer’s order increase in importance.
Because in our complex economic system products are generally produced in anticipation of market demand, storage is necessary and important. Manufacturers, wholesalers and retailers all hold inventories. When consumers make purchases from retail outlets, retailers inventories are reduced and are replenished from wholesalers inventories which in turn are replenished from the manufacturers inventory. Similarly the consumers own supply of products is reduced by his own consumption and replenished by his purchases. When a product is purchased at the retail level, stock levels fluctuate all along the
line of distribution.
Marketers have three reasons for holding products in storage :
(a) To even out the seasonal factor in production and in sales. A manufacturer of Christmas ornaments has a market for its products only during the immediate per Christmas period, but its costs- are lower if one
(b) To obtain economies in other business operations Manufacturers who, make products in a large number of sizes each as nuts and bolts use the same machines to produce different sizes. It is often more economical to schedule long production sums of several weeks supply of particular sizes rather than making the total needs of each size weekly.
(c) To improve their quality and value products as cheese, tobacco, rice, wine must be aged or conditioned to improve their flavour and hence to increase their value.
Concentration activity involves purchasing, storage, grading, transportation, financing, and risk-bearing. In India, in Case of grains, sugar, rice, coal, etc. this activity is now undertaken by the government.
2. Dispersion. Concentration is not the main goal of Marketing. The main objec of marketing is to take the products to the consumers. Concentration is just a step towards that end. Transportation is a necessary and important marketing activity. Markets are separated geographically from production areas, Many factories are delibrately located away from populated areas to avoid traffic congestion, health hazards and high land costs. Dispersion activity is the activity through which goods and services are delivered to their real consumers at the right time and right place in the right quantity and through the most appropriate channels of distribution.
This work is done by the wholesalers who first stores the goods and then sell to the retailers in small quantities. These retailers in their turn sell goods to the actual consumers. Distribution marketing activity involves many, other supporting activities such as sale, storage, classification and gradation, “ transportation, financing and risk bearing.
Some large producing companies have, undertaken the work of distribution in their hands through their chain shop network.
3. Equalisation. The third major process of the marketing machinery – is ‘Equalisation’. According to Clark and Clark, between these process of concentration and dispersion occurs the activity which we call ‘Equalisation Equalisation consists of adjustment of supply to demand on the basis of time, quantity and quality” In simple words, equalisation is the process of making available the goods in a particular place or market just in accordance to the actual demand so that the chances of loss might be minimised. It is the process of adjustment of supply to the actual demand of a particular place.
After concentration, it has to be seen that the right kind of goods in right ‘ ^quantify are-being taken to a particular market according to the demand. If the equilibrium between the supply and demand is diminished, it is quite possible that it may cause heavy loss either to the suppliers or to the buyers. It may also go against, the interests of the consumers who might not get the right type of product in stipulated quantity. In this way the very object of marketing is forfeited. It is, therefore, expedient that proper coordination is maintained between concentration, and dispersion. Only then equalisation will be ensured.
These three processes of marketing go on simultaneously.’ The wholesalers on the one hand procure products from the producers and on the other hand make available these goods to the retailers in the different markets . according to their requirements, in this way, in their activity of dispersion they look to the equalisation. Therefore, Clark rightly calls concentration, dispersion and equalisation the heart of marketing process.
Name the in in e acti ities generally, classified as marketing activities.
Indentification of marketing activities is sometimes a complicated matter. Explain.
Identification Of Marketing Activities
To identify marketing activities is not so simple as it looks. The work is complicated with difficulties met in determining just where marketing commences, and where it ends. The marketing process both begins and ends with the final buyer, with information flowing back to the producer and – products flowing forward to the final buyer. The marketing activities most easily identified are those concerned with bringing products into contact with markets. Selling is one of these. Buying is’ the others id e of selling. It is not so easy to identify as a marketing activity. The buying of goods for resale is one of the retailers most important work. To sell goods to the consumers he must buy those things. according to consumers’ needs and wants. But purchasing is as clearly a marketing activity for the manufacture? His buying decision is influenced by the effect his purchase has on his products marketability.
Activities not directly concerned with bringing products into contact with markets are more difficult to identify. Although planning and designing ‘ the product may not look like marketing activities, products should posses? those characteristics that final buyers want and desire. These wants and desires must be discovered in an early stage of pro duct development otherwise the product doomed to fail in the market.
The final buyer .also does some marketing activity. Marketers try to move products and services into the hands of final buyers but it does not follow that all marketing stops there. Storage is generally classified as a marketing activity. Potatoes and onions are produced seasonally, are stored til! the end of the year by marketing concerns, but at times, individual consumers take over part of storage activity – they may purchase sufficient quantity of these things to store in their homes.
Nine activities generally classified as marketing activities. We classify marketing activities into three general categories containing nine activities in all:
(a) Merchandising Activities :
(i) Product Planning and-Development, (ii) Standardising and grading. (iii) Buying and Assembling. (iv) Selling.
(b) Physical Distribution Activities :
(v) Storage, (vi) Transportation. ,
(c) Supporting Activities :
(vii) Marketing Financing, (viii) Marketing Risk Bearing, (ix) Obtaining and Analysing Marketing Information.
(a) Merchandising Activities. It is necessary to determine and meet the various market needs in terms of products and to stimulate market demands. ‘ –
(i) Product Planning and Development. Product adjustment to the buyers’ needs is essential for successful marketing. Product planning and development is an activity undertaken before actual production of the product; In most industries, the producers try to improve the product with the change in the technology or shifts in buyers’ expectations. They make continuous change in physical and non-physical attributes of the product keeping in mind the changing needs of the buyers.
Physical attributes include colour, size, design, packing and non-physical attributes include value, utility, quality etc. Non-innovating concerns face gradual elimination from the market. Growing recognition of the importance of satisfying buyers wants and preferences is responsible for making the marketing planning and development oriented. Product planning and development are being regarded crucial in marketing management.
(ii) Standardizing and Grading. A standard shows what basic quantities or characteristics a product must have to be designated by certain grades. These standards should be based on qualities desired by the buyers or on the use to which the article is to be put. Grading is the act of separating or inspecting the goods according to the establisned specifications including size, weight or quality.
For efficient marketing standardizing and grading are very important , functions. Both these make it possible for customers to purchase by description instead of by inspection. ,
(iii) Buying and Assembling, Assembling means bringing together : –
- different quantities of a wide variety of items for resale by a concern, or
- a large quantity of similar items of resale a particular region. The first kind of assembling is “done by the retailers like departmental stores and super bazars. The. second kind of assembling is done by the wholesalers.
Buying for the purpose of marketing, means the acquisition of goods .auu services by sellers to buyers for the purpose of resale. The,end consumers also purchased the goods for their ultimate use, such purchases are not included within the purview of marketing activities. Successful buying needs an( ability to estimate customer’s needs weeks and even months in advance. When the retailers order goods that will be delivered and placed on sale three or four months later is an act of anticipating what consumers will purchase in the future. It is important to know customer’s needs and buying habits to their buying predict actions.
(iv) Selling. It is not only transfer of ownership but it has the purpose of identifying prospective customers stimulating demand and providing information and service to buyers. For this the marketer must combine such activities like personal selling, advertising, sales promotion, packaging and customer service. A blend of selling activities coordinated into a sales programme is called a promotional mix. Great skill is needed in planning an optimum promotional mix and coordinating the different selling activities.
(b) Physical Distribution Activities. Under physical distribution activities come the storage and transportation. These activities are necessary to move products from their places of production to their places of consumption. Manufacturers produce in anticipation of market demand.
(v) Storage. In the present complex economic system products are generally produced before market demand storage become necessary from the time of production till the time of consumption.
Manufacturers, wholesalers, retailers all hold inventories and manage them. Marketers hold products in storage for seasonal factors, economies in other business operations and improvement of the quality and value. Storage becomes necessary where production is seasonal and demand of the product is parennial or where production is parennial and demand is seasonal.
(vi) Transportation. Transportation is necessary and important because most of the markets are separated geographically from production areas. Many factories are deliberately located away from urban, areas to avoid population and traffic congestion and hign land costs and for health hazards. Transportation meets the. need of different areas and at different times. It helps in expanding markets. It maintains regular supply and improved services to consumers.
(c) Supporting Marketing Activities. Under this head we include : (i) Marketing financing; (if) Marketing risk bearing ; and (iii) Obtaining and analysis marketing information. All these activities support or contribute to the carrying out of other marketing activities.
(vii) Marketing Financing. Marketers do the wok of receivers and sources of credit. As receivers, they utilize short term financing to tide their operations over seasonal peaks that require additional inventory investments and higher promotional expenses. Most middlemen and many manufacturers finance seasonal variations in expenses through credit. There are two main sources of credit: trade credit, and banks. Trade credit in short term financing is extended by suppliers. Manufacturers offer their customers credit terms allowing them three to four months to pay. Trade credit tends to be expensive when interest is charged on overdue advances. Bank also provide short term finance to the business through cash credit and overdrafts.
In recent times instalment credit has become very popular. The system has given more to the development of mass markets.
(Viii) Market Risk Bearing. Some risk is inevitable due to supply and demand variations and natural calamities. The marketers who do the storage 45 activity have to do financing as well as risk bearing. Marketing institutions have the problem of deciding on the appropriate size of inventories. There is always risk that an inventory will not be sold if it proves too large relating to market demand. Risks attached to natural hazards like fire and floods, deterioration of products in storage and damage in transit can often be transferred to insurance companies who are prepared to cover the risks in return for premium payments. But some risks can not be transferred. Such as fall in prices, change in demand, change in fashion, taste etc. of consumers.
Risks of changes in market demand are lessened .nrough accurate sales forecasting and marketing research.
(ix) Obtaining and Analysing Marketing Information. The success of marketing operations depends largely upon management’s knowledge and appraisal of information as the size, locationiand characteristics of different markets, the nature of present and future customers and their buying habits , and nreferenees, competitors strength; and plaris and trends in market supply and demand Marketing information is gathered in different ways. Marketing Research methods are used in getting information sources outside the company. Economic and business forecasting techniques are used to get important information on future market conditions.
Explain why no general scheme for classifying marketing activities exist, which is universally applicable?
Discuss the relationship of the performance of marketing activities to marketing efficiency?
Difficulties In Classification Of Marketing Activities
A systematic division of marketing activities helps in studying marketing problems but no such classification scheme is applicable universally. For some industries like cosmetics, packaging and advertising may be of greatest importance so much so that they deserve classification as separate marketing activities while storage may not be so important as to deserve , separate classification.
Each company has its own individualized set of concern and marketing aims and the list of marketing activities is simply a classification of those needful to secure the aims. If the numbers and kinds of marketing activities change with tne marketer the product or distribution method then what is the significance of classifying activities done under various circumstances. The farmers unlike manufacturers cannot alter the design of their products. As such the farmers have little practical interest in product design. Inspite of variances of this kind there are enough goals and .activities to justify generalisation about the marketing activities.
Performance of Marketing Activities and Marketing Efficiency.
Repetition in performan’‘e of marketing activities is a sign of efficiency. No doubt, some activities are done at each distribution level-buying and selling for example may be done several times since each middlemen interposed between producer and final buyer, customarily both buys and sells. Marketing costs could be reduced through eliminating certain middlemen.
The efficient marketing system would stress direct sates by producers to final users. Direct sale is the most efficient marketing system, in the case of some industrial products. But in some circumstances direct sale may not prove very efficient and even may not be possible at all.”With such manufactured products as soap, toothpaste produced mainly by a few large companies direct sale is impracticable as consumers buy these products in small quantities so that the amount of money got from each transaction would not be enough to cover the costs of reaching the customer. Direct distribution of onions and oranges by many thousands of grocers would not only be prohibitively expensive but greatly inconvenient for consumers most of whom prefer to buy sevcial food items in bulk and at a time most convenient to them.
Marketing channels for such products are necessarily complex and long . and individual marketing activities must be performed repeatedly as products move from producers and manufacturers to final buyers. At each distribution level, these activities are done in specialised ways under these conditions shortening the marketing channel, often, results in increased costs and reduced efficiency.
The question is therefore, not what activities have to be done, but rather which, combination of marketing institutions can do them most efficiently. Marketing efficiency results from finding the optimum division of responsibility among the institutions doing the activities at different distribution levels.’ :
Marketing attempt to reduce marketing risks that cannot be transferred by a variety of means. Explain.
(A) Assess the role of marketing financing,
Marketing financing is an important supporting marketing activity. A supporting activity may not relate directly to ownership transfers but contribute to other marketing activities.
(A) Marketing Financings –
Marketers both as receivers and sources of credit are concerned with financing. As receivers they sometime use short term financing to tide their operations over seasonal peaks that additional inventory investments and higher promotional expenses Many retailers for instance increase-their inventories 50 to 60 percent before Diwali, Holi and other festivals and also increase their Sales forces and advertising outlays accordingly, if permanent capital investments were kept at a level high enough to meet these seasonal needs, much money would lie unproductive in the rest of the year. Consequently most businessmen finance seasonal variations in marketing expenses through credit.
The two main sources of credit are trade credit and banks. Trade credit plays an important role in short term financing. Manufacturers and middlemen offer their customers credit terms allowing them one to four months to pay But trade credit is more expensive when interest is charged on overdue balances.
Instalment credit has now become very popular. T V. sets, fridge, coolers, furniture, automobiles are sold on the instalment plan. Instalment credit has contributed significantly to the development of mass markets for many consumer durables. Departmental stores and retailers use credit as a means of attracting patronage. At the wholesale level most transactions are on credit basis.
(B) Marketing Risk Bearing –
Marketing risks arise from both supply and demand changes and natural hazards. Any institution that carries on inventory take the risks that supply and demand conditions may change. Thus marketers who perform the storage activity also perform not only financing but risk bearing.g. Most marketing institutions have the problem of deciding on the proper size of inventories. There is always risk that an inventory will not be sold if it proves too large relative to market demand. But there is also risk if it proves too small, orders will be lost because they cannot be executed.
Risk Transfer, A marketers may transfer part of its risk burden eliminating some risks entirely and converting others from unpredictable amounts of potential loss to known items of expense. For example, when a seller agrees to reimburse a buyer for any drop in a product’s price that may occur within a given period, the buyer succeeds in transferring the entire risk of a price decline during the period to the seller.
Hedging. Hedging provides another way to transfer the risks of price changes in a limited number of items traded on organised commodity1 exchanges. Hedging is a procedure involving simultaneous sales in the future market when purchases are made in the current (spot) market and simultaneous purchase in the future market when sales are made in the current market so that gains or losses on current transactions are approximately balanced off against the opposite experienced in the future market.
Insurance, Risks attached to such current hazards as fire and floods, deterioration of products in storage and damage in transit can often be transferred to institutions that specialized in assuming such risk. Insurance companies cover all these risks against premium payments. When risks are transferred in this way, unpredictable amounts of potential loss become known amounts of expense.
Risk Reduction. Because many marketing risks cannot be transferred, marketers concentrate on trying to reduce them as far as possible. Risks of – changes in market demand are reduced through accurate sales forecasting and marketing research. Available techniques for market measurement are by no means foolproof, a well considered sales forecast can help reduce the margin of error in deciding on inventory size. Risk of a change in market demand is reducible also through aggressive programmes of advertising, persona! selling and the like. Reasonably, accurate sales forecasting should also help in reducing the supply risk of being out of stock and unable to fill customer’s orders.
Other risks involved in changing supply conditions such as risk that the supply will cause competitors to cut prices may be partially offset by differentiating products so that customers will be reluctant to accept substitutes. To the extent that product differentiation succeeds, in building customer loyalty, a marketer gains control over the supply; its customers will not switch to substitutes supply because of small price differentials. In a limited sense, the marketer gains a degree of monopoly control over the products supply. However, products differentiation only reduces the risks of price competition it does not eliminate it. Few marketers ever succeed in completely differentiating their products.
Briefly discuss the various approaches to the study of marketing.
“Three basic approaches are used customarily in describing and explaining the marketing system. The commodity, the institutional and the functional.” Explain briefly these approaches.
In the variety of approaches to the study of marketing what homogeneity do you find? Can you suggest an ideal approach.
Approaches To The Study Of Marketing
In the early stages of evolution of economic life, man’s wants were limited. Production was strictly in accordance with demand. The scope of marketing was naturally also very limited. There was direct and personal relations between the producers and the consumers. Production and marketing techniques were quite simple. In fact, there was no marketing problem. But now-a-days man’s wants have increased manifolds and they are still on the increase with development of knowledge in different areas.
But at present large scale production is carried on with the help of most sophisticated – machines and the consumption of these goods is made by a very large number of consumers throughout the world. As such the direct contact between the * producers and consumers is almost impossible. There is a long chain of middlemen which make it possible for these goods to be carried to the consumers. Marketing process is getting more and more complex in the present times. Modern marketing process can be studied from three points of view :
(a) Commodity Approach
(b) Institutional Approach
(c) Functional Approach.
(a) Commodity Approach. Under this approach a particular product is selected and then a detailed study is made regarding the various sources of its supply, quality of the product, its characteristics, its uses, limits of the market for the product, the intervening middleman engaged in the wofk of distribution, the various means of transport which actually carry the goods to the consumer’s and after sales services. For example, if we want to study -marketing of wheat or rice then we shall have a study in detail of the sources of the supply of these commodities, their kinds different uses, their buyers and actual consumers, suppliers, the various means of transport used to carry them from the actual place of production to the markets and then how these ’ products actually reach the hands of the users by the efforts of the retailers.
The problems relating to storage classification and gradation, packaging, brand and financing are also involved in marketing of the products. All these have to be studied in fuller details.
Commodities may be classified under various group such as agricultural, ‘ minerals and industrial products. Marketing problems have to be studied separately in respect of each product for they differ widely in their characteristics. Commodity approach has its own merits and demerits. The merit of this approach is that it gives full insight into the inherent problems underlying the marketing of each particular product. But the greater disadvantage of this approach is that it takes a long time to study the ‘ marketing process.
(b) Institutional Approach, Under this approach, the functioning of various institutions engaged in the task of marketing is studied scientifically. These are the days of mass production. Consumption is made by the people spread over throughout the world. Actual marketing is done by specialised institutions. Their help is vital in the marketing process. These are wholesalers, retailers, advertising agencies, transport agencies, marketing research institutes, commercial banks; insurance companies, warehousing, etc. All these institutions help in one or the other way to take the goods to the hands of actual users.
The selection of these institutions depend on the nature of a product. For example, for industrial products direct selling is preferable. For consumer goods like soap, cloth, etc. the help of the wholesalers, retailers is essential for distribution work. The main thing about the consumer goods is that they are purchased by the consumers generally in small quantities and not in bulk. Therefore, their direct sale by the producers to the sellers is not economical. It entails higher costs and involves other difficulties.
The great merit of the institutional approach is that it provides complete knowledge of each institution engaged in particular part of marketing.
(c) Functional Approach. Under this approach, we study the marketing functions right from the production stage of the goods and services upto their reaching the hands of the consumers. These marketing operations include purchase, classification, standardization and gradation transport, storage, advertisement, financing and risk bearing, etc.
The credit for designing this approach goes to A.W. Shaw who enumerated the functions of middlemen as follows:
Sharing the risk, transporting the, goods,’financing the .operation, selling (communication of ideas about the goods, and assembling; assorting and reshaping.1 Later on L.D.H. Weld introduced some notable changes in the concept by pointing out that the above functions are not always performed by middlemen but also partly by the producers and partly by the consumers.
A marketing function is a major specialised activity’ performed, in marketing. Functional approach, therefore, splits down the field of marketing into a few functions which are to be performed by doing marketing work. Through such a study of functions, changes in the structure of marketing caused by shifting, combining or eliminating activities from one agency to another could be made easily understandable. As*a means of classifying the various phenomena of marketing under a small number of categories. This approach is definitely an improvement over the former ones in two respects. Conservation of time and avoidance of much repetition.
But this approach is also free from defects. Undue emphasis. on functions of marketing doing not permit one to know how these functions are applied to specific business operations. Secondly, the marketing functions are so numerous that it is difficult to eliminate the unnecessary from the necessary functions. Finally this approach is also repetitive to some extent.