MARKETING MANAGEMENT AND INTERNATIONAL TRADE

Lesson 1. CONCEPT OF MARKETING AND MARKETING MANAGEMENT PROCESS

Module 1. Overview of marketing

Lesson 1

CONCEPT OF MARKETING AND MARKETING MANAGEMENT PROCESS

1.1 Introduction

Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of values with others (Kotler et. al. 2010). Management philosophy by which organizations’ goals can be best achieved through identification and satisfaction of the customers’ stated and unstated needs and wants is referred to as ‘concept of marketing’. This emphasizes that the organization should analyze the needs of its customers and make decisions to satisfy these needs in a better way as compared to its competitors. Adam Smith, the well known economist, wrote in his 'Wealth of Nations' in 1776 that the needs of producers should be considered only with regard to meeting the needs of consumers. This philosophy is consistent with the marketing concept and would also be adopted by the organizations in future. Besides the Smithian concept, there are alternative marketing concepts that have prevailed during different historical time periods, some of which are relevant even today.

1.2 Concepts of Marketing

The major concepts that have guided and continue to guide the organizational activities are as follows:

1.2.1 The production concept

This is the oldest concept. According to this concept, consumers will choose those products which are relatively cheap and available at almost all places. The business organizations adopting this concept produces product on a mass scale and aim to produce products at low cost with higher production efficiency so as to keep the selling price low. This concept is adopted by firms for their expansion. Adoption of this concept is favourable in countries with higher population such as India, where a large population makes it possible to have cheap labour available. In organizations that practice this concept, production and technology dominate the thinking process of key managers. They think that marketing can be managed by managing production. The organizations which adopt this concept are able to obtain efficiency in production. Their assumption is that a decrease in cost of production due to maximization of output would bring all the patronage. But in real situations, customers are motivated by many factors apart from lower price. Thus, production concept is not able to act as a right marketing philosophy for the organization.

1.2.2 The product concept

This concept is based upon the assumption that consumers’ purchase is strongly affected by quality, performance and novel features. The business organization adopting this concept produces high quality, superior products and continuously upgrades them. One of the limitations of this concept is that those who are associated with product development become so engrossed with the product that they do not pay attention to consumers’ need.

1.2.3 The selling concept

This concept is based upon the assumption that consumers (individual as well as business) will not purchase products in sufficient quantity if left alone. Therefore, it is necessary for selling organizations to pursue aggressive efforts to promote and sale. This concept is favourable for unsought goods as well as for overcapacity plants.

1.2.4 The marketing concept

This concept gives priority to consumers’ needs. Instead of producing the product and then trying to sell it, this concept relies on producing the product what is required by consumers. The concept emphasizes to become more efficient than competitors in all aspects of marketing mix.

1.2.5 The holistic marketing concept

The business environment has undergone substantial changes in the last few years. Responding to this change, the organizations are now adopting holistic marketing concept. According to this concept, everything matters in marketing and thus a broad integrated approach is required. This concept takes into consideration the four important activities i.e. relationship marketing, integrated marketing, internal marketing and performance marketing.

Relationship marketing aims at establishing and maintaining long-term, mutually satisfying relationship with key stakeholders of a business organization. The key stakeholders are customers, channel members, financers and employees.

Integrated marketing calls for adopting integrated approach with respect to four marketing mix elements viz., product, price, place and promotion.

The internal marketing emphasizes that the members of the organization and especially senior management are devoted towards marketing activity irrespective of their functional specialization.

Performance marketing is related with returns to the business from various marketing tasks and programmes. Apart from only monetary returns it also includes legal, ethical, social and environmental impacts of marketing activities.

1.3 Marketing Management Process

Marketing management is the process of knowing customer needs and wants, developing products and services and offering it to customers so as to satisfy their needs and wants. In the process, business organization earns profit. Thus, the first step of marketing is to identify a set of consumers whose unmet needs can be satisfied. It is necessary for marketing organization to identify opportunities in the market by analyzing and scanning macro environment and obtaining market related information through process of market research to get idea about current and future market demand. By selecting target marketing, organization finds out a homogenous set of consumers who will respond favorably to the marketing programmes offered by the organization. The analysis of competitors helps the marketing managers to devise programmes so as to differentiate it from competitors. While selecting a marketing strategy, the consumer decision making process and factors affecting the process needs to be dealt with. Identification and selection of target market and positioning strategy aids marketing organization in developing new products or service. A brand name is chosen and appropriate pricing policy is adopted for the new offer taking a long term view and competitors strategies. The awareness about the product or service is done adopting appropriate promotion policy. In short, the total marketing management process starts with identification of unmet consumer needs and ends with a satisfied customer. Table 1.1 shows the key steps of the marketing management process.

Table 1.1 Key steps of the marketing management process

	Step	Activity
1.	Market analysis	Finding out current position of the organization in respect of current market share, market power, the relevant strength, weakness, opportunities and threat for the organization
2.	Market planning	Selecting a target market, selecting market strategy.
3.	Implementation	Execution of the planned strategy and allocation of scarce resources to achieve optimum results.
4.	Control	Evaluating the process and rectifying the deficiencies in terms of deviation from targets.