Agribusiness Management and Trade 3(3+0)

Lesson 10. Concepts of Marketing

10.2 MARKET

Word market comes from Latin word ‘Markets’ which merchandise or trade or a place where business is conducted.

Market in economic sense carries a board meaning

1. Market is sphere within which price determining forces operate.

2. A market in area within which force of demand & supply converge to establish a single price.

3.  Term market refers, not to a place but to a commodity or commodities and buyers and sellers who are in free business relationship with one another. Thus market is defined in term of existence of fundamental forces of demand & supply and is not necessarily confined to a particular geographical location.

Components of market

1. Good or a commodity for transaction

2. Existence of buyers and sellers

3. Business relationship between buyers and sellers

4. Place where  transaction takes place

10.3 MARKETING AND MARKETING MANAGEMENT

Marketing can occur any time a person or organization strives to exchange something of value with another person or organization. Thus at its core marketing is a transaction or exchange.

• In this broad sense marketing consists of activities designed to generate and facilities exchanges intended to satisfy human or organizational much or want

• Marketing is about identifying and meeting human and social needs.

• Shortest definition is “meeting needs profitably”.

• American marketing association marketing is an organizational function and a set of process for creating, communicating and delivering value to customers and for managing costumer relationships in ways that benefit organization and its stock holders.

• Marketing is a total system of business activities designed to plan, promote and distribute want satisfying products to target markets in order to achieve organizational objectives. This definition has two significant implications.

• Focus:-  entire system of business activities should be costumer – oriented. Costumer’s wants must be recognize and satisfied.

• Duration:- marketing should start with an idea about a want satisfying product and should not end until  customer’s wants are completely satisfied, which may be some time affair  exchange is made.

Marketing Management is art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering and communicating superior customer value

10.4 WHAT IS MARKETED?

Mainly 10 types of entities are marketed: goods, services, events, experiences, persons, places, properties, organisations, information, and ideas.  examples of these  entities are presented below

1. Goods:  Physical goods constitute bulk of most countries’ production and marketing efforts. Ex: Car, television, machines, etc

2. Services: hotels, hospitals, lawyers, barbers, banks, insurance companies etc.

3. Events:  trade shows, artistic performances, film fare awards, Olympics, world cups

4. Experiences: By orchestrating several services and goods, a firm can create, stage and market experiences. Ex: Amusement park, Water Park, village ambiance in hotels in Mumbai etc.

5. Persons: Celebrity marketing is a major business. Artists, musicians, CEOs get help from celebrity marketers. Ex: Sachin Tendulkar, Aamir Khan, Amitabh Bachchan etc.

6. Places: Cities, states, region and nations compete actively to attract tourism. Ex: in software industry Bengaluru is positioned as “Silicon Valley” of India, Kerala is marketed as “Gods own country”, India is marketing it as a tourism destination through “Incredible India” advertisement campaign.

7. Properties: Properties are intangible rights of ownership of eir real property (real estate) or financial property (stock and bonds).

8. Organisations: Organisations actively work to build a strong, favourable and unique image in minds of target publics. Ex: Universities, Art organisations etc.

9. Information: Information is essentially what books, schools and universities produce market and distribute at a price to parents, students and communities.

10. Ideas: Every market offering includes a basic idea. Awareness about AIDS, family planning, discouraging smoking etc.

10.5 KEY COSTOMER MARKETS

Based on type of customer served, market can be categorised into following four markets.

i)     Consumer markets: It consists of ultimate consumers who buy goods and services for their own personal or household use. Ex: Dairy Products, cosmetics, computer, camera etc.

ii)   Business markets: It consists of all individual and organisations that buy goods & services for one or more of following purposes.

1. To make or goods & services: A food processing company purchases fruits to manufacture finished products like, fruit juice, jelly etc.

2. To resell to or business users or to customers. Ex: Wholesaler or retailer

3. To conduct organisations’ operations. Ex: computers purchased by banks, universities.

Hence, any goods or service purchased for a reason other than personal or household consumption is part of business market.

iii) Global markets:   market other than their own nation where firm markets its products.

iv) Non-profit & Government markets: Universities, charitable organisations & any or government organisations.

10.6 EVOLUTION OF MARKETING CONCEPTS

What philosophy should guide a company’s marketing efforts? Increasingly, marketers operate consistent with a holistic marketing concept. Following is review of evolution of earlier marketing concepts or ideas.

•  Production Concept: This is one of oldest concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented business concentrate on achieving high production efficiency, low costs and mass distribution.

•  Product Concept: This concept proposes that consumers favour products that offer most quality, performance or innovative features. Managers in se organisations focus on making superior products and improving m over time.

•  Selling Concept: This holds that consumers and businesses, if left alone, won’t buy enough of organisation’s products. Organisation must, therefore, undertake an aggressive selling and promotion effort. Selling concept is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance and encyclopaedias. Most firms also practice selling concept when they have overcapacity. Their aim is to sell what they make rather than make what market wants.

•  Marketing Concept: Instead of a product-centred, “make-and-sell”            philosophy, business shifted to a customer-centred and “sense-and-respond” philosophy.  job is not to find right customers for your products, but to find  right products for your customers. Ex: Dell Computers doesn’t prepare a perfect computer for its target market. Rather, it provides product platforms on which each person customises features he desires in computer.

•  Holistic Marketing Concept: This concept is based on development, design and implementation of marketing programs, processes and activities that recognises its breadth and interdependencies. Holistic marketing is thus an approach that attempts to recognise & reconcile scope and complexities of marketing activities. This concept is characterised by four major components: relationship marketing, integrated marketing, internal marketing and performance marketing.

• Relationship marketing: It aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain ir business. Four key constituents for relationship marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies) and members of financial community (shareholders, investors, analysts). Marketers must respect need to create prosperity among all se constituents and develop policies and strategies to balance returns to all key stakeholders.

• Integrated Marketing:  marketer’s task is to devise marketing activities and assemble fully integrated marketing programs to create, communicate and deliver value for consumers. se marketing activities are classified as marketing mix tools of four broad kinds, called four Ps of marketing: product, price, place and promotion.

• Internal Marketing: Internal marketing is about ensuring that everyone in organisation embraces appropriate marketing principles, especially senior management. Internal marketing is task of hiring, training and motivating able employees who want to serve customers well. Internal marketing must take place in two levels. At one level, various marketing functions-sales force, advertising, customer service, product management, marketing research-must work together. At second level, or departments must embrace marketing; y must also “think customer”. Therefore, it requires vertical alignment with senior management and horizontal alignment with or departments.

• Performance Marketing: Holistic marketing incorporates performance marketing and understanding returns to business from marketing activities and programs, as well as addressing concerns and is legal, ethical, social and environmental effects.

10.7 DIFFERENCE BETWEEN SELLING AND MARKETING

Many managers use 'marketing' and 'selling' as synonyms though re is a substantial difference between both concepts. It is necessary to understand differences between m for a successful marketing manager. Selling has a product focus and mostly producer driven. It is action part of marketing only and has short term goal of achieving market share.  Emphasis is on price variation for closing sale where objective can be worded as “I must somehow sell product to customer’. This short term focus does not consider a prudential planning for building up brand in market place and winning competitive advantage through a high loyal set of customers. End means of any sales activity is maximizing profits through sales maximization.

When focus is on selling, businessman thinks that after production has been completed task of sales force starts. It is also task of sales department to sell whatever production department has manufactured. Aggressive sales methods are justified to meet this goal and customer's actual needs and satisfaction are taken for granted. Selling converts product in to cash for company in short run.

Marketing as a concept and approach is much wider than selling and is also dynamic as focus is on customer rather than product. While selling revolves around tile needs and interest of manufacturer or marketer, marketing revolves around that of consumer. It is whole process of meeting and satisfying needs of consumer. Marketing consists of all those activities that are associated with product planning, pricing, promoting and distributing product or service.

The task of marketing commences with identifying consumer needs arid does not end till feedback on consumer satisfaction from consumption of the product is received. It is a long chain of activity, which comprises production, packing, promotion, pricing, distribution and then selling. Consumer needs become guiding force behind all the activities. Profits are not ignored but they are built up on a long run basis. Mind share is more important than market share in Marketing. According to Prof. Theodore Levitt ' difference between selling and marketing is more than semantic. A truly marketing minded firm tries to create value satisfying goods and services which consumers will want to buy. What is offered for sale is determined not by seller but by buyers. Seller takes his cues from buyer and the product becomes consequence of marketing effort, not vice versa. Selling merely concerns itself with the tricks and techniques of getting customers to exchange their cash for company's products, it does not bother about value satisfaction that the exchange is all about. On contrary, marketing views entire business as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs.