UNIT - I

INTRODUCTION TO MARKETING

In the initial stages, trade was simply a barter system. During this period, local
markets developed. Goods were brought to these markets from near-by places for sales.
The difficulties experienced under the barter system induced the people to think about a
common medium of exchange. Various kinds of metals like gold, silver, copper etc. were
introduced as a medium of exchange. The appearance of money quickened the phase of
trade, which is the heart of marketing.

ORIGIN OF MARKETING

Hundred years ago, most firms were production oriented, i.e., the manufacturers
focused on production of quality products and then looked for people to purchase them.
With the advent of Industrial Revolution and technological transformation, the emphasis
shifted to an effective sales force to final customers for their growing output. After 1950,
the shift to marketing was so emphatic that the manufacturers first took into consideration
the customers’ wants and then manufactured their goods accordingly.

CONTRIBUTIONS TO THE DEVELOPMENT OF MARKETING THOUGHT

Marketing has come a long way from being recognized as a function of an

organization in India. Marketing is such a type of function that is used by all types of
organizations. Marketing is used for customer satisfaction and customer services play a
vital role in the economy. The following persons contributed to the development of
marketing thought.
1920 - Cherington
1951 - Alderson
1954 - Drucker
1956 - Hensen
1960 - Levitt
1960 - McCarthy
1969 - Kotler and Levy
1980 - Porter
1982 - Peters and waterman

WHAT A MARKET IS?

The term market is derived from the Latin word “Marcatus” which means
merchandise, trade or a place where actual buying and selling take place or where buyers
and sellers personally meet together to effect purchases and sales.
 MARKET COMMUNICATIONS
COMMMMMCOMMUNICATIONS

MARKET
THE CIRCLE BODY OF
BODY OF OF BUYERS
SELLERS EXCHANGE

FEEDBACK INFORMATION
SATISFACTION
DISSATISFACTION

TYPES OF MARKETS

1) On the basis of selling area, local, national and international markets.

2) On the basis of article of trade, product markets, e.g., cotton market, bullion market.
3) On the basis of nature of exchange dealings, spot or cash market and futures or
forward market.
4) On the basis of nature of goods sold consumer goods market and industrial goods
market.
5) On the basis of period, short term markets and long term markets.
6) On the basis of nature and magnitude of selling, we have wholesale and retail
markets.

MEANING OF MARKETING

The term ‘marketing’ can be defined from two viewpoints – micro and macro,
i.e., firm’s point of view and national point of view.
MICRO MARKETING: The concept of micro marketing reveals two significant aspects. First,
marketing must ensure need satisfying goods and services. It should begin with the
customer and not with the production process. Secondly, marketing rather than
production should determine what products are too made.
MACRO MARKETING: Marketing may be viewed as a complex system of organizations and
processes by which a nation’s resources are distributed among the people to satisfy their
needs and wants. Here the focus is on the total system rather than on the activities of an
individual firm.
(a) Information function: Under an efficient marketing system, there should exist a
network of information that links together producers and consumers. For example, it is
often complained that producers of agricultural products do not know what the market
will pay for the product when harvested. Further, lack of information on supply and
demand makes the product dear in some places and cheap in some other places. This
causes losses to not only sellers but the buyers as well.
(b) Equalising and Distribution Function: There is always an imbalance supply and
demand for products. Adjustments are required in holding stock and their equitable
releases geographically and at required times. It is true that in such cases, transport costs
and it storage costs are incurred but the price varies. An efficient distribution system is
also capable of maintaining price stability in the long run showering advantages on
buyers and sellers as well.
( c) Centralised Exchange Function: Markets tend to be mainly physical locations called
central markets, where buyers and sellers meet face to face and exchange goods and
services. They may need middlemen/intermediaries, as the producers may not be able to
ensure supply throughout.

DEFINITION OF MARKETING

The American Marketing Association (AMA) defines marketing as “the

performance of business activities that direct the flow of goods and services from
producer to consumer or user”.

IMPLICATIONS OF MARKETING
• Who are our existing / potential customers?
• What are their current / future needs?
• How can we satisfy these needs?
Can we offer a product/ service that the customer would value?
• Can we communicate with our customers?
• Can we deliver a competitive product of service?
• Why should customers buy from us?

FEATURES OF MARKETING

The main features of modern marketing are as follows:

(a) Marketing is consumer-oriented
(b) Marketing starts and ends with the consumer
(c ) Modern marketing precedes and Succeeds production
(d) Modern marketing is the guiding element of business
(e) Marketing is a science as well as an art
(f) Marketing is a system
(g) Marketing process is the essence of marketing
(h) Marketing is goal oriented
(i) Marketing is a process
OBJECTIVES OF MARKETING

(a) Profit-maximization is another objective of marketing. If the firm fails to earn decent
profits, its very existence itself may be handicapped. Some authorities consider profit as
only an incentive but not an objective.
(b) Successful distribution of products is another notable objective of marketing.
Effective distribution refers to the free flow of goods and services to the consumers.
IMPORTANCE OF MARKETING

Benefits to the Society

a) Delivers the Standard of living : Both production and sales on mass scale bring down
the cost of production and increase the amount of profit. Besides, the consumers are also
benefited by getting a variety of goods at a lower price. Lower price results in larger
consumption by more consumers and thereby their standard of living is increased.
b) Connects the Producers and Consumers: The very object of production is
consumption. The producers produce goods and services for selling. Therefore, they
should get in touch with the consumers who require such goods and services. Similarly,
the consumers should also know the sources of supply.
c) Increases the National Income: The national income of a country is composed of the
purchasing power i.e., what money can buy in terms of goods and services Effective
marketing reduces the distribution costs and thereby lower the prices. Lower prices to
consumers mean more purchasing power, which in turn means an increase in the national
income.
d) Provides Employment Opportunities: Effective marketing results in large-scale
production, which in turns creates more employment in the production process. In our
country, the business establishment rank next to agriculture in providing employment
opportunities.
e) Helps to maintain Economic Stability: As observed by a classical economist,
“Nothing happens in our economy until somebody sells something”. Therefore,
marketing is the mainspring of all economic activities. Besides, the economic activities
must be stable and free from fluctuations, especially in price. Effective marketing system
enables to maintain the price level stable by equating demand and supply.
Benefits to the Firm
As observed by Stanton, “Marketing is the beating heart of many operations of the
firms”.
a) If the marketing function is not effective, the whole organization will be put into
trouble.
b) It creates revenue to the firm. Without this revenue, no production process is possible.
Besides, the firm itself cannot grow.
c) The marketing organization provides a channel of communication between the firm
and the consumers. It is continuously furnishing information about the consumers,
demands, tastes and preferences to the top managements.
d) It helps the producer’s increase the volume of sales. Large scale implied more
production and more profit. More production also helps to lower the production and
marketing costs.
DIFFERENCES BETWEEN

a) Market, Marketing and Marketers

A market, colloquially, is a group of people who are willing to buy something.
There is a "market" for dishwasher soap.

Marketing is the process of trying to get this group of people interested in buying
something to buy YOUR thing - e.g., to buy your particular brand of dishwasher soap.

Marketers (those who practice marketing) try and figure out what's going on in the minds
of those who are buying, say, dishwasher soap and use a lot of psychology to try and
convince these people that a certain brand is much better / safer, even when in reality
only small differences exist.

b) Customer and Consumer

Customer means who purchases the product from the marketer, from the retailer,
or from the wholesaler. Here we do not brother about who uses the product.
Consumer means who uses the product of course purchased by the customer or
proscpet.here we consider finally who is going to use the product we call them as
consumer.

c) Marketing and Selling

SL .
NO. MARKETING SELLING
1 Focuses on customer’s needs Focuses on seller’s needs
2 Customer enjoys supreme Product enjoys supreme importance
importance
3 Product planning and development High pressure selling to sell goods already
to match products with markets produced
4 Integrated approach to achieve Fragmented approach to achieve immediate
long –term goals gains
5 Converting customer needs into Converting products into cash.
products
6 Caveat Vendor (let the seller Caveat emptor (let the buyer beware)
beware)
7 Profits through customer Profits through sales volume
satisfaction

APPROACHES TO THE STUDY OF MARKETING

a) Product or Commodity Approach – The marketing system is examined for each one
of the specific commodities. In other words, specific commodities are selected and they
are closely followed to see how it reaches the consumer from the producer. For instance,
if we want to study the marketing of cotton, we should begin with the study of the
sources of supply of cotton, the volume of demand, the mode of transportation involved,
the problems of storage, the intermediaries in the channels of distribution, etc.
Merits
1. It is a simple method to follow
2. It is a concrete method. It gives concrete results.
Demerits
1. This method is repetitious because it repeats all the operations of marketing for every
product.
b) Institutional Approach – I t mainly deals with the functions of intermediaries like
wholesalers, retailers, etc. Hence, this approach is also known as Middlemen Approach.
Merits
1. This approach considers the operation of various intermediaries involved in the
marketing system. Hence, it is a practical approach.
Demerits
1. This method fails to explain the interrelations of the various institutions.
2. It is inadequate, in the sense that it is more descriptive but not analytical.
c) Functional Approach – The functional approach splits down the field of marketing
into a few functions such as buying, selling, transportation, storage, standardization,
grading, financing, risk-taking and marketing research, etc Each function is analyzed one
after another, and its nature, need , importance, etc., are ascertained.
Merits
1) This approach is quite useful in the sense that it gives a very clear picture about the
various functions of marketing.
Demerits
1) It fails to explain how such functions are applied to the specific business operations.
2) This approach is also repetitive to some extent.
d) Decision Making or Management Approach- The changes in marketing are mainly
due to two factors: controllable and uncontrollable. Under this approach, the marketing
managers should study both the factors and should take proper decisions so that
controllable factors can be adjusted to suit the situation caused by uncontrollable factors.
e) Legal Approach – Marketing includes all activities having to do effective changes in
ownership and possession of goods and service. There are numerous enactments passed
in our country, which regulate or, largely, control marketing activities. For example,
Common Carriers Act, Sale of Goods Act, etc.
f) Economic Approach – Marketing is that part of economics, which deals with the
creation of time, place and possession utilities. Place Utility is created by making the
goods and services available to the consumer at the place where such goods are needed.
Time Utility is created by making the goods available at the time when they re needed.
Possession utility is created by transferring the goods to those who need them. It is true
that value and price, and demand and supply factors are important in market mechanism.
However, such an approach alone is incapable of giving the whole idea of marketing.
g) System Approach –Business as a whole is a body, but is composed of separate
functional areas, such as, production, engineering, personnel, marketing, etc. These
functions could be split down further into still smaller parts (sub-sub-systems).
Accordingly, marketing has product planning, pricing, promotion, distribution, etc., as
sub-sub-systems. Each of these functions is independent but they are interdependent also.
They continually interact to achieve the aim of the system as a whole.

WHO PERFORMS THE MARKETING FUNCTIONS

Only the intermediaries who constitute the channels of distribution perform

marketing functions. They are called marketing institutions. They may be individuals,
firm or companies.
However, it should be remembered that marketing functions could also be
performed by the manufacturers and even by the consumers under certain circumstances.

FUNCTIONS OF MARKETING

Exchange Functions: All companies – manufacturers, wholesalers, and retailers – buy

and sell to market their merchandise.
1. Buying includes obtaining raw materials to make products, knowing how much
merchandise to keep on hand, and selecting suppliers.
2. Selling creates possession utility by transferring the title of product from seller to
customer.
Physical Distribution functions: These functions involve the flow of goods from
producers to customers. Transportation and storage provide time utility, place utility, and
require careful management of inventory.
3. Transporting involves selecting a mode of transport that provides an acceptable
delivery schedule at an acceptable price.
4. Storing goods is often necessary to sell them at the best selling time
Facilitating Functions: These functions help the other functions take place.
5. Financing helps at all stages of marketing. To buy raw materials, manufacturers often
borrow from banks or receive credit from suppliers. Manufacturers may finance
wholesalers, and retailers may receive financing from the wholesaler or manufacturer.
Finally, retailers often provide financing to customers.
6. Standardizing sets uniform specifications for products or services. Grading classifies
products by size and quality, usually through a sorting process. Together, standardisation
and grading facilitate production, transportation, storage and selling.
7. Risk-taking even though competent management and insurance can minimize risks –
is a constant reality of marketing because of such losses as bad-debt expense,
obsolescence of products, theft by employees, and product-liability lawsuits.
8. Gathering market information is necessary for making all marketing decisions.

HOW CONSUMER SATISFACTION LEADS TO BETTER SALES

Every consumer has certain wants and needs and a strong desire to satisfy them.
To satisfy his wants, the consumer purchases certain goods under the impression that the
goods would satisfy his wants. If the product satisfied his wants, the consumer shall
become the customer of the firm and tell about the product to his friends and others. In
this process, he advertises the product. This consumer advertising improves the
effectiveness of the manufacturers advertising and other sales efforts. Such factors finally
lead to better volume of sales.
 On the other hand, if he is dissatisfied, he may switch over to some other product
of the competitor. Further, he will propagate his dissatisfaction to others and thereby
prevent others from consuming the product. This in turn results in lesser volume of sales.
A fall in the sales will lead to lower profit or even to a loss. Finally, it may lead to the
closure of the business unit.

EVOLUTION OF MARKETING CONCEPT

The modern concept of marketing is not the result of a sudden change in the
process of thinking of the business managers. It is the result of the changing situation,
which compelled the business people to give an important place to the consumer and his
wants. The change in the line of thinking took place after passing several stages.
(a) Self Sufficient Stage: In the earlier days of human history, each family was self-
sufficient. They produced what they wanted to consume and practically no surplus was
available to initiate the process of exchange. Hence, it may be stated that the concept of
marketing was absent in this stage.
(b) Exchange-Oriented Stage: When the people began to realize the importance and uses
of division of labour specialization, the next stage i.e., exchange oriented stage came into
being. The barter system was prevalent in those days. Competition was totally absent in
those days. With the invention of money, many problems connected with the exchange of
goods and services were solved largely. This is the first stage in the evolution of
marketing.
(c) Production-Oriented Stage: (“Make what you know how to make”). The next stage
came with the dawn of the Industrial Revolution. It was believed that if the product is of
quality and priced reasonably, nothing would prevent the producer’s from achieving
satisfactory sales and profit. This also led to a wrong belief that proper and timely
communication to the buyer was not an inevitable adjunct in the process of selling. It
appears that producers gave more emphasis to production rather than consumption as the
ultimate end and objective of trade and commerce.
(d) Sales Oriented Stage: At this stage everyone started realizing the purpose and
importance of marketing. It assumed that consumers would normally not buy enough
unless approached with a substantial selling and promotional effort. Under this concept,
the greater emphasis was on increasing the sales than on customer satisfaction. This was
possible then, because the demand usually outstripped supply.
(e) Marketing-Oriented Stage: As the consumers, demand and the production capacity of
the manufacturers came into equilibrium, the producers were forced to re-think over the
philosophy of marketing. Further, the evil effects of competition made the producers
realize that the product could not be sold without an effective sales force. It was thus
formally approved that “the aim of marketing is to know and understand the customer so
well that the product or service fits him and sells itself.
(f) Consumer-oriented Stage: During this stage it was realised that measuring consumer
needs or behaviour alone was not enough. Consumer satisfaction should be the real and
correct perspective on which marketing policies of an organization should be built.
(g) Management-Oriented Stage: As consumer orientation became an accepted
marketing philosophy, the entire business philosophy underwent a subtle change. Today,
marketing considerations are most crucial in business planning and decision-making.
CHANGING CONCEPTS IN MARKETING OR PHILOSOPHIES OF MARKETING
MANAGEMENT

(a) The Production Concept: “consumers will favour those products that are widely
available and low in cost. Managers of production oriented organizations concentrate on
achieving high production efficiency and wide distribution coverage.
(b) The Product Concept: The product assumes that the consumers will respond favorably
to quality goods that are reasonably priced and therefore little marketing efforts are
sufficient.
(c) The Selling Concept: The selling concept assumes that consumers will normally not
buy enough products of a firm unless the firm takes substantial selling and promotional
efforts.
(d) The Marketing Concept: The marketing concept provides that the main task of every
business enterprise is to determine what the consumers want and to adjust its production
to deliver the goods, which can effectively create the desired satisfaction.
(e) The Societal Marketing Concept: This concept holds that the main task of the business
is to generate consumer satisfaction and long-run consumer and public welfare.
(f) Holistic Marketing Concept: This concept is based on the development, design and
implementation of marketing programs, processes and activities that recognizes their
breadth and interdependencies. An approach attempts to recognize and reconciled the
scope and complexities of marketing activities. The dimensions of holistic marketing are.

INTERNAL
INTEGRATED
MARKETING
MARKETING
Senior Management
Communications
Marketing Department
Products& Services
Other Departments
Channels

HOLISTIC
MARKETING

PERFORMANCE
MARKETING RELATIONSHIP
Sales revenue MARKETING
Brand& Customer equity Customers
Ethics, Community Channels
Environement , legal Partners
RECENT INNOVATIONS IN MODERN MARKETING
(a) Conversional Marketing: It refers to the conversion of a negative demand into a
positive demand which all or most of the potential buyers dislike the firm’s product or
indifferent towards the services rendered by the firm. Negative demand applies to many
products and conditions. For example, vegetarians have a negative demand for meat.
Many travelers have a negative demand for air travel.
(b) Simulation Marketing: This is the process of creating a demand for a product, which
has no demand. No demand is a state in which all the prospects are uninterested or
indifferent to a particular product. However, this is a rare condition. If such a condition
prevails, the marketer should experience much difficulty even to start with.
(c) Developmental Marketing: It refers to the conversion of the latent demand into actual
marketing. Latent demand refers to a state when a substantial number of prospects have a
strong desire or need for something or quality that does not found or exist in the actual
product. In this state, the marketer has an opportunity of developing the product
incorporating all the qualities in the product needed by the prospects.
(d) Remarketing: Remarketing takes the form of finding or creating new uses of users for
an existing product. For example, Nylon, which originally had an end use for making
cloth and hosiery. Banking soda now finds uses as cleansing and deodorizing agent, etc.
Thus, in real sense marketing is a method by which new type of satisfactions are created
for old products.
(e) Over marketing: It constitutes the striving by a firm to generate increased sales while
neglecting quality control, production efficiency and / or cash flow management. An
example of over marketing is found in the U.S. auto industry. Since the advent of
Japanese imported cars, American auto companies escalated advertisements to protect
themselves from the foreign competition. BY neglecting to make the car more fuel
efficient, quieter and less susceptible to repairs, they failed to take advantage of the
growth opportunities.
(f) Meta marketing: The word ‘meta’ is being used to mean ‘beyond’ as in metaphysics.
This concept is developed, as the marketing appears to be moving towards broader
horizons. The concern of meta-marketing is to focus all scientific, social, ethical and
managerial experiences on marketing.
(g) Synchro marketing: The process of converting an irregular demand into a regular
demand is known as synchro marketing. For instance, hotels in hilly stations are over
booked in hot summer and less booked or even unbooked in other seasons, cool drinks
and electric fans have a higher demand during summer and no demand during rainy
seasons.
(h) De marketing: A situation, which may come about because of temporary shortages
occasioned by short-term excess demand for a company’s products. Demarketing has
become the declared policy of an increasing number of oil-exporting countries. The
reasons are:
 Greater revenues
 Conservation of resources
 Speedy development of alternative sources of supply
 More control and powers
  Political gains
(i) Counter marketing: The task of trying to destroy the demand for a product is called
counter marketing or unselling. Classic examples are alcohol, cigarettes, etc. However,
the producers generally take this measure only when the government prohibits or bans the
production of such goods.

DEFINTION OF MARKETING MANAGEMENT

According to Philip Kotler, “Marketing Management is the analysis, planning,

implementation and control of programmes designed to bring about the desired exchange
with target markets for the purpose of achieving organizational objectives. It relies
heavily on designing the organizations offering in terms of the target market’s needs and
desires and using effective pricing, communication and distribution to inform, motivate
and service the market”.

PROBLEMS OF MARKETING MANAGEMENT

(a) Lack of Marketing Personnel: The non-availability of sufficient number of well-

trained, efficient and experienced marketing personnel is an important hurdle in the way
of marketing management in India.
(b) Lack of Marketing Research: There is a great need of marketing research both for the
development of internal and international trade. Only a very little has been done in India
in this field. Thus, lack of marketing Research is another hurdle in the way of marketing
management in India.
(c) Absence of Scientific Product Planning: Product planning is the act of markeing out
and supervising the search, screening development and commercialization of new
products, the modification of existing lines and the discontinuance of marginal or
unprofitable items. However, in India, only very little attention is paid towards product
planning.
(d) Marketing Costs: Cost of marketing the products such as cost of conducting
marketing research, cost of promotional activities, packaging and selling expenses are
constantly increasing. For the proper development of marketing management, marketing
costs should be kept within the control.

MARKETING MANAGERS’ RESPONSIBILITY

His responsibilities are:

1. To find out marketing opportunities

2. To improve marketing plan, procedures, etc.
3. To develop new innovations, product, market discovery etc.,
4. To develop the sales force
5. To have constant touch with the market-business research.
6. To avail of resources to be utilized effectively.
7. To interpret the market situations
8. To adopt the most profitable and desirable channels of distribution
9. To supervise and control the various departments under him.
 10. To develop the existing market.
11. To review marketing programs for improvement, if needed.
12. To control the marketing costs
13. To exercise effective account of advertising
14. To forecast effectively and profitably
15. To adopt sound pricing policy for competing in market. In consultation with other
top members.
16. To keep sufficient inventory to meet demand
17. To maintain good relation with customers, consumers, etc.
18. To create good inter-relationship within the firm
19. To facilitate growth and diversification of products.
20. To evaluate the effectiveness of management performance.

LAYOUT OF TYPICAL FUNCTIONAL MARKETING ORGANIZATION

CEO, PRESIDENT OR MANAGEING DIRECTOR

MARKEITNG MANAGER/ DIRECTOR

Product or Brand Consumer Relations

Sales Manager Manager Manager
Marketing manager 1. Sales Campaigns
1. Production Group To attend complaints
services 2. Management of 2. Product Group and grievances
1.Mktg. planning sales force
2.Mktg.Information
3.Mktg.Intelligence Manager Physical
4. Mktg., Research Distribution
1. Distribution channels
2. Transport
Advertising Manager 3. Warehousing
1. Advertising 4. Inventory Control
2. Sales Promotion 5. Packaging
3. Publicity 6. Order processing
4. Public Relations 7. Material Handling
5. Exhibitions and 8. Customer Service
show rooms

MARKETING MANAGEMENT PROCESS 2. Product Group

The marketing management process involves the following stages:

1. Scanning the Environment
2. Analysing Marketing Opportunities
3. Designing Marketing Strategies
4. Implementing and Controlling Marketing Practices
MARKETING MIX

The marketing mix is probably the most famous marketing term. Its elements are the
basic, tactical components of a marketing plan. Also known as the Four P's, the
marketing mix elements are price, place, product, and promotion.
The concept is simple. Think about another common mix - a cake mix. All cakes contain
eggs, milk, flour, and sugar. However, you can alter the final cake by altering the
amounts of mix elements contained in it. So for a sweet cake add more sugar!

Some commentators will increase the marketing mix to the Five P's, to include people.
Others will increase the mix to Seven P's, to include physical evidence(such as uniforms,
facilities, or livery) and process (i.e. the whole customer experience e.g. a visit the
Disney World). The term was coined by Neil H. Borden in his article The Concept of the
Marketing Mix in 1965.

PRODUCT: The management should first decide the product, which the firm should
produce. It should produce only those products, which can be marketed. It may offer a
single product or several products. The management should also revise the product
design; make improvements in the products frequently to suit the changing tastes and
preferences of the consumers. In short, product mix requires decisions with regard to (a)
size and weight of the product (b) quality of the product (c) design of the product (d)
Volume of output (e) brand name (f) packaging (g) product range (h) product testing (i)
warranties and after sales services, etc.
PRICE: Pricing decisions and policies have a direct influence on sales volume and
profits of business. Price is therefore, a important element in the marketing mix. A lot of
exercise and innovation is required to determine the price that will enable the firm to sell
its products successfully. Demand, cost, competitions, government regulation, etc. are the
vital factors that must be taken into consideration in the determination of price. Price mix
involves decisions regarding base price, discounts, allowances, freight payment, credit,
etc.
PROMOTION: Promotion component of the marketing mix is concerned with bringing
products to the knowledge of customers and persuading them to buy. Promotion mix
involves decisions with respect to advertising, personal selling and sales promotion.
Growing competition and widening market have made simultaneous use of more than one
promotional method all the more necessary. There is no one ideal promotional mix that
fits all situations. While devising a promotional mix nature of product, type of customers,
the promotion budget, stage of demand, etc. should be taken into consideration.
PLACE: Marketing channel policy is another integral part of the marketing mix. The
management should select the channels through which the product should reach the target
market at the right time. Other aspects such as physical handling, transporting and their
financial considerations should be taken into account.

Economic forces

Product
Competitive Political
forces forces

Price Customer Place

Promotion Legal and

Regulatory
Socio-cultural forces
forces Technological forces

FACTORS AFFECTING MARKETING MIX

I . FACTORS AFFECTING THE MARKET

(a) Consumer’s Behaviour : The consumer’s behaviour is determine by his
motivation in purchasing, buying habits, living habits, buying power, social environment,
etc. Technical and socio-economic development of the society also bring changes in the
consumer’s behaviour.
(b) Trade’s Behaviour : This includes the behaviour of intermediaries in the
distribution channel like wholesalers and retailers. Their motivation, structure, practices
and attitudes shall also affect the marketing of the goods and the volume of sales.
(c) Competitor’s Behaviour : Competition is another factor affecting the price and
demand for the product.The major factors included in the competitor’s behaviour are:
1. Size and strength of the competitors
2. Number of competitiors
3. Direct and indirect comprtition.
4. Relation to supply and demand.
5. Product choices offered to the consumers
6. Their motivation and attitudes, the degree of competition on price
 7. Trends, technological and social changes affecting demand and supply.

(d) Governments Behaviour: The policies of the Government and changes in them
are beyond the control of the firm. The management should consider the Government
laws and policies while formulating the marketing mix.

II. FACTORS AFFECTING THE PRODUCT

(a) Product planning: To identify the consumer group and to satisfy their wants in
a better way, it is necessary to plan the product efficiently. It includes the type, deign,
quality of the product, market segmentation, the volume, time and place of the sale,
product research etc.
(b) Branding: Formulation of brand policies, deciding about the trademark and
popularizing the brands are some of the vital aspects of brand decision.
(c) Packing: The firm should also consider the packing policy of the firm after
determining its objectives and economies.
(d) Personal Selling: If the firm is going to adopt the system of personal selling, it
will also affect the marketing programme.
(e) Advertising: Advertising policy of the firm, its role in the programme for sales
promotion, formulation of advertisement copy, media of advertising, cost of advertising,
etc. are some of the important aspects of this variable.
(f) Sales Promotion: Management should chalk out the programme for sales
promotion for customers and dealers separately and manage the exhibition and displays,
etc.
(g) Physical Distribution: the marketing manager should also decide the system of
physical distribution, and policies relating to warehousing, regional sales depots,
transport media should be adjusted according to the marketing programme of the business
firm.
(h) Market Research: The collection of reliable date relating to markets, their
analysis etc., should also considered while formulating the marketing mix.

MARKETING SYSTEM

Marketing system is an interacting set of institutions, activities and flows

designed to facilitate exchange transactions between organizations (business or non-
business) and its market. In simple words, the exchange takes place between two parties
is known as the marketing system.

MARKETING PROCESS

1. Concentration: Concentration is the first process of marketing. Concentration denotes

bringing the goods at a single point, to make possible convenient and economical
distribution. In other words, collection of goods for the purpose of distribution is known
as “concentration”. It involves purchasing, storage, grading, transportation, financing and
risk bearing.
2. Dispersion: Dispersion means dispersing the goods to the needed persons. Some of the
products are dispersed to manufacturers and the others are dispersed to the ultimate users.
The wholesalers who first involved in the work of storing and then sell to the retailers in
small amount do this work. Finally, retailers it finally reaches the ultimate users.
Dispersion involves other supporting activities like sale, storage, classification, grading,
transportation, financing, risk bearing etc. Dispersion is essential because the buyers are
not located near the enterprise.
3. Equalisation: The activity that occurs between the activities of concentration and
dispersion is known as equalization. Equalisation refers to the adjustment of supply to
demand on the basis of time, quantity and quality. The main objective of equalization is
to ensure regular supply of goods that are produced in a particular season, but consumed
throughout the year. For instance, paddy, wheat. Some kinds of goods have demand only
during a particular season, but production takes place continuously. For example
raincoats, umbrella, etc. Thus, equalization ensures regular supply.

DEFINITION OF MARKETING ENVIRONMENT:

“A company’s marketing environment consists of the factors and forces that

affect the company’s ability to develop and maintain successful transactions and
relationships with its target customers”.
- Philip Kotler

VARIOUS ENVIRONMENTAL FACTORS AFFECTING THE MARKETING

FUNCTION

The environment may be classified into two namely, external and internal. The
internal factors are inherent in the organization and are controlled by management.
The external forces which cannot be controlled by the management.

The marketing environment surrounds and impacts upon the organization. There
are three key perspectives on the marketing environment, namely the 'macro-
environment,' the 'micro-environment' and the 'internal environment'.