UNIT - VII

WHAT IS MARKETING?
Marketing is defined as the process of determining the needs and wants of consumers and
being able to deliver products that satisfy those needs and wants. Marketing includes all
of the activities necessary to move a product from the producer to the consumer. Think of
marketing as a bridge from the producer to the consumer.
Marketing starts with market research, a learning process in which marketers get to know
everything they can about the needs and wants of consumers, and it ends when somebody
buys something. Many companies feel that services provided to customers after the
purchase also are an important part of marketing. All of these enterprises - production,
advertising, transportation, processing, packaging, and selling -are included in the
marketing process.
THE NINE FUNCTIONS OF MARKETING
In order for the marketing bridge to work correctly - providing consumers with
opportunities to purchase the products and services they need -- the marketing process
must accomplish nine important functions.
The functions are:
Buying - people have the opportunity to buy products that they want. Selling - producers
function within a free market to sell products to consumers.
Financing - banks and other financial institutions provide money for the production and
marketing of products.
Storage - products must be stored and protected until they are needed. This function is
especially important for perishable products such as fruits and vegetables.
Transportation -products must be physically relocated to the locations where consumers
can buy them. This is a very important function. Transportation includes rail road, ship,
airplane, truck, and telecommunications for non-tangible products such as market
information.
Processing - processing involves turning a raw product, like wheat, into something the
consumer can use -- for example, bread.
Risk-Taking - insurance companies provide coverage to protect producers and marketers
from loss due to fire, theft, or natural disasters.
Market Information - information from around the world about market conditions,
weather, price movements, and political changes, can affect the marketing process.
Market information is provided by all forms of telecommunication, such as television, the
internet, and phone.
Grading and Standardizing - Many products are graded in order to conform to
previously determined standards of quality.
THE FOUR UTILITIES OF MARKETING
The marketing process must also add "utility" to the products consumers want. Utility is
the use or satisfaction a person gets from a product. If you purchase a chain saw you
anticipate that you will receive a certain amount of utility from it. You will be able to use
the saw to cut fire wood, prune trees, and take care of a variety of jobs around your home.
There are four types of utility.
Form Utility - a product must be processed into a form that the customer wants or needs.
For example, wheat is processed into bread, trees are processed into lumber, and potatoes
are processed into french fries. If you ordered french fries with your lunch and the waiter
brought you a raw potato, you probably wouldn't be too happy.
Place Utility - place utility involves transporting products to the location where
consumers can buy them. If you live in Alaska, you certainly wouldn't want to have to
drive to California to buy oranges. Thanks to our modern transportation systems you
don't have to; you simply drive to the local grocery store and oranges are there ready to
add to your shopping cart -- place utility that helps add Place Utility to products.
Possession Utility - possession utility establishes legal ownership of a product. When
you purchase something you normally receive a receipt; this provides legal ownership
and the right to use the product. Some products, computer software, for example, also
provide a user license. A license of this kind gives you the right to use the product within
certain guidelines Stocks prove that you own part of a company. This is an example of
Possession Utility.
Time Utility - this could be described as being in the right place at the right time when a
customer is ready to purchase a product. Creating and keeping customers means having
products available for when they want them, and often this requires some type of storage
facility. Wheat is one example of a commodity that must be stored after it is harvested. It
is stored in silos until processors are ready to convert it into food products such as bread
or cereals.
A silo is used to store grain products like wheat. This allows the product to be used by
people when they need it; an example of Time Utility.

Market segmentation
It is separating a market into distinct groups of potential consumers who share common
characteristics and interests and who are likely to be attracted to particular products or
services. Segmentation allows you to develop products and plans which fit the needs of
customers more efficiently. Market segmentation is also separating the customers into
different groups, and sometimes can split up into different age groups because different
age customers are interested in different things from the business. Market segmentation is
a marketing approach that encompasses the identification of different groups of
customers with different needs or responses to marketing activity. The market
segmentation process also considers which of these segments to target.
Market Segmentation is defined as the process of splitting customers, or potential
customers, in a market into different groups, or segments, within which the customers
share a similar level of interest in the same or comparable sets of needs satisfied by a
distinct marketing proposition; it is also explained as a marketing technique that targets a
group of customers with specific characteristics, i.e. a particular group that has its own
distinct customer profile and buyer characteristics so that for marketing purposes, it can
be targeted separately from other segments of the market.
It is a key ingredient for successful marketing as it simplifies the targeting, positioning
and the planning process. Wikipedia explains Market Segment as a sub-group of people
or organizations sharing one or more characteristics that cause them to have similar
product needs.
A true Market Segment meets all of the following criteria: it is distinct from other
segments (heterogeneity across segments), it is homogenous within the segments
(exhibits common attributes), it responds similarly to a market stimulus and it can be
reached by a market intervention. Market Segmentation simplifies the firm’s product,
pricing, promotion and distribution strategies and also facilitates planning and organizing
function of management more easily and cost effectively; but it requires a thorough
understanding of the customers needs. It is referred as a tool for defining markets and
thereby allocating resources; it uses statistical techniques called factor analysis and
cluster analysis to combine attitudinal and demographic data to develop segments that are
easier to target.
Market Segmentation can be done on the basis of the location (Geographic
Segmentation); on the basis of age, income, gender and other measurable factors
(Demographic Segmentation); on the basis of lifestyle, likes, dislikes, taste and
preferences (Psychological Segmentation); and according to the history, loyalty and
responsiveness (Behavioral Segmentation).
A business must analyze the different needs of the market segments; their internal
strengths and weaknesses; external opportunities and threats; and various others factors
like the mission, vision, values, beliefs, attitudes, norms and standards of the
organization; as well as the competitors strategy, social and cultural factors, economic
environment, global perspective, demographic environment, technological and political /
legal aspects before deciding their own niche.

Philip Kotler mentioned five criteria for an effective segmentation which states that
Segmentation should be: -

1. Measurable: - it should be possible to determine the values of the variable used for the
segmentation.
2. Relevant: - it should justify the expected profits and the growth potential.
3. Accessible: - the target customers must be reachable and servable for the organization.
4. Distinguishable: - the target audiences must be diverse and able to show different
reactions to different marketing mix.
5. Feasible: - the firm must have an ability to draw an effective marketing program for its
customers.
The following are the advantages of Market Segmentation for a firm:
a) Helps in better understanding of the customers’ needs and wants. b) Better targeting
and position of the product. c) Encourages two-way communication among the potential
buyer and the organization. d) Maintaining effective relationship with the customers. e)
Retaining the existing customers and attracting new ones. f) Improving service delivery
standards. g) Reducing cost / expenses on various marketing activities and increases
market share; resulting in higher profits.
Finally, Market Segmentation is rightly referred as a marketing term referring to the
buyers into groups (segments) that have common needs and will respond similarly to a
marketing action, it is an identifiable group of individuals, families, firms, or
organizations, sharing one or more characteristics or needs in an otherwise homogenous
market. Market Segmentation generally responds in a predictable manner to a marketing
or promotional offer.
“As the burring of distinctions among firms increases in electronic markets, survival
requires identifying your unique role in the market place in terms of value to the
customers” – Kalakota and Whinstone.