What is Marketing?
Marketing is a process of promoting the buying and selling of a product or service. The term ‘marketing’ has been defined in different ways by different people. Some consider marketing as a business activity, while some believe marketing is a coordinated and integrative effort, a process of adjusting demand and supply.
Table of Contents
- 1 What is Marketing?
- 2 Marketing Definition
- 3 Basic Terminology in Marketing
- 4 Evolution of Marketing
- 5 Objectives of Marketing
- 6 Nature of Marketing
- 7 Characteristics of Marketing
- 8 Scope of Marketing
According to the American Marketing Association (AMA), marketing is “the performance of business activities that direct the flow of goods and services from producer to consumer or user.”
As per Philip Kotler, “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with other.”
The traditional concept of marketing focuses on selling goods and services which are already produced by the organisation. Marketing activities are concerned with persuading consumers and selling goods and services with least attention towards consumer satisfaction. It emphasises on the selling philosophy by creating a separate department for maximising the sales volume.
On the other hand, as per the modern concept of marketing, consumer wants and needs are the guiding spirit for any organisation. It starts with identifying the needs of consumers and then planning the product or service in such a manner that it satisfies the consumers at the maximum level.
A consumer is the focal point of all marketing activities. The modern concept uses various concepts, such as marketing research, market targeting, product development, public relations and market communication, to achieve its objective of consumer satisfaction.
Basic Terminology in Marketing
Marketing is an activity that is concerned with meeting and satisfying the needs and demands of customers; thereby, building long- term relationships with customers.
In the words of Philip Kotler, a renowned Management Consultant, Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging product and value with others.
Before understanding the concept of marketing in detail, let us first explain the terminologies associated with marketing, in the next sections.
Needs, Wants and Desires
For any small or large organisation, the most important question to answer is “what do the customers want?” This question can be answered by understanding the needs, wants and demands of customers. Needs, wants and demands are a basic part of the marketing principles. Sometimes, these three terms are used interchangeably; however these three terms have different implications. Let us delve into the details of each of these three terms one by one.
A need refers to an individual’s basic requirement. The fundamental needs of a human include food, clothes and shelter. Humans cannot survive if these needs are not fulfilled. These needs are not created; rather they exist automatically in every human.
Also the fact that human needs go beyond fundamental needs. There can be needs for education, healthcare, insurance, pension, etc. However, needs are not physical rather they can be social and individual. Some of the needs of humans are:
- Basic physical needs include food, shelter, clothing and safety.
- Social needs can be a need for belongingness and affection.
- Individual needs can be a need for knowledge and self-expression.
Human needs are few, but their wants are unlimited. These wants are dictated by one’s social circle, cultural background and individual personality. An individual may want branded clothes, high-end ornaments or well-furnished house etc. It should be noted that wants are not permanent and they change on a regular basis.
For example, in the 1990s, having a pager (a wireless telecommunications device) was a want; however, this want of people changed when basic mobile phones or feature phones were introduced. The want for feature phones changed when smartphones with advanced features were introduced. Organisations can influence wants by offering various products, informing customers about the product and using marketing strategies to persuade them to buy the product.
Desire is an extension of want. A desire for a product is stimulated by advertising, which attempts to give buyers a sense of lack or wanting. In-store retailing, merchants try to pique the desire of the buyer by showcasing the products attractively.
For example, a person who has never driven a BMW may desire to own and drive a high-end model of BMW. Similarly, it is also a common desire of womankind to own precious stones such as diamonds.
Offerings and Brands
In marketing parlance, an offering refers to what an organisation offers to the customers. It is much more than merely the product itself and entails elements that depict added value for customers. The elements pertaining to the product can be its availability, convenience, delivery, technical customer support or quality of service.
A good offering gives the organisation an edge over competitors and creates value by meeting customers’ wide range of needs. To develop an offering, an organisation needs to find out the factors that are most sought by customers.
On the other hand, a brand infers to a distinct symbol, mark, logo, name, word and/or sentence that an organisation uses to differentiate its product from competitors. A brand is regarded as one of the company’s most valuable assets. It showcases the identity of the company, the recognisable logo, slogan or mark that the public can relate to.
Exchange and Transactions
Exchange can be defined as a transfer of goods, services or ideas in return for something valuable. Organisations are involved in the exchange process with an objective of transferring goods, services and ideas. There are certain conditions that are necessary to be fulfilled for the exchange process. Some of these conditions are as follows:
- There should be a benefit or satisfaction derived by both parties involved in this process.
- There should be ‘something of value’ to which each party must possess confidence.
- There should be trust between parties so that expectations can be met in the exchange.
On the other hand, the term ‘transaction’ refers to transferring the ownership of goods or services for money. Transaction is meaningless without an exchange between a buyer and the seller. A transaction is the marketing’s unit of measurement and consists of a trade of values between two parties.
Value and Satisfaction
Value can be defined as a ratio between what customers get and what they give in return. In other words, it is the difference between the benefits derived from a product and costs of acquiring the product. For example, Milind is a businessman and wants to buy a new car.
He had a criteria for choosing the car which includes reliability, durability, performance, delivery services, and effective training and maintenance. He was considering five options, say, Dezire, Verna, Aura, Amaze, and Honda City. After studying all the attributes that he wanted in his car; he decided to buy Verna. here, we can say that the value that Milind expects to derive is maximum in case of Verna.
On the other hand, satisfaction refers to the individual judgement of any person regarding the perceived performance of any product in comparison with the expectations. If performance is less than expectations, it leads to dissatisfaction. If the performance is equal to expectations, it brings satisfaction.
On the other hand, if performance happens to be greater than what has been expected, it results in customer delight. For example, Flipkart is a popular multi-brand online retailer that offers an extremely beneficial No Questions Asked Return Policy which attracts customers especially those thinking of trying a new product.
Evolution of Marketing
With the Industrial Revolution during the late 18th and early 19th century, businesses expanded and a need for established marketing practices was felt. The marketing philosophy was in existence for centuries, but the modern concept of marketing is a professional practice which has emerged only after the Industrial Revolution.
Since then the marketing philosophy has undergone various evolutionary changes. These changes can be traced under four main stages or orientations, which are mentioned below:
Till the 1930s, there was a common believe among manufacturing organisations that customers would prefer to purchase reasonably priced and easily available products. Thus, the organisations laid emphasis on increasing the output and achieving high production efficiency.
The production concept prevailed for a longer duration as the demand was far greater than the supply of goods and consumers were keen to buy whatever being offered to them. In India, the pro- duction concept existed till 1991 (the pre-liberalisation period).
Thus, it can be said high production efficiency, low prices and wider distribution are some key features of the production orientation stage. For example, Ford automobiles are a classic example of production orientation.
The product concept stresses that organisations should focus their efforts on creating a product of superior quality and features. Under this concept, an organisation should focus on improving the existing product lines over a period of time.
The product concept is based on as assumption that consumers prefer to buy products that offer high quality, performance and innovative features.
However, there is a flaw in this concept i.e. organisations may forget to study consumers’ minds and launch products based on their own technological research and scientific innovations. Many a time, it is observed that innovations enter the market before the market is ready for the product. For example, Apple Inc.
This concept emphasises that organisations should make efforts towards pushing sales of their products by promoting aggressively and making profits by increasing sales volume. The selling concept is based on an approach that only making the best product available is futile for an organisation unless it resorts to aggressive salesmanship.
Similar to production and product concepts, the sales concept also fails to focus on customers’ needs. For example, Insurance companies.
The marketing concept is based on the principle of maximising profits by satisfying customer needs. Organisations provide products as per the needs and wants of customers. Under the marketing orientation, organisations consider that the ‘customer is king’.
All the activities of organisations (production, finance, human resource, research and development) are centred on the marketing function.
Objectives of Marketing
The main objective of marketing is to achieve consumer satisfaction and maximise profits. The following are some important objectives of marketing:
- To satisfy consumers
- To provide quality products
- To create a demand for products
- To generate revenues
- To facilitate two-way communication
- To ensure price stability
To satisfy consumers
The primary objective of marketing is to identify consumer needs and satisfy those needs in the best possible manner.
To provide quality products
Marketing aims at upgrading technology to provide quality products to their consumers. It also helps in gaining a competitive advantage in the market and building the goodwill of the organisation.
To create a demand for products
Marketing aims to create additional demand for its products through promotional efforts. A high satisfaction level of customers leads to repeat business.
To generate revenues
Marketing is a revenue generating function of the business without which the business cannot prosper. The revenues that are brought in by the marketing function is used for paying salaries, purchasing materials and for expansion of the business.
To facilitate two-way communication
The marketing function helps in communicating about the product or service features to the customers. Additionally, the marketing function also communicates the responses and feedback of the consumers to the organisation.
To ensure price stability
Marketing function ensures stable demand which in turn ensures stable market prices. Thus, marketing avoids market price fluctuations.
Nature of Marketing
Marketing is a vast subject and different people perceive the concept of marketing from different points of views. The following points explain the nature of marketing:
- Marketing focuses on customers
- Marketing happens in a dynamic environment
- Marketing is an economic activity
- Marketing is an art and science
- Marketing is a managerial function
Marketing focuses on customers
Customers are at the centre of all marketing activities. Organisations develop their offerings according to the needs and demands of customers. Usually, organisations focus on developing their offerings for a specific group of customers or the target market.
However, a few organisations focus on more than one target market with various product mix, promotion mix, prices and distribution systems to meet the specific needs of the respective target markets.
Marketing happens in a dynamic environment
Marketing is a process that takes place in an active environment. It is the dynamism of any business environment that makes marketing challenging and interesting. A business is surrounded by internal and external environments. The internal environment consists of organisational culture, supply chain and target customers. The internal business environment affects the production, distribution and promotional aspects of the organisation.
The environment includes various factors, such as political, economic, sociocultural, technological, legal, demographic and global factors, which are better known as factors of the external environment. These factors not only generate opportunities, but also bring some threats for the organisation.
Marketing is an economic activity
It is an economic activity which embraces all activities involved in the exchange of goods, services and ideas. It ensures the transfer of ownership of products from producers to the end users.
Marketing is an art and science
Marketing is an art as well as science of selecting the target market and delivering value to consumers. It ensures the availability of products at the right time, at the right place and to the right audience.
Marketing is a managerial function
It is a managerial function that includes all activities designed to maximise profit through ascertaining, creating, stimulating and satisfying the needs of ultimate consumers.
Characteristics of Marketing
Every organisation be it government or private, commercial or non-commercial or small scale or large scale need to market themselves to their target consumers. While doing this, these are some of the important characteristics of marketing that they must keep in mind:
- It is an exchange process
- It is a consumer-driven approach
- It is a continuous activity
- It is an integrated approach
It is an exchange process
Marketing is an exchange process that involves the transfer of goods, services and ideas from one person to the other in return of some monetary value. Different functions of marketing like distribution, after-sales services and packaging facilitate the exchange process.
It is a consumer-driven approach
As discussed previously, a consumer is the focal point of all marketing activities. Marketing attempts to satisfy consumer needs to retain the market demand for an organisation’s products. The process of marketing starts with identifying the needs of consumers and then planning the product that satisfies those needs.
It is a continuous activity
Marketing is a continuous process in the sense that it endlessly monitors the scope of innovation in the business environment. It is a never-ending process that includes developing and improving products and formulating various strategies such as pricing strategies, distribution strategies and promotional strategies.
It is an integrated approach
Marketing involves the coordination of several interrelated activities with the aim of delivering value to consumers. For example, marketing involves promotional measures to make consumers aware of the availability of a product, its features, etc.
Scope of Marketing
In recent years, the scope of marketing has increased to a greater extent. There are various areas where the concept of marketing can be applied. Let us discuss some of these areas as follows:
Physical or tangible products constitute a major share in an economy’s production and marketing. Organisations are involved in the production of billions of products under various categories, such as food, automobiles, machinery, etc. These products need to be marketed to their target consumers.
Services are intangible offerings offered to consumers for consumption. It includes various business verticals such as hotels, airlines, banking, healthcare, education, software programs, consultants and many more. The service sector constitutes a major share of the economy.
With the advancement of economies, countries have shifted from production of goods to the orientation of services. Marketing covers both the manufacturing and service sectors.
Marketing covers events, like tradeshows, organisation’s anniversary, award shows, festivals, health camps and other such events.
For example, if an organisation hosts global sports events, like Olympics or Commonwealth Games, it would need marketing to get the audience and spectators.
Much of marketing is around creating a memorable experience for customers. Marketers try to entertain their customers by providing an in-depth experience with products/services. For example, entertainment parks give customers a delightful experience of rides and games.
This type of marketing is called experiential marketing, which focuses on marketing strategies that influence the purchasing decisions of customers.
Many a time, people also need to market themselves to gain publicity. This includes the likes of artisans, musicians, politicians, sports personalities, bollywood celebrities, etc. These people market themselves to show their talent to gain a brand image in society. This type of marketing is called celebrity marketing.
Geographical places such as cities, states, regions and historical places also need to market themselves to attract tourism and trade. Many a time, the marketing or endorsement of these places is done by well-known personalities or celebrities.
For example, the marketing of State of Gujarat is done by Shri Amitabh Bachchan.
Real estate properties and financial assets also need to be marketed to their target consumers. Marketing enhances the possession utility of these properties. With the rise in income level, people have become interested in investing money in real estate, bonds and stocks. Marketing builds trust and confidence among investors and plays a vital role in buying and selling of these properties.
Marketing also encompasses the marketing of information-based products and services such as educational institutions, encyclopaedias, non-fictional books, specialised magazines and newspapers.
Media revolution and rise in literacy level have also increased the need for marketing information. The packaging of the product is a critical carrier of information about the product, from the marketer to the consumer.
Sometimes ideas also need to be marketed to the consumers. These ideas are intellectual thoughts that can benefit customers. Ideas include concepts and philosophies on various issues.
For an organisation, an idea can be in the form of a blueprint of a business plan/project. In the social context, an idea may aim at creating awareness about issues, such as AIDS or family planning.