1. Marketing
E-528-529, sector-7,
Dwarka, New delhi-110075
(Nr. Ramphal chowk and Sector 9 metro station)
Ph. 011-47350606,
(M) 7838010301-04
www.eduproz.in
Educate Anytime...Anywhere...
"Greetings For The Day"
About Eduproz
We, at EduProz, started our voyage with a dream of making higher education available for everyone. Since its
inception, EduProz has been working as a stepping-stone for the students coming from varied backgrounds. The best
part is – the classroom for distance learning or correspondence courses for both management (MBA and BBA) and
Information Technology (MCA and BCA) streams are free of cost.
Experienced faculty-members, a state-of-the-art infrastructure and a congenial environment for learning - are the few
things that we offer to our students. Our panel of industrial experts, coming from various industrial domains, lead
students not only to secure good marks in examination, but also to get an edge over others in their professional lives.
Our study materials are sufficient to keep students abreast of the present nuances of the industry. In addition, we give
importance to regular tests and sessions to evaluate our students’ progress.
Students can attend regular classes of distance learning MBA, BBA, MCA and BCA courses at EduProz without
paying anything extra. Our centrally air-conditioned classrooms, well-maintained library and well-equipped laboratory
facilities provide a comfortable environment for learning.
Honing specific skills is inevitable to get success in an interview. Keeping this in mind, EduProz has a career
counselling and career development cell where we help student to prepare for interviews. Our dedicated placement
cell has been helping students to land in their dream jobs on completion of the course.
EduProz is strategically located in Dwarka, West Delhi (walking distance from Dwarka Sector 9 Metro Station and 4-
minutes drive from the national highway); students can easily come to our centre from anywhere Delhi and
neighbouring Gurgaon, Haryana and avail of a quality-oriented education facility at apparently no extra cost.
EDUPROZ Page 1

2. Marketing
Why Choose Edu Proz for distance learning?
• Edu Proz provides class room facilities free of cost.
• In EduProz Class room teaching is conducted through experienced faculty.
• Class rooms are spacious fully air-conditioned ensuring comfortable ambience.
• Course free is not wearily expensive.
• Placement assistance and student counseling facilities.
• Edu Proz unlike several other distance learning courses strives to help and motivate pupils to get high
grades thus ensuring that they are well placed in life.
• Students are groomed and prepared to face interview boards.
• Mock tests, unit tests and examinations are held to evaluate progress.
• Special care is taken in the personality development department.
"HAVE A GOOD DAY"
EDUPROZ Page 2

3. Marketing
Karnataka State Open University
(KSOU) was established on 1st June 1996 with the assent of H.E. Governor of Karnataka
as a full fledged University in the academic year 1996 vide Government notification
No/EDI/UOV/dated 12th February 1996 (Karnataka State Open University Act – 1992).
The act was promulgated with the object to incorporate an Open University at the State level for
the introduction and promotion of Open University and Distance Education systems in the
education pattern of the State and the country for the Co-ordination and determination of
standard of such systems. Keeping in view the educational needs of our country, in general, and
state in particular the policies and programmes have been geared to cater to the needy.
Karnataka State Open University is a UGC recognised University of Distance Education Council
(DEC), New Delhi, regular member of the Association of Indian Universities (AIU), Delhi,
permanent member of Association of Commonwealth Universities (ACU), London, UK, Asian
Association of Open Universities (AAOU), Beijing, China, and also has association with
Commonwealth of Learning (COL).
Karnataka State Open University is situated at the North–Western end of the Manasagangotri
campus, Mysore. The campus, which is about 5 kms, from the city centre, has a serene
atmosphere ideally suited for academic pursuits. The University houses at present the
Administrative Office, Academic Block, Lecture Halls, a well-equipped Library, Guest House
Cottages, a Moderate Canteen, Girls Hostel and a few cottages providing limited
accommodation to students coming to Mysore for attending the Contact Programmes or Term-
end examinations.
EDUPROZ Page 3

4. Marketing
E-528-529, sector-7,
Dwarka, New delhi-110075
(Nr. Ramphal chowk and Sector 9 metro station)
Ph. 011-47350606,
(M) 7838010301-04
www.eduproz.in
Educate Anytime...Anywhere...
"Greetings For The Day"
About Eduproz
We, at EduProz, started our voyage with a dream of making higher education available for everyone. Since its
inception, EduProz has been working as a stepping-stone for the students coming from varied backgrounds. The best
part is – the classroom for distance learning or correspondence courses for both management (MBA and BBA) and
Information Technology (MCA and BCA) streams are free of cost.
Experienced faculty-members, a state-of-the-art infrastructure and a congenial environment for learning - are the few
things that we offer to our students. Our panel of industrial experts, coming from various industrial domains, lead
students not only to secure good marks in examination, but also to get an edge over others in their professional lives.
Our study materials are sufficient to keep students abreast of the present nuances of the industry. In addition, we give
importance to regular tests and sessions to evaluate our students’ progress.
Students can attend regular classes of distance learning MBA, BBA, MCA and BCA courses at EduProz without
paying anything extra. Our centrally air-conditioned classrooms, well-maintained library and well-equipped laboratory
facilities provide a comfortable environment for learning.
Honing specific skills is inevitable to get success in an interview. Keeping this in mind, EduProz has a career
counselling and career development cell where we help student to prepare for interviews. Our dedicated placement
cell has been helping students to land in their dream jobs on completion of the course.
EduProz is strategically located in Dwarka, West Delhi (walking distance from Dwarka Sector 9 Metro Station and 4-
minutes drive from the national highway); students can easily come to our centre from anywhere Delhi and
neighbouring Gurgaon, Haryana and avail of a quality-oriented education facility at apparently no extra cost.
EDUPROZ Page 4

5. Marketing
Why Choose Edu Proz for distance learning?
• Edu Proz provides class room facilities free of cost.
• In EduProz Class room teaching is conducted through experienced faculty.
• Class rooms are spacious fully air-conditioned ensuring comfortable ambience.
• Course free is not wearily expensive.
• Placement assistance and student counseling facilities.
• Edu Proz unlike several other distance learning courses strives to help and motivate pupils to get high
grades thus ensuring that they are well placed in life.
• Students are groomed and prepared to face interview boards.
• Mock tests, unit tests and examinations are held to evaluate progress.
• Special care is taken in the personality development department.
"HAVE A GOOD DAY"
EDUPROZ Page 5

6. Marketing
Karnataka State Open University
(KSOU) was established on 1st June 1996 with the assent of H.E. Governor of Karnataka
as a full fledged University in the academic year 1996 vide Government notification
No/EDI/UOV/dated 12th February 1996 (Karnataka State Open University Act – 1992).
The act was promulgated with the object to incorporate an Open University at the State level for
the introduction and promotion of Open University and Distance Education systems in the
education pattern of the State and the country for the Co-ordination and determination of
standard of such systems. Keeping in view the educational needs of our country, in general, and
state in particular the policies and programmes have been geared to cater to the needy.
Karnataka State Open University is a UGC recognised University of Distance Education Council
(DEC), New Delhi, regular member of the Association of Indian Universities (AIU), Delhi,
permanent member of Association of Commonwealth Universities (ACU), London, UK, Asian
Association of Open Universities (AAOU), Beijing, China, and also has association with
Commonwealth of Learning (COL).
Karnataka State Open University is situated at the North–Western end of the Manasagangotri
campus, Mysore. The campus, which is about 5 kms, from the city centre, has a serene
atmosphere ideally suited for academic pursuits. The University houses at present the
Administrative Office, Academic Block, Lecture Halls, a well-equipped Library, Guest House
Cottages, a Moderate Canteen, Girls Hostel and a few cottages providing limited
accommodation to students coming to Mysore for attending the Contact Programmes or Term-
end examinations.
EDUPROZ Page 6

7. Marketing
Unit-1-Introduction to Marketing
Introduction:
Marketing is an activity which can be seen every where. Any time you try to buy something,
marketing has a role to play. It is often viewed by many as being advertising or sales promotion
or marketing research. But it is a concept much larger than any of them or all of them put
together. Marketing consists of all activities designed to create exchanges which satisfy human
or organizational needs or wants in a way that brings profit for the firm. It performs the task of
both identifying and satisfying customer needs. This helps business enterprises in anticipating
customer demand and creating satisfied customers through conception, production, promotion
and physical distribution of goods and services. No example can better illustrate this than the
popularity of Mobile Phone. In less than fifteen years, mobile phones have become such an
important part of our lives that many of us cannot think of a life without it.
This unit deals with meaning, importance and functions of marketing. The old concepts of
marketing under which companies have conducted marketing activities and the modern concepts
which are now being used are explained in detail.
Learning Objective 1: Define market and marketing.
Market and Marketing
What is Market?
Originally, a “Market” was a public place in a town or village, where household provisions and
other objects were available for sale. The definition of market has expanded in this globalized
world. The traders may be spread over a whole town, or city or region or a country and yet form
a market. For example, stock market, Oil & Oilseeds market, Steel or Metals market etc where
people across the countries can participate in the business. The essentials of a market are (i) a
commodity / item which is dealt with, (ii) the existence of buyers and sellers, (iii) a place; be it a
certain region, a country or the entire world and (iv) interactions between buyers & sellers to
facilitate transactions.
1. On the basis of Geographic Area –
Local Market is the place where the purchase and sale of goods / services involve buyers and
sellers of a small local area. The example of local market is a village or a town, market. In this
market day to day requirement like vegetable, fruits, meat and fish are sold.
Regional Market –
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8. Marketing
When the purchase and sale of goods involve buyers and sellers of a region, such as a large town
market catering to needs of a group of villages or towns, such a market is common in case of
wholesale / retail sale of food grains.
National Market –
When the purchase and sale of goods involve both buyers and sellers of the entire nation then it
is called as national market. This type of market in the case of commodities such as Cotton &
Textiles Market located in Mumbai, Tea and Jute Markets located in Kolkata. With the advent of
internet, this concept is also getting obsolete, as you can operate in any market, sitting in your
town or city.
Global or World Market –
When the purchase and sale of goods involve buyers and sellers of many nations, there is said to
be a World or Global Market. Many commodities such as Gold, Silver, Tea, Coffee, Spices are
sold in such global markets. Many manufactured products and specialized services are also sold
across the globe by many companies. Producers of Coca-cola and Sony brand sell their products
in the global market in almost all countries. Indian companies like TCS, Infosys, and WIPRO
sell and provide their IT enabled services to many companies in different parts of the world.
They operate in a Global Market.
1. On the basis of Nature of Competition in the market –
Perfect Market –
It refers to a market or market situation where there is perfect competition. Competition is said to
be perfect when (a) the sellers & buyers of a particular product are so many that none of them
have to sell or buy at a single uniform price. (b) Price is determined by the market forces of
supply & demand.
Imperfect Market –
In contrast to the perfect competition, the imperfect market will have imbalance between number
of buyers and sellers. This market is further divided into three parts. They are Monopoly,
Monopolistic and oligopoly. In case of monopoly, single seller dominates the entire market
where as in oligopoly few sellers dominate the market. The details of these types of markets will
be discussed in the pricing unit.
1. On the basis of Nature of Goods Sold –
Consumer Goods Market –
Definition: A Consumer Goods Market is defined as a market where the final output of the firm
goes for the consumption of individual or household.
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9. Marketing
Consumer Goods Market –
This is a market, where the buyers who are individuals and households purchase a variety of
products and services to satisfy their needs and wants. For example, an individual buys a
chocolate for his personal consumption whereas a family buys a refrigerator for household or
family consumption. Products sold in consumer goods market are classified as Non-Durables,
such which are frequently purchased such as bathing soap, detergent etc. and Durables such as
refrigerator, TV Set, Washing Machine, Car, Clothing etc. Non-Durables are also known as
FMCG – Fast Moving Consumer Goods e.g. Soap, detergent etc…
Industrial Goods Market –
Definition: A business market is defined as a market where output of one firm goes either as raw
material, goods in process or as consumables of another industry.
This market is also known as organizational or B 2 B market. It is made up of organizations
including manufacturing units, service firms, government departments and other business
enterprise. The products which are sold in the industrial goods market are typically, raw
materials, machines, machine tools, equipments, components and spares etc. Generally, the
buyers of industrial goods, purchase products and services either for producing other products
and services which can be sold in the consumer markets or for using them to facilitate the
operation of business enterprise. In many such cases, the buyer is an organization whose
consumption will depend on how the end user’s demand will change. Hence, in business
markets, the demand is a derived demand. Demand for steel will depend on the consumption of
steel equipments, rods and other accessories in the construction and real estate sector.
Non-Profit and Government Markets –
This market which consists of Non-Profit organizations such as social-service agencies,
educational organizations, charitable organizations and Government Departments and agencies
needs special skills to sell to them. These buyers have limited purchasing power which is why
pricing to this market needs to be planned carefully. Government, which is a large buyer, makes
purchases on the basis of tenders, bids and negotiation.
What is Marketing?
Marketing is a set of business activities that facilitate movement of goods and services from
producer to consumer. It is an ongoing process of discovering and translating consumer needs
into products and services, creating demands for them, serving the customer and his demand
through a marketing programme of promotion and distribution to fulfill the company’s marketing
goals in a competitive environment.
It is evident that customer, his needs and wants are very important aspects of today’s marketing.
Customer focus is the very essence of marketing and his viewpoints should be taken into account
while making marketing decisions.
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10. Marketing
In this era of rapid changes, it is marketing which keeps the business in close contact with its
economic, political, social and technological environment and informs it of events and changes
that can influence its activities.
American Marketing Association (AMA) offers the following definition of Marketing.( AMA
2004)
Definition: Marketing is an organization function and a set of process for creating,
communications and delivering value to customers and for managing customer relationships in
ways that benefit the organization and its stake holders.
The Chartered Institute of Marketing defines Marketing as:
Marketing is the management process responsible for identifying, anticipating and satisfying
customer requirements, profitably.
Having understood what a Market is and what is Marketing, we will now look what is an
exchange and the exchange process.
The Exchange Process
Today’s marketing system has evolved from the time of a simple barter of goods through the
stage of a money economy to today’s complex marketing. Throughout all these stages,
exchanges have been taking place. In small town and villages there were artisans such as
carpenters, weavers, potters blacksmiths, barbers and others such service providers who
produced goods and services not only for their own consumption but also for exchanging with
others what they could not produce but needed. This was barter system of exchange. For a
transaction to take place between two parties, it was necessary that there be needs and wants on
both sides. The development of money came to act as a common medium, and the exchange
process became very easy and convenient.Fig.1.1. below shows the exchange process under
money economy in which products and services flow to the market from the producers and
sellers and money, the value of the products and services, flow from the buyers to the sellers.
Figure 1.1
Thus, exchange is an act of obtaining a desired product or service from someone by offering
something in return. This exchange process will continue as long as human society exists
because satisfying one’s needs is the basic instinct of human beings and no one can produce
everything that he /she needs. For an exchange process to take place, between two or more
parties, few conditions have to be met. They are:
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11. Marketing
• Each party has something that could be of value to other party.
• Each party has desire, willingness and ability to exchange.
• Each party is capable of communicating and delivering.
• Each party has the freedom to accept or reject the offer.
Learning Objective 2- Understand the concepts and functions of marketing.
Core Concepts
There are certain fundamental concepts and tasks which one needs to know to fully understand
the marketing function. These concepts provide foundation for a marketing orientation and to
manage the marketing function.
1. Needs and Wants
The marketer’s task lies in satisfying human needs and wants through the exchange process. It is
alleged that “marketing creates needs” and makes people buy things they do not actually need. In
reality, marketing or marketers do not create “needs”, but they create “wants”. Needs are the
basic human requirements of food, clothing shelter water and air. When we desire certain
specific objects or items to fulfill these needs, they are called wants. For example, when a person
is hungry, he can satisfy his hunger by taking a simple meal at home. Instead, if he wants to eat a
Pizza or a Hamburger or a 5-Star Hotel meal, it is not a ‘need’ but a ‘want’.
The task of a marketer is to influence our wants rather than needs. He does so along with other
influential such as socio-cultural forces and institutions such as family, religion, and different
reference groups.
Marketers, suggest to consumers that a particular car would satisfy the person’s need for esteem.
They do not create the need for esteem, but try to point out how a particular product would
satisfy that need.
1. Demand
Human wants are unlimited, but their resources are limited. When a want for an object is backed
or supported by buying ability, willingness to spend and desire to acquire a product / service, it
becomes a potential demand. The task of assessing or estimating demand is very crucial for a
marketer. He should understand the relationship of the demand for his product with its price.
Demand forecasting is essential for allocation of resources in a company.
1. Product and Services
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12. Marketing
‘Product is a generic term used to describe what is being offered by a seller or marketer. It may
be a good, a service or idea, which can be marketed by offering a set of benefits it offers to
customers to satisfy their needs. However, there is a distinction between products and services.
When we say ‘product’ we mean a physical or a tangible product such as a tooth paste, a
refrigerator or a mobile phone, whereas ’service’ refers to an act, performance, a benefit and
indicates intangibility and absence of ownership or possession. Services can include banking
service, hospitality service, airlines service, health service, entertainment service etc. Thus, a
product can be defined as anything that can be offered to market to satisfy a need or want.
Today, many types of entities such as goods, services, experiences, events, persons, places and
ideas are being marketed.
1. Target Market
Very few products can satisfy everyone in the market. Therefore, marketers divide the market
into distinct groups of buyers who have similar preferences. These groups are called segments
with their own specific demographic, psychographic and behavioral characteristics. The marketer
decides as to which of these segment or segments offer highest opportunity for his company. For
each of these target markets, the firm develops a product / service suited to their needs. TATA
group has recently designed an economy car called ‘NANO’ is priced around Rs.1 Lakh. The
target market for this car is all aspirants who dream of owning a car but cannot afford cars which
are now available for minimum Rs.2.5 Lakh. A Target Market is the group of people at whom a
marketer targets his marketing efforts to sell his goods and services.
1. Marketing Management
Marketing Management which is also the title of this course refers to all the activities which the
marketing managers, executives and personnel have to undertake to carry out the marketing
function of the firm. It involves (i) analyzing the market opportunities by under taking consumer
needs and changes taking place in the marketing environment, (ii) planning the marketing
activities, and (iii) implementing marketing plans and settings control mechanism to ensure
smooth and successful accomplishment of the organizations goals. Marketing Management is a
critical function, especially in highly competitive markets. It provides competitive edge to an
organization through strategic analysis and planning.
1. Values and Satisfaction
In developed and developing economies, consumers have several products or brands to choose to
satisfy his/her need. Consumers’ perceptions about value that they can expect from different
products or services depend upon several factors. Sources that build the customer expectations
include own experience with products, friends, family members, consumers’ reports and
marketing communications. Customer value is the difference between total benefits received and
total costs incurred by him in acquiring the product or services. The types of benefits could be
product’s functional value, or its brand related image value and any accompanying service value.
The types of costs a customer can incur may be monetary cost and energy cost.
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13. Marketing
Value is primarily a function of quality, service and cost. Value increases with increase in quality
and service and decreases with increase in cost. Value is an important marketing concept and the
task of marketing is to identify, create, communicate, deliver and monitor customer value. �
Customers generally experience satisfaction when the performance level meets minimum
performance expectations of a product or service. When the performance as perceived exceeds
the expected performance level, the customer will be not just satisfied, but delighted. Thus
customer satisfaction or delightment with respect to a product or service encourages customers to
come back and repurchase the product or service in future. Satisfied customers can be an asset to
the marketing company over a period of time, as they will spread favorable word-of-mouth
information or opinions.
Functions Of Marketing
The delivery of goods and services from producers to their ultimate consumers or users includes
many different activities. These different activities are known as marketing functions. Different
thinkers have described these functions in different ways. Some of the most important functions
of marketing are briefly discussed below:-
1. Marketing Research and Information Management
Marketers need to take decisions scientifically. Marketing research function is concerned with
gathering, analyzing and interpreting data in a systematic and scientific manner. The types of
market information could be analysis of market size and characteristics, consumer tastes and
preferences and changes in them from time to time, channels of distribution and communication
and their effectiveness, economic, social, political and technological environment and changes
therein. A company can procure such information from specialized market research agencies,
government or can decide to collect themselves.
1. Advertising and Sales Promotion – Advertising is a mass media tool used to inform,
persuade or remind customers about products or services. It is an impersonal message
targeted at a chosen group through paid space or time.
2. Sales Promotion is a short-term incentive given to customers or intermediaries to promote
sales. It supplements advertising and personal selling and can be used at the time of
launching a new product or even during its maturity period.
3. Product Planning and Management – A Marketer should identify the needs and wants
of consumers, develop suitable products / services and make them available. Marketer is
also required to maintain the product and its variations in size, weight, package and price
range according to the changing needs and requirements of his customers. Information
available through Market Research helps product management in taking appropriate
decisions while planning the marketing efforts.
4. Selling – This function of marketing is concerned with transferring of products to the
customer. An important part of this function is organizing sales force and managing their
activities. Sales force management includes recruitment, training, supervision,
compensation and evaluation of salesmen. They need to be assigned targets and
territories where they can operate. The salesmen interact with prospective purchasers
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14. Marketing
face-to-face in order to sell the goods. The purchaser may be end customer or an
intermediary, such as a retailer or a dealer.
5. Physical Distribution – Moving and handling of products from factory to consumers
come under this function. Order processing, inventory, management, warehousing and
transportation are the key activities in the physical distribution system.
6. Pricing – This is perhaps the most important decision taken by marketer, as it is the only
revenue fetching function and success and failure of the product may depend upon this
decision. Therefore, the decision regarding how much to charge should be taken such that
the price is acceptable to the prospective buyers and at the same time fetches profits for
the company. While deciding on the price, the factors to be considered are competition,
competitive prices, company’s marketing policy, government policy, and the buying
capacity of target market etc.
Learning Objective 3: Explain the importance of marketing.
Importance Of Marketing.
Peter Drucker, the famous management thinker in one of his classic articles has said “Marketing
is everything”. All other activities in the organization are support services to the marketing
strategy that the company pursues. Marketing is important not only to the company but to the
consumers and society and to the economy.
Consumer stands to benefit from marketing activities. He has more alternatives to choose from,
improved and better quality products are available and he is able to buy goods at convenient
locations. Thanks to much improved customer service, a consumer is able to complain and
expects his complaint to be attended in reasonable time. He can now buy with credit or debit card
or cash or on installments.
For the society as a whole, marketing is important because it acts as a change agent making
people use latest products and improves the standard of living of the people. As we know, the
main objective of marketing is to produce products and services for the society as per their needs
and tastes, and while doing so it creates demand for these goods and services, encourages them
to use them, thus leading to higher demand and sales. This higher demand allows the company to
achieve economies of scale in both production and distribution resulting in decrease in
production and distribution costs which can be used to reduce prices to consumers.
For a company in any business, marketing is considered to be the most important activity. It
helps an organization to keep abreast of changes taking place in the market and consumer tastes
and preferences through market research. Based on this reliable data, it responds to these changes
by rectifying any drawbacks in its products or changing its competitive strategy. Thus the
company’s decision- making and planning are not based on just hunches but on sound market
information. The firm that follows such practices is sure to prosper under all conditions.
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15. Marketing
Marketing provides an effective channel of communication to the company with its consumers
by way of advertising and sales promotion. Marketing thus brings revenue and earns goodwill
for the company.
Successful operation of marketing activities creates, maintains and increases the demand for
goods and services in the economy. It results in the increased level of production. This, in turn,
increases the national income, which is beneficial to the economy. Marketing operations require
the services of intermediaries such as wholesalers, retailers, transporters, and service provides for
storage, finance, insurance and advertising. These services provide employment in large
numbers.
Learning objectives 4: Differentiate between types of marketing orientations.
Marketing Orientations
Companies adopt different philosophies to market their products and services. An analysis of
evolution of marketing thought over last several decades and reliance of marketing managers on
specific marketing orientations, leads us to classify marketing concepts into several categories.
These categories reflect the philosophies guiding the company’s marketing efforts. The
philosophy adopted by a company should strike a balance between the interests of the company,
customers, society and public. There are five competing concepts and an organization can choose
any one of them for conducting marketing activities.
1. The Production Concept – This is one of the oldest concepts of marketing and assumes
that consumers will prefer those products and services that are easily available and
affordable. Companies which adopt this philosophy for their marketing should focus on
improving production and distribution efficiency.
Production concept is a useful philosophy under situations where demand is more than
supply and the companies are trying to increase production and when production costs
are high. Companies are trying to achieve economies of scale. Under such conditions, it
is likely that quality of products is neglected and service to customers is very impersonal.
2. The Product Concept assumes that consumers will prefer those products that offer
quality, performance or innovative features. Managers in such companies focus on
developing superior products and improving the existing product lines by devoting time
to innovations. The problem with this orientation is that managers forget to read the
customer’s mind and launch products based on their own technological research and
scientific innovations. Very often it is observed that innovations enter the market before
the market is ready for the product, or is aware or clear about its benefits.
3. This product-oriented management with excessive attention to product rather than
customer leads to short-sightedness about business. This was termed as “Marketing
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16. Marketing
Myopia” by Prof. Theodore Levitt of Harvard Business School. He recommended that
companies should have a clearer and broader vision of business they are in and should
adapt to the changes in the needs of the customers and in the environment. For example, a
company like KODAK should not think they are only in the business of selling cameras
and photographic films. They should believe that they are in the business of preserving
memories for customers and photography in general
4. The Selling Concept – The Selling concept assumes that consumers generally, will not
buy a company’s products unless aggressive selling and promotion efforts are
undertaken. It also holds that consumers typically do not think of buying these products
which are non-essential goods without persuasion or aggressive selling action. Use of this
concept leads people to believe that marketing is all about selling. The problem with this
approach is the belief that the customer will certainly buy the product after persuasion
and will not complain even if dissatisfied. In reality, this does not happen and companies
pursuing this concept fail in business. This approach is applicable in the cases of
unsought goods such as life insurance, vacuum cleaners that buyers normally do not think
of buying.
5. The Marketing Concept – The Marketing Concept proposes that a company’s task is to
create, communicate and deliver a better value proposition through its marketing offer, in
comparison to its competitors; to its target segment and that this customer oriented
approach only can lead to success in the market place.
To day, marketing function is seen as one of the most important function in the
organization. Many marketers put the customers at the centre of the company and argue
in favor of such a customer orientation where all functions work together to respond,
serve and satisfy the customer.
Many successful and well known multinational companies have adopted marketing
concept as their business and marketing philosophies. Many Indian companies in the
banking and other service sectors follow customer orientation and service as their motto.
According to this concept, a company’s marketing effort must start right from
identifying, through Market Research, exact needs & wants of the target market.
Table 1.1. Differences between Selling and Marketing Concepts
2. Marketing Concept
1. Selling Concept
4. Emphasis on Customer needs and
3. Emphasis on Product wants
6. Goal is to produce what is needed
by
5. Goal is to sell what is produced
7. the customers
8. Aggressive Sales and Promotion 9. All the departments of the company
used 10. work together for serving the
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11. customers
13. Objective is profit through
12. Objective is profits through Sales customer
volume 14. Satisfaction
6. The Societal Marketing Concept – This marketing concept emphasizes that the key task
of the company is not only to determine the needs and wants of the target markets and
delivering the desired satisfaction but also to preserve and enhance the consumers and
society’s overall well being.
This concept calls upon marketers to build social, ethical and environmental considerations into
their marketing practices. It seems to be an appropriate philosophy for marketing at this time
when there is environmental degradation and social services have been neglected in India. In the
recent years, we have been witnessing a lot of complaints about products and packaging that are
harmful to health and ecology. Marketers must come forward to protect the interest of both the
customers and the environment and this they can achieve by adopting or following the societal
marketing concept.
Summary
1. Marketing is a dynamic and all pervasive subject in business
2. The main functions of Marketing are Marketing Research and Information Management,
Product Planning, Advertising and Sales Promotion, Selling, Physical Distribution and
Pricing.
3. Marketing plays an important role in the economic development of a country like India. It
is also very important from the customer and societal point of view as it helps improve
the standard of living of people through better product and service offers.
4. Marketing as a concept has evolved over a period of time and has witnessed changes and
modifications in its philosophy. There are five concepts which describe this development
and offer ways to companies on how to conduct their business – Production Concept,
Product Concept, Selling Concept, Marketing Concept and Societal Marketing Concept
However, the first three are of limited use today.
Unit 2 Strategic Marketing Process
Introduction.
Marketing strategies and programs in the organizations are derived from the companywide
strategic planning. Thus, you have to understand how organizations develop their strategic plans.
After analyzing the strategic plan, you should be able to relate these plans’ role in guiding the
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marketers, and their application in serving the customers with the help of company’s employees
as well as intermediaries.
Learning Objective1: Describe the companywide strategic planning.
Strategic Planning
Strategic planning is the process of defining the company mission, setting the long term and
short term objectives, designing an appropriate business portfolio and coordinating functional
strategies of the company.
Looking at the definition, you will be able to identify four important factors of the strategic
planning. They are
1. Defining the company mission.
2. Formulating the objectives
3. Designing an appropriate business portfolio
4. Coordination at business levels.
Now, we will discuss the above points and their relevance to the marketing plans.
Defining the company mission:
An organization mission explains who its customers are, how it satisfies their needs and what
type of products it offers.
Let me explain this concept by taking a mission statement of the Trends in Vogue, a family
beauty saloons chain from Cavin Kare, a well known fast moving consumer goods (FMCG)
company in India. The mission statement is
1. “To provide the customer an unparalleled service experience
2. To provide the customer the largest range of “natural” products and services
3. To be the first to introduce sub-formats and value-added services
4. To be the most preferred family beauty salon chain for customers, employees and
Alliance partners.
5. To provide consistent profits to all stakeholders”
Trends in Vogue mission statement analysis:
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a. Who its customer is? Mission statement 4 states “family who are going to beauty
saloons” as their customers.
b. How it satisfy their needs? Mission statement 1 and 2 describes the needs as unparalleled
service experience and offering largest range of natural products and services
c. What type of products it offers? The company offers natural products in their beauty
saloons.
Formulating the objectives.
Mission statement provides a general view of the company’s products and its method of
satisfying the customer. Mission statement is once again divided into specific objectives which
are stated in writing, can be measured quantitatively and fixed for particular time. Objectives
may be business oriented or market oriented. They help marketers to develop strategies and
programs. You will come to know how organizations deduce their mission into different
objectives form the following example of Bharat Electronics Limited (BEL), a public sector
enterprise in the electronic field.
Mission: To be a customer focused globally competitive company in defence electronics and in
other chosen areas of professional electronics, through quality, technology and innovation.
Objectives:
1. To be a customer focused company providing state-of-the-art products & solutions at
competitive prices, meeting the demands of Quality, delivery & service.
2. To generate internal resources for profitable growth.
3. To attain technological leadership in defence electronics through in-house R&D, partnership
with defence/research laboratories & Academic institutions.
4. To give thrust to exports.
5. To create a facilitating environment for people to realize their full potential through
continuous learning & team work.
6. To give value for money to customers & create wealth for shareholders.
7. To constantly benchmark company’s performance with best-in-class internationally.
8. To raise marketing abilities to global standards.
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9. To strive for self-reliance through indigenization
Designing an appropriate business portfolio.
After setting mission and objectives, management will develop its business portfolio.
Business portfolio is the right mix of businesses that company operates and products that offers
to customers.
Portfolio analysis is the process by which company analyze its products and businesses.
Company develops their business portfolio in two steps
a. Analyze the existing business portfolio and decide which business should receive more, less or
no investment.
b. Developing the new business portfolio for future to meet growth opportunities and eliminating
the unprofitable portfolios.
Analyzing the existing business portfolio:
The current business portfolio of the company is analyzed by the businesses in which it operates.
To make it clearer, let me take an example of ITC group. The company operates in FMCG,
hotels, paper boards, specialty papers and packaging and agribusiness. These businesses are
independent from each other and have their mission and objectives separately. These subsidiaries
of organizations are called as Strategic business units (SBU)
Strategic business unit: The unit of the company that has separate mission and objectives and
that can be planned independently from other businesses.
Characteristics of SBU.
1. It may be brand, or a product line or separate division of the company.
2. It is having distinct mission and objectives.
3. It is managed by separate executive team.
Strategic planning models used in assessing the existing businesses:
1. BCG matrix ( Boston Consultancy Group)
2. GE matrix ( General electric)
BCG matrix: This model is used to identify company’s SBU’s position in the market. This model
identifies the SBU’s strength, weaknesses, opportunities and threats on the basis of market
growth rate and relative market share. This model is also known as growth share matrix.
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Figure 2.1.
High Low
Relative Market Share
Axis components:
1. Market growth rate: The rate at which market is growing
2. Relative market share: Market share of the SBU divided by the market share of the largest
competitor.
Model components:
Star: This category represents the high market share and high industry growth. SBU’s in this
category require large investment to defend their position. SBU will turn as cash cow after some
time.
Cash cows: This category represents the low growth rate and high market share which is the
characteristic of SBU operating in mature industry. Here company needs less investment to hold
their position. Hence it generates more cash or in management terms we say cash cow can be
milked.
Question Mark: This category represents high market growth and low market share. SBU’s in
this category has two options, either to invest heavily and bring them to star position or divest /
liquidate from that position.
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Dogs: SBU’s in this category generates less cash for the company as it operates in low growth
and low market share. Usually companies will not invest in this category and try to liquidate or
divest.
BCG matrix for ITC
1. SBU: FMCG
Industry growth rate: 24% (AC Nielson retail audit report 2007)
Company growth rate: 50% (the Hindu business line 19th January 2008)
Company’s market share : 8% (outlook business)
Largest competitor share: HUL: 54% (outlook business)
Relative market share= 0.14
2. SBU: Paper board
Industry growth rate: 7.2% (the Hindu business line 27th May 2007)
Company growth rate: 11% (the Hindu business line 19th January 2008)
Company’s market share: 55%
Largest competitors share: BILT 35%
ITC’s FMCG segment analysis shows that though it is market leader in some categories their
overall relative market share is 0.14. Company is in the high growth low relative market share
area i.e. question mark position. ITC should invest heavily to convert its SBU position into star.
ITC’s Paperboard industry is in low growth and high market share category i.e. in cash cow
segment. It should plan for investing the cash generated from this position into other businesses.
GE matrix:
1 Management can use the GE business matrix to classify SBU’s on the basis of two factors
a. Market attractiveness: Market size, entry barriers, competitors, technology and
profit margin are some factors used to analyze the market attractiveness.
b. Business position can be determined on the basis of market share, SBU size, R&D capabilities
and cost controls
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Each cell in the model represented by the particular strategy namely, invest strategy, protect
strategy, harvest strategy and divest strategy
2 Invest strategy: In this position SBU
a. Should receive ample resources
b. Should support by well financed marketing efforts.
3 Protect strategy: SBU’s in this position should
a. Allocate the resources selectively.
b. Develop strategies which help in maintain its market position.
c. Generate cash needed by other SBU’s.
Business position
High Medium Low
Figure 2.2
4. Harvest strategy: SBUs should not receive substantial new resources and if required, sell them.
5. Divest strategy: SBUs which falls into this category should not receive any resources and sell i
or shut it as early as possible.
Developing the new business portfolios
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After analyzing the existing business of the company, let us discuss company’s future plans i.e.
growth or downsizing. Company adopts growth strategies to become more competitive in the
market, tap new opportunities and become preferred employer. Downsizing is used when the
product or market became unattractive to it. The Ansoff Product-Market Growth Matrix is a
marketing tool created by Igor Ansoff and first published in his article “Strategies for
Diversification” in the Harvard Business Review (1957). The matrix allows marketers to
consider ways to grow the business via existing and/or new products, in existing and/or new
markets.
Ansoffs model of product/ market expansion.
Figure 2.3.
a. Market penetration: A strategy used in increasing the sales of company’s existing products
without modifying it in the existing market.
Characteristics of market penetration.
1. Serve customer with existing products by opening new stores.
2. Increase the promotion activities to increase the consumption.
3. Improve the service offerings.
Café- coffee day a reputed coffee chain in south India, started its operation in brigade road,
Bangalore, in the year 1996. It offers different varieties of the coffee to its existing customers.
Today it is having 100 stores in Bangalore.
b. Market development: In this strategy company identifies the new markets to sell their existing
products.
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In case of market development company identifies and develops new markets for its existing
products
Café coffee day, enthused by the success of offering a world-class coffee experience, has opened
a Café in Vienna, Austria and is planning to open other Cafes in the Middle East, Eastern
Europe, Eurasia, Egypt and South East Asia in the coming months.
(Source: www.cafécoffeeday.com)
c. Product development: In this strategy, company identifies new product and sells them existing
markets.
Café coffee day added quick bites and ice-cream in their menu to cater to the needs of customers.
d. Diversification: A strategy for company growth through starting up or acquiring businesses
outside the company’s current products and markets.
Café coffee day started offering tea and cold drinks in its highway café retail outlets. These
highway café outlets offer excellent service to the travelers on the high way.
Downsizing: Eliminating the unprofitable products of the company from its product line
In the year 2000 M.S. Banga then chairman of Hindustan Unilever limited (HUL), used power
branding strategy to improve the sales and productivity. He reduced HUL’s number of products
from 110 to 35.
Coordination at business levels
1. Organization’s strategies exist in three different levels. They are corporate level, business
level and operation level.
2. Corporate level:
a. High risk and greater profit
b. Greater need for flexibility exists.
c. Long term planning
d. Choice of businesses, dividend policies, sources of long-term financing, and priorities for
growth
3. Operation level strategies
a. Implement the overall strategy formulated at the corporate and business levels
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b. Involve action-oriented and operational issues
c. Relatively short range and low risk
d. Modest costs: depend upon available resources
e. Relatively concrete and quantifiable
4. Business level strategies
a. Acts as a bridge between decisions at the corporate and functional levels
b. Less costly, risky, and potentially profitable than corporate-level decisions
c. More costly, risky, and potentially profitable than functional-level decisions
d. Include decisions on plant location, marketing segmentation, and distribution
In the strategic plan, company brings the synergy between all the three levels. To make it more
clearer, company’s marketing strategy are different from HR strategies but it should bring
coordination between both to meet organization’s objectives. Company should bring the
coordination between its growth plans and segmentation then only the operation strategy works
well.
SWOT analysis
S W O T represents strengths, weaknesses, opportunities and threats. SWOT analysis helps
company to implement its strategies by leveraging strengths, overcoming from weaknesses,
tapping the opportunities and minimizing the threats
1) Strengths:
Following are the list of strengths that company should have
i. Valuable competencies or know-how
ii. Valuable physical assets
iii. Valuable human assets
iv. Valuable organizational assets
v. Valuable intangible assets
vi. Important competitive capabilities
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2) Weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage.
Resource weaknesses relate to inferior or unproven skills, expertise, or intellectual capital and
Lack of important physical, organizational, or intangible assets.
3) Opportunities: Opportunities are those which match with its financial and organizational
resources, can generate profits for long term and become strength in future.
4) Identifying External Threats
i. Improved technology
ii. Improved products by competitors
iii. Dumping of materials
iv. Unfavorable political situation
v. Potential of a hostile takeover
vi. Change in the demography
SWOT helps marketer to understand the current position of the company. It also helps to
leverage its strengths to improve the performance and tap the opportunity that exists.
Weaknesses and threats analysis helps company to overcome from them and become more agile.
Learning Objective 2: Understand the marketing mix exists in the company
Developing the marketing mix.
Marketing mix: The product, its price, promotion and distribution blended together to get
favorable response from the customer.
This is also called as 4P’s of Marketing or Market assortment.
1. Product: It is a good, service, idea, place or person that offered to customer to satisfy his/her
need. The attributes of product are variety, quality, warranty, design, packaging, and service
For example, Marico, a FMCG company offers hair oil in two brand names i.e. parachute and
nihar. The brand nihar, offered in two types of packaging i.e. Sachets and bottles and offered in
two qualities i.e. coconut oil and perfumed hair oil.
2. Price: the value at which customer is willing to purchase the product.
For example, BSNL offers prepaid service recharge coupons in Rs175, Rs335, Rs500, Rs 1000,
Rs2000 and Rs 5000 denominations.
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Figure 2.4.
The marketing mix
3. Place: Distribution of goods from the factory to the target customer. It includes distributors,
stockiest and retailers. To illustrate, Zenith computers uses authorized distributor to sell laptops
and desktops to the target customers.
4. Promotion: communicating product features and its uses to target customers through different
Medias. For example, Bharati group promotes its cellular services (AIRTEL) through TV, Radio
and news paper.
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Learning Objective 3:
Discuss how to design marketing planning models
Marketing planning:
Though strategic plan exists in the organization but it is very essential to have functional plans to
coordinate departmental activities. For example, the marketing plan guides the sales and
distribution activities of the organization. Therefore it is essential to know what the contents of a
marketing plan are.
Contents of marketing plan
a. Executive summary: Brief summary of plan, which help busy executives to go through the
points very quickly.
b. Analyzing the current market situation: The following factors should be answered in this
section.
1. What is the intended market and market segment?
2. What is the consumer buying behavior process for particular category of products?
3. How conducive is the marketing environment to do the business?
4. Whether company got right marketing mix for intended target customer?
5. Who are major competitors and what are their marketing strategies?
c. PEST analysis: In this section, the external environment of the company is analyzed to find
opportunities and threats.( for detail see UNIT 3)
d. Objectives and issues: This part of the marketing plan should discuss marketing objectives that
company would like to achieve in particular period and issues that may affect them.
e. Marketing strategy: This section should highlight on
1. Identifying the segmentation, target customer and positioning strategy
2. 4P’s of marketing
3. Planned activities: the following factors should be discussed in this section
4. What are the programs that company plans to undertake?
5. Who are responsible to monitor these programs?
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6. How much time it takes to complete the program?
7. How much will it cost?
8. Marketing Budget
9. Control: Any program implemented need to be controlled to check its performance. Hence
organization should take periodic auditing by a review committee. The control process for the
plan should be discussed in this section.
Marketing Implementation and control.
Marketing implementation: The process in which marketing strategies and plans are converted
in to proper marketing actions to achieve the objectives.
Marketing implementation depends on the following factors:
1. Organization structure
2. Organization culture
Marketing control: The process of evaluating marketing performance and taking corrective
actions.
Marketing control involves four steps. They are
a. Set specific marketing goals.
b. Measure the marketing performance
c. Evaluate the market performance against objectives
d. Take corrective actions
Marketing control is divided into two parts. They are operation control and strategic control.
Operation control involves assessing the current activities against annual plan and taking
corrective actions. Strategic control is used to assess whether existing strategic plans of the
company meets the opportunities exist for it. Marketing audit is used as a strategic control tool.
According to Philip Kotler “marketing audit is comprehensive, systematic, independent and
periodic examination of a company’s environment, objectives, strategies and activities to
determine problem areas and opportunities and to recommend a plan of action to improve the
company’s marketing performance”.
Characteristics of marketing audit:
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1. Comprehensive.
2. Systematic
3. Independent
4. periodic
Components of marketing audit:
1. Marketing environment audit
2. Marketing strategy audit
3. Marketing organization audit
4. Marketing systems audit
5. Marketing productivity audit.
6. Marketing function audit
Summary:
1. Strategic planning process involves defining the company mission, formulating the objectives,
designing an appropriate business portfolio and coordination among functional strategies.
2. BCG and General electric models are used to analyze existing market situation of SBU.
3. SBU’s growth and downsizing strategies are determined by Ansoff model of product- market
growth matrix.
4. Marketing mix or 4Ps of marketing is the assortment of product, place, price and promotion.
5. Marketing implementation depends on organization structure and its culture.
6. Marketing Audit is used as strategic control tool.
Unit 3 Marketing Environment
Introduction.
A marketing oriented company always keeps tab on its external environment carefully to analyze
opportunities and threats. This external environment influences company’s strategies in two
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levels i.e. external macro environment and external micro environment. The macro environment
involves political and legal, economic and natural, social and cultural and technology
environment. The micro environment consists of supply chain, customer and competitor. These
factors are uncontrollable by the organization. Even the best company faces threat if one of the
external environments is adverse to it. A moderate company will be successful if the external
environment favors it. Hence marketing companies should monitor the external environment
carefully and continuously.
Learning Objective -1 : Understand the need of environmental scanning.
Environmental scanning
This is the process of gathering, analyzing and forecasting of external environments’ information
to identify opportunity and threats that company faces.
Need for environmental scanning:
It helps in
1. Identifying the opportunities that company has in immediate future.
2. Identifying the threats faced by the company.
3. Demand forecasting
4. Developing appropriate business plans.
5. Adjusting the company strategy in changing competitive environment.
Learning Objective 2: Analyze the influence of micro environment on company’s strategies.
Analyzing the organization’s micro environment
Marketing department let alone can not satisfy all the needs of customer. Therefore it is essential
to integrate the functions of suppliers, publics, company departments and intermediaries in
creating the value to the customer. These forces are known as organization’s micro environment.
Microenvironment: The forces which are very close to company and have impact on value
creation and customer service
Figure 3.1
Forces in the micro environment
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The company
Remember in the previous unit we discussed about the strategic and marketing planning.
Deducing a strategic plan in to specific marketing plan require coordination of other functions
like finance, Human resource, production, and research and development. For example, Safe
Express, a leader in the supply chain management solution wants to hold its position in the US $
90 billion Indian logistics market. Company plans to expand its service areas in the coming
months. To meet the targets of the marketing plan, other departments of safe express also
expanding their horizon. Company is coming out with logistics parks in different cities; plan’s to
hold seven million square feet of warehousing capacity in the next three years and investing Rs
10 billion in three years to meet that targets. The above example shows that company’s
marketing plan should be supported by the other functional department activities also.
Intermediaries
Marketing intermediaries: The firms which distribute and sell the goods of the company to the
consumer.
Marketing intermediaries plays an important role in the distribution, selling and promoting the
goods and services. Stocking and delivering, bulk breaking, and selling the goods and services to
customer are some of the major functions carried out by the middlemen. Retailers, wholesalers,
agents, brokers, jobbers and carry and forward agents are few intermediaries to name. Retailers
are final link between company and customers. Their role in the marketing of product is
increasing every day.
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Publics
These are microenvironment groups, which helps company to generate the financial resources,
creating the image, examining the companies’ policy and developing the attitude towards the
product.
We can identify six types of publics
1. Financial publics influence the company’s ability to obtain funds. For example, Banks,
investment houses and stockholders are the major financial publics.
2. Media publics carry news and features about the company e.g. Deccan Herald
3. Advertisement regulation agencies, telecom regulation agency( TRAI), and insurance
regulation agency(IRDA) of the government
4. Citizen action groups: Formed by the consumer or environmental groups. For example,
people for ethical treatment of animals (PETA) or Greenpeace.
5. General publics: a company should be concerned towards general publics’ attitude towards
its products and services.
6. Internal publics: Employees who help in creating proper image for the company through
word of mouth.
Competitors
A company should monitor its immediate competitor. The product should be positioned
differently and able to provide better services.
Suppliers
Suppliers are the first link in the entire supply chain of the company. Hence any problems or cost
escalation in this stage will have direct effect on the company. Many companies adopted supplier
relation management system to manage them well.
Customers
A company may sell their products directly to the customer or use marketing intermediaries to
reach them. Direct or indirect marketing depends on what type of markets Company serves.
Generally we can divide the markets into five different categories. They are
a. Consumer market.
b. Business market
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c. Reseller market
d. Government market and
e. International market
You will come to know about these five different markets from the following example.
MRF a tyre company sells its product directly to consumer (in case of urgency, customer
purchases directly from showroom) i.e. operates in consumer market. It operates in business
markets by selling tyres to companies like Maruti Udyog limited. MRF also sells TYREs to
BMTC and KSRTC, transport organizations of Karnataka government. If MRF sells tyre in
African or American countries then it is operating in the international market. If MRF buys the
old tyres, retreads it and sells it to the consumer at a profit then company is operating in the
reseller market.
Learning Objective 3:
To analyze the influence of external macro environment on company’s plans.
Company’s macro environment.
Figure 3.2 Forces in the macro environment.
Demographic Environment.
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Demography: The study of population characteristics like size, density, location, gender
composition, age structure, occupation and religion.
Demography statistics helps companies to develop their products in better way. These statistics
are also used in developing proper supply chain, communicating product information and
changing the product attributes. Demographic environment is analyzed on the basis of the
following factors.
1. Age structure of the population
2. Marital status of the population
3. Geographic distribution of the population
4. Education level
5. Migration
6. Occupation.
Age structure of the population: from the following table you can generalize that India is
having 48% population who are aged less than 21 and 28% of the population are in the bracket of
21-25. Many marketing companies are focusing on these two segments. For example, Radio
Indigo, FM radio station from Jupiter capital venture operates in Bangalore and Goa, plays
international music. Radio indigo targets youth segment who like western music.
TABLE 3. 1: POPULATION IN DIFFERENT AGE GROUPS AND THEIR PROPORTIONS
TO TOTAL POPULATION
Age group Population Percentage
All Ages 1,028,610,328 100.0
0–4 110,447,164 10.7
5–9 128,316,790 12.5
10 – 14 124,846,858 12.1
15- 19 100,215,890 9.7
20 – 24 89,764,132 8.7
25 – 44 284,008,819 27.6
45 – 64 139,166,661 13.5
65 – 79 41,066,824 4.0
80+ 8,038,718 0.8
Less Than 18 422,808,543 41.1
Less than 21 492,193,906 47.9
Age no stated 2,738,472 0.3
Source: C2 and C14 Table, India, Census of India 2001.
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Marital status of the population:
TABLE 3.2: POPULATION BY MARITAL STATUS AND SEX: INDIA – 2001
Number of Persons Percentage to
Marital status
( in ‘000) Total
Persons Males Females Males Females
Total 1,028,610 532,157 496,454 100 100
Never Married 512,668 289,619 223,048 49.8 54.4
Married 468,593 231,820 236,773 45.6 43.6
Widowed 44,019 9,729 34,290 4.3 1.8
Divorced / Separated 3,331 988 2,343 0.3 0.2
Source : C2 and C14 Table, India,
Census of India 2001
Half of the Indian population falls into the never married category. This provides an opportunity
for organized wedding industry. Indian wedding industry is worth Rs 1, 25,000 crore today.
Vintage group and shaadi.com are few to name in this industry. These companies are offering
end to end solution to the customers who are looking for lavish wedding in the exotic locations
both in domestic and abroad.
Geographical distribution of the population
Table 3.3; Rural – urban distribution of the population
Population
Persons 1,028,737,436
Males 532,223,090
Females 496,514,346
Rural 742,617,747
Urban 286,119,689
% Urban population 27.8%
Rural India with 74 crore population is a biggest market. Companies are trying to get a pie in this
untapped market. For example, DCM Shriram limited, opened ‘Hariyali’ bazaars in rural market.
These bazaars offer quality agriculture inputs, financial services, and farm output services.
Education level: More than 3 crore people in India either have graduation or post graduation.
This has led to the growth of many sunrise sectors. This educated population fuelled the growth
of information technology (IT), information technology enabled services (ITES), and
biotechnology industries.
TABLE 3.4: NUMBER AND PERCENT LITERATES BY LEVEL OF EDUCATION: INDIA
2001
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Absolute Numbers
Level of education
(000′)
Persons Males Females
Literate 560,688 336,534 224,154
Literate without educational level $ 20,023 11,361 8,662
Below Primary 144,831 81,148 63,683
Primary 146,740 83,525 63,215
Middle 90,227 55,940 34,286
Matriculation/Secondary 79,230 51,202 28,028
High secondary/ Intermediate/PreUnivercity/ Senior
37,816 24,596 13,220
Secondary
Non technical diploma or certificate not equal to degree 386 259 128
Technical diploma or certificate not equal to degree 3,667 2,901 766
Graduate and above 37,670 25,533 12,137
Migration: Geographical shift in the population is becoming an interesting area in the
demographic studies. The Table 6, list out the various reasons for migration.
TABLE 3.5: NUMBER OF MIGRANTS BY PLACE OF BIRTH – INDIA 2001
Migrations by Place
Category Percentage
of birth
A. Total Population 1,028,610,328
B. Total Migrations 307,149,736 29.9
Migrants within the state of
B.1 258,641,103 84.2
enumeration
Migrants from within the
B.11 181,799,637 70.3
districts
Migrants from other districts
B.12 76,841,466 29.7
of the state
Migrants from other states in
B.2 42,341,703 13.8
India
Migrants from other
B.3 6,166,930 2.0
countries
Source: Table D1 India,
Census of India 2001.
TABLE 3.6: REASONS FOR MIGRATION OF MIGRANTS BY LAST RESIDENCE WITH
DURATION (0-9 YEARS) INDIA 2001
Number of Percentage to
Reason for migrations
Migrants Migrants
Persons Males Females Persons Males Females
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Total migrants 98,301,342 32,896,986 65,404,356 100.0 100.0 100.0
Reason for migration :
14,446,224 12,373,333 2,072,891 14.7 37.6 3.2
Work / Employment
Business 1,136,372 950,245 186,127 1.2 2.9 0.3
Education 2,915,189 2,038,675 876,514 3.0 6.2 1.3
Marrige 43,100,911 679,852 42,421,059 43.8 2.1 64.9
Moved after birth 6,577,380 3,428,673 3,148,707 6.7 10.4 4.8
Moved with households 20,608,105 8,262,143 12,345,962 21.0 25.1 18.9
Other 9,517,161 5,164,065 4,353,096 9.7 15.7 6.7
Source: Table D3, Census
of India 2001
Marketers started identifying the niches in the migrated communities and offered their goods and
services. For example, Nandhini, an Andhra restaurant in Bangalore catering to the food needs of
the Andhra community. Patrika, a Rajasthan based daily now available through out the country.
Occupation:
TABLE 3.7: DISTRIBUTION OF MAIN WORKED BY DIFFERENT INDUSTRIAL
CATEGORIES, INDIA 2001
Main Workers Percentage
Industrial category
(’000s) (%)
Total main workers * 312,972 100.0
Agricultural & allied activities 176,979 56.6
Mining & quarrying 1,908 0.6
Manufacturing 41,848 13.4
Electricity, gas and water supply 1,546 0.5
Construction 11,583 3.7
Wholesale, retail trade & repair work, Hotel and
29,333 9.4
restaurants
Transport, storage & communications 12,535 4.0
Financial intermediation, Real estate, business activities 6,109 2.0
Other services 31,131 10.0
Source : Industrial classification data based on
sample
Agriculture is the main occupation of the people in India but the share of other services is
growing rapidly. The other service category includes IT and ITES. Employees of these
categories have high disposable income. This has led to the opening of specialty stores and
manufacturing of the luxury items in the country.
Political And Legal Environment.
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Government policies, legislations, regulations, and stability will directly affect the business.
Therefore it is inevitable for the firm to closely monitor this environment. The political and legal
forces are grouped into the following four categories.
Monetary and fiscal policies: These policies regulate government spending, money supply and
tax legislations.
1. Social legislations and regulations. Environmental protection act which specifies the
emission level.
2. Government relationships with industries: Government subsidies and change in tariff rate
will have direct impact on the particular company.
3. Legislations related to marketing: Following are the list of legislations which affect marketing
activities of the company.
Table 3.8
· Companies act 1956. · Industrial dispute act 1957
· Consumer protection act · Minimum wages act
· Payment of bonus act. · Environmental protection act
· Industries development and regulation act. · Trade union act
· Contract law · Factories act 1948
· The contract labor (regulation and abolition) act1970. · Sales promotion employees’ act1976
· Shops and establishment act 1953 · Copyright act 1957
· Trade marks act 1999 · Patents act 1970
· Designs act 2000 · Foreign exchange management act 1999
Economic And Natural Environment:
Consumer spending pattern
According to National sample survey 2005-06,
1. Monthly per capita consumption in rural area: Rs625.
2. Monthly per capita consumption in urban area: Rs1, 171.
3. Food expenditure in monthly per capita consumption: 53 %( Rural area)
4. Food expenditure in monthly per capita consumption: 40%( urban Area)
The above data shows that most of the expenditure in monthly per capita income goes to the food
expenditure only. Marketers in the non food category should promote heavily to change this
spending pattern. Companies in the food category should note that food expenditure in monthly
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per capita expenditure is coming down. Hence extra efforts are required by these companies to
sell their products.
Interest rate: when interest rates are high, consumer tend not to make long term purchase like
housing. If the interest rate is low people put their money in alternative financial options where
they get better return.
Inflation: Higher the inflation rate lesser will be the purchasing power of the consumer. Hence
government always tries to control the inflation within the limit.
Changes in income: The rise in the salaries of the employees, improved performance of stock
market and better industrial growth led to the change in the income pattern in India. Many
Indians became millionaires and billionaires. Percentage of below poverty line is decreasing, but
the concern is rich and poor divide is growing.
Natural Environment:
Environmental concerns are growing over the years. Governments increased regulations to
manage the natural resources. Marketers should aware of such trends in the natural environment.
Some of the factors which organizations should keep a vigil are
a. Inadequate raw materials
b. Global warming and pollution levels and
c. Regulatory world.
a. Inadequate raw materials: We are over depending on Middle East countries for petroleum
products. Automobile companies are improving their technologies and also planning to come out
with hybrid cars which use alternative fuels.
b. Global warming is a big issue today.
c. Regulatory world; The Indian government through environmental protection act, making
stringent rules on emission and environment standards. Companies, particularly in automobiles
should adhere to those norms, which are expensive and time consuming.
Social and cultural environment:
1. Working women and rise of metro sexual man.: Number of women who are working in
India is increasing. This segment is looking towards products which help them in bringing better
work life balance. MTR a fast food giant in south India started offering ready to eat products to
this segment. These products are instant in nature where a woman dips a product in the hot water
for 2-3 minutes and serves. Metro sexuality is another new phenomenon, wherein a man also
assumes the role of women like purchasing household items and helping in kids’ education etc. It
made marketers’ task more difficult on positioning their products.
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2. Time short people: This segment involves people who work long hours and have less
personal time. These people are looking for products which satisfy them quickly and
conveniently. For example, Easy bill, from Hero group offers one stop solution to consumer to
pay their utility bills and do other financial transactions.
Technology environment
1. Growth of information technology and biotechnology industries: Information technology has
revolutionized the lives of the people. It bought dramatic changes in the way organizations
operates. It helped in cost reduction, automation, better communication and efficiency in the
organizations. Indian banks few years ago use to take lengthy time to process the customer
requests reduced it to few hours because of information technology.
Learning Objective 4:
The difference between the external macro and micro environment.
Difference between Micro environment and Macro environment.
Table 3.9
Macro environment Micro environment
Size Large small
Control Cannot be controlled Can be controlled to some extent
Uncertainty Very high low
complexity High low
Political, social, cultural, technology, Customer, publics, competitors,
Examples
demography and natural environment suppliers and intermediaries.
PEST (Political and legal, economic and natural, social and cultural, and technology
environment) Analysis:
Table 3.10
Factors Opportunity Threat
1. Political and legal environment
a. Monetary policy
b. Fiscal policy
c. Environmental policy
d. Lobby groups
2. Social and cultural environment
a. Gender
b. demographics
c. work culture
3. Economic and natural environment
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a. Income
b. Spending power
c. Inflation
d. Interest rate
e. Raw materials
f. Taxation
4. Technology environment
a. Entry barriers
b. Growth of technology
c. Transfer of technology
Summary
1. Environment scanning is necessary to understand opportunities and threats faced by the
company.
2. Micro environment factors like marketing intermediaries, suppliers, competitors, publics and
customers influences company’s strategies. These are controllable to some extent.
3. Population variables like age, gender, marital status and occupation helps the company to
assess the market and change or develop their offerings
4. Shortage of raw material and increase in the income disparity are immediate concerns of the
organizations.
5. Working women and time short people changing the socio- cultural environment of the
country.
6. Technology is helping company to reduce cost, increase the efficiency and save time.
7. Micro and macro environment are differentiated on the basis of size, complexity, and
uncertainty.
Unit 4 Understanding the Marketing Information Systems (MIS)
Introduction
In the earlier chapter, we saw how marketing environment is changing and presenting new
opportunities and threats to an organization. The main responsibility for identifying significant
changes in the market place falls on the marketing department. They are better placed and have
advantages in undertaking this task because they are regularly interacting with customers and
observing competition.
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44. Marketing
The Marketing Departments need to develop Marketing Information Systems that provide
them information about buyer wants, preferences, behavior and also about competition. They are
able to do this by setting up systems and marketing related research methods to collect this
valuable information which is ultimately used to help make marketing decisions.
A Marketing Information System is a set of procedures to collect, analyze and distribute
accurate, prompt and appropriate information to different levels of marketing decision makers.
Learning Objective 1: Understand the concept of Marketing Information System, as well as its
characteristics & benefits.
Characteristics of MIS
Philip Kotler defines MIS as “a system that consists of people, equipment and procedures to
gather, sort, analyze, evaluate and distribute needed, timely and accurate information to
marketing decision makers.
Its characteristics are as follows:
1. It is a planned system developed to facilitate smooth and continuous flow of information.
2. It provides pertinent information, collected from sources both internal and external to the
company, for use as the basis of marketing decision making.
3. It provides right information at the right time to the right person.
A well designed MIS serves as a company’s nerve centre, continuously monitoring the market
environment both inside and outside the organization. In the process, it collects lot of data and
stores in the form of a database which is maintained in an organized manner. Marketers classify
and analyze this data from the database as needed.
With the advent of Computer Technology, MIS has taken a step further to provide managers
direct access to the databases. This system called Marketing
Decision Support System (MDSS) links a decision maker to relevant databases and analysis
tools, thereby allowing him to gain deep insights into needs and trends of customers with the
help of sophisticated statistical analysis.
Today companies organize the information in databases such as customer database, product
database, and field sales database and combine them to be stored in a huge database called Data
Warehouse. The process of searching through information in data warehouse to identify
meaningful patterns that guide decision making is called Data Mining.
Benefits of MIS
Various benefits of having a MIS and resultant flow of marketing information are given below:
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1. It allows marketing managers to carry out their analysis, planning implementation and control
responsibilities more effectively.
2. It ensures effective tapping of marketing opportunities and enables the company to develop
effective safeguard against emerging marketing threats.
3. It provides marketing intelligence to the firm and helps in early spotting of changing trends.
4. It helps the firm adapt its products and services to the needs and tastes of the customers.
5. By providing quality marketing information to the decision maker, MIS helps in improving the
quality of decision making.
Types of Marketing Information
A Marketing Information System supplies three types of information.
1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly,
quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports,
inventory levels, payables, and receivables etc. which are made available regularly. Information
on customer awareness of company’s brands, advertising campaigns and similar data on close
competitors can also be provided.
2. Monitoring Information is the data obtained from regular scanning of certain sources such as
trade journals and other publications. Here relevant data from external environment is captured
to monitor changes and trends related to marketing situation. Data about competitors can also be
part of this category. Some of these data can be purchased at a price from commercial sources
such as Market Research agencies or from Government sources.
3. Problem related or customized information is developed in response to some specific
requirement related to a marketing problem or any particular data requested by a manager.
Primary Data or Secondary Data (or both) are collected through survey Research in response to
specific need. For example, if the company has developed a new product, the marketing manager
may want to find out the opinion of the target customers before launching the product in the
market. Such data is generated by conducting a market research study with adequate sample size,
and the findings obtained are used to help decide whether the product is accepted and can be
launched.
Components of MIS
The following diagram shows a typical Marketing Information System with its components.
Which are?
1. Internal Records System
2. Marketing Intelligence System
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3. Marketing Research System
4. Analytical Marketing System
Fig 4.1 The Marketing Information System
Internal Records System
This includes information on (i) Order to payment cycle and (ii) sales information systems.
Order to payment cycle has a system which records, the timing and size of orders placed by
consumers, the payment cycle followed by consumers and the time taken to fulfill the orders, in
the shortest possible time. Customers place order through sales people and companies dispatch
the goods and receive payments directly or through bank. A proper record system pertaining to
order – to – payment cycle management helps mangers to decide on production and dispatch
schedule, inventory and accounts receivable schedule and also logistics and distribution
management schedules,
Sales Information Systems record everything in the sales Department, starting from Sales Call
Reports to prospects history to Sales territory and quota information for better sales planning and
forecasting purpose.
Marketing Intelligence System
This is a set of procedures and sources used by managers to obtain everyday information about
developments in the marketing environment. This system supplies ‘happenings’ data unlike
Internal Records System which supplies ‘results’ data. Marketing managers collect data from
published sources like books, magazines and journals; by talking to customers, intermediaries
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