Nature and Scope of Marketing

• A market is a group of buyers and sellers involved in negotiating the terms of purchase or sale
of goods and services. It involves the forces of supply (sellers) and demand (buyers),
facilitating smooth exchange and transactions.
 Evolution of Marketing

• Marketing evolved through different stages:

• 1. Barter System - Direct exchange of goods.
• 2. Money Economy - Use of money simplified
transactions.
• 3. Industrial Revolution - Mass production and
distribution.
• 4. Competition - Firms started differentiating products.
• 5. Emergence of Modern Marketing - Focus on
customer satisfaction, service, and convenience.
 Stage of Barter
• In the barter system, communities produced goods for their needs and exchanged the surplus
with others. This was limited to local markets with familiar buyers and sellers.
 Stage of Money Economy
• The introduction of money replaced barter, making transactions easier and more
standardized. However, fundamental marketing practices remained unchanged at this stage.
 Stage of Industrial Revolution
• This stage introduced machines, better transportation, and mass production. Products
became cheaper and widely available, leading to larger markets and greater competition.
 Stage of Competition
• With mass production, companies faced stiff competition. They began focusing on product
differentiation and ensuring that customers preferred their products over competitors'.
 Emergence of Marketing
• Increased competition and diverse products made selling difficult. Businesses started
focusing on customer satisfaction, competitive pricing, convenient delivery, and after-sales
service. This marked the true emergence of modern marketing.
 Definition of Marketing
• "Marketing is a total system of business activities designed to plan, price, promote, and
distribute want-satisfying products, services, and ideas to target markets to achieve
organizational objectives." - Stanton & Futrell.
 Implications of Definition
• • Marketing is customer-oriented.
• • It starts from product conception and continues even after the sale.
• • The goal is to satisfy customers to ensure repeat business.
• • It integrates all business activities towards customer satisfaction.
 Marketing Concept
• The marketing concept revolves around three beliefs:
• 1. Company operations should be customer-oriented.
• 2. The goal should be profitable sales volume.
• 3. All marketing activities must be well-coordinated within the organization.
 5 Concepts of Marketing
• 1. Exchange Concept - Focus on transaction.
• 2. Production Concept - Focus on mass production at low cost.
• 3. Product Concept - Focus on product quality and innovation.
• 4. Sales Concept - Focus on aggressive selling and promotions.
• 5. Marketing Concept - Focus on customer needs and satisfaction.
 Exchange & Production Concept
• • Exchange Concept: Marketing revolves around exchanging goods and services.
• • Production Concept: Consumers prefer products that are affordable and easily available,
but it ignores customer preferences beyond price.
 Product Concept
• Focuses on delivering high-quality and innovative products. Firms can suffer from 'Marketing
Myopia' if they ignore understanding customer needs and only focus on product excellence.
 Sales Concept
• Companies cannot rely on customers to buy automatically. They must actively promote their
products through advertising, discounts, and persuasive sales techniques.
 Marketing Concept Shift
• The shift in approach includes:
• • From production to customer focus.
• • From supply-driven to demand-driven.
• • From focusing on volume to focusing on profitability.
• • From sales to satisfaction.
• • From internal focus to external market needs.
 Selling vs. Marketing
• Selling focuses on convincing customers to buy what the company has produced, with
emphasis on short-term goals. Marketing, on the other hand, focuses on identifying customer
needs first and then producing products to satisfy them. It aims for long-term profitability
and customer satisfaction, making marketing a core function in modern businesses.
Marketing Mix & Market
Segmentation
Overview based on James Culliton
and Jerome McCarthy
 Introduction to Marketing Mix
• James Culliton coined the term 'Marketing Mix'.
• Described marketing manager as a 'Mixer of
Ingredients'.
• Jerome McCarthy introduced 4Ps:
• 1. Product
• 2. Place
• 3. Price
• 4. Promotion
 1st P - Product Variable
• - Product line, design, quality, features,
models
• - Packaging, branding, trademark,
merchandising
• - Services (pre-sale/after-sale), new products
 2nd P - Place Variable
• - Channels of distribution
• - Types of intermediaries, policies, dealer
relations
• - Physical distribution: transportation,
warehousing, inventory
 3rd P - Price Variable
• - Pricing policies, price levels, margins,
discounts
• - Terms of delivery, credit terms, installment
facilities
• - Resale price maintenance
 4th P - Promotion Variable
• - Personal selling: objectives, efforts,
motivation
• - Advertising: media mix, budget, programs
• - Sales promotions: displays, contests, trade
promotion
• - Publicity & public relations
 Environmental/Behavioral Variables
• 1. Customer: location, behavior, needs, loyalty
• 2. Competition: intensity, number of
competitors
• 3. Trade: practices, attitudes, services
• 4. Environmental: technology, laws, economy,
culture
Marketing Mix vs Environmental Variables

• - Marketing Mix: Controllable (from within

firm)
• - Environmental Variables: Non-controllable
(external)
• - Marketing is the interaction of both sets to
form strategy
 Choosing the Right Marketing Mix
• - Identify product lines, pricing, promotion,
and placement
• - Adjust to environmental changes, customer
preferences
 Market Segmentation - Definition
• Market segmentation is the process of dividing
the total market into sub-markets.
• - Based on differences in needs and behaviors
• - Helps develop focused marketing strategies
 Benefits of Market Segmentation
• - Efficient and economic marketing
• - Identify less satisfied segments
• - Mutual benefits for firm and customer
 Segmentation Methods
• 1. Geographic: region, climate, population
• 2. Demographic: age, gender, income,
education
• 3. Psychographic: personality, lifestyle, values
• 4. Buyer Behavior: motivation, expectations
• 5. Volume: bulk vs one-time buyers
 Steps in Segmentation
• 1. Assess customer differences
• 2. Identify descriptive characteristics
• 3. Create customer segments
• 4. Develop marketing mix for each segment
• 5. Evaluate segment response
• 6. Estimate purchase levels
• 7. Select target segments
 Marketing Targeting
• - Targeting follows segmentation
• - Evaluate market size, cost, product future
• - Select segments that are relevant, accessible,
profitable
 Marketing Planning
• Marketing planning means deciding in
advance how a business will achieve its
marketing goals using the resources it has.
Step 1: Scanning the Business Environment

• - PESTL Analysis: Study Political, Economic,

Social & Technological factors, legal factors
• - Market & Competitor Analysis
• - Customer Needs and Product Fit
• - Spotting Opportunities
 Step 2: Internal Scanning
• - Define Business Mission
• - Assess Strengths & Weaknesses
• - Identify Strategic Business Units (SBUs)
• - Use BCG Matrix: Stars, Cash Cows, Question
Marks, Dogs
 Step 3: Setting Marketing Objectives
• - Choose Focus Areas: Sales, Market Share,
Profits, etc.
• - Align with Corporate Goals
• - Assess Current Performance and Set Targets
 Step 4: Developing Marketing Strategy
• - Target Market Selection and Segmentation
• - Understand Customer Needs
• - 4Ps: Product, Price, Place, Promotion
• - Adapt to Uncontrollable Factors
Step 5: Functional Plans & Programmes
• - Sales Forecasting
• - Distribution and Channel Planning
• - Advertising and Promotion Strategy
• - Sales Force Planning
 Marketing Strategy
• A coordinated plan to reach the right
customers using Product, Price, Place, and
Promotion.
 Types of Strategies
• - Offensive (Frontal, Flanking, Bypass,
Encirclement, Guerrilla)
• - Defensive
• - Niche
• - Demarketing & Remarketing
Importance of Marketing in Indian Economy

• - Drives Production and Consumption

• - Improves Productivity and Investment
• - Creates Entrepreneurs and Managers
• - Empowers Consumers
• - Aids Economic Planning
Rural (village area )Marketing: Importance

• - Large Consumer Base

• - Rising Incomes
• - High Bank Deposits
• - Impact of Green Revolution & Govt Schemes
 Rural Market Features
• - Huge Size, Scattered Villages
• - Seasonal Demand Linked to Agriculture
 Problems in Rural Marketing
• - Poor Infrastructure & Transport
• - High Distribution Costs
• - Lack of Trained Dealers
• - Limited Media Reach
• - Low ROI
 Main Problem Areas in Rural Marketing1
• 1. Physical Distribution Challenges.
• Transportation: Rural India suffers from poor transportation infrastructure.
Many villages are only connected by kacha roads that become unusable
during monsoons, making access to interior markets difficult or
impossible.
• Warehousing Problems: There is a severe shortage of warehousing
facilities in rural India. The existing government agencies like the Central
Warehousing Corporation (CWC) and State Warehousing Corporations
(SWC) primarily serve urban or semi-urban nodal points, not deep rural
areas. This makes it hard to service retailers in villages efficiently.
• Communication Problems: Basic communication infrastructure is lacking.
Without proper telecommunication and digital connectivity, coordination
of supply chains, sales, and promotions becomes very challenging.
 Channel Management Issues
• Rural markets need multiple tiers in the
distribution system due to:
• Long physical distances
• Scattered and isolated village settlements This
necessitates a chain that includes:
• Village-level shopkeepers
• Mandi-level distributors
• Town-level wholesalers or Stuckists
• Manufacturer’s branch warehouses
 Key issues:
• High costs and complexity in administration due
to multiple tiers
• Unavailability or unsuitability of dealers for
certain product categories
• Inadequate banking and credit facilities hinder:
• Smooth
• remittance Bank-enabled supply transactions
• Credit-based selling
Sales Force Management Problems
• Executives are unwilling to work or settle in
rural areas.
• Salesmen lack familiarity with the local
culture, traditions, and buying behavior.
• Language barriers affect effective
communication and relationship building.
• Rural marketing requires intensive training
and creative thinking to be successful.
 4. Promotion and Marketing
Communication Challenges
• a.Constraints from Market & Consumer Nature:
• Low literacy, low media exposure, and different
lifestyle patterns limit the effectiveness of
standard promotional methods.
• b. Constraints in Media Availability:
• Limited reach of conventional media like TV,
newspapers, and the internet in rural areas.
Lack of local media platforms in many villages.
 Cost–Service
• Servicing rural areas is cost-intensive due to
dispersed demand and infrastructure gaps.
• Balancing affordability for rural consumers
while maintaining service quality and
profitability is a major challenge.
 Solutions for Rural Marketing
• - Use Local Transport
• - Partner with Local Retailers
• - Train Local Sales Force
• - Use Local Media
• - Offer Small Pack Sizes
 Solutions to Rural Marketing Problems
• 1. Use a Combination of Transport Modes: Optimize logistics using a
mix of road, rail, and local transport to improve reach and reliability.
• 2. Develop a Long-Term Retail Network Strategy: Companies should
recognize that maintaining rural retail outlets is a long-term
investment. Over time, these outlets become viable and generate
consistent returns.
• 3. Train Sales Personnel Intensively: Focus on educating them about
local culture, language, and lifestyle. Equip them with creative
problem-solving and adaptive selling strategies tailored to rural needs.
• 4. Select a Suitable Media Mix for Promotions: Use folk media, local
events, wall paintings, loudspeaker announcements, and video vans.
Ensure the message is simple, visual, and in the local language.
• 5. Offer Smaller, Affordable Packs: Create low-cost, value-based
packaging (like sachets) to suit the limited and irregular income of
rural consumers.