Individual Assignment

Prepared by
HDM 2014/06

Marketing Operation
Higher Diploma in Marketing

Course Lecturer: Mr. Ravi Dissanayake

Submission Date: 05th October 2014

Department of Marketing Management

Faculty of Commerce and Management Studies
University of Kelaniya.

Contents

1. Definitions for "What is Marketing"

2. Introduction to marketing philosophies
Production Concept
Product Concept
Sales Concept
Marketing concept
Holistic Marketing Concept
3. Introduction to marketing core concepts
4. Basic elements of consumer behavior
5. Basic elements of marketing environment

1. Definitions for "What is Marketing"

Marketing is a process of creating value, communicating the value and
delivering the value at a profit by customer satisfaction
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Key insight of marketing

Satisfying customers
Maintain profitability
Getting life time value of customers
Mantra of Marketing
Customer is the boss
Customer is the king
Customer is the god
Customer is always right

Other Definitions for Marketing

Charted Institute of Marketing
The Chartered Institute of Marketing defines marketing as identifying anticipating and
satisfying customer needs and wants at a profit.
Philip Kotler
According to Philip Kotler, The term Marketing is defined as a social and
managerial process by which individuals and groups obtain what they need and want
through creating, offering and exchanging products of value with others is known as
Marketing.
American Marketing Association
Marketing: Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers,
clients, partners, and society at large.

Harvard Business School

Marketing is the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges that
satisfy individuals' and companies' goals.
A marketing orientated approach means a business reacts to what customers want
by considering environment evidence. The decisions taken are based around
information about customers needs and wants, rather than what the business thinks
is right for the customer. Most successful businesses take a market-orientated
approach.
The Marketing Mind Set should be a OUT IN approach. For marketing decishions
the marketer should think of Competitor, Market and Customer.
The marketing mix is often referred to as the Four Ps - since the most important
elements of marketing are concerned with:

Product - the product (or service) that the customer obtains

Price - how much the customer pays for the product

Place how the product is distributed to the customer

Promotion - how the customer is found and persuaded to buy the product

And in service marketing its the 7Ps which includes people, process and physical
evidence.
It is known as a mix because each ingredient affects the other and the mix must
overall be suitable to the target customer.
What makes for an effective marketing mix?
An effective marketing mix is one which:

Meets customer needs

Achieves marketing objectives

Is balanced and consistent

Creates a competitive advantage for the business

The marketing mix for each business and industry will vary; it will also vary over time.
For most businesses, one or two elements of the mix will be seen as relatively more
important than the others, as illustrated below:
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What makes for an effective marketing mix?

An effective marketing mix is one which:

Meets customer needs

Achieves marketing objectives

Is balanced and consistent

Creates a competitive advantage for the business

The marketing mix for each business and industry will vary; it will also vary over time.
For most businesses, one or two elements of the mix will be seen as relatively more
important than the others, as illustrated below:
Marketing is based on thinking about the business in terms of customer needs and
their satisfaction. Marketing differs from selling because "Selling concerns itself with
the tricks and techniques of getting people to exchange their cash for your product. It
is not concerned with the values that the exchange is all about. And it does not, as
marketing invariable does, view the entire business process as consisting of a tightly
integrated effort to discover, create, arouse and satisfy customer needs." In other
words, marketing has less to do with getting customers to pay for your product as it
does developing a demand for that product and fulfilling the customer's needs.

2. Marketing philosophies
Under the marketing management philosophy, there are five concepts:

Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept

I.

Production Concept

Those companies who believe in this philosophy think that if the goods/services are
cheap and they can be made available at many places, there cannot be any problem
regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing
efforts in reducing the cost of production and strengthening their distribution system.
In order to reduce the cost of production and to bring it down to the minimum level,
these companies indulge in large scale production.
This helps them in effecting the economics of the large scale production.
Consequently, the cost of production per unit is reduced.
The utility of this philosophy is apparent only when demand exceeds supply. Its
greatest drawback is that it is not always necessary that the customer every time
purchases the cheap and easily available goods or services.

II.

Product Concept
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Those companies who believe in this philosophy are of the opinion that if the quality
of goods or services is of good standard, the customers can be easily attracted. The
basis of this thinking is that the customers get attracted towards the products of good
quality. On the basis of this philosophy or idea these companies direct their
marketing efforts to increasing the quality of their product.
It is a firm belief of the followers of the product concept that the customers get
attracted to the products of good quality. This is not the absolute truth because it is
not the only basis of buying goods.
The customers do take care of the price of the products, its availability, etc. A good
quality product and high price can upset the budget of a customer. Therefore, it can
be said that only the quality of the product is not the only way to the success of
marketing.

III.

Selling Concept

Those companies who believe in this concept think that leaving alone the customers
will not help. Instead there is a need to attract the customers towards them. They
think that goods are not bought but they have to be sold.
The basis of this thinking is that the customers can be attracted. Keeping in view this
concept these companies concentrate their marketing efforts towards educating and
attracting the customers. In such a case their main thinking is selling what you
have.
This concept offers the idea that by repeated efforts one can sell-anything to the
customers. This may be right for some time, but you cannot do it for a long-time. If
you succeed in enticing the customer once, he cannot be won over every time.
On the contrary, he will work for damaging your reputation. Therefore, it can be
asserted that this philosophy offers only a short-term advantage and is not for longterm gains.

IV.

Marketing Concept
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Those companies who believe in this concept are of the opinion that success can be
achieved only through consumer satisfaction. The basis of this thinking is that only
those goods/service should be made available which the consumers want or desire
and not the things which you can do.
In other words, they do not sell what they can make but they make what they can
sell. Keeping in mind this idea, these companies direct their marketing efforts to
achieve consumer satisfaction.
In short, it can be said that it is a modern concept and by adopting it profit can be
earned on a long-term basis. The drawback of this concept is that no attention is
paid to social welfare.

V.

Holistic Marketing Concept

The holistic marketing concept is based on the development, design, and

implementation of marketing programs, processes, and activities that recognize their
breadth and interdependencies. Holistic marketing recognizes that everything matters in
marketing and that a broad, integrated perspective is often necessary
Relationship Marketing a key goal of marketing is to develop deep, enduring
relationships with people and organizations that directly or indirectly affect the success
of the firms marketing activities. Relationship marketing aims to build mutually satisfying
long-term relationships with key constituents in order to earn and retain their business.
Four key constituents for relationship marketing are customers, employees, marketing
partners (channels, suppliers, distributors, dealers, agencies), and members of the
financial community (shareholders, investors, analysts).
Integrated Marketing occurs when the marketer devises marketing activities and
assembles marketing programs to create, communicate, and deliver value for
consumers such that the whole is greater than the sum of its parts. Two key themes
are that (1) many different marketing activities can create, communicate, and deliver
value and (2) marketers should design and implement any one marketing activity with all
other activities in mind.
Internal Marketing an element of marketing, is the task of hiring, training, and
motivating able employees who want to serve customers well. It ensures that everyone
in the organization embraces appropriate marketing principles, especially senior
management.
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Social Responsibility Marketing / Performance Marketing requires understanding

the financial and nonfinancial returns to business and society from marketing activities
and programs what is happening to market share, customer loss rate, customer
satisfaction, product quality, and other measures. They also consider the legal, ethical,
social and environmental effects of marketing activities and programs.
It is all about doing business in a socially ethical manner.

Includes
1. Green Marketing Environmentally friendly marketing
2. Ethical Marketing- Doing business in a ethical and socially responsible
manner
3. Cause related Marketing Can connect a good cause for charity purpose to
the good cause for charity society to promote the brand in a socially accepted
manner

3. Core concept of Marketing

Need, Wants and Demand: Marketing begins with human needs and wants. Needs
are feelings of deprivation of some satisfaction. People need food, air, water, shelter
to survive. Wants are desire for satisfies of needs. Wants which are backed by the
purchasing power become demand
Products (Goods, Services and Ideas): A product is anything that can be offered
to satisfy a need or want. A product may consist of three components- physical
goods, services and ideas.
Value, Cost and Satisfaction: Value means the customer's estimate of the
product's overall capacity to satisfy his/her needs. Cost is the price which a customer
pays the products. Satisfaction is inner felling.
Value
Product Value: Quality of the product (package, ingredients, quality)
Service Value: After sales service facility (Warranty, service, Usage
demonstration)
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People value: Attractive service by the staff (Greeting,Smile,care)

Cost
Financial cost: Product Price
Time cost: The time spend to purchase the product (Searching time)
Physical Cost: The effort customer put to purchase
Physiological cost: Unpleasant situation face by the customer using a product
( feel

emotional bad)

Exchange and Transaction: Exchange is the process of obtaining a desired

product from someone by offering something in return. Exchange leads to
transactions.
Relationship and Networks: Relationship marketing refers to the process of
building long-term satisfying relationship with customer, distributors and suppliers.
Marketing Environment: Marketing environments are divided into two parts.
Internal environment includes customer, suppliers, managements, employees,
productions, etc. On the other hand external environment includes sociocultural
environment, political, technological, economic environment, etc.
Competition: Completion may come in many forms. A firm always competes with
the existing player. Threat of potential competitor is also taken in consideration.
Substitute product is also a competitor to firm.
i. Brand Competition

ii. Industry competition

iii. Market Competition

iv. General competition

Supply Chain: Supply chain is a longer channel includes backward and forward
logistic. It stretches from raw materials to delivery of finished goods to the ultimate
consumer. Capturing higher value of supply chain gives firm competitive advantage
over competitor firms.
Target markets, positioning, and Segmentation
A marketer can rarely satisfy everyone in a market. Not everyone likes the same
cereal, hotel room, restaurant, automobiles, and college
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Carefully choosing the set of people to cater in the total market eg: Youth,
Students,Teachers

4. Consumer behavior
Consumer behavior consists of the actions that consumers take in regard to making
decisions about purchasing various goods and services. A study of this phenomenon
will often focus on the psychological and other factors that motivate people to either
buy a product or reject it in favor of some other option. In order to create a
successful marketing campaign, it is necessary to understand these factors and
utilize those behaviors in a manner that motivates consumers to make purchases.
One of the key elements that influence consumer behavior is the self-image of the
consumer. People who crave admiration in order to feel good about them will often
go to extraordinary lengths to receive validation from others. This will often lead them
to purchase the latest trendy clothing and the newest car loaded with extras, and
being seen in the right places can be extremely important. By contrast, people who
are less concerned with what others think are likely to focus on making purchases
they deem as practical and capable of providing them with the comfort and service
they require.
Consumers buyer behaviour and the resulting purchase decision are strongly
influenced by cultural, social, personal and psychological characteristics. An
understanding of the influence of these factors is essential for marketers in order to
develop suitable marketing mixes to appeal to the target customer.
CULTURAL factors include a consumers culture, subculture and social class. These
factors are often inherent in our values and decision processes.
SOCIAL factors include groups (reference groups, aspirational groups and member
groups), family, roles and status. This explains the outside influences of others on
our purchase decisions either directly or indirectly.
PERSONAL factors include such variables as age and lifecycle stage, occupation,
economic circumstances, lifestyle (activities, interests, opinions and demographics),
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personality and self-concept. These may explain why our preferences often change
as our `situation' changes.
PSCHOLOGICAL factors affecting our purchase decision include motivation
(Maslow's hierarchy of needs), perception, learning, beliefs and attitudes.
These factors cause consumers to develop product and brand preferences. Although
many of these factors cannot be directly controlled by marketers, understanding of
their impact is essential as marketing mix strategies can be developed to appeal to
the preferences of the target market
When purchasing any product, a consumer goes through a decision process. This
process consists of up to five stages
Problem recognition. The first step is problem recognition. During this step, the
consumer realizes that she has an unfulfilled need or want. Let's use the example
of a consumer who has just been informed by her mechanic that fixing her car will
cost more than it's worth. Our consumer realizes that she now has a transportation
problem and wants to fulfill that need with the purchase of a car.
Information search. The next step is to gather information relevant to what you
need to solve the problem. In our example, our consumer may engage in research
on the Internet to determine the types of vehicles available and their respective
features.
Evaluation. After information is gathered, it is evaluated against a consumer's
needs, wants, preferences, and financial resources available for purchase. In our
example, our consumer has decided to narrower her choices down to three cars
based upon price, comfort and fuel efficiency.
Purchase. At this stage, the consumer will make a purchasing decision. The
ultimate decision may be based on factors such as price or availability. For
example, our consumer has decided to purchase a particular model of car because
its price was the best she could negotiate and the car was available immediately.
Post-purchase evaluation. At this stage, the consumer will decide whether the
purchase actually satisfies her needs and wants. Is our car purchaser happy with
her purchase? If she is not satisfied, why isn't she?

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5. Introduction marketing environments

Firms are affected by lots of different things; a firm's marketing environment is made
up of all of the things that affect the way it operates. Some of the factor's in a firm's
marketing environment can be controlled by the firm but some are uncontrollable.
Firms need to understand their marketing environment so that they can make the
most of positive factors and manage the impact of negative factors. A firm's
marketing environment can be spilt into three parts: internal environment, macro
environment and micro environment.
Internal Environment
The internal environment is made up of factors within the firm itself. Examples
include employees, company policy, capital assets, the firm's structure and the firm's
products (materials). within an organization that influence its activities and choices,
particularly the behavior of employees. Include the organizations mission statement,
leadership styles, and its organizational culture.
Micro Environment
The micro environment is made up of factors that are close to the firm and affect it
on a 'day to day' basis; usually these factors interact with the firm or are involved in
the same industry. Micro environment examples include customers, banks and trade
unions as they all interact with the firm. Competitors are also part of the micro
environment because they are selling competing products, their activity could have a
direct impact on the firm's daily business. Some of the factors within the micro
environment can be controlled whilst others cannot. For more information about the
micro environment and how to analyses a firm's micro environment through a
stakeholder

analysis,

of operations that
factors

Factors or elements in

affect

an organization's immediate

its performance and decision-making freedom.

include competitors, customers, distribution

the general public.

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channels, suppliers,

area
These
and

Macro Environment
The macro environment is made up of factors that affect the firm on a long term
basis. In general macro environment factors are not close to the firm. Micro
environment factors could be national or global measures and affect many industries
and groups. Macro environment examples include legislation, the economy (e.g.
recession, inflation, VAT changes), and technological change such as the internet.
Macro environment factors are uncontrollable factors but still influence company
strategy.The major external and uncontrollable factors that influence an
organizations decision making, and affect its performance and strategies. These
factors include the economic factors, demographic, legal, political, and social
conditions, technological changers and natural factors. Micro environment influences
include competitors, changes in interest rates, changes in cultural tastes,
disastrous weather, or government regulations.

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