Module: I Marketing Management Concepts: Marketing concept is the philosophy that companies should examine the requirements of their customers and then make decisions to satisfy those needs in a better manner than the competitors. Today, most of the companies have adopted various marketing concepts, but this has not always been the case. Let us now understand major marketing concepts. The major marketing concepts are: • • • Production concept Sales concept Marketing concept Production Concept According to the production concept, a company should focus on those items that it can produce most efficiently and also focus on creating supply of low-cost items that create the demand for the products. The key questions that a company needs to ask itself before producing an item are: • • Can we produce the item? Can enough of it be produced? This concept worked fairly during the 1920s as the items that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose task was to complete the transactions at a price fixed by the cost of production. All in all, this concept prevailed until the late 1920's. Sales Concept According to this concept, the companies would not only produce the items but would also try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were − • • Can we sell the item? Can we account enough for it? This concept paid little attention to whether the item actually was required. The goal simply was to beat the competition with little focus on customer satisfaction. Marketing was an operation performed after the product was developed and produced and many people came to relate marketing with hard selling. Even today, people use the word "marketing" when they actually mean “sales.”
Marketing Concept The marketing concept relies upon marketing studies to define market segments, their size, and their requirements. To satisfy those requirements, the marketing team makes decisions about the controllable parameters of the marketing mix. This concept was introduced after World War II as the customers could afford to be selective and buy only those items that precisely met their changing needs and these needs were not immediately obvious. The key questions changed to − • • • What do customers actually want? Can we improve it while they still want it? How can we keep the customers satisfied? In reply to these discerning customers, companies began to adopt marketing concepts, which includes − • • • Focusing on customer requirements before developing a product Aligning all operations of the company to focus on those needs Realizing a gain by successfully satisfying customer needs over the long-term When companies began to adopt this concept, they actually set up separate marketing departments whose objective was to satisfy customer needs. Mostly, these departments were sales departments with expanded responsibilities. While this widened sales department structure can be found in some enterprises today, many of them have structured themselves into marketing organizations having a worldwide customer focus. Processes of Marketing Management: Marketing process includes ways in which value can be created for the customers to satisfy their requirements. It is an endless series of actions and reactions between the customers and the companies making attempt to create value for and satisfy the needs of customers. In marketing process, the situation is examined to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are taken, plan is executed, and results are monitored. The following four steps are involved in the marketing process − Situation Analysis Analysis of the situation in which the company finds itself serves as the basis for identifying chances to satisfy unfulfilled customer needs. Situational and environmental analysis is done to identify the marketing options, to understand the company’s own capabilities and to understand the surroundings in which the company is operating.
Marketing Strategy After identifying the marketing options available, a strategic plan is developed to pursue the identified options. An analysis is done and the best available option is chosen; a plan or strategy is made for that option. Marketing Mix Decisions At this step, elaborated tactical decisions are made for the controllable parameters of the marketing mix. It includes decisions related to product development, product pricing, product distribution and product promotion. Implementation and Control Finally, the marketing plan is executed and the outputs of marketing efforts are monitored to adjust the marketing mix according to the market changes. This being the final step, it transforms the written or planned strategy into action and the product is presented according to this process. Functions of Marketing Management: The term functions of marketing management means the main role of this type of management in any organization. We need to understand the major functions of marketing management in order to understand and groom our organization. The following are some of the major functions of marketing management − • • • • • • • • Selling Buying and Assembling Transportation Storage Standardization and Grading Financing Risk Taking Market Information The marketing process performs certain activities as the products and services move from the producer to consumer Selling Selling is the crux of marketing. It involves convincing the prospective buyers to actually complete the purchase of an article. It includes transfer of ownership of products to the buyer. Selling plays a very vital part in realizing the ultimate aim of earning profit. Selling is groomed by means of personal selling, advertising, publicity and sales promotion. Effectiveness and efficiency in selling determines the volume of the firm’s profits and profitability.
Buying and Assembling It deals with what to buy, of what quality, how much from whom, when and at what price. People in business purchase to increase sales or to decrease costs. Purchasing agents are much tempted by quality, service and price. The products that the retailers buy for resale are selected as per the requirements and preferences of their customers. Assembling means buying necessary component parts and to fit them together to make a product. ‘Assembly line’ marks a production line made up of purely assembly functions. The assembly operation includes the arrival of individual component parts at the work place and issuing of these parts for assembling. Assembly line is an arrangement of employees and machines in which each individual has a particular job and the work is passed directly from one employee to the next until the product is complete. Transportation Transportation is the physical means through which products are moved from the places where they are produced to those places where they are needed for consumption. It creates locational utility. Transportation is very important from the procurement of raw material to the delivery of finished products to the customer’s places. Transportation depends mainly on railroads, trucks, waterways, pipelines and airways. Storage It includes holding of products in proper, i.e., usable or saleable, condition from the time they are produced until they are required by customers in case of finished products or by the production department in case of raw materials and stores. Storing protects the products from deterioration and helps in carrying over surplus for future consumption or usage in production. Standardization and Grading Standardization means setting up of certain standards or specifications for products based on the intrinsic physical qualities of any item. This may include quantity like weight and size or quality like color, shape, appearance, material, taste, sweetness etc. A standard gives rise to uniformity of products. Grading means classification of standardized items into certain well defined classes or groups. It includes the division of products into classes made of units possessing similar features of size and quality. Grading is very essential for raw materials; agricultural products like fruits and cereals; mining products like coal, iron and manganese and forest products like timber.