UNIT-1

MARKETING THEORY AND

PRACTICES

DR. NIDHI TEWATIA

 1. Concepts of marketing, Introduction:

• Marketing, as indicated in the term, denotes a process

that is continuous in nature. The market should be
continuously involved in initiating, conducting and
finalizing transactions and exchange. This is an
unending process and would continue till production
and consumption cease to exist in the world.
• Meaning: The term ‘marketing’ can be defined
analytically or operationally. The analytic way of
explaining the terms to show how marketing differs
from various other activities of a firm, marketing deals
with identifying and meeting human and social needs.
• One of the shortest definitions of marketing is “meeting needs
profitably”.
• Definitions: According to kotler: “Marketing is the science and
art of exploring, creating, and delivering value to satisfy the
needs of a target market at a profit. Marketing identifies
unfulfilled needs and desires”
• According to American management association: “Marketing
is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational
objectives”. Thus marketing may be defined as those as those
business functions which are most directly and primarily
concerned with three activities :
A. The recognition of the demand,
B. The stimulation of demand ∑
C. The satisfaction of demand
 Core concepts of marketing:
• Marketing Management is a social and
managerial process by which individuals or
firms obtain what they need or want through
creating, offering, exchanging products of
value with each other. the total marketing can
be fulfilled the core concepts of business.
 NEED/ WANT/ DEMAND:
• Need: It is state of deprivation of some basic satisfaction. eg.-
food, clothing, safety, shelter.
• Want: Desire for specific satisfier of need. eg.- Indians needs
food – wants paneer tikka/ tandoori chicken. Americans needs
food- wants hamburger/ French fries.
• Demand: Want for a specific product backed up by ability and
willingness to buy. eg.- Need – transportation. Want – Car (say,
Mercedes)……but able to buy only Maruti. Therefore, Demand
is for Maruti.

 PRODUCTS- GOODS/ SERVICES/ PLACE: Product is anything

that can satisfy need/ want.Product components are Physical
Good., Service,Idea.eg. Fast food- burger/ pizza.Physical Good –
material eaten.Service – purchase of raw material/
cooking,Idea – speed of computer/ processing power.
 VALUE/ COST/ SATISFACTION:
• Decision for purchase made based on value/ cost
satisfaction delivered by product/ offering..Product
fulfills/ satisfies Need/ Want. Value is products
capacity to satisfy needs/ wants as per consumer’s
perception or estimation.Each product would have
a cost/ price elements attached
• Satisfaction – Estimated in terms of time lead &
travel comfort.
• VALUE– Products capacity to satisfy.
• COST– Price of each products.
 EXCHANGE/ TRANSACTION: EXCHANGE: – The act/
process of obtaining a desired product from
someone by offering something in return. For
exchange potential to exist, the following
conditions must be fulfilled:
• There must be at least two parties.
• Each party has something of value for other party.
• Each party is capable of communication & delivery.
• Each party is free to accept/ reject the exchange
offer.
• Each party believes it is appropriate to deal with the
other party
 TRANSACTION: – Event that happens at the end
of an exchange. Exchange is a process towards an
agreement. When agreement is reached, we say a
transaction has taken place.
• Barter transaction.
• Monetary Transaction.
• At least two things of value.
• Condition agreed upon.
• Time of agreement.
• Place of agreement.
• May have legal system for compliance.
 RELATIONSHIP/ NETWORKING: Relationship marketing:-
It’s a pattern of building long term satisfying relationship
with customers, suppliers, distributors in order to retain
their long term performances and business. Achieved
through promise and delivery of ,high quality, good
service, fair pricing, over a period of time.
 MARKETING NETWORK: It is made up of the company
and its customers, employees, suppliers, distributors,
advertisement agencies, retailers, research &
development with whom it has built mutually profitable
business relationship. Competition is between whole
network for market share and NOT between companies
alone
 MARKET: A market consists of all potential customers sharing
particular need/ want who may be willing and able to engage in
exchange to satisfy need/ want. Market Size = fn (Number of
people who have need/ want; have resources that interest others,
willing or able to offer these resources in exchange for what they
want.

 MARKETERS/ PROSPECTS: Working with markets to actualize

potential exchanges for the purpose of satisfying needs and wants.
One party seeks the exchange more actively, called as “ Marketer”,
and the other party is called “Prospect”. Prospect is someone
whom marketer identifies as potentially willing and able to engage
in exchange. Marketer may be seller or buyer. Most of time,
marketer is seller. A marketer is a company serving a market in the
face of competition. Marketing Management takes place when at
least one party to a potential exchange thinks about the means of
achieving desired responses from other parties.
 Main concepts of Marketing:
Studies reveal that different organizations have different
perception of marketing and these different perception
have led to the formation of different concept of marketing
studies also reveal that at least five distinct concept of
marketing have guided and still guiding business firms.
• 1. Production Concept
• 2. Product Concept
• 3. Selling Concept
• 4. Marketing Concept
• 5. Societal Marketing Concept
 1.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.
 2.Product Concept
• 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.
3.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.
4.Marketing Concept: 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.
5.Societal Marketing Concept: This concept
stresses not only the customer satisfaction but
also gives importance to Consumer
Welfare/Societal Welfare. This concept is
almost a step further than the marketing
concept. Under this concept, it is believed that
mere satisfaction of the consumers would not
help and the welfare of the whole society has
to be kept in mind.
Differences between selling and marketing
SELLING MARKETING
• Selling starts with seller • Marketing starts with buyer
• Selling based on existing • Marketing based on all
activities activities
• Selling refers goods and • Marketing refers customer
services satisfaction
• What is offered? is enough • What should be offered? will
• Packing is enough for think
product protection • Packing is for convenient to
customers
• Cost determines price
• Consumer determines price
• Customer is last
• Customer is first
 Scope of Marketing
• When we talk about the scope of
marketing, we’re referring to all the
different areas that marketing
encompasses. It’s not just about
promotions or ads; marketing
touches every aspect of a business,
from product development to
customer relationship management.
Let’s break down the extensive scope
of marketing into its key
1. Market Research
• Understanding your audience is the first step in any
marketing strategy. Market research involves gathering
and analyzing data to identify the needs and
preferences of your target customers. This can be done
through surveys, focus groups, customer feedback, and
analytics tools. By knowing your market, you can tailor
your products, services, and messages to better meet
customer needs.
2. Product Development
• Marketing plays a crucial role in product development
. It’s not enough to create a product and hope it sells;
marketers must work closely with the product
development team to ensure that the product meets
customer needs. This involves identifying market gaps,
developing features that provide value, and testing the
product with real users before launching.
3. Branding
• Branding is one of the most critical aspects of
marketing. It’s about creating a unique identity that
sets your business apart from competitors. A strong
brand helps build trust and loyalty with customers.
This includes your company’s logo, tagline, colors, and
the overall message you convey to your audience.
4. Advertising and Promotions
• While advertising is just one piece of the marketing
puzzle, it’s an essential one. It includes all the
methods you use to promote your products or services
to consumers. This could be through digital ads, TV
commercials, print ads, or influencer marketing.
Promotions, on the other hand, involve offering
discounts, special deals, or limited-time offers to
encourage sales.
5. Sales and Distribution
• Marketing is also responsible for determining how and where products
will be sold. This involves choosing the right distribution channels—
whether that’s online stores, physical retail locations, or a mix of both.
The goal is to make it as easy as possible for customers to purchase
your products.
6. Digital Marketing
• In today’s world, digital marketing is a vital component of the overall
marketing strategy. This includes everything from search engine
optimization (SEO) and content marketing to social media and email
marketing. As more consumers spend time online, businesses must
ensure they have a strong digital presence to stay competitive.
7. Customer Relationship Management (CRM)
• Marketing doesn’t end with a sale. Building and maintaining strong
relationships with customers is key to long-term success. CRM systems
help businesses manage customer interactions, track behavior, and
deliver personalized experiences that keep customers coming back.
8. Public Relations (PR)
• Public relations is another essential part of marketing. It’s all about
managing a company’s reputation and building a positive public image.
This could involve handling media relations, responding to crises, and
communicating with stakeholders through press releases or interviews.
9. Content Marketing
• Content marketing is all about creating valuable,
relevant content to attract and engage your
audience. This could be through blog posts, videos,
infographics, or podcasts. The goal is to educate,
entertain, and build trust with potential customers
without directly selling to them.
10. Social Media Marketing
• Social media has transformed the way businesses
interact with customers. Platforms like Facebook,
Instagram, LinkedIn, and Twitter allow brands to
engage with their audience in real-time, building
relationships and fostering loyalty. Social media
marketing involves creating content, running ads,
and engaging with followers to grow your brand’s
presence.
The Role of Marketing in Business

• The importance of marketing in business is more important than ever

today. Without it, even the best products would go unnoticed. It helps
companies understand customer needs, develop strategies to meet
those needs, and ultimately persuade consumers to make a purchase.
• Creating Value: Marketing begins with creating value. This means
identifying the unmet needs of consumers and finding ways to solve
their problems through innovative products or services.
• Building Relationships: Successful marketing is about more than
making a sale; it’s about building long-term relationships with
customers. By engaging with customers at every stage of their
journey, businesses can foster loyalty and trust.
• Generating Awareness: Without marketing, it’s difficult for
consumers to know about a product or service. Whether it’s through
digital ads, social media posts, or word-of-mouth, marketing ensures
that potential customers are aware of what’s available to them.
 The Importance of Marketing

1. Driving Sales and Revenue

• Marketing generates awareness for your product or
service, attracting potential customers and driving sales.
Without marketing, even the best products would go
unnoticed. Whether through digital campaigns or in-
person events, marketing ensures that your target
audience knows about your offerings and is encouraged
to take action.
2. Building Brand Awareness
• A strong marketing strategy helps build brand recognition,
making your business stand out in a crowded
marketplace. When consumers are aware of your brand,
they’re more likely to choose you over competitors.
Consistent branding across all touchpoints helps create a
memorable identity that sticks with consumers.
3. Creating Customer Loyalty
• Marketing helps build relationships with customers, turning
first-time buyers into loyal advocates. Through personalized
experiences, rewards programs, and engaging content,
businesses can foster loyalty and keep customers coming
back for more.
4. Providing Insights for Product Development
• Marketing is also essential for gathering feedback and
insights that inform product development. By
understanding customer preferences, businesses can
create products that better meet market demands. This
ensures that the company remains competitive and
continues to grow.
5. Supporting Business Growth
• Marketing fuels business growth by increasing customer
acquisition, retention, and revenue. Whether you’re a
startup or an established enterprise, marketing helps you
scale by attracting new customers and expanding into new
markets.
 Types of marketing
environments:
There are two significant types of
marketing environments:
• Internal marketing environments
• External marketing environments
You can break down the external
marketing environment further into:
• Micro marketing environment
• Macro marketing environment
What is an internal marketing environment?

• An internal marketing environment

consists of factors that fall within your
control and impact your marketing
operations, including your
organization’s strengths, weaknesses,
uniqueness, and competencies.
• Think of essential marketing elements
such as your people and teams, the
quality of your product or service,
capital assets and budgets, and
company policy. Internal marketing
environment factors are controllable.
Here’s an example of some internal
elements you might monitor in your
marketing environment:
What is an external marketing environment?

• The external marketing environment

includes all factors that do not fall
within your organization’s control,
including technological advancements,
regulatory changes, and social,
economic, and competitive forces.
• These factors may be controllable or
uncontrollable, but defining and
studying their changes and trends
gives your business and marketing
team some power to stay the course.
The external marketing environment
can be broadly categorized into micro
and macro marketing environments.
What is a microenvironment in marketing?

• The microenvironment in marketing

is closely linked to your business and
directly affects marketing operations.
It includes factors like customers,
suppliers, business partners,
vendors, and even competitors.
Microenvironment factors are
controllable to some extent.
 What is a macroenvironment in marketing?

• The macro marketing environment includes factors that influence your overall business operation. These
factors are outside your direct control but can have a big impact on how you market your products or
services.

• While it’s true that the macro marketing environment can overwhelm a business and cause it to fail, it
can also lead to growth. A curious perspective and healthy company culture that empowers employees
and teams to share ideas, collaborate, and take creative risks will position your business for success.

• Your macro marketing environment is continually changing, so it’s vital to keep a close watch on these
factors that may serve as potential threats or opportunities to your business.

• An easy way to remember these factors is by using the PESTLE acronym, which stands for:

• P: Political factors
• E: Economic factors
• S: Social and demographic factors
• T: Technological advancement factors
• L: Legal and regulatory factors
• E: Environmental factors
• Political
Political changes can affect your market
environment. For instance, new government
policies or trade regulations may have a
massive effect on how you can market and
conduct your business in certain regions.
• Economic
Economic trends, like inflation or changing
interest rates, play a huge role in marketing
decisions. When interest rates rise,
businesses may cut spending, impacting
how they promote their products or
services.
• Social and demographic
Shifts in demographics or cultural trends
can shape consumer behavior. For example,
if younger audiences value sustainability,
businesses may need to highlight eco-
friendly products to stay relevant.
• Technological advancement
Advances in technology constantly reshape the
market environment. From automation to AI-
powered marketing tools, these factors
influence how businesses connect with
customers.
• Legal and regulatory
Laws and regulations can make or break a
marketing strategy. Compliance with
advertising standards or privacy laws ensures
smooth business operations while building trust
with customers.
• Environmental
Growing awareness of climate change has
made environmental factors more important
than ever. For instance, an unpredictable
environmental change, like the COVID-19
pandemic in 2020, can significantly change the
way we work, market, and do business globally.
 Examples of a marketing environment

To help you understand the effects of different marketing

environments, let’s look at some examples.
• Internal marketing environment: Your internal company culture
has an impact on how your employees behave, which in turn affects
your marketing operations. An organization that emphasizes
teamwork and collaboration, for example, will have more engaged
employees. This, in turn, will help the organization perform better
than competitors who do not share these values.
• Micro marketing environment: Say your business relies on a
network of suppliers, distributors, and retailers to get your products
to the customer. It’s wise to build good relationships with these
vendors, as any changes can influence your marketing strategy.
• Macro marketing environment: The shockwaves from the COVID-
19 pandemic are still hitting marketers. First, remote work changed
how we market goods and services. Now, inflation and the rising
cost of living loom large over the macro marketing environment.
 What is the Boston Consulting Group (BCG)
Matrix?

• The Boston Consulting Group Matrix (BCG

Matrix), also referred to as the product
portfolio matrix, is a business planning tool
used to evaluate the strategic position of a
firm’s brand portfolio. The BCG Matrix is one
of the most popular portfolio analysis
methods. It classifies a firm’s product and/or
services into a two-by-two matrix. Each
quadrant is classified as low or high
performance, depending on the relative
market share and market growth rate.
The horizontal axis of the BCG
Matrix represents the amount of
market share of a product and its
strength in the particular market. By
using relative market share, it helps
measure a company’s
competitiveness.
The vertical axis of the BCG Matrix
represents the growth rate of a
product and its potential to grow in
a particular market.
In addition, there are four quadrants
in the BCG Matrix:
1.Question marks: Products with
high market growth but a low
market share.
2.Stars: Products with high market
growth and a high market share.
3.Dogs: Products with low market
growth and a low market share.
4.Cash cows: Products with low
market growth but a high market
The assumption in the matrix is that an
increase in relative market share will
result in increased cash flow. A firm
benefits from utilizing
economies of scale and gains a cost
advantage relative to competitors. The
market growth rate varies from industry
to industry but usually shows a cut-off
point of 10% – growth rates higher than
10% are considered high, while growth
rates lower than 10% are considered
low.
The BCG Matrix: Question Marks

• Products in the question marks quadrant are in a

market that is growing quickly but where the
product(s) have a low market share. Question marks
are the most managerially intensive products and
require extensive investment and resources to
increase their market share. Investments in question
marks are typically funded by cash flows from the
cash cow quadrant.
• In the best-case scenario, a firm would ideally want
to turn question marks into stars (as indicated by A).
If question marks do not succeed in becoming a
market leader, they end up becoming dogs when
market growth declines.
 The BCG Matrix: Dogs

• Products in the dogs quadrant are in a

market that is growing slowly and where the
product(s) have a low market share.
Products in the dogs quadrant are typically
able to sustain themselves and provide cash
flows, but the products will never reach the
stars quadrant. Firms typically phase out
products in the dogs quadrant (as indicated
by B) unless the products are
complementary to existing products or are
used for a competitive purpose.
 The BCG Matrix: Stars

• Products in the star quadrant are in a market that is

growing quickly and one where the product(s) have
a high market share. Products in the stars quadrant
are market-leading products and require significant
investment to retain their market position, boost
growth, and maintain a competitive advantage.
• Stars consume a significant amount of cash but
also generate large cash flows. As the market
matures and the products remain successful, stars
will migrate to become cash cows. Stars are a
company’s prized possession and are top-of-mind
in a firm’s product portfolio.
 The BCG Matrix: Cash Cows

• Products in the cash cows quadrant are in a market

that is growing slowly and where the product(s) have a
high market share. Products in the cash cows quadrant
are thought of as products that are leaders in the
marketplace. The products already have a significant
amount of investments in them and do not require
significant further investments to maintain their
position.
• Cash flows generated by cash cows are high and are
generally used to finance stars and question marks.
Products in the cash cows quadrant are “milked” and
firms invest as little cash as possible while reaping the
profits generated from the products.