Marketing consists of many concepts and tools. Mainly, we can consider marketing as a societal process and a managerial process.
Marketing is a societal process, which fulfills the customer's requirement through creating, presenting, and exchanging products/services with others. Marketing is a managerial process planned by the organization to meet the customer needs and organizations goals through conceptualisation, pricing, promotion, and distribution of goods/ services and ideas.
Marketing Vs. Sales
Normally people think marketing is selling the product. However, Selling comes after marketing. Marketing is to find and convince the customer for buying the product. Selling means getting the deal signed by the customer (or closing the deal).Both are equally important for the success and growth of a business. Marketing prepares the customers for the sales. It mainly consists of advertising, promotion,and direct mail.
Marketing function involves:
Marketing is a societal process, which fulfills the customer's requirement through creating, presenting, and exchanging products/services with others. Marketing is a managerial process planned by the organization to meet the customer needs and organizations goals through conceptualisation, pricing, promotion, and distribution of goods/ services and ideas.
Marketing Vs. Sales
Normally people think marketing is selling the product. However, Selling comes after marketing. Marketing is to find and convince the customer for buying the product. Selling means getting the deal signed by the customer (or closing the deal).Both are equally important for the success and growth of a business. Marketing prepares the customers for the sales. It mainly consists of advertising, promotion,and direct mail.
Marketing function involves:
- Identifying the prospective customers Market research and analysis - identifying the customer's requirement and desire
- Product identification- offering the desired product that fits into the customer's requirement.
- Strategic planning to penetrate the market
- Packaging and Pricing - providing benefits and satisfaction to the customer. Advertising the product
The Sales process involves converting the prospects into the customers. The Sales function includes:
- Selling the identified, packaged, and priced product in the marketplace.
- Being responsible for the revenue generation and profits
ii. Marketing Mix - 4Ps
To get the desired response from the market, marketers use several tools known as marketing mix. McCarthy divided these tools into four groups called as 4Ps of marketing: Product, Price, Place, and Promotion. Marketing variables of each P are shown in Figure.
To get the desired response from the market, marketers use several tools known as marketing mix. McCarthy divided these tools into four groups called as 4Ps of marketing: Product, Price, Place, and Promotion. Marketing variables of each P are shown in Figure.
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| Variables Under Each P of Marketing Mix (Adapted from Philip Kotler) |
A brief description of 4Ps is-:
a. Product: According to product concept, the consumer prefers products that give the most in terms of quality, performance, and modern features.
b. Price: Price element generates revenue. In small companies, the company's boss can set price of a product but in large companies, separate department handles the pricing. It is the most critical element for any company. To set the price, company has to decide wholesale and retail prices, discount credit terms,and allowances.
c. Place: Once the production is over, the next step is the movement of the product.Place consists of distribution channel, outlet locations, transportation, inventory levels and locations where the product would sell.
d. Promotion: Promotion includes the activities like marketing campaigns, sales schemes, print ads etc. that are required by the company to promote and communicate the features and utility of the product to the target market.
iii. Segmentation, Targeting and Positioning (STP)
Any business should generate a profit while giving value to the market. The value to the market is a function of perceived value by the consumer of the product.One of the mantras of marketing is to identify customers with different state of same need and provide products suiting those variations in need. If done effectively,it would ensure that consumer sees value in the product and the business would generate profit. This process is called Segmentation, Targeting, and Positioning.
There are two types of marketing processes:
1. Mass Marketing: It is a process, which presumes that there is one market and one product would suit the requirement of all the customers. This strategy works for those companies where all the customers have the same need. For example,marketing for liquid milk.
2. The Value-delivery process: In this process a company follows a three step marketing strategy :
a. Segmentation: Segmentation is a process in which the company divides the marketplace into subsets of same consumer needs.
As a milk producer, a dairy unit may segment the consumers into various segments like:
i. Children:
Infants who may need milk in powder form with different health supplements
Grown up infants and kids who may need milk with high fat content
ii. Health Conscious Adults
a. Product: According to product concept, the consumer prefers products that give the most in terms of quality, performance, and modern features.
b. Price: Price element generates revenue. In small companies, the company's boss can set price of a product but in large companies, separate department handles the pricing. It is the most critical element for any company. To set the price, company has to decide wholesale and retail prices, discount credit terms,and allowances.
c. Place: Once the production is over, the next step is the movement of the product.Place consists of distribution channel, outlet locations, transportation, inventory levels and locations where the product would sell.
d. Promotion: Promotion includes the activities like marketing campaigns, sales schemes, print ads etc. that are required by the company to promote and communicate the features and utility of the product to the target market.
iii. Segmentation, Targeting and Positioning (STP)
Any business should generate a profit while giving value to the market. The value to the market is a function of perceived value by the consumer of the product.One of the mantras of marketing is to identify customers with different state of same need and provide products suiting those variations in need. If done effectively,it would ensure that consumer sees value in the product and the business would generate profit. This process is called Segmentation, Targeting, and Positioning.
There are two types of marketing processes:
1. Mass Marketing: It is a process, which presumes that there is one market and one product would suit the requirement of all the customers. This strategy works for those companies where all the customers have the same need. For example,marketing for liquid milk.
2. The Value-delivery process: In this process a company follows a three step marketing strategy :
a. Segmentation: Segmentation is a process in which the company divides the marketplace into subsets of same consumer needs.
As a milk producer, a dairy unit may segment the consumers into various segments like:
i. Children:
Infants who may need milk in powder form with different health supplements
Grown up infants and kids who may need milk with high fat content
ii. Health Conscious Adults
- Adults who may need low fat content in milk
- Adults who may not like milk flavor and may want milk in other flavors like banana; elaichi etc
iii. Travelers
This segment may want milk to be packaged such that its shelf life increases and it can be used over few days
b. Targeting: It is the process of reviewing the market and selecting the appropriate target segment. Suppose after review it comes out that there are three different segments exist e.g. one segment wants very low fat milk, the second wants milk that has moderate level of fat, and the third wants to have milk with very high fat content for their consumption. Then, there must be three different product lines that would cater to each segment. The product lines can be double toned milk,toned milk, and the full cream milk. Now, each product would target each customer segment individually.
However, identifying separate segments does nnot necessarily mean catering to all segments. You may have to review your capability, analyze the viability of serving each segment and finally arrive at the target segment. This target segment would be the most suitable for your business with respect to several factors like growth prospects, competitors, pricing, market demand etc. A large dairy company like Amul, has capability to produce for each segment and can target each segment.
For example, it provides powder milk brand for infants; pouched milk; flavored milk and tetra pack milk with long shelf life. However, for a small regional player like "Parag", marketing it may not be possible to have so many offerings for the various segments in the market. Hence, they target the segment that consumes liquid milk only as the company may not have the capability to produce milk powder etc.
c. Positioning: It involves defining product attributes and then highlighting them during marketing or promotional . campaigns to generate interest and sales volumes for the business. Defining clear positioning by highlighting certain product attributes helps differentiate a product in the marketplace.
Let us take example of ice cream. When Amul launched its ice - cream some years ago in India there were many challenges e.g. establishing manufacturing facilities, distribution, establishing cold chain, and then marketing. The biggest of them was how to position its ice - cream in the market place vis-à-vis its competitors, which were big established names in the ice - cream industry like Quality Walls, Vadilal and Go Cool. Amul positioned its ice - cream as "Real Milk, Real Ice - Cream" against competitors who were using vegetable fats in their ice - creams. This positioning strategy helped Amul gain very big market share in no time across India.
This segment may want milk to be packaged such that its shelf life increases and it can be used over few days
b. Targeting: It is the process of reviewing the market and selecting the appropriate target segment. Suppose after review it comes out that there are three different segments exist e.g. one segment wants very low fat milk, the second wants milk that has moderate level of fat, and the third wants to have milk with very high fat content for their consumption. Then, there must be three different product lines that would cater to each segment. The product lines can be double toned milk,toned milk, and the full cream milk. Now, each product would target each customer segment individually.
However, identifying separate segments does nnot necessarily mean catering to all segments. You may have to review your capability, analyze the viability of serving each segment and finally arrive at the target segment. This target segment would be the most suitable for your business with respect to several factors like growth prospects, competitors, pricing, market demand etc. A large dairy company like Amul, has capability to produce for each segment and can target each segment.
For example, it provides powder milk brand for infants; pouched milk; flavored milk and tetra pack milk with long shelf life. However, for a small regional player like "Parag", marketing it may not be possible to have so many offerings for the various segments in the market. Hence, they target the segment that consumes liquid milk only as the company may not have the capability to produce milk powder etc.
c. Positioning: It involves defining product attributes and then highlighting them during marketing or promotional . campaigns to generate interest and sales volumes for the business. Defining clear positioning by highlighting certain product attributes helps differentiate a product in the marketplace.
Let us take example of ice cream. When Amul launched its ice - cream some years ago in India there were many challenges e.g. establishing manufacturing facilities, distribution, establishing cold chain, and then marketing. The biggest of them was how to position its ice - cream in the market place vis-à-vis its competitors, which were big established names in the ice - cream industry like Quality Walls, Vadilal and Go Cool. Amul positioned its ice - cream as "Real Milk, Real Ice - Cream" against competitors who were using vegetable fats in their ice - creams. This positioning strategy helped Amul gain very big market share in no time across India.
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