Marketing Aptitude for SBI PO & Associates
Introduction
The
objective of all business enterprises is to satisfy the needs and wants of the
society.
Marketing
is, therefore, a basic function of all business firms. When a salesperson sells
washing
machines,
a doctor treats a patient or a Government asks people to take their children
for getting
polio
drops, each is marketing something to the targets. Traditionally, small firm
owners did not
give
as much importance to marketing as to other functions such as accountancy,
production and
selling.
Training programmes, enterprise development and the current thrust for
competitiveness
have
now given high priority to promoting marketing awareness among small business
owners,
and
marketing is now assuming its rightful place along with other business
functions.
Since
early 1990s there has been a change in the thinking of businessman from product
orientation
to consumer orientation. Modern business concerns lay emphasis on ‘selling
satisfaction’
and not merely on selling products. The activities have to be coordinated so as
to
develop
the marketing mix, which provides maximum satisfaction to the customers. That
is why
marketing
research and product planning occupy an important role in marketing. The other
important
functions of marketing include: buying and assembling, selling,
standardisation,
packing,
storing, transportation, promotion, pricing and risk bearing. Thus, the scope
of
marketing
is very wide and no more restricted to merely selling of products.
What
is Marketing ?
Marketing
may be narrowly defined as a process by which goods and services are exchanged
and
the
values determined in terms of money prices. That means marketing includes all
those
activities
carried on to transfer the goods from the manufacturers or producers to the
consumers.
We
shall be learning later in the lesson that marketing is more than a mere
physical process of
distributing
goods and services. It is the process of discovering and translating consumer
wants
into
products and services. It begins with the customer (by finding their needs) and
ends with the
customer
(by satisfying their needs).
The
scope of marketing can be understood in terms of functions that an entrepreneur
has to
perform.
These include the following:
1.
Functions of exchange: which include buying and assembling and selling?
2.
Functions of physical supply: include transportation, storage and warehousing
3.
Functions of facilitation: Product Planning and Development, Marketing
Research,
Standardisation,
Grading, Packaging, Branding, Sales Promotion, Financing
The
Marketing Concept
The
marketing concept holds that the key to achieving organizational goals consists
in
determining
the needs and wants of target markets and delivering the desired satisfactions
more
effectively
and efficiently than competitors1. Under marketing concept, the emphasis is on
selling
satisfaction and not merely on the selling a product. The objective of
marketing is not the
maximization
of profitable sales volume, but profits through the satisfaction of customers.
The
consumer
is the pivot point and all marketing activities operate around this central
point. It is,
therefore,
essential that the entrepreneurs identify the customers, establish a rapport
with them,
identify
their needs and deliver the goods and services that would meet their requirements.
The
components of marketing concept are as under:
Satisfaction of Customers:
In the modern era, the customer is the focus of the
organization.
The organization should aim at producing those goods and services, which
will
lead to satisfaction of customers.
Integrated marketing: The
functions of production, finance and marketing should be
integrated
to satisfy the needs and expectations of customers.
Profitable sales volume:
Marketing is successful only when it is capable of maximizing
profitable
sales and achieves long-run customer satisfaction.
Marketing
in Simple words
Marketing
is nothing but to Tell about your product and to Sell it. The technical
definition is “
Marketing
is the process of planning and executing the concepts, pricing, promotion and
distribution
of ideas/goods/services to satisfy individual's/organizational “.
Types
of Marketing
There
are several types of marketing are there, some of them are
Bench Marketing
o The
Bench Marketing is nothing but the comparison of the business processes
with
competitors and improving prevailing ones.
Drip Marketing
o Drip
Marketing is nothing but sending promotional items to Clients.
Viral Marketing
o Viral
Marketing is nothing but, Marketing by the word of the mouth, having a
high
pass-rate from person to. The best example for this is Creating a 'buzz' in the
industry.
Guerilla Marketing
o Guerilla
Marketing is an Unconventional marketing intended to get maximum
results
from minimal resources. (just remember Maximum results from Minimum
resources)
Social Media
Marketing
o M
using online communities, social networks, blog marketing etc is called the
social
media marketing.
Direct Marketing
If the company directly
reaches to the customers on a personal basis (ex : phone calls,
private
mailings, etc) rather than traditional channel of advertising (like TV,
Newspapers,
etc)
then that type of marketing is called the Direct Marketing.
o Types
: There are number of types in direct marketing, Some of them are……
Direct
Mail Marketing : Advertising material sent directly to home and
business
addresses (This is the most common form of direct marketing)
Telemarketing
: It is the second most common form of direct marketing,
in
which marketers contact consumers by phone.
Email
Marketing : This type of marketing targets customers through their
email
accounts (you might have observed them in your e mails too)
Indirect Marketing
o Distributing
a particular product through a channel that includes one or more
resellers
is called Indirect Markeging (simply we can say that telling about our
product
indirectly)
Difference between
Direct and Indirect Marketings :
o In
Direct marketing you advertise your own products or services. But in Indirect
marketing
you advertise somebody else’s Product.
o Ex :
Example of direct marketing is Shivani Sharma… As she markets her blog
on
her own. Example of Indirect marketing is Katrina Kaif, as she markets LUX
but
she doesn’t own that company ;)
Internet Marketing
o Marketing
of products or services over the Internet is called Internet Marketing. It
is
also know as i-marketing, web-marketing, online-marketing, Search Engine
Marketing
(SEM) and e-Marketing.
Digital Marketing
o The
marketing which uses digital advertising is called digital marketing.
Television,
Radio, Internet, mobile etc.
Marketing
Mix (4 Ps) :
The
Marketing Mix model (also known as the 4 P's) is a tool used by marketers while
defining
the
marketing strategy. Iif you could identify the right combination of these elements,
your
marketing
would succeed. E. Jerome McCarthy introduced the 4 P's of Marketing as a way to
describe
the mix of factors required to successfully market a product.
The 4 P’s are :
Product
Price
Promotion
Place (distribution)
5
P’s of Marketing :
4 P’s
o Product
o Price
o Promotion
o Place
(distribution) and
People
Packaging
Process
7
P’s of marketing
Product
Price
Place
Promotion
People
Process
Physical
evidence
Important
Note : Here the first 4 P's are considered as the basis of any marketing
process. The
last
3 P's are a recently added.
SWOT
Analysis
SWOT
Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a tool for
auditing an
organization
and its environment. The SWOT Analysis is the first stage of planning and helps
marketers
to focus on key issues. Strengths and weaknesses are internal factors.
Opportunities
and
threats are external factors.
Customer
Relationship Management (CRM)
In
order to sell my product, I should maintain good Customer Relations. I mean I
should interact
with
customers and know their needs and according to that I have to design my
product. This is
called
Customer Relationship Management (CRM in short). The CRM concerns the
relationship
between
the organization and its customers (to learn more about customers' needs and
behaviors
in
order to develop stronger relationships with them).
Three
Levels of a Product
Core Product
Actual Product
Augmented Product
Market
Research
Researching
(or gathering information) about Customers or Market. I mean, to discover what
customers
want, need, or believe (and ofcourse, how the Act). Once you came to know all
the
details
then you can easilea get an idea on how to market your product.
Market
Information
The
Information about Market. I mean the information like the prices of the
different
commodities
in the market, and getting the Demand and Supply information.
Market
Segmentation
Market
Segmentation is nothing but dividing the market into Parts. Into different
homogeneous
groups
of consumers. The purpose of this is to allow your marketing program to focus
on the
subset
of prospects that are "most likely" to purchase your offering. If
done properly this will
help
to insure the highest return for your marketing expenditures.
Branding
Displaying
the importance of the product and other things in the form of Logo is called
Branding
(this
logo may consists some symbols, colours and letters)
Marketing
versus Selling
The
basic difference between marketing and selling lies in the attitude towards
business. The
selling
concept takes an inside-out perspective. It starts with the factory, focuses on
the
company’s
existing products, and calls for heavy selling and promoting to produce
profitable
sales.
The marketing concept takes an outside-in perspective2. It starts with a
well-defined
market,
focuses on customer needs, coordinates all the activities that will affect
customers, and
produces
profits through creating customer satisfaction.
Importance
of Marketing in Small Business
Since
marketing is consumer oriented, it has a positive impact on the business firms.
It enables
the
entrepreneurs to improve the quality of their goods and services. Marketing
helps in
improving
the standard of living of the people by offering a wide variety of goods and
services
with
freedom of choice, and by treating the customer as the most important person.
Marketing
generates employment both in production and in distribution areas. Since
a business
firm
generates revenue and earns profits by carrying out marketing functions, it
will engage in
exploiting
more and more economic resources of the country to earn more profits.
A
large scale business can have its own formal marketing network, media
campaigns, and sales
force,
but a small unit may have to depend totally on personal efforts and resources,
making it
informal
and flexible. Marketing makes or breaks a small enterprise. An enterprise
grows,
stagnates,
or perishes with the success or failure, as the case may be, of marketing.
“Nirma” is an
appropriate
example of the success of small scale enterprise.
Marketing
of Services
The
services sector is more than twice the size of the manufacturing sector. The
growing
competitive
market for services means that a marketing orientation has become
essential
for the survival for service industries too.
India’s
high capabilities in Information Technology are well known. In addition, there
is the
most
popular segment of its services sector, the entertainment industry,
particularly films and TV
happens
to be one of the fastest growing in the world. Indian films are popular across
West Asia,
Afghanistan,
Central Asia, Russia, South Africa and South East Asia. They are now
penetrating
the
western world.
Marketing
Research
Marketing
research is the means by which the information necessary to run a business is
obtained.
It helps an entrepreneur to take decisions concerning the type of product, the
price
policy,
the channel of distribution, and sales promotion can be made rightly with the
help of
marketing
information at the right time. It is the gathering, recording, and
analysis
of all facts about problems relating to the transfer and sale of goods and
services from
producer
to consumer. For example, a hotel should find out what all services are needed
to
satisfy
its customers and the soft toy manufacturer making teddy bears needs to find
out if
children
really want purple teddy bears and so on. Every company, irrespective of size,
must
research
its market, customers and competition; initially to set it on the right course
and then
continually
to monitor its performance. Small-scale firms are often unable to afford
continuous
marketing
research. However, they can use personal contacts and other informal methods
for
collecting
required information about markets.
Marketing
information can be collected from the following sources :
Market
Segmentation
A
market consists of large number of individual customers who differ in terms of
their needs,
preferences
and buying capacity. Therefore, it becomes necessary to divide the total market
into
different
segments or homogeneous customer groups. Such division is
called
market segmentation. They may have uniformity in employment patterns,
educational
qualifications,
economic status, preferences, etc.
Market
segmentation enables the entrepreneur to match his marketing efforts to the
requirements
of
the target market. Instead of wasting his efforts in trying to sell to all
types of customers, a
small
scale unit can focus its efforts on the segment most appropriate to its market.
A
market can be segmented on the basis of the following variables :
Geographic
Segmentation : The characteristics of customers often differ across nations,
states,
regions
cities or neighbourhoods. The entrepreneur can decide to operate in one or a
few or all
the
geographic areas, but pay attention to differences in geographic needs and
preferences.
Demographic
Segmentation : Variables such as age, sex, family size, income, occupation,
education,
religion, race and nationality are widely used for market segmentation.
Psychological
variables : Personality, life style, social class, etc. can also be used for
market
segmentation.
For example, some products like pens, watches, cosmetics and briefcases are
designed
differently for common men and status seekers.
Behavioural
Segmentation : Buyers are divided into groups on the basis of their knowledge,
attitude,
use or response to a product.
Marketing
Mix
In
order to cater to the requirements of identified market segment, an
entrepreneur has to develop
an
appropriate marketing mix. Marketing mix is a systematic and balanced
combination of the
four
inputs which constitute the core of a company’s marketing system – the product,
the price
structure,
the promotional activities and the place or distribution system”. These are
popularly
known
as “Four P’s” of marketing.
An
appropriate combination of these four variables will help to influence demand.
The problem
facing
small firms is that they sometimes do not feel themselves capable of
controlling each of
the
four variables in order to influence the demand.
A
brief description of the four elements of marketing mix is as follows :
1.
Product : The first element of marketing mix is product. A Product is
anything that can be
offered
to a market for attention, acquisition, use, or consumption that might satisfy
a want or
need.
Products include physical objects, services, events, persons, places, ideas or
mixes of
these.
This element involves decisions concerning product line, quality, design, brand
name,
label,
after sales services, warranties, product range, etc. An appropriate
combination of
features
and benefits by the small firm will provide the product with USP (unique selling
proposition).
This will enhance the customer loyalty in favour of its products.
Products
and services are broadly classified into consumer products and industrial
products.
Consumer
products are bought for final consumption; where as Industrial products are
bought by
individuals
and organisations for further processing or for use in
conducting
business.
Other
ways of classifying products are as follows :
a. Convenience
products : These are consumer products that the customer buys very
frequently,
without much deliberation. They are low priced of low value and are widely
available
at many outlets. They may be further subdivided as :
Staple Products : Items
like milk, bread, butter etc. which the family consumes
regularly.
Once in the beginning the decision is programmed and it is usually carried
on
without change.
Impulse Products : Purchase
of these is unplanned and impulsive. Usually when the
consumer
is buying other products, he buys these spontaneously for e.g. Magazines,
toffees
and chocolates. Usually these products are located where they can be easily
noticed.
Emergency products : Purchase
of these products is done in an emergency as a
result
of urgent and compelling needs. Often a consumer pays more for these. For
example
while traveling if someone has forgotten his toothbrush or shaving kit; he
will
buy it at the available price.
b. Shopping
products : These are less frequently purchased and the customer carefully
checks
suitability,
quality, price and style. He spends much more time and effort in gathering
information
and making comparisons. E.g. furniture, clothing and used cars.
c. Specialty
products : These are consumer goods with unique characteristics / brand
identification
for which a significant group of buyers is willing to make a special purchase
effort.
For example, Mitsubishi Lancer, Ray ban glasses.
d. Unsought
product : These are products that potential buyers do not know exist or do
not yet
want
.For example Life Insurance, a Lawyers services in contesting a Will.
The
above product decisions are very important to ensure the sale of products. A
product has
both
tangible and intangible components. While buying a product, the customer does
not merely
look
for the physical product, but a bundle of satisfaction. Thus the impact that
any product has
upon
a buyer goes well beyond its obvious characteristics. There is a psychological
dimension to
all
customer purchases; what a customer thinks about a product is influenced by far
more than
the
product itself. For example, the buyer of an air conditioner is not purchasing
cooling machine
only.
He looks for attractive colour and design, durability, low noise, quick
cooling, etc. These
influencing
factors must be considered by the small firms to meet the requirements of
different
kinds
of customers.
2.
Price : The second element is the price, which affects the volume of
sales. It is one of the
most
difficult tasks of the marketing manager to fix the right price. The variables
that
significantly
influence the price of a product are: demand of the product, cost, competition
and
government regulation. The product mix includes: determination of unit price of
the
product,
pricing policies and strategies, discounts and level of margins, credit policy,
terms
of
delivery, payment, etc. Pricing decisions have direct influence on the sales
volume and
profits
of the firm. Price, therefore, is an important element of the marketing mix.
Right price
can
be determined through pricing research and by adopting test-marketing
techniques. Small
firms
should think of pricing as a method whereby prices are set with regard to
costs, profit
targets,
competition and the perceived value of products. Because of their simplicity,
costplus-
pricing
are attractive to small businesses, though this is not the only mode of pricing
utilized
by small firms. For example, the profit margin in the cost-plus approach may
well be
fixed
after examining both the nature of the market and the competitor activity
within it. It is
a
mistake for small firms to rely wholly on cost-plus, but very often small firms
do that to the
detriment
of profits and market share. The pricing policies mainly followed by the small
firms
are:
a. Competitive
pricing : This method is used when the market is highly competitive and
the
product is not differentiated significantly from the competitor’s products.
b. Skimming-the-cream
pricing : Under this pricing policy, higher prices are charged
during
the initial stages of the introduction of a new product. The aim is to recover
the
initial
investment quickly. This policy is quite effective when the demand for a
product is
likely
to be more inelastic with respect to price in its early stages; to segment the
market
into
segments that differ in price elasticity of demand and to restrict the demand
to a
level,
which a firm can easily meet.
c. Penetration
pricing : Under this policy, prices are fixed below the competitive level
to
obtain
a larger share of the market. Penetration pricing is likely to be more
successful
when
the product has a highly elastic demand; the production is carried out on a
large
scale
to achieve low cost of production per unit; and there is strong competition in
the
market.
3.
Promotion : Promotion refers to the various activities undertaken by the
enterprise to
communicate
and promote its products to the target market. The different methods of
promoting
a product are through advertisement, personal selling, sales promotion and
publicity.
4.
Place or Physical Distribution : This is another key
marketing mix tool, which stands for
the
various activities the company undertakes to make the product available to
target
customers.
Place mix or delivery mix is the physical distribution of products at the right
time
and
at the right place. It refers to finding out the best means of selling, sources
of selling
(wholesaler,
retailers, and agents), inventory control, storage facility, location,
warehousing,
transportation,
etc. This includes decisions about the channels of distribution, which make
the
product available to target customers at the right time, at the right place and
at the right
price.
By selecting wrong distribution channels or by using the ones it has
traditionally used,
a
small firm could be depriving it of new market opportunities. In a situation
where a small
firm
has only one primary product, the general rise and fall of sales will lead to a
rise and fall
of
the firm, unless the firm learns to consistently adjust its marketing mix to
match consumer
demand.
A
marketing mix must be consistent for any product. Pricing, for example, must be
consistent
with
packaging and perceived product quality. If one of these is not in line with
others, then sales
might
suffer as a consequence. A manager selecting a marketing mix is like a cook or
chef
preparing
meal. Each knows through experience that there is no ‘one best way’ to mix the
ingredients.
Different combinations may be used depending upon one’s needs and objectives.
In
the
marketing as in cooking, there is no standard formula for a successful
combination of
ingredients.
Marketing mixes vary from company to company and from situation to situation.
The
right marketing mix is important for any product to have a long life cycle.
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