Basics of Marketing Study Notes

Important Note: To get good marks, Always provide real life examples wherever required

Chapter 1: Introduction to Marketing

Marketing is the process of identifying, anticipating, creating, and satisfying customer needs and wants through the exchange of valuable products or services. Philip Kotler, a renowned marketing expert, defined marketing as "the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.

The functions of marketing as identified by Kotler, include:

Identifying customer needs: Understanding the needs and wants of customers is the first step in creating a successful marketing strategy.
Designing products or services: Once customer needs are identified, marketers design products or services to meet those needs.
Communicating value: Marketing involves communicating the value of products or services to customers through advertising, sales promotions, personal selling, and other communication channels.
Delivering value: The marketing function includes delivering products or services to customers through channels such as distribution, transportation, and logistics.
Pricing products or services: Marketing also involves setting prices for products or services that customers perceive as valuable.
Building relationships: Marketers build relationships with customers to create brand loyalty and repeat business.

Scope of marketing includes:

Product and service management: Marketing involves managing the entire lifecycle of a product or service, from design and development to launch and ongoing support.
Pricing strategies: Marketing includes developing pricing strategies that reflect the perceived value of a product or service to customers while maximizing profitability.
Promotion and advertising: Marketing involves promoting products or services through advertising, sales promotions, public relations, and other communication channels.
Sales management: Marketing includes managing the sales process, including sales forecasting, sales force management, and sales performance analysis.
Distribution and channel management: Marketing involves selecting and managing distribution channels to ensure that products or services reach customers in the most efficient and effective way possible.
Market research: Marketing involves conducting market research to understand customer needs and preferences, identify market trends, and assess the competition.
Brand management: Marketing includes building and managing brands to create a strong brand identity and maintain customer loyalty.
Customer relationship management: Marketing involves building and maintaining relationships with customers through effective customer service, feedback management, and personalized marketing communications.
Social responsibility and ethics: Marketing includes addressing social and ethical issues related to the production, distribution, and marketing of products and services.

The core concepts of marketing include:

Need: A need is a basic human requirement, such as food, shelter, or clothing.
Want: A want is a desire for a specific product or service that satisfies a need.
Demand: Demand refers to the willingness and ability of customers to purchase a product or service.
Customer value: Customer value is the perceived benefit customers receive from a product or service relative to its cost.
Exchange: Exchange is the process of obtaining a desired product or service by offering something in return, such as money or other goods.
Customer satisfaction: Customer satisfaction is the degree to which a product or service meets or exceeds customer expectations.
Customer delight: Customer delight is exceeding customer expectations to create a positive emotional response.
Customer loyalty: Customer loyalty is the tendency of customers to continue purchasing products or services from a particular company or brand.

Marketers are individuals or organizations that identify, anticipate, and satisfy customer needs and wants through the exchange of goods, services, or ideas. Prospects are potential customers who may be interested in purchasing a product or service.

A customer market is a group of customers who share similar needs and wants. Key customer markets are those customer groups that a company targets with its products or services, such as consumer markets, business markets, and global markets.

A marketplace is a physical or virtual space where buyers and sellers interact to exchange goods or services. A marketspace is an online marketplace where buyers and sellers interact digitally. A meta market is a group of complementary products and services that are used together to satisfy a particular need.

Digital markets refer to markets that are based on digital technologies, such as the internet, mobile devices, and social media. Digital markets have transformed the way companies market their products and services, enabling them to reach a wider audience and provide more personalized experiences.

The brick and click model is a business model that combines traditional brick-and-mortar stores with online e-commerce platforms. This model allows companies to reach customers through multiple channels, providing a seamless shopping experience and increasing customer loyalty.

Impact of Globalization, Technology and Social Responsibility on Marketing:

Globalization, technology, and social responsibility have had a significant impact on marketing. Globalization has created new markets and increased competition, while technology has transformed the way companies market their products and services. Social responsibility has become an important consideration for companies, as consumers increasingly demand socially responsible and sustainable products and practices.

New consumer capabilities, such as mobile and social media, have enabled consumers to be more informed and empowered in their purchasing decisions. As a result, companies need new capabilities to engage with these consumers, such as personalized marketing and real-time customer support.

The functions of a marketing manager include identifying customer needs and wants, developing marketing strategies, managing product development, pricing, promotion, and distribution, conducting market research, and building and managing customer relationships.

Selling versus Marketing:

Selling involves persuading customers to buy a product or service, while marketing involves identifying and satisfying customer needs and wants through the exchange of value. Marketing is a broader concept that includes selling as one component.

Concept of Marketing Myopia:

Marketing myopia refers to the failure of companies to focus on customer needs and wants, instead becoming too focused on their products or services. This narrow focus can lead to a loss of market share and decreased profitability. Example: Nokia's Failure

Example: One of the most famous examples of marketing myopia is the story of Kodak, a company that revolutionized the photography industry with the introduction of its first camera in 1888. For many years, Kodak dominated the market and enjoyed tremendous success. However, the company failed to keep up with changing consumer preferences and new technological innovations, such as digital photography.

Chapter 2: Marketing Environment

Environment refers to the external factors that affect the operation of a business.

It includes both the internal and external factors that impact the performance of the business.
The environment can be classified into two types: Macro and Micro Environment.

Macro Environment:

The macro environment refers to the larger societal forces that affect the entire industry or market.
It includes factors such as demographic, economic, sociocultural, natural, technological, and political-legal environment.
The macro environment factors are beyond the control of a business.

The micro environment

It refers to the internal factors of a company that impact its operations.
It includes factors such as suppliers, customers, competitors, and intermediaries.
The micro environment factors are within the control of a business.

Components and Characteristics of Macro Environment:

Demographic: Factors such as age, gender, income, education, and ethnicity that impact the market demand and supply.
Economic: Factors such as inflation, recession, income, and interest rates that impact the buying power of consumers and businesses.
Sociocultural: Factors such as beliefs, values, customs, and lifestyle that impact the consumer behavior.
Natural: Factors such as natural disasters, climate change, and weather conditions that impact the operations of businesses.
Technological: Factors such as innovation, research, and development that impact the way businesses operate.
Political-legal: Factors such as laws, regulations, and government policies that impact the business environment.

Needs & Trends:

Businesses need to analyze the macro environment to identify the opportunities and threats in the market.
Understanding the trends and needs of the market helps businesses to develop a competitive advantage and meet the demands of the consumers.

Major Forces Impacting:

Macro environment: Technological advancements, globalization, changes in the economy, and changes in the political-legal environment.
Micro environment: Changes in the customer preferences, supplier relations, competitor actions, and the availability of resources.

Need for Analyzing the Marketing Environment:

Analyzing the marketing environment helps businesses to identify the opportunities and threats in the market.
It helps businesses to develop a competitive advantage and meet the demands of the consumers.
It helps businesses to adapt to the changes in the market and stay ahead of the competition.

Analyzing the Demographic, Economic, Sociocultural, Natural, Technological, and Political-Legal Environment:

Demographic: Analyzing the population size, age distribution, income level, and education level to identify the demand for products and services.
Economic: Analyzing the economic indicators such as GDP, inflation rate, and unemployment rate to understand the buying power of the consumers.
Sociocultural: Analyzing the beliefs, values, customs, and lifestyle of the consumers to understand their needs and preferences.
Natural: Analyzing the natural resources and environmental factors that impact the operations of the business.
Technological: Analyzing the technological advancements that impact the way businesses operate.
Political-legal: Analyzing the laws, regulations, and government policies that impact the business environment.

Chapter 3: Segmentation, Market Targeting & Positioning

Segmentation:

Segmentation is the process of dividing a market into smaller groups of consumers with similar needs, wants, or characteristics.
It helps businesses to identify the specific needs of each segment and develop products or services that meet those needs.

Need & Benefits:

Segmentation helps businesses to identify and target specific groups of consumers with customized products or services.
It helps businesses to improve their marketing efforts by understanding the needs and preferences of their target customers.
It helps businesses to maximize their profits by focusing on the most profitable segments.

Types (Bases) of Segmenting Consumer Markets:

1. Geographic Segmentation: Dividing the market based on geographic factors such as location, climate, and population density. Examples include:

Region: A company might segment its market based on regions, such as dividing customers in the United States into regions like the Northeast, South, Midwest, and West.
City or Metropolitan Area: A company might segment its market based on cities or metropolitan areas, such as focusing its marketing efforts on customers in New York City, Los Angeles, or Chicago.
Climate: A company might segment its market based on climate, such as developing products for customers living in hot or cold climates.

2. Demographic Segmentation: Dividing the market based on demographic factors such as age, gender, income, education, and occupation. Examples include:

Age: A company might segment its market based on age groups, such as developing products for teenagers, young adults, middle-aged adults, or seniors.
Gender: A company might segment its market based on gender, such as developing products for men or women.
Income: A company might segment its market based on income levels, such as developing products for high-income or low-income customers.

3. Psychographic Segmentation: Dividing the market based on psychographic factors such as lifestyle, personality, and values. Examples include:

Lifestyle: A company might segment its market based on the lifestyle of its customers, such as developing products for active, health-conscious, or environmentally conscious customers.
Personality: A company might segment its market based on personality traits, such as developing products for extroverted or introverted customers.
Values: A company might segment its market based on values, such as developing products for customers who prioritize sustainability or social responsibility.

4. Behavioral Segmentation: Dividing the market based on behavioral factors such as usage rate, brand loyalty, and buying behavior. Examples include:

Usage Rate: A company might segment its market based on the frequency of use of its products, such as developing products for heavy or light users.
Brand Loyalty: A company might segment its market based on brand loyalty, such as developing products for customers who are loyal to its brand or to its competitors' brands.
Buying Behavior: A company might segment its market based on buying behavior, such as developing products for customers who are price-sensitive or quality-sensitive.

Levels of Segmentation:

Mass Marketing: Treating the market as a homogeneous group and developing a single marketing strategy for everyone.
Segment Marketing: Identifying and targeting specific segments with different marketing strategies.
Niche Marketing: Identifying and targeting very specific segments with unique needs and preferences.
Micromarketing: Tailoring products and services to meet the needs of individual customers.

Criteria for Effective Segmentation:

Measurable: The segments should be identifiable and quantifiable.
Accessible: The segments should be reachable through marketing efforts.
Substantial: The segments should be large enough to be profitable.
Differentiable: The segments should be distinct and respond differently to marketing efforts.
Actionable: The segments should be able to be targeted and effectively reached through marketing efforts.

Market Potential: The total demand for a product or service in a market.

Market Share: The percentage of the total market demand that a company captures with its products or services.

Market targeting is the process of selecting one or more market segments to focus on and develop a marketing mix to meet the needs and wants of those segments.

Concept of Target Markets: A target market is a group of customers that a business has decided to aim its marketing efforts towards. This group of customers is most likely to buy the products or services offered by the business. Target markets are identified based on the segmentation criteria such as geographic, demographic, psychographic, and behavioral factors.

Market Targeting and Criteria for Selection: Once the market segments have been identified, businesses need to evaluate and select the most suitable target markets to focus on. The criteria for selecting a target market are as follows:

Market Size: The target market must be large enough to generate sufficient sales volume and profits for the business.
Market Growth: The target market should be growing or have the potential for growth in the future.
Competition: The target market should have a low level of competition, or the business should be able to differentiate itself from its competitors.
Profitability: The target market should be profitable for the business.
Compatibility: The target market should be compatible with the resources, capabilities, and objectives of the business.

Evaluating and Selecting the Market Segments:

Full Market Coverage: A business that adopts a full market coverage strategy targets all possible market segments with a product or service. For example, a company like Amazon targets all customers who buy products online.
Multiple Segment Specialization: A business that adopts a multiple segment specialization strategy targets several different market segments with a different product or service for each segment. For example, a company like Nestle targets different segments with products like KitKat (for kids), Nescafe (for coffee lovers), and Maggi (for working women).
Single-Segment Concentration: A business that adopts a single-segment concentration strategy targets a single market segment with a specialized product or service. For example, a company like Rolex targets only high-end luxury watch buyers.
Individual Marketing: A business that adopts an individual marketing strategy creates customized products or services for each individual customer. For example, a company like Nike ID allows customers to design their own shoes.
Long Tail Marketing: A business that adopts a long tail marketing strategy targets a large number of small, niche market segments with specialized products or services. For example, a company like Etsy targets individual artisans who make handmade products.

Positioning is the process of creating a distinct image of a product or brand in the mind of the consumer. It involves developing a unique identity and value proposition for the product or brand that differentiates it from competitors and resonates with the target market.

Concept of Differentiation: Differentiation refers to the process of creating a unique product or brand image that sets it apart from its competitors. This can be done by highlighting unique features, benefits, or attributes of the product or brand that are relevant to the target market.

Concept of Positioning: Positioning is the process of establishing a distinctive image or identity of a product or brand in the minds of consumers. It involves creating a unique perception of the product or brand in relation to its competitors. The goal of positioning is to create a strong and favorable perception of the product or brand that resonates with the target market.

Value Proposition: A value proposition is the unique benefit that a product or brand offers to its target market. It is a statement that communicates the unique value or benefits that a customer will receive by choosing the product or brand over its competitors. A value proposition should be clear, concise, and relevant to the target market.

Unique Selling Proposition: A unique selling proposition (USP) is a statement or tagline that communicates a unique and compelling benefit or advantage of a product or brand that sets it apart from its competitors. The USP should be relevant, memorable, and persuasive to the target market.

Chapter 4: Consumer Behavior

Consumer behavior refers to the actions and decisions that consumers make when purchasing goods or services. It involves the study of how people choose, use, and dispose of products and services, as well as the factors that influence their behavior.

Understanding consumer behavior is important for businesses as it allows them to develop effective marketing strategies that resonate with their target market. By studying consumer behavior, businesses can identify the needs and preferences of their customers, and tailor their marketing efforts to meet those needs. This can help businesses create products that better satisfy their customers and ultimately drive sales.

Comparison between Organizational Buying Behavior and Consumer Buying Behavior:

Five-Stage Model of Buying Decision Process

The Five-Stage Model of Buying Decision Process is a framework that describes the steps that consumers go through when making a purchase decision. The five stages are:

Problem Recognition: This is the first stage of the buying decision process. In this stage, the consumer becomes aware of a problem or need that they want to address. This could be triggered by an internal need (such as hunger or thirst) or an external stimulus (such as advertising or a recommendation from a friend).
Information Search: Once the consumer has recognized a problem or need, they will begin to search for information about possible solutions. This could involve searching for information online, asking friends or family for recommendations, or visiting stores to gather more information.
Evaluation of Alternatives: In this stage, the consumer evaluates the different options that they have identified in the information search stage. They will compare the features and benefits of each option, and weigh the pros and cons of each before making a decision.
Purchase Decision: Once the consumer has evaluated the alternatives, they will make a decision about which product or service to purchase. This decision may be based on a number of factors, including price, quality, convenience, or brand reputation.
Post Purchase Behavior: After the consumer has made a purchase, they will evaluate their decision and their satisfaction with the product or service. This may involve comparing their expectations to the actual experience, and may influence their future purchase decisions.

Moment of Truth (MOT) is a concept that describes the various points in a customer's journey where they come into contact with a brand or product, and form an impression or opinion of it. These moments of truth can be positive or negative, and they can have a significant impact on the overall customer experience.

Zero Moment of Truth (ZMOT) is a term coined by Google, which refers to the moment when a consumer begins to search for information online before making a purchase decision. This is a critical moment in the buying process, as it is often where consumers form their initial impressions of a product or brand.

There are several moderating effects that can influence consumer decision-making at each stage of the buying process. These include:

Personal factors: Personal factors such as age, gender, income, and lifestyle can all influence consumer decision-making. For example, a consumer who is price-sensitive may be more likely to choose a lower-priced product, even if it means sacrificing some quality.
Social factors: Social factors such as culture, family, and social class can also play a role in consumer decision-making. For example, a consumer from a culture that values environmental sustainability may be more likely to choose a product that is environmentally friendly.
Psychological factors: Psychological factors such as motivation, perception, and attitudes can also impact consumer decision-making. For example, a consumer who has a positive attitude towards a particular brand may be more likely to choose that brand over a competitor.
Situational factors: Situational factors such as time pressure, location, and mood can also influence consumer decision-making. For example, a consumer who is in a hurry may choose a product that is readily available, even if it is not their preferred choice.

Buying roles refer to the different roles that individuals or groups play in a purchase decision-making process. There are typically five main buying roles:

Initiator: This is the person who first suggests the idea of making a purchase. For example, a child may initiate the purchase of a new toy by asking their parent to buy it for them.
Influencer: An influencer is someone who provides information or recommendations that influence the purchase decision. This can be a friend, family member, or even an online review.
Decider: The decider is the person who ultimately makes the purchase decision. This could be the person who is paying for the product or the one who has the final say in the decision-making process.
Buyer: The buyer is the person who actually makes the purchase, whether in a physical store or online.
User: The user is the person who will actually use the product. For example, a child who receives a new toy as a gift would be considered the user.

Chapter 5: Marketing Mix

The marketing mix is a strategic framework that businesses use to create and implement effective marketing strategies. It consists of a set of controllable tactical marketing tools that a company uses to create a desired response from its target market. The concept of marketing mix was first introduced by Neil Borden in the 1950s and was later popularized by E. Jerome McCarthy in his book "Basic Marketing: A Managerial Approach" in 1960.

The traditional marketing mix consists of four elements, also known as the 4Ps: product, price, promotion, and place. However, as marketing evolved, three additional elements were added, making the marketing mix a 7Ps framework:

Product: The product element refers to the physical or intangible offering that a company provides to its target market. This includes the features, design, quality, packaging, and branding of the product.
Price: The price element refers to the amount that customers are charged for the product. This includes the pricing strategy, discounts, payment terms, and other pricing-related factors.
Place: The place element, also known as distribution, refers to the channels through which the product is made available to customers. This includes the physical locations, online channels, and other distribution channels used by the company.
Promotion: The promotion element refers to the methods used by the company to communicate with the target market. This includes advertising, sales promotions, personal selling, public relations, and other promotional tactics.
People: The people element refers to the individuals who are involved in the marketing process, including employees, sales representatives, and other stakeholders.
Process: The process element refers to the procedures and processes used by the company to deliver the product or service to the customer.
Physical Evidence: The physical evidence element refers to the tangible elements that customers can see, touch, or experience when interacting with the product or service. This includes the physical environment, packaging, and other tangible aspects of the product or service.

The product life cycle (PLC) is a concept that describes the stages a product goes through from introduction to decline. The PLC concept suggests that every product has a limited life span and goes through a sequence of stages as it evolves in the market. The product life cycle consists of four stages:

Introduction: In this stage, a new product is launched in the market. The sales are low, and the company incurs high costs in terms of research and development, marketing, and distribution. The focus is on creating awareness and interest in the product through advertising and public relations.
Growth: In this stage, the product starts gaining acceptance in the market. The sales increase rapidly, and the company starts generating profits. The focus is on increasing market share and expanding distribution channels.
Maturity: In this stage, the product reaches its peak level of sales. The sales growth starts to slow down, and the competition intensifies. The focus is on defending market share and differentiating the product from competitors.
Decline: In this stage, the sales of the product start declining due to various factors such as changing customer needs, technological advancements, and increased competition. The focus is on reducing costs and phasing out the product.

The characteristics of each stage of the PLC are:

Introduction: Low sales, high costs, limited distribution, and no competition.
Growth: Rapid sales growth, increased profits, expanded distribution, and increased competition.
Maturity: Peak sales, stable profits, high competition, and product differentiation.
Decline: Declining sales, reduced profits, limited distribution, and product phase-out.

Types of product life cycles, which can vary depending on factors such as the industry, product category, and market dynamics. Some common types of PLC include:

Standard PLC: This is the most common type of PLC, where the product goes through the introduction, growth, maturity, and decline stages.
Extended PLC: In this type of PLC, the product remains in the growth or maturity stage for an extended period due to factors such as innovation or customer loyalty.
Shortened PLC: In this type of PLC, the product goes through the stages of introduction, growth, and maturity at an accelerated pace due to factors such as rapid market adoption or technological advancements.
Reintroduction PLC: In this type of PLC, the product is reintroduced into the market after a decline stage, often with new features or branding.

The strategies across stages of the PLC vary depending on the stage of the product in the market. Some common strategies include:

Introduction stage: In this stage, the focus is on creating awareness and generating interest in the product through advertising, public relations, and promotions. Pricing is often high to recover the costs of research and development.
Growth stage: In this stage, the focus is on expanding distribution and gaining market share. Pricing is often reduced to attract more customers, and advertising is focused on building brand loyalty.
Maturity stage: In this stage, the focus is on maintaining market share and defending against competition. Product differentiation and customer service are emphasized, and pricing may be adjusted to remain competitive.
Decline stage: In this stage, the focus is on reducing costs and phasing out the product. Pricing may be lowered to clear out inventory, and promotional efforts may be reduced. Businesses may also consider product redesign or repositioning to extend the life cycle.