CHAPTER-1: INTRODUCTION TO MARKETING

Learning objectives of this chapter are: Ø  Meaning and Concept of Marketing Ø  Importance of Marketing Ø  Different approaches to the study of marketing: Commodity approach, Functional approach, Institutional approach, System approach, Environmental approach, Managerial approach, Economic approach, Legalistic approach Ø  Development of marketing concepts/Company-oriented marketing philosophies Ø  Marketing mix and its components

Chapter Preview: This chapter attempts to provide the basic marketing terminologies used in marketing, meaning, and concept of marketing, its importance, concepts, different approaches to study marketing, and marketing mix. Indeed, this chapter is very important to give important insights about marketing which are equally important for understanding other chapters of marketing.

Ø  Meaning and Concept of Marketing

In general sense, marketing means to sell a product. But selling is only part of marketing. This is the age of marketing. Marketing activities are part of our daily life. All types of organization such as private, public, government and non-profit organizations need marketing. These organizations’ success greatly depends on marketing. Marketing is the business activity which is directed at satisfying human needs. Marketing tries to identify human needs and produce a product to satisfy them. Marketing matches products with consumer needs. Marketing means not only to buy and sell but it is moreover attracting costumer satisfying their needs for retaining them. Marketing always aims to develop long term relationship with the customer.

               

According to William Stanton- “Marketing is a total system of business activities designed to plan, price, promote and distribute want-satisfying product to target market to achieve organizational objectives.”

According to Kotler and Armstrong- “Marketing is the process by which individual and group obtain what they need and want by creating and exchanging products and values with others.”

Marketing mainly focuses on four major elements:

i)       Product: Identification and selection of a product

ii)      Price: Determination of its price

iii)    Place/Distribution: Selection of a distribution channel to reach the customers’ place

iv)    Promotion: Development and implementation of a promotional strategy for the benefits of the customers

Marketing thus is an organizational function and a set of processes for creating, communicating, and delivering products or services to consumers, and for managing customer relationships in ways that benefit the organization and its stakeholders. It consists of a set of activities like product development, modifying existing products, branding, packaging, labeling, quality control, setting pricing, objectives, distribution and channel management, promotional activities. Consumer's needs identification and satisfaction is the main theme of marketing and they are aimed to achieve organizational objectives in a dynamic environment. Thus marketing process encompasses all activities aimed at identifying and satisfying customer needs through exchange relationship to achieve organizational objectives in a dynamic environment.

Ø  Importance of Marketing

 Marketing has become a part of our everyday life. Marketing plays a significant role in the organization, consumer and society. Its importance is increasing day by day. The following charts show the importance.

of marketing to consumer, organization, and society.

                                                            Fig: Importance of Marketing

a)      Importance to Consumer: Marketing plays a significant role in satisfying the customers’ needs, wants and requirements. The following are the major importance to consumers.

i)       Value Addition: By delivering the right products at the right quantity at the right time at the right price, marketing adds the value of products to the consumer.

ii)       Information sharing: Marketing provides information to the consumer about the product, price, place, and promotion.  It shares information to consumers to take the decision about manufacturers and products or services.

iii)    Living Standard of consumer: Marketing delivers a standard of living to the consumer. It offers a product that satisfies their needs. Safe and hygiene product of high quality improve the quality of life as well as living standard.

iv)    Product Assortment/Wider selection facility: Marketing provides a wider selection facility to consumers from a set of products. It provides all product at a convenient place. So they can exercise freedom of choice.

v)      Customer Satisfaction: Better product performance provides customer satisfaction. Marketing provides satisfaction to the consumer by satisfying customers’ wants, needs, and requirements.

b)      Importance to Organization: Marketing plays a vital role in an organization. The importance of marketing to the organization can be described as follows

i)       Information for decision making: Marketers require up-to-date, complete, reliable information about markets, consumers, their needs, preferences, fashion etc. to take quick and rational decisions. Thus, marketing helps to take such information by the help of marketing information system.

ii)      Demand Management: Marketing helps to create market demand of products or services through different marketing promotional tools such as advertising, sales promotion, publicity, public relations and so on. These marketing tools basically aim to inform, remind and encourage costumer to purchase product.

iii)    Coordinated usage of resources: Marketing identifies market opportunity in target markets. Organization can choose the most profitable segment. Integrated approach to marketing facilitates the coordinated use of resources.

iv)    Product Distribution: Marketing distribute products manufactured by the organization. It distributes the product of the right quality in right time to the right place in right quantity.

v)      Objectives achievement: The main target of marketing is to achieve organizational objectives such as profit maximization, cost minimization. Marketing mix can be changed to meet competition and consumer need.

vi)    Environmental Adaptation: Marketing monitors and identifies environmental changes to identify important trends. Changes in consumer preference resulting from technological, economic, political and socio-cultural forces can be monitored. This helps the organization to adapt in a dynamic environment.

c)      Importance to Society and nation: Marketing is not only important to consumers and business firms but

also important to society and the nation as a whole. Its importance to society and nations are described as follows:

i)       Employment Generation: Marketing is an important source of generating employment opportunities. About 33% of people of the world are engaged in marketing activities. Thus, marketing helps to reduce the unemployment problem of the society and nation.

ii)      Utilization of available resources: Marketing utilizes various resources such as physical, financial, human, materials and informational resources for the development and growth of the nation.

iii)    Living standard of people: Marketing helps to raise the living standard of people by offering incomes and employment to as many people as possible. It also provides the right products to the right consumers at the right place at the right price which helps to raise and maintain the living standard of people.

iv)    Utility creations: Marketing aims to create different types of utilities such as place utility, time utility, ownership utility and form utility etc.

v)      Economic development: Marketing activities accelerate business activities. It helps industrialization. It is the important tool for economic management. Most economic decisions are affected by marketing.

vi)    Social responsibilities: Marketing helps to bear social responsibilities towards its society and country in many ways. For example, eco-friendly products are made or pollution is controlled to promote social interests, products are offered at a reasonable price, employment is created, planting trees, energy saving, etc. are done to enhance social well-being.

Ø  Different Approaches to the study of Marketing

There are different approaches to the study of marketing which are briefly described below:

1.      Commodity/Product Approach: This approach focuses on flow of commodity. According to this approach, marketing is the function of the flow of commodity from the source of production to the place of consumption. It is concerned with demand, supply, channels, and transportation. This approach is prevalent in agro- oriented economics.

Advantages: This approach is concerned with the flow of specific commodity from supplier to consumer. It means it studies demand and supply of a commodity in detail. This approach establishes a marketing system for each commodity.

Disadvantages: This approach results in duplication of marketing efforts. It is also time-consuming and costly.

2.      Functional Approach: This approach focuses on different functions of marketing such as exchange functions, physical functions, distribution functions, and auxiliary functions, etc.  According to this-this approach, the study of these functions is known as marketing. It is concerned with the following functions of marketing.

i)       Exchange Function: This is the primary function of marketing. It is related to the buying and selling function. Buying function involves demand forecast, identification of supply sources, purchase of raw material, machinery and IT whereas selling function involves identification of costumer, demand stimulation, price fixation, and promotion.

ii)      Distribution Function: This is the supporting function of marketing. It covers the area of transportation and storage. It ensures the right delivery of the right products to the right place at the right time as desired by the customers.

iii)    Facilitating Function: This is the auxiliary function of marketing which involves branding, standardization, grading, labeling, packaging, risk bearing, financing and communicating, etc.

Advantages: This approach is concerned both with the flow of commodity and institutions in the movement of goods. It gives emphasis on the functions of marketing.

Disadvantages: This the approach does not care about the needs, wants and demands of costumes.

3.      Institutional Approach: This approach focuses on various institutions involved in marketing such as producer/manufacturers (producers who convert raw materials into finished goods), middlemen (agents, wholesalers, retailers who help to deliver finished goods to ultimate consumers), facilitating institutions (transport organizations, banks, finance companies, insurance companies, advertising agencies, research, and consulting firms, etc.). Under this approach, it studies how these different institutions and agencies work together for making marketing system successful.

Advantage: The understanding of institutions help marketing and its cost can be reduced through proper selection of institution.

Disadvantage: This the approach does not provide a total view of marketing and it also ignores customer needs.

4.      System Approach:  This approach is system oriented. A marketing system is a collection of interrelated and interdepended parts to achieve marketing objectives. Marketing system consists of input, processing, output, and feedback components that operate in a dynamic environment.

Environment Fig: Marketing as a simple system

a.      Input: It includes the marketing mix element: product, price, place, and promotion.

b.      Processing: It consists of environmental influences and buyer decision for purchase

c.      Output: It consists of objectives achievement in terms of profit, service, growth, survival, leadership.

d.      Feedback: It provides information to redesign inputs and processing. It helps to take corrective action in time.

e.      Environment: A marketing system is likely to be affected by a fast-changing dynamic environmental factors that include internal factors (organizational vision, mission, strategies, policies, management style, organizational culture, structure, employees, etc.) and external factors (political-legal, economical, socio-cultural, technological, etc.).

Advantages: It provides an integrated (total) picture of the marketing system. It also makes marketing system effective by carefully analyzing the changing forces in designing the marketing mix.

Disadvantages: It ignores customer needs. It is difficult to implement.

5.      Environmental Approach: According to this approach, marketing operates within a dynamic environment. It should continuously monitor and adapt to the changing environment to achieve marketing objectives. There are mainly two forces of the environment which affects marketing such as internal forces and external forces.

·        Internal factors: These factors are controllable factors such as employees, suppliers, marketing intermediaries, customers, competitors and public.

·        External factors: These factors are uncontrollable by a firm such as political-legal, economical, socio-cultural, and technological forces.

Advantage: This approach provides environment-friendly situation to the marketers.

Disadvantage: This approach is expensive and gives less emphasis to the achievement of marketing goals.

6.      Managerial Approach: This approach is management oriented. It focuses on managerial decisions related to marketing. It emphasizes achievement of goals by getting marketing jobs done through people. This concept basically gives emphasis on following managerial means:

i)       Marketing Planning: It is the process of setting marketing goals and activities and choosing future marketing activity to achieve these marketing goals and activities. It includes the SWOT analysis, establishment of marketing goals., selecting marketing action to achieve goals, designing marketing mix, co-ordination of marketing activities etc.

ii)      Marketing Implementation: It includes the assignment and direction of the human resource to carry out the marketing plan in a coordinated manner. In this phase human resources are hired, the channel for distribution is selected, physical and financial resources are provided to execute marketing plans and activities, and improve the quality of the work environment.

iii)    Marketing Control: It ensures that the right things are done in the right manner and at the right time. Marketing control is the measurement and correction of marketing performance to achieve planned goals. This process includes the establishing standards, measuring actual performance, finding deviation (the difference between actual performance and standard performance.) and taking the corrective action if necessary.

Advantages: This approach uses both qualitative and quantitative techniques for marketing decision making. Timely decision making helps marketing to achieve objectives.

Disadvantages: This approach ignores costumer and environmental dynamics.

7.      Economic Approach: According to this approach marketing is the process of buying and selling of goods and services. Human wants are unlimited but resources to fulfill those wants or needs are scarce. Marketing helps to make effective use of scarce resources. The assumptions of this approach are:

• There are many individual firms in the market and their main objective are to maximize their profits.
• The buyer wants to get the maximum satisfaction.
• Both the buyer and seller have complete information about the market.
• Prices are determined by the interaction between demand and supply.

Advantages: This approach is well-developed and popular among economists.

Disadvantages: This approach is based on various assumption and has no relevance in the world of marketing.

8.      Legal Approach: This approach advocates that marketing activities should be legal and regulated by government laws or agencies. Marketers must work under legal provisions such as acts, laws, policies, procedures, etc. If they have to do anything against these laws and policies, they must first take prior permission from respective parties. For example, some industries such as alcohol, medicine, bricks industries are not allowed to conduct without taking prior permission from the government in Nepal.

Advantages: This approach gives protection to society and consumers by implementing appropriate legal laws and policies. This gives top priority to social responsibility.

Disadvantages: It does not care about the actual needs, wants and requirements of consumers.

Ø  Development of marketing concepts/Company-oriented marketing philosophies

There are 6 different concepts of marketing, each of which varies in the function that they deal with. For example – the production concept deals with the production and selling concept deals with selling. Each of the concepts was developed as per the need of the market. As the market changed, so did the concepts of marketing. And today, we have an opportunity to look at all these concepts of marketing. The figure below represents different concepts of marketing as started from the production concept to a recent concept, the holistic marketing concept.

Fig: Various Concepts of Marketing

1.      Production Concept: The production concept is an old concept of marketing. According to this concept, customers will prefer products and services that are widely available and are of low cost. So business is mainly concerned with making as many units as possible. By concentrating on producing maximum volumes, such a business aims to maximize profitability by exploiting economies of scale.

According to Philip Kotler- “Production concept is the philosophy that consumers will favor products that are available and highly affordable and that management should, therefore, focus of improving production and distribution efficiency.”

The main features of the production concept are as follows:

·        Starting Point: The starting point of this concept is the factory.

·        Focus: The main focus of this concept is on mass production. It reduces per unit cost of production and increases sales volume.

·        Means: The production concept helps a firm to achieve its objectives by adopting mass distribution or facilitating wider availability of products.

·        Ends: This concept helps a firm to maximize its profit through production efficiency.

In conclusion, production concept is the old concept of marketing which gives emphasis on mass production and mass distribution of products. In this concept, the needs of customers are secondary compared with the need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant. It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers.

2.      Product Concept: According to product concept of marketing, consumers will favor those products that offer the most quality, performance, or innovative features. Marketers assume that consumers admire well made products and can appraise quality and performance. Thus, marketers remain effortful in regular improvement in quality of products to meet the needs, wants and requirements of consumers.

According to Philip Kotler- “The product concept is a management orientation that assumes consumers will favor those products that offer the most quality for the price, and therefore the organization should devote its energy in improving product quality.”

       The main features of the product concept are as follows:

·        Starting Point: The starting point of this concept is also factory.

·        Focus: The focus of this concept is on product quality, as it assumes quality, attracts more customers. It can be achieved through research, innovation, and regular improvement activities.

·        Means: This concept strives to maximize the firms’ profit by continuously improving products or services through regular research, innovation, and performance.

·        Ends: The main objective of this concept is to achieve a maximum profit through quality product.

In conclusion, product concept focuses on producing quality products and improving them over time through regular research, innovation and performance. The objective of this concept is profit maximization through quality products at reasonable price.

3.      Selling Concept: According to the selling concept, consumers will buy products only if the company aggressively promotes and engages in promotional activities in selling the products. This concept gives emphasis on mass selling and promotional efforts. Under this concept, marketers focus on stimulating customers’ needs through promotional efforts such as advertising, sales promotion, personal selling, and publicity rather than on building long-term profitable customer relationships. It is based on the business philosophy of sell what they make rather than to make what the market wants. For example, this concept is widely used in sales of most unsought products such as insurance, blood donations, and counseling services.

In the words of Kotler and Armstrong, selling concept is the idea that consumers will not buy enough of organization’s products unless the organization undertakes a large scale selling and promotional efforts.”

The main features of selling concept are as follows:

·        Starting Point: The starting point of selling concept is also factory.

·        Focus: This concept focuses on needs and wants of sellers. It gives more emphasis on sales volume than customers’ needs, wants and requirements.

·        Means: This concept brings organizational effectiveness through a set of promotional activities or efforts.

·        Ends: The goal of selling concept is profit maximization through high sales volume. This concept gives much more emphasis on sales volume rather than building long-term relationship with customers.

In conclusion, business firms who believe selling concept, focus on heavy promotional efforts to attract potential customers. It assumes that customers will buy products only if they are marketed with aggressive promotions.

4.      Modern Marketing Concept: The modern marketing concept is the new concept of marketing. The company must be effective than competitors in creating, delivering, and communicating customer value to its target customers in order to achieve organizational objectives. The marketing concept believes in the pull strategy and says that companies need to make their brands so strong that customers themselves prefer their brands over every other competitor. This can be achieved through marketing. This concept believes on- We make what we can sell.

According to Kotler and Armstrong, marketing the concept is the marketing management philosophy that holds that achieving organizational goals depend on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than competitors do.”

The main features of marketing concept are as follows:

·        Starting Point: The starting point of marketing concept is its target market. Marketers get information about market, market segment, needs and interests of customers.

·        Focus: This concept focuses on the needs and wants of customers. Without the fulfillment of customers’ needs, no organization can achieve its objectives.

·        Means: This concept brings organizational effectiveness through a set of integrated marketing activities.

·        Ends: The goal of marketing concept is profit maximization through customer satisfaction. This concept considers the profit as the returns or Prasad of customer satisfaction.

In conclusion, marketers who believe in modern marketing concept emphasizes customer satisfaction through integrated marketing efforts for achieving organizational goals. Target market, customers’ needs, integrated marketing, and profitability are four pillars of this concept.

5.      Societal Marketing Concept: The societal marketing concept is a broad concept that holds that a company should make marketing decisions by considering consumers’ wants, the company’s requirements and society’s well-being. It focuses on needs / wants of target markets & delivering value better than competitors that preserves the consumer’s and society’s well-being.

Fig: Three aspects of Societal Marketing Concept

In the words of Kotler and Armstrong, “the organization should determine the needs, wants, and interests of target markets. It should deliver superior value to customers in a way that it maintains or improve the consumers’ and society’s well-being. Company should aware on pollution control, equal employment opportunity, after sales services, public awareness, return on investment, and so on.”

The main features of societal marketing concept are as follows:

·        Starting Point: The starting point of the societal marketing concept is the target society. Marketers get information about the market, market segment, needs and interests of customers.

·        Focus: This concept focuses on needs and wants of society. It focuses on customers as well as social needs or social responsibility.

·        Means: This concept brings organizational effectiveness by being responsible for society, ethical issues and social well-being. It gives emphasis on integrated marketing efforts to enhance the interests of customers, community and company.

·        Ends: The goal of societal marketing concept is profit maximization through customer and social well-being. This concept considers the interests of consumers, organization, and society.

In conclusion, the societal marketing concept is a broad concept of marketing which focuses on needs, wants of 3Cs such as community, consumers and company. This concept maintains a balance between customer satisfaction, social well-being and company’s profits.

6.      Holistic Marketing Concept: The holistic marketing concept is the newest and latest approach to marketing. It is not only a new marketing paradigm, but it provides a new way of looking at a business. It is originated as a response to fundamental changes in the current marketing environment such as demographic changes, globalization, keen competition, Internet development, corporate social responsibility, and so on. This holistic concept recognizes that ‘everything matters’ with marketing and a broad integrated perspective is necessary to attain the best solution.

Fig: Holistic Marketing Concept

·      Integrated marketing: Integrated marketing is an approach to creating a unified and seamless experience for consumers to interact with the brand/enterprise; it attempts to meld all aspects of marketing communication such as advertising, sales promotion, public relations, direct marketing, and social media, through their respective mix of tactics, methods, channels, media, and activities, so that all work together as a unified force. It is a process designed to ensure that all messaging and communications strategies are consistent across all channels and are centered on the customer.

·        Internal marketing: Internal marketing is the promotion of a company’s objectives, products and services to employees within the organization. The purpose is to increase employee engagement with the company’s goals and fostering brand advocacy. Employees who are enthusiastic about their company and its offerings are likely to share that enthusiasm with their social networks. As a result, internal marketing can be an effective part of external branding and marketing efforts.

·        Relationship marketing: Relationship marketing is about forming long-term relationships with customers. Rather than trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services. It emphasizes on customer retention and satisfaction rather than a dominant focus on sales transactions.

·        Socially responsible marketing: Socially responsible marketing is critical of excessive consumerism and environmental damages caused by corporations. It is based on the idea that market offerings must not be only profit-driven, but they must also reinforce social and ethical values for the benefit of citizens. The idea of socially responsible marketing is sometimes viewed as an extension of the concept of Corporate Social Responsibility (CSR). CSR is promoted as a business model to help companies self-regulate, recognizing that their activities impact an assortment of stakeholders, including the general public

According to Philip Kotler and Armstrong- “a holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize the breadth and interdependencies.”

The main features of holistic marketing concept are as follows:

·        Starting Point: The starting point of this concept is its target market. Marketers get information about market, market segment, needs and interests of customers.

·        Focus: This concept focuses on marketing which is effectively the whole body rather than its many individual component parts.

·        Means: This concept brings organizational effectiveness through a set of marketing activities such as relationship marketing, integrated marketing, internal marketing, and socially responsible marketing.

·        Ends: The goals of holistic concept are organizational profits, customer satisfaction, and social well-being.

In conclusion, holistic marketing concept is a marketing strategy that is developed by thinking that the business as a whole, its place in the broader economy and society, and in the lives of its customers. It is based on the development, design, and implementation of marketing programs, processes and activities that are interlinked and interdependent with each other.

Ø  Comparison/Differences among six marketing concepts at a glance

Concepts/Basis	Starting Point	Focus	Means	Ends
Production Concept	Factory	Mass production	Mass production at lower costs	Profit through production efficiency
Product Concept	Factory	Product quality	High quality, innovation & performance	Profit through quality products
Selling Concept	Factory	Sellers’ needs	Heavy promotional efforts	Profit through high sales volume
Modern Marketing Concept	Target Market	Customers’ needs	Integrated marketing	Profit through customer satisfaction
Societal Marketing Concept	Target society	Social responsibility	Responsible for social and ethical issues	Profit through customer & social well-being
Holistic Marketing Concept	Target market	Stakeholders’ needs, social responsibility, technology	4Ps, 4Cs	Organizational profits, customer satisfaction & social well-being

Ø  Marketing mix and its components

Meaning and concept of Marketing mix: The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion, and Place. In this definition, price refers to the item actually being sold, price refers to the value that is put for a product, place refers to the point of sale or location and promotion refers to all the activities are undertaken by a firm to make the products or services known to the user and trade. However, nowadays, the marketing mix increasingly includes several other Ps like people, process and physical environment as vital mix elements.

Generally marketing mix denotes 4Ps and it addresses the following questions:

·        What type of products need to be produced?

·        How to determine price of the products?

·        How and in which market or place to present the products for sale?

·        How to motivate potential customers to buy or promote the product?

Different authors and scholars have defined marketing mix differently. Some of the popular definitions are given below:

“Marketing mix is the setting of the firms of marketing decision variables at a particular point in time.”- Philip Kotler

“Marketing mix is the term that is used to describe the combination of the four inputs that constitute the core of company’s marketing system: the product, the distribution system, the price structure, and the promotional activities.” -William J. Stanton

“Marketing mix is the controllable variables, which the company puts together to satisfy its target market.”- Jerome E. McCarthy

In conclusion, marketing mix is the term that is used to describe the combination of the four Ps such as product, price, place, and promotion which the company puts together for achieving marketing objectives by satisfying its target market or customers. Therefore, marketing mix can be defined as the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. It is a foundation model for businesses.

Components of marketing mix: Product, price, place, and promotion are the main components of the marketing mix. These components have their own components, which are known as supportive components. Organizational success can be achieved through the proper mix of these components. Each of the four Ps has its own tools to contribute to the marketing mix.

Fig: Components of marketing mix

The marketing mix can be divided into four groups of variables commonly known as the four Ps:

1.      Product: Product is one of the most important components of marketing mix. It can be defined as goods and/or services offered by a company to its customers. It is anything that can satisfy the customers’ needs and wants. It can be physical/tangible or service/intangible offered to the consumers. It is the bundle of utilities. It is the heart of the whole marketing mix. It satisfies the needs and wants of customers by offering different quality, design, variety, branding, packaging, and services of products.

·        Quality: Quality is an essential feature of products or services which helps to satisfy the needs, wants and requirements of customers.

·        Design: Design is also another component of the product mix. All people like well-designed and attractive products.

·        Variety: One type of product does not satisfy all types of customers so there should be varieties of products or product lines to meet the needs, wants and requirements of different consumers.

·        Branding: Branding is a name, symbol or identity of products or services. Thus, product brand should be simple, attractive, short, eye-catchy, memorable, and distinctive so that customers can recognize the products or the company.

·        Packaging: Packaging is the activity of designing and producing the container or wrapper for products. Good packaging such as durability, attractiveness, economical, easy to handle always attracts more customers.

·        Service: Service is the intangible nature of products which is offered by one party to another for the benefits of both parties. After sales-services, warranty, home delivery, etc. are examples of services.

2.      Price: Price is another important component of marketing mix. It is the amount of money paid by customers to purchase the product. It is an exchange value which a customer pays for products or services. It plays a significant role in marketing. Different factors such as marketing objectives, costs of productions, nature of the market, the demand for the product, competition, etc. affect in the determination of the price of the product.

·        List Price: Price is the exchange value or money that a buyer pays for products or services. List price is the print value or face value of a product on which a discount is given. For example, price printed on the cover of a book. let's say, Rs. 525 is a list price of that book.

·        Discount: Discount is a popular technique of pricing where a certain amount is reduced from the list price. Marketers can offer discounts, either in the form of cash or trade to attract more customers and maintain a long term relationship with them.

·        Allowance: Allowance is also another component of price mix to attract more customers especially marketing intermediaries.

·        Payment period: Payment period is the time of payment. Short payment period is favorable for firms and long payment period is better to customers.

·        Credit terms: Credit term is the facilitation of credit transaction by the company to its middlemen. It can be short, intermediate or long term and so on.

3.      Place (or distribution): Place is another component of marketing mix. It is the location where the products are available to consumers or can be sold or purchased. Buyers can purchase products either from physical markets or from virtual markets. In a physical market, buyers and sellers can physically interact with each other whereas in a virtual market, buyers and sellers interact through the Internet. The physical distribution consists of all the activities concerned with moving the right amount of the right product to the right place at the right time. Distribution mix includes marketing channels, coverage, collection, location, inventory, transportation, logistics, and supply.

• Marketing channels: Marketing channels is the movement of goods and services by transferring ownership titles from the producer (production point) to ultimate consumers (consumption place). It can be directly through the Internet or indirect through marketing middlemen such as agents, wholesalers, and retailers.  
• Coverage: Coverage is the scope of target markets covered by marketers for selling and distribution of goods and services. Larger the coverage, larger the target customers in the market. It can be selective or extensive.
• Collection: Proper collection system is required to deliver the goods and services to its target customers quickly and effectively.
• Location: Location is buying or consumption place. Customers prefer to order the products from near location rather than far location area.
• Inventory: Inventory is the process of keeping the goods and services in store so as to deliver them whenever needed. It creates time utility. Marketers should avoid a lower or high level of inventory. An optimal level of inventory is recommended to maximize the profit of the company.
• Transportation: It is the means and mode of transport whereby goods are delivered from one place to another. It creates place utility. While choosing the transportation, safe and cost-effective mode should be selected.
• Logistics and supply: Logistics and supply are the physical distribution of goods and services from the production point to the consumption place. It should be regular and effective in the distribution system.

4.      Promotion: Promotion is another component of marketing mix. It is one of the important components of marketing mix that communicates the product’s features and benefits and persuade customers to purchase the product. It includes the various strategies or techniques employed to promote and make the ultimate users aware of their brands or products. Without promotional activities, even quality products cannot be sold. There is a saying in Nepalii- Bolneko pitho bikchha, nabolneko chamal bikdaina. Promotion mix includes advertising, personal selling, sales promotion, and publicity.

·        Advertising: It is the paid presentation and promotion of ideas, products, and services by an identified sponsor in mass media. There are different forms of advertising such as print, radio, TV, banner ad, billboard, poster, brochures, catalogs webpage, and emails.

·        Personal Selling: It is another component of the promotion mix. It is face-to-face selling in which a seller attempts to persuade a buyer to make a purchase. It is the process of persuading potential customers to purchase products and services or to act on any idea through face-to-face or by telephone. Sales presentation, sales meetings, sales training and incentive programs for intermediaries and telemarketing are different forms of personal selling.

·        Sales promotion: Sales promotion is the process of persuading a potential customer to increase the immediate sales of products and services. There are different forms of sales promotion such as coupons, contests, rebates, samples, free gifts, and exhibition, etc.

·        Publicity and public relations: Publicity and public relations are also important components of promotion mix. Publicity is the message or attention given to someone or something by the public media on free of costs whereas public relation is a tool designed to favorably influence attitudes of customers towards an organization, its products, and its policy. It can be done through a feature article, press conferences, news release, lobbying, stakeholder relations etc.

The four Ps as the four Cs

The 4Ps of the marketing mix can be reinterpreted as the 4Cs. It has been said that the customer’s interests (the buyer) has to be put ahead of the marketer’s interests (the seller).

·        Customer solutions, not products: The term ‘Product’ is replaced with a new term ‘Customer solutions’ which states that customers want to buy value or a solution to their problems rather than just a product.

·        Customer cost, not price: Customers want to know the total cost of acquiring, using and disposing of a product.

·        Convenience, not place: Customers want products and services to be as convenient to purchase as possible.

·        Communication, not promotion: The term ‘Promotion’ is replaced with a new term ‘Communication’ in which customers want two-way communication with the companies that make the product.

Review/Important Questions

Brief Answer Questions

1.      Define demand, values and satisfactions.

2.      Define marketing in your own words.

3.      Point out any two differences between marketing concept and selling concept.

4.      Why marketing is importance to consumer? Give any four reasons.

5.      Write down any four approaches to the study of marketing.

Short Answer Questions

6.      “Marketing is meeting customers’ needs profitably.” Elaborate it.

7.      “Marketing is a social process by which individual and groups obtain what they need and want through creating and exchanging products and value with others.” Comment.

8.      Point out any four approaches to the study of marketing? Briefly explain any two of them.

9.      What is marketing concept? Explain the differences between sales oriented marketing concept and societal marketing concept.

Comprehensive Answer Questions

10.   What is marketing mix? Explain briefly the components of marketing mix.

11.   What are the companies-oriented marketing philosophies? Explain them briefly.

                                                                          THANK YOU!