The Nature and scope of Marketing - 1

1. Nature and Scope of Marketing
By: Kalpana Ambepitiya
PhD (Marketing) (Reading), MBA (Finance) (IGNOU-India),
MPA (Colombo-Sri Lanka), PGD (Finance) (IGNOU-India),
BBMgmt Hons (Marketing) (Kelaniya-Sri Lanka)

2. Nature and Scope of Marketing
• The History of Marketing
• What is Marketing
• Definitions of Marketing
• Development of Marketing
• Marketing Management Orientations
• Why do organizations needs to be Marketing Oriented?
• Relationship Marketing

3. History of Marketing
• Early humans had only basic requirements such as food and shelter
• They themselves obtained them collecting, growing and hunting. They
lived under trees or in caves. Therefore they were self- sufficient.
• Once the needs became more, the man could not obtain them on his
own.
• Then he had to exchange for what he has with others. Eg. A farmer
exchanged his rice with fisherman's fish.
• It was called the Barter System
• However, Barter system was not efficient. There were many problems
with the barter system. E.g. Person could not easily find another
person who had his need and who wanted his surplus.
• Then came the introduction of medium of exchange called money.

4. • The birth of selling goods and services started with
the use of money as a medium of exchange.
• People started producing more items than that they
want and sold them in the market for money and
obtained their other requirements from the money
they received,
• That gave birth to markets. Markets are places where
customers and suppliers met. They were geographical
places. It was a pre-planned place at a pre-planned
time to exchange goods.

5. Markets
• The excess items were sold in the market and markets
became very competitive
• Producers met the buyers directly at the market
place.
• After some time the producers could not handle
selling effectively.
• There were problems of sharing time for production
and selling and many other practical problems.
• As a results specialist sellers were born. They are
called the middlemen.

6. • The focus shifted to sales, retaining customers, finding
new customers
• Selling could not be done well without really
understanding the needs and wants of customers
• Therefore customers became more important
• A customer oriented approach had to be used
• That paved the way to form businesses as marketing
organizations

7. What is Marketing?
• Marketing is a societal and managerial process
where people and organizations ( customers)
obtain what they need and want by exchanging
products and services of value with each other
• Marketing focuses on the needs and wants of
customers.
• It is concerned about satisfying customers through
supply of goods and services
• Many think marketing is only advertising and
selling. But marketing is almost a way of life that
everybody needs to know.

8. Iceberg Theory
Iceberg- under
water
Selling &
advertising
M
A
R
K
E
T
I
N
G
Water

9. All profit and non profits are using marketing
• Marketing is not only used by commercial profit oriented
organizations but also by other organizations such as temples,
churches and many other not for profit organizations and
persons.
• For example : Temple/Church provide their service ( product) to
its congregation( customer) It announcers its activities
( promotion) to its congregation (target market). It depends on
funds of congregation ( price/payment) for its survival. Further it
is located where their congregation can have easy access
( place).
• Therefore customer would be the most important element of
any marketing organization.
• Marketer needs to strive to satisfy its customers as “ No
customers means No business”

10. Few definitions of Marketing
• Marketing is not a science and there is no
single universally adopted definition. Lets
discuss about some widely used definitions.
• Adams Smith( 1776) “ Consumption is the sole
purpose of all production and interest of
product ought to be attended to, only so far as
it may be necessary for promoting that of the
consumer”

11. Phillip Kotler( The Millennium Edition –2000)
“Marketing is a societal process by which individuals
and groups obtain what they want through creating,
offering and freely exchanging products and services
of value with others
Chartered Institute of Marketing – UK
“ Marketing is a management process, which is
responsible in identifying, anticipating and satisfying
customer needs and wants at a profit”

12. • American Marketing Association
“Marketing Management is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods
and services to create exchanges that satisfy individual and
organisational goals”
Dibb, Simkin,Pride and Ferrel
“Marketing Consists of individual and organizational activities that
facilitate and expedite satisfying exchange relationships in dynamic
environment through the creation, distribution, promotion and
pricing of goods, services and ideas”

13. • Dental Work
• Vaccination
Negative Demand
• Foreign Language Courses
No Demand
• Harmless Cigarettes
• Fuel-Efficient Cars
Latent Demand
• Walkman
• Cassette Players
Declining Demand
• Umbrella
• Resorts
Irregular Demand
• Changing Preference
• Increasing Competition
Full Demand
• Local Milk powder
Overfull Demand
• Cigarettes
• Alcohol
Unwholesome Demand

14. Needs, Wants and Demands
• Needs – Basic Human Requirements
• Wants – Directed at specific objects
• Demands – Backed by ability to pay
Target Markets, Positioning & Segmentation
• STP Analysis
Offerings and Brands
• Offering – Value Proposition made Tangible
• Brand – Offering from a known source
Value & Satisfaction
• Value – Benefits / Cost
• Customer Value Triad – Quality, Service and Price
• Satisfaction – Product’s perceived performance
Marketing Channel
• Communication Channel – Deliver & Receive message
• Distribution Channel – Display, sell & Deliver
• Service Channel – Carry out transactions

15. Core ingredients of various definitions indicate the key
functions and activities of marketing
• Customer is the center of all Marketing activities.
• Marketing focuses on the needs and wants of customers.
• Identifying favorable emerging market opportunities
• It is concerned about satisfying customers through supply of goods
and services
• Marketing involves analysis planning and control
• Marketing is concerned about staying ahead with competition and
making profits
• Marketing has a heavy emphasis on relationships
• Creating value to both the customer and organization

16. Development of Marketing
• Marketing as an exchange process
• exchange is the act of obtaining something by offering
something in return ( money, services, goods or a
combination)
• For an exchange to take place following conditions must
exists:
• 1. Two parties
2. Each party must possess something of value that the
other party likes
• 3. Parties must be able to communicate about their value
proposition

17. Is Marketing a function of management or a business
philosophy ?
• It is a function of management as well as a business
philosophy
• It is considered as a function of management as it uses
management techniques in satisfying customers.
• Businesses has various divisions that handles different
functions such as human resource, financial, operations
and marketing.
• In a typical Marketing Department there are marketing
managers, product managers, sales managers, sales
representatives, sales persons, delivery assistants etc.

18. As a function, marketing is involved in several activities
• Identifying customer requirements through research
• Study about customer perception and products, set
prices, involved in distribution systems, promotion
activities, etc.
• Anticipate customer demand by forecasting
• Work with other functional departments to develop
products and services to satisfy customer needs
• Simply analyzing, planning, implementation and control
of all the marketing activities.

19. • Marketing as a business philosophy
• Marketing is considered as a overall business philosophy
which runs through all departments of an organization
and embedded in all the activities of a marketing
organization. It is a way of business thinking.
• The idea rooted in satisfying customers through the
supply of goods and services does not restrict to one
department or function.
• It is the purpose of the whole business. Everyone should
have the customer oriented attitude in an organization.
• Customer is the King

20. • Marketing is running like a silver lining in all
aspects of the business.
• Therefore it is considered as an attitude of mind
rather than a specific function or discipline.
• A marketing integrated approach is required in all
departments and functions of a company
• Peter Drucker- “Business success is not
determined by the producer but by the customer”

21. Marketing Management Orientations in the Evolution
of Marketing?
• Production Concept: “ Consumers will prefer
products that are widely available and inexpensive”
• - Concentrates on – high production efficiency- low
cost- mass distribution
• Example : Ford T- Model
• : Govt Hospital and other Service Depts
• Price and place considered

22. Ford T Model

23. Product Concept
• “ Consumers will favor those products that offer most
quality, performance or innovative features”
• Just making superior products will make customers
seek and buy them
• More focus on “Product” in the M. Mix.
• Marketing Myopia- shortsightedness of not
considering customer needs and behavior

24. Selling Concept
• “If consumers are left along, will ordinarily not buy
enough of the organization's products. Therefore the
organizations must undertake aggressive selling and
promotional effort”
• Consumers have buying lethargy and have to be
persuaded
• Sell what is made or available rather than what
consumer wants.
• Heavy focus on Promotion

25. Marketing Concept
• “Key to achieving organizational goals consists
in determining the needs and wants of target
market and delivering the desired satisfaction
more effectively than competitors”
• Focus on all Product, Price, Place and
Promotions
• To apply marketing concept three conditions
should be met

26. Key Components of the Marketing
Concept
Marketing Concept
achieving organizational goals
consists in determining the
needs and wants
of target market and
delivering the
desired satisfaction more
effectively than competitors
Customer Orientation
Corporate activities
Are focused on
Customer satisfaction
Integrated Effort
All staff should accept
The responsibility of
Creating customer
satisfaction
Goal Achievement
The belief that
corporate
goals can be achieved
Through customer
Satisfaction

27. Selling Vs. Marketing
• Starting Point- focus- Means- End
Factory Product Promotion
Profits through sales
volume
Target
Market
Customer
needs
Coordinated
- Mktg
Profit through customer
satisfaction

28. Societal Marketing Concept
“Organisations task is to determine the needs, wants and
interest of consumers of target markets and to deliver
the desired satisfaction more effectively and efficiently
than competitors in a way that preserve or enhances the
customer’s and the societies well being”
• They must balance often conflicting position of company
profits, consumer wants and public interest
• Societies well being is the public interest which includes –
Ecological ( Green Marketing), Human
( Ethical Marketing) and The Intelligent Consumption

29. What is Green Marketing?
• This stems from how marketer responds to the
environment. The marketers have been practicing very
environmental destructive activities.
• Resource depletion and degradation - Genetic
engineering- Pollution- Harmful emissions and products-
health hazards

30. What is ethical Marketing?
• Ethical Marketing are the rules of conduct and moral principals
regulating marketing.
- The limit of Claims/Promises that can be made as to product
benefits
- Discriminating competing products
- Marketing of products like cigarettes, alcohol
- Limitations in Marketing products to children
- Religious/racially susceptible Brand names and images
- Unaccepted Promotional methods
- Using women in unaccepted manner

31. Modern approach - Holistic Marketing
• The holistic marketing concept looks at marketing as
a complex activity and acknowledges that everything
matters in marketing

32. Holistic Marketing

33. Relationship Marketing
• Relationship marketing includes of building mutual
satisfaction with customers long term relationships
with key parties as well as go through profit of the
business.
• Relationship marketing involves cultivating the right
kind of relationship with right kind of groups.
• Outcomes of relationship marketing is to create
marketing network which consist of customers,
employees, supplies, distributors, retailers, agencies
and so on.

34. • Benefits of relationship marketing
–Retaining existing customers is cheaper than
getting new ones
–Repeat customers are costing less to service as
they are familiar with the company
–Reduce customer dissatisfaction and bad word
of mouth
–Keep customer databases and service more
effectively
–Small changes in retention rates have large
effects on revenue

35. Integrated Marketing
• The marketer task is to device marketing activities
and assemble fully integrated marketing
programmes to create, communicate and deliver
value for customers.
• Marketing programmes are the combination of
decisions on value enhancing marketing activities
to use.

36. Example;

37. Internal Marketing
• Internal Marketing is the task of hiring, training and
motivating to able employees who want to serve
customers well.
• Internal Marketing must place on two levels;
– At the level thinks the various marketing functions – sales
forcing, advertising, customer service, product
management, marketing research and so on.
– Another level thinks about the customer wants, needs,
demand and satisfaction.

38. Social Responsibility Marketing
• Social responsibility marketing concept build social
and ethical consideration into their marketing
parties.
• Focus on satisfying customers needs and wants
while enhancing individual and societal well-being.
• Considering the collective needs of society as well
as customer desires and the organization’s profits:.

39. If an organization can adopt a marketing oriented
approach it would be able to get
• Increased customer satisfaction
• Increased customer loyalty
• Increased reputation
• Increased motivation among staff
• Increased market share
• Reduction of waste
• Combat threats from competitors

40. Difficulties in Developing the Marketing
Orientation
• The main problem is with the differences of emphasis of
other branches of the organization.
Engineering, production, Finance, R&D, HR etc.
• Lack of committed leadership and vision
• Failure of managers to understand the true concept
• Inability to to adapt to change
• Difference in attitudes/culture
• Autocratic leadership
• Lack of customer knowledge
• Lack of infrastructure- required technology