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 Market
The term ‘market’ refers to the aggregate of all demand for a particular product or service, arising from the
aggregate of all consumers, both existing and potential for the product. It means that the whole group of
consumers of a particular product constitutes the ‘market’ for that product.

Philip Kotler states, “A market consists of all the potential customers sharing a particular need or wants who
might be willing and able to engage in exchange to satisfy that need or want.”

***What is a Market - Definition and Different types of Markets

A set up where two or more parties engage in exchange of goods, services and information is called a market.
Ideally a market is a place where two or more parties are involved in buying and selling.

The two parties involved in a transaction are called seller and buyer.

The seller sells goods and services to the buyer in exchange of money. There has to be more than one buyer and
seller for the market to be competitive.

Monopoly - Monopoly is a condition where there is a single seller and many buyers at the market place. In such a
condition, the seller has a monopoly with no competition from others and has complete control over the products
and services.

In a monopoly market, the seller decides the price of the product or service and can change it on his own.

Monopsony - A market form where there are many sellers but a single buyer is called monopsony. In such a set up,
since there is a single buyer against many sellers; the buyer can exert his control on the sellers. The buyer in such a
form has an upper edge over the sellers.

Types of Markets

1. Physical Markets - Physical market is a set up where buyers can physically meet the sellers and purchase
the desired merchandise from them in exchange of money. Shopping malls, department stores, retail stores
are examples of physical markets.
2. Non Physical Markets/Virtual markets - In such markets, buyers purchase goods and services through
internet. In such a market the buyers and sellers do not meet or interact physically, instead the transaction is
done through internet. Examples - Rediff shopping, eBay etc.
3. Auction Market - In an auction market the seller sells his goods to one who is the highest bidder.
4. Market for Intermediate Goods - Such markets sell raw materials (goods) required for the final
production of other goods.
5. Black Market - A black market is a setup where illegal goods like drugs and weapons are sold.
6. Knowledge Market - Knowledge market is a set up which deals in the exchange of information and
knowledge based products.
7. Financial Market - Market dealing with the exchange of liquid assets (money) is called a financial market.

Financial markets are of following types:

1. Stock Market - A form of market where sellers and buyers exchange shares is called a stock market.
2. Bond Market - A market place where buyers and sellers are engaged in the exchange of debt securities,
usually in the form of bonds is called a bond market. A bond is a contract signed by both the parties where
one party promises to return money with interest at fixed intervals.
3. Foreign Exchange Market - In such type of market, parties are involved in trading of currency. In a
foreign exchange market (also called currency market), one party exchanges one country’s currency with
equivalent quantity of another currency.
4. Predictive Markets - Predictive market is a set up where exchange of good or service takes place for
future. The buyer benefits when the market goes up and is at a loss when the market crashes.

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What is marketing? Definition and meaning

Marketing is a business term that experts have defined in dozens of different ways. In fact, even at company level
people may perceive the term differently. Basically, it is a management process through which products and services
move from concept to the customer. It includes identification of a product, determining demand, deciding on its
price, and selecting distribution channels. It also includes developing and implementing a promotional
strategy incorporating both outbound and inbound marketing.

Collins Dictionary has the following definition of the term:

“Marketing is the organization of the sale of a product, for example, deciding on its price, the areas it should be
supplied to, and how it should be advertised.”

Below is the American Marketing Association’s definition:

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.”

 What is Marketing Management?

Everything we need to know about marketing management. Marketing Management performs all managerial
functions in the field of marketing.

Marketing Management identifies market opportunities and comes out with appropriate strategies for exploring
those opportunities profitably.

It has to implement marketing programme and evaluate continuously the effectiveness of marketing-mix. It has
to remove the deficiencies observed in the actual execution of marketing plans, policies, and procedures. It
looks after the marketing system of the enterprise.

Management is the process of getting things done in an organised and efficient manner. Marketing
management aims at efficient operation of marketing activities.

Marketing management smoothen the process of exchange of ownership of goods and services from seller to
the buyer. Marketing management, like all other areas of management comprises of the function of planning,
organising, directing coordinating and controlling.

Marketing management is the process of decision making, planning, and controlling the marketing aspects of a
company in terms of the marketing concept, somewhere within the marketing system.

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 Marketing Evolution Overview

Marketing evolution refers to the changes that have taken place in the field of marketing over the past two hundred
years as societies have evolved from agrarian societies to industrial societies to post-industrial societies. Marketing
is a subset in the field of business and is primarily concerned with increasing customer awareness of available
products. Marketing is closely related to sales because marketing campaigns must successfully raise product
awareness to produce sales.
The evolution of marketing has followed the development of production processes as these processes have become
more complex and productive over time. Marketing as an art and practice has evolved in response to differences in
customer demands that have been present within each of the types of different economic societies.

History of Marketing
Marketing dates back to ancient times when traders faced competition from other traders in selling luxury goods to
royal and high-income members of society. Contemporary marketing originated during the industrial revolution
when technological advances led to a rapid increase in the availability of consumer goods to larger portions of the
population.
The first use of the term marketing was in the late 19th century as economic competition became more prevalent.
During the industrial revolution, organizations could create large quantities of goods for lower prices, making goods
more widely available to the general population. These increases in production capabilities gave customers a wider
variety of options to choose from when making consumption decisions, and competition between similar companies
emerged. The field of marketing evolved in response to companies' desire to gain market share in this competitive
environment.

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Eras in Marketing
A few distinct eras in marketing have emerged as production processes have evolved and improved the availability
of goods.

Simple Trade Era

The simple trade era of marketing spanned from the beginning of time until the industrial revolution in the mid-
1800s. The trading of handmade goods characterized the trade era. The majority of the population lived within a
subsistence economy where families produced basic goods and traded those goods for other basic goods. Economic
activity for luxury goods during this era was characterized by production methods that were labor intensive, which
led to the limited availability of high-priced luxury goods. Marketing during this era focused on raising awareness
about the availability of luxury goods for high-income consumers.

Production Era

Industrialization led to the production era of marketing. Industrialization drastically increased the production
capabilities and availability of goods, which led to a rapid decrease in prices, making more goods available to larger
portions of the population in the mid-1800s. This era is also characterized by the rise of competition between
organizational producers capable of mass production. This era was critical because organizations began considering
sales and marketing through gaining market shares over competitors as an essential business focus.

Sales Era

The sales era was characterized by intense competition between organizations producing similar products.
Industrialized production processes resulted in a wide variety of produced goods in large quantities, reducing prices
for consumers. More consumers were able to access products due to these decreased prices. Organizations further
reduced prices during this period in an attempt to undercut competitor prices. This era is significant because the
focus or marketing campaigns relied heavily on attaining sales that were driven by low prices rather than analysis of
consumer demand or a focus on producing high-quality products.

Marketing Era

Mass production led to the marketing era. Before mass production, companies only needed to consider costs and
prices; with competition, organizations began devising methods for developing products that were superior to
competitor products and marketing those products as superior to similar products.
Market research became popular during the marketing era as organizations reduced their focus on being low-cost
providers and increased their focus on identifying consumer needs. Differences in quality emerged as differentiated
product lines that targeted different market segments emerged for many organizations as market research revealed
differences in customer expectations. Marketing campaigns highlighted differences among products from the same
organization and portrayed products as superior in quality to competitor products.

Relationship Era

The relationship era extends customer-centered practices from the marketing era beyond market research to
identify customer needs to focus on building relationships with customers. Customer engagement is a goal in the
relationship era; social media or digital communications usually facilitate customer engagement. Relationships are

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becoming increasingly important as consumers desire to purchase products from organizations that have goals
aligned with the values of the customer, such as, environmental sustainability, social justice, or fair-trade practices.

Digital Marketing Era

The digital marketing era has transformed the method organizations use to market to potential customers. Digital
marketing requires different types of specialists, such as, graphic designers, social media influencers, and
technology-savvy team members, to transform marketing campaigns into digital formats. Expenses in the digital
marketing era are no longer related to providing physical displays or hosting events; instead, these expenses often
arise from paying digital platforms fees for displaying advertisements to customers on their platforms.

 Core Concepts of Marketing

8 Core Marketing Concepts

Philip Kotler, the eminent writer, defines modern marketing as, “Marketing is social and managerial process by
which individuals and groups obtains what they needs and wants through creating and exchanging product and value
with others.” Careful and detailed analysis of this definition necessarily reveals some core concepts of marketing.

1. Needs

Existence of unmet needs is precondition to undertake marketing activities. Marketing tries to satisfy needs of
consumers. Human needs are the state of felt deprivation of some basic satisfaction. A need is the state of mind that
reflects the lack-ness and restlessness situation.

Needs are physiological in nature. People require food, shelter, clothing, esteem, belonging, and likewise. Note that
needs are not created. They are pre-existed in human being. Needs create physiological tension that can be released
by consuming/using products.

2. Wants

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Wants are the options to satisfy a specific need. They are desire for specific satisfiers to meet specific need. For
example, food is a need that can be satisfied by variety of ways, such as sweet, bread, rice, sapati, puff, etc. These
options are known as wants. In fact, every need can be satisfied by using different options.

Maximum satisfaction of consumer need depends upon availability of better options. Needs are limited, but wants
are many; for every need, there are many wants. Marketer can influence wants, not needs. He concentrates on
creating and satisfying wants.

3. Demand

Demand is the want for specific products that are backed by the ability and willingness (may be readiness) to buy
them. It is always expressed in relation to time. All wants are not transmitted in demand. Such wants which are
supported by ability and willingness to buy can turn as demand.

Marketer tries to influence demand by making the product attractive, affordable, and easily available. Marketing
management concerns with managing quantum and timing of demand. Marketing management is called as demand
management.

4. Product

Product can also be referred as a bundle of satisfaction, physical and psychological both. Product includes core
product (basic contents or utility), product-related features (colour, branding, packaging, labeling, varieties, etc.),
and product-related services (after-sales services, guarantee and warrantee, free home delivery, free repairing, and so
on). So, tangible product is a package of services or benefits. Marketer should consider product benefits and
services, instead of product itself.

Marketer can satisfy needs and wants of the target consumers by product. It can be broadly defined as anything that
can be offered to someone to satisfy a need or want. Product includes both good and service. Normally, product is
taken as tangible object, for example, pen, television set, bread, book, etc.

However, importance lies in service rendered by the product. People are not interested just owning or possessing
products, but the services rendered by them. For examples, we do not buy a pen, but writing service.

Similarly, we do not buy a car, but transportation service. Just owning product is not enough, the product must serve
our needs and wants. Thus, physical product is just a vehicle or medium that offers services to us.

5. Utility (value), Cost, and Satisfaction

Utility means overall capacity of product to satisfy need and want. It is a guiding concept to choose the product.
Every product has varying degree of utility. As per level of utility, products can be ranked from the most need-
satisfying to the least need-satisfying.

Utility is the consumer’s estimate of the product’s overall capacity to satisfy his/her needs. Buyer purchases such a
product, which has more utility. Utility is, thus, the strength of product to satisfy a particular need.

Cost means the price of product. It is an economic value of product. The charges a customer has to pay to avail
certain services can be said as cost. The utility of product is compared with cost that he has to pay. He will select
such a product that can offer more utility (value) for certain price. He tries to maximize value, that is, the utility of
product per rupee.

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Satisfaction means fulfillment of needs. Satisfaction is possible when buyer perceives that product has more value
compared to the cost paid for. Satisfaction closely concerns with fulfillment of all the expectations of buyer.
Satisfaction releases the tension that has aroused due to unmet need(s). In short, more utility/value with less cost
results into more satisfaction.

6. Exchange, Transaction, and Transfer

Exchange is in the center of marketing. Marketing management tries to arrive at the desired exchange. People can
satisfy their needs and wants in one of the four ways – self-production, coercion/snatching, begging, or exchanging.

Marketing emerges only when people want to satisfy their needs and wants through exchange. Exchange is an act of
obtaining a desired product from someone by offering something in return. Obtaining sweet by paying money is the
example an exchange.

Exchange is possible when following five conditions are satisfied:

1. There should be at least two parties

2. Each party has something that might be of value to the other party

iii. Each party is capable of communication and delivery

1. Each party is free to accept or reject the exchange offer

2. Each party believes it is desirable to deal with the other party

Transaction differs from exchange:

Exchange is a process, not event. It implies that people are negotiating and moving toward the agreement. When an
agreement is reached, it is transaction. Transaction is the decision arrived or commitment made.

For example, Mr. X pays Rs. 25000 and obtains a computer. There are various types of transactions, such as barter
transactions, monetary transactions, commercial transactions, employment transactions, civic transactions, religious
or charity transactions.

Transaction involves following conditions:

1. At least two things of value

2. Agreed upon conditions

iii. A time of agreement

1. A place of agreement
2. A law (legal system) of contract to avoid distrust

Donor gives donations and receives honor, appreciation, and special invitation, or even special influence in
administration. Gift is rewarded in terms of gratitude, a good behaviour, saying, “thank you” or with the expectation
that the receiver of the gift will offer the same in the future. Almost all transfers are same as transactions. Transfer
and transaction both are important for marketer.

7. Relationships and Network

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Today’s marketing practice gives more importance to relation building. Marketing practice based on relation
building can be said as relationship marketing. Relationship marketing is the practice of building long-term
profitable or satisfying relations with key parties like customers, suppliers, distributors, and others in order to retain
their long-term preference in business.

A smart marketer tries to build up long-term, trusting, and ‘win-win’ relations with valued customers, distributors,
and suppliers. Relationship marketing needs trust, commitment, cooperation, and high degree of understanding.

Relationship marketing results into economical, technical, social, and cultural tie among the parties. Marketing
manager is responsible for establishing and maintaining long-term relations with the parties involved in business.

Network is the ultimate outcome of relationship marketing. A marketing network consists of the company and its
supporting stakeholders – customers, employees, suppliers, distributors, advertising agencies, colleges and
universities, and others – whose role is considered to be essential for success of business. It is a permanent setup of
relations with stakeholders. A good network of relationships with key stakeholders results into excelling the
marketing performance over time.

8. Market, Marketing, Marketer, and Prospect

In marketing management, frequently used words are markets, marketing, marketer, and prospects. A market
consists of all potential customers sharing a particular need or want who might be willing and able to engage in
exchange to satisfy this need or want.

Marketing is social and managerial process by which individuals and groups obtain what they need and want
through creating and exchanging product and value with others.

Marketer is one who seeks one or more prospects (buyers) to engage in an exchange. Here, seller can be marketer as
he wants other to engage in an exchange. Normally, company or business unit can be said as marketer.

Prospect is someone to whom the marketer identifies as potentially willing and able to engage in the exchange. (In
case of exchange between two companies, both can be said as prospects as well as marketers). Generally, consumer
or customer who buys product from a company for satisfying his needs or wants can be said as the prospect.

 Functions of Marketing
The ultimate aim of marketing is exchange of goods and services from producers to consumers in a way that
maximizes the satisfaction of customer’s needs. Marketing functions start from identifying the consumer needs and
end with satisfying the consumer needs. The universal functions of marketing involve buying, selling, transporting,
storing, standardizing and grading, financing, risk taking and securing marketing information. However, modern
marketing has some other functions such as gathering the market info and analyzing that info. Market planning and
strategy formation. To assist in product designing and development also comes under the marketing functions. The

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marketing functions have been discussed here briefly:

 Market Information
 Market Planning
 Exchange Functions
 Product Designing and development
 Physical Distribution
 Standardization and Grading
 Financing
 Risk Taking
 Packaging, labeling and branding
 Customer Support
Market Information
To identify the needs, wants and demands of the consumers and then analyzing the identified information to arrive at
various decisions for the successful marketing of a firm’s products and services is one of the most important
functions of marketing. The analysis involves judging the internal weaknesses and strengths of the organization as
well politico-legal, social and demographic data of the target market. This information is further used in market
segmentations.
Market Planning
Market-planning aims at achieving a firm’s marketing objectives. These objectives may involve increasing market
presence, dominate the market or increase market share. The market planning function covers aspects of production
levels, promotions and other action programmes.
Exchange Functions
The buying and selling are the exchange functions of marketing. They ensure that a firm’s offerings are available in
sufficient quantities to meet customer demands. The exchange functions are supported by advertising, personal
selling and sales promotions.
Product Designing and development
The product design helps in making the prodyct attractive to the target market. In today’s competitive market
environment not only cost matters but also the product design, suitability, shape, style etc. matter a lot in taking
production decisions.
Physical Distribution
The physical distribution functions of marketing involve transporting and storing. The transporting function involve
moving products from their points of production to locations convenient for purchasers and storing function involve
the warehousing products until needed for sale.
Standardization and Grading
Standardization involves producing goods at predetermined specifications. Standardization ensures that product
offerings meet established quality and quantity. It helps in achieving uniformity and consistency in the output
product. Grading is classification of goods in various groups based upon certain predetermined characteristics. It
involves the control standards of size, weight etc. Grading helps in pricing decisions also. The higher quality goods
and services attract higher prices.

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Financing
The financing functions of marketing involve providing credit for channel members or consumers.
Risk Taking
Risk taking is one of the important marketing functions. Risk taking in marketing refers to uncertainty about
consumer purchases resulting from creation and marketing of goods and services that consumers may purchase in
future.
Packaging, labeling and branding
Packaging involves designing package for the products, labeling means putting information required / specified on a
product’s covering. Packaging and labeling serve as promotional tools now a days, Branding distinguishes the
generic commodity name to a brand name. For example, Wheat Flour is a generic name of a commodity while
“Ashirvad Aata” is a brand name. In service industry, also branding matters a lot.
Customer Support
Customer support is a very important function of marketing. It involves pre sales counseling, after sales service,
handling the customer complaints and adjustments, credit services, maintenance services, technical services and
consumer information. For example, water purifier comes with an onsite service warranty of 7 years helps in
marketing and is an important marketing function as well.

 Process of Marketing Management

Following are the steps involved in the process of marketing management :

Step 1 : Setting Marketing Objectives :

The first step of marketing management process is setting marketing objectives. While setting objectives, the
organisational mission must be considered. The mission helps the marketer to conduct the proper environmental
scanning and search for new opportunities.

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Step 2 : Analyzing Marketing Opportunities :

In the next step, different marketing opportunities are analysed in accordance with the strengths and weaknesses of
the organisation, which can be internal or external. The availability of further opportunities can be examined on the
basis of the project or work assigned.

A consistent market information system is needed for the effective analysis of the opportunities. This enables the
marketers to have information regarding choices and preferences of target customers, their geographical locations,
buying behavior, social behavior, etc.

Step 3 : Researching and Selecting Target Markets :

After analyzing the opportunities, the research and selection of target market is carried out. For selecting a target
market, it is very essential to understand that how the attractiveness of a particular market can be measured. There
are various techniques which are used to measure the market potential and forecast the future demand. Under
modern marketing concept, the whole market is divided into several small segments. These segments are evaluated
to select the target markets, and then different positioning strategies are applied to each market.

Step 4 : Designing Marketing Strategies :

This is the most crucial step of marketing management process. In this, the marketing strategy of an organisation is
designed for the target markets. The strategy reflects the overall plan of the organisation for achieving marketing or
business objectives.

Marketing strategy states the major approaches through which an organisation can achieve its business goals in a
target market. It also comprises of basic decisions related to marketing mix, marketing expenditure and marketing
distribution.

This step also involves extensive marketing research for the development of firm-market system. Based on the
system, four Ps of marketing management, viz., product, price, place, and promotion are determined and applied on
the consumers. The organisation should also decide the total expenditure to be used for marketing mix.

Step 5 : Planning Marketing Programs :

The broad marketing strategies alone are not enough to meet the organisational goals. In order to achieve the
business goals and implement marketing strategies, the organisation requires effective marketing programs.

These marketing programs include decisions regarding the product characteristics, packaging, policies related to
services, branding, pricing (retail as well as wholesale), credits, discounts and allowances, recruitment, selection and

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integration of different marketing intermediaries for effective distribution, advertisement, sales promotion, personal
selling, direct marketing, etc.

Step 6 : Organizing, Implementing and Controlling the Marketing Effort :

The concluding step in marketing management process involves organisation of resources and implementation and
control of the marketing plan.

A marketing organisation is designed to apply the marketing plan into action, that is for the implementation of
marketing plan.

Once the plan is executed, activities concerned with customer feedback and sales forecast are organised. This is
done to evaluate the effectiveness of marketing plan.

In marketing plan, control is very essential component through which alternations or modifications can be done.
Controlling in marketing is responsible for determining performance standards, analyzing actual performance and
minimizing the difference between actual and desired performance.

It involves three main elements, i.e., measuring, analyzing, and monitoring. The marketing manager compares the
actual performance with the standard performance and takes corrective measures, if required. In case of applying
corrective measures, the reason for the deviation is identified by conducting market research.

Understanding the Marketplace and Customer Needs

 Understanding the Marketplace and Customer Needs

Marketers need to understand customer needs and wants and the marketplace in which they operate. Five core
customer and marketplace concepts:

1. Needs, wants, and demands

2. Market offerings (products, services, and experiences)
3. Value and Satisfaction
4. Exchanges and Relationships
5. Markets

1. Customer Needs, Wants, and Demands:

The marketer must try to understand the target market’s needs wants and demands. Needs are the basic human
requirements. People need food, air, water, clothing and shelter to survive. People also have strong needs for
education, recreation and other services. These needs are not created by society or by marketers. They exist in the
very texture of human biology and the human condition.

Needs - A human need is a state of felt deprivation of some basic satisfaction. Ex. Hungry, Thirsty etc.

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Wants - Wants are desires for specific satisfies of these deeper needs. Ex. If thirsty, can satisfy by drinking tea,
coffee, or water.

Demands - Demands are wants for specific products that are backed by an ability and willingness to buy them.

2. Market offerings (Products, Services and Experiences):

Customer's needs and wants are fulfilled through a marketing offering - some combination of products, services,
information or experiences offered to a market to satisfy customers. Marketing offerings are not limited to physical
products. They also include services, activities or benefits offered for sale that are essentially intangible and do not
result in the ownership of anything. Examples include banking, airline, hotel, and tax preparation and home repair
services.

More broadly, market offerings also include other entities such as persons, places, organization, information, and
ideas. For examples, beyond promoting its banking services, Bank Asia run ads asking people to denote used or old
winter clothes to the Salvation Army. In this case, the marketing offering is helping to keep those who are less
fortunate warm.

3. Customer Value and Satisfaction:

Customer value is the amount of benefits which customers get from purchasing products and services. It can also
define as the difference between the values customer gains from using a product and cost of the product. Customer
value is high if the customer gains more benefits as compared to the cost of product and services and customer value
is low if the customer gains less benefit as compared to the product and services cost. For Example,

Customer value of Dell laptops and computers are high in view of its customers. Dell products quality, efficiency,
brand, delivery and after sale service are the benefits for buyers and definitely it pays more than cost of the product
and services.

Human always build some expectation in their mind about person, place product, services and etc. In marketing,
buyer has expectation with the product which he or she going to purchase. The buyer expectation about product(s)
comes from marketing, word of mouth or brand reputation.

Buyer will be satisfied if the product meets or exceed expectations. Buyer will be dissatisfied if the product does not
meet the expectation which buyer set in his mind before buying it.

Customer value and satisfaction directly linked with the quality of products and services. In recent years
organizations are focusing on quality to increase customer satisfaction. Total quality management is the set of
continuous programs designed to improve the quality product, services and marketing processes.

4. Exchanges and Relationships:

Exchange is the act of obtaining a desired object from someone by offering something in return.

Marketing consists of actions to build and maintain desirable exchange relationships.

When consumers decided they want to satisfy their needs and wants they do so through what is known as exchange
relationships. Exchange relationships or exchanges is the act of obtaining a desired object from someone by offering
something in return.

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Marketers try to bring about a response to some market offering. Responses by consumers may be buying or trading
products or services or something more. As an example, a church may want new membership or a social action
group may want the acceptance of their ideas.

5. Markets:

A market exists when there are actual and potential buyers of products and services. A market is based on the
concept of exchange and relationships and consumers share a particular need or want that can be satisfied through
the exchange relationship.

While a market refers to an exchange and relationship coexistence, the act of marketing means the management of
these markets to bring about profitable customer relationships. Creating these relationships requires work. As an
example, sellers must:

1. Search for buyers

2. Identify the buyers needs
3. Create market offerings that meets customer expectations
4. Set competitive pricing for the products or services
5. Promote them
6. Warehouse them, and
7. Deliver the product

Core marketing activities include:

1. Consumer research
2. Product development
3. Communication
4. Distribution
5. Pricing
6. Service

In closing, marketing is carried out by both sellers and buyers. In today’s digital marketing environment, it allows
consumers (buyers) to market for products easily. Consumers search for products online. They interact with
companies through the company website or social media sites and make purchases. In today’s market environment,
marketing is truly a two-way affair.

 What is Customer Value?

Customer value is defined as the perception of what a product or service is worth to a customer against the
possible alternatives. Worth means whether the customer feels they got the benefits over what was paid.

Some benefits:

 quality of the product or service

 success from using the product or service

 advantages of ownership

 points of differentiation

 quick access to a solution

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 image and brand of the company or the product

 existing relationships or experience

Customer value equation:

Another customer value definition suggests that there are two aspects of customer value. These two aspects are the
desired value and perceived value. Desired customer value refers to what the customer wants to receive from a
product or service. Perceived value is the benefit the customer believes they actually received from a product or
service after it was purchased.

When making purchasing decisions, consumers typically compare their perceived value of similar products and
services. After that, they opt for those with the highest customer lifetime value among all the available offerings in
the marketplace. Since every consumer has a unique set of needs, wants and resources, no two consumers will place
the same value on the same product or service.

The highest quality of products or services does not necessarily mean the highest consumer value. Consumers
evaluate the benefits against the offered cost. While some are willing to pay a higher price for a high level of quality,
others may consider that the same benefits are not worth the price.

Customer Value components

The image below shows the different parameters which can determine the actual customer value delivered to
customer from the marketer or manufacturer. These are:

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1. Quality
The value of the product is derived from the quality of a product.
A well finished, long lasting, sturdy product will have more value as compared to a poor, low-quality product.

2. Price
Customer value is often evaluated by the price of the product or service. There can be the same product by two
companies, but they can charge different prices. And if the customer feels justified, he or she can pay a higher price
if the perceive it as a high value product.

3. Service
Similar to quality, service is an intangible value which a company can offer, and create customer value. A company
offering good service, quick customer response and resolving customer queries, will always have an upper hand as
compared to competition.

4. Marketing/Branding
Marketing helps a company position its product in the most accurate way. A good, strong, positive branding about a
product can lead to higher value in the mind of the customer.

5. Social Influence
Word of mouth regarding the product as well as perception of the product in the society also defines the customer
value which a product gets.

6. Past Experience with the product

If a customer has used a product in the past, and he or she knows the exact benefit, there is high chance that the
customer would purchase the product again, and hence they have a high value for the product & brand.
The above parameters can be used by the sellers to define the customer value they want their product or service to
deliver.

 Total customer cost

Definition (1):

Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing
of the given market offering, including monetary, time, energy, and psychic costs for getting the expected benefits.

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The costs included following components in the total customer cost are briefly discussed below:

 Monetary costs: These are the prices of the product that customers buy and achieve the desired utility.
Precisely, these are the prices paid for the products or services for their utilities by their customers.
 Time costs: These are the amounts of time spent on finding, evaluating, purchasing, and making other
decisions regarding the products. High engagement products have high time costs than low engagement
products.
 Energy costs: These are the degrees of physical efforts applied by the customers for finding, evaluating,
purchasing the ultimate products, and also taking those to their home.
 Psychic costs: These are the costs associated with the dissatisfaction and frustration of the customers with
the products and services. These costs can occur during different phases of the purchasing process.

Definition (2):

Total customer cost means the finished parcel or costs a customer wishes to pay in the searching, investigating,
buying, keeping up, and acquiring a certain item or administration. For example, a customer buying a pack of bread
wants to spend less in the process for research and support, but a customer buying a car has the desire of spending
much more on collecting information regarding fuel expenses, engine quality, availability of parts, and the like.

 Meaning of Marketing Mix

A combination of factors that are used for marketing by a company to encourage consumers to buy their products,
commonly termed as 4Ps: product, price, place, and promotion.

These four elements are adjusted to find the right combination that meets the needs of customers while generating
optimal income for the company.

The 7Ps of Marketing Mix

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The Marketing Mix elements include 7Ps namely…

1. Product
2. Price
3. Place
4. Promotion
5. People
6. Process and
7. Physical Evidence
These 7Ps are divided into 2 parts such as traditional and modern Ps, because before there were only 4Ps Product,
Price, Place, and Promotion.

Later in the modern era due to the rise in demand for services additional 3Ps were added People, Process, and
Physical Evidence.

Here is an example video showing the Marketing Mix with an example of 7Ps of Coca Cola Company how they
adopted in their business and achieved success.

Traditional 4Ps of Marketing Mix With Examples

1. Product
In the marketing mix, the product or service is the most important without which the marketing concept itself does
not exist.

Customers acquire products for a singular reason that they’re perceived because the means that to satisfy their wants
and needs.

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According to Philip Kotler, “A product is anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a need or want.”
In effect, according to this definition, products include physical products, services, persons, places, organizations,
and ideas.

Products have various attributes such as quality, variety, design, brand, packaging, services, and warranties that can
be changed depending on what the specific market wants.

For example, when consumers wanted Tata Indigo Marina, it was an updated version of Tata Indigo.

2. Price
The second factor is the price, which impacts the volume of sales. It is a price that will obtain a quantity, weight or
specific measurement of a product.

For example, you buy a packet of chips which is net 10 grams in weight, for this value ’10’ denotes the price of the
product.

The price is the only marketing mix element that can be changed quickly. Price straight away influences the
development of marketing strategy as it is the main factor that influences the assessment of importance obtained by
customers. Firms have to take some factors while fixing the price of a product.

These factors are:

 Objectives of business
· The competitive environment
· Product and promotional policies of the firm
· Nature of price sensitivity
· Conflicting interest between manufacturer and intermediaries
· Routine pricing decisions
· Active entry of non-business groups in pricing decisions

3. Place
The place is an important factor of a marketing mix, which covers the various activities the company tries to reach
the specific categorized customers by their products availability.

Place mix deals with the physical distribution of products to the destination at the right time and right place.

For example, a customer usually purchases toiletries from nearby retail stores. So, toiletry marketers must ensure
that their products are available at almost every nook and corner store.
Distribution channels may also be used in a marketing strategy to differentiate a product from its competitors.

For example, Amway distributes its products using a direct distribution channel while HUL uses multi-channel
distribution (through retailers, wholesalers, online sources, etc.).
A company uses distribution channels like retailers, wholesalers, merchants, brokers, and
value-added resellers. The management also aims to keep the physical distribution costs (inventory, transportation,
and storage) as low as possible.

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4. Promotion
This method helps to communicate the features and benefits of the products or services to its target customers. Some
commonly used methods such as advertising, sales promotion, direct selling, public relations, direct marketing, etc.

For example, Toyota promotes its brands by advertising, sales promotions, public relations, sponsorship, etc.

The promotion is a key element of any marketing activity used to positively influence the perceptions of the target
customers in order to facilitate exchanges between the seller and the customer.

Additional 3Ps of Marketing Mix With Examples

The traditional method of 4Ps was not enough to market services. After considering the rapidly increasing role of
services in the economy and customer-orientation, additional 3Ps were added to the marketing mix to serve the
purpose of marketing services.

People, Process, and Physical evidence are additional 3Ps. They play a greater role in the marketing of services than
in the marketing of products.

1. People
This is a vital element of the modern marketing mix or the service mix. Having appropriate staff and people are an
essential part of any service provider.

Recruiting the right employees and giving training for them appropriately to deliver their services are very essential
if an organization wants a competitive advantage.

Consumers make judgments and deliver perceptions of the service based on the behavior and performance of
employees how they react with them.

Therefore, the service staff should have the appropriate interpersonal skills, aptitude, and service knowledge to
provide the service to meet the consumer expectation for the money they are paying for.

2. Process
This refers to the step by step way to the delivering service to the end customer.

For example, when you go to McDonald’s drive-through, you are first greeted by an attendant who asks you for your
order.

Then, a person notes down your order and informs a crew member about it. Within the time you pay your bill, your
order reaches you. You take your order and leave. This represents a service delivery process.

The service process can be automatized as well. For example, in movie theaters, they have introduced an online
ticket booking facility and ticket counter to offer convenience to customers and also reduce the human element in
the service delivery process.

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3. Physical evidence
Physical evidence is the tangible part of a service. The satisfaction of customer service is an unknown factor, as they
cannot rate a particular service until it is consumed.

Therefore, service providers should try to offer services with the element of tangibility.

Physical evidence can include web pages, paperwork (such as invoices, tickets, and dispatch notes), brochures,
furnishings, ambiance, signage (such as those on aircraft and retail stores), brand logos, the uniform of employees,
business cards, and the building itself.

Importance of Marketing Mix

 It helps us in identifying the opportunities and helps in product development.
 It acts as a guide for any business to take up decisions and strategies.
 It makes the organization to differentiate with their competitors.
 It gives the proper direction how a product or service to be reached, final user.

 Marketing Concepts ( marketing philosophies)

Introduction

Marketing concept is a strategy or an approach adapted by the firms to satisfy needs, promote sales, maximize profit
or lead the market. Marketing concepts also reflect the developments in the marketing approaches across time. There
are five marketing concepts evident in the marketing:

1. The Production Concept

2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept

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The Production Concept

The Production Concept is among the oldest Marketing management orientations. Production Concept suggests that
customers will prefer products that are readily available and are highly affordable. The main focus is on production
i.e. maximize the production.The manufacturers in this concept believe that supply will create the demand and
economies of scale will lead the supply. Improving production & other operations and making distribution channels
efficient are prime objectives of the management . The ‘price’ factor is very crucial to the customers.

Another concept we must learn in production is marketing myopia. It means that every resource in Production
Concept is employed in making operations efficient that one might lose sight of the real objective of business
operation i.e. satisfying customer needs and building customer relationships.

Features of Production Concept

1. Production oriented
2. High Production efficiency
3. Wide Distribution
4. Low Price
The Product Concept

In the product concept, the focus is more on the product i.e. consumers will prefer the products which will provide
the quality ,performance and innovative solutions. Management focuses more on product development and product
improvement. Customers are also selective while making purchasing decisions i.e. they buy the goods of the
competing brands comparing the features. The ultimate goal of the product concept is to earn maximum profit by
increasing production of high quality goods of low price using high efficiency and selling them in mass quantity.

There is a marketing myopia in the product concept i.e. companies are so into product development and
product improvement that buyers desire might get overshadowed. In this concept, the manufacturers are more into
innovation and technological development on product. Apple and Google are two companies that are operating
under Product concept.

Features of Product Concept

1. Emphasis of Product Quality

2. Reasonable Price
3. No concern with customers’ need
4. Regular quality improvement
The Selling Concept

The Selling concept of marketing focuses attention on the seller and distribution channel than the consumers. The
main focus in selling concepts is to increase sales volume and earn profit using various promotional and advertising
activities.

The selling concept is typically practised with unsought goods- those that buyers do not normally think of
buying, such as insurance. Selling concept is still prevailing in the market. It focuses more on selling the product at
any cost and pushes the supply factors despite the demand. The companies sell what they make to customers rather
than making what customers want.

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Features of Selling Concept

1. Selling – orientation
2. Aggressive Selling and Promotion
3. No Concern with consumers’ needs
4. Customer Persuasion
The Marketing Concept

In previous concepts, the more focus was given to the product and production channel than customers. The
marketing concept is consumer centered i.e. sense-and-respond . The marketing concept holds that achieving
organizational goals depends on knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do.

Marketing concept considers outside-in perspective i.e. the need and demand for the product is inspired from
the consumer. Firms analyze the needs of the consumer and make decisions to satisfy those needs. The marketing
concept starts with a well-defined market, focuses on consumer needs, and integrates all the marketing activities that
affect the customers.

Features of Selling Concept

1. Customer Orientation
2. Integrated Marketing
3. Customer Satisfaction
4. Realization of organizational goals
5. Profit creation
The Societal Marketing Concept

The societal marketing concept is a more welfare focused form of marketing. It emphasizes sustainability – socially
and environmentally responsible marketing that meets the present needs of consumers and business while also
preserving or enhancing the ability of future generations to meet the needs.

More and more companies have adapted to societal marketing concepts i.e. considering consumers’ needs
and welfare of the society. A growing number of companies known for their hard core approaches to business such
as GE, Google, IBM, Intel, Nestle, Unilever and Walmart-they are concerned not just with short-term economic
gains but also with the well-being of their customers, the depletion of natural resources vital to the business. Some
of the factors which firms consider apart from satisfying customers are environmental degradation, increasing
pollution, resource depletion, worldwide inflation, population explosion, consumerism etc.

Features of Societal Marketing Concept

1. Social responsibility orientation

2. Customer need satisfaction
3. Integrated marketing efforts
4. Profit through social well-being and consumers welfare
a

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