Module: 1, Marketing Concepts and its Evolution

Paper: 0 Marketing Management

Ms. Neetika Sharma

Assistant Professor, Department of Commerce, GGDSD College, Rajpur.

Dr. Kulbhushan Chandel

Department of Commerce and Management Himachal Pradesh University, Shimla

es

BPSMV, KhanpurKalan, Sonipat

Prof YoginderVerma

Pro–Vice Chancellor

Central University of Himachal Pradesh. Kangra. H.P.

Prof. S P Bansal Vice Chancellor Maharaja Agrasen University, Baddi

Content Writer

Co-Principal Investigator

Paper Coordinator

Principal Investigator

Items Description of Module

Subject Name Management

Paper Name Marketing Management

Module Title Marketing Concepts and its Evolution

Module Id Module no.- 1

Pre- Requisites Basic knowledge of marketing

Objectives To study the components of marketing

Keywords Marketing, companies, consumers, products.

QUADRANT-I

Module: 1 Sales and Marketing Research

1. Learning Outcome

2. Introduction

3. Origin and meaning of marketing

4. Core concept of marketing

5. Definitions of marketing

6. Marketing concept

7. Development of marketing concept

8. Different concepts of marketing

9. Difference between traditional and modern concepts of marketing

10. Some new concepts of marketing

11. Summary

1. Learning outcomes:

After completing this module, the students will be able to:

Understand the meaning of marketing.

Understand the evolution of marketing.

Understand the development of marketing concept.

Understand the new concepts of marketing.

2. Introduction:

The marketing concept come out in the mid- 1950s and challenged the proceeding concepts.

For understanding the meaning of marketing, firstly understand the meaning of market .The

word Market is derived from the Latin word MARCATUS which means merchandise or trade

or a place where business is conducted. Marketing is not only a place of exchange but an

arrangement that provides an opportunity of exchanging goods and services for money.

Peter Drucker, a leading management theorist, puts it this way –

“There will always one can assume, be need for some selling. But the aim of marketing is to

make selling super fulvous. The aim of marketing is to know and understand the customer so

well that the product or services fits him and sells it. Ideally, marketing should result in a

customer who is ready to buy. All that should be needed then is to make the product or

services available.”

Marketing is a broader concept which includes all human activities in relation to the

market .it includes product planning and development, buying and assembling, pricing

distribution and selling, branding and packaging, standardization and grading , transportation

and warehousing, promotion and advertising, financing, risk bearing, analysis of market in

terms of its present and potential customers.

3. Origin and Meaning of Marketing :

In mid 1950s most firms were production oriented i.e. the manufacture emphasized only on

production of quality products and then looked for people to purchase them. With the passage

of time and technological advancement, the focus shifted to an effective sales force to find

that customers for their increasing output. After 1950s the marketing shifted to impressive

concern that the manufacturer first looks into consideration the customers wants and then

manufactured their goods according to their interest.

The American Marketing Association defines

“Marketing as the process of planning and executing the conception, pricing, promotion and

distribution of ideas, goods and services to create exchanges that satisfy individual and

organizational objectives.”

Marketing is a broader and comprehensive term and it includes set of activities and

important resources necessary to direct and facilitate the flow of goods and services from the

producer to the consumer. Marketing also availing the right goods and services to the right

people, at the right place and at the right time.

4. Core Concept of Marketing:

Philip Kotler explained the core concept of marketing in his book – “Marketing Management”

as,

Core Concept of Marketing

According to him, every human being has endless needs and demands . There are many

products which can satisfy human wants and demands. These wants and demands can be

fulfilled by exchange of goods and services . Marketers try to increase demand by making

products more attractive , affordable and easily available .Market is a place where goods and

services exchanged. Marketing means all those activities that take place in relation to market

.Hence , the marketing is a social process by which individual and groups obtain what they need

and want through exchanging products and values with others.

5. Definitions of Marketing :

To understand the concept of marketing different authors define marketing in their own way .

Some definitions of Marketing are as follows:

5.1 According to Pyle,(Principles of Marketing) – “ Marketing comprises both buying and selling

activities.”

5.2 According to Tousley ,Clark and Clark ( Principles of Marketing ) – “Marketing consists of

those efforts which affect transfers in the ownership of goods and services and which provide

for their physical distribution.”

5.3 According to Paul Mazur – “ Marketing is the delivery of standard of living.”

5.4 According to William J. Stanton – “ Marketing is a total system of interacting business

activities designed to plan, price, promote and distribute want satisfying products and services

to present and potential customers.”

5.5 According to H.L. Hansen (Marketing )- “Marketing is the process of discovering and

translating consumer needs and wants into product and service specifications, creating demand

for these products and services and then in turn expanding the demand.”

6 Marketing Concepts :

Needs,

wants and

demands

Products Value and

satisfaction

Exchange

and

transaction

Markets

and

Marketers

To understand the meaning of modern marketing , one should be clear the meaning of marketing

concepts. Marketing concepts has two words: Marketing and Concepts. A concept is a

philosophy, an attitude and course of thinking. Marketing concept is the philosophy that guides

the activities of marketing.

6.1 Definitions of Marketing Concept :

i) According to Philip Kotler in his book,” Marketing management “states that

,”Marketing concept is customer oriented backed by integrated marketing aimed at

generating customer satisfaction as the key to satisfying organizational goals.”

ii) According to Arthur P. Felton, “ Marketing concepts is a corporate state of mind that

insists on the integration and coordination of all marketing functions, which in turn

are welded with all the other corporate functions, for the basic objective of producing

maximum long range corporate profits.”

7. Development of Marketing Concept :

The history of development of marketing concept is divided into four stages:

7.1 1st Stage : Production – oriented Philosophy (1900 to 1930 )

Till 1930‟s , USA was facing shortage of production and at that time the general philosophy

of business was ,” produce as much as u can , because there is a limitless market “. In this

stage the main focus on increasing the production not the selling. Producers were busy to find

Development of Marketing Concept

1st STAGE

(From 1900 to

1930 )

Production-

oriented

2nd STAGE (from 1930 to

1950) Sales-oriented

3rd STAGE (from 1950 to

1990)

Customer -

oriented

4th STAGE (from 1990 to till

date)

Social - oriented

and implement the ways and means which increases production. That‟s why this stage is

called as production – oriented stage. The assumptions of this philosophy are :

Anything that can be produced can be sold.

To keep the cost of production is low

Produce only certain basic products.

7.2 2nd Stage : Sales – Oriented Philosophy ( 1930 to 1950 )

This stage lies between the periods from Great Depression to the end of World War II.

During this stage the main problem was not production, but how to sell it. In this stage the

focus of businessmen was shifted towards sales and this stage is called as sales – oriented

stage. The main assumptions of this philosophy are:

Production of good quality product

Finding new buyers of the product

Convince the buyers through good selling tactics.

7.3 3rd Stage : Customer – Oriented Philosophy ( 1950 to 1990)

In this stage the needs of the consumer determined and then integrated efforts were taken to

produce the goods that satisfied these needs and wants. The main assumptions of the

philosophy are :

Only desired products by consumer should be produced,

Consumer is treated as a king of the market,

To integrate all activities to satisfy consumer wants.

Focus on long range profits rather than „quick sales‟.

7.4 4th

Stage : Social – Oriented Philosophy (1990 to update )

In this stage focus not only consumer satisfaction but also for consumer welfare or social

welfare. The assumptions of social orientation philosophy are :

Only those products produced which are desired by the consumers,

The purpose of the firm is long term profit objective rather than quick sales,

The firm should discharge its social responsibilities .

8. Different Concepts of Marketing :

Marketing has been defined by different people in different ways. Some

important concepts are as follows:

8.1 Production Concept :

This is one of the oldest concept of Marketing. According to that concept, producer

believed that if the product is good and reasonably priced, it will be

most popular if no special marketing efforts are made. In other words, customer prefer

those products which are low priced and easily available.

According to Philip Kotler , “ the production concept hold that consumer will favour

those products that are widely available and low in cost management in production

oriented organization concentrate on achieving high production efficiency and

Distribution coverage.”

This concept is very useful in Banks , General Hospitals and Industries which producing

convenience products.

8.2 Product Concept :

According to this concept , producer believed that by making superior products and

improving their quality , they will attract more customer. Superior products are always

prefer by the customer.

According to Philip kotler , “ The product concept holds that consumer will favour those

products that offer the most quality performance and features . Management in these

product oriented organizations focus their energy on manufacturing good quality products

and improving them over time.

This concept is useful for specialized nursing homes, bakeries and Industries which are

producing electronic products.

8.3 Selling Concept :

According to that concept, the customer will not normally purchase the product unless

they are convinced through proper advertising , sales promotion and salesmanship efforts.

It shows that even the best products cannot have assured sales without the help of sales

promotion. So, a marketing concept points out that goods are not bought but they sold

with the help of salesmanship efforts, aggressive advertising and intensive sales

promotion . This concept change the attitude of marketers as sales – oriented. Some

important aspects of selling are:

It provides a human touch to business transactions.

It enhances the customer‟s confidence in the seller.

It provides prospective customers of the product.

This concept is practiced in the NGO‟s, college admissions, offices and political parties.

8.4 Marketing Concept :

This concepts focus on the determination of the requirements of potential customers and

supplying product to satisfy their requirements. This concept highlights that the primary

task of every business enterprise is to study the needs, desires and values of potential

customers. The market concept focus on the four points :

Target market

Customer Needs

Integrated Marketing

Profit through Customer Satisfaction.

8.5 Distribution of goods and services concept :

This is the traditional concept of marketing. According to this concept, marketing starts

when the production process is completed and ends when goods are sold. It has no

concern with the pre- production activities and after sales activities. Under this concept

the firms are more concerned with maximizing their profits by maximizing their sales.

According to American Marketing Association, “Marketing is the performance of

business activities that directs the flow of goods and services from producer to consumer

or user.”

8.6 Creation of Utility concept :

According to this concept marketing is the creation of different types of utilities in goods

and make them valuable.

According to Richard Buskirk, “ Marketing is an integrated system of action that creates

value in goods through the creation of form , place, time and ownership utility.” It means

there are four types of utilities: Form Utility, Time utility, Place Utility, Possession

Utility.

For Example:

Product Planning and development create form utility.

Transportation and distribution channels create place.

Storage and warehousing create time utility.

Salesmanship and Advertising create possession utility.

8.7 Societal Marketing Concept :

This is the new and broader concept of marketing. This concept focuses that the

organization should first determine the needs, wants and interests of the target markets. It

emphasized on producing goods and services which are beneficial for the society.

According to Philip Kotler, “ Societal marketing concept is customer- orientated concept

backed by integrated marketing aimed at generating customer satisfaction and long – run

customer welfare as the key to attaining long – run profitable volume.”

This concept is based on the following assumptions:

The organization shall offer long – run consumers and public welfare,

The mission of an organization is to create satisfied customers,

The organization will offer only those products to the customers which are beneficial

both to the consumers and the society.

8.8 Delivery of Standard of living Concept :

According to this concept, marketing includes all those activities which create and

provide a better standard of living to the society. Consumers are motivated to

purchase new products that are easily available in the market. This concept is a

customer-oriented concept and is more close to the modern concept of marketing.

Acc .to Paul Mazur, “Marketing is the creation and delivery of standard of living to the

society.”

Acc. to Prof. Malcolm McNair, “Marketing is the creation and delivery of standard of

living to the society.”

9. Difference between Traditional and Modern Concepts of Marketing:

Basis Traditional Concept of Marketing Modern Concept of Marketing

1.Orientation It is a production-oriented concept. It is a consumer-oriented concept

2.Scope It has a narrow concept. It has a wide scope .

3.Purpose The purpose of this concept is

earning profits through more

production and higher sales.

The purpose of this concept is

earning profits through increase in

customer satisfaction.

4.Focus Focus on sales . Focus on customer satisfaction.

5.Social Responsibility No place for social responsibility. It dedicates itself to social

responsibility by providing

standard of living to the society.

6.Market Research No scope for market research. Top priority for market research.

7.Integration between

marketing departments

There is no integration with the

marketing department. Different

departments of firm are

independent.

All activities of various

departments are directed and

integrated by the marketing

department.

8.Consumer welfare There is no place for consumer

welfare.

It is the main responsibility of the

marketer for consumer welfare.

9. Principle It follows the principle of „Seller

Awareness.”

It follows the principle of “Buyer

awareness.”

10. Some New Concepts of Marketing :

10.1 Relationship concept :

Acc to Philip Kotler- “Relationship marketing is the process of building long –term,

trusting, WIN-WIN relationship with customers, distributors, dealers and suppliers.

Relationship marketing promises and delivers high quality, efficient services and fair

prices to the other party overtime. It is accomplished by strengthening the economic,

technical and social ties between members of the two organizations or between the

markets and the individual customer.”

10.2 Mass Marketing Concept :

Mass Marketing means to sell the mass produced goods. This concept focus on sale of

mass production by using tools of mass marketing i.e. mass advertising , mass

promotion , mass distribution to large group of customers.

10.3 Niche Marketing Concept :

Niche Marketing is a concept where marketer plays a role of specialist in particular

segments. For example : Quality Specialist for manage low or high quality of the

products, Service Specialist for providing best services which are not provided by other

firms , Product line Specialist for availing only one product line or product.

10.4 Strategic Marketing Concept :

Strategic marketing is a decision making process which includes the analysis of internal

potential and external environments of a firm in order to efficiently use the various

marketing resources to achieve organizational objectives.

10.5 Stimulation Marketing Concept :

In this concept a proper stimulation is provided to customers for buying the product.

There is no demand in this situation and people are not interested to purchasing the

products, so to create demand stimulation is provided.

10.6 Synchromarketing Concept :

In this concept there is a state of irregular demand or we can say that demand is more

than supply. In other seasons, whatever is supplied goes to waste for want of demand .

10.7 Demarketing Concept :

Under this concept the demand for a product exceeds the supply and this is also known

as overfull demand. the term overfull demand is defined as a situation in which demand

exceeds the level at which the marketer feels able or motivated to supply it.

10.8 Remarketing :

Remarketing is associated with the term “ faltering demand “ , which is invariably for

all kinds of products , services , places , organization etc. In this state, there is a decline

in demand for the products is possible, if no preventive action is taken to enhance the

target market.

10.9 Database Marketing Concept :

Database Marketing is a process of collecting and using data on our customers and

markets helps us to acquire a better understanding of the market so that we can utilize

sales and marketing techniques in a more precise and cost effective way.

10.10 Network Marketing :

Network means a strong interdependence between the firms controlling different

activities, i.e. firms are components of a value chain . So that is why the success of the

value chain is not only dependent on its performance but is closely related to the

interactions between all the firms making that chain. According to Kotler ( 1991)- “

Marketing started out as an analysis of how commodities are produced and distributed

through an economic system. Subsequently, we became interested in distribution

channels themselves and the functions marketers perform. What I think we are

witnessing today is a movement away from a focus on exchange in the narrow sense of

transaction towards a focus on building value- laden relationships and marketing

networks …..”

11. Summary :

Marketing concepts emerged in mid 1950s and challenged the proceeding concepts.

Marketing as the process of planning and executing the conception, pricing, promotion and

distribution of ideas, goods and services to create exchanges that satisfy individual and

organizational objectives. The core concepts of Marketing start from needs, wants and

demands and ends with market and marketers. Marketing concepts tells us about the

philosophy that guides the activities of marketing. These are customer oriented concepts

aimed at generating customer satisfaction .The starting stage of Marketing concepts is

Production Stage then proceeds for sales oriented, customer oriented and finally social

oriented stage. From these stages we know about the development of marketing concepts.

The traditional concept of marketing is totally different from the Modern concept of

Marketing. Modern concept of marketing focus on customer satisfaction and it is consumer

oriented process. It creates and delivers the standard of living to the society and aims at

earning profit only by satisfying the consumers. Whereas, the Traditional concept of

Marketing focus only on production of commodities. It was based on the idea that a consumer

would buy what the seller produces. It is the production Oriented concepts aims at earning

maximum profits and does not provide after sale services. There are also some new concepts

of marketing which enhances the new practices and opportunities for today‟s competitive

world. At last we can say that Marketing is seen as the task of creating, promoting, and

delivering goods services to consumers and businesses. Marketers are skilled in stimulating

demand for a company‟s products, but this is too limited a view of the tasks marketers

performs. Just as production and logistics professional are responsible for supply

management, marketers are responsible for demand management. Marketing managers seek

to influence the level, timing, and composition of demand to meet the organisation‟s goals

.Marketing concepts aims at serving customer demand by offerings right product, in right

amount at right place and to right customers.