Core Concepts of Marketing (Philip Kotler Summary)
Marketing Management is a social and managerial process by which individuals or firms obtain what they need or want through creating, offering, exchanging products of value with each other.
(1) NEED/ WANT/ DEMAND:
Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing, safety, shelter.
Want: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer tikka/ tandoori chicken. Americans needs food- wants hamburger/ French fries.
Demand: Want for a specific product backed up by ability and willingness to buy. eg.- Need – transportation.
Want – Car (say, Mercedes)……but able to buy only Maruti. Therefore, demand is for Maruti.
Marketers cannot create needs. Needs preexists. Marketers can influence wants. This is done in combination with societal influencers.
Demand influenced by making product :
- APPROACHABLE/ AFFORDABLE
- AVAILABLE EASILY
To target consumers (4 P’s) – Product/ Promotion/ Price/ Place
(2) PRODUCTS- GOODS/ SERVICES/ PLACE.
Product is anything that can satisfy need/ want.
- Physical Good.
eg. Fast food- burger/ pizza.
Physical Good – material eaten.
Service – purchase of raw material/ cooking
Idea – speed of computer/ processing power.
Importance of product lies in
- Owning them (minor)
- Obtaining them (major).
Hence, products are really a via- media for services.
Hence, in marketing, focus is on providing/ satisfying service rather than providing products.
Marketing Myopia: Focus on products rather than on customer needs.
(3) VALUE/ COST/ SATISFACTION:
- Decision for purchase made based on value/ cost satisfaction delivered by product/ offering.
- Product fulfills/ satisfies Need/ Want.
- Value is products capacity to satisfy needs/ wants as per consumer’s perception or estimation.
- Each product would have a cost/ price elements attached to it.
Eg. – Travel from city A to city B.
Need – to reach B ( from A)
Method/ Products- Rail/ air/ road or train/ plane.
Satisfaction – Estimated in terms of time lead & travel comfort.
VALUE- Products capacity to satisfy.
COST- Price of each products.
(4) EXCHANGE/ TRANSACTION:
To satisfy need/ want, people may obtain the product through
- Self Production
- By force or coercion
EXCHANGE: – The act/ process of obtaining a desired product from someone by offering something in return. For exchange potential to exist, the following conditions must be fulfilled.
- There must be at least two parties.
- Each party has something of value for other party.
- Each party is capable of communication & delivery
- Each party is free to accept/ reject the exchange offer.
- Each party believes it is appropriate to deal with the other party.
TRANSACTION: – Event that happens at the end of an exchange. Exchange is a process towards an agreement. When agreement is reached, we say a transaction has taken place.
a) Barter transaction.
b) Monetary Transaction.
- At least two things of value.
- Condition agreed upon.
- Time of agreement.
- Place of agreement.
- May have legal system for compliance.
Proof of transaction is BILL/ INVOICE.
TRANSFER: – It is one way. Hence, differ from Transaction.
NEGOTIATION: – Process of trying to arrive at mutually agreeable terms.
Negotiation may lead to
- Decision not to Transaction
(5) RELATIONSHIP/ NETWORKING:
Relationship marketing:- It’s a pattern of building long term satisfying relationship with customers, suppliers, distributors in order to retain their long term performances and business.
Achieved through promise and delivery of
- high quality
- good service
- fair pricing, over a period of time.
Outcome of Relationship Marketing is a MARKETING NETWORK.
MARKETING NETWORK: It is made up of the company and its customers, employees, suppliers, distributors, advertisement agencies, retailers, research & development with whom it has built mutually profitable business relationship.
Competition is between whole network for market share and NOT between companies alone.
A market consists of all potential customers sharing particular need/ want who may be willing and able to engage in exchange to satisfy need/ want.
Market Size = fn (Number of people who have need/ want; have resources that interest
others, willing or able to offer these resources in exchange for what
In Marketing terms: Sellers – called as “INDUSTRY”.
Buyers – referred to in a group as “MARKET”.
Types of Markets:
- Resource Market,
- Manufacturing Market,
- Intermediary Market,
- Consumer Market,
- Government market.
(7) MARKETERS/ PROSPECTS:
Working with markets to actualize potential exchanges for the purpose of satisfying needs and wants.
One party seeks the exchange more actively, called as “ Marketer”, and the other party is called “Prospect”.
Prospect is someone whom marketer identifies as potentially willing and able to engage in exchange.
Marketer may be seller or buyer. Most of time, marketer is seller.
A marketer is a company serving a market in the face of competition.
Marketing Management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.
AMA- American Marketing Association.
It defines marketing management as the process of planning & executing the conception of pricing, promotion, distribution of goods, services, ideas to create exchanges that satisfy individual and organizational goals.
n Can be practiced in any market.
n Task of marketing management is to influence the level, timing, composition of demand in a way that will help the organization to achieve its objective. Hence, marketing management is essentially demand management.
States of “DEMAND” could be:
- Negative demand – Major market dislikes product, hence try to avoid. eg.- injections.
- No Demand – Constant unaware and uninterested in product. eg.- segway.
- Latent Demand – Need exists, not fulfilled by current products. eg.- ATM, mobile.
- Declining demand – Demand decreases over period of time. eg.- pagers, scooters.
- Irregular Demand – Seasonally. eg.- fans, raincoat.
- Full Demand – Good volume of business. eg.- tooth paste, most of FMCG items.
- Overfull Demand – Demand greater than ability to handle. eg.- VSNL sim card.
- Unwholesome Demand – Unwholesome product. eg.- cigarettes, narcotic drugs.