Core Marketing Concepts
To understand marketing, we must be aware of the various core concepts of marketing management. Without knowing them, it is very difficult to understand marketing. Various 20 core concepts of marketing or 20 core concepts of marketing can be explained as follows:
Needs
A need is a basic requirement that an individual wishes to satisfy. The most basic concept underlying marketing is that of human needs. Human needs are a state of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. These needs were not invented by marketers; they are a basic part of the human makeup. Needs are very generic in nature and as a marketer, we can not create needs.
According to Kotler and Keller, we can distinguish five types of needs:
- Stated needs (The customer wants an inexpensive car.)
- Real needs (The customer wants a car whose operating cost, not initial price, is low.)
- Unstated needs (The customer expects good service from the dealer.)
- Delight needs (The customer would like the dealer to include an onboard GPS system.)
- Secret needs (The customer wants friends to see him or her as a savvy consumer.)
Wants
A want is a desire for a specific product or service to satisfy the underlying need. Consumer wants are shaped by personal, economical, social, and cultural forces, the media, and marketing activities of a business. As a marketer we can influence wants to some extent.
To differentiate between need and want, let us assume four students are hungry; their need is food. Assuming they have the resources to get involved in acquiring food to satisfy hunger, they go to a restaurant. One orders a vegetable mo: mo, the second orders a Newari Khaja set, the third asks for a chicken burger, and the fourth buy an instant noodle. All of them are eating some variation of food to satisfy hunger. The specific satisfier that an individual looks for defines the want. Therefore, wants are specific satisfiers of some needs.
Demand
When the want is backed by purchasing power, it is called the demand. In another word, wants to be backed by an ability to pay, willingness to pay, and authority to purchase is popularly known as demand and marketers are particularly interested in demand rather than just needs or wants becåuse marketing is demand management and as a marketer, we can create demand by using appropriate marketing tools such as advertising, personal selling, sales promotion, public relation, publicity, and direct marketing, etc.
Product
One of the important elements of the marketing mix is a product. Product is a need-satisfying entity. It is a set of tangible and intangible attributes, which may include packaging, color, price, quality, and brand plus the seller’s services and reputation. The product can be goods, services, ideas, places, experiences, events, persons, properties, organizations, etc. A Product is much more than a set of physical attributes. It consists of physical characteristics, product quality, price, brand, packaging, design, color, sellers’ reputation, sellers’ services, product warranty, etc. It is believed in marketing that no product no marketing.
Exchange
Exchange is the heart of marketing. It is the very base of marketing. In fact, another name for exchange is marketing. Exchange is obtaining something by giving something in return. Producers and manufacturers are making available all sorts of goods needed by the society giving weightage to quality, price, place, time, regularity, and so on.
Unless these are exchanged for money or money’s worth, there is no meaning. If an exchange does not take place, there will be an inventory pile-up badly affecting the whole mechanism Of production and distribution as it is not matched to consumption.
If the producer gives free gifts, donations, or charity, it is not exchanged. Again, if one takes things from his own factory, his farm, and his garden, it does not constitute exchange. If a businessman has stocked goods for sale at a price, there is no exchange if he supplies goods to his family members and friends free of cost. Although people can satisfy their needs by self-production begging or theft, only one feasible way to satisfy the needs of customers in marketing is exchange.
Thus, an exchange is an act of obtaining the desired product from someone by offering something in return.
Transaction
The transaction is the deal that takes place between the parties of the exchange namely the buyer and the seller. The seller is ready with goods to part with and the buyer is ready with the money to pay for. These dealings or transactions may be cash or credit. In these days of keen competition, cash dealings form a small part of total dealings. Some companies sell their goods on credit to the extent of 90 percent where hardly 10 percent of transactions are of cash type.
Today, business is multiplying more and more because of credit transactions. People are buying goods and services because of credit. The rule is not “cash and carries”, instead “enjoy now and pay later”. Thus, buying a car or a motorbike, flat, or house, is within the reach of the middle and lower-middle class. The concept of “EMI” (Equal monthly installment) has turned everybody to enjoy now and pay later.
Distribution
Distribution includes all the various activities the company undertakes to make the product accessible and available to target customers. It involves the marketing channel and physical distribution. The marketing channel makes the product available to the customers. Physical distribution makes the product accessible to channel members and customers. Distribution is also called “the other half of marketing”. It fulfills the gap between the producer and consumer.
Supply Chain
The supply chain is a longer channel stretching from raw materials to components to finished products carried to final buyers. The supply chain _for coffee produced in the Gulrni district of Nepal may start with farmers who plant, tend, and pick the coffee beans and sell their harvest. After farmers sell their harvest to wholesalers or perhaps a coffee cooperative, the beans are prepared and then transported to the developed world for sale through wholesale or retail channels. Each company in the chain captures only a certain percentage of the total value generated by the supply chain’s value delivery system. When a company acquires competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value.
Marketing Channels
To reach a target market, the marketer uses three kinds of marketing channels. Communication channels deliver and receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, smartphone, billboards, posters, and the Internet, Firms also communicate through the look of their retail stores and Web sites and other media, adding dialogue channels such as e-mail, blogs, text messages, and URLs to familiar monologue channels such as ads.
Distribution channels help display, sell, or deliver the physical product or service(s) to the buyer or user, These channels may be direct via the Internet, mail, or mobile phone or telephone or indirect with distributors, wholesalers, retailers, and agents as intermediaries. To carry out transactions with potential buyers, the marketer also uses service channels that include warehouses, transportation companies, banks, and insurance companies. Marketers clearly face a design challenge in choosing the best mix of communication, distribution, and service channels.
Paid, Owned, and Earned Media
The rise of digital media gives marketers a host of new ways to interact with customers and consumers. Communication options available for marketers can be classified into three categories. Paid media include television, magazine, display ads, and sponsorships, all of which allow marketers, to show their advertisements or brand for a fee. Owned media are communication channels marketers actually own, like a company brochure, website, blog, Facebook page, or Twitter account. Earned media are streams in which consumers, the press, or other outsiders voluntarily communicate something about the brand via word of mouth, buzz, or viral marketing methods. The emergence of earned media has allowed some companies to reduce their paid media budgets.
Impressions and Engagement
Marketers now think of three “screens” or means to reach consumers: TV, Internet, and mobile. Impressions, which occur when consumers view a communication, are a useful metric for tracking the scope or breadth of a communication’s reach that can also be compared across all communication types. The downside is that impressions don’t provide any insight into the results of viewing the communication. Engagement is the extent of a customer’s attention and active involvement with communication, which is more likely to create value for the firm. Some online measures of engagements are Facebook “likes”, Twitter tweets, comments on a blog or Web site, and sharing of videos or other content.
Relationships and Relationship Marketing
Relationships are the bonding and lasting business kinship based on mutual trust between the marketing organization and the customers, particularly long-term. In fact, it is a customer attraction and detention exercise which is no cakewalk. The customer is the king.
He is to be kept always happy by satisfying his needs in terms of quality, price, time, quantity, and regularity in supply. Once the customer understands the marketer that he has a keen interest in him in all contexts, he builds goodwill for the company; tells his friends and relatives as a result of which customers increase.
In case a customer is dissatisfied, like a rotten potato, he makes other good potatoes also to rot. That is why relationship marketing has become a specialized aspect of modern marketing which beliefs in building long-term partnerships with, customers for long-lasting loyalty.
Relationship marketing is one of the emerging concepts of modern marketing. Relationship marketing is building long-term mutually satisfying relations with customers in order to earn and retain their long-term loyalty. In relationship marketing, the customer is regarded as a partner in creating value. Relationship marketing is a long-term partnership between marketer and customer. Both parties collaborate on identifying needs and designing a marketing mix for customer satisfaction and organizational goal achievement.
Customer Value
Customer value is the net of expected benefits for customers and the cost involved in acquiring the product or service. Benefits can be product benefits, brand or company benefits, functional or performance benefits, service benefits, and emotional or self-expressive benefits. In another word, customer value is different between what a customer gets and what a customer gives. It is the comparison between total customer benefits and total customer costs. Customer benefits include product benefit, service benefit, image benefit, and personal benefit. Similarly, total customer costs include money cost, time cost, energy cost, and psychic cost. Mathematically,
value= Benefit/Cost = funcctionalbenefit+Emotional benefit/Monetary costs+Time costs+Energy costs+Psychic costs
But we cannot express customer value in numeric terms because it depends on customers’ perceptions. Thus, customer value is also called customer perceived value.
Customer Satisfaction
The main aim of marketing is to create a satisfied customer. Customer satisfaction in marketing is a comparison between customer expectation and product performance. If there is no difference between the customer’s expectation and product performance, the result will be a satisfied customer. If the customer’s expectation is higher than product performance, the result will be dissatisfied customers. If product performance is higher than the customer’s expectation, the result will be a highly satisfied or delighted customer. In today’s competitive world, it is not enough to satisfy customers we must delight them by offering more than their expectations.
| Expectation & Performance | Result |
| Customer’s expectation > Product Performance | Dissatisfied Customer |
| Customer’s expectation < Product Performance | Highly Satisfied Customer |
| Customer’s expectation = Product Performance | Satisfied Customer |
Market
Traditionally, the market is a place for buying and selling. But the market as referred to earlier is not a place necessarily. It is coming together of buyers and sellers in person or in contact with any means where they are in touch with the detailed information about what sellers are having to Offer and what buyers are ready to buy. It is a mechanism that facilitates price fixation easily and quickly for the mutual benefit of buyers and sellers, Physical presence of goods and people at a point is not market.
The forces of exchange and price-fixing take place easily and quickly which represents the market. The market is the starting point because marketer must satisfy the needs of the market. Thus, marketing follows it. That is goods flow from the sellers to the buyers and money or money’s worth follows from the buyer to reach the sellers to complete the exchange.
According to Philip Kotler, “Market is the set of all actual and potential buyers of a product or service.”
Markets are classified in many ways such as consumer market, business market, global market, government market, etc.
Marketer
A marketer is an individual or an institution who is engaged in making available the goods; he has his own portfolio of the range of products he can offer to the interested buyers. The marketer creates only place, time, ownership, and awareness utility.
The marketer is an intermediary between the manufacturer and final consumer who perform the role of buying from manufacturers and producers and sells to buyers either for final consumption or for further processing and sale. Thus, any channel participant who tries to fulfill the gap between points of production to point of consumption is a marketer.
Prospects
The counterpart of market and marketing is prospects. Not only marketers (sellers) or only prospects cannot constitute a market. It is impossible for marketers to sell the products in absence of prospects. Marketers are there because prospects are there. If there is nobody to buy the goods and services, what marketers will do? That is why prospects are consumers and they are in the driver’s seat. Prospect is a person or an organization that is ready and willing to buy and pay for the goods and services. It is not to undermine the marketers because a “clap” is possible with two hands and not one. As a marketer, we must qualify prospects and should try to convert that prospects into partners in the long run by implementing relationship marketing.
Competition
The competition includes all the actual and potential rival offerings and substitutes a buyer might consider. An automobile manufacturer can buy steel from U.S. Steel, from a firm in Japan or Korea, or from any country. Alternatively, it can buy aluminum parts to reduce the cad’s weight or engineered plastics instead of steel. Clearly, steel is more likely to be hurt by substitute products than by other integrated steel companies and would be defining its competition too narrowly if it didn’t recognize this. Similarly, Coke may compete with Pepsi or fruit juice or mineral water, or glucose.
Marketing Mix
The marketing mix is a popular term in marketing. This marketing mix was coined by Professor Neil Borden of Harvard Business School. The marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. A marketing mix is a blend Of product, price, place, and promotion tools. Thus, it is popularly known as the four Ps’ of marketing which was popularized by Professor McCarthy of the Michigan State University of America. Nowadays, the four Ps have expanded to the seven Ps’ by adding people, process, and physical evidence, especially for service marketing. Of late, Philip Kotler and Kevin Lane Keller have offered modern marketing management four Ps which consist of People, Processes, Programs, and Performance.
Marketing Environment
A company’s marketing environment consists of all the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers.
The marketing environment surrounds and impacts the organization. There are two key perspectives on the marketing environment, namely the microenvironment and the macro environment which is also known as the task environment and the broad environment. The task environment includes the actors engaged in producing, distributing, and promoting the offering. These are the company, suppliers, distributors, dealers, and target customers. The supplier, groups are material suppliers, and service suppliers, such as marketing research agencies, advertising agencies, banking, and insurance companies, and telecommunication companies. Distributors and dealers include agents, brokers, manufacturer representatives, and others who facilitate finding and selling to customers.
The macro-environment which is also called the broad environment consists of six components: demographic environment, economic environment, socio-cultural environment, natural environment, technological environment, and political-legal environment. Change in the macro environment creates different opportunities and threats for marketers. Marketers must pay close attention to the trends and developments in marketing environmental factors and forces and adjust their marketing strategies as needed.
