Marketing | ICSE Class 10 Commercial Studies Notes

This note covers the meaning and objectives of marketing, the difference between marketing and selling, the features of marketing and the philosophies that guide it, the main functions of marketing and the marketing mix of product, price, place and promotion, with tables, worked examples and exam-style answers.

What does marketing mean?

Marketing is a much broader idea than most people first think. Many people use the word loosely. Some describe any trip out to buy goods or services as "marketing".

Others confuse marketing with selling and believe it begins only after a product has been made. Some treat it as merchandising, that is, designing a product. Each of these descriptions may be partly correct, but marketing covers far more.

The traditional description

Traditionally, marketing has been described through its functions or activities. In this sense it is the performance of business activities that direct the flow of goods and services from producers to consumers.

Most manufacturing firms do not make goods for their own use but for others. To move goods from producer to consumer, many activities are needed: product designing or merchandising, packaging, warehousing, transportation, branding, selling, advertising and pricing. All of these are marketing activities.

Definition: marketing. Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers, and in the modern sense a social process by which individuals and groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others.

Before and after production

Marketing is not merely a post-production activity. Many activities are performed before goods are actually produced, and many continue after the goods have been sold.

Identifying customer needs, collecting information for developing the product, designing a suitable package and giving the product a brand name all happen before production begins.

Follow-up activities are needed after the sale to maintain good customer relations and to procure repeat sales.

The social process view

In modern times, emphasis is placed on describing marketing as a social process. It is a process whereby people exchange goods and services for money or for something of value to them. The focus is on interaction and persuasion, not on forcing anyone to buy.

What are the main features of marketing?

A careful analysis of the modern definition reveals several important features. These features explain why marketing is treated as a social process rather than a single activity.

Needs and wants

The primary reason people engage in marketing is to satisfy some need or want. A need is a state of felt deprivation, a feeling of being deprived of something. If unsatisfied, it leaves a person unhappy and uncomfortable.

On getting hungry, for example, we become uncomfortable and look for objects capable of satisfying our hunger. Needs are basic to human beings and do not pertain to a particular product.

Wants, on the other hand, are culturally defined objects that are potential satisfiers of needs. Human needs shaped by factors such as culture, personality and religion are called wants.

A basic need for food may become a want for dosa and rice in one person and for chapatti and vegetables in another, depending on where and how each grew up.

A marketer's job is to identify the needs of target customers and develop products and services that satisfy them.

Creating a market offering

Market offering refers to a complete offer for a product or service, having given features such as size, quality and taste, at a certain price, available at a given outlet or location.

Suppose a firm offers a mobile phone in four versions that differ in memory size and camera, priced between ₹10,000 and ₹40,000 depending on the model, and sold at the firm's own shops in the big cities. That whole package is its market offering.

A good market offer is developed after analysing the needs and preferences of potential buyers.

Customer value and exchange

Buyers make decisions on their perception of the value of a product in satisfying their need, in relation to its cost.

A product will be purchased only if it is perceived to give the greatest benefit or value for the money. The marketer's job is to add to the value of the product so that customers prefer it to competing products.

Marketing works through the exchange mechanism. Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone, offering something in return.

In the modern world goods are produced at different places and distributed over a wide area through middlemen, involving exchanges at different levels. Exchange is therefore called the essence of marketing. An exchange can take place only when five conditions are met.

1. At least two parties, the buyer and the seller, must be involved.
2. Each party must be capable of offering something of value to the other, such as a product from the seller and money from the buyer.
3. Each party must have the ability to communicate and deliver the product or service.
4. Each party must have the freedom to accept or reject the other party's offer.
5. The parties must be willing to enter into a transaction, so acceptance or rejection is voluntary and not based on compulsion.

These are the necessary conditions for an exchange. Whether the exchange actually takes place depends on whether it suits both parties and makes them better off, or at least not worse off.

Marketing is not confined to business organisations. It is equally relevant to non-profit organisations such as hospitals, schools, sports clubs and social and religious organisations, helping them spread messages such as family planning, improve literacy and provide medication to the sick.

What is the difference between marketing and selling?

Many people confuse selling for marketing and consider the two terms to be the same. In fact, marketing refers to a large set of activities of which selling is just one part.

A marketer of televisions, before making a sale, plans the type and model of televisions to be produced, the price at which they will be sold, and the distribution outlets at which they will be available.

Marketing thus involves a whole range of activities relating to planning, pricing, promoting and distributing products that satisfy customer needs.

What selling covers

Selling, on the other hand, is restricted to promotion of goods and services through salesmanship, advertising, publicity and short-term incentives, so that the title of the product is transferred from seller to buyer, or in other words the product is converted into cash.

Points of difference

Note: selling is a part of marketing. Selling is one activity within marketing. Marketing includes activities performed before goods are produced and after they are sold, while selling is the narrower act of persuading a buyer to purchase.

What are the objectives of marketing?

The objectives of marketing flow from its nature as a social process that satisfies needs and wants at a profit. They can be grouped under five heads.

Satisfying customer needs

The first objective is to identify the needs and wants of target customers and to develop products and services that satisfy them. Under the marketing concept, customer satisfaction is the focal point of all decisions: what product is made, with what features, at what price and where it is sold all depend on what customers want.

A related aim is to build customer value, so that buyers see the product as giving the greatest benefit for the money and prefer it to competing products.

Creating and managing demand

The second objective is to create demand for the firm's products, so that target customers buy the product, stay satisfied and more customers are attracted, letting the firm grow.

In some situations the manager has to manage demand instead. When demand is more than the company can handle, the manager may reduce it for a time by cutting promotion expenditure or raising prices. Where demand is irregular, as for seasonal products such as fans or woollen clothes, the marketer changes the time pattern of demand through short-term incentives to buyers.

Earning profit through satisfaction

The third objective is to earn profit for the firm. Under the marketing concept, profit follows from satisfied customers rather than from aggressive pushing alone: the basic role of the firm is to identify a need and fill it, and satisfied buyers come back for repeat purchases.

Increasing market share and goodwill

The fourth objective is to increase the firm's market share, that is, its sales as a part of the total sales of that product in the market, and to build goodwill, a good name for the firm and its brands. A firm known for good products and fair dealing finds it easier to win new customers and to launch new products.

Wider objectives for society

The fifth group of objectives looks beyond the firm. By making a wide variety of goods available at reasonable prices in many places, marketing helps to raise the standard of living. Marketing activities such as selling, advertising, transport and warehousing also create employment.

The societal marketing concept adds concern for the long-term welfare of society, so a firm should meet customer needs without harming society or the environment.

What is marketing management and what philosophies guide it?

Marketing management means management of the marketing function. It refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers or users.

Its focus is on achieving desired exchange outcomes with target markets. The process involves choosing a target market, getting, keeping and growing customers, and creating, developing and communicating superior values for customers.

Why the guiding philosophy matters

To achieve desired exchange outcomes, an organisation must decide what philosophy or thinking should guide its marketing efforts. This philosophy determines the weightage given to different factors, such as product features, selling techniques, customer needs or social concerns. The philosophy has evolved over time.

The earlier concepts

The production concept held that profits could be maximised by producing at large scale, reducing average cost, since consumers would favour products widely available at an affordable price.

The product concept shifted emphasis from quantity to quality, as customers began looking for products superior in quality, performance and features.

The selling concept assumed that customers would not buy enough unless adequately convinced, so firms undertook aggressive selling and promotional efforts.

The marketing and societal concepts

The marketing concept holds that focus on satisfaction of customer needs is the key to success. All decisions are taken from the point of view of the customers, and selling follows automatically.

Its pillars are identification of the target market, understanding customer needs and wants, developing products to satisfy them, satisfying them better than competitors, and doing all this at a profit.

The societal marketing concept extends this by adding concern for the long-term welfare of society, paying attention to social, ethical and ecological aspects of marketing.

What are the main functions of marketing?

Marketing is concerned with exchange of goods and services from producers to consumers in a way that maximises the satisfaction of customer needs. From the viewpoint of management, a number of activities are involved.

Information, planning and product design

Gathering and analysing market information is necessary to identify customer needs and to analyse available opportunities and threats as well as the strengths and weaknesses of the organisation. With the growth of computers, more companies use interactive sites on the internet to gather customer views before taking important decisions.

Marketing planning means developing appropriate marketing plans so that marketing objectives can be achieved. A marketer of colour TV having 10 per cent of the current market share and aiming at 20 per cent in the next three years must develop a complete plan covering production, promotion and action programmes.

Product designing and development makes the product attractive to target customers. A good design can improve performance and give competitive advantage. When buying a motorbike, we look not only at cost and mileage but also at shape and style.

Standardisation, grading, packaging and branding

Standardisation and grading are related. Standardisation refers to producing goods of predetermined specifications, which helps achieve uniformity and consistency in output and reduces the need for inspection, testing and evaluation.

Grading is the classification of products into different groups on the basis of important characteristics such as quality and size. Grading is particularly necessary for products not produced to predetermined specifications, such as agricultural products like wheat and oranges.

Packaging and labelling are considered the pillars of marketing. Packaging refers to designing and developing the package for the products, and labelling refers to designing and developing the label to be put on the package.

Packaging protects the product and also serves as a promotional tool. Branding helps create product differentiation and build customer loyalty.

Customer support services such as after-sales services, handling complaints, credit services and maintenance services aim at maximum customer satisfaction and bring repeat sales.

Pricing, promotion and distribution

Pricing refers to the amount of money customers have to pay to obtain a product. Demand is related to price: generally the lower the price, the higher the demand.

Promotion involves informing customers about the product and persuading them to purchase, using advertising, personal selling, publicity and sales promotion.

Physical distribution covers decisions about channels of distribution and the physical movement of the product, including inventory, storage and warehousing, and transportation.

Transportation moves goods from one place to another; tea grown in Assam, for example, has to be carried to buyers in many other states.

Storage or warehousing bridges the time gap between production and sale, as with woollen garments or seasonal agricultural products.

What is the marketing mix?

The marketing mix consists of various elements broadly classified into four categories, popularly known as the four Ps of marketing: product, price, place and promotion.

The success of a market offer depends on how well these ingredients are mixed to create superior value for customers and achieve sale and profit objectives.

Product and price

Product means goods or services or anything of value offered to the market for sale.

The concept relates not only to the physical product but also to the benefits offered from the customer's viewpoint, such as toothpaste bought for whitening teeth and strengthening gums.

It also includes the extended product, such as after-sales services, handling complaints and availability of spare parts, which matter greatly for consumer durables like automobiles and refrigerators.

Price is the amount of money customers have to pay to obtain the product. For most products the level of price affects the level of demand. Marketers decide pricing objectives, analyse the factors determining price, and fix a price, along with decisions on discounts and credit terms.

Place and promotion

Place or physical distribution includes activities that make the firm's products available to target customers. Decisions include selecting dealers or intermediaries, supporting them with discounts and promotional campaigns, and managing inventory, storage and transportation.

Promotion includes activities that communicate the availability, features and merits of products to target customers and persuade them to buy. Firms spend substantial amounts on tools such as advertising, personal selling and sales promotion techniques like price discounts and free samples.

How are these ideas applied?

Exam questions often describe a business situation and ask which approach it shows or which objective it serves. The worked examples below follow that pattern.

Worked example 1. A school-bag maker has 5,000 unsold bags. Manager A wants to offer a 20 per cent discount and hire more salespeople to push the existing stock. Manager B wants to ask students and parents what they need in a bag, redesign it, and then decide its price, outlets and advertising. Which approach is selling and which is marketing, and which should the firm choose for long-term growth?

Answer: Manager A's plan is selling: it starts with the existing product after production and aims at converting stock into cash through short-term incentives and salesmanship. Manager B's plan is marketing: it starts with customer needs before production and plans product, price, place and promotion together.

The discount may clear the 5,000 bags now, but the firm should choose Manager B's approach for long-term growth, because profit through customer satisfaction brings repeat sales.

Worked example 2. Total sales of packaged fruit juice in a town are 5,00,000 bottles a year and stay the same for two years. A firm's sales rise from 50,000 bottles in the first year to 60,000 bottles in the second. Calculate the firm's market share in each year and its sales growth, and name the objectives of marketing this shows.

Answer: Market share in year 1 = 50,000 ÷ 5,00,000 × 100 = 10 per cent. Market share in year 2 = 60,000 ÷ 5,00,000 × 100 = 12 per cent. Sales growth = (60,000 − 50,000) ÷ 50,000 × 100 = 20 per cent.

The rise shows two objectives at work, creating demand and increasing market share. The firm should keep the growth by satisfying customers so that they buy again, rather than by price cuts alone.

Worked example 3. A marketer of colour TV has 10 per cent of the current market share and aims at 20 per cent in the next three years. State the marketing plan decisions the marketer must take.

Answer: The marketer must develop a complete marketing plan covering the level of production, promotion of the products, pricing and distribution, and specify the action programmes to achieve the objective. The marketer should choose a combination of the four Ps that raises market share from 10 to 20 per cent.

Glossary

• Marketing: The performance of business activities that direct the flow of goods and services from producers to consumers, and a social process of exchange.
• Selling: Promotion of goods and services through salesmanship, advertising, publicity and short-term incentives so that title passes to the buyer.
• Need: A state of felt deprivation, a feeling of being deprived of something, which leaves a person uncomfortable if unsatisfied.
• Want: A culturally defined object that is a potential satisfier of a need, shaped by culture, personality and religion.
• Market offering: A complete offer for a product or service with given features, at a certain price, available at a given outlet.
• Exchange: The process through which two or more parties come together to obtain the desired product or service by giving something in return.
• Marketing management: Planning, organising, directing and control of the activities that facilitate exchange of goods and services between producers and consumers.
• Marketing mix: The combination of the four Ps, product, price, place and promotion, used to create superior value for customers.
• Standardisation: Producing goods of predetermined specifications, which helps achieve uniformity and consistency in output.
• Grading: Classification of products into different groups on the basis of important characteristics such as quality and size.
• Branding: The process of giving a name, sign or symbol to a product to identify and distinguish it from competitors' products.
• Packaging: The act of designing and producing the container or wrapper of a product.
• Labelling: Designing and developing the label to be put on the package, giving information about the product and its contents.
• Promotion: The use of communication with the twin objective of informing potential customers about a product and persuading them to buy it.
• Marketing concept: The philosophy that satisfying customer needs is the key to success, with every decision taken from the customer's point of view.

Common errors and misconceptions

• Misconception: Marketing means the same as selling. Correct: Marketing is a large set of activities of which selling is just one part.
• Misconception: Marketing begins only after a product is produced. Correct: Marketing includes activities performed before production, such as identifying needs and designing packages, and continues after the sale.
• Misconception: A need and a want are the same. Correct: A need is a state of felt deprivation, while a want is a culturally defined object that satisfies a need.
• Misconception: The only objective of marketing is to make a profit. Correct: Profit is earned through customer satisfaction; marketing also aims to create demand, increase market share and goodwill, and raise the standard of living.
• Misconception: Marketing means advertising. Correct: Advertising is only one tool of promotion, and promotion is only one of the four Ps of the marketing mix.
• Misconception: Under the marketing concept a firm need not sell. Correct: Selling still takes place, but it becomes easier because the product has been designed, priced and placed to suit customer needs.
• Misconception: Marketing is only for business firms. Correct: Marketing is equally relevant to non-profit organisations such as hospitals, schools and sports clubs.

Exam-style questions with model answers

Q1. Define marketing. [2 marks]

1. Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers.
2. In the modern sense, it is a social process by which individuals and groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others.

Q2. State any three differences between marketing and selling. [3 marks]

1. Marketing is a large set of activities of which selling is one part, while selling is restricted to promotion of goods and services.
2. Marketing begins before production with identifying customer needs, while selling starts after the product has been produced.
3. Marketing aims at satisfying customer needs, while selling aims at transferring title of the product from seller to buyer and converting it into cash.

Q3. Explain any four features of marketing. [4 marks]

1. Needs and wants: marketing helps individuals and groups obtain what they need and want, and its focus is on satisfying these.
2. Creating a market offering: marketers develop a complete offer with given features, at a certain price, available at a given outlet.
3. Customer value: buyers decide on their perception of the value of a product in relation to its cost, so the marketer adds value.
4. Exchange mechanism: marketing works through exchange, where two or more parties obtain the desired product by giving something in return.

Q4. Explain the four Ps of the marketing mix. [4 marks]

1. Product means goods, services or anything of value offered to the market, including benefits and after-sales services.
2. Price is the amount of money customers pay to obtain the product, and it affects the level of demand.
3. Place includes activities that make the product available to target customers through dealers, inventory and transportation.
4. Promotion includes activities that communicate the features and merits of the product and persuade customers to buy it.

Q5. Explain any five objectives of marketing. [5 marks]

1. Satisfying customer needs: marketing identifies the needs and wants of target customers and develops products that satisfy them, making customer satisfaction the focal point of all decisions.
2. Creating demand: marketing aims to create and grow demand, so that target customers buy the product, stay satisfied and more customers are attracted.
3. Earning profit: the firm earns profit through customer satisfaction, since satisfied buyers come back for repeat purchases.
4. Increasing market share and goodwill: marketing aims to raise the firm's share of total market sales and to build a good name for the firm and its brands.
5. Raising the standard of living: by making a wide variety of goods available at reasonable prices in many places, marketing improves people's standard of living and also creates employment.

Q6. Distinguish between the selling concept and the marketing concept. [5 marks]

1. Starting point: the selling concept starts from the factory and the existing product, while the marketing concept starts from the market and the needs of customers.
2. Main focus: the selling concept focuses on the existing product, while the marketing concept focuses on customer needs.
3. Means: the selling concept relies on aggressive selling and promotion, while the marketing concept uses integrated marketing, planning all four Ps together.
4. Ends: the selling concept seeks profit through sales volume, while the marketing concept seeks profit through customer satisfaction.
5. Assumption: the selling concept assumes customers will not buy enough unless persuaded, while the marketing concept holds that if products meet customer needs, selling follows automatically.

Q7. Explain any five functions of marketing. [5 marks]

1. Gathering and analysing market information: identifying customer needs and analysing opportunities, threats, strengths and weaknesses before decisions are taken.
2. Marketing planning: developing plans to achieve marketing objectives, such as a higher market share, covering production, promotion and action programmes.
3. Product designing and development: making the product attractive to target customers, improving its performance and giving it a competitive advantage.
4. Standardisation and grading: producing goods of predetermined specifications, and classifying products such as wheat or oranges into groups by quality and size.
5. Packaging and labelling: designing the package and the label, which protect and identify the product and also serve as promotional tools.

Key takeaways

• Marketing is the set of business activities that direct goods and services from producers to consumers, and in the modern view a social process of exchange.
• Marketing begins before production with identifying customer needs and continues after the sale with follow-up to keep customers and win repeat sales.
• Selling is only one part of marketing: it starts after production and aims to transfer the title of the existing product and convert it into cash.
• The objectives of marketing are to satisfy customer needs, create and manage demand, earn profit, increase market share and goodwill, and raise the standard of living.
• A need is a state of felt deprivation, while a want is the culturally shaped object a person chooses to satisfy that need.
• Under the marketing concept, customer satisfaction is the focal point of every decision, and profit follows from it rather than from aggressive selling.
• The marketing mix combines the four Ps, product, price, place and promotion, to create superior value for customers.
• Exchange is the essence of marketing and needs at least two willing parties, each able to offer value, communicate and accept or reject the offer freely.

Test yourself

What is a market offering?

A complete offer for a product or service with given features such as size, quality and taste, at a certain price, available at a given outlet or location.

Name the four tools of the promotion mix.

Advertising, personal selling, sales promotion and publicity together make up the promotion mix.

What is meant by grading?

Grading is the classification of products into different groups on the basis of important characteristics such as quality and size, and is necessary for products like agricultural goods.

State any three objectives of marketing.

Satisfying customer needs, creating and managing demand, and earning profit through customer satisfaction. Increasing market share and goodwill and raising the standard of living are others.

Why is exchange called the essence of marketing?

Because marketing works through exchange, where two or more parties come together to obtain the desired product or service by giving something in return.

What is marketing management?

It means management of the marketing function, that is, planning, organising, directing and control of the activities that facilitate exchange of goods and services between producers and consumers.

What does the societal marketing concept add to the marketing concept?

It adds concern for the long-term welfare of society, paying attention to the social, ethical and ecological aspects of marketing.