Marketing: Concept and Functions — notes

In marketing, a market means the actual and potential buyers of a product, not just a place.

By area: local; regional; national; international (global).

By time: very short period (supply fixed, e.g. perishables); short period (supply can change partly with existing plant); long period (supply can change fully, including new plant). Some books add a secular or very long period.

By nature of goods: produce (commodity) markets for farm goods; manufactured goods markets (consumer and industrial goods); bullion markets for gold and silver; stock markets for securities.

Marketing is the social and managerial process of finding out what customers need and want, and satisfying those needs through the creation and exchange of goods and services, so that the firm earns a profit.

Features: needs and wants; creating a market offering; customer value; exchange mechanism; customer orientation; it is continuous; it applies to goods, services and non-business bodies alike.

Traditional concepts (start from the factory; profit through sales volume):

• Production concept — buyers want cheap, widely available goods; focus on mass output.
• Product concept — buyers want the best quality; focus on perfecting the product (can ignore changing needs).
• Selling concept — buyers will not buy enough unless persuaded; focus on aggressive selling.

Modern concepts (start from the market):

• Marketing concept — find needs first, satisfy them better than rivals; profit through satisfaction.
• Societal marketing concept — satisfy customers while protecting the long-term welfare of society and the environment.

Marketing vs selling: selling is one part of marketing; it transfers ownership, focuses on the seller's need and ends with the sale. Marketing focuses on the buyer, begins before production and continues after the sale.

Objectives: creating demand; customer satisfaction; increasing market share; profitable sales volume; building goodwill and image.

Importance to firms: higher sales and profit; information for decisions; development of new products.

Importance to consumers: wider choice; better quality; information; value for money; higher standard of living.

Importance to society: employment in transport, storage, retailing and advertising; economic growth; goods reaching every region; a link between production and consumption.

Functions of exchange:

• Buying — acquiring goods of the right kind, quality and quantity for resale or use.
• Assembling — gathering goods from scattered producers into one place.
• Selling — transferring ownership to the buyer.

Functions of physical supply:

• Transport — moving goods to buyers (place utility).
• Storage / warehousing — holding goods until they are wanted (time utility).

Facilitating functions:

• Standardisation — setting specifications in advance.
• Grading — sorting goods into classes after production or harvest.
• Financing — providing funds and credit for marketing activities.
• Risk bearing — covering losses from damage, delay, theft or price changes.
• Market research / information — collecting and analysing data on buyers, demand and rivals.