Core Concepts of Marketing

Philip Kotler, the eminent writer, defines modern marketing as, “Marketing is social and managerial process by which individuals and groups obtains what they needs and wants through creating and exchanging product and value with others.”

The above definition of marketing rests on the following concepts:

Needs

Existence of unmet needs is precondition to undertake marketing activities. Marketing tries to satisfy needs of consumers. Human needs are the state of felt deprivation of some basic satisfaction. A need is the state of mind that reflects the lack-ness and restlessness situation.

Needs are physiological in nature. People require food, shelter, clothing, esteem, belonging, and likewise. Note that needs are not created. They are pre-existed in human being. Needs create physiological tension that can be released by consuming/using products.

Wants

Wants are the options to satisfy a specific need. They are desire for specific satisfiers to meet specific need. For example, food is a need that can be satisfied by variety of ways, such as sweet, bread, rice, sapati, puff, etc. These options are known as wants. In fact, every need can be satisfied by using different options.

Maximum satisfaction of consumer need depends upon availability of better options. Needs are limited, but wants are many; for every need, there are many wants. Marketer can influence wants, not needs. He concentrates on creating and satisfying wants.

Demand

Demand is the want for specific products that are backed by the ability and willingness (may be readiness) to buy them. It is always expressed in relation to time. All wants are not transmitted in demand. Such wants which are supported by ability and willingness to buy can turn as demand.

Marketer tries to influence demand by making the product attractive, affordable, and easily available. Marketing management concerns with managing quantum and timing of demand. Marketing management is called as demand management.

Product

Product can also be referred as a bundle of satisfaction, physical and psychological both. Product includes core product (basic contents or utility), product-related features (colour, branding, packaging, labeling, varieties, etc.), and product-related services (after-sales services, guarantee and warrantee, free home delivery, free repairing, and so on). So, tangible product is a package of services or benefits. Marketer should consider product benefits and services, instead of product itself.

Marketer can satisfy needs and wants of the target consumers by product. It can be broadly defined as anything that can be offered to someone to satisfy a need or want. Product includes both good and service. Normally, product is taken as tangible object, for example, pen, television set, bread, book, etc.

However, importance lies in service rendered by the product. People are not interested just owning or possessing products, but the services rendered by them. For examples, we do not buy a pen, but writing service.

As per the definition, anything which can satisfy need and want can be a product. Thus, product may be in forms of physical object, person, idea, activity, or organization that can provide any kind of services that satisfy some needs or wants.

Utility (value), Cost, and Satisfaction

Utility means overall capacity of product to satisfy need and want. It is a guiding concept to choose the product. Every product has varying degree of utility. As per level of utility, products can be ranked from the most need-satisfying to the least need-satisfying.

Utility is the consumer’s estimate of the product’s overall capacity to satisfy his/her needs. Buyer purchases such a product, which has more utility. Utility is, thus, the strength of product to satisfy a particular need.

Cost means the price of product. It is an economic value of product. The charges a customer has to pay to avail certain services can be said as cost. The utility of product is compared with cost that he has to pay. He will select such a product that can offer more utility (value) for certain price. He tries to maximize value, that is, the utility of product per rupee.

Exchange, Transaction, and Transfer

Exchange is in the center of marketing. Marketing management tries to arrive at the desired exchange. People can satisfy their needs and wants in one of the four ways – self-production, coercion/snatching, begging, or exchanging.

Marketing emerges only when people want to satisfy their needs and wants through exchange. Exchange is an act of obtaining a desired product from someone by offering something in return. Obtaining sweet by paying money is the example an exchange.

Exchange is possible when following five conditions are satisfied

1. There should be at least two parties
2. Each party has something that might be of value to the other party
3. Each party is capable of communication and delivery
4. Each party is free to accept or reject the exchange offer
5. Each party believes it is desirable to deal with the other party

Transaction differs from exchange

Exchange is a process, not event. It implies that people are negotiating and moving toward the agreement. When an agreement is reached, it is transaction. Transaction is the decision arrived or commitment made.

For example, Mr. X pays Rs. 25000 and obtains a computer. There are various types of transactions, such as barter transactions, monetary transactions, commercial transactions, employment transactions, civic transactions, religious or charity transactions.

Transaction involves following conditions:

1. At least two things of value
2. Agreed upon conditions
3. A time of agreement
4. A place of agreement
5. A law (legal system) of contract to avoid distrust

Transfer involves obtaining something without any offer or offering anything without any return. For example, Mr. X gives gift to Mr. Y. Transfer is a one-way process. But, pure transfer is hardly found in practice. One transfers something with some unexpressed expectations. Offer of money to beggar is to get the favour of God.

Relationship Marketing

Customer is the king in the business. If you want to grow up your business, you have to create a good relationship to customer. You have to keep always busy to make happy of customers by satisfying his or her needs in terms of quality, price, time, quantity, regularly in supplying. In relationship, the quality of product is very important. If the customer understands the quality, value or facilities of your product he will build the goodwill for your company by telling his friends and relatives because of which this way customers increase.

This think has also negative side and that is customer will be dissatisfied for boring, inequality product. So, if you want to run your business in long-term you have to create a good and long-term relationship to customers for longer lasting loyalty.

Market

Marketing follows market. Market is a set of present and future buyer. Market is a place where buyers and sellers are come in touch with detailed information about what sellers are offer and what buyers are ready to buy. Some people do not say that in market a place should stay. But a market is where different types of transactions happen that is also call market. In market, the goods flow from the sellers to the buyers and money flow from buyer to reach sellers to complete the exchange.