Introduction to Marketing

Marketing, intuitively, has something to do with the market. Even without deep knowledge of theory, it’s evident that marketing involves the various activities happening in the market. Here, we’ll start with a quote from Peter Drucker, one of the prominent management gurus, to understand marketing’s purpose.

"Marketing is the only distinguishing and unique function of business. If you want to know what a business is, we have to start with its purpose, and its purpose must lie outside the business itself. In fact, it must lie in the society since a business enterprise is an organ of the society. There is only one valid definition of business purpose — that is to create a customer."

Key Points from Drucker’s Perspective

Purpose of Business: The business’s purpose is to create a customer, as the customer will provide the revenue necessary for the business to thrive.
Market Relationship: The purpose lies outside the business, in society, with the customer.
Customer Satisfaction: Maintaining customers requires meeting their expectations, keeping them satisfied with the offerings.

Marketing, according to Drucker, revolves around creating and sustaining customers. This also implies that understanding why a customer might choose your product is crucial for successful marketing.

Philip Kotler’s Definition of Marketing

Introducing Philip Kotler

When discussing marketing theory, Philip Kotler is an essential name. Known as the father of modern marketing, Kotler established marketing as an academic discipline through his textbooks, which are widely studied.

Kotler’s Definition

"Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others."

Kotler’s definition of marketing touches upon several important aspects. Let’s break it down for a deeper understanding.

1. Societal Process

What it Means: Marketing is not just a singular activity; it’s a process that takes place within a society. This implies that marketing activities are shaped by and respond to societal needs and the behaviors of people within a society.

Process: It involves multiple steps and activities that work together.
Societal: Marketing operates within society, aiming to meet societal needs, which includes fulfilling the demands of both individuals and groups.

2. Individuals and Groups

Why Kotler Emphasizes Both: Kotler distinguishes between individual behavior and group behavior because the two influence purchasing decisions differently.

Individual Behavior: When an individual shops alone, their choices are often based on personal needs and preferences. For example, buying a shirt alone might involve choosing based on color, fit, and style without external influence.
Influence of Groups: Shopping with a group can change preferences. An individual may go to buy a simple shirt but, due to peer influence, end up purchasing something entirely different, like a pair of shoes or a flashy shirt. This shift highlights group influence on individual choices.
Group Decision Making: Certain purchasing decisions, especially for high-value items like houses or cars, involve group input. For instance, the color, model, and features of a car or the layout of a house may be decided collectively within a family. These are group-driven decisions where each person’s input contributes to the final choice.

3. Needs and Wants

Needs vs. Wants: Kotler distinguishes between basic necessities (needs) and desires (wants).

Need: Basic human requirements, such as food, water, clothing, and shelter.
Want: Specific preferences for satisfying needs, shaped by culture and individual personality. For example, while everyone needs shelter, some might want a luxurious apartment while others prefer a small house.

4. Creating, Offering, and Exchanging Value

Creating: Developing products or services that fulfill customer needs and wants.
Offering: Presenting these products or services to potential customers in a way that appeals to them.
Exchanging: The process of transactions in which products or services of value are provided to customers in exchange for money, feedback, or other forms of value.

In summary, Kotler’s definition emphasizes that marketing is about satisfying needs and wants within a societal context, considering both individual and group behaviors, and involving the creation, offering, and exchange of value.

Introducing Maslow’s Hierarchy of Needs

Maslow’s hierarchy organizes human needs into a pyramid, starting with the most essential needs at the bottom. This hierarchy helps marketers understand the different levels of consumer needs and what motivates them to fulfill each level:

Physiological Needs: Basic needs for survival (e.g., food, water, warmth). Marketing at this level focuses on providing essentials.
Safety Needs: Once basic needs are met, people seek security (e.g., employment, health, property). Products that assure safety—like insurance, stable jobs, or security systems—appeal to this need.
Social/Belongingness Needs: After safety, individuals seek relationships and community (e.g., friendship, family). Marketing here often involves products that promote social connections, like social media platforms, family-oriented services, or community-based products.
Esteem Needs: This level includes the need for respect, self-esteem, and status (e.g., luxury goods, professional achievements). Marketers can appeal to esteem needs by offering premium products or experiences that provide a sense of accomplishment.
Self-Actualization: The highest level involves realizing one’s potential and seeking personal growth (e.g., pursuing passions, creativity, or education). Marketing can appeal here by offering products and services that encourage self-expression, skill-building, or personal growth.

Using Maslow’s hierarchy, marketers can better align their products and messages to the specific needs consumers are trying to satisfy, from basic necessities to self-fulfillment.

Distinguishing Needs and Wants

Needs represent essential requirements; they are fundamental and universal, like the need for food, safety, and social connections. Needs are not created by marketers but are inherent to human survival and functioning.
Wants are the specific forms or expressions of those needs, influenced by culture, personal preferences, and societal trends. Marketers don’t create needs but guide wants by positioning products as the ideal way to satisfy these underlying needs.

Examples in Context

Marketers thus tailor products to specific wants, making them appear as ideal ways to fulfill underlying needs. This distinction between needs and wants helps businesses effectively target consumers at different levels of Maslow's hierarchy.

Marketing as a Process to Satisfy Needs and Wants

Marketing centers on how individuals and groups fulfill their needs and wants by using products and services that deliver value. Here’s how this process unfolds:

Identifying Needs and Wants: Marketers first identify consumer needs and wants.
- Needs are essential requirements, like food, safety, and belonging.
- Wants are specific expressions of needs, shaped by individual preferences, culture, and societal trends.
Offering Products and Services: After identifying needs and wants, marketers design and offer products or services to satisfy them.
- Products and Services: Anything that can meet a need or want, such as food (need) or gourmet meal kits (want).
- Creating Value: Products and services hold value when they provide benefits that outweigh their costs.
Value Creation: In marketing, value is a key driver—it is the benefit derived per unit of cost.
- Example: If a toothpaste costs ₹50 and provides benefits like fresh breath and hygiene, consumers may find value in it. However, if it costs ₹1000 with the same benefits, consumers might perceive it as lacking value.
- Value creation becomes the marketer’s goal, as it leads to customer satisfaction and loyalty.

The Four P’s of Marketing (Marketing Mix)

To deliver value effectively, marketers develop an offering using the four P’s of marketing:

Product: Developing the right product to meet customer needs.
Price: Setting a price that aligns with perceived value.
Place: Ensuring the product is available where consumers can access it.
Promotion: Communicating the product’s value to the target market.

Free Exchange

A free exchange in marketing refers to the freedom for both buyers and sellers to engage voluntarily. It’s a type of market democracy where:

Buyers are free to purchase from any seller.
Sellers can choose whom to sell to.
Example of Restricted Exchange: In a monopolistic market, such as a single aluminum supplier for car manufacturing, the lack of free exchange may create an imbalance, with buyers having no choice but to purchase from the single supplier.

Definition of Marketing

Marketing can be distilled down to a simple one-line definition:

Marketing is the process of delivering value to the target group.

Key Elements of Marketing

To understand this, let’s break it down into the core components that define marketing:

Identifying the Target Consumer
- The first step in marketing is to identify who your consumers are. These are the individuals or groups that are likely to benefit from your product or service. Knowing your target audience helps tailor the marketing strategies effectively to meet their expectations.
Determining Needs, Wants, and Demands
- Needs are the fundamental requirements, like food, shelter, and safety.
- Wants are specific preferences shaped by culture, personality, or trends (e.g., preferring a particular cuisine or style).
- Demand arises when wants are backed by purchasing power.
- In marketing, it’s crucial to understand what customers need, want, and demand so that the product or service offering can be aligned with their expectations.
Developing an Offering to Satisfy the Target Group
- Once you understand the needs and wants of the target consumer, you need to develop an offering—a product or service that fulfills these expectations. This offering should deliver value, meaning it provides benefits that outweigh any associated costs.
Delivering Value
- Delivering value is at the heart of marketing. Value is perceived when the benefits exceed the cost of the product or service. A successful value delivery leads to customer preference for your product, increasing demand and, ultimately, revenue and profit.

The Marketing Process: A Step-by-Step Summary

Identify Target Consumers: Determine who is most likely to need or want your product/service.
Determine Needs and Wants: Understand what constitutes “value” for these consumers by analyzing their needs, wants, and demands.
Develop an Offering: Create a product or service that aligns with these needs and offers clear value.
Deliver Value: Ensure that the offering provides more benefits relative to its cost, encouraging customer satisfaction and loyalty.

When effectively implemented, delivering value leads to customer satisfaction, preference, and a positive reputation, resulting in increased revenue and profit for the organization.